For New York Times, U.S. Labor Abuses At Home and Abroad Are a Thing of Decades Past

Dean Baker

China's foreign labor practices are no different from America's, in the past or today. (Marissa Orton / Wikimedia Commons)

Does for­eign invest­ment make the U.S. econ­o­my more vulnerable?

Appar­ent­ly the New York Times believes it does. A lengthy arti­cle on the growth of Chi­nese for­eign invest­ment told readers:

But the show of finan­cial strength [for­eign invest­ment by Chi­na] also makes Chi­na — and the world — more vul­ner­a­ble. Long an engine of glob­al growth, Chi­na is tak­ing on new risks by expos­ing itself to shaky polit­i­cal regimes, volatile emerg­ing mar­kets and oth­er eco­nom­ic forces beyond its control.

Any major prob­lems could weigh on China’s growth, par­tic­u­lar­ly at a time when it is already slowing.

Usu­al­ly invest­ing in oth­er coun­tries is thought to both increase returns to the coun­try doing the invest­ment and diver­si­fy risks, since it is unlike­ly that for­eign coun­tries will be sub­ject to the same prob­lems that may be hit­ting Chi­na (or the U.S.) at the same time. It is inter­est­ing that the New York Times seems to hold the oppo­site perspective.

The piece seems to imply that Chi­na is unusu­al in the demands it makes on the coun­tries in which it invests:

Chi­na is forc­ing coun­tries to play by its finan­cial rules, which can be oner­ous. Many devel­op­ing coun­tries, in exchange for loans, pay steep inter­est rates and give up the rights to their nat­ur­al resources for years. Chi­na has a lock on close to 90 per­cent of Ecuador’s oil exports, which most­ly goes to pay­ing off its loans.

The Unit­ed States took the lead in estab­lish­ing the Inter­na­tion­al Mon­e­tary Fund, which often acts as its agent in dis­putes. For exam­ple, in the East Asian finan­cial cri­sis, the IMF imposed very detailed pro­grams on the coun­tries of the region, which set tax and spend­ing sched­ules, changed reg­u­la­tions through­out the econ­o­my and required the pri­va­ti­za­tion of var­i­ous indus­tries. The con­di­tions placed by Chi­na on the coun­tries in which it invests may be dif­fer­ent, but they are not with­out precedent.

The piece also bizarrely implies that labor abus­es by U.S. com­pa­nies or their con­trac­tors are a thing of the past, telling readers:

Chi­nese min­ing and man­u­fac­tur­ing oper­a­tions, like many Amer­i­can and Euro­pean com­pa­nies in pre­vi­ous decades, have been accused of abus­ing work­ers overseas.

Of course there are many places in the world, most notably Bangladesh and Cam­bo­dia, where there are reg­u­lar reports of work­ers, often chil­dren, work­ing long hours in dan­ger­ous con­di­tions to make goods under con­tract with U.S. cor­po­ra­tions. Some­times these work­ers are held against their will and have their pay stolen by their employ­ers. This is an ongo­ing prob­lem, not a his­tor­i­cal concern.

In dis­cussing the new Chi­nese infra­struc­ture bank, the piece tells readers:

Wash­ing­ton is wor­ried that Chi­na will cre­ate its own rules, with low­er expec­ta­tions for trans­paren­cy, gov­er­nance and the environment.

It would be help­ful to know who in Wash­ing­ton says they are wor­ried about these issues. Pre­sum­ably all of Wash­ing­ton does not have these con­cerns. Also, just because politi­cians say these are their con­cerns, it doesn’t mean they are their actu­al con­cerns. For exam­ple, it may just be pos­si­ble they fear com­pe­ti­tion from a Chi­nese invest­ment bank.

A ver­sion of this post orig­i­nal­ly appeared on CEPR’s blog Beat the Press.

Dean Bak­er is co-direc­tor of the Cen­ter for Eco­nom­ic and Pol­i­cy Research and co-author of Social Secu­ri­ty: The Pho­ny Cri­sis (Uni­ver­si­ty of Chica­go Press, 2000).
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