Reagan's acolytes

Peter Morici, professor of business at the University of Maryland, said: "Things are going to get so bad something will have to be done in the next few weeks. Banks will sink, credit markets will seize, the economy will go into something much worse than a recession."

The Guardian

The above article suggests that the Republicans rejected the bailout because it riled their beliefs in Reaganesque liberalism.

How completely ridiculous. To stand aboard the sinking ship whining about a doctrine that is largely responsible for the crisis itself is woefully out of touch.

Ideology doesn't sit well with FE. Tends to blind rather than illuminate.

Working in fair trade agriculture

Thanks to Simon for inviting me to contribute some thoughts to his excellent blog. As my first post I'd like to share some thoughts on my experiences to date working with the Association of Organic Producers of Sangria (AOPS)*:

For the uninitiated, Fair trade is an increasingly popular form of exchange, especially for buyers in Europe. It is managed by the Fair Trade Labelling Organization (FLO), who allow producers to display the fair trade label on their produce in return for meeting a set of standards for labour conditions, environmental performance, and most importantly distributing a premium to be paid by the clients in a way which benefits the producers as a community.

Much debate exists about whether fair trade is a form of "charity" (ie. the buyer donates to the seller a bit extra to improve their quality of life) or if it is in fact a new way for producers to compete in the international market (ie. the producer offers to guarantee certain standards to its workers in return for higher payment from the seller). The answer is of course that both are true, and thus arises the hope that fair trade may be the way to create "a market with a human face." But what is the balance in reality?

My experience in four months working as an intern in post harvest production and financial analysis amongst other things (including acting as a tour guide!) for AOPS has shown me that in the eyes of this particular Association, the "charity" side of fair trade is more important than the "market" side. In a community meeting in Mamonito, high up in the mountains of Sangria, the president of the association asked an associate (producer) "has AOPS helped you this year?" The associate replied no. Then the president explained to all the gathered village members who have worked with AOPS for 20 years how fair trade works, that AOPS is different from "the competition" which simply wants to buy the product at a price higher price in order to break the association and then reduce the price, and that every time a producer sells to AOPS they are receiving "help" because AOPS is providing a market for their produce, and is "helping" further by providing the communal funds which last year were used to provide... a trailer. The producer was again asked if they had received help. He nodded enthusiastically and illuminated smiles filled the palm thatched community building. But had the message real sunk in? And was it believed?

Producers are asked to be loyal to the association because they are receiving "help". But unfortunately for AOPS, in the four months that I have been working in their offices in Pat Pat this deal has not been selling too well. In both bananas and cocoa, producers are increasingly selling to the competition and every producer I have spoken to sees the dilemma not as a moral one (of loyalty) but an economic one- who is offering the best price? And the immediate answer is not AOPS.

In economic terms, this can be viewed as a classic "prisoners dilemma"- in the long run the associates would be better off if they sold to AOPS, maintaining the association and the fair trade premium and thus making sure everybody receives a good price as well as non price benefits such as trailers and other communal goods (a previous premium was used to purchase school grounds). But the producers have a short term incentive to "defect" and sell to the competition at a higher price. Economic theory predicts that the outcome of the "game" will depend on the degree of trust between the producers- a rational strategy to maintain the association depends on having a credible belief that others will do the same. In the case of AOPS, it appears that producers don't even know what they are supposed to be having trust in- the basic information about how the association works is not widely disseminated. Or perhaps just not believed.

I think this particular dilemma raises issues on a number of levels. The producers can hardly be criticised for being shortsighted in selling to the competition if they are genuinely unaware of the benefits AOPS is offering. But could it not also be the case that the benefits are known (if a little vague) but are simply not considered worth waiting for? What is a share in a community owned trailer worth in comparison to the possibility of having a little extra money to repair the motorbike lying in disrepair in the producer's own backyard right now? And why should the producer be made to feel like a charity case for selling the product which they have produced with all their own effort at a price which isn't even the best available?

I still believe that fair trade can work in theory. And that it can work for AOPS. But perhaps producers need to be offered a little more than a far off promise of a communal "gift" and some of the harsh economic realities of competing in the market need to be addressed for this to be possible. But if the competiton really is a on a vendetta to break the cooperative and then lower the buying price, it can only be by creating trust and communality between the associates that AOPS can survive.

*Names have been changed to preserve profesional confidentiality. But factual details are correct to best of author's knowledge.

Lunchtime rambler

I like this.

It appears that when leaving a country it heightens the desire to give greater scrutiny to its politics. I never gave an election closer attention that that in 2005 when I lived in Canada and now newly arrived in Amsterdam, the blood is boiling again for some good old labour/tory swing around.

David Edgar in the Guardian links the Tories 'broken society' campaign strategy with a long line of Conservative strategy, showing that's it's little different to that employed in the 80s and 90s.

And let's make no mistake, Britain's current social problems are of Tory manufacture. By making the economy the centre piece of British life, rather than an important aspect of it, Britain ended up with an pretty good economy, but pretty rotten society.

We are spoon fed by our jobs, unable to work out what the hell to do with our time other than throw cash at it, sucked dry of creativity by numbing operations then wonder why it is our children throw thensleves about lost and angry. The money man came to call and we let our families and communities drop.

It's always been the argument of this blog that the economy and society cannot be separated. Further,it is more and more apparent that a strong cohesive society is necessary for a good economy to function. America's Golden Age was more underpinned by its commitment to redistribution and investment in education than it was to market forces. Reagan's legacy was to systematically plunder this wealth (in the form of monetary and social capital), let the market rule in the misguided belief that this was for the good of the people. It is not, the market takes into its bounds what is good for the market, however short term, depraved or economically unexpedient that may be.

Why? because it's people that run it. people making phone calls, making links. Economic specialisation played a large part in breaking these down. We lost a diversity in social interaction thus making our ties more purely economic. Think next time you need a plumber why you're unable to contact the one who lives two doors down from you instead of consulting the yellow pages.

Thatcher ensured that the economy wrote the rule book, as such stripping it of its legs, the basket in which it functions, the creation of its very own aggregate demand that isn't borrowed on a million credit cards but through human ingenuity and satisfaction.

If the Thatcher built the house of cards, Blair came along with a fine water spray can and made sure it got all soggy. It was the return of government. Hugely involved and taking care of our money in quantities that defied economic sense. Any sense in fact as it was raised in ways so devious and unaccountable that it was impossible to know from where the money originated. Unaccountable in its raising and so too in its spending. Private Finance Initiatives, privatisation and increasingly centralised procurement policy meant that projects were handed out to a carefuly selected few. It was government-sponsored industrial concentration. More money ending up in fewer hands - the tune of the so-called glorious decade 1995-2005.

It was the tune the whole country sang. Finance and non-doms entered the scene, both getting disproportinately large say in how the country was run with a disportionately diminishing contribution. The elite was doing very well indeed, bankers included, which led it to a curious attitiude when dealing with credit:

"Sure - money's cheap. We'll be fine."

And so vast sums were doled out to people who could ill afford it. In our arrogance we believed we were so well insulated, so much better thought out than our ancestors that we were immune from the bursting that characterised previous delusions.

For all the political blame laying, it is overstating the case to say this was Thatcher's or Blair's fault. It's just that they so purely characterised the spirit of their era that it seems the whole situation is created by them. Truly we get the leaders we deserve.

Suffice it to say, the Blair era took Thatcher's weak legs and loaded it with a ton of concrete. We're now stuck with an economy that's done very well for corporate concentration but enjoys little of the ingenuity enjoyed of having small to medium-sized companies (SMEs) easy to set up, and smooth to run. These companies act as the mortar to the rest of the economies bricks. Moreover the smaller communities involved in running them mean that their workers are, on the whole, happier, more involved in their work, more motivated to generate it profit. Speak to the analysts at Accenture to get an idea of the stress and inhumanity of working for a multi-national (not to mention a management consultancy, which must be left for aother rant).

Back to the point - SMEs are now so overloaded with regulation that can be easily sideskipped or complied with by the big boys that they're been sucked of ingenuity.

For that it is most certainly Blair and Brown that are to blame.

Fiat Healing

"The economy is not healing itself." *

It's the economy stupid

"A recent study showed that more than 90 per cent of recent conflicts were resolved by mediation, not victory on the battlefield. And of course failure to generate durable peace agreements leads to a resumption, all too often, of war. Conflict costs Africa an estimated 18 billion dollars a year - a figure it can obviously ill afford as a region."

Lord Malloch Brown, UK Foreign Office Minister, in a statement to UN Security Council - gaarrrr!

FE kicks back

In anticipation of a reboot of FE and the mouthwatering prospect of Anglefish joining the team. I thought I'd write a little on what FE is about.

Erm......

1) Economics means people dammit
- Economics has a disastrous propensity to shred any and all humanity from its theorising. This is especially evident when using ita tools to make conclusions about people subjects. Cf Steven 'Freakonomics' Levitt and Gary Becker's risible attempts to summarise life in a series of desitute precepts that do nothing to delineate its colour much less generate useful conclusions. Even if the problem is not theory itself, the statistical gymnastics that is applied to socially generated phenomena strains essential humanity from that data. It loses texture, spice and has a hideous effect when reapplied (or inflicted) gentle men and women.

2) Managerialism is the opiate of the people
Codependent nature of human relations does not rub with overpaid, self-inflated tossers told they can rule the roost. New Labour's failing has been lack of recognition of this fact.

3) Trust the people and they will provide for themselves and trust them enough to help them!
This wonderful paradox gets it about right. Agan its a slant on managerialism and the dystopia propogated when people are treated as units not souls aware of their own position and able to make good decisions. A lack of trust or faith in each other is a major failing, not only of British society, but its economy. Trust breeds social connections breeds productivity. (You'll note I'm happy to return everything to the economic in order to show how socially defined the entire economic process is so as to be indistinguishable from it.) Part of breeding trust is to provide social stability through insulation of the people from raw market processes, the latter being nothing but a chimera and a plaything for the economically powerful to get their way. Insulation consists in: education, arbiting approprately between corporate, financial interests and those of the people (ie goddamn spine!) and (gasp!) SPACE for people to breathe - a certain gp of non policy for communities to flourish. Community activation policy also helpful to this end.

It's a liberalish standpoint. Left Libertarian is the best term I've found to describe it: a recognition that what matters are peoples substantive freedoms measured by life as its actually lived - not an excuse for laissez-faire that far from being hands off result in a big hand up and crushing loss of empowerment for everbody but the very very few.

Much of what is written is a railing against the limitations of theory in general and for that matter overbearing policy which acts to restrict lives which are simply beyond definition.

Sing me a song of a midnight waltz? And then theorise it and you'll see what I mean.

Heroes: Karl Polanyi, EF Schumacher, Amartya Sen
Villains: Becker, Friedman, the entire political class (with the exception of perhaps Tony Benn)