Business can change China …

News & Politics

Jim Hoagland had a confused editorial in yesterday's WaPo.

The piece was titled "Business Can Change China," but the Op-ed was all about how multinational businesses are profiting from China's cheap labor force, and how investors prefer stability -- AKA repression -- over any namby-pamby talk of human- or political rights.

Hoagland drew a parallel between China today and Apartheid South Africa in the 1970s and 80s:

A turning point in the struggle against apartheid came in 1977, when the Rev. Leon Sullivan persuaded U.S. companies to adopt a set of principles to guide their commercial involvement in South Africa.
This code of conduct centered on equal opportunity for blacks who worked for these companies and for local firms with significant institutional ties to U.S. companies. The Sullivan Principles shifted the discussion from self-justifying theories about business advancing social change to the practical steps of what happened every day in the workplace.
This sign of outside support encouraged black South Africans to reengage and renew a political process that had been crushed. And it provided significant pressure points for anti-apartheid activists abroad. A combination of sanctions and domestic political activity brought economic pressures that helped end apartheid a little over a decade ago.
He seems to have forgotten that those corporate codes of conduct -- and the idea of engagement more generally -- were much of the Reagan administration's case against sanctions, which they fought until domestic political pressure became overwhelming.

There are lots of problems with South Africa as an historic analog to China, but the failure of engagement is not one of them. Hoagland nevertheless argues that "U.S. firms need to develop a similar code of business conduct with Chinese characteristics."

The truth is that U.S. firms that move production to China, like Wal-Mart, not only enjoy the cheap labor, they also know that those cheap wages are directly threatened by expanding political rights. When people gain political rights -- especially the right to organize -- they then agitate for more pay, better benefits and annoying things like workplace safety and environmental regulations.

Those firms' interest is in wall-papering over political repression, and one of the ways they do that is with voluntary "codes of conduct," an idea with which Western firms have a rich history of almost negligible effect.

It's almost as if Hoagland really wants to write that fairly evident point, but can't in the editorial pages of the Washington Post. After all, if he were to extend his analysis to its logical conclusion -- and be honest -- he'd have to call for economic sanctions against China; sanctions* put much more pressure on the South African government than any voluntary codes of corporate conduct ever did.

The problem is that economic sanctions based on a country's human rights record or other political differences (security issues being the exception) are illegal under the WTO, an institution that the WaPo has long championed. Apparently, that leads to some noticeably bizarre opinion pieces.

*Some have argued that economic sanctions in and of themselves didn't bring the Apartheid regime to heel; it was the sporting sanctions that really bothered white South Africa -- they couldn't play in the World Cup!

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