If you’d asked me at the beginning of this summer whether things would be more expensive in Ghana or Ecuador, I would have said Ghana without much hesitation. It seems natural to assume that in countries which are poorer (smaller GDPs, smaller average income, worse indicators on the human development index, etc.), prices would also be lower. As it turns out, though, it’s not quite that simple.
There are some things in Ghana that are absurdly cheap. You can get more than enough street food to fill you up for next to nothing. A bowl of rice, spaghetti noodles and beef in sauce set me back 60 pesewa—about 40 cents. Fruit in the market is so cheap compared to home that it seems free. One cedi (66 cents) will get you a pile of four or five delicious oranges or two ripe mangoes. My dad’s house is a concrete walled compound which could easily be a B-movie drug lord’s hideout. It has three bathrooms, a kitchen, dining and living rooms and five bedrooms, plus a garage. His rent for this is something like $100 a month (though, to be fair, the city water supply randomly turns off for weeks at a time, and often comes out in interesting shades of grey, white and brown when it is on). Transportation also seems practically free—a 30 minute ride in a shared taxi from a rural village back into town cost me something like 30 cents.
However, some things in Ghana are fairly expensive given the income of average Ghanaians, and occasionally even for visiting Americans. Going to a movie in the Accra Mall cost me 15 cedis ($10)—comparable to a ticket back home. Meals in sit-down restaurants are cheaper than their American counterparts, but still a fortune compared to street food. A decent-sized entrée will set you back $5-10, sometimes a bit more if the restaurant is really nice. Groceries in the supermarket (Shoprite, a South African chain which seems to only exist in the Accra Mall) are often more expensive than they would be in the US. Boxes of cereal can run up to $6 for a normal sized package of cornflakes. Butter is at least $4, and that’s only if you buy the cheap stuff that smells weird. The lentils I insisted on buying cost about $7 for a package that was maybe twice as big as the ones I see back in the States. Services are also on the expensive side—a manicure is $10, and a haircut can be twice that in the city, especially if you’re a white person.
Ecuadorian prices seem more uniform. Grocery store items are fairly cheap across the board—good chocolate bars with fruit added can be purchased for 90 cents, bananas are usually less than 50 cents for a kilogram (2.2 pounds) and basic staples are usually at or below the cost of similar items in the US (though as with Ghana, cereal is a notable exception—I tried to buy Honey Bunches of Oats today, but was dissuaded by the $6.35 price tag). A movie ticket is a little less than $5. Public transportation over long distances is hardly more than in Ghana—usually about $1 per hour of travel, made possible by the state-owned petroleum companies, and government policies which heavily subsidize gasoline (it’s been $1.03 per gallon for diesel and $1.72 for premium gas since I got here a month ago). Quito is covered in restaurants serving a fixed almuerzo (lunch)—usually juice, soup, a plate of rice and meat and occasionally dessert for $1.50-$2. Dinner will set you back a bit more, but it’s easy to find good meals for under $5. I’ve seen salons advertising $2 haircuts and manicures for even less.
I have a theory to explain the pricing differences I’ve encountered. In Ghana, people do not have money. There are definitely rich people living in cities (mostly Accra, the capital), and there’s some kind of emerging middle class, but by and large, people struggle to pay for necessities. I think this has created a two-tier pricing system. The poor masses need to buy basic staples of life. They buy their food in markets and from street vendors. They need to travel sometimes, and they can mostly afford to do so because shared taxis and trotros abound. The things that you need to survive are all widely available, mostly for next to nothing (at least by my American standards). However, because of the overall poverty, things like movies and manicures are well out of reach of most people. The city I was living in, a regional capital city with a population of about 50,000, doesn’t even have a movie theater. There’s no supermarket either—everyone goes to the outdoor public market which is filled with produce and pungent-smelling fish. I had to make weekend trips into Accra (2.5 hours, give or take) to buy things like cheese, yogurt, lentils and cereal. These items are really only available to the elites, and because of that, they’re much more expensive. I’m sure there are a lot of other reasons on the supply side as well, but from a demand perspective, the pricing gap makes sense, because it’s reflective of a wealth gap.
Ecuador seems to be better off. The overall standard of living is much higher than in Ghana (and almost all other sub-Saharan African countries, I would imagine). There are absolutely poor people here, in Quito and especially in more rural areas. But even the poor seem to have a little more money for luxury and non-essential items. My host mom in Plaza Gutierrez had never traveled further than Otavalo (a city 2 hours away)—she hadn’t even been to Quito, much less outside of the Andean region of Ecuador. But while I was staying with her, she took the whole family to a pool that was about half an hour away, with an entry fee of $2 per person. Not a fortune by my standards, but not exactly small change for a family of five. There also seems to be a much more well-defined urban middle class. My host family in Quito, for example, survives on the income of my dad, who’s a petroleum engineer in the Amazon. This is enough to allow them occasional trips to the US and private school for their three children, but not so much that my host mom doesn’t remark about how expensive textbooks for high school are. I’m not sure what the typical income and lifestyle in Quito looks like, but my family doesn’t seem at all like an anomaly. Quito seems to have more middle ground in its income demographics than Accra, which has shacks and slums with no water or electricity, giant walled compounds where the super-rich live, and not much in between.
So in Ecuador, people buy produce at indoor markets, but the average Quito family also shops at the supermarket. Smaller cities have supermarkets too, and they’re common in Quito (contrasting with Ghana, which seems to literally have two supermarkets in the entire country, both of which are located in the Accra Mall). This means that prices need to be affordable for the masses, not just the super-elites and gringos. Government policies and subsidies help keep prices down in stores (a really interesting system that I’ll write more about later). The average urban family can afford at least occasional luxuries like movies, and their prices reflect that fact.
I’m curious about the supply-side factors that have made this all come into being, but from a demand perspective, the pricing differences I’ve seen between here and Ghana make a fair amount of sense. Interestingly, the net result of these differences is that it’s cheaper for me to maintain my lifestyle in Ecuador than in Ghana. If you just need a place to stay and not starve to death, Ghana wins hands down. But if you want supermarket cereals, the occasional movie, books, manicures and recreation on the weekend, Ecuador would probably end up coming out on top. Who would have thought?
Showing posts with label economics. Show all posts
Showing posts with label economics. Show all posts
9.21.2011
6.04.2010
In defense of capitalism, I think
This year, I've read a lot and tried to pay attention to the news. And everywhere I look, capitalism appears to be responsible for a seemingly endless list of atrocities. It's the economic system that brought us Bhopal, the military industrial complex, Superfund sites, sweatshops, the financial crisis, climate change and the Gulf oil spill.
Right now, we're witnessing what seems like the Last Days of capitalism. Every passing day brings new evidence that this system is unsustainable, exploitative and killing the planet. As our economy crumbles around us, people are taking it as evidence that the entire philosophy of capitalism is wrong. And though it might make me unpopular in some circles, I want to defend the core tenets of capitalism. Not because I don't agree with every single criticism people have made of the way our system operates, and not because I don't think we need radical change. Not because I'm harboring some illusion that our political system is capable of fixing the world's problems, and not because I'm defeatist and think we have to accept the current system and be "realistic". There's nothing realistic about pretending that changing our lightbulbs and waiting for Congress to pass an even more flawed version of Waxman-Markey will stop climate change.
Here's the thing: I think the core idea of capitalism--individuals coordinating their desires and abilities through a market--is actually a really good idea. On its most basic level, capitalism is about matching up someone doing or making something with someone willing to pay them for it. Capitalism encourages research and innovation--for drugs to treat HIV/AIDS, for alternative energy sources, for better water infrastructure in developing countries. Capitalism provides rewards for people who provide goods or services that meet needs. And I don't think there's another economic system that does that.
Where capitalism becomes problematic is when it gets large, global, industrialized and values maximizing profit at the expense of everything else, including human life or ecological health. Some people would argue these problems are inherent in the system, but I disagree. A woman in Ghana running a sewing business which makes traditional West African clothing for customers is still a capitalist enterprise, and one which, I would argue is fundamentally different from the likes of Dow Chemical or Monsanto. We need a system which will preserve those enterprises--the independent bookstores, clothing makers, hippie juice bars, creative dance teachers and farmers--without allowing corporate behemoths to commit state-sanctioned murder.
How do we get there? I'm not sure. I'm skeptical about the effectiveness of our political system to create change, especially on the scale we need in the time we have. I think overturning both Citizens United and its underlying precedent--corporate personhood--would be a good start. Holding corporations legally accountable for their actions would be better. That's a change that won't come from our legislative or executive branches, but a few rogue judges could get us somewhere. And if courts in the US won't hear it, we need to drag Coca-Cola, Nestle, Dow and anyone else we can think of in front of the International Criminal Court.
More than anything, I think we need to break the cycle of materialism and consumption. As Adbusters loves to say--"When you cut off the flow of oxygen to a person's brain, their brain dies. When you cut off the flow of nature to a person's soul, their soul dies. It's as simple as that." We need to get everyone in the developed world outside, starting at a young age. We need to resist media intrusion into our lives. We need to take down billboards, and any other ads that we're forced to look at. We need to remember how to value nature, and how to see ourselves as connected to it. We need to learn to be happy with what we have. We need to remember how to be people.
All of that's going to take a while. And it's not everything we should be doing, by any means. We need people sitting in front of bulldozers. We need people who won't come down from trees. We need anger and outrage and giant posters of people killed by methyl isocyante paraded in front of every single politician in this country. We need to find a way to take our government back, and I'm not talking "helpful tips" like calling your elected officials to tell them what you think. But when we get there, if we get there, and we get to re-write our world, I think capitalism should stick around. I don't mind paying someone to grow my food, as long as I know who they are and how they're growing it.
1.15.2008
Capitalist activism?
So, we've spent the last two days in Post class debating economics, environmental issues, social change and activism. Which sounds like my cup of tea, except I keep leaving class wanting to kill someone. Because, these, essentially were the debates:
Day 1 : Environmental Justice
Issue: Are there always losers in a capitalist system and can you make progress in areas like this without destroying capitalism?
Sides:
Victor Lindstrom--You can't change things like high pollution areas without getting rid of capitalism, therefore you shouldn't try.
Darren Veit and others--You can't change without getting rid of capitalism, therefore we should get rid of capitalism because it's inherently racist and classist.
Me and nobody else--Capitalism and environmental/social justice aren't incompatible, you just need small amounts of regulation and government action which gives market incentives for positive change.
Day 2: Social Entrepreneurship
Issue: Can you make money without exploiting someone?
Sides
Darren--No, it's completely impossible, especially in the US because it's ingrained in our economic and political system.
Me--Yes--trade isn't a zero-sum game. You having a dollar means someone else has a dollar less, but that's not a bad thing all the time. If I sell you something for a dollar that you're willing to buy for a dollar, everyone wins. I get a dollar richer. You get a dollar of value. And this isn't just theory--Grameen Bank, case in point. It's an incredibly profitable business, and it benefits the poor who get microloans. Even Cranium. Who does that exploit? I'm not going to say it does no harm to anybody, and especially not the environment, but that's different than exploitation.
I'm so sick of feeling like the only activist who doesn't hate capitalism. Yes, it has its problems, but find me a better system. And people like Ms. Engstrom, who get mad about the fact that we're looking for alternative fuel technologies for cars, when we should all just stop driving in the first place..I'm sorry, but we as a society can't function that way. Progress doesn't have to be a bad thing. And while you might be ok with that, most people wouldn't be, and you can't force people to live a certain way.
And it occurs to me now that I'm conflicted about so many things, everyday. I have so many things fighting inside of me, so many different opinions about every single little thing in the world. Let me show you what I mean:
I have a deep respect for our women and men in uniform, and I believe that they are incredibly brave and loyal people. I think war is necessary sometimes. But I hate our military-minded complex, I hate that we fight other cultures first and negotiate later, and I hate the wars those brave soldiers have been involved in in the last few decades.
I believe everyone should have opportunity to advance and that companies should pay people living wages. I know that most people are poor through bad luck or birth, not because of laziness. But I also think companies have a right to hire people at market prices--what people are willing to work for, be it in third world sweatshops or here within our borders. After all, a sweatshop job is better than no job, as horrible as that sounds.
I love the earth and I would rather die than live in a world without mountains, trees, animals and functional ecosystems (and I'm pretty sure that's not an exaggeration for dramatic effect). I believe we all, collectively need to wake up and start reducing our consumption, building sustainable communities and taking care of the earth. But I don't think you can force businesses to be more green. You can't shut down the cattle industry, even if it is responsible for 25% of the world's carbon emissions. You can't make ExxonMobile stop spending billions of dollars to convince people that climate change isn't real. And you can't say that the better information will win, because the people with the money aren't usually the green ones, and it hasn't been working.
How can I change the world when I can't convince my own father to keep our thermostat below 70 degrees? How can I justify asking other people to change their lives when I live in the house I do, wear the clothes I wear, buy the things I buy? How can I, believing so much in the value of competition, the human spirit, the beauty of innovation, how can I tell somebody that their idea, their business, their profit-making method is not valid because the cost is too high to society?
To those of you who ask--how can you spend so much time thinking about these things, my only response is--how can you not? I've never known another way to think, to look at the world. I've thought this way since 2nd grade--my knowledge and opinions have shifted, my core values have remained the same. I believe our lives have no higher mandate, no higher purpose, than to work as hard as we can for as long as we can to make the world a better place, in whatever way we see that. Some people are scientists, giving us a better understanding of the world around us and its possibilities. Some are artists, making us think and adding beauty to a world that can seem bleak. Some of us are businesspeople, coming up with new ideas and finding better ways to make them. And some of us are activists, for the same reason--because that is our calling. Because that is the only way I know to make the world better.
Day 1 : Environmental Justice
Issue: Are there always losers in a capitalist system and can you make progress in areas like this without destroying capitalism?
Sides:
Victor Lindstrom--You can't change things like high pollution areas without getting rid of capitalism, therefore you shouldn't try.
Darren Veit and others--You can't change without getting rid of capitalism, therefore we should get rid of capitalism because it's inherently racist and classist.
Me and nobody else--Capitalism and environmental/social justice aren't incompatible, you just need small amounts of regulation and government action which gives market incentives for positive change.
Day 2: Social Entrepreneurship
Issue: Can you make money without exploiting someone?
Sides
Darren--No, it's completely impossible, especially in the US because it's ingrained in our economic and political system.
Me--Yes--trade isn't a zero-sum game. You having a dollar means someone else has a dollar less, but that's not a bad thing all the time. If I sell you something for a dollar that you're willing to buy for a dollar, everyone wins. I get a dollar richer. You get a dollar of value. And this isn't just theory--Grameen Bank, case in point. It's an incredibly profitable business, and it benefits the poor who get microloans. Even Cranium. Who does that exploit? I'm not going to say it does no harm to anybody, and especially not the environment, but that's different than exploitation.
I'm so sick of feeling like the only activist who doesn't hate capitalism. Yes, it has its problems, but find me a better system. And people like Ms. Engstrom, who get mad about the fact that we're looking for alternative fuel technologies for cars, when we should all just stop driving in the first place..I'm sorry, but we as a society can't function that way. Progress doesn't have to be a bad thing. And while you might be ok with that, most people wouldn't be, and you can't force people to live a certain way.
And it occurs to me now that I'm conflicted about so many things, everyday. I have so many things fighting inside of me, so many different opinions about every single little thing in the world. Let me show you what I mean:
I have a deep respect for our women and men in uniform, and I believe that they are incredibly brave and loyal people. I think war is necessary sometimes. But I hate our military-minded complex, I hate that we fight other cultures first and negotiate later, and I hate the wars those brave soldiers have been involved in in the last few decades.
I believe everyone should have opportunity to advance and that companies should pay people living wages. I know that most people are poor through bad luck or birth, not because of laziness. But I also think companies have a right to hire people at market prices--what people are willing to work for, be it in third world sweatshops or here within our borders. After all, a sweatshop job is better than no job, as horrible as that sounds.
I love the earth and I would rather die than live in a world without mountains, trees, animals and functional ecosystems (and I'm pretty sure that's not an exaggeration for dramatic effect). I believe we all, collectively need to wake up and start reducing our consumption, building sustainable communities and taking care of the earth. But I don't think you can force businesses to be more green. You can't shut down the cattle industry, even if it is responsible for 25% of the world's carbon emissions. You can't make ExxonMobile stop spending billions of dollars to convince people that climate change isn't real. And you can't say that the better information will win, because the people with the money aren't usually the green ones, and it hasn't been working.
How can I change the world when I can't convince my own father to keep our thermostat below 70 degrees? How can I justify asking other people to change their lives when I live in the house I do, wear the clothes I wear, buy the things I buy? How can I, believing so much in the value of competition, the human spirit, the beauty of innovation, how can I tell somebody that their idea, their business, their profit-making method is not valid because the cost is too high to society?
To those of you who ask--how can you spend so much time thinking about these things, my only response is--how can you not? I've never known another way to think, to look at the world. I've thought this way since 2nd grade--my knowledge and opinions have shifted, my core values have remained the same. I believe our lives have no higher mandate, no higher purpose, than to work as hard as we can for as long as we can to make the world a better place, in whatever way we see that. Some people are scientists, giving us a better understanding of the world around us and its possibilities. Some are artists, making us think and adding beauty to a world that can seem bleak. Some of us are businesspeople, coming up with new ideas and finding better ways to make them. And some of us are activists, for the same reason--because that is our calling. Because that is the only way I know to make the world better.
12.22.2007
Economics and the environment: in defense of recycling
In preparation for college and life, I've been reading some books about real-life applications of economic reasoning and theory. And I've been reading Adbusters and some other socialist or quasi-socialist writings which are, in varying degrees, anti-free market, anti-consumerist and heavily critical of traditional economic wisdom. I'm trying to find the line of truth somewhere in between extremes, one that allows for conservation and responsible use of resources, but doesn't stifle personal freedom or liberty and still allows for economic growth and opportunity.
My book on economics is rather like an older version of Freakonomics, with some more controversial conclusions and more in-depth explanation of the economics behind decisions. (If you're interested, it's called The Armchair Economist by Steven Landsburg.) Most of it consists of explaining cost-benefit analysis, which is the main tool that economists use for evaluating the merits of a policy decision. Cost-benefit analysis, like the rest of economics, has no moral system inherent to it, and seeks to reach a solution involving the maximum possible efficiency. It relies on two premises--a cost is a cost, no matter who bears it, and a benefit is a benefit, no matter who incurs it. For example, when applying cost-benefit analysis to the legalization of drugs, the increased drug use as a result in considered a benefit, not a cost, because consumers are able to buy more drugs at a reduced cost.
So, the reasoning takes some getting used to, but it makes sense in most cases. Until the chapter called "Why I'm Not an Environmentalist". This chapter points out many legitimate flaws in what the author calls "the religion of environmentalism". A lack of willingness to question fundamental assumptions (something, incidentally, that free-market economics also suffers from). Ignoring markets when trying to solve environmental problems. Lack of willingness to compromise. A pervasive holier-than-thou attitude. These are all problems, and I wish we could solve them. But the arguments made by the author, while criticizing his opponents for their lack of economic logic and rationality, seem overly simplistic to me. Now, I'm not an economist or an environmental scientist, and if anyone can find any reasons why my critiques of his arguments are wrong, I'd appreciate hearing them.
First, Landsburg argues that recycling is bad if your aim is to preserve forests. This is because paper companies have a vested interest in keeping forests around, so if demand for paper is high, logging companies have an incentive to plant more trees and keep forests around. I don't disagree with this argument in its premise--logging companies certainly don't want to see all of our forests disappear, and it would be ridiculous to suggest otherwise. However, this argument as a whole has three large flaws. One is that is fails to distinguish between the quantity and the quality of forests--a crucial distinction to most people who are interested in forest preservation. The second is that it ignores the problem of very high demand. And the final problem is the issue of waste and finite resource consumption.
The way I see this situation is somewhat different. Paper companies currently own some amount of land which they use to plant trees which are then cut down and processed into paper. Suppose that everyone starts recycling and demand for paper falls by 50%. Many of those companies will likely choose not to re-plant trees on the land they currently devote to growing trees and will instead use that land for a more profitable activity. Thus, we have a net loss in land area covered in trees, and less carbon is offset by the presence of those trees. This is exactly what Landsburg is talking about. He didn't cite any studies showing that this is in fact what would happen, or that this has happened in the past, but let's assume that his logic is correct.
But consider the reverse. Suppose everyone who currently recycles, persuaded by Mr. Landsburg's argument, stops doing so. Demand for paper rises by 50%, and the land that paper companies currently own is inadequate to meet demand. After utilizing all of their available resources--converting some land to tree-growing, maximizing the number of trees per square mile, etc--there still isn't enough land to meet demand. What happens now? Paper companies try to obtain more land. Due to the fact that it would be more efficient for them to get land that already has trees on it, they will likely try to acquire forested land from the government or from a private source. The end result is the same--land that was once a growing forest providing a habitat for animals becomes a place where trees are grown until they are big enough to be profitable and are then cut down.
In short, an incredibly high demand for paper would lead to forest ecosystems--places with diversity of life that provide habitat--being turned into land with trees on it. I've seen these kind of forests, and they aren't pretty. The trees and skinny, have almost no branches on them, there's almost no undergrowth, and I doubt they would provide much shelter for animals. Both types of land are technically forests, but they're not the same thing.
In addition, this argument fails to look at the consequences of paper production. Logging and transport of paper takes fossil fuels--a finite resource, not a renewable one, as trees are. Recycling also takes fossil fuels and chemicals, and I'm not sure as to the environmental effects of that. It's something I'd be interested in finding out more about, but unless someone can prove otherwise, I'm guessing that the environmental costs of recycling are no more damaging than the costs of logging new trees in terms of fossil fuels and harmful chemicals. Also, using new paper constantly and not recycling it creates waste. Waste has to be stored somewhere--in landfills, which use space, which is also a finite resource (we only have one earth for the time being). I think moderation is important here, and I'm not advocating using no paper. Paper is a function of our society, and assuming Landsburg's argument is correct, a large dip in paper demand would result in less forests. But excess demand and consumption also has consequences that I think we need to keep in mind.
My economics books (textbooks too) are filled with comments about pollution. Most of these state that pollution is a cost of doing business-necessary, unavoidable, and able to be quantified. For example, Landsburg models it in cost-benefit analysis. If I live in a city that has a factory which pollutes, the correct way to determine if the factory should be allowed to continue polluting is to determine how much I, and other individuals in my city, would be willing to pay for cleaner air. If the total amount is higher than the money made by the factory from polluting, then we pay the factory to stop and it stops. If not, it goes on polluting. And that, in an economist's world, is not seen as a problem. My textbooks describe pollution as an "externality"--something that has a cost to people not involved in the profits of whatever is creating it, and something therefore, that the market does not correct for. This seems like a more optimistic idea, because it allows for the argument that it's fair to force regulation. But essentially, it's the same problem--if the government forces a factory to stop polluting, that's going to make their product cost more, which will drive prices up for the same consumers living in the city where the pollution was a problem in the first place. So the same question--how much is it worth to you?--it still the deciding factor.
I don't disagree with this logic. Again, it's the end conclusion that I have an issue with. It's fine to argue that pollution and environmental costs are just that--costs, which can be measured in monetary value to the individuals they concern. But this fails to account for the fact that environmental damage effects us all--it's not just the inhabitants in that city who breathe bad air who suffer. Everyone has a share in the effects of global warming, regardless of how close you live to the factories that are polluting. Cost-benefit analysis is fine, but what about the end of the world? Let's assume that eventually, global warming, if left unchecked could lead to the end of life on earth as we know it--mass extinctions, the end of the human race, or whatever. If you analyze that in terms of cost-benefit, I'm willing to bet everyone on earth (nihilists and suicidal people exempted) would pay the highest cost possible in order to avoid that outcome, because if we didn't, the money that we saved would be useless. So given that, I think it makes sense to make some sacrifices to stop things that effect us all, even if they lead to us having less in the end. Having less is better than having nothing.
I think, in the end, both sides need to concede a bit. Environmentalists and economists shouldn't be two separate sides--in an ideal world, they could work together. My hope for the future is just that. I wish environmentalists were more willing to consider market-based solutions to problems, to be more innovative instead of regulating everything, and to give people and companies more incentives to decrease their impact. I wish economists were willing to acknowledge that some things do effect everybody and can't practically be analyzed only in cost-benefit terms, and that morality does have a place in discussions like this when what's at stake is so large. And I wish everybody were willing to slow down production a bit and take some time to just smell the flowers.
My book on economics is rather like an older version of Freakonomics, with some more controversial conclusions and more in-depth explanation of the economics behind decisions. (If you're interested, it's called The Armchair Economist by Steven Landsburg.) Most of it consists of explaining cost-benefit analysis, which is the main tool that economists use for evaluating the merits of a policy decision. Cost-benefit analysis, like the rest of economics, has no moral system inherent to it, and seeks to reach a solution involving the maximum possible efficiency. It relies on two premises--a cost is a cost, no matter who bears it, and a benefit is a benefit, no matter who incurs it. For example, when applying cost-benefit analysis to the legalization of drugs, the increased drug use as a result in considered a benefit, not a cost, because consumers are able to buy more drugs at a reduced cost.
So, the reasoning takes some getting used to, but it makes sense in most cases. Until the chapter called "Why I'm Not an Environmentalist". This chapter points out many legitimate flaws in what the author calls "the religion of environmentalism". A lack of willingness to question fundamental assumptions (something, incidentally, that free-market economics also suffers from). Ignoring markets when trying to solve environmental problems. Lack of willingness to compromise. A pervasive holier-than-thou attitude. These are all problems, and I wish we could solve them. But the arguments made by the author, while criticizing his opponents for their lack of economic logic and rationality, seem overly simplistic to me. Now, I'm not an economist or an environmental scientist, and if anyone can find any reasons why my critiques of his arguments are wrong, I'd appreciate hearing them.
First, Landsburg argues that recycling is bad if your aim is to preserve forests. This is because paper companies have a vested interest in keeping forests around, so if demand for paper is high, logging companies have an incentive to plant more trees and keep forests around. I don't disagree with this argument in its premise--logging companies certainly don't want to see all of our forests disappear, and it would be ridiculous to suggest otherwise. However, this argument as a whole has three large flaws. One is that is fails to distinguish between the quantity and the quality of forests--a crucial distinction to most people who are interested in forest preservation. The second is that it ignores the problem of very high demand. And the final problem is the issue of waste and finite resource consumption.
The way I see this situation is somewhat different. Paper companies currently own some amount of land which they use to plant trees which are then cut down and processed into paper. Suppose that everyone starts recycling and demand for paper falls by 50%. Many of those companies will likely choose not to re-plant trees on the land they currently devote to growing trees and will instead use that land for a more profitable activity. Thus, we have a net loss in land area covered in trees, and less carbon is offset by the presence of those trees. This is exactly what Landsburg is talking about. He didn't cite any studies showing that this is in fact what would happen, or that this has happened in the past, but let's assume that his logic is correct.
But consider the reverse. Suppose everyone who currently recycles, persuaded by Mr. Landsburg's argument, stops doing so. Demand for paper rises by 50%, and the land that paper companies currently own is inadequate to meet demand. After utilizing all of their available resources--converting some land to tree-growing, maximizing the number of trees per square mile, etc--there still isn't enough land to meet demand. What happens now? Paper companies try to obtain more land. Due to the fact that it would be more efficient for them to get land that already has trees on it, they will likely try to acquire forested land from the government or from a private source. The end result is the same--land that was once a growing forest providing a habitat for animals becomes a place where trees are grown until they are big enough to be profitable and are then cut down.
In short, an incredibly high demand for paper would lead to forest ecosystems--places with diversity of life that provide habitat--being turned into land with trees on it. I've seen these kind of forests, and they aren't pretty. The trees and skinny, have almost no branches on them, there's almost no undergrowth, and I doubt they would provide much shelter for animals. Both types of land are technically forests, but they're not the same thing.
In addition, this argument fails to look at the consequences of paper production. Logging and transport of paper takes fossil fuels--a finite resource, not a renewable one, as trees are. Recycling also takes fossil fuels and chemicals, and I'm not sure as to the environmental effects of that. It's something I'd be interested in finding out more about, but unless someone can prove otherwise, I'm guessing that the environmental costs of recycling are no more damaging than the costs of logging new trees in terms of fossil fuels and harmful chemicals. Also, using new paper constantly and not recycling it creates waste. Waste has to be stored somewhere--in landfills, which use space, which is also a finite resource (we only have one earth for the time being). I think moderation is important here, and I'm not advocating using no paper. Paper is a function of our society, and assuming Landsburg's argument is correct, a large dip in paper demand would result in less forests. But excess demand and consumption also has consequences that I think we need to keep in mind.
My economics books (textbooks too) are filled with comments about pollution. Most of these state that pollution is a cost of doing business-necessary, unavoidable, and able to be quantified. For example, Landsburg models it in cost-benefit analysis. If I live in a city that has a factory which pollutes, the correct way to determine if the factory should be allowed to continue polluting is to determine how much I, and other individuals in my city, would be willing to pay for cleaner air. If the total amount is higher than the money made by the factory from polluting, then we pay the factory to stop and it stops. If not, it goes on polluting. And that, in an economist's world, is not seen as a problem. My textbooks describe pollution as an "externality"--something that has a cost to people not involved in the profits of whatever is creating it, and something therefore, that the market does not correct for. This seems like a more optimistic idea, because it allows for the argument that it's fair to force regulation. But essentially, it's the same problem--if the government forces a factory to stop polluting, that's going to make their product cost more, which will drive prices up for the same consumers living in the city where the pollution was a problem in the first place. So the same question--how much is it worth to you?--it still the deciding factor.
I don't disagree with this logic. Again, it's the end conclusion that I have an issue with. It's fine to argue that pollution and environmental costs are just that--costs, which can be measured in monetary value to the individuals they concern. But this fails to account for the fact that environmental damage effects us all--it's not just the inhabitants in that city who breathe bad air who suffer. Everyone has a share in the effects of global warming, regardless of how close you live to the factories that are polluting. Cost-benefit analysis is fine, but what about the end of the world? Let's assume that eventually, global warming, if left unchecked could lead to the end of life on earth as we know it--mass extinctions, the end of the human race, or whatever. If you analyze that in terms of cost-benefit, I'm willing to bet everyone on earth (nihilists and suicidal people exempted) would pay the highest cost possible in order to avoid that outcome, because if we didn't, the money that we saved would be useless. So given that, I think it makes sense to make some sacrifices to stop things that effect us all, even if they lead to us having less in the end. Having less is better than having nothing.
I think, in the end, both sides need to concede a bit. Environmentalists and economists shouldn't be two separate sides--in an ideal world, they could work together. My hope for the future is just that. I wish environmentalists were more willing to consider market-based solutions to problems, to be more innovative instead of regulating everything, and to give people and companies more incentives to decrease their impact. I wish economists were willing to acknowledge that some things do effect everybody and can't practically be analyzed only in cost-benefit terms, and that morality does have a place in discussions like this when what's at stake is so large. And I wish everybody were willing to slow down production a bit and take some time to just smell the flowers.
11.22.2007
Liberalism
I love liberalism. I know that's a vague term, but to me, being a liberal means acknowledging a few social and economic truths. Specifically, socially:
a) If you sleep with someone, you're both adults, everyone consented and no one died, it's none of the government's business.
b) Institutionalized rascism is not a method of national security.
c) Evolution is a theory, rather like gravity. Intelligent design, on the other hand, is just bullshit, and bullshit requires proof before we start teaching it in schools.
d) If we're going to ignore the Geneva Conventions, we could at least have enough balls to not outsource our "enhanced interrogation techniques". On second thought, we could have enough balls to call it what it is--torture.
e) Probably one way we could have fewer illegal immigrants is if we stop staging CIA coups in Latin American countries, overthrowing people we don't like, replacing them with military dictatorships and then send in economic hitmen to convince the countries to borrow large sums of money that go to development which is contracted to US companies and keeps the countries in a perpetual cycle of debt and poverty. You know, because if everyone in their home countries wasn't starving to death, they might not want to leave.
f) Although arguing that the 3rd Amendment protects the right to have an abortion is a bit sketchy, trust me, you don't want to see a country where women are forced to have babies they don't want to.
And economically:
a) Free market capitalism, while wonderful for increasing GDP, isn't always the best way to protect the environment.
b) Trickle down economics doesn't always work either.
c) The cost of taking campaign contributions from large corporations is a loss of political integrity. Campaign finance reform is in order.
d) Sometimes, equity is better than efficiency.
e) Also, I've read the Constitution very carefully, and I can promise you that there is nothing in there saying you have the right to unlimited consumption of fossil fuels. Just FYI.
My breed of liberalism would best be defined as progressive--I believe that your personal life is your business, no matter how odd society finds your choices, as long as they're not harming anyone else. I believe that equity trumps efficiency--I'd rather have a bit smaller economic pie if everyone gets a piece. I believe that the environment is important enough to put some restrictions on our sacred doctrine of capitalism, because as Al Gore so eloquently pointed out, you can't make money if you don't have a planet to live on. And I believe that if I'm pregnant and you try to tell me what to do, I will kick your ass. Actually, I know that for a fact.
That said, I also have a few bones to pick. There are some arguments liberals need to stop making, and there are some issues of hypocracy and public behavior that we would do well to correct. Specifically:
a) Ok, please stop with the "Against Abortion? Then Don't Have One" bumper stickers. People who are against abortion view it as murder, not as a choice. You're telling them that if they're against killing people, they shouldn't do it themselves, but should continue to let you. No. That argument is not going to convince anyone, and it's going to piss people off.
b) Al Gore. Stop flying around the world in a private jet to promote An Inconvinent Truth. Airplanes are the worst contributers to global warming of any form of transportation.
c) Castro and Chavez are not governments we should be idealizing or promoting. Chavez recently abolished all term limitations on the Venezualen presidency and refused to renew the broadcasting license for a station that broadcast anti-Chavez images during the attempted coup in 2002. And when Castro took over, there were teenagers in Cuba injecting themselves with HIV to protest the government. Homosexuals were executed. I'd rather have a corrupt democracy than a repressive socialist state.
d) Michael Moore, please just stop. No one likes you anymore. Also, you own shares in Halliburton, were raised in a rich suburb of Flint, and have hired to date one black person to work on any of your films. Way to be progressive!
e) Biofuels are not a godsend. Ethanol takes so much petroleum to produce and transport that it's worse for the environment than gasoline, and it's also made out of corn. Which is food. In a world where 50% of people are malnourished. Not a good idea, people.
f) The feminist and gay rights movements need to recognize trans people and truly work on issues for all women and gays, rather than trying to get rich white women/gays the same rights that rich white straight men have.
That's all for now. I believe in liberalism, in spite of all its problems. I believe it can work. But it would help a lot if people would check some facts and calm down once in a while.
a) If you sleep with someone, you're both adults, everyone consented and no one died, it's none of the government's business.
b) Institutionalized rascism is not a method of national security.
c) Evolution is a theory, rather like gravity. Intelligent design, on the other hand, is just bullshit, and bullshit requires proof before we start teaching it in schools.
d) If we're going to ignore the Geneva Conventions, we could at least have enough balls to not outsource our "enhanced interrogation techniques". On second thought, we could have enough balls to call it what it is--torture.
e) Probably one way we could have fewer illegal immigrants is if we stop staging CIA coups in Latin American countries, overthrowing people we don't like, replacing them with military dictatorships and then send in economic hitmen to convince the countries to borrow large sums of money that go to development which is contracted to US companies and keeps the countries in a perpetual cycle of debt and poverty. You know, because if everyone in their home countries wasn't starving to death, they might not want to leave.
f) Although arguing that the 3rd Amendment protects the right to have an abortion is a bit sketchy, trust me, you don't want to see a country where women are forced to have babies they don't want to.
And economically:
a) Free market capitalism, while wonderful for increasing GDP, isn't always the best way to protect the environment.
b) Trickle down economics doesn't always work either.
c) The cost of taking campaign contributions from large corporations is a loss of political integrity. Campaign finance reform is in order.
d) Sometimes, equity is better than efficiency.
e) Also, I've read the Constitution very carefully, and I can promise you that there is nothing in there saying you have the right to unlimited consumption of fossil fuels. Just FYI.
My breed of liberalism would best be defined as progressive--I believe that your personal life is your business, no matter how odd society finds your choices, as long as they're not harming anyone else. I believe that equity trumps efficiency--I'd rather have a bit smaller economic pie if everyone gets a piece. I believe that the environment is important enough to put some restrictions on our sacred doctrine of capitalism, because as Al Gore so eloquently pointed out, you can't make money if you don't have a planet to live on. And I believe that if I'm pregnant and you try to tell me what to do, I will kick your ass. Actually, I know that for a fact.
That said, I also have a few bones to pick. There are some arguments liberals need to stop making, and there are some issues of hypocracy and public behavior that we would do well to correct. Specifically:
a) Ok, please stop with the "Against Abortion? Then Don't Have One" bumper stickers. People who are against abortion view it as murder, not as a choice. You're telling them that if they're against killing people, they shouldn't do it themselves, but should continue to let you. No. That argument is not going to convince anyone, and it's going to piss people off.
b) Al Gore. Stop flying around the world in a private jet to promote An Inconvinent Truth. Airplanes are the worst contributers to global warming of any form of transportation.
c) Castro and Chavez are not governments we should be idealizing or promoting. Chavez recently abolished all term limitations on the Venezualen presidency and refused to renew the broadcasting license for a station that broadcast anti-Chavez images during the attempted coup in 2002. And when Castro took over, there were teenagers in Cuba injecting themselves with HIV to protest the government. Homosexuals were executed. I'd rather have a corrupt democracy than a repressive socialist state.
d) Michael Moore, please just stop. No one likes you anymore. Also, you own shares in Halliburton, were raised in a rich suburb of Flint, and have hired to date one black person to work on any of your films. Way to be progressive!
e) Biofuels are not a godsend. Ethanol takes so much petroleum to produce and transport that it's worse for the environment than gasoline, and it's also made out of corn. Which is food. In a world where 50% of people are malnourished. Not a good idea, people.
f) The feminist and gay rights movements need to recognize trans people and truly work on issues for all women and gays, rather than trying to get rich white women/gays the same rights that rich white straight men have.
That's all for now. I believe in liberalism, in spite of all its problems. I believe it can work. But it would help a lot if people would check some facts and calm down once in a while.
11.15.2007
How many times...
...can a corporation betray us before we question its right to exist?
That was the heading for a very well-done page in the last issue of Adbusters, and it really got me thinking. If you look at the track record of any major American corporation (and I don't care how socially conscious it claims to be) you're going to find some pretty evil shit buried beneath the smiling pictures of their "diverse" group of employees.
We, the Socially Conscious Youth of America, know large corporations are bad. We know they're owned by Satan. We sit around and discuss this in Starbucks coffee stores wearing shirts we bought at Target with Nike shoes. We believe this to be true, but we rarely act. And that, to me, is the single biggest failure in youth activism today. Too few people are willing to walk the walk.
Let's look at some of these companies. Starbucks, which seems to be regarded as the not-so-evil corporation based on the numbers of young, hip people I see there all the time, definitely has some labor issues. For one, although they claim to support third world producers, only 6% of the coffee they buy is fair-trade certified, and fair trade in itself doesn't guarantee a fair or even a better deal for third world coffee growers. (Fair trade also puts a cap on business growth, doesn't allow growers to roast their own coffee, and defines a fair wage as the minimum wage for the country of origin for the coffee.) Starbucks is noted for providing part-time employees with health insurance and other benefits. Good, right? Sure, except that the cut-off for part time employment is 20 hours a week, so Starbucks gets around this by having a lot of employees who work 19.75 hours a week and are denied benefits. So much more cost effective.
Then there's American Apparel. Yes, their average wage is $12 USD/hour. But they're definitely not a union-friendly company. They were accused of union busting in 2003 and since then have refused to disclose information about worker unions at the company. Three sexual harassment lawsuits have also been filed by former employees against Dov Charney, the CEO. And socially progressive as they brag to be, with their "never retouched models", I don't see them promoting any new or different beauty standards from the rest of the fashion industry.
And of course, where would we be without hating on some oil companies? Exxon-Mobile has three lovely black marks against it (that I'm aware of; I'm sure there are many more). Number one: In the 1980s, the company, along with several other oil and gas companies, gave money to a Christian missionary organization working in Columbia. The deal? The missionaries would convince the indigenous people they were working with to move off their land onto reservations and become "civilized"; in return, Exxon and the other companies had first rights to the petroleum-rich land the people had been living on. Number two: I'm sure we all remember hearing about the disastrous Exxon-Valdez oil spill off the coast of Alaska in 1989--the one that spilled 10.8 million gallons of oil, the one that environmental scientists in the area predicted would take approximately 30 years for the ecosystem to recover from. The official cause? The skipper was drunk and hit a reef, causing the tanker to spill its oil. The real story? Exxon had been faking safety reports and did not have proper safety equipment turned on--equipment that would have allowed the ship to see and avoid the reef. The reason? The system was determined too expensive to operate. And then number 3: Exxon has also been behind some of the organizations that have been turning up "scientific" studies denouncing global warming. They pay scientists to say that it's fake, the scientists do so, and we get more bullshit studies calling the single largest threat this planet has ever faced a fraud.
Pepsi and Coke each have their own issues--both have been accused of contaminating local water supplies in India with DDT, pesticides, and other carcinogens. Coca-Cola admitted to killing and intimidating workers in Columbia to prevent a union from forming, and they've also been accused of human rights violations with workers in Guatemala. And both of them are such large companies--PepsiCo owns Frito-Lay, which makes just about every major brand of chips. Also on the large-companies-who-own-hella-stuff front, you have ConAgra, which owns dozens of smaller food companies and is the largest manufacturer of processed food in the country. They also have a beef processing plant in Greely, Colorado which has been investigated numerous times amidst allegations of safety violations, workers rights violations and employing illegal immigrants. And they're one of the big guys that's contributing to industrialized agribusiness that's making the smaller farmers go out of work.
I would also like to point out that although Nike has been accused of workers rights violations and running sweatshops, a) they have improved dramatically since these charges were first leveled, and b) Adidas and Reebok both have much lower scores in terms of social responsibility and working conditions.
Fortunately, this isn't black and white. You're not either with us or with the capitalists. You can't boycott every business on the evil list, and you probably don't want to. So start small. Maybe cut one or two coffees a week. Get your next pair of pants used. And most importantly, know what you're buying. Be educated. Know your facts. Only when the majority of people are aware of things like this will real change ever occur.
That was the heading for a very well-done page in the last issue of Adbusters, and it really got me thinking. If you look at the track record of any major American corporation (and I don't care how socially conscious it claims to be) you're going to find some pretty evil shit buried beneath the smiling pictures of their "diverse" group of employees.
We, the Socially Conscious Youth of America, know large corporations are bad. We know they're owned by Satan. We sit around and discuss this in Starbucks coffee stores wearing shirts we bought at Target with Nike shoes. We believe this to be true, but we rarely act. And that, to me, is the single biggest failure in youth activism today. Too few people are willing to walk the walk.
Let's look at some of these companies. Starbucks, which seems to be regarded as the not-so-evil corporation based on the numbers of young, hip people I see there all the time, definitely has some labor issues. For one, although they claim to support third world producers, only 6% of the coffee they buy is fair-trade certified, and fair trade in itself doesn't guarantee a fair or even a better deal for third world coffee growers. (Fair trade also puts a cap on business growth, doesn't allow growers to roast their own coffee, and defines a fair wage as the minimum wage for the country of origin for the coffee.) Starbucks is noted for providing part-time employees with health insurance and other benefits. Good, right? Sure, except that the cut-off for part time employment is 20 hours a week, so Starbucks gets around this by having a lot of employees who work 19.75 hours a week and are denied benefits. So much more cost effective.
Then there's American Apparel. Yes, their average wage is $12 USD/hour. But they're definitely not a union-friendly company. They were accused of union busting in 2003 and since then have refused to disclose information about worker unions at the company. Three sexual harassment lawsuits have also been filed by former employees against Dov Charney, the CEO. And socially progressive as they brag to be, with their "never retouched models", I don't see them promoting any new or different beauty standards from the rest of the fashion industry.
And of course, where would we be without hating on some oil companies? Exxon-Mobile has three lovely black marks against it (that I'm aware of; I'm sure there are many more). Number one: In the 1980s, the company, along with several other oil and gas companies, gave money to a Christian missionary organization working in Columbia. The deal? The missionaries would convince the indigenous people they were working with to move off their land onto reservations and become "civilized"; in return, Exxon and the other companies had first rights to the petroleum-rich land the people had been living on. Number two: I'm sure we all remember hearing about the disastrous Exxon-Valdez oil spill off the coast of Alaska in 1989--the one that spilled 10.8 million gallons of oil, the one that environmental scientists in the area predicted would take approximately 30 years for the ecosystem to recover from. The official cause? The skipper was drunk and hit a reef, causing the tanker to spill its oil. The real story? Exxon had been faking safety reports and did not have proper safety equipment turned on--equipment that would have allowed the ship to see and avoid the reef. The reason? The system was determined too expensive to operate. And then number 3: Exxon has also been behind some of the organizations that have been turning up "scientific" studies denouncing global warming. They pay scientists to say that it's fake, the scientists do so, and we get more bullshit studies calling the single largest threat this planet has ever faced a fraud.
Pepsi and Coke each have their own issues--both have been accused of contaminating local water supplies in India with DDT, pesticides, and other carcinogens. Coca-Cola admitted to killing and intimidating workers in Columbia to prevent a union from forming, and they've also been accused of human rights violations with workers in Guatemala. And both of them are such large companies--PepsiCo owns Frito-Lay, which makes just about every major brand of chips. Also on the large-companies-who-own-hella-stuff front, you have ConAgra, which owns dozens of smaller food companies and is the largest manufacturer of processed food in the country. They also have a beef processing plant in Greely, Colorado which has been investigated numerous times amidst allegations of safety violations, workers rights violations and employing illegal immigrants. And they're one of the big guys that's contributing to industrialized agribusiness that's making the smaller farmers go out of work.
I would also like to point out that although Nike has been accused of workers rights violations and running sweatshops, a) they have improved dramatically since these charges were first leveled, and b) Adidas and Reebok both have much lower scores in terms of social responsibility and working conditions.
Fortunately, this isn't black and white. You're not either with us or with the capitalists. You can't boycott every business on the evil list, and you probably don't want to. So start small. Maybe cut one or two coffees a week. Get your next pair of pants used. And most importantly, know what you're buying. Be educated. Know your facts. Only when the majority of people are aware of things like this will real change ever occur.
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