Free trade doesn’t have to lead to global inequality

Just read the article “Buy Some Stuff, Enslave Somebody”. It’s a very good article, about an issue that has been with us for a long time but we haven’t faced up to it. The writer uses the concept of “plausible deniability”, with it’s associations of dodgy dealings and conspiracy theories, to describe the attitude of celebrities (and even Chief Executives) who promote companies engaged in in-humane and anti-environmental practices – and then say they didn’t know or even that it isn’t their problem.

However the writer, Josh Rosenblatt, goes on to say:

With free trade has come an explosion of global inequality

I don’t think there is a causal link here. If trade were truly free, companies who bought “sweatshop” labour would find their workers leaving and working for companies who paid them better, so companies paying lower wages couldn’t survive or would have to raise wages. This is what “should” happen in truly free labour markets. The problem isn’t with trade being free, but in free trade being imperfectly free. And as trade can never be perfectly free, the whole system needs balancing by some other non-market forces. So I’m saying that it’s not the fact that traders trade that is the problem, but that the system by which traders trade can never be right enough – it needs something more. And I’m not arguing for a system (like communism) that abolishes trade!

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