June 04, 2007

• The second article you linked to had only a vague connection with first. Extending high risk and therefore high interest credit to America's working poor seems harmful, maybe it is. It's hard to compare that with micro-lending or selling prepay cell phones to people living on a couple of dollars a day. America's poor are not equivalent to the world's poor. It would be even harder to come to the conclusion that what's happening in the first link is bad based on the second link. I'm guessing it's great that some of the worlds poorest are being welcomed into the fold of consumerism. Even if my guess is wrong what's beyond the pale is ignoring them, which is the standard operating procedure for people in the west.
• "The world's four billion poor are estimated to have $5 trillion of annual purchasing power parity" Wow, that's $1,250 each! Who knew that the global poor were rolling in such giant piles of dough?
• Ne$tlé! Ne$tlé! Ne$tlé!
• I am calling UNICEF and demanding a full refund.
• That's the current mantra en vogue with the 'new economists'. Consume stalls, middle clases lose their economic power? There's billions that can't afford the big-priced items, that are hungry for all those shiny things. The founder of the first TV monopoly here in Mexico boasted it until his death, his market was 'the dowtrodden'; his programming catered to the lowest common denominator with no pretensions of anything but giving them 'what they wanted'. The Salinas example in the article is telling of the dangers: everything from appliances to banking services are being targeted to the 'little people' that doesn't dare set foot on a traditional bank or big store, in hope of catching up their hard-earned pesos... and dollars, coming from relatives working up north. But this is wide open for money laundering, growth of informal/undergorund economy (people selling smuggled/knockoff goods on the street, without paying taxes) and does nothing but foster the vicious circle of immigration->dependency from outside currency->whitering of domestic industry->immigration.
• Um... they've been doing this for years now in the US It's called a "Dollar Store".... duh (avoid the toothpaste)
• It's great that the poor are getting access to more, and more affordable, consumer products. Just don't believe the corporate types and b-school theorizers who claim it's about helping the poor. "I just got a cell phone! Surely this means the village will soon have running water and adequate health care facilities, and at the factory we'll be able to organize without getting death threats!"
• It's impossible to generalize about whether this is a good thing or not. It has to be decided on a case by case basis. If a telecom company comes up with a cheap cellphone it can sell at a profit to poor people, that would be a good thing because it raises the poor's standard of living. If a scummy bank decides to basically cheat people with larcenous mortgages well....
• I would be curious to know more about the potential economic consequences of such a focus by multi-nationals. Will it help grow the economic activity in these regions, or is it more likely to simply syphon out funds that would otherwise be spent locally and remain in the community. Reminds me of an article I read not too long ago about an African country and cashews. The cashews used to be harvested and processed in country. The industry was inefficient and nowhere near it's potential, but many local people got paid some money from cashews. Then the local trade laws were changed. The cashew harvest is now controlled by international companies, reaching many new markets. All the nuts are shipped directly out of the country for processing. Few local people see any money from cashews.
• From the first link: "We have to get away from thinking of the poor as a problem," said C.K. Prahalad, author of the book "The Fortune at the Bottom of the Pyramid." I love that sentence.
• Nal's point is important - it's about where the profits go. Often, that means processing in country. I buy "fair trade" coffee, but I doubt that it's actually that fair trade because it was probably roasted out of country. Raw coffee has an incrediably low value, roasted is what makes the money. Processing and manufacturing makes money - it's why developed nations want to keep it in their countries. The yogurt example in the article mentioned that Danone had a partnership with a local dairy - before I read that, I had wondered if they were doing some crazy import thing, but I guess that would be silly versus local production. Danone might be skimming a fair bit off the top (pun intended, and not very good), but at least it's not siphoning all of the profits out of country. Development needs to concentrate on exactly that - the development of economies, not markets. Getting new markets doesn't do a country any good if those markets are being supplied heavily from other countries. They want their own market to be supplied from their own country. Or maybe they can get together as a region. But we still don't understand development economics. International trade seems to be a general benefit to developed economies, but when Europe was in its "developing" period (c1550-1850), the economies which grew the fastest were those which, like Britain, were protectionist and had colonies. Similarly, while open and integrated markets in Britain were correlated with growth in the nineteenth century, the integration of India's markets at the same time was correlated with the country getting poorer.
• Trade is always good, so long as it's free and honest. I don't see how selling people stuff could be bad. Both parties must believe the deal makes them better off, or it doesn't take place. Isn't that why capitalism is the bestest of systems?
• Bzuh!
• Merrell Sleep?
• Too much hard think too early.
• THere's an old lady at my door trying to sell me yogurt with a "h" and a packet of low-water soap. Does that mean I'm poor?
• Will it help grow the economic activity in these regions, or is it more likely to simply syphon out funds that would otherwise be spent locally and remain in the community. When trade is working correctly, it isn't an either/or situation. Both parties win. In the case of cellphones, for instance, there's a "fund outflow" to the telecom manufacturer but at the same time a farmer buying a phone can now quickly find out the best prices at which to sell his crop. The cumulative benefit to the farmer in time, energy and profit probably exceeds the one-time profit of the cellphone maker.
• Does that mean I'm poor? It depends. Can you afford to get both, or do you have to choose between the yogHurt or the soap?
• I wash my clothes in the yogHurt.
• I only wash funky hoodies in yogurth.
• Should I consider SuperFrankenstein to be more of a superhero, or more of a monster?
• I suppose I could use the soap to wash the yog[H]urt "pot."
• It's Yhogurt. Pronounced Yuh-ho-gert
• ...or Yuh-ho-guh-hert, the second "h" is invisible.
• Trade is always good, so long as it's free and honest. I don't see how selling people stuff could be bad. Both parties must believe the deal makes them better off, or it doesn't take place. Isn't that why capitalism is the bestest of systems? posted by darling at 10:04AM UTC on June 05, 2007 Except that there is all sorts of trade that happens when both parties DON'T feel that the deal makes them better off. If you have to sell your crops at a loss because otherwise you'll have no money to pay your rent or taxes, then you are screwed. When the coffee buyers come around, they pay a tiny fraction of what the coffee is worth roasted, and the farmers accept it, because all of the coffee buyers only offer the same price. That is true is many other areas of trade - that's why there is a fair trade movement (to fight against this kind of cartel-style trade around the world). If capitalism were always the best thing for everyone, there would be no sweatshops in the world. But people need to live, and in most places that means getting money, and the more they need the money, the less negotiating power they have. Also, what is best for a person or one community isn't necessarily what's best for a country. Some people may be employed by these schemes, but if the development of the rest of the countries economy is stymied by basically being run from overseas, that is a bad thing. If you were being sarcastic, sorry. I have no sarcasm detection software on this laptop. When trade is working correctly, it isn't an either/or situation. Both parties win. In the case of cellphones, for instance, there's a "fund outflow" to the telecom manufacturer but at the same time a farmer buying a phone can now quickly find out the best prices at which to sell his crop. The cumulative benefit to the farmer in time, energy and profit probably exceeds the one-time profit of the cellphone maker. But trade "working correctly" is a huge assumption - lots of times the trade really isn't beneficial to one party. In India in the 1870s, for instance, international trade of grain exascerbated their famine and contributed to the deaths of millions. And much of the trade around the world is coercive in one way or another - people and countries desparate for money have much less power to negotiate. If a country has to pay off a massive national debt, they can't afford to keep out an oil drilling firm, even if that oil drilling firm is treating workers badly. And we've all seen examples in the last century when that coercion wasn't just economic (which is the most common), but actually violent - the United States has supported coups and and attempted coups against countries which chose (out of their own national self-interest) to try to control their own oil trade. I do support trade for the developing world - that is the only way their economies can grow and develop. But I think it has to be responsible trade, and that the countries should be given more soveriegnty over how they handle their own economies for their own good, not the benefit of western corporations. That means getting rid of the WTO and the World Bank, or at least massively overhauling them. They are ideologically dogmatic, and usually wrong about the healthiest ways to develop. Free trade may not be the best thing for a developing economy, not when it is trying to get its fledgeling industries going. WE (ie the West) didn't have free trade when our industries were fledgeling - why do we insist that they do? Of course, we in the West also benefitted through the whole of the 18th and 19th centuries from cheap goods produced through slave labour, then indentured labour, raping the earths resources, coercive trade -- maybe we should let the third world conquer us and treat us like we did in the 19th and early 20th century. That would help them develop. (sorry, I can't spell today)
• Free trade may not be the best thing for a developing economy, not when it is trying to get its fledgeling industries going. Some development economists would argue that freer trade is exactly what's needed. Third world farmers are not getting access to first world markets because Western countries slap outrageous tariffs on agricultural imports. We've basically frozen the Third World out. Instead we turn around and give them pitiful handouts (tied to their buying our products).
• I don't really disagree, jb -I'm not one of those Panglossian people who think unfettered capitalism automatically delivers Utopia (hence the flippant tone). It's the bestest in the sense of leastest worstest, not in the sense of perfect. Sweatshops are terrible but people work in them because the alternative is even worse. We could argue about how free a choice that is, of course. But the general principle that trade is always good still holds, and I can't see that selling people phones or yoghurt is problematic. Didn't some abolitionists argue that slavery was economically harmful, incidentally, and that the sugar crop would be more profitable worked by free labour?