If you draw a box around labour and management and compute the relative bargaining power of each group, child labour worsens the bargaining position of labour (by increasing supply). It is in the collective interests of China's poor (children and adults alike) to see child labour ended.
What you have noticed is something completely different: it may be advantageous for an individual family to send their child to work.
Restrictions on child labour put the system out of Nash equilibrium but they perform better globally with respect to helping the poor. This paradox manifests itself in many places; I suspect, given that this is Hacker News, that you may be familiar with a few of them already.
The critical conclusion that free markets search for nash equilibria but NOT global optima is highly relevant to fiscal philosophy and entrepreneurship.
What you have noticed is something completely different: it may be advantageous for an individual family to send their child to work.
Restrictions on child labour put the system out of Nash equilibrium but they perform better globally with respect to helping the poor. This paradox manifests itself in many places; I suspect, given that this is Hacker News, that you may be familiar with a few of them already.
http://en.wikipedia.org/wiki/Braess%27s_paradox
The critical conclusion that free markets search for nash equilibria but NOT global optima is highly relevant to fiscal philosophy and entrepreneurship.