Tag Archives: Supreme Court

A Global Minimum Wage

Fanciful Utopia

The idea I’m about to foist upon you is not a new one, and it might not even be original (feel free to direct me to anything in the literature or blogosphere that might have scooped me on this one).

To make matters worse, it’s not even an enterprising idea — it’s a policy recommendation!  I first started formulating it when I was a wee undergrad, and when I pitched it to one of my Econ professors, he told me it sounded too much like “global utopia.”  I haven’t spent much time refining the idea since then, so it hasn’t changed,  but the times have, perhaps sufficiently to make the idea palatable…

The Idea

There are essentially just two big steps to this idea, the goal of which is to end exploitation of workers:

  1. Set a global minimum wage (GMW)
  2. Allow countries to place import tariffs on companies that pay below this global minimum wage
1. Set a global minimum wage
This will be very hard to determine.  It makes sense for whatever wage is agreed upon to be expressed in USD, but at purchasing power parity (PPP) rather than exchange rates, as that will make it more stable (If I’ve lost you, don’t worry, the rest will still make sense).
Where exactly the GMW should be set is tricky, to say the least.  It needs to be set high enough that it actually accomplishes its goal of lifting workers out of poverty and preventing exploitation, but low enough that it doesn’t push economic activity underground or off the books.
2. Allow Tariffs
This part is also tricky. I’m still not sure whether tariffs should just be allowed against companies that fail to pay the GMW or against product categories from an entire country if the respective government fails to enforce the GMW in that sector.
In any case, the enforcement for this plan would be through the World Trade Organisation (WTO).
As I said, this idea has not undergone significant revision since I first dreamed it up, but the current political climate might make it either more palatable or less so.  First, the reasons I think it might be more plausible:
Pro: Rising Protectionism
I’m not a big fan of “economic nationalism” but it’s a completely predictable consequence of a recession or downturn, and in this case it could be put to good use.  I think politicians in the US  would love the opportunity to slap tariffs on China and other emerging economies; European leaders would love it even more because they could do it in the name of Human Rights!
Con: Corporate Objections
The major opponents to this will of course be large multi-national corporations who rely on low wages at one end of their global supply chain.  Their objection to paying livable wages to workers in developing countries is nothing new, but their political power, especially in the US, has been growing significantly.
Recent Supreme Court decisions (Wal-Mart v Dukes, Brown v Entertainment Merchants Association, etc.) have solidified the Roberts court’s reputation as the most corporate-friendly in history; with the current composition of SCOTUS, it’s quite possible that any tariffs enacted in support of the GMW could be successfully challenged in court in the US, the biggest single market for imports.  And even that would require a treaty to be ratified in the first place; given the increased corporate influence over Congress authorized by Citizens United v FEC, it would be difficult, at best, to get any sort of legislation passed enshrining the GMW in law.
As with any other idealistic global scheme, it would be possible to proceed without US participation, but the effect would be reduced.
Thoughts???