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Do free markets drive human trafficking?

Many Americans have long believed that human trafficking is a problem that occurs somewhere overseas. Yet the recent string of human trafficking busts and investigations in major cities like Los Angeles, small towns like Waterloo and even in Biloxi earlier this year, have called attention to the issue in the U.S.

Last year alone, more than 5,500 human trafficking cases were reported to the National Human Trafficking Resource Center. The actual number of victims is likely much higher as many cases go unreported.

Human trafficking, often associated with prostitution or involuntary labor, is defined as the movement of a person by means of force or exploitation. Some have suggested that human trafficking is an unfortunate byproduct of the free market system — the rationale being that societies based on open and globalized markets are favorable to trade in goods and services will also engage in forcible trading in humans. They do so as a way of obtaining cheap labor in order to produce the quantity of goods that wealthier consumers desire.

In addition, free market economies, offering more opportunities for employment, quality housing and safety, appeal to migrants looking to improve their standard of living. Even though migrants may voluntarily seek out free market countries, there can be roadblocks along the way that make the path hazardous and lead to human trafficking. This distinction between voluntary and involuntary migration can obscure the association between economic opportunities and migration.

Because the benefits of free market economies are already well-documented, my co-authors and I set out to learn whether a potential cost is human trafficking.

To measure the severity of human trafficking across countries, we sampled data from 112 countries and three sources, including the United Nations, the U.S. Department of State and the Freedom Funds Global Slavery Index. The data can be separated into countries with more inbound or outbound human trafficking or whether the country was mainly used in transit. In addition, we examined data comparing the policies a country has in place to combat human trafficking.

Our research shows results that are contrary to the belief that free markets drive human trafficking. Instead, we find that countries practicing authentic capitalism, such as smaller-sized governments and less-regulated markets, actually experience less human trafficking. As a country becomes more free market, including opening its borders to free trade, it is less likely to be a high destination country for human trafficking victims.

In fact, free market countries may actually prevent human trafficking because they are more likely to adopt stricter anti-trafficking regulations. This includes adopting policies specifically designed to prevent human trafficking. In the event that it does occur, free market countries are more likely to have rules in place to protect victims and prosecute traffickers.

These strict anti-trafficking regulations were put to use in Los Angeles last month, when officers arrested nearly 300 people for being involved in a human trafficking ring and rescued some of the victims. And in Mississippi, a new law was signed earlier this year to give greater protection to minors by including a trafficked child in the definition of an abused child. More efforts are underway to combat the problem.

Overall, this work suggests that countries with more liberal economic policies are not more likely to be involved in human trafficking and are actually more likely to adopt policies that prevent it and prosecute against those who do engage in it.

Claudia Williamson is an assistant professor of economics at Mississippi State University and co-director of the Institute for Market Studies.

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