I got into a scrape today with a militant Starbucks employee. Today their coffee of the day was what they call "fair trade" certified. My comment to him was that if Starbucks really wanted to make a positive impact their coffee should be free trade certified. This touched off a debate during which he may or may not have spat in my coffee. My main point was only that if the coffee did not have to be fair trade certified (whatever that means exactly) it would presumably be cheaper. Starbucks would therefore be able to buy more of it, which would increase the overall wealth of our hard working Central American coffee producing friends. Buying less at an artificially inflated price does a disservice to both the buyers and the sellers (taken as a whole). I did not, at any point, bring up the fact that I am presently studying economics at the Masters Level and he is presently working at Starbucks. Even so, he was having none of it, insisting instead that greedy, rich, capitalists were the reason coffee growers lived in poverty.
The Economist says it better in this article from last week. Here is an excerpt, but I urge you to read the entire thing:
But goods and services are not just lying around waiting to be grabbed by the greediest or most muscular countries. Market economics is not a zero-sum game. America consumes $10 trillion worth of goods and services each year because it produces (not counting the current-account deficit of 5% or so of the total) $10 trillion of goods and services each year. Africa could produce and consume a lot more without America producing and consuming one jot less. It so happens that the case for more aid, provided of course that it is well spent, is strong—but the industrialised countries do not need to become any less rich before Africa can become a lot less poor. The wealth of the wealthy is not part of the problem.
To believe otherwise, however, is very much part of the problem. For much of the 20th century the developing countries were held back by an adapted socialist ideology that put global injustice, inequality and victimhood front and centre. Guided by this ideology, governments relied on planning, state monopolies, punitive taxes, grandiose programmes of public spending, and all the other apparatus of applied economic justice. They also repudiated liberal international trade, because the terms of global commerce were deemed exploitative and unfair. Concessions (that is, permission to retain trade barriers) were sought and granted in successive negotiating rounds of the General Agreement on Tariffs and Trade. A kind of equity was thus deemed to have been achieved. The only drawback was that the countries stayed poor.
Towards the end of the century, many developing countries—China and India among them—finally threw off this victim's mantle and began to embrace wicked capitalism, both in the way they organised their domestic economies and in their approach to international trade. All of a sudden, they are a lot less poor, and it hasn't cost the West a cent. In Africa, too, minds are now changing, but far more slowly. Perhaps that has something to do with the chorus that goes up from Africa's supposed friends in the West, telling the region that its plight is all the fault of global inequality, “unfair trade” and an intrinsically unjust market system.
Is it possible I'm starting to take this MBA thing waaaaay too seriously?
The Economist says it better in this article from last week. Here is an excerpt, but I urge you to read the entire thing:
But goods and services are not just lying around waiting to be grabbed by the greediest or most muscular countries. Market economics is not a zero-sum game. America consumes $10 trillion worth of goods and services each year because it produces (not counting the current-account deficit of 5% or so of the total) $10 trillion of goods and services each year. Africa could produce and consume a lot more without America producing and consuming one jot less. It so happens that the case for more aid, provided of course that it is well spent, is strong—but the industrialised countries do not need to become any less rich before Africa can become a lot less poor. The wealth of the wealthy is not part of the problem.
To believe otherwise, however, is very much part of the problem. For much of the 20th century the developing countries were held back by an adapted socialist ideology that put global injustice, inequality and victimhood front and centre. Guided by this ideology, governments relied on planning, state monopolies, punitive taxes, grandiose programmes of public spending, and all the other apparatus of applied economic justice. They also repudiated liberal international trade, because the terms of global commerce were deemed exploitative and unfair. Concessions (that is, permission to retain trade barriers) were sought and granted in successive negotiating rounds of the General Agreement on Tariffs and Trade. A kind of equity was thus deemed to have been achieved. The only drawback was that the countries stayed poor.
Towards the end of the century, many developing countries—China and India among them—finally threw off this victim's mantle and began to embrace wicked capitalism, both in the way they organised their domestic economies and in their approach to international trade. All of a sudden, they are a lot less poor, and it hasn't cost the West a cent. In Africa, too, minds are now changing, but far more slowly. Perhaps that has something to do with the chorus that goes up from Africa's supposed friends in the West, telling the region that its plight is all the fault of global inequality, “unfair trade” and an intrinsically unjust market system.
Is it possible I'm starting to take this MBA thing waaaaay too seriously?
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