Fair trade coffee: so much more (or less) than it seems, depending on your point of view

From the latest Journal of Economic Perspectives

Fair trade coffee is a cup half full, according to
Raluca Dragusanu, Daniele Giovannucci, and
Nathan Nunn in “The Economics of Fair Trade”
(Summer 2014, vol. 28, no. 3, pp. 217–36). We are
not persuaded.
The authors barely mention the fees imposed
upon current and prospective fair trade coffee
growers by FLO-CERT, the organization that
verifies and certifies fair trade products. By not
spelling out the fees, the authors may leave readers
with a mistaken impression that the fees are
trifling. Elliott (2012) summarizes nicely the latest
fee structure. For cooperatives of poor producers,
the initial application fee is €525, and fees for the
first inspection vary from €1430 to €3470 depending
upon a cooperative’s size. While certifications
are good for three years, annual fees range from
€1170 to €2770 and include interim surveillance of
growers’ practices. In short, Fairtrade International
requires farmers in low-income countries to pay
thousands of dollars in order to participate in a network
presumably intended to offer poverty relief
to its producer organizations as well as protection
from allegedly ruthless local monopsonist coffee
buyers, called coyotes. The existence of these large
and explicit costs to growers casts some doubt on
the relatively optimistic conclusions of this paper.
As the authors acknowledge, only a small fraction
of coffee grown by fair trade producers is able to be
sold as fair trade coffee, but readers should also
be clear that applying to join the fair trade network
does not guarantee a willing buyer on the other
side of the market. As Fridell (2007) notes, newcomers
to fair trade production are the least likely
to benefit because they cannot compete on an
equal footing with established cooperatives in
an already saturated market. Fridell cites Martinez
(2002), who in turn describes the plight of a certified
producer organization that searched for eight
years to locate a willing buyer.

There’s plenty more here in the whole letter to the JEP.

On Democracy: Against elections

Some readers of this blog with know my preoccupation with the shortcomings of Vox Pop Democracy. Here are some aphorisms from David Van Reybrouck who’s book Against elections does not appear to have been translated out of Dutch at this stage. They offer some interesting ways of understanding the difference between deliberative and representative democracy.

1. Democracy is not meant to make people happy, it is meant to teach people how to be unhappy.
2. Democracy is not meant to be exciting, but to be boring.
3. Democracy is not about solving conflict, it is about learning to live with conflict. (Luc Huyse)
4. A world in which conflicts are constantly being minimized is not a democracy, it is utopia.
5. A world in which conflicts are constantly being maximized is not a democracy, it is hysteria.
6. A world in which conflicts are valued as sources of insight into each other nurtures the culture of democracy.
7. Of all political systems, democracy is the one that celebrates conflict the most.
8. Democracy is not about consensus, it is about conflict.
9. A world in which conflicts are being dealt with before they turn into violence fosters the culture of democracy.
10. A world in which conflicts are neither buried nor blown up is in the process of becoming democratic.
11. Democracy is an early harvest of what otherwise would grow into war.
12. In order to remain democratic, the pursuit of happiness should go hand in hand with the acceptance of unhappiness.
13. Happy the society whose inhabitants are all slightly unhappy, for this may betray the culture of democracy.
14. Democracy is about the even distribution of unhappiness. This is its utopian ideal. In the absence of its full realisation, it teaches people to be moderately happy about their moderate unhappiness.
15. Democracy is government of the people (tick), for the people (tick), by the people (question mark).
16. Universal suffrage does not suffice to allow us to speak of ‘government by the people’.
17. If elections once belonged to the nature of aristocracy, universal suffrage was only a form of ‘quantitative democratisation’, not ‘qualitative democratisation’ (Bernard Manin). People got a right to vote, not to speak.
18. The person who casts his or her vote, casts it away. This is called: the principle of delegation. The only way of reclaiming that vote, is by sanctioning candidates at the next election.
19. Today, people despise the elected, but worship the elections. This is wrong: rather than being upset about politicians, parties and parliaments, they should be upset about the electoral
mechanism.
20. For the very first time in the history of representative government, the weight of the next election has become bigger than the weight of the previous election. The danger of the sanction has become bigger than the power of the delegation.
21. The theory of electoral democracy: let the past push the present (delegation). The practice of electoral democracy: the future hinders the present (sanction). This cripples action. We are being ruled by a misty void. This void is not the future, but the fear of the future.
22. Elections are not only outdated as a democratic procedure, they were never meant to be democratic in the first place. Elections were invented to stop the danger of democracy. This is not
blasphemy, but history.
23. Three thousand years of experimenting with democracy, and only two hundred years of playing with elections: and yet, we believe that elections are sacred.
24. There is nothing sacred about elections. They are only procedures, aristocratic procedures that people have tried to democratize, with considerable success, over the past two centuries.
25. There is nothing sacred about ‘one man, one vote’. It is only the historically contingent expression of a deeper democratic concern: the equal distribution of political chances.
26. If democracy is government through debate, electoral democracy is fairly mute: citizens wait, citizens listen, citizens cast their vote, citizens wait again.
27. In a world that is becoming increasingly horizontal, elections are an obsolete vestige of more vertical times.
28. In a world where information spins fast, voting once every four years is no longer enough.
29. In a world where technology empowers people, citizens not only want to vote, but voice their opinions, too.
30. Democracy through periodic delegation and sanction is rapidly loosing its legitimacy.
31. In a communication society like ours, it is natural that people want to engage in public discussion on the future of their society, it is positive that they want to take part in collective affairs and help shape the future of their communities.
32. People have the right to vote, they now ask for the right to speak.
33. How should the right to speak be organized? We have to avoid that only those with money, degrees and contacts get heard. We should not repeat the mistakes from the past: a new democracy should never become an elitist democracy.
34. The right to speak should be evenly distributed. The best way to do so is by sortition, i.e. by random sampling.
35. Sortition is the blind selection procedure by which a random sample of a population is drafted in order to get an adequate representation of that population.
36. If elections create representation on the basis of virtue, sortition creates representation on the basis of equality.
37. Both have their advantages: elections may guarantee more competences, sortition guarantees more freedom. Those who are drafted have to rotate after a while, their decisions will not be influenced by the need for reelection.
38. Two key notions for elections: delegation and sanction. Two key notions for sortition: equality and rotation.
39. If democracy is about the equal distribution of political chances, sortition guarantees that everybody has the same chance of being selected.
40. ‘One man, one vote’ now becomes ‘One person, one chance’.
41. Sortition is commonly used in contemporary democracies: it forms the basis of the entire polling business.
42. Opinion polls measure what people think when they don’t think; it would be much more interesting to know what they think when they had a chance to think (James Fishkin).
43. Giving a random sample of people a chance to think by letting them talking to each other and to experts and by giving them time to get at their own conclusions is the very nature of deliberative democracy.
44. Deliberative democracy is not about voting but about talking; it is not about avoiding conflict but about embracing it; it is not about consensus but dissensus.
45. Because deliberative democracy is both about the pursuit of happiness and the acceptance of unhappiness, it is a much needed complement to classical electoral democracy

Daniel Ellsberg on life and groupthink

HT Paul Monk who cites this as one of his favourite passages. It’s now one of mine. And a nice explanation of how easy it is – whether within an organisation or the caverns of one’s own riotous psyche - to slip into the pathologies of groupthink and self-deception. Somehow this doesn’t quite get the emphasis it should (if it gets any at all) in schools of management and/or government.

The urgent need to circumvent the lying and the self-deception was, for me, one of the ‘lessons of Vietnam’; a broader one was that there were situations – Vietnam was an example – in which the US Government, starting ignorant, did not, would not, learn. There was a whole set of what amounted to institutional anti-learning mechanisms working to preserve and guarantee unadaptive and unsuccessful behaviour: the fast turnover in personnel; the lack of institutional memory at any level; the failure to study history, to analyse or even record operational experience or mistakes; the effective pressures for optimistically false reporting at every level, for describing ‘progress’ rather than problems or failure, thus concealing the very need for change in approach or for learning. Well, helping the US Government learn – in this case learn how to learn – was something, perhaps, I could do; that had been my business.

Daniel Ellsberg Papers on the War, Simon and Schuster, New York, 1972, p. 18.

Vox pop journalism as a system of domination: Syriza edition

When the French and Russian Revolutions occurred, the existing order asserted itself through the intervention of foreign nations. Recognising this, and decrying it is not to endorse either revolution, but to note how powerful and self-reinforcing systems of domination are.

A much more trivial example is the minority government that emerged in Australia in 2010. I thought some of the things that occurred offered excellent opportunities to do some worthwhile resetting – of our parliamentary procedure for instance. They offered the prospect of restoring to Question Time some semblance of democratic utility. But somehow the surrounding forces that had produced the old equilibrium managed to wrest the same result from the procedures introduced by the new parliament.

This interview with Australian Greek Yanis Varoufakis shows us our bankrupt institution of vox pop journalism as a similar system of domination. The most basic cause of the simplistic bombast one sees in this interview is that it sells – it arouses emotions (which are the engine of engagement well ahead of reason) and it keeps things simple and personal. It’s Greece versus the Troika. Varoufakis verses Merkel. It’s ultimatums, struggle. Someone wins. Someone loses. It’s responsibility and fiscal conservatism versus naïve utopianism etc etc. Never imagine that some new kind of meaning might be forged in an exchange of views – the only task is that of fitting the interviewee – however reluctantly, however invidiously, into one of numerous pre-ordained pigeonholes.

In this interview with ‘broadsheet’ journalist of some intelligence and, one imagines repute – one who would imagine herself as a thoughtful, well briefed journalist not overly simplifying or sensationalising – Yanis Varoufakis tries to explain himself. He seems very lucid to me. But his attempt to put his case is constantly frustrated by the interviewers’ resolute instance on not listening to him and seeking to engage with him on his points – or to simply allow him to get his message across. Of course a good interviewer will help shape the conversation, but she’s going to dominate it. He’s going to have to answer her questions.

What’s the ultimatum? Will he deal with the Troika, etc et. Now in some circumstances this makes some sense. When the interviewee’s technique is built around obfuscation, some gotcha questions or insistence on ’yes’ or ‘no’ may be in order. Here Varoufakis is trying to explain a whole different way of seeing things (which it isn’t my purpose here to defend). My point is that he isn’t obfuscating. He’s seeking to explain himself – which he does with great clarity and according to the rules of journalism and political communication which is to say, he keeps things simple and illustrates with examples. So he asks the interviewer if she’d recommend that someone took the help of a friend if the friend was offering to lend them money to pay interest on a debt they couldn’t repay.

Anyway the interview goes on – Varoufakis is remarkably calm and lucid throughout. He does get angry, but it doesn’t contaminate the mood of the interview as it would if I were in his position. And the incomprehension just rolls on. How sad. How unfortunate that whole professions can manage to arrive at a modus operandi so antithetical to achieving what they would regard as their objectives. Still, journalists wouldn’t be the only profession in that position would they?

The interview of the blogpost: 

Speaking of bullshit . . .

A brief note – with a long appendix – about my recent re-reading of Frankfurt’s “On Bullshit” in the writing of a recent post. I remembered the article fondly, but on re-reading it I found it was mostly bullshit – Srsly! It wasn’t the most odious of bullshit – which comes with all sorts of swagger. But it was bullshit nevertheless – not bullshit as swagger but bullshit as vapidity.  The article has a single – very good – idea in it which accounts for its well deserved fame or notoriety which could have received just as good explication by the author in a 700 word op ed – 500 if you were pressed for space. The idea can be summarised very briefly. Firstly we have a great sentence. “Even the most basic and preliminary questions about bullshit remain . . . not only unanswered but unasked.” And then the thesis. Bullshit is deception but the deception is not that of the deliberate untruth of the liar – which requires an interest in truth so as to deceive. Rather the deception is that though the words are delivered with apparent seriousness, they are rather delivered with  complete disregard for the truth. And an environment in which people speak without knowing their subject is the bed in which bullshit grows.

That’s more or less it. Other interesting and important ideas have been set out by others. For instance I had originally remembered that Frankfurter had also drawn attention to the way in which both the bullshitter and bullshitee are complicit in the performance, but that insight appears to have been supplied by a later contributor. Anyway Frankfurter takes 16 pages to set out the simple ideas I’ve summarised above. Now of course it’s often the case that an article expounds a single idea – the assertion of which could be done in a paragraph or two, but in a good article the supporting pages - 15 in this case – help amplify and illustrate the point. I don’t think that’s the case here. Here are two sentences which appear towards end of the essay in sequence:

Convinced that reality has no inherent nature, which he might hope to identify as the truth about things, he devotes himself to being true to his own nature. It is as though he decides that since it makes no sense to try to be true to the facts, he must therefore try instead to be true to himself.

What does the second sentence add to the first? They seem to say not just the same thing, but precisely the same thing – two sentences which could be alternatives, but not complements. I think the whole article is like this. And in this it’s very like so many other academic material. Full of academic filler, or to use Frankfurter’s term, bullshit. (I recently bought a Kindle book called “Infrastructure: The Social Value of Shared Resources” by Brett M. Frischmann. I was anxious to read it because it was right up my alley – conceptualising infrastructure as a commons and drawing parallels between traditional economic infrastructure and non-traditional infrastructure – such as intellectual resources and social capital. It’s got some good stuff in it, but it had the same problem. Endless handling of possible objections often trivial only occasionally somewhat less so.)

If one took objections of that kind seriously one would never get anywhere. As exhibit A I extract below the fold a couple of pages of Frankfurter’s discussion which helps to establish what he thinks bullshit is. The example he provides is probably not a very good example. So he spends two pages going through possible objections to the example – only to conclude that if you ignore those objections it is a good example. Why not pick a better example – or make one up?  I don’t know the answer but I presume it’s because his example has a famous philosopher in it and – after all – he’s writing a philosophy essay isn’t he?

Continue reading

Complexity, reducibility, integrity and bullshit: the general untheory

I

Some readers may recall an earlier post which I christened an ‘untheory’ of innovation. It argued that there’s not much use in ‘theories’ of innovation if they’re taken as recipe books for senior managers to ‘drive down’ innovation through organisations. Why? Because if innovation is to thrive, endless decisions must be made to facilitate any number of different innovations and it can’t be known in advance who should be co-ordinating those decisions. An innovation might involve some slight or pronounced change in accounts, marketing, technical specifications, supplier relations, training, industrial relations and on and on. For these decisions to be made well – or as I like to say ‘on the merits‘ – all sorts of pathologies must be overcome:

There are hierarchies, there’s groupthink, there’s second guessing hierarchies, there’s trying to keep people happy and consensus at any cost, there’s ‘not invented here’, there’s ‘not in my backyard’ there’s excessive risk-aversion (though it’s usually aversion to a certain kind of risk, which is the product of another pathology – process hugging) and other manifestations of status quo bias, there’s adulation of those with high status either within a hierarchy or the wealthy and powerful over the less so and on and on.

That’s why I’ve argued that one of the most useful things one might do as far as ‘teaching’ management or innovation is concerned, is to coach managers not with the usual flattering stories of how far sighted heroic managers were, but rather with unflattering stories which highlight the foibles of our understanding – and offer means of overcoming them. What I’m arguing for is a recognition of the irreducibility of the on the ground experience – its lack of susceptibility to systematic, theoretical insight and its management corollary – policies adopted and driven from the top.

There are any number of areas in which we wave away the possibility of such irreducibility and instead embrace an empty and deluded kind of managerialism in which those at the top are forever attending strategy sessions, restructuring, reengineering and all the rest of it. Progress is not made (and as an aside, cannot easily be measured or ranked) because a lot of the progress that is necessary is sui generis and made at the coalface – or at least must involve the giving the coalface and autonomy to solve its problems and push for improvements.

Some other areas where this jumps out at me are: Continue reading

Shock! Good government improves wellbeing

Actually the magnitude of the effect is a bit of an eye-opener.

Empirical Linkages between Good Government and National Well-being
by John F. Helliwell, Haifang Huang, Shawn Grover, Shun Wang

Abstract:

This paper first reviews existing studies of the links between good
governance and subjective well-being. It then brings together the
largest available sets of national-level measures of the quality of
governance to assess the extent to which they contribute to
explaining the levels and changes in life evaluations in 157
countries over the years 2005-2012, using data from the Gallup World
Poll.

The results show not just that people are more satisfied with their
lives in countries with better governance quality, but also that
actual changes in governance quality since 2005 have led to large
changes in the quality of life. For example, the ten-most-improved
countries, in terms of delivery quality changes between 2005 and
2012, when compared to the ten countries with most worsened delivery
quality, are estimated to have thereby increased average life
evaluations by as much as would be produced by a 40% increase in per
capita incomes.

The results also confirm earlier findings that the delivery quality
of government services generally dominates democratic quality in
supporting better lives. The situation changes as development
proceeds, with democratic quality having a positive influence among
countries that have already achieved higher quality of service
delivery.

The middleware of democracy. Or from knowledge to wisdom: or at least knowledge 2.0

StyrelseSimon Heffer’s High Minds presents us with a portrait of the mid-Victorians in which they consciously set about building the world which became ours. A liberal democratic world.

To do so they recognised the need for all sorts of public goods. Those of education and health surely enough, an honest public service chosen on merit too (an idea they nicked from the Chinese who’d been at it for a millenium or so) and also civic virtue. It’s a stirring and a sobering story reflecting an age which I think had a more balanced understanding of the necessary ecology of public and private goods each reinforcing each other in building the Good Life.

Today for all manner of reasons – intellectual, sociological and economic - our contemporary vision is profoundly skewed toward private good and private endeavour as the paradigmatic category. That’s why I regard it as a happy hunting ground for low hanging policy fruit – a panoply of ways to drive productivity and economic growth that don’t even cost any serious government money.

But as Heffer makes clear, this Victorian quest was not just economic. It was a political project. As he argued in an interview with Geraldine Doogue – which I quote from memory because I can’t find on the ABC website – they knew that democracy was coming, so they needed to get The People a decent education before they used their vote to wreck the place. Continue reading

Paul Krugman the academic, Martin Wolf the economic journalist: Bottom line – read Wolf’s great new book

MartinWolf2011ByDaphneBorowski.pngPaul KrugmanI’m a big, though not uncritical admirer of Paul Krugman – of his straightforwardness and his aggression in what is almost always a worthy cause. And yet, reading Martin Wolf’s magnificent book rather inauspiciously titled The Shifts and the Shocks: What We’ve Learned-and Have Still to Learn-from the Financial Crisis, I’m struck by how modest Krugman’s achievement is.

Before his decisive turn with the coming of George Bush’s presidency and what Krugman saw as the rampant dishonesty of the campaigning and discourse of the right, Krugman styled himself as an aggressive defender of centrism, puncturing the fallacies of the heroes of the right and left. As he put it, he liked to catch them with their hands in the intellectual cookie jar and expose them in his pieces. Thus in his attacks on the ‘policy entrepreneurs’ of the Clinton era and before, like Lester Thurow and Robert Reich, he’d frequently ‘catch’ each of them not paying sufficient respect to the subtleties of comparative advantage and allegedly committing themselves to various other alleged intellectual fallacies.

While I was quite sympathetic to the points he was making on policy – these guys were often somewhere between little and a lot too slick in the way they presented their stuff - I didn’t really think that Krugman had demonstrated that they had in fact committed themselves to those fallacies. If you tried to read them ‘with’ the grain as it were, to get what they were trying to say – knowing also that they’re trying to communicate with people who are not steeped in economics – it wasn’t clear they were mistaken logically whether or not you ultimately agreed with them.

By contrast on the right we had all sorts of hijinks – massive tax cuts that paid for themselves, full Ricardian equivalence, modelling the Great Depression as a spontaneous holiday and various other grand themes thrown together with the flimsiest of evidence. In any event since Krugman has self-identified as a fighting Liberal, he’s been fantastically good at skewering his opponents – almost always when they need skewering, and at the same time he’s kept producing interesting academic(ish) papers. And in economics where models should be used to test, train and illustrate economic intuition and shouldn’t take over the show, academic(ish) papers are usually better than academic papers. Yet there’s been something missing. Continue reading