Foot Loose Capital

A long-awaited UN study on international labor standards due out in June could be a great democratizing force. But in spite of big promises and good intentions, early hints of its findings suggest that transnational business is getting off easy. That, in essence, is the criticism of Prof. John Ruggie, of Harvard’s Kennedy School of Government and the grand vizier of the United Nations’ attempts to put a human rights leash on the global economy.

Studies don’t always matter and who can say if another over-parsed and cautious tome will ultimately say anything important. After all, the International Labor Organization (ILO) has been around for some 90 years with a fairly stringent set of standards for workers’ rights, with little real-world impact.

Ruggie’s report could be an eye-opener and a "tonic for the troops." But unfortunately it probably won’t be.

Last year Ruggie laid out a hierarchy of problematic industries, putting mining and oil/gas companies at the top, with all others far down the list – with food and drink a distant second. While the former is a popular target, with a ready list of spectacular and graphic abuses, the footwear/apparel/textile sector is more responsible for the parlous state of human rights in the world today.  The reason is opportunity cost.

How did deep democratization and Keynesian reforms get traction in the middle decades of the 20th century? Trade unions and masses of fed-up workers propelled the drive for economic justice with responsive governance - consumer regulations, health and safety inspections and the like.  Later, in the 1980s, defiant worker movements in Poland, Brazil, South Korea, and South Africa pushed autocrats from power. "Sweatshops," wrote Marc Miller in his new biography of Yiddish writer Morris Rosenfeld, "were a catalyst for change."

After two decades documenting how low-skilled assembly workers have been denied the right to form unions and bargain collectively, it seems clear that corrupt and repressive governments have become safe havens of industry.  In self-defense, they point to "foot loose capital" as the underlying problem. But in fact, the interests of the big brands and the dictators in the countries where they do business are congruent. This is particularly true in the mining/oil/gas sector, apparel and shoe industries, where companies have had a dozen years to clean up their act and should now be called to account.

But instead of pointing to the brutes in suits that are four steps removed from consumers, the Ruggie report will be an empty gesture. By turning a blind eye to sweat shops (putting them far down the list of "bad actors," for example) we are denying Chinese, Thai, Mexican, and Sri Lankan societies, the democracy catalyst that could be a jumping-off point for meaningful change.

While far short of the collective bargaining ideal, what I saw work in Indonesia was nonetheless impressive; they pushed up wages almost 300%.  The similar collective action is going on today in Vietnam – the number of strikes has quadrupled since 2006, and wages have nearly doubled.

In Guatemala or Malaysia today, nascent unions bring young people into the struggle for justice and human rights.  It’s just one of the essential-to-democracy things that unions do.