Quotulatiousness

July 30, 2013

The economic inefficiency of “fair trade” goods

Filed under: Business, Economics, Food — Tags: , , , , — Nicholas @ 10:26

Tim Worstall applauds you for wanting to use some of your economic surplus to help out the poor and less fortunate producers of various goods in the developing world, but points out that the “fair trade” method is incredibly inefficient at funnelling any of that extra money to the original producers of your coffee or other “fair trade” goods:

However, you might want to have a little think about this in the lights of these quite astonishing numbers:

    An interesting statistic is that in 2010, retail sales of fair-trade-labelled products totalled about $5.5 billion, with about $66 million premium — or about 1.2 percent of total retail sales — reaching the participating producers. There has to be a better way of helping poor farmers. Having only 1.2 cents out of every dollar spent on fair-trade products reach the target farmers is a hugely inefficient way of helping these people. If people wish to help these farmers there has to be charities out there that can transfer more than 1.2 cents per dollar to them.

It may well be that you are exercising your consumer choice as a way to make the world a better place. It’s just an incredibly inefficient method of doing so and thus you might want to reconsider that plan.

My own supposition is that the reason Fair Trade is so appallingly inefficient is the number of Interchangeable Emmas who have to be paid from that money supposedly going to producers. It takes very many poor coffee farmers’ incomes to pay for the PR bod advertising Fair Trade coffee from an office in central London. It might well be better to simply do as Madsen urges, and buy things made by poor people in poor countries. Then send the money saved by not paying the Emmas off to a charity of some minimal efficiency. Or even, if coffee farmers are really your thing, simply drink an extra cup or two a day and send the money by increasing demand for their production.

Update: In a marginally related item, Jonathan Katz explains why the policy of sending food to distant lands is less an attempt to ameliorate hunger than it is a corporate welfare policy to prop up US agribusiness:

The problem, says Christopher Barrett, an economist at Cornell University and one of the world’s leading experts on food aid, is that the U.S. has an entirely different goal when it comes to sponsoring humanitarian assistance. Feeding the hungry has never been its sole purpose.

Rather, the historical goal of food aid has been to stimulate U.S. businesses — the agriculture and shipping industries above all. Modern food aid was devised in the early days of the Cold War as a way to dispose of government-held surpluses, in order to regulate crop prices at home and create markets abroad. The main programs in the early days of food aid didn’t even give food away for free, rather selling it to foreign governments at a discount. “It just happened that this could get advertised as and provide humanitarian relief on occasion,” Barrett said.

Over time, things began to change. Surplus disposal became less important than other forms of domestic price control, and the cheaply sold food did not prove very effective in opening markets. When in the 1970s and 1980s, food donated during famine emergencies in Asia and Africa proved effective, free-food distributions took over as the dominant programs.

Today, the major players in food aid are nongovernmental organizations (NGOs) such as World Vision. But, because of how American laws are structured, domestic corporations still reap the much of the profit. Major U.S. agribusinesses can count on hundreds of millions of dollars in annual sales to the government.

Shipping companies do even better. Federal law mandates that at least half of all U.S. food aid must be shipped aboard U.S.-flagged vessels. With shipping costs taking up nearly 40 percent of any food assistance funding, the law guarantees hundreds of millions of dollars in contracts for shipping companies. The winner of the Mozambique shipment was no exception: Sealift Inc. has grossed $203 million in government contracts since 2011, mostly from the Pentagon, according to data at USASpending.gov. This benefit is not lost on the shipping industry: The sector’s leading coalition, USA Maritime, spent $250,000 lobbying Congress on food aid and cargo-preference laws in 2011 and 2012.

The real, long-term source of damage to American interests from the NSA revelations

Filed under: Business, Government, Technology, USA — Tags: , , , , , — Nicholas @ 10:10

In The Atlantic, James Fallows explains why the NSA’s digital overreach has likely harmed US long-term interests in many different ways:

In short: because of what the U.S. government assumed it could do with information it had the technological ability to intercept, American companies and American interests are sure to suffer in their efforts to shape and benefit from the Internet’s continued growth.

    American companies, because no foreigners will believe these firms can guarantee security from U.S. government surveillance;

    American interests, because the United States has gravely compromised its plausibility as world-wide administrator of the Internet’s standards and advocate for its open, above-politics goals.

Why were U.S. authorities in a position to get at so much of the world’s digital data in the first place? Because so many of the world’s customers have trusted* U.S.-based firms like Google, Yahoo, Apple, Amazon, Facebook, etc with their data; and because so many of the world’s nations have tolerated an info-infrastructure in which an outsized share of data flows at some point through U.S. systems. Those are the conditions of trust and toleration that likely will change.

The problem for the companies, it’s worth emphasizing, is not that they were so unduly eager to cooperate with U.S. government surveillance. Many seem to have done what they could to resist. The problem is what the U.S. government — first under Bush and Cheney, now under Obama and Biden — asked them to do. As long as they operate in U.S. territory and under U.S. laws, companies like Google or Facebook had no choice but to comply. But people around the world who have a choice about where to store their data, may understandably choose to avoid leaving it with companies subject to the way America now defines its security interests.

Update: Also in the aftermath of Edward Snowden’s revelations, you’d think that Senator Ron Wyden would get the credit he clearly has been deserving all this time:

For many, many years we’ve covered Senator Ron Wyden’s seemingly quixotic attempts to signal to the American public (and press) that the NSA was doing a hell of a lot more surveillance than most people believed, even those who were carefully reading the laws. Because secrecy rules meant that he couldn’t directly reveal what he’d learned while on the Senate Intelligence Committee, he had to issue vague statements, documents and speeches hinting at things that were going on that he couldn’t actually talk about. Of course, now that Ed Snowden leaked a bunch of documents, it’s shown that Wyden was absolutely correct in what was going on (and that the American public wouldn’t like it).

You’d think that would lead people to have a lot more respect for the incredible efforts he went through to alert people to these issues without breaking the secrecy laws. And, in fact, many more people are aware of those efforts. The Washington Post has a nice article about Wyden’s attempts to bring these issues out and to get a real debate going on them.

However, towards the end, the reporter talks to two different former top lawyers at the NSA, who both appear to be really, really angry about Wyden daring to suggest to the public that the NSA wasn’t playing straight with the American public. First up, we’ve got Stewart Baker, the former NSA General Counsel and top Homeland Security official, who is so anti-civil liberties and pro-surveillance that he’s almost a caricature of himself — including claiming that the Boston bombings prove that Americans need less privacy and that civil libertarians complaining about too much surveillance are the real cause for the September 11 attacks.

The return of “lawful access”

Filed under: Cancon, Law, Liberty, Media, Technology — Tags: , , , , — Nicholas @ 07:56

Michael Geist on the Canadian implications of some information that was published in a Buzzfeed article about a Utah ISP and the NSA’s installation of a “little black box” in their network:

The article describes how a Foreign Intelligence Service Act (FISA) warrant allowed the NSA to monitor the activities of an ISP subscriber by inserting surveillance equipment directly within the ISP’s network. The experience in Utah appears to have been replicated in many other Internet and technology companies, who face secret court orders to install equipment on their systems.

The U.S. experience should raise some alarm bells in Canada, since the now defeated lawful access bill envisioned similar legal powers. Section 14(4) of the bill provided:

    The Minister may provide the telecommunications service provider with any equipment or other thing that the Minister considers the service provider needs to comply with an order made under this section.

That provision would have given the government the power to decide what specific surveillance equipment must be installed on private ISP and telecom networks by allowing it to simply take over the ISP or telecom network and install its own equipment. This is no small thing: it literally means that law enforcement (including CSIS) would have had the power to ultimately determine not only surveillance capabilities but the surveillance equipment itself.

While Bill C-30 is now dead, the government may be ready resurrect elements of it. Earlier this month, a cyber-bullying report included recommendations that are lifted straight from the lawful access package.

Was Caligula the victim of a historical smear campaign?

Filed under: Books, Europe, History, Media — Tags: , , , , — Nicholas @ 00:01

I confess, my views on Emperor Caligula (formally Gaius Julius Caesar Augustus Germanicus) were almost completely informed by the character in the novels I, Claudius and Claudius the God by Robert Graves. BBC News Magazine‘s Mary Beard thinks Caligula got a fearful load of bad press:

Of course, there had been some very nasty monarchs and despots before Caligula. But, so far as we know, none of his predecessors had ever ticked all the boxes of a fully fledged tyrant, in the modern sense.

There was his (Imelda Marcos-style) passion for shoes, his megalomania, sadism and sexual perversion (including incest, it was said, with all three of his sisters), to a decidedly odd relationship with his pets. One of his bright ideas was supposed to have been to make his favourite horse a consul — the chief magistrate of Rome.

Roman writers went on and on about his appalling behaviour, and he became so much the touchstone of tyranny for them that one unpopular emperor, half a century later, was nicknamed “the bald Caligula”.

But how many of their lurid stories are true is very hard to know. Did he really force men to watch the execution of their sons, then invite them to a jolly dinner, where they were expected to laugh and joke? Did he actually go into the Temple of the gods Castor and Pollux in the Roman Forum and wait for people to turn up and worship him?

It is probably too sceptical to mistrust everything that we are told. Against all expectations, one Cambridge archaeologist thinks he may have found traces of the vast bridge that Caligula was supposed to have built between his own palace and the Temple of Jupiter — so it was easier for him to go and have a chat with the god, when he wanted.

So the idea that Caligula was a nice young man who has simply had a very bad press doesn’t sound very plausible.

All the same, the evidence for Caligula’s monstrosity isn’t quite as clear-cut as it looks at first sight. There are a few eyewitness accounts of parts of his reign, and none of them mention any of the worst stories.

No revisionist slant on Caligula is complete without a few nasty cracks directed towards kindly old Uncle Claudius:

More topical though is the question of what, or who, came next. Caligula was assassinated in the name of freedom. And for a few hours the ancient Romans do seem to have flirted with overthrowing one-man rule entirely, and reinstating democracy.

But then the palace guard found Caligula’s uncle Claudius hiding behind a curtain and hailed him emperor instead. Thanks to Robert Graves, Claudius has had a good press, as a rather sympathetic, slightly bumbling, bookish ruler.

But the ancient writers tell a different story — of an autocrat who was just as bad as the man he had replaced. The Romans thought they were getting freedom, but got more of the same.

Considering what happened then, it’s hard not to think of the excitements and disappointments of the Arab Spring.

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