Category Archives: Economics

The Story of Stuff


Here’s something that got me thinking:

The Story of Stuff is a 20-minute, fast-paced, fact-filled look at the underside of our production and consumption patterns, with a special focus on the United States. All the stuff in our lives, beginning from the extraction of the resources to make it, through its production, sale, use and disposal, affects communities at home and abroad, yet most of this is hidden from view. The Story of Stuff exposes the connections between a huge number of environmental and social issues and calls for all of us to create a more sustainable and just world. It’ll teach you something. It’ll make you laugh, and it just may change the way you look at all the stuff in your life forever.

Naturally, the topic is far from new to GlobaLab. I have been looking at the political economy of globalisation for months now. I agree with many of this movie’s positions, and love its simple and entertaining tone. Well done to Annie Leonard and to all those involved for translating into an easily-graspable short film some of the complexities of the global economy, particularly the commodity chains that form the backbone of world trade.

Yet, I can’t help pointing out: it’s not that simple. Describing the problem as one of ever-collapsing natural resources and abused Third World workers fighting the evil and conspiratorial plans of multinational corporations with the help of selfless international NGOs might look good on film, but is it an actual reflection of the real world?

I am not a great admirer of corporations, or a blind believer in the transparency of their CSR policies, but branding them all as Earth-destructors does not do justice to the good many of them do (in terms of job-creation, economic growth, research into innovation – including into clean energy), nor will it help change the way they behave.

And similarly, the omnipresent sanctification of NGOs fails to disclose their deep accountability limits and underlying political interests. According to One World, the NGO sector scores lower than the corporate and intergovernmental sectors when it comes to transparency, so it is legitimate to question many of their claims, especially their Doomsday positions on the environment and development.

But on one point I fully agree: consumerism lies at the centre of this system, so if we want to change it we have to start thinking of creative ways to change people’s attitude towards stuff…

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The Economist: missing the point, once again…

Shooting Pencils At Target @ JupiterImagesThe Economist reviews this week Forces for Good, a new book about exceptional NGOs, which according to the weekly are too few and rare to be worthy of the illustrious paper’s attention. The authors, Leslie Crutchfield and Heather McLeod Grant, surveyed thousands of (US) nonprofits, and finally concentrated their attention on a sample of 12, which they believe have achieved the highest levels of impact.

These included America’s Second Harvest, Habitat for Humanity and – much to the Economist’s delight – the notoriously right-wing Heritage Foundation, a proof that this was a “serious piece of research, not the usual sentimental tosh that gets written about left-leaning NGOs” [sic!].

The Economist once again shows its contempt towards the NGO sector and its lack of understanding of its internal diversity. Kicking off with a series of scathing (and unreferenced) remarks about social enterprises, which seem to reduce the debate to a pathetic comparison between the successes of Google and those of the Grameen Bank (apples and oranges, anyone?), it then sings the praises of the 12 selected nonprofits for their excellent achievements (data, anyone?). The fact that social enterprises and nonprofits might not actually be one and the same thing, or that being based (as the 12 selected organisations are) in the US as opposed to Bangladesh might offer considerable advantages to – for example – making the most of market forces does not seem to be a relevant piece of information for the illustrious weekly.

The Economist is not alone in displaying a lack of understanding towards the complexities of the third sector, and of social enterprises in particular. Roger L. Martin & Sally Osberg – echoing Muhammad Yunus – have already made a plea on the pages of the Stanford Social Innovation Review for strengthening the definition of social entrepreneurship [PDF], but definitions are not enough when we are facing the challenges of applying them to different cultural contexts. We might reach an agreement on what a social enterprise might be in the US (therefore what parameters we can adopt to evaluate its success), but this does not mean we can apply this model to the whole world.

Aside from these important theoretical considerations, “where is the social-entrepreneurial equivalent of a for-profit start-up like Google or Microsoft […]? where is the evidence of massive social change?” – asks an irritated Economist.

Kick Start Kenya - oilseed pressThe answer is Kick-Start, a Kenya-based organisation that develops and promotes technologies that can be used by dynamic entrepreneurs to establish and run profitable small scale enterprises. As reviewed by the MIT’s Innovations journal, Kick-Start has started 50,000 new businesses, generating $52 million a year in new profits and wages, and is directly responsible for a 0.6% increase of Kenya’s GDP. See a good video by the Schwab Foundation on Kick-Start’s successful water pump here.

Now, can someone at the Economist more interested in facts than in rhetorical preaching let me know if Google can be said to have had a comparatively similar impact on the US economy and on its social needs?

My heart’s with Ethan

 Chris Jordan, Cell Phones, 2007 (courtesy: http://www.chrisjordan.com/)

Ethan Zuckerman remains my No. 1 favourite blogger of all times, and given how much I struggle to update GlobaLab at least 2-3 times a week, while trying to work and retain a decent social life, I am in awe at his amazing prolificacy.

A quick browse at his last few entries would be enough to feed an average person’s brain for 6 months. Over the last few days, he’s been busy reporting from the PopTech conference, which he describes as “the annual three-day gathering of scientists, inventors, geeks, philosophers and thinkers in coastal Maine“. The event is a catwalk for amazing projects and ideas that are truly transforming the world. If you haven’t followed the event, you can read Ethan’s posts on some of the most interesting presentations, including (but there are more):

It took me good part of the day to read them all, and there are many more celebrity bloggers who reported from the event, including BoingBoing, Next Billion, and a few (but not many) non-English speaking bloggers.

If this isn’t enough for you, check out Ethan’s earlier post about a new initiative to fight counterfeit pharmaceuticals in Ghana (hopefully soon the whole of Africa), mPedigree, which will use mobile phones to track drugs from their original producers all the way to the pharmacy shelves, allowing each buyer in the chain to ensure that they’re dealing with a legitimate product. Or check out the entry in which he takes a good shot at unravelling the complex situation in Somalia, in response to the Onion’s eye-opening video Situation in Nigeria Seems Pretty Complex, a must see for all Africanists:

In The Know: Situation In Nigeria Seems Pretty Complex

What can I say? Ethan, you are my personal hero!!!

Enterprising answers to development

Tomato vendor, African market

A few good sources exploring the themes of social entrepreneurship and microcredit.

Beyond Good Intentions reproduces an article from the International Trade Forum on innovative approaches to reduce poverty through trade, which are bringing business, NGOs, government and aid agencies together. Examples include Bespoke Experience, a social enterprise creating high-end tourism lodges in Mozambique, and using its profits to enable communities to work their way out of poverty.

NOW and PBS review the debate on microcredit, and whether it’s really pro-poor or simply exploiting the most vulnerable, with a focus on Compartamos, the Mexican non-profit turned for-profit microfinance institution at the centre of a fierce debate. It contains an excellent interview on the subject with Muhammad Yunus, the world-renowned founder of the Grameen Bank and father of microcredit, who also wrote another good piece on Social Business Entrepreneurs here.

Environment and development

Deep, deep green - C: Private Eye cartoon

Ok, I am late. I was meant to post this yesterday to tow the line with the rules of Blog Action Day, but didn’t have time. But really, in California it’s still the 15th. And the blogosphere is allowed to be chaotic…

Well, I am certainly not an environmental expert, but you don’t have to be a genius to understand that we are at a historical turning point on environmental thinking. Most of the environment-related blogs and sites I read – such as Grains of Sand, the outstanding blog of Caspar Henderson, award-winning writer and journalist on environmental affairs, who also writes on the Open Democracy site – agree that addressing environmental degradation and climate change should be the top priority for all politicians. Celebrating Al Gore’s Nobel Peace Prize, Alex Steffen writes on WorldChanging:

“There is no longer any reasonable debate about whether or not we need to move with all possible speed towards a different way of living on this planet. To argue the contrary is now to prove oneself morally bankrupt”.

Point taken, you won’t hear a whisper from this blog, sir! But while there is (not) much talk of historical responsibilities, EcoEquity and of the right of developing nations to achieve our levels of economic welfare and prosperity, in practice most realist observers would admit that such rights will be trampled in the name of national economic self-interest.

With Western politicians more interested in wooing political constituencies, how can we expect them to make fair choices about who should bear the costs of carbon emission reduction? Are we honestly so deluded to think that the US and EU will consider slashing their economic growth perspectives, harm their own national companies, cause unemployment and possibly even political unrest, in order to help China, India or Brazil become wealthy, highly-industrialised nations? If we are, then perhaps we should simply ask Father Christmas to bring us a new atmosphere on 25 December.

The truth is, as a number of critical political ecologists concerned about international development put it, that the climate change debate could prove to be the hardest hurdle to jump for nations trying to develop. As Tim Forsythe and Zoe Young put it on Mute Magazine:

“There seems to be consensus among global elites about where to start (be afraid, be very afraid … but always trust the government), how to address the challenge (change development patterns in the South to ‘offset’ carbon emissions produced by business as usual in the North), and who is responsible (mainly you and me). Real doubts and arguments are suppressed while market-friendly ‘solutions’ are served up on a nice, glossy plate”.

For example, northern corporations – supported by government policies – are increasingly buying out large quantities of land to convert into ‘carbon sinks‘, often in areas where land tenure and land use rights are in dispute, so they don’t have to reduce their carbon emissions.

Many environmentalist would already have me gunned down for what I’ve written so far, but let me reassure them: I really do love trees! I’ve planted about 20 so far myself! But I just can’t see how we can expect our governments to solve this situation while lifting millions of people out of poverty.

So, what is to be done? Are we – generally concerned individuals, who are passionate about global justice, yet also care about passing on to our children a world where the air is breathable and the seas still populated by fish schools – just condemned to take sides? If we do not agree with this state of play, are we to be considered environmental foes?

I refuse to bow to this logic. The answers to the problems of climate change, environmental degradation and sustainable development are far more complex and intertwined than what we’re being told so far. On the one hand, we need to invest serious money into researching and identifying appropriate technologies to the economic development needs, energy consumption requirements and environmental challenges of developing countries. This would show developing nations that we are not just paying lip-service to the press when we say we want to help them fight poverty.

On the other hand, we need to engender a behavioural shift in the developed world, recognising that the neo-liberal economic principles that govern our economies and societies are also part of the problem, so it’s unrealistic to expect people not to discount the future when the socio-economic structures that surround them are giving them the opposite message. This is about much more than switching to energy-saving light bulbs. It’s about questioning one of the founding tenets of contemporary capitalism: consumerism.

Addressing climate change requires a deeper re-thinking than most governments, corporations and – dare I say – radical environmentalists are ready to concede. Gore is right: this is the end of the beginning. But – in Kevin Smith’s words – another end of the world is, indeed, possible.

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Update 18/10/07

Blog Action Day was a resounding success, with over 20,000 blogs focusing on the 15th of October on the topic of the environement (or the 16th if you’re always late like I am). Check the statistics on the Blog Action Day site and make sure you enter your email address to be notified about next year’s Blog Action Day.

Incidentally, White African wrote a post listing a number of African bloggers that have taken part in the initiative and have posted about Africa and the environment. I particularly enjoyed AfriGadget’s post entitled: where the world sees junk, Africa recycles.

Stuffed and Starved

Patel's Stuffed and Starved book-cover

You know a book is good when not one, but three different friends write to you unprompted to recommend it. And you know it’s a masterpiece when it spawns a Facebook fanclub group! So today I bought Stuffed and Starved, Raj Patel’s new study on the absurdities and political interests lying behind the current global food system, which leaves millions fighting obesity while millions more struggle to get a meal a day.

Felicity Lawrence on The Guardian sings its praise:

Unless you are a corporate food executive, the food system isn’t working for you. If you are one of the world’s rural poor dependent on agriculture for your livelihood – and roughly half the global population of 6 billion fall into this category – you are likely to be one of the starved. If you are an urban consumer, whether an affluent metropolitan or slum-dwelling industrial labourer, you are likely to be one of the stuffed, suffering from obesity or other diet-related ills.

Raj Patel’s fascinating first book examines this apparent paradox. His thesis is that the simultaneous existence of nearly 1 billion who are malnourished and nearly 1 billion who are overweight is in fact the inevitable corollary of a system in which a handful of corporations have been allowed to capture the value of the food chain. Moreover, government policies through history have been designed to control our food. Their aim has been to provide cheap food for the urban masses and so prevent dissent at home. The instruments of colonial command may have been replaced with newer mechanisms that give a greater role to the private sector, but control our food they still do with disastrous social consequences, despite all the neo-liberal rhetoric of free trade and choice.

Another book joining my awful backlog of to-do reading…

Sachs on China’s lessons for the World Bank

Posters decorating Beijing during the China-Africa summit 2007

Jeffrey Sachs depicts a clear and concise picture of why the World Bank has got it all wrong and why China is getting it all right in Africa on the Guardian’s Comment is Free. He is mostly right – structural adjustment programmes have devastated African economies and if anything caused a surge in that very corruption that the World Bank blames as the cause of its failures.

Yet, one thing Jeffrey doesn’t quite explain is why China is acting like a Samaritan in Africa, dispensing sound advice alongside investment in infrastructures. Still, an excellent read, which I am reproducing below.

China’s lessons for the World Bank
As the World Bank clings to its free-market ideology, China is providing more practical help for developing countries.

The China Daily recently ran a front-page story recounting how Paul Wolfowitz used threats and vulgarities to pressure senior World Bank staff. The newspaper noted that Wolfowitz sounded like a character out of the mafia television show The Sopranos. At the same time, while the Wolfowitz scandal unfolded, China was playing host to the Africa Development Bank (ADB), which held its board meeting in Shanghai. This is a vivid metaphor for today’s world: while the World Bank is caught up in corruption and controversy, China skilfully raises its geopolitical profile in the developing world.China’s rising power is, of course, based heavily on its remarkable economic success. The ADB meeting took place in the Pudong district, Shanghai’s most remarkable development site. From largely unused land a generation ago, Pudong has become a booming centre of skyscrapers, luxury hotels, parks, industry, and vast stretches of apartment buildings. Shanghai’s overall economy is currently growing at around 13% per year, thus doubling in size every five or six years. Everywhere there are startups, innovations, and young entrepreneurs hungry for profits.I had the chance to participate in high-level meetings between Chinese and African officials at the ADB meetings. The advice that the African leaders received from their Chinese counterparts was sound, and much more practical than what they typically get from the World Bank.

Chinese officials stressed the crucial role of public investments, especially in agriculture and infrastructure, to lay the basis for private-sector-led growth. In a hungry and poor rural economy, as China was in the 1970s and as most of Africa is today, a key starting point is to raise farm productivity. Peasant farmers need the benefits of fertiliser, irrigation, and high-yield seeds, all of which were a core part of China’s economic takeoff.

Two other critical investments are also needed: roads and electricity, without which there cannot be a modern economy. Farmers might be able to increase their output, but it won’t be able to reach the cities, and the cities won’t be able to provide the countryside with inputs. The officials stressed how the government has taken pains to ensure that the power grid and transportation network reaches every village in China.

Of course, the African leaders were most appreciative of the next message: China is prepared to help Africa in substantial ways in agriculture, roads, power, health, and education. And the African leaders already know that this is not an empty boast. All over Africa, China is financing and constructing basic infrastructure. During the meeting, the Chinese leaders emphasised their readiness to support agricultural research as well. They described new high-yield rice varieties, which they are prepared to share with their African counterparts.

All of this illustrates what is wrong with the World Bank, even aside from Wolfowitz’s failed leadership. Unlike the Chinese, the bank has too often forgotten the most basic lessons of development, preferring to lecture the poor and force them to privatise basic infrastructure, rather than to help the poor to invest in infrastructure and other crucial sectors.

The bank’s failures began in the early 1980s, when, under the ideological sway of President Ronald Reagan and prime minister Margaret Thatcher, it tried to get Africa and other poor regions to cut back or close down government investments and services. For 25 years, the bank tried to get governments out of agriculture, leaving impoverished peasants to fend for themselves. The result has been a disaster in Africa, with farm productivity stagnant for decades. The bank also pushed for privatisation of national health systems, water utilities, and road and power networks, and grossly underfinanced these critical sectors.

This extreme free-market ideology, also called “structural adjustment”, went against the practical lessons of development successes in China and the rest of Asia. Practical development strategy recognises that public investments – in agriculture, health, education, and infrastructure – are necessary complements to private investments. The World Bank has instead wrongly seen such vital public investments as an enemy of private-sector development.

Whenever the bank’s extreme free-market ideology failed, it has blamed the poor for corruption, mismanagement, or lack of initiative. This was Wolfowitz’s approach, too. Instead of focusing the bank’s attention on helping the poorest countries to improve their infrastructure, he launched a crusade against corruption. Ironically, of course, his stance became untenable when his own misdeeds came to light. The bank can regain its relevance only if it becomes practical once again, by returning its focus to financing public investments in priority sectors, just as the Chinese leadership is prepared to do.

The good news is that African governments are getting the message on how to spur economic growth, and are also getting crucial help from China and other partners that are less wedded to extreme free-market ideology than the World Bank. Many African governments at the Shanghai meeting declared their intention to act boldly, by investing in infrastructure, agricultural modernisation, public health, and education.

The Wolfowitz debacle should be a wake-up call to the World Bank: it must no longer be controlled by ideology. If that happens, the bank can still do justice to the bold vision of a world of shared prosperity that prompted its creation after the second world war.