Tuesday, 28 July 2009

An unambiguously good bill?

BK Drinkwater posts on An Unambiguously Good Bill He writes
Maryan Street's Customs and Excise (Prohibition of Imports Made by Slave Labour) Bill is not only wonderfully short and a shining example of truth in advertising, it is, as Idiot/Savant notes, a moral necessity
But is it such an unambiguously good bill? There is no doubt that slavery is to be condemned. But will this bill help in the fight against slavery, as I assume it is designed to do.

The fear I have is that the devil is in the detail, or at least in the interpretation and enforcement of the detail. With a broad definition given to "slavery" such a bill may end up as little more than protectionism by stealth. For example, will the bill outlaw the importation of product from countries which pay "slave wages"?

Clause 5 inserts a definition of "slave labour" into the principal Act. The definition mirrors the definition in international law as laid out in the 1926 Slavery Convention and the Rome Statute of the International Criminal Court. Clause 5 reads:
Section 2(1) of the principal Act is amended by inserting the following definition in its appropriate alphabetical order: “slave labour means labour by persons over whom any or all of the powers attaching to the right of ownership are exercised.”
Economists think of ownership in terms of residual rights of control. Following Grossman and Hart ("The Costs and Benefits of Ownership: A Theory of Vertical and Lateral Integration", 'Journal of Political Economy', 94:691-719) economists tend to define the owner of an asset - normally non-human - as the one who has residual rights of control over the asset; that is whoever can determine what is done with the asset, how it is used, by whom it is used, when they can use it etc. But in a world of incomplete contracts, in particular incomplete employment contracts, the employer has, at least, partial residual control rights over an employee. No employment contract can detail all tasks to be carried out at all times in all circumstances and thus the employer has residual rights to determine these things in the uncontracted for situations. That is she has residual control rights, and thus can exercise, at least, some of the powers attaching to the right of ownership. Is this slavery?

As noted above, What of countries where wags are low compared to New Zealand? Are these "slave wages"? However determined. Does the payment of such low wages imply that the powers attaching to the right of ownership are being exercised?

Clause 6 of the bill states:
Schedule 1 of principal Act amended
Schedule 1 of the principal Act is amended to add the following:
"Goods manufactured or produced wholly or in part by slave labour."
How is this in practice to be determined? And by whom? Given the multi-country production methods in use by many firms today, how are we to know of the labour practices of all those who have a hand in a goods production? With a broad interpretation given to "slavery", the enforcement of the bill could end up as little more than protectionism.

The idea behind the bill is a good one, but the results of the practice of enforcement could be anything but.


Peter Salmon said...

This is a silly bill and will be used for protectionist ends.

Who is to define 'slave labour'.

I assume one of the targets are sweatshops in China and India. With
China we have an FTA and we want one with India.

Paul Walker said...

So called "sweatshops" are one target I was thinking of. If paying "slave wages" amounts to slavery then you can see how such a bill could be used.

bk drinkwater said...

I've posted a response over here. I suspect you have the better of the argument, but I like to think I made a noble attempt.

Paul Walker said...

Have responded to part of your argument. Will more about the rest and respond later.