Friday, July 22, 2011

comparative advantage and local economies

Ricardo pointed out that each region has some resource or way of doing things that gives them an economic advantage over other regions. Coffee only grows in certain tropical areas, and many people in non-tropical areas want coffee. It is thus advantageous for people in tropical areas to produce coffee and trade the beans for something they want with the northern people who want their coffee.

While this makes superficial sense, it is not how things work in the global economy. What it assumes is an equal playing field, which is not the case. The coffee producers and sweatshop workers in the third world are in a much worse position than the people in the first world. If they don't produce their coffee or work in the sweatshops to produce our computers and tools, they starve or get shot. We work and live under much better conditions and we don't have to slave away under horrible conditions. If we choose not to work we can get unemployment or welfare. We have many pretty good options as far as work. In addition, the resources that many third world countries have are plundered by multi-national corporations. They effectively do not give any advantage to the third world people who live where those resources are. Those resources effectively belong to the multinationals and the third world people give them those resources at the pain of death and corrupt debt. This has prompted the perverse modification of Ricardo's original inentions by some economists. Now the comparative advantage comes from cheap labor. The third world has plenty of cheap labor and we don't. If we bring this to its logical conclusion, it can be used to justify slavery, which is the cheapest form of labor.

A local basic needs economy would circumvent this perversion of human life. If people come from a position of being able to produce all their basic needs locally within a village or region in a democratic manner, they will probably choose not to work in sweatshops or coffee plantations (unless the sweatshops and coffee plantations pay better and have better working conditions, but then they wouldn't be called sweatshops anymore).

It is important that people are producing their basic needs and not just being given them. Handouts are ultimately disempowering. People need to contribute to their own welfare, their families and their communities welfare and this empowers. The less abstract this contribution, the more empowering. In this sense, though we have our material needs provided for in the first world, we are disempowered in a spiritual and psychological sense as long as we are only providing for these needs with money. A wealthy financier or industrialist may feel a certain sense of power, but he is on one level deeply disempowered because his power comes only from the abstraction of money. A caveat is that if his money was gotten by creative work, there is some psychological sense of satisfaction in that.

Another misrepresenation of economists is that third world people have always "chosen" to go the route of western consumerism. Though this might be the case in numerous occasions now, historically tribal people and land-base people were enslaved, killed, their land taken away, their resources stolen. Of course after this rape and pillage, they might have either forgotten a better past or have to choose between death and starvation and a rosier seeming western lifestyle.

An objection to local economies is sometimes made that people will not have enough good things to eat unless they trade with the rest of the world. I don't think this is true because every region where food can be produced (and this is most regions, unless they are too mountainous or desertified) can produce good food. It seems to me that most of what people crave on a daily basis in the west--coffee, sugar, chocolate, is the result of addiction, an unhealthy lifestyle where some basic needs are not met and these imported goods are a poor substitute that never fully satisfies. It would be different if these goods where indulged in occasionally, as a luxury. No, they are clearly the manifestation of addictions. If they were luxuries, then people in local economies that did not produce them could trade for them as luxuries, but the objection above will lose its force.

Friday, July 15, 2011

Two ways of doing things

There is a natural human tendency to take the easy way out when trying to build or make something. Experienced builders and craftspeople (or rather let's call them installers of factory manufactured goods, since there are very few craftsopeople left in the US) will say that if one wants to do things right, one has to avoid shortcuts.

If one goes to third world countries or poor neighborhoods, it appears that shortcuts and poor craftsmanship (or installmanship) are the rule. One might conclude that poor people in the US and abroad are lazy, and perhaps there is some truth to that. But there is another side to it. Often poor builders and installers do not have anywhere near the resources and tools that wealthier builders and installers have. They have to use more ingenuity with less resources. It may not look as good, but often times it works just as well. The wealthy are showing how empire works: after raping the rest of the world for resources, they are all brought to a local store. With enough rape, almost anything can be done "right". For everything you want to make, there is a product at the store. The product may be toxic, may have been toxic to the workers who made it, may require mountaintop removal, raiforest depletion, war, and confiscation of peasant land. The wealthy user of the product does not concern themselves with all this but with how good and powerful their project will look like, or how comfortable it will make them feel. The more power is used in installing, the better. The more chemicals, the better. Anyone who has ever studied primitive or medieval technology will be impressed with how much more elegance and finesse it exhibits than most modern technology.

But still, most ghetto and third world installations are not very pretty, even if they are clever at times. One of the things that impressed me at the Possibility Alliance is that beauty, not just function, is a priority. Despite having almost no resources from the global economy, most of what is built, installed and crafted there is beautiful, with attention to detail.Beautiul but not ostentatious, or into power for power's sake.