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the illiberal global labor market

Lant Pritchett concludes “Let Their People Come: Breaking the Gridlock on Global Labor Mobility” not by talking about amnesty, but bilateral temporary work agreements. In just 151 pages (available for free), Pritchett not only presents a convincing argument for the reduction of labor movement restrictions, but also thoughtfully and respectfully engages the anti-immigration ideas that keep labor mobility reform off the agenda. While unafraid to voice disagreement with these ideas, Pritchett is careful to acknowledge their political import, and -in a welcomed bow to pragmatism- produces his final recommendations in the context of these realities. This post will be the first in a series to explore Pritchett’s arguments, beginning with an introduction to the matter at hand and the morality of the foreign labor debate.

The great distortion in the international marketplace is not found in trade or capital, but in labor, probabilistically damning billions to lives of poor health, wealth, and education. While it has become easier for goods and money to find their most attractive market, regardless of country, labor laws have made it increasingly difficult for the world’s poor.

At a historically unique time of global consciousness, with tens of billions of dollars spent on development assistance and tens of thousands protesting perceived exploitation of the world’s poor, the world’s democratic powers are making it harder than ever to live and work within their borders. In the 19th century, the wage gap (adjusted for PPP) between Ireland and the US was 2.3:1; today the gap between the US and many countries is three times as great, and the distance between the enterprising foreign worker and the US has commensurately widened.

Pritchett notes that “a recent World Bank study has estimated the benefits of the rich countries allowing just a 3 percent rise in their labor force through relaxing restrictions. The gains from even this modest increase to poor-country citizens are $300 billion—roughly four and a half times that magnitude of foreign aid.” Not only does such reform promise great benefit to the worker, but “the current rich-country residents benefit from this relaxation on distortions to labor markets—so the net cost is in reality a net benefit of $51 billion. It would seem that the choice between spending $70 billion on foreign aid for an uncertain magnitude of gains versus a policy change with a net benefit to rich-country residents of $51 billion for gains to the world’s poor of $300 billion would, naively, be an easy one.”

Yet the nativism of the Know-Nothing Party has indeed carried the day. There are numerous justifications for opposition to foreign labor, and while I focus on the moral questions in this post, I’ll briefly introduce Pritchett’s list of common objections below (for the sake of clarity, I’ve spared the ellipses from this patched together list of quotes):

“- Nationality is a morally legitimate basis for discrimination.
– Proximity or physical presence in the same political jurisdiction is all that matters for moral obligations.
– “Development” is exclusively about nation-states, not nationals [living or working abroad]
– Labor movements are not “necessary” (or desirable) to raise living standards.
– Increased migration of unskilled labor will lower wages (or take jobs away from natives) and worsen the distribution of income in the receiving countries.
– Movers are a fiscal cost because they use more services than they pay in taxes.
– Allowing movement across borders creates risks of crime and terrorism.
– “They” are not like “us”—culture clash.”

The first and second points are relevant to today’s moral discussion. Pritchett notes, that “nearly every modern polity is now built around the notions of fairness and equity. Now, after centuries of struggle, it is widely regarded as morally illegitimate to limit people’s life chances because they were born a woman, are of a minority race or ethnicity, were raised in a certain religion, or have a physical disability. And yet, as chapter 3 documents, the single largest factor affecting a person’s life chances is the country in which he or she is born—this dwarfs gender or race or parents’ socioeconomic status as a determinant of well-being.”

Yet, to many, “as long as a specific Haitian is suffering while physically in Haiti, the moral obligation of the United States is nothing, or next to nothing. If that same Haitian manages to arrive on the soil of the United States, the moral obligation to that specific person increases almost infinitely. At the same time, it is perceived as moral to deploy violence to prevent that Haitian from setting foot on American soil by, for instance, interdicting his or her boat in international waters.”

Pritchett raises the question, “Why is it that people feel morally justified to use coercion to prevent people from crossing their national border to pursue voluntary economic transactions? And not only is that the prevalent attitude, but there is no truly significant agitation against that view from the development community.” Pritchett then proceeds to attack this moral presumption by first raising the specter of apartheid:

The analogy between apartheid and restrictions on labor mobility is almost exact. People are not allowed to live and work where they please. Rather, some are only allowed to live in places where earning opportunities are scarce. … The current international system of restrictions on labor mobility enforces gaps in living standards across people that are large or larger than any in apartheid South Africa. It is even true that labor restrictions in nearly every case explicitly work to disadvantage people of “color” against those of European descent. The obvious response is that with apartheid people of the same nation-state were treated differently while the apartheid of international barriers to mobility is treating people of different nation-states differently. People subject to the same laws should be treated the same based on conditions of birth. The fact that people are, by whimsy of birth, allocated to different nation-states and hence treated differently has no moral traction. In nearly all modern theories of justice and ethical systems, most conditions of birth—one’s sex, race, and ethnicity—are excluded as morally legitimate reasons for differences in wellbeing, and yet discrimination on the basis of nationality is allowed.
….
An Indian girl not having life chances equal to those of an Indian boy is widely regarded as morally unacceptable, while preventing an Indian girl (or Pakistani, Bolivian, or Egyptian girl—or her parents) from moving across national borders to have the same life chances as a German boy (or U.S., French, or Japanese boy) is considered morally acceptable.  …  But behind a “veil of ignorance,” who would agree to a system in which some people are born in Niger (or choose any poor country) and some in Switzerland (or choose any OECD country) and those born in Switzerland are entitled to use coercion to prevent those born in Niger from enjoying life chances equal to those born in Switzerland?

Pritchett acknowledges the many opinions on the philosophical foundations of justice, some of which might rebut that a valid “moral system is whatever emerges from an continued, uncoerced dialogue about values within a community of practice.” He notes, however, that “one question such a notion of justice cannot address is the justice of physical exclusion from the “community.” If the community is smaller than the nation-state, I would imagine that most nations would prevent communities from enforcing physical exclusion of others on “values” grounds—in fact, segregation was justified on precisely this “communitarian” grounds. If the “community” relevant for establishing a notion of justice coincides with the nation-state, this is a disaster. One can think of a long list of historical instances in which protecting the “community” and its beliefs led to physical exclusion (or expulsion)—but none of them positive. Though communitarian theories of justice are powerful and convincing on many grounds, I do not believe they can be relevant for this particular question.”

This moral nationalism has many implications for the foreign labor question, far beyond a simple rejection of the moral significance of the foreign born. Pritchett notes that such nationalism sabotages even the socially conscious who argue that immigration is desirable only on the condition that the laborers are treated at the same high standard as any citizen:

Crudely put, most people in most industrial countries think that tolerating excessive differential treatment of people within their national boundaries is “immoral” but have few qualms about the suffering of people outside their boundaries—and think it acceptable to force people to stay outside. The level of deprivation of people in Haiti causes almost no direct concern in the United States. But if a Haitian manages to reach the United States, his or her very physical presence on U.S. territory creates an enormous set of obligations and political concern.

This partly explains why the highest percentages of foreign-born workers are not found in the US (7.2%) or Europe (4.5%), but rather in the United Arab Emirates (73.8%), Kuwait (57.9%), Singapore (33.6%), Oman (26.9%), and Saudi Arabia (25.8%). The latter countries have no qualms with treating foreign laborers the same way the US and Europe treats tourists or visiting businessmen – individuals free to enter into voluntary agreements, but of no additional consequence to the state.

The benefit to the migrant worker is clear, a 2003 Jasso, Rosenzweig, and Smith paper found an increase of $17,000 to $37,989 (in PPP) for the same worker upon moving to the US.  Even a marginal increase in migrant workers to industrial countries could have an enormous impact (far greater than development aid) on the well-being of the world’s poor. Future posts will address the obstacles to labor mobility that emerge from the perceived self-interest of the industrial world’s general public and false notions of development. The final post will look at Pritchett’s proposal to reconcile the great potential of labor mobility with these obstacles.

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Filed under: General Welfare, Philosophy,

3 Responses

  1. […] people, not plots of land Returning for another round (first round: the illiberal global labor market) of Breaking the Gridlock, Lant Pritchett attacks international organizations’ assumption […]

  2. […] For fear of some anti-free traders remaining unimpressed, I would add that we also don’t allow distributional considerations to take precedence over more efficient technological innovations.  I don’t expect this counter-argument to impress anti-free traders in isolation, but free labor has the advantage over free trade in that the direct benefits accrue to those most in need; folks against an unskilled labor influx out of a concern for distributional effects would do well to consider Pritchett’s points in the previous post on the morality of labor mobility. […]

  3. […] People Come: Breaking the Gridlock on Global Labor Mobility.” In those posts, I addressed the morality, the positive development implications, and the benefits to host nations of increasing work visas. […]

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