Buying local vs. Trade as aid

[TheOriginalFlashDavo]

This update on the "No Impact Man" blog got me thinking a little. A worthy aim to be trying to buy/eat locally to reduce carbon footprint....etc due to transportation of foods ...etc, but the point that is raised in the post (by someone else) about then taking away the trade that would go to developing nations/farmers makes sense too.

So we have a conundrum, well worthy of discussion I thought. Especially as his "solution" of paying off the farmer's debt instead is a little short sighted a solution imho.

If rich people don’t buy stuff, how do poor people make a living?

A while back, I got an email from Emily Hauser, an OpEd writer for the Chicago Tribune, who rightly said, essentially: It’s all very well saying plastic bags are the devil, but what about the jobs of all the people who work in plastic bag factories? What do we do about them? Yesterday, here on No Impact Man, we talked about what I consider to be a sustainable eating plan, which depends, largely, on buying local, seasonal food. As with the plastic bag factory workers, the question remains: What happens to the Kenyan farm workers, for example, who depend on Americans to buy their produce?

This is a hugely important question that Emily and other readers raise. As Emily wrote: “Because what you're doing is so radical, it has led me to consider the possibilities of the logical outcomes of some of your decisions, should they become standard behavior across the board, and they raise questions that I believe we as a society need to consider.”

So let’s start with the concerns about local eating, published in Greater Good Magazine, of Peter Singer, the Princeton University ethicist, and his co-writer the environmentalist Jim Mason:

“If you have a dollar to spend on beans and you can choose between buying locally grown beans at a farmers’ market or beans grown by a poor farmer in Kenya—even if the local farmer would get to keep the entire dollar and the Kenyan farmer would get only two cents from your dollar—you will do more to relieve poverty by buying the Kenyan beans.”

I don’t think I have to forego sound ecological practices like not using plastic bags and eating locally and seasonally for fear of hurting the plastic-bag-factory workers and the far-away farmers. I do think I have a responsibility to keep their plight in mind and to try to help them, if the results of my living environmentally causes them suffering. But the question remains, how? In a way, the whole issue boils down this: If rich people consume less for the sake of the planet and spend less money, how are poor people, who rely on the spin offs of what rich people spend, supposed to live?

Let me say that I’m no fan of trickle-down economics—the idea that you buy a dollar worth of beans so a Kenyan farmer gets two cents. In our market place, the real point of buying beans is to, well, buy beans, not to help the Kenyan farmer. To my way of thinking, that method of helping people is far too indirect. Let’s face it, considering the current level of world poverty, it seems safe to say, at least as a method of humanitarian relief (as opposed to getting cheap food), buying far-away beans doesn’t work.

What about if we instead found a way to take the whole dollar (rather than the two cents) and use it to help the Kenyan farmer directly? That is to say, what if, instead of helping the Kenyan farmer as a side-effect of buying beans, we just helped the Kenyan farmer and buy beans some other day? I’m no economist, but how about if we took our dollar and used it to pay off that farmer’s debt so that he or she could keep the food at home and feed the neighbors instead of air shipping it to us?

It follows, then, that part of environmental living might include tithing to help poverty, at least for the more wealthy among us, a subject that Peter Singer covered with great eloquence in the New York Times Magazine. In his article, Singer said suggested that if the richest 10 percent of Americans tithed 10 percent of their incomes to world poverty, the yield would be $404 billion.

He wrote: “For more than 30 years, I’ve been reading, writing and teaching about the ethical issue posed by the juxtaposition, on our planet, of great abundance and life-threatening poverty. Yet it was not until, in preparing this article, I calculated how much America’s Top 10 percent of income earners actually make that I fully understood how easy it would be for the world’s rich to eliminate, or virtually eliminate, global poverty.”

In my note to Emily Hauser, I wrote: “For a couple of hundred years, progress in the northern hemisphere has largely consisted of how to take really good care of ourselves—at least materially. We've accomplished that and beyond. What a lot of people like me are calling for is the next stage of progress. Not more of the same but a whole new direction. We've learned how to take care of ourselves. True progress, now, is about learning how to take care of each other.”

To my way of thinking, doing that—taking care of each other—might be a lot better accomplished by my taking up Singer’s suggestion to tithe than by leaving poor people the two cents that’s left after I buy a dollar’s worth of Kenyan beans.

http://noimpactman.typepad.com/blog/...h-people-.html

[TallGuyLittleCar]

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.

when it comes to produce the buy local vs trade issue is largely one of behavior at times. People are accustomed to buying their produce in the supermarket where the large amounts of produce they buy makes shipping produce in from far away viable and profitable. The truth of the matter though is that the local farmers market has the same produce for often less money. It's just a matter of behavior and convenience. At other times, during the winter, it is one of availability.. after the first frost a lot of people would be stuck eating nothing but meat all winter.

[DaVulf]

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.

Adam Smith was an idiot. Who the hell would think Comparative Advantage was a good theory.

[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]

Adam Smith was an idiot. Who the hell would think Comparative Advantage was a good theory.

Your intellectual grasp of all things economic is outstanding!

[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.

[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]

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.

[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

[MagnusVS]

Adam Smith was an idiot. Who the hell would think Comparative Advantage was a good theory.

It was David Ricardo. Not Adam Smith.

[FlashLackey]

It seems to me that the article is basically a long-winded, careful acknowledgement of the far-reaching costs of many environmentalist efforts. The same costs that others have been pointing out more concisely for years now.

[DanOnTheMoon]

I try to support local small businesses whenever possible.

[MagnusVS]

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.

It's not silly business sense. If people are willing to pay more for the grain in another country, the farmers will export. You can try to make people support local vegetables/fruit/etc. but most people will buy what's cheapest. And as poor countries in many cases have comparative advantages in producing these goods, it results in the trade we see today. If a country should produce all it's own goods, they would face a big loss in consumer and producer surplus.

DaVulf - Comparative advantages is a good theory and, what it seems to me, very respected by economists worldwide.

[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.

[TallGuyLittleCar]

It's not silly business sense. If people are willing to pay more for the grain in another country, the farmers will export.

I think you either missed my point or i missed in making my point. Exporting grain to a grain producing nation probably isn't the best idea of long term economic stability.

You can try to make people support local vegetables/fruit/etc. but most people will buy what's cheapest.

in the states local usually is cheaper. however the farmer's market is often only open saturday morning.. so it is a bit less convenient.

[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)?

[TheOriginalFlashDavo]

It seems to me that the article is basically a long-winded, careful acknowledgement of the far-reaching costs of many environmentalist efforts. The same costs that others have been pointing out more concisely for years now.

Just as there are far-reaching costs of avoiding many environmentalist efforts, the same costs that others have been pointing out more concisely for years now.

Tough conundrum at times, isn't it?

[MagnusVS]

If the US has a comparative advantage in producing these goods, they will produce them themselves. As businesses in a country will change their production/reallocate resources between different industries over time, those industries that are profitable will survive.

It's sad that poor countries export the food out of the country. Poverty is also very hard to understand and explain. One theory that can explain a bit, is that most poor countries must import real capital like machines, oil etc. To afford this, they have save less money, which again gives them less economic growth and it's spiraling downwards. Research has found that many countries have managed to improve their economic growth by making export of real capital illegal (one of the main points of the Solow Growth Model).