Buying local vs. Trade as aid

[TheOriginalFlashDavo]

Growing produce to sell half way around the world that they can grow there is just silly business sense. If that is the best plan you can come up with you deserve to starve.

Now if the kenyan wants to sell me coffee instead of beans that I can grow myself.. well then good on him. I'm going to buy his coffee beans because I can't grown coffee myself or even buy locally grown coffee.. and i'm physically and mentally addicted to coffee.

Actually, the main issue with that is with bodies like the World Bank and other development finance bodies. In many places they have basically forced many local farmers to grow "cash crops" to sell overseas rather than the crops that would provide food locally.

And also, if on the one hand American (and Australian et al) can take advantage of the global economy with regards to cheaper labour ...etc then it's hardly unfair for developing economies to be able to grow crops for those in the west who can pay more.

[TallGuyLittleCar]

Actually, the main issue with that is with bodies like the World Bank and other development finance bodies. In many places they have basically forced many local farmers to grow "cash crops" to sell overseas rather than the crops that would provide food locally

how have the forced local farmers to grow cash crops? Does hte world bank and other finance bodies have militaries deployed to these areas. Are they napalming disobedient villages?

Or are the merely expecting these people to have a plan to pay back the money they borrow?

And also, if on the one hand American (and Australian et al) can take advantage of the global economy with regards to cheaper labour ...etc then it's hardly unfair for developing economies to be able to grow crops for those in the west who can pay more.

They can do whatever they wish, all I was saying is that if you are trying to use the cheaper cost of labor to have a competitive edge in agriculture you are probably going to have a bit of a problem. The U.S. sort of tried different agriculture methods in the early 1800s.. it turns out technology is cheaper than the cheapest human.

[DaVulf]

Comparative advantage is critical to understanding modern international trade theory.

Under absolute advantage, one country can produce more output per unit of productive input than another. With comparative advantage, if one country has an absolute (dis)advantage in every type of output, the other might benefit from specializing in and exporting those products, if any exist.

Source: http://en.wikipedia.org/wiki/Comparative_advantage

Basically, although machinery is fairly cheap, the extremely low cost of labour over there makes it cheaper for them to produce. Were we to focus resources on producing those products that they make, then we might be able to do it cheaper. This would imply that maybe we have an absolute advantage in both products. Either way, if they can produce one and not the other, we should let them produce what they can, and focus more on the one they cannot. You then trade for the difference.

If we tried to produce absolutely everything we consume... oh wait.. we can't.

[TallGuyLittleCar]

Source: http://en.wikipedia.org/wiki/Comparative_advantage

yes thank you I read about it before your daddy was using molsens to get the comparative advantage on yo momma.

Basically, although machinery is fairly cheap, the extremely low cost of labour over there makes it cheaper for them to produce. Were we to focus resources on producing those products that they make, then we might be able to do it cheaper. This would imply that maybe we have an absolute advantage in both products. Either way, if they can produce one and not the other, we should let them produce what they can, and focus more on the one they cannot. You then trade for the difference.

The key is that you average all the products you are trading for a net gain. You make take a hit on one product but you make up for it in the gain of another.

If we tried to produce absolutely everything we consume... oh wait.. we can't.

well that is really another matter.

[TheOriginalFlashDavo]

how have the forced local farmers to grow cash crops? Does hte world bank and other finance bodies have militaries deployed to these areas. Are they napalming disobedient villages?

Or are the merely expecting these people to have a plan to pay back the money they borrow?

They pay them to grow cash crops. Very simple. If they don't grow cash crops but rather for the local community demand they don't pay them. Pretty simple really, and it's not actually that easy to say no to money when it's being offered to you and you don't have any, despite your capacity to grow food for yourself and your community. The World Bank's view is that the way out of "poverty" is to grow crops that people from overseas will buy. I'm just not sure it's as straightforward an equation as that, and if you look into the collapse of some of the cash crop industries in Kenya and some other places, you can see the very real long term damage this policy can do.

it turns out technology is cheaper than the cheapest human.

Actually, hereabouts, the exact opposite is true. Hence why there is less investment in technology, labour is just so cheap. They just resurfaced the road out the front of our place, how it was done was a wonder to behold.

[TallGuyLittleCar]

They pay them to grow cash crops.

how forceful.

The World Bank's view is that the way out of "poverty" is to grow crops that people from overseas will buy. I'm just not sure it's as straightforward an equation as that, and if you look into the collapse of some of the cash crop industries in Kenya and some other places, you can see the very real long term damage this policy can do.

I think blaming that policy alone is rather short sighted.. perhaps the local governments are a we bit corrupt.

Actually, hereabouts, the exact opposite is true. Hence why there is less investment in technology, labour is just so cheap. They just resurfaced the road out the front of our place, how it was done was a wonder to behold.

I was talking in terms of trade. Basically how it would be cheaper for me to buy a tractor in the united states then to hire a bunch of farmers in kenya then have the stuff shipped over to me

[david petley]

Originally Posted by TheOriginalFlashDavo
They pay them to grow cash crops.

how forceful.

It's amazing how powerful a dollar can be, if that is the only thing keeping your family alive through to the next day.

david

[TallGuyLittleCar]

It's amazing how powerful a dollar can be, if that is the only thing keeping your family alive through to the next day.

david

in this circumstance the farmers already had a roof over their head and food on the table. I imagine the money from the west was wanted by the farmers so they could be western products and such.

[TheOriginalFlashDavo]

in this circumstance the farmers already had a roof over their head and food on the table. I imagine the money from the west was wanted by the farmers so they could be western products and such.

Not directed at any of your other comments, but with this one, you're really showing you have no idea at all.

So where exactly have you gleaned this gem of information about farmers being paid to switch to cash crops is because they have an abundance of money to buy "western" products (the majority of which are not even made in the west)?

[Visionray]

They pay them to grow cash crops. Very simple. If they don't grow cash crops but rather for the local community demand they don't pay them. Pretty simple really, and it's not actually that easy to say no to money when it's being offered to you and you don't have any, despite your capacity to grow food for yourself and your community. The World Bank's view is that the way out of "poverty" is to grow crops that people from overseas will buy. I'm just not sure it's as straightforward an equation as that, and if you look into the collapse of some of the cash crop industries in Kenya and some other places, you can see the very real long term damage this policy can do.

No doubt that the World Bank has indirectly done damage to some countries through it's lending policies. On the other hand, simply lending or giving money to governments to use however they wish has disastrous effects - especially if those governments are corrupt.

There is simply no way to avoid the negative effects in these situations. You give a corrupt government money and they waste it away - the people suffer. You punish a corrupt government by not lending them money - the people suffer.

Think for a second why the World Bank would tell a poverty stricken nation to export certain crops as a condition for a loan. Let's face facts, poor nations will never free themselves unless their economy is stimulated. You can't simply unleash the money hose at something and hope it sustains itself. A nation can't build it's economy and raise it's GDP unless they export. The goal is long term.

[TheOriginalFlashDavo]

No doubt that the World Bank has indirectly done damage to some countries through it's lending policies. On the other hand, simply lending or giving money to governments to use however they wish has disastrous effects - especially if those governments are corrupt.

There is simply no way to avoid the negative effects in these situations. You give a corrupt government money and they waste it away - the people suffer. You punish a corrupt government by not lending them money - the people suffer.

Think for a second why the World Bank would tell a poverty stricken nation to export certain crops as a condition for a loan. Let's face facts, poor nations will never free themselves unless their economy is stimulated. You can't simply unleash the money hose at something and hope it sustains itself. A nation can't build it's economy and raise it's GDP unless they export. The goal is long term.

You have pointed out one issue that is a huge factor: corruption. And unfortunately not enough is done by those with control over financing to reign this in, both internally and externally. No, it's not an easy problem to solve. And hence why from both sides I'm saying there's no easy answer.

Unlike some who want to "defeat" one side of the debate by offering their own simple solution from their side. Those that are agitating for change are doing so because, let's face it, the majority of folk are quite prepared to spend no time at all thinking of anyone else but themselves. And that, for me, is not sustainable.

[MagnusVS]

A nation can't build it's economy and raise it's GDP unless they export. The goal is long term.

I guess they can raise it to a certain degree, but trade is important. And import is just as important as export.

you're old enough to remember the ozone, right? remember when it was "world consensus" that we were going to cause an ice-age in our life-times by depleting the ozone? what happened to that?

Not to mix myself into your happy little environment debate, but didn't the world community actually do something with that? We stopped using refrigerators etc that contained CFC gases and found other substitutes.

[FlashLackey]

Not to mix myself into your happy little environment debate, but didn't the world community actually do something with that? We stopped using refrigerators etc that contained KFK gases and found other substitutes.

so, let me know if i have this correct. some time between the mid seventies and now, humans reversed the temperature trend of the earth from going to cold to going to warm, by updating refrigerator technology?

dont go mixing if you cant handle the pressure!

[Visionray]

I guess they can raise it to a certain degree, but trade is important. And import is just as important as export.

of course it is, but it seems your implying that the World Bank isn't involved in facilitating trade?

www.worldbank.org/trade
http://go.worldbank.org/C9G060LTB0
http://go.worldbank.org/XXCAUR4L00

You can't import anything when you don't have the money to pay for it, right?