i.want.world

Fair Trade - Just Another Scam

Nestlé has just announced that KitKat – Britain's biggest-selling chocolate bar – will carry the Fairtrade logo from next month. But how much do consumers really know about the Fairtrade movement? Is it, as some say, an essential safety net that helps poor farmers earn a better living or, as others say, an example of western feel-good tokenism that holds back modernisation and entrenches agrarian poverty?  

We might think of sub-Saharan subsistence economies when we think of Fairtrade, but the biggest recipient of Fairtrade subsidy is actually Mexico. Mexico is the biggest producer of Fairtrade coffee with about 23% market share. Indeed, as of 2002, 181 of the 300 Fairtrade coffee producers were located in South America and the Caribbean. As Marc Sidwell points out, while Mexico has 51 Fairtrade producers, Burundi has none, Ethiopia four and Rwanda just 10 – meaning that "Fairtrade pays to support relatively wealthy Mexican coffee farmers at the expense of poorer nations".

The article additionally points out:

Another criticism is over institutional inefficiencies. The vast majority of the money from Fairtrade sales remains in the west – with only about 5% of the Fairtrade sale price actually making it back to the farmers. As Philip Oppenheim says, "any intelligent person will ask why I should pay 80p more for my bananas when only 5p will end up with the producer". Fundamental to the failure of wealth transfer are issues such as the fact that while 90% of the world's cocoa is produced in the developing world, only 4% of the chocolate is produced there. Developing countries remain locked in the primary sector commodities market, while the west cashes in on their value-added conversion.

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Today's 'wow' Momment

"Globalisation allowed the US to suck up the savings of the rest of the world and consume more than it produced." George Soros, FT.com January 23 2008.

Seismograph. The line indicates the daily volatility of the Dow Jones index, between 1901 and 2009.

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Andy Warhol would be happy

David Reilly at Bloomberg notes that the pricing of credit default swaps on both the US government debt and Campbell’s is the same...

Here is the link. Hat tip goes to TheBrowser.

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trying to make sense out of it all

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markets in everything: Hurling Shoes

The shoe hurled at President George W. Bush has sent sales soaring at the Turkish maker as orders pour in from Iraq, the U.S. (!, AT) and Iran.    

The brown, thick-soled “Model 271” may soon be renamed “The Bush Shoe” or “Bye-Bye Bush,” Ramazan Baydan, who owns the Istanbul-based producer Baydan Ayakkabicilik San. & Tic., said in a telephone interview today.    

“We’ve been selling these shoes for years but, thanks to Bush, orders are flying in like crazy,” he said. “We’ve even hired an agency to look at television advertising.”

Hat tip: Mahalanobis.   

via Marginal Revolution by Alex Tabarrok on 12/20/08

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Chrysler hires BK law firm

From the WSJ: Chrysler Hires Law Firm Jones Day as Bankruptcy Counsel

Chrysler's move suggests the auto maker is preparing for imminent financial failure should its efforts to persuade Congress to deliver federal rescue funds fall short.

Click on cartoon for larger image in new window. Rerun of a great cartoon from Eric G. Lewis, a freelance cartoonist living in Orange County, CA.

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don't do list: economic meltdown edition

The association community has always been enamored with the Jim Collins idea of creating “stop doing lists,” so here is my brief stop doing list for association community leaders feeling frazzled by a steady diet of negative information about the state of the global economy.

1. STOP reacting to each daily dose of bad news–It’s appropriate to be serious and sober about what’s going on today, but don’t overreact to every wild stock market gyration or new government report. Focus on integrating today’s data into your long-term view.

2. STOP looking for shortsighted ways to retrench–It’s appropriate to conserve resources by eliminating unnecessary expenditures, but investments in building staff and organizational capabilities do not fall into that category. Focus on value creation as your top strategic priority.

3. STOP redoubling your efforts as a defensive strategy–It’s appropriate to concentrate on serving members well when they most need us, but the overused “doing more with less” rallying cry is a tired and unrealistic approach. Focus on your ability to deliver what’s most important.

via Principled Innovation LLC 

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austrian school of economics

Given that all major economies currently have a central bank supporting the private banking system, almost all new money is supplied into the economy by way of bank-created credit (or debt). Austrian economists believe that this bank-created credit growth (which forms the bulk of the money supply) sets off and creates volatile business cycles and maintain that this "wave-like" or "boomerang" effect on economic activity is one of the most damaging effects of monetary inflation.

According to the Austrian Business Cycle Theory, it is the central bank's policy of ineffectually attempting to control the complex multi-faceted ever-evolving market economy that creates volatile credit cycles or business cycles. By the central bank artificially "stimulating" the economy with artificially low interest rates (thereby creating excessive increases in the money supply), the bank itself induces inflation (often focused in asset or commodity markets) and speculative investment, resulting in "false signals" going out to the market place, in turn resulting in clusters of malinvestments, and the artificial lowering of the returns on savings, which eventually causes the malinvestments to be liquidated as they inevitably show their underlying unprofitability and unsustainability...

via - wikipedia

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let’s abolish central banks!

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money as debt

"If the American people ever allow private banks to control the issue
of their money, first by inflation and then by deflation, the banks
and corporations that will grow up around them, will deprive the
people of their property until their children will wake up homeless on
the continent their fathers conquered."

---
Thomas Jefferson in 1802 in a letter to then Secretary of the
Treasury, Albert Gallatin

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