Wednesday, June 20, 2007

Sir Topham Hatt's Railway Isn't a Good Product Safety Model

by Tom Bozzo

David Leonhardt scores some easy points (*) in a good Economix article on outsourcing that puts in the Paper o' Record something I said in our comments last week: it lets rich-country outsourcers reap benefits of what would otherwise be outlaw behavior while (mostly) preserving their corporate images. Leonhardt:
This secrecy [about companies' relationships with Chinese contract manufacturers] brings a number of advantages. It keeps competitors from finding out tricks of the trade. It keeps consumers from discovering that their $100 brand-name shirt comes from the same assembly line as a $40 generic version. And it prevents activists from criticizing a company for the working conditions in a factory where its products are made. The companies get the cost advantages of outsourcing without the publicity disadvantages.
This leads us to the Quote of the Day, from Dani Rodrik:
[Rich and poor nations] should consider instead exchanging policy space: “I [poor nation] will allow you to protect your national social compact, if you allow me to engage in development strategies that conflict with WTO and IMF rules of good behavior.” The challenge is to design procedures that enable the use of policy space for socially desirable purposes, while limiting it for beggar-thy-neighbor purposes.
That's from a short essay (MS Word), "Saving Globalization From Its Cheerleaders," linked from this post.

(*) We've been there before.

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