Greed Isn’t So Good

Greed Isn’t So Good

Is anybody else shocked by the revelations coming out of the Royal Commission into Banking and Financial Services?  Our banks and financial service industries are amongst the most profitable organisations in the  world and they handsomely remunerate their staff. Yet it seems that it’s not enough.

I find it extraordinary, because it is economically so unnecessary.

At the time of Jesus people lived within a premodern agrarian economy. Rather than finding ways to increase the productivity of their land, the rich  grew richer by simply appropriating the profits of the poor. Israel’s peasantry experienced a double whammy. Rome demanded tribute, which sent many farmers spiralling into unsustainable debt. When they couldn’t’ repay their debts their wealthy creditors would demand their land, which they would then rent back to the farmer via sharecropping or add it to vast estates that were managed for them and employed the former owners as day labourers.

In this type of economy the way people got rich was literally by taking from someone else. The Old Testament Law tried to create safeguards: loans were to be interest-free; any amount that remained outstanding in a Sabbath year was to be forgiven;  any land that had been forfeited was to be returned in the Jubilee year. Yet human greed proved too weighty. The laws were not followed and the rich continued to gobble up the land of the poor. So incendiary did this become that when the Jewish rebellion erupted in 66CE one of the first things the rebels did was to burn the land records held in the temple.

Against this background I can make sense of Jesus’s fierce denunciations of the rich and his continual insistence that the rich sell what they have and  return it to the poor from whom they had taken it.  Wealth in these type of economies was synonymous with exploitation.

Capitalism was meant to be different. It is built on the idea that the wealth is not fixed but can be grown. For example, if I can find better fertilising methods I can increase my crop yield  without taking anything from my neighbour. Or if instead of everyone engaging in small-scale agriculture, we specialised labour, so that those with a mechanical bent built and repaired our machinery, and those with good carpentry skills specialised in building barns and houses, the same amount of effort would produce greater results than when we were all trying to do a bit of everything.  Wealth can be grown through productivity gains. It doesn’t need to be stolen.

This is what makes the revelations out of  the Royal commission so disturbing.  We know how to build a society in which wealth is growing without stealing from others. But we don’t do it. By historical stands we are fabulously wealthy. Yet it’s never enough. And so we cheat and exploit  to gain more.  And it’s not only those in the banking industry. We hear a continual stream of revelation of people  exploiting others, from the poker machine industry to 7-Eleven to exploitation of migrant workers.

The problem is we are susceptible to greed. Jesus put it this way:

“Do not store up for yourselves treasures on earth, where moths and vermin destroy, and where thieves break in and steal.  But store up for yourselves treasures in heaven, where moths and vermin do not destroy, and where thieves do not break in and steal. For where your treasure is, there your heart will be also…No one can serve two masters. Either you will hate the one and love the other, or you will be devoted to the one and despise the other. You cannot serve both God and money.”

For a long time I read this the wrong way around. I thought Jesus said, “wherever your heart is,  there your treasure will be also.”   That is that whatever we set our heart upon will become that which we treasure.  But that’s not what he said. He said  that wherever our  treasure is, our hearts will follow.  Whatever I spend my life amassing, no matter how much I tell myself I am detached from it,  it will almost certainly capture my heart.  That’s a difficult truth to hear in an age of accumulation.

Is it really any surprise then,  that in a society in which we place so much importance on accumulating wealth  and are so expert at accumulating, that  instead of contentment it all too often creates an irresistible desire to have more, a desire that drives us to  do terrible things such as those that have been exposed recently.  We may have created an economic  system in which exploitation of others is not necessary, but we have yet to create a human heart that  can resist the allure  of gaining more.

 

 

Fashion with a conscience

A few years ago I was in Cambodia being driven along one of its crowded streets where the only rule of the road seemed to be “get out of the way of somebody who’s driving a bigger vehicle than you”, when I saw a number of flatbed trucks carrying people jammed in like sardines pass by. I asked my Cambodian host who they were and he replied they were people who worked in the clothing factories being transported to their workplace. Conditions didn’t improve much when they got off the trucks and the wages they received were pitifully low, not enough to survive on. Yet a job in a clothing factory left many of them better off than they were trying to farm in the countryside.

This is the reality of global trade. Some of the clothes manufactured in those factories by those very people who drove past me will make their way to Australia where they’ll be sold at a cheap price by people happily chanting slogans such as “down down prices are down.”

The good news in all of this is that change is not only possible, but it’s happening. Today Baptist World Aid Australia released an updated edition of its global fashion report. The report ranks companies in the fashion industry according to their supply chain practices, that is the policies and practices they have in place to ensure workers are paid fairly, have decent working conditions, and child and slave labour is not used.

It’s an amazing piece of work, with 87 companies assessed against more than 40 criteria and consideration given to the treatment of workers at every stage of production from the farm to the factory.

Baptist World Aid first began producing this report a couple of years ago and there have been some astonishing changes as a result of it. Since 2013 the number of companies tracing inputs suppliers has increased from 49% to 79%; the number of companies tracing their raw materials suppliers has increased from 17% to 39%; the number of companies who had improved wages for at least some portion of their workers had grown from 14% in 2015 to 33% in 2016.

The issues are quite complex and the Baptist World Aid fashion report doesn’t try to dumb them down or cut through to some kind of simplistic assessment. It’s a brilliant piece of work by dedicated team of justice champions.

Best of all, for those who want the topline results there is a pocket summary guide. Get a hold of it, see how your favourite companies rate, and either preference the product of those who rate better or write to your favourite company asking them to do better in the next report.

The report and the summary version are both available at behindthebarcode.org.au

Disclaimer: I previously worked for and now consult to Baptist World Aid Australia

I Don’t Want to Be A Customer of Bastards Inc

Are we really this greedy?

Fact 1. The people who make our clothing are paid so poorly that they cannot put food on the table or pay their rent or send their kids to school. The chart below, using data from the clean clothes campaign, shows the minimum wage for garment workers across Asia compared to a living wage (a wage sufficient to meet the basic needs of a worker and their family). Most workers get paid the minimum wage and it is nowhere near enough for them to live decently.

min-living-wage

Fact 2: The wages of garment workers usually makes up less than 5% of the retail price we pay for the garments. So to pay a garment worker in Indonesia a living wage for a $50 pair of shoes would add no more than 10%, or $5, to the price. To pay a worker in Cambodia a living wage on a $5 T-shirt would add about $1 to the price.

Fact 3: The multinational corporations that commission the goods know that neither their shareholders nor their customers will tolerate this. So they continue to exploit their workers.

I refuse to accept that this is natural or normal or necessary. I will exercise my right to demand that Bastards Inc does better. I can demand that the directors of fashion labels and sporting goods manufacturers and furniture makers and toy emporiums pay their workers a living wage.

To join the revolution check out Baptist World Aid’s behindthebarcode.org.au

My day at IKEA, a symbol of hope or a sign of doom?

I am surrounded by a wall of sound. The low rumble of trolleys laden with meals, like whispered thunder. The chinking of cutlery on crockery. A cacophony of voices. Crying babies. Excited five-year-olds. Wearied parents. Lovestruck couples. Welcome to IKEA, where consumerism has become a form of recreation.

It seems that for many going to IKEA is an experience to be enjoyed, an outing to look forward to. The place is huge and has all the resonances of a theme park. The takeaway food stalls selling hotdogs and soft drink and soft serves. The cafeteria. The massive car parks. The long queues at checkouts located in vast open spaces. The palpable sense of anticipation.

It’s pure marketing genius. I despise shopping at the best of times, but I find myself caught up in the mood, thrilled by the discovery of bargain priced furniture and sensing that something that attracts this big a crowd must be worthwhile.

And it comes from a company that appears to be making serious efforts to ensure it has a sustainable and fair supply chain. IKEA has invested heavily in renewable sources of energy for its factories and outlets and ensures that the timber in its furniture can be traced back to the forest of origin and that those forests are sustainably harvested. In the last couple of years the company has begun rolling out living wage programs for its workers and suppliers. There is still some way to go but the direction seems to be positive.

I don’t know what to make of it. I find myself confronted with the feeling that we’ve become trapped inside consumerism and we simply don’t know how to find a way out. For all its laudable efforts to be ecologically and socially responsible IKEA feeds and is fed by consumerism, that malady of the human spirit where the experience of consumption is in itself a reward we seek, yielding the overconsumption that is driving our planetary ecosystems into dangerous places. And for all my desire to live in a way that is ecologically and socially responsible, I have to admit that I too enjoy the experience of consuming and acquiring. I’d like to believe that IKEA represents the hope that there is a way we can continue to consume at the levels we do and for it to be sustainable. But I suspect that is very wishful thinking.

Think Corruption, Think….

A few years back when I heard the word “corruption” it called to mind images of tin pot dictators stuffing billions of dollars into Swiss bank accounts. Now I think of multinational corporations. Here’s why: for every bribe taker there has to be a bribe giver, and in the case of large scale bribery, the bribe giver often represents corporate interests.

The papers this week have been full of allegations that Leighton’s Constructions paid bribes to win large contracts in Iraq, Malaysia and Indonesia. Leighton’s appears to concede corruption did exist – it was the company that alerted authorities it may have beached the law in its dealings with Iraq and staff were sacked after other corruption claims. The question is how high up the corporate ladder knowledge of bribery went.

Leighton’s is not alone. Securency, the Reserve Bank subsidiary responsible for printing plastic bank notes has been caught up in corruption scandals recently, allegedly paying bribes to many countries to win contracts. A few years back German engineering giant, Siemens, was fined $1.4 billion when found guilty of bribery. The prosecutor in the case commented at how disturbed he was that bribery was accepted as normal business practice.

So are these just a few bad apples in a relatively clean corporate sector? I don’t know.It seems that corruption is more common in some industries and some countries than others. A September 2013 report by the UK’s Chartered Institute of Building, for example, found 49% of construction professionals surveyed thought corruption was either extremely common or fairly common in the construction industry in the UK.

What I do know is that for every bribe received there must be someone paying it, and that this frequently implicates big business. Greed, it seems, is universal.

 

Dancing with the Devil. Nestle, Chocolate and Child Labour

The world’s largest food company, Nestle, does not have a good reputation with advocates for justice. For years the company has been accused of aggressively marketing infant formula to women in the developing world, leading them to preference formula over breast milk, at great risk to baby health. For example,  a 2013 report by Save the Children estimates that breastfeeding in the first hour after birth could save 830,000 infant lives each year. In view of this many people have joined a global boycott of Nestle products.

Until recently Nestle also  left justice advocates less than impressed with the ways it acquired cocoa for its chocolate products. Like the other major chocolate companies, Nestle sources a lot of its cocoa from West Africa. The cocoa is grown in Ghana and Ivory Coast on small family farms. In the Ivory Coast there are over 800,000 households farming and selling cocoa. Most are desperately poor, employ their children in often dangerous farm-work, and a small number hold slaves.

When this was exposed in 2001 a bill was passed by the US Congress proposing development of a “child labor free” label that would be applied to chocolate products. Before it was ratified by the US Senate, intense lobbying by the chocolate industry saw it withdrawn in favour of a voluntary code. As outlined by the Harkin-Engel Protocol, the voluntary code would see the Governments of Ghana and Ivory Coast, the chocolate industry and civil society groups working together on the issue, with July 2005 the deadline for a system to certify chocolate was free of worst forms of child labour. The deadline passed without any system in place and was extended to 2008, missed, and extended again to 2010, when it was again missed.

As these deadlines were missed consumer activists around the world demanded action. In particular, we asked the major chocolate companies to have their cocoa certified as child and forced labour free via one of the existing certification bodies such as Fairtrade, Rainforest Alliance, or UTZ Certified. The response was positive. In 2010 Cadbury announced its dairy milk chocolate was certified under the Fairtrade label, soon to be followed by Mars which announced its entire global cocoa supply would be Rainforest Alliance certified by 2020.

But what of Nestle? Nestle set up its own “Nestle Cocoa Plan”. This recognised that for cocoa farms to be free of worst forms of child labour and forced labour, a number of things needed to happen, including:

  1. Farmer incomes need to rise. When farmers are not earning enough to rise out of poverty, it is inevitable that they will employ their children and forced labour;
  2. Communities need to be educated about the benefits of education for their children;
  3. Schools need to be built and staffed.

Under the Nestle Cocoa Plan:

  1. Farmers are being provided with new cocoa trees and training in improved agriculture methods. In Ivory Coast most cocoa trees are old and their yield is declining. The trees distributed under the cocoa plan are seeing these replaced, with farm yields likely to increase fourfold;
  2. Farmers are forming cooperatives and selling direct to exporters. This skips two layers of middle-men and thus earns a higher return to farmers;
  3. Schools are being built in communities participating in the Cocoa plan and community awareness programs run;
  4. UTZ Certified is being contracted to certify that the cocoa produced by farmers in the cocoa plan is free of worst forms of child labour and forced labour.

Last week Nestle announced that all its Australian made confectionery is now UTZ certified.

These are great outcomes, and for the Australian context place Nestle at the front of the pack. But they are just the first step. The Nestle Cocoa Plan, at June 2012, covers just 20% of Nestle’s cocoa supply in the Ivory Coast. The remaining 80% is sourced through regular channels, with their high levels of abusive child labour.  The company has made no public commitments to when it will get this figure to 100%. It’s preferred approach is to make public announcements only when it has achieved a goal.

Moreover, Nestle continues to rely on pure market forces to improve farmer income. The argument is that by helping farmers increase the quantity and quality of cocoa they produce, they will get greater returns. This will be true if demand increases in line with productivity gains, which Nestle predicts will happen as the Chinese and Indian markets grow. If demand doesn’t increase sufficiently, cocoa farmers will see a declining price.

But will pure market forces ever be enough? Cocoa farmers are making a 25 year investment when they plant cocoa trees, and over that 25 years prices will fluctuate wildly. The chart below shows the price fluctuations of the last 30 years as a guide.

cocoaprices

At few, if any points, has the market price been sufficient to lift cocoa farmers out of poverty, and at many points has been so low they are plunged into extreme poverty. It seems to me that companies like Nestle need to pay above market prices. They should determine what farmers need to enjoy a living wage (ie enough to meet their living costs) and never pay below it. This would function as a floor rather than a fixed price.

I know this will be greeted by howls of protest from my free market friends, but I would point out that this is a market with many imperfections and that we interfere with our own market all the time – minimum wages, workplace health and safety laws, immigration restrictions, tax breaks, and more – and still manage to run a viable economy. Markets should work for people, not the other way around.

So back to the issue which opened this post. Though there is still a long way to go, Nestle is doing some very good things on cocoa, and in the Australian market are the standout for consumers of chocolate. But they are still reported to aggressively promote infant formula to poor families. So am I letting them off the hook by praising them for what they’re doing on cocoa? Do I join the boycott until they are doing justice across their entire range of products, or do I buy their chocolate and simultaneously urge them to do better on baby milk?

I am not convinced boycotts achieve much. I suspect it’s better to engage with Nestle as a concerned consumer of their products, to praise them when they do well and critique them when they do injustice. It does mean buying from a company that I am told engages in some practices I deplore. Does that make me complicit in those practices? It probably does, but I also know that were I to stop buying from every company with behaviours I consider deplorable I would have to stop buying altogether. Nestle is hardly alone. It seems to me that almost all consuming is ethically tainted, but by raising my voice from inside the system I can hopefully play my part in removing some of the stains.

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