Global Austerity-Pollin

Pollin discusses the period after World War II and how it became influential in governments policies in promoting economic growth and equality. These policies became more and more interventionist as exemplified in communist countries where the government controlled “virtually all productive assets and economic activity was directed through a government-established comprehensive plan” (pollin 874). These resulted in high employment rates and relative equality in health and educational opportunities.

Similar to that there were import substituting industrialization models where every chance to increase capacity to manufacture goods was taken to strengthen the local market, this kept healthy domestic markets and rose the standard of living in the countries it was present in. While there were many benefits from these forms of socialism pollin argues that it was repressive and forced companies to compete against each other for government favor. Pollin goes on to argue that the transition from big government to the neoliberal governments has increased global inequality in income and standard of living. In examining this he looks at the institution of sweatshops and their affect on the workers and the economy. The workers are effectively enslaved in some sweatshops where the business takes the new workers ID card so they cannot leave the immediate area without facing arrest. The success of the sweatshop can be attributed to the surplus of workers in less-developed countries where lack of taxes on imported goods make farming business crumble and people flood to the cities for work where more jobs have not been created, this surplus of workers leaves people desperate enough to find work at sweatshops appealing. He goes on to quote several economists who talk about sweatshops as a blessing because they create jobs and that they must be beneficial to the people because people continue to work there. Pollin disagrees with this saying that while they do create jobs that’s not to say they are a good thing, he sites many examples of countries where as wages rose, so did employment rates. This could punch a huge hole in people’s argument that raising wages would cause job losses. He goes on to discuss Bono’s attempt to raise money for developing countries and how the country would benefit much more from the establishment of the macro economic policies of the UN rather than raising Bono’s financial goal to aid the country. This makes sense to me because it seems that philanthropists like Bono only try to relieve the symptoms of poor economic policies rather than the cause, while noble it is also an inefficient use of effort, much more could be done if the countries policies were self sufficient. If sweatshops were made to pay their workers a living wage, Pollin calculates that it would only increase the cost of products by about 1.8%. Considering Americans have begun the practice of paying between 15 and 28% more for products guaranteed to have worker friendly business practices this would be one of the smarter moves on the part of the developing countries, they wouldn’t lose business and they could raise the standard of living in their country.