Quotulatiousness

January 28, 2015

Employment skills at the very basic level

Filed under: Business, Economics, Government, USA — Tags: , , — Nicholas @ 04:00

Warren Meyer says what the US needs to do is to make changes to the structure of the working world to allow companies to profitably hire low-skilled workers:

A lot of head scratching goes on as to why, when the income premium is so high for gaining skills, there are not more people seeking to gain them. School systems are often blamed, which is fair in part (if I were to be given a second magic wand to wave, it would be to break up the senescent government school monopoly with some kind of school choice system). But a large portion of the population apparently does not take advantage of the educational opportunities that do exist. Why is that?

When one says “job skills,” people often think of things like programming machine tools or writing Java code. But for new or unskilled workers — the very workers we worry are trapped in poverty in our cities — even basic things we take for granted like showing up on-time reliably and working as a team with others represent skills that have to be learned. Amazon.com CEO Jeff Bezos, despite his Princeton education, still learned many of his first real-world job skills working at McDonald’s. In fact, back in the 1970’s, a survey found that 10% of Fortune 500 CEO’s had their first work experience at McDonald’s.

Part of what we call “the cycle of poverty” is due not just to a lack of skills, but to a lack of understanding of or appreciation for such skills that can cross generations. Children of parents with few skills or little education can go on to achieve great things — that is the American dream after all. But in most of these cases, kids who are successful have parents who were, if not educated, at least knowledgeable about the importance of education, reliability, and teamwork — understanding they often gained via what we call unskilled work. The experience gained from unskilled work is a bridge to future success, both in this generation and the next.

But this road to success breaks down without that initial unskilled job. Without a first, relatively simple job it is almost impossible to gain more sophisticated and lucrative work. And kids with parents who have little or no experience working are more likely to inherit their parent’s cynicism about the lack of opportunity than they are to get any push to do well in school, to work hard, or to learn to cooperate with others.

Unfortunately, there seem to be fewer and fewer opportunities for unskilled workers to find a job. As I mentioned earlier, economists scratch their heads and wonder why there are not more skilled workers despite high rewards for gaining such skills. I am not an economist, I am a business school grad. We don’t worry about explaining structural imbalances so much as look for the profitable opportunities they might present. So a question we business folks might ask instead is: If there are so many under-employed unskilled workers rattling around in the economy, why aren’t entrepreneurs crafting business models to exploit this fact?

January 14, 2015

“This is what happens when you let the half-wits take charge of economic policy”

Filed under: Americas, Economics — Tags: , , , — Nicholas @ 02:00

Tim Worstall on the very sad economic plight of Venezuela:

As times go on the stories about how far and how fast the economy of Venezuela has fallen apart become ever more dramatic. They now actually have the Army, seriously, the armed forces, guarding food supplies. And the police are handing out toilet paper. We can just about imagine such things happening in the wake of some massive natural disaster, the levee breaks, the hurricane comes ashore, but not as day after day activity as something normal for the nation. But there has been no natural disaster in Venezuela, this is just the result of some years of idiot socialism. What makes it all so tragic is that there was and is another way to achieve the stated aim: making the poor better off. And when we consider what we might want to do to make the poor better off we’d better pay attention to this, admittedly extreme, example.

[…]

Sure, Venezuela’s an oil exporter, sure the price of oil has fallen. But this isn’t what happens in a commodity producer when the exports fall in price. This is what happens when you let the half-wits take charge of economic policy for a nation. Actually, in Venezuela, calling them half-wits is probably a mite too polite.

There’s absolutely nothing wrong at all with the intention of making the poor better off. Indeed, I share that aim: that’s why I’m this capitalist free marketeer type, as it’s the only socio-economic system we’ve ever had that has made the poor substantially better off for any period of time. However, there are good ways and bad ways of going about doing this and if we want to succeed in our aim, in the US, of making the poor better off then we’d do well to pay attention.

The short answer is don’t screw with the market.

January 9, 2015

QotD: Britain in the “New Elizabethan Age” of the 1950s

Filed under: Britain, Economics, History, Quotations — Tags: , , — Nicholas @ 01:00

The euphoria of the New Elizabethan Age was all the more striking when set against the backdrop of the deprivation and austerity of the immediate post-war years. For many people, things had actually got worse after the war. The shortages — of food, of fuel, of housing — were such that on the first anniversary of VE Day, as Susan Cooper later recalled, “the mood of the British was one not of festivity but of bleak resignation, with a faint rebelliousness at the restrictions and looming crises that hung over them like a fog.” “We won the war,” one housewife was quoted as saying. “Why is it so much worse?” The winter of 1947 was the coldest of the century: there were shortages, and strikes, and everyone shivered; and in the spring the floods struck, closing down the London Underground, washing away the crops of thirty-one counties and pouring into thousands of homes. By the following year, rationing had fallen well below the wartime level. The average adult in 1948 was entitled to a weekly allowance of thirteen ounces of meat, one-and-a-half ounces of cheese, six ounces of butter, one ounce of cooking fat, eight ounces of sugar, two pints of milk and one egg. Even dried egg, which had been a staple of meals in wartime, had disappeared from the shops. Children at the beginning of the 1950s still wondered what their parents meant when the reminisced about eating oranges, pineapples, and chocolate; they bathed in a few inches of water, and wore cheap, threadbare clothes with “Utility” labels. It was just as well that the British prided themselves on their ability to form an orderly queue; they had plenty of opportunities to prove it. Not until July 1954 did food rationing finally come to an end.

Austerity left its mark, and many people who had scrimped and saved through the post-war years found it hard to accept the attitudes of their juniors during the long boom that followed. As one housewife later commented: “It makes you very careful and appreciate what you have got. You don’t take things for granted.” Caution, thrift, and the virtues of “making do” had become so ingrained during the long years of rationing that many people never forgot them and forever told each other, “Waste not, want not”, or reminded themselves to put things aside “for a rainy day”, or complained that their children and grandchildren did not “know the value of money.”

Dominic Sandbrook, Never Had It So Good: A history of Britain from Suez to the Beatles, 2005.

December 10, 2014

US child poverty is bad … but nowhere near as bad as they say

Filed under: Media, USA — Tags: , , , , — Nicholas @ 00:04

Tim Worstall debunks a headline statistic from earlier this month:

We’ve a new report out from the Mailman School of Public Health telling us that in some urban parts of the US child poverty is up at the unbelievable rates of 40, even 50% or more. The problem with this claim is that it’s simply not true. Apparently the researchers aren’t quite au fait with how poverty is both defined and alleviated in the US. Which is, when you think about it, something of a problem for those who decide to present us with statistics about child poverty.

[…]

Everyone else [in the world] (as well as using a relative poverty standard, usually below 60% of median earnings adjusted for family size) measures poverty after the effects of the tax and benefits systems on alleviating poverty. So, in my native UK if you’re poor you might get some cash payments (say, unemployment pay), some tax credits, help with your housing costs (housing benefit we call it), reduced property taxes (council tax credit) and so on. Whether you are poor or not is defined as being whether you are still under that poverty level after the effects of all of those attempts to alleviate poverty.

In the US things are rather different. It’s an absolute standard of income (set in the 1960s and upgraded only for inflation, not median incomes, since) but it counts only market income plus direct cash transfers to the poor before measuring against that standard. Thus, when we measure the US poor we do not include the EITC (equivalent of those UK tax credits, indeed our UK ones were copied from the US), we do not include Section 8 vouchers (housing benefit), Medicaid, we don’t even include food stamps. Because the US measure of poverty simply doesn’t include the effects of benefits in kind and through the tax system.

The US measure therefore isn’t the number of children living in poverty. It’s the number of children who would be in poverty if there wasn’t this system of government alleviation of poverty. When we do actually take into account what is done to alleviate child poverty we find that it’s really some 2-3% of US children who live in poverty. Yes, that low: the US welfare state is very much child orientated.

(Emphasis mine)

December 6, 2014

Everyday life in “The Ghetto Archipelago”

Filed under: Bureaucracy, Law, Media, USA — Tags: , , , , — Nicholas @ 00:03

At Reason, J.D. Tuccille reviews On the Run: Fugitive Life in an American City, by Alice Goffman:

The police presence in 6th Street is pervasive. Residents, young black men in particular, can expect to be frequently stopped, questioned, and searched. Many initial arrests are for drugs, often possession of marijuana. After that, as Goffman records, the system takes on a horrible logic of its own. Criminal records make employment hard to find, and recurring court dates devour time that might be devoted to work, job searches, or family responsibilities. Without regular income, court fees add up and may prove unpayable. Many of the people Goffman writes about are essentially constant low-level fugitives, hunted by police for missed appointments. Some end up committing additional crimes to pay their accumulating debts to the courts.

People living on the wrong side of the law are both dependent on and vulnerable to those around them. Goffman documents how chronic legal problems prevent young men from attending the births of their children or the funerals of their friends, since the authorities often monitor those occasions looking to make arrests. Those legal problems also provide opportunities for angry girlfriends and other acquaintances to avenge perceived wrongs with a simple phone call to the cops.

Neighborhoods heavily populated by young men on the run (usually in the most figurative sense, since their lives become circumscribed by familiar people and streets) also create business opportunities for those willing to serve their idiosyncratic needs. One memorable character in On the Run is Jevon, whose memory and ability at mimicry allow him to earn money impersonating men to their parole officers for curfew-checking phone calls. Another, Rakim, augments income from his passport photo business selling clean urine to men facing drug tests. Many local businesses-such as rental car lots and motels-have two price sheets, one for mainstream customers and one for those who have no credit cards or ID.

Identification itself is a commodity, with employees inside the Pennsylvania Department of Transportation selling drivers licenses-basically, new identities — for a substantial fee. (Other public employees, from court clerks to prison guards, also find it lucrative to sell favors and services.) “The level of social control that tough-on-crime policy envisions-particularly in a liberal state-is so extreme and difficult to implement,” Goffman writes, “that it has led to a flourishing black market to ease the pains of supervision.”

H/T to ESR who wrote:

Linked article explains why, though I’ve defended the shooting of Michael Brown as a prudent and ethical response to an imminent threat of deadly force, I’ve had little patience with those defending the Ferguson police in general either before or after the shooting.

Yes, the system oppresses people like the blacks in Ferguson, in a way that has little to do with “institutional racism” but everything to do with a vicious cycle of deteriorating ghetto culture coupled with perverse incentives on the police created by “tough on crime” laws.

How do I know? I’ve never been to Ferguson…but Philadelphia is my city. I used to live there, mere blocks from the ghetto archipelago. I’ve seen some of the overspill from what Goffman is writing about. She speaks truth, and we would do well to heed her.

November 25, 2014

QotD: Rand Paul and the war on drugs

Filed under: Law, Liberty, Quotations, USA — Tags: , , , , , — Nicholas @ 00:01

I’ll do everything to end the war on drugs. … The war on drugs has become the most racially disparate outcome that you have in the entire country. Our prisons are full of black and brown kids. Three-fourths of the people in prison are black or brown, and white kids are using drugs, Bill, as you know … at the same rate as these other kids. But kids who have less means, less money, kids who are in areas where police are patrolling … Police are given monetary incentives to make arrests, monetary incentives for their own departments. So I want to end the war on drugs because it’s wrong for everybody, but particularly because poor people are caught up in this, and their lives are ruined by it.

Rand Paul, speaking to Bill Maher, 2014-11-15.

November 23, 2014

Working and middle class pushback against Obamacare

Filed under: Health, USA — Tags: , , — Nicholas @ 11:20

At Mother Jones, Kevin Drum looks at some of the reasons Obamacare is not being embraced by the working and middle classes the way many expected:

Obamacare winners and losersHere’s an interesting chart that follows up on a post I wrote a few days ago about Democrats and the white working class. Basically, I made the point that Democrats have recently done a lot for the poor but very little for the working and middle classes, and this is one of the reasons that the white working class is increasingly alienated from the Democratic Party.

I got various kinds of pushback on this, but one particular train of criticism suggested that I was overestimating just how targeted Democratic programs were. Sure, they help the poor, but they also help the working class a fair amount, and sometimes even the lower reaches of the middle class. However, while there’s some truth to this for certain programs (unemployment insurance, SSI disability), the numbers I’ve seen in the past don’t really back this up for most social welfare programs.

Obamacare seems like an exception, since its subsidies quite clearly reach upward to families in the working and middle classes. Today, however, Bill Gardner points me to a Brookings paper from a few months ago that suggests just the opposite. The authors calculate net gains and losses from Obamacare, and conclude that nearly all its benefits flow to the poor. If I interpolate their chart a bit, winners are those with household incomes below $25,000 or so, and losers are those with incomes above $25,000.

October 24, 2014

QotD: Poverty in the West is not like poverty in the rest of the world

Filed under: Economics, Quotations, Technology, USA — Tags: , , , — Nicholas @ 00:01

What is it, in terms of physical goods and services, that we wish to provide for the poor that they do not already have? Their lives often may not be very happy or stable, but the poor do have a great deal of stuff. Conservatives can be a little yahoo-ish on the subject, but do consider for a moment the inventory of the typical poor household in the United States: at least one car, often two or more, air conditioning, a couple of televisions with cable, DVD player, clothes washer and dryer, cellphones, etc. As Robert Rector and Rachel Sheffield report: “The home of the typical poor family was not overcrowded and was in good repair. In fact, the typical poor American had more living space than the average European. The typical poor American family was also able to obtain medical care when needed. By its own report, the typical family was not hungry and had sufficient funds during the past year to meet all essential needs. Poor families certainly struggle to make ends meet, but in most cases, they are struggling to pay for air conditioning and the cable-TV bill as well as to put food on the table.” They also point out that there’s a strong correlation between having boys in the home and having an Xbox or another gaming system.

In terms of physical goods, what is it that we want the poor to have that they do not? A third or fourth television?

Partly, what elites want is for the poor to have lives and manners more like their own: less Seven-Layer Burrito, more Whole Foods; less screaming at their kids in the Walmart parking lot and more giving them hideous and crippling fits of anxiety about getting into the right pre-kindergarten. Elites want for the poor to behave themselves, to stop being unruly and bumptious, to get over their distasteful enthusiasms, their bitter clinging to God and guns. Progressive elites in particular live in horror of the fact that poor people tend to suffer disproportionately from such health problems as obesity and diabetes, and that they do not take their social views from Chris Hayes — and these two phenomena are essentially the same thing in their minds. Consider how much commentary from the Left about the Tea Party has consisted of variations on: “Poor people are gross.”

A second Xbox is not going to change that very much.

Kevin D. Williamson, “Welcome to the Paradise of the Real: How to refute progressive fantasies — or, a red-pill economics”, National Review, 2014-04-24

September 9, 2014

QotD: The Iron Law of Redistributionism

Filed under: Bureaucracy, Economics, Politics, Quotations — Tags: — Nicholas @ 00:01

[P]olicies intended to “help” the poor are invariably hijacked by a rentier class that fattens on the rising diversion of income. Result: help never arrives, much wealth is destroyed, growth is strangled, and the poor get poorer.

Eric S. Raymond, Google+, 2014-09-06.

August 21, 2014

Ferguson authorities issue an average of “about 3 warrants and 1.5 cases per household”

Filed under: Law, USA — Tags: , , , — Nicholas @ 07:45

The relationship between the Ferguson police and the residents of the municipality seem to have been on a weird footing long before the current face-off, as Walter Olson points out:

Reading through this Newsweek article on the troubled relations between police and residents in Ferguson, Mo. before this month’s blowup, this passage jumped out at me:

    “Despite Ferguson’s relative poverty, fines and court fees comprise the second largest source of revenue for the city, a total of 2,635,400,” according to the ArchCity Defenders report. And in 2013, the Ferguson Municipal Court issued 24,532 arrest warrants and 12,018 cases, “or about 3 warrants and 1.5 cases per household.”

My first reaction – maybe yours too – was “is that a misprint?” Three arrest warrants per household in Ferguson last year?

Now let’s stipulate that some of those warrants were written against out-of-towners, especially in matters arising from traffic offenses, tickets being a key revenue source for many municipalities in St. Louis’s North County. Yet here’s a second statistic some will find surprising: while reported property-crime rates in Ferguson have run well above the national average for years, violent-crime rates have not. After a high period that lasted through 2008, they have declined steadily to a point where last year Ferguson had about the same rate of violent crime as the nation generally.

What seems clear at this point is that Ferguson – while in some ways a nicer and safer town than some have imagined – does suffer from a unusual degree of antagonism between police and residents, an antagonism that crucially involves race (the town is an extreme outlier in its now-famous extent of black underrepresentation in elected office) and yet has other vital dimensions as well.

Update: Alex Tabarrok says this is an example of the return of debtor’s prisons in modern America.

How does a stop for jaywalking turn into a homicide and how does that turn into an American town essentially coming under military control with snipers, tear gas, and a no-fly zone? We don’t yet know exactly what happened between the two individuals on the day in question but events like this don’t happen without a deeper context. Part of the context is the return of debtor’s prisons that I wrote about in 2012:

    Debtor’s prisons are supposed to be illegal in the United States but today poor people who fail to pay even small criminal justice fees are routinely being imprisoned. The problem has gotten worse recently because strapped states have dramatically increased the number of criminal justice fees….Failure to pay criminal justice fees can result in revocation of an individual’s drivers license, arrest and imprisonment. Individuals with revoked licenses who drive (say to work to earn money to pay their fees) and are apprehended can be further fined and imprisoned. Unpaid criminal justice debt also results in damaged credit reports and reduced housing and employment prospects. Furthermore, failure to pay fees can mean a violation of probation and parole terms which makes an individual ineligible for Federal programs such as food stamps, Temporary Assistance to Needy Family funds and Social Security Income for the elderly and disabled.

[…]

You don’t get $321 in fines and fees and 3 warrants per household from an about-average crime rate. You get numbers like this from bullshit arrests for jaywalking and constant “low level harassment involving traffic stops, court appearances, high fines, and the threat of jail for failure to pay.”

If you have money, for example, you can easily get a speeding ticket converted to a non-moving violation. But if you don’t have money it’s often the start of a downward spiral that is hard to pull out of

August 11, 2014

Ordinary British life before August 1914

Filed under: Britain, History — Tags: , , , — Nicholas @ 10:35

The Telegraph has an interesting series of short articles drawn from their 1914 archive, showing ordinary life in Britain before the start of World War One. This isn’t the upper-crust’s way of life we tend to see in TV and movie presentations of the immediate pre-war era:

A month before the outbreak of war Henley Regatta opened in “brilliant fashion”, The Daily Telegraph reported, with record crowds and “perfect” weather. It presents an image of Edwardian Britain as we fondly imagine it to have been, before the sudden cloudburst of August 1914.

Of course, the reality was far different for the 99 per cent of people who did not own land, collect rents or vacation at Biarritz and Marienbad. Most Edwardians worked in dark, noisy factories, cut hay in fields, toiled down dirty and dangerous mines; had bones bent by rickets and lungs racked by tuberculosis. Life expectancy then was 49 years for a man and 53 years for a woman, compared with 79 and 82 years today. They lived in back to back tenements or jerry-built terraces, wore cloth caps or bonnets (rather than boaters, bowlers and toppers) and they had never taken a holiday — beyond a day trip to Brighton or Blackpool — in their entire lives.

The country was a seething mass of social tension and violent confrontations. It was a land torn and dislocated by the struggle of increasingly militant suffragettes; strikes in mills, mines and on the railways; the constitutional battle between Lords and Commons; and the threat of civil war in Ireland.

Readers of the Telegraph — as a glance at the archives will reveal — were far better informed about the true state of their nation and the world than our sugary sentimental view allows us. In a dramatic scoop, the paper had published an exclusive interview with Kaiser Wilhelm II in October 1908 in which the Kaiser had expressed alarmingly frank — and hostile — views about his mother’s native land (the Kaiser’s mama, Empress Victoria, was Queen Victoria’s eldest daughter). In this interview the Kaiser accused “you English” of being “mad, mad, mad as March hares” for fearing that the construction of Germany’s High Seas Fleet was aimed at challenging the Royal Navy’s command of the world’s oceans. Implausibly, he claimed that Germany’s real target was the rising sun of Japan.

H/T to Marian L. Tupy for the link.

July 22, 2014

23% of US children live in poverty … except that’s not actually true

Filed under: Government, USA — Tags: , , — Nicholas @ 07:48

In Forbes, Tim Worstall explains why the shocking headline rate of child poverty in the US is not correct (and that’s a good thing):

The annual Kids Count, from the Annie F. Casey Foundation, is out and many are reporting that it shows that 23% of American children are living in poverty. I’m afraid that this isn’t quite true and the mistaken assumption depends on one little intricate detail of how US poverty statistics are constructed. This isn’t a snarl at Kids Count, they report the numbers impartially, it’s the interpretation that some are putting on those numbers that is in error. For the reality is that, by the way that the US measures poverty, it does a pretty good job in alleviating child poverty. The real rate of children actually living in poverty, after all the aid they get to not live in poverty, is more like 2 or 3% of US children. Which is pretty good for government work.

[…]

However, this is not the same thing as stating that 23% of US children are living in poverty. For there’s a twist in the way that US poverty statistics are compiled.

Everyone else measures poverty as being below 60% of median equivalised household disposable income. This is a measure of relative poverty, how much less do you have than the average? The US uses a different measure, based upon historical accident really, which is a measure of absolute poverty. How may people have less than $x to live upon? There’s also a second difference. Everyone else measures poverty after the influence of the tax and the benefits system upon those incomes. The US measures only cash income (both market income and also cash from the government). It does not measure the influence of benefits that people receive in kind (ie, in goods or services) nor through the tax system. And the problem with this is that the major poverty alleviation schemes in the US are, in rough order, Medicaid, the EITC, SNAP (or food stamps) and then Section 8 housing vouchers. Three of which are goods or services in kind and the fourth comes through the tax system.

July 10, 2014

Argentina’s economic woes – tourist edition

Filed under: Americas, Economics — Tags: , , , , — Nicholas @ 10:56

How bad is the Argentinian economy right now? So bad that middle class Argentine tourists in Brazil eat at soup kitchens, according to the Wall Street Journal‘s Miriam Jordan:

The state-funded Citizen Restaurant in downtown Rio is accustomed to serving a balanced meal at an unbeatable price to about 5,000 poor residents of this city each day. During the World Cup, however, this cafeteria has been catering to another clientele as well: middle-class Argentines.

“We serve homeless people, drug addicts, blue-collar workers and retirees,” said Jose Barbosa, Rio de Janeiro state coordinator for food security. “This World Cup we have been welcoming Argentine soccer fans, too.”

With the value of the Argentine peso deeply eroded amid the country’s economic woes, many Argentines who have flocked here to root for their soccer team […] say they’re counting every Brazilian real they spend — and hunting for bargains. On Monday, dozens of Argentines lined up alongside Brazilians to buy lunch at the cafeteria, where a meal of black beans, white rice, salad and choice of meatballs or chicken sausage cost 1 real, or about 40 U.S. cents.

“Rio is very expensive — that’s why I am here,” said Fernando Castillo, a 24-year-old bartender from Buenos Aires. With gusto, he dug into his plate of food, which sat on a plastic-blue tray beside a cup of guava juice and a fresh orange for desert, both included in the price. “This is perfect,” he said, “especially at this price.”

“The generous portion keeps us filled all day,” added his cousin, Thomas Castillo.

[…]

To save on accommodations and flights, many Argentines drove to Brazil. In Rio, their campers and cars occupied prime beachfront parking spots until the city evicted them.

It then allowed them to park vehicles and pitch tents in a vast parking lot downtown that abuts the permanent bleachers where Rio’s samba schools perform during the annual carnival celebrations.

Word spread quickly at these parking lots that Citizen Restaurant, within walking distance of the Argentine encampment, offered good Brazilian fare at a bargain-basement price in a clean, safe environment. “It started with 10 of them one day, then 50 of them came and now we’re seeing about 200 Argentines each day,” said Ricardo Chaves, the eatery’s administrator.

June 25, 2014

QotD: The difference between money and wealth

Filed under: Economics, History, Quotations, USA — Tags: , , — Nicholas @ 00:01

… it is a mistake to use “money” and “wealth” as synonyms. Money is not wealth (though it is often a signifier of wealth). Wealth is a concept far greater, deeper, and more complex than mere money can encompass. Money is a tool; wealth is a state of being, an environment, a continuum in which we conduct our lives. When the left speaks of inequality in purely monetary terms, they are engaging in a puerile and futile kind of reductionism.

Consider a man with a wife and three teenage daughters, who lives in a house with only one bathroom. This man wouldn’t need a million dollars to feel wealthier; he’d just need a second bathroom. A chance to have a hot shower in the morning and have a clean space on the sink for his shaving gear. Wealth to this man is not the money it would take to build the extra bathroom; wealth is the time and comfort the new bathroom brings. Wealth is comfort he gains, his improved state of mind, the increased peace in his household, his improved quality of life. The marginal utility of the additional bathroom is great indeed (the utility of additional bathrooms would be less). The wealth of that additional bathroom is much greater, proportionally, than if this man and his family lived in a huge mansion with fifteen bathrooms. (In fact, the huge house might decrease his happiness due to the expense of upkeep and maintenance. Who knows?)

You don’t make a poor person wealthy by giving them money; history is full of lottery winners who ended up just as poor as when they started, and many’s the dissipated scion of a rich family who frittered away the family fortune. Wealthy people tend to have a lot of money because money is correlated with wealth (but does not cause it). Income, investments, assets — all can generate money for a wealthy person.

But wealth is more than just stuff. A loving spouse and healthy, happy children are treasures. Running a successful business can mean more than just the profits it generates; there is deep satisfaction in conducting a successful enterprise. A deep love of art or music can enhance and enrich a life. The company of good friends is truly priceless, and something that wise people learn to value more as time goes by.

Money gives access to some of those things, but all the money in the world can’t buy an appreciation of those things.

But to speak of wealth even in this broadened sense is misleading, for in America even “poor” people are wealthy beyond the dreams of people in many places in the world. And compared to people in most ages of the earth prior to the 20th century, there are no poor Americans. It’s amazing to consider how much better life for an average person is now compared to past times. We have food in amazing abundance and variety. Every house has a big-screen television, central heating and air-conditioning, and a refrigerator and range. Everybody has at least one car. Everybody has a cellular phone, and most people have a computer. Few of us work more than eight hours a day to afford all these things, leaving plenty of free time to relax. Medical technology has extended our lifespans, and made our tour upon the earth far more pleasant than in former times. We live healthier, more active, more stimulating lives than at any point in our history — wealthier lives.

Monty, “Wealth as an end and wealth as means to an end”, Ace of Spades HQ, 2014-06-24.

June 24, 2014

Fairtrade loses the moral high ground

Filed under: Africa, Business, Media — Tags: , — Nicholas @ 11:53

Following up on an article from earlier this month on Fairtrade’s business and ethical problems, Rossa Minogue talks to Professor Christopher Cramer who lead the investigation on which the report was based:

I ask Cramer if he was surprised by the study’s findings. ‘Yes and no’, he says. ‘[Fairtrade] perpetuated this fantasy of rural Africa being full of small, family farmers with roughly the same amount of land as each other. Unless there was an extraordinarily benign trickle-down effect, you wouldn’t really expect things to be much better [on Fairtrade farms]. But to find that the wages were worse and that most of the working conditions were worse, that did surprise me — and it’s a puzzle.’

The study’s findings were certainly disconcerting for Fairtrade’s supporters. They showed that farm labourers often make less on Fairtrade farms than non-Fairtrade farms, while many smallholders live in abject poverty. So, does Fairtrade benefit anyone in Third World agriculture? Cramer tells me that, during his four years of field research, his team realised that what Fairtrade defined as ‘smallholders’ covered everything from owners of farms of half a hectare to 130 hectares. The owners of bigger farms, he tells me, ‘are the ones who capture most of the direct benefits. They also tend to control the leadership of the cooperatives.’ So it seems that the larger farms, the ones that would presumably be doing alright anyway, are the only ones that reap the rewards of Fairtrade — a programme allegedly aimed at helping the poorest of the poor.

Cramer’s report is definitely a damning indictment of Fairtrade, which is why Fairtrade is doing all it can to smear its findings. When I wrote about Cramer’s findings a few weeks ago, I was informed that people who had tweeted my piece received direct tweets from Fairtrade UK, dismissing the article as sensationalist and untrue. Naturally, Cramer has borne the brunt of this hostility: ‘There was a legal threat made against us when [Fairtrade officials] saw the first draft of our press release’, he says. ‘They’ve also sent me hostile letters.’

[…]

In the West, people are often puzzled as to why rural Africans give up what is sometimes perceived to be a poor but idyllic existence in the countryside to live in the slums on the outskirts of cities. However, this puzzlement ignores the harsh realities of rural poverty. For many, moving to the city, where they can at least eke out a living, is the only rational choice. So what is the best path out of poverty for the farmhands of Africa?

‘That’s a big question. The focus must be on increasing agricultural productivity and that involves a lot of things, including infrastructure and investment. I don’t buy into the small-is-beautiful paradigm. My research shows that if you’re interested in driving up quality and enhancing productivity, as well as the lives and prospects of the poorest people, large-scale production has its advantages. Betting on the strong can also be betting on the weak.’

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