Kaushik Basu, Carl Marks Professor of International Studies and professor of economics, gave a lecture entitled “Global Labor Standards and Local Freedoms” yesterday afternoon in Caldwell Hall. The talk was part of the Cornell Institute for Public Affairs’ Spring 2005 Colloquium Series, “Broadening Horizons: The Changing Face of Public Policy in the New Millennium.”
Basu discussed the circumstances under which the government can justifiably intervene in contracts between people, such as the appropriateness of child labor, minimum wage, and labor hours regulations. He illustrated that developing countries have two supply-demand equilibria, one where workers labor for long hours under low wages and the other where they work for higher wages and fewer hours. Though a government can use “benign intervention” such as temporary labor legislation to push the economy toward the higher equilibrium if it is stuck at the lower one, higher labor costs would cause firms and their capital to flee to another country. The best alternative, he said, is for “similarly placed countries … to come together” to collectively formulate labor standards.
The talk was especially relevant for Barbara Krause, senior advisor to President Jeffrey S. Lehman ’77, who leads a working group on the University’s ethical purchasing policy, which Lehman established after last year’s student protests over the school’s relationship with CINTAS. She said that the group — made up of an undergraduate student, a graduate student, a faculty member, a staff member, and three administrators — was established to discuss what the University is doing right now and what the potential is for the future. As far as Krause knows, the University of Michigan is the only school with an ethical purchasing policy.
The decision over when to enforce labor standards is anything but easy. Calling child labor a “dreadful institution,” Basu nonetheless does not support the ban or boycott of imports that could have been made with child labor, because such moves are “based on a misunderstanding of what causes child labor.” Oftentimes, it is caused by “parental desperation,” and children prohibited from certain sectors will merely switch into more dangerous ones such as prostitution or mining.
He cited a UNICEF study, which found that 5,000 to 7,000 Nepalese children went into the prostitution market after the U.S. banned that country’s carpet exports in the 1990s. Basu also recounted how the demand for products carrying the label “not made with child labor” forced the centralization of soccer ball production to a Reebok plant in Pakistan, crowding out legitimate, smaller producers across that country.
The talk had its lighter moments, such as when Basu described Indians’ responses to a law mandating seat belt use. Some wear the seat belt loosely around them and buckle it only when they see a policeperson. Others wear shirts that have a picture of a seat belt, making it impossible to tell the difference from far away.
CIPA fellows made up the bulk of the attendees. Chris Lackert MPA ’05 responded enthusiastically to the talk, saying, “I wish I knew about Professor Basu before, so that I could have taken a class with him.”
Brian Ohl MPA ’05 said that Professor Basu provided important, policy-relevant information for CIPA students.
The Colloquium invites thirteen guest speakers each semester to discuss issues facing public affairs and public policy professionals.
Archived article by Heather Klein