As far as your third way goes – I think organised labour is vital, but a part of a bigger picture. Cases come to mind like Thailand, where I’d argue that inequality is deeply entwined with socio-political structures. There, politics probably prevents strong organised labour – but, then, if we have a political environment where organised labour can thrive, it’s probably also going to be a political environment where the poorer can assert themselves in other ways. People generally don’t like being significantly poorer than others, and not being able to do anything about it. That sense of self-esteem that Lula has given the Brazilian poor is not only about labour rights; it’s about ownership of the political system.

I agree with you on the more general idea that politics are a/the serious barrier to addressing inequality. Inequality, by definition, benefits someone, and people don’t like giving up privilege. As long as we try and stick to the “all must win prizes”, pro-poor approach to development (is there any other way for donor countries to do it?), it’s going to be really difficult to address this from outside, if it’s even possible. Maybe this is where the aid-as-life-support idea really has to kick in.

There is *reams* of research about how Governments can support labour laws without scaring off investment, or rather, suggesting that labour rights don’t scare off investors. In large part, we are not talking about minimum wages, but about better, more stable conditions. Wages are one aspect of this. Sri Lanka is a good example – the Ceylon Worker’s Congress plantation union formed political party and their role in Parliament helped them generate a political voice. Coupled with some strategic strikes, they managed to massively improve conditions for workers – health care was provided, education improved, housing improved, while wages also increased, though not at breakneck pace. The tea industry didn’t suffer any noticible decline in investment over this period – the story is of slightly less profit for the plantation against a proportionately much larger gain for the workers. (The union isn’t what it used to be anymore, but that’s a different story).

I also don’t think this is necessarily a case of a ‘fairtrade’-like arrangements, where consumers pay a premium for a better conscience. In many cases, the industries and producers who would be hit by the use of better labour laws and conditions are not the ones which are only marginally profitable but often the ones in the strongest position: the biggest plantations and farms, the largest industries. Experience from successful union movements suggests that potential gains from price changes (in agricultural goods) are split a little more evenly between capital and labour, rather than prices being changed, since these businesses are often price-takers in a global market. Profits do fall a bit, but we’re not talking about decimating the industries here – a small change, a little protection makes a proportionately very large difference to labour standards of living.

How can lessons from Brazil’s experience be applied elsewhere? Are these lessons generalizable, considering Brazil’s natural resource abundance?

Related to your points about labor organization, I saw this article in the NY Times that describes an interesting model for factory work in the developing world: http://www.nytimes.com/2010/07/18/business/global/18shirt.html?_r=2&pagewanted=1&hp.

My worry is that this model is dependent on a specific sub-set of consumers (i.e. college students) who are potentially more willing (and able?) to make their purchasing decisions based on factory working conditions, workers’ wages, etc. I’m skeptical that consumer behavior can foster such changes in working conditions on a larger scale. Following from this, an important question (on which there must be mountains of literature) is, how much room do governments have in implementing labor legislation while not scaring away investment?

How can lessons from Brazil’s experience be applied elsewhere? Are these lessons generalizable, considering Brazil’s natural resource abundance?

Related to your points about labor organization, I saw this article in the NY Times that describes an interesting model for factory work in the developing world: http://www.nytimes.com/2010/07/18/business/global/18shirt.html?_r=2&pagewanted=1&hp.

My worry is that this model is dependent on a specific sub-set of consumers (i.e. college students) who are potentially more willing (and able?) to make their purchasing decisions based on factory working conditions, workers’ wages, etc. I’m skeptical that consumer behavior can foster such changes in working conditions on a larger scale. Following from this, an important question (on which there must be mountains of literature) is, how much room do governments have in implementing such labor legislation without scaring away investment?