Each country tries to gain a cost advantage over its rivals by lowering its standards. The only way to stop this race is to make competition over labor standards illegal. Once this is accomplished, business will be forced to look for profits in other ways such as raising productivity and improving product quality. This is the race to the top that we all want to encourage. However, it can only become a reality if we stop firms from taking the low road to the bottom.
Labor standards can also contribute to faster growth.
For the last twenty years, economists have instructed the developing world to focus on export-led growth. Though some countries have grown, overall growth has slowed. Export-led growth has inevitably pitted worker against worker. It has caused job loss and wage decline in the industrialized countries. Developing countries have become dependent on overseas markets.