Despite our reputation around here as market crazed fanatics whc would do and argue anything to further the interests of international capital there is indeed a method to our perceived extremism: no, not that we are in fact market crazed fanatics.
I certainly am driven to recommend markets as the solution to most problems most of the time simply because markets are indeed the solution to most problems most of the time.
Take for example the problem of child labour. Most certainly we would all prefer a better world in which the young go to school and prepare themselves for making the future world even better. But as Paul Krugman points out, this isn’t actually one of the options available to those who currently labour in carpet factories, brickworks or upon garbage dumps. The options are work or starve.
So what might we do to try and reduce these pressures upon the young innocents? How about globalisation?
We examine the effects of trade liberalization on child work and schooling in Indonesia. (…) Our main findings show that increased exposure to trade liberalization is associated with a decrease in child work and an increase in enrolment among 10 to 15 year olds. The effects of tariff reductions are strongest for children from low skill backgrounds and in rural areas. However, a dynamic analysis suggests that these effects reflect the long term benefits of trade liberalization, through economic growth and subsequent income effects, while frictions and negative adjustment effects may occur in the short term.
Please note, this is not a result of us in the rich countries reducing our tariff barriers to Indonesian products. This is the result of the Indonesian government reducing tariff barriers to imports. Just another proof that imports are what make us all rich and that it is wealth that reduces child labour.
The policy prescription seems obvious as well. All those campaigning for the end of child labour (a worthy and noble goal) should in fact be campaigning for the poor countries where child labour exists to reduce their import tariffs. Sadly, of course, this is not what happens: all too many seem to be arguing for both the end of child labour and also that those nasty western products must be kept out of the poor countries so as to protect infant industries. A depressingly counter-productive course of action.