One of the things to recommend for the new Bangladesh -- stop paying so much attention to the international bureaucracies. Some of them do a few useful things but overall they stopped being serious organizations some time ago.
Yes, the World Health Organization does some useful work on drug prices, generics, and infectious diseases. The Food and Agriculture Organization has been known to have useful advice on improving agricultural productivity. The other one, the International Labour Organization, ILO, should just be ignored. For it's still peddling all the things sensible, serious -- and rich -- countries stopped doing decades ago. It is, sadly, still trapped in the corporatist economic ideas of 50 years back. Which isn't a good thing for us to be copying as we try to build a 21st century economy in Bangladesh.
To take an example or two from the ILO's most recent report: “Adding sectoral wage boards and strong collective bargaining mechanisms” and, well, no.
The first part, sectoral control of wages is simply nonsense. Wages are set in the national labour market. What determines your or my wages is how much we can earn in the next job we might be able to get -- that's what our current employer has to pay to keep us. But “sectoral wages” mean that jute wages are set for the jute industry, RMG for RMG, barbering wages for barbers -- entirely ignoring the whole point of wage differences.
It's a kind of nonsense based upon what we would, in political economy, call “corporatism.” The idea that “Big Labour,” the big companies and an interventionist government can and should plan how the economy works. It's also the basis of fascist economics but, no, thinking this is a good idea doesn't mean that you're a fascist -- it just means that you're wrong.
Strong collective bargaining is that code for strong unions. Which, given that the ILO is effectively colonized by the international union movement makes political sense. It also makes absolutely no economic sense. For to be able to bargain collectively it must be possible to keep the other workers out of the employment that is doing the bargaining. But, that again runs against our basic idea about labour markets -- they're economy wide.
Here in Bangladesh we've probably got too many people working in jute, rickshaws, and on small farms. We've probably got not enough people doing that nice indoor work, no heavy lifting which comes from working for bigger companies and in services. So, now we say strong union power. The unions can only have power if they can stop people from leaving the rickshaw sector to those higher paid jobs.
But stopping people doing that is 100% what we're trying not to do -- we want people to leave low paid employment for higher paid. Which, obviously, isn't going to happen if we've strong union power protecting the jobs and wages of the higher paid now, is it?
The real problem with all of these ideas -- with corporatism itself as well as the ILO's prescriptions -- is that they're really about a static economy and people are trying to distribute what there is in a zero sum game.
Ok, so the capitalists have power so we need unions to counteract that. But a static economy isn't the Bangladeshi problem nor even the desire. Growing at 5% a year and more -- as the country is -- is a vibrantly dynamic economy. Exactly when and where we don’t desire to be creating power blocks at all. Just that economic growth, on its own, is going to be redistributing that economic growth.
Plus, and here's the essential part, moving labour and other factors of production from lower to higher valued uses. That's actually what the growth is, that change in the structure of the economy.
There's another way to put this. The ILO is run by, staffed by, those who still believe in the ideas that the rich countries abandoned 50 years ago. They're in the ILO because no rich country government will bother to employ them so outdated are their economic ideas. Therefore a place that wants to be a rich country -- as Bangladesh does and in the passage of time will be -- really shouldn't be paying attention to the ILO.
Really, bureaucrats that not even France, or Sweden, will pay attention to? Why should we listen?
Tim Worstall is a senior fellow at the Adam Smith Institute in London.
