Jason Scorse

Globalization's Impact on Compliance with Labor Standards

In an effort to shed some light on the larger question of labor standardsvand globalization, we seek to examine compliance with minimum wage legislation in Indonesia. Indonesia is an ideal case study because the govern ment made minimum wages a central component of its labor market policies in the 1990s. During this time, minimum wages quadrupled in nominal terms and doubled in real terms. In this paper we estimate the relationship between international competition and compliance with the statutory minimum wage in Indonesia. We identify firms facing international competition with two plant-level indica tors. First, we use the plants export orientation as one measure of international competition. Second, we use the plants foreign ownership as another measure of international competition. Critics claim that foreign firms are exploiting foreign workers, although our research on developing countries has shown that foreign enterprises are more likely to pay higher wages. This framework provides a direct test of the relationship between meas ures of globalization and labor standards, as defined by compliance with the regional minimum wage.

Fisheries and the Marine Environment

The oceans are in serious trouble; this is not hyperbole or more “doom and gloom” prognosticating. Multiple assessments of the state of the oceans show that the majority of fisheries are declining and face complete collapse.1

Demand-Side Interventions

The majority of this book has focused on supply-side solutions— policies that influence the behavior of farmers, landowners, timber companies, fisherman, and corporations. Many of these policies, by influencing the prices and quantities of goods produced, end up influencing demand. But there are many interesting and effective policy interventions that directly address the demand side of the equation.

Putting Monetary Values on the Environment and Living Things

The first three chapters outlined the basic conceptual framework of how economists approach environmental problems. Economists do not begin with the assumption that all pollution and environmental degradation should be eliminated; they believe that society must strike a balance between industrial development and environmental quality. Much of the methodology that economists employ to help society weigh the trade-offs between environmental goals and the production of goods and services relies on putting monetary values on the environment and living things.

Tools to Address Environmental Problems

The field of economics would be of limited use to environmentalists if it was only good at examining the causes of environmental problems and offered little about how to actually solve them. Fortunately, this is not the case. This chapter provides an overview of the policy options for addressing environmental problems that economists have developed and the areas where they can be most effective. By and large, these policies fall under the heading of “market-based” mechanisms and are not at all controversial on the theoretical level; where disagreement exists is in the implementation and in the details.

Forest and Biodiversity Conservation

Preserving biodiversity is often considered the signature goal of environmentalism; along with pollution control, it has defined the movement since its inception. But preserving biodiversity is one of the most difficult policy challenges. It also raises very complicated moral and philosophical questions.

Valuing Future Generations

If valuing current generations and their environmental needs wasn’t difficult enough, policymakers also have to contend with how to value future generations. This is not an abstract issue; the biggest environmental issue of all, climate change, has huge implications for future generations (as well as current generations);1 so do other issues, such as the depletion of nonrenewable resources, the degradation of unique and irreplaceable ecosystems, nuclear waste disposal, and the hole in the ozone layer.

The Root Causes of Environmental Problems

Environmental problems are extremely complex and varied, yet they almost always share similar features, be it air pollution in Mexico City or a village in Indonesia, habitat loss in Kenya or Brazil, or fisheries collapse in the Indian, Pacific, or Atlantic oceans.

Environment Vs. Economy

Before moving on to issue-specific discussions about economics applied to environmental policy, I would be remiss not to spend a few pages on the controversial topic of the “environment versus economy” debate. Environmentalists are often confronted with the claim that stronger and more far-reaching environmental regulations will harm the economy by decreasing economic growth, raising unemployment, and making the home country less competitive globally, thus weakening export markets and leading to outsourcing.

Determining the “Optimum” Amount of Pollution

At first glance, determining an optimum pollution level may strike many environmentalists as strange or even heretical; there is an obvious “optimum” for pollution (despite what economists may think): zero.