Archive for the ‘Economic & political’ Category

Brexit, Steenbergs and the future

Sunday, June 26th, 2016

While I had been nervously expecting that Brexit result, it’s not until you hear it that the impact really hits you.  And while it remains a shock, we must look forward and deal with the additional risks that it throws at us, as well as seek out those opportunities that we have been told are on the horizon.

I voted for Remain for myself, for my children and for the business, and live in one of the few regions outside of Scotland, Northern Ireland and London that voted to Remain.  Brexit will be narrow the opportunities for everyone, but especially the young.  But we lost, that’s democracy, and it’s time to move on – you can’t undo a result you don’t like, because that’s undemocratic, abuses the just rights of those that voted to Leave and makes a mockery of the British – and yet I really, really don’t like this result.

So what to do.  It’s time to get down into the detail, and to hold those that pushed to Leave to deliver on their promises.  But I expect there to be a wide gap between the promises and reality – few savings and no extra cash for public services nor it even appears cuts in immigration because the labour provided by Poles, the Latvians etc is needed.  And we have many “Europeans” as relatives (my mum, aunts, uncles and cousins), friends and colleagues and we will do everything possible to protect us and them from any impact from Brexit, especially xenophobia.

But back to Steenbergs.

Firstly, as a food business that mainly sells into the UK, but largely imports raw materials and packaging from the EU and exports into the EU, as well as with India and Sri Lanka etc etc, I would like to know what the new legislation is going to be.

Why?  Because the whole of Steenbergs’ business is dependent on and completely based on primary regulation from the EU as is the UK food industry.  There is effectively no UK food legislation.  These regulations cover food safety, food labelling, food information, allergen declarations, organic imports/exports/manufacturing, food packaging, waste regulations, chemical residues in food whether from pesticides, mycotoxins etc etc.  We’re designing new packaging – what will the new UK labelling rules be?  The current regulations are not onerous, are good and protect customers and the give us safe food to eat each and every day, and they work from Ireland to Romania.

Also, not only is food and drink the UK’s largest manufacturing sector, but 75% of UK food and drink exports go to the EU (or £18.3 billion); the sector employs 3.8 million people, or 14% of all UK employment (IGD, 2015) – so how the UK government deals with this is vital for real people and their livelihoods.

When will this new legislation come into place and how will it differ?

Secondly, we want to continue to buy from the EU and sell into the EU.  What are the terms of this trade deal going to be?  What extra paperwork will there be?  My accountant will want to know how to treat VAT, or even if our whole accounting package is now redundant.  And so on and so on.

Ultimately, while the politicos say be patient.  I cannot wait 2 years for the politicians to plan, negotiate etc as we have staff that need to know next week what this means for them, and our current investment plans must now be put on hold while we wait for the powers that be work it all out.  We say get a move on.

Our suspicion is that the EU legislation will just become UK legislation and, for Steenbergs to be able to trade with our EU friends, we will need to meet EU rules and regulations for all the above.  So what’s it going to be.  Our guess: it will be business as beforehand with some wrinkles from the new empowered Westminster government (ex Scotland), but (and here’s the rub) Steenbergs and all but the smallest food businesses will still need to meet all (and we mean all) the EU food and packaging legislation, but our honourable friends in Westminster or our Eurocrats will not be at the negotiating table to determine what those rules are.

What will be the longer-term impact? Overall, I suspect not that much, except less control over how we run our business, plus a few extra hoops to jump through.  That’s less freedom and accountability, not more.

So let’s get down to it, and make the best of what this new path throws at us.  Finally, I will never forget those who took us down this wrong path.

Reference

IGD (2015) The UK’s food and drink industry, accessed 25 June 2016

Iranian Fairtrade Saffron

Monday, May 23rd, 2016

We’ve just been informed that our gorgeous Fairtrade saffron has been removed from Amazon’s listings.

Iranian saffron is in breach of US sanctions against Iran, so cannot be sold in the UK.  Despite the nuclear deal signed in 2015, US companies still cannot trade with Iran on many products, so Amazon gets caught under that.  They’ve, also, removed an Iranian spice blend – sabzi ghormeh – that we make here in Yorkshire for sanction busting.  It’s a pity because both are good products.  I am sure that soon the position will be improved.

Needless to say, you can still buy it direct from Steenbergs and support the rural poor in Torbat, Iran.  In March, we posted some good photos of saffron picking in Iran.

From a UK perspective, the official UK Government’s position is that “There is a positive outlook for UK-Iran trade relations and the UK Government fully supports expanding our trade relationship with Iran.”

My Thoughts on Wages of Tea Pickers in India

Saturday, September 26th, 2015
Tea Picking In Darjeeling

Tea Plucker in Darjeeling, India

I have prevaricated about writing about the recent BBC investigation into conditions on some Assam tea estates, but felt that I really had to write something.  I did give a 2 minute response on BBC Radio York, but that was a tongue-tied minute or two.

I was dismayed by the conditions and experiences of tea workers shown in File on Four’s investigation.  But I was not surprised.  We (that’s everybody) all know, deep down, that tea is a product founded during colonialism and continued under unequal power relations.

Isn’t that why Fairtrade was started in the first place? Isn’t that part of the rationale behind the Ethical Tea Partnership, Tea2030 and the Rainforest Alliance?  Doesn’t Oxfam campaign on policies of unfair pay, unequal power and poor conditions within the tea industry all the time?

Yet tea remains an industry dominated by multi-national corporations, many with their own plantations – Twinings and Fortnum & Mason by the Weston Family; Lipton and PG Tips by Unilever; and Tea Pigs and Tetley Tea by Tata and so on.

However, while Oxfam released a report on wages in the tea industry in 2013, not much seems to have happened since.  Tea workers in Assam earned INR 115 versus a minimum wage of INR 177 (BBC, 2015), as against INR 89 and INR 159 respectively in 2012 (Ethical Consumer, 2013).  I think the ideas of the tea industry are sensible but far too gently paced, and the tea majors could work much quicker to transform the social conditions of the tea industry.  Tea2030 includes all the key UK players, so it is not as if they don’t have the power nor the management know-how to undertake change?

I must admit to a feeling of powerlessness ourselves . Firstly, as a micro-tea business, we sell less tea than your average Starbucks outlet.  So we must rely on the social standards set by outside agencies when buying our teas – Fairtrade, Organic and UTZ.  And I did naively think that by buying mainly Fairtrade teas we would be automatically protected from low wages, but this only requires a minimum wage to be paid with the commitment to move towards a living wage.  But what we don’t want, or expect to be providing, is certified poverty through Steenbergs-branded products.

So I have double-checked wages, conditions and child labour at the main suppliers of the teas we buy tea; these are summarised below.  We have been assured that no children are employed in any of the plantations, and that Indian law requires that no-one under 18 years old can be employed on plantations.

Tables on (i) Wages at Tea Plantations from which Steenbergs sources its main teas; (ii) Social conditions at those tea plantations

Analysis of Daily Pay Rates At Indian And Sri Lankan Tea Estates In 2015

Table describing social and environmental conditions at certian tea estates in India and Sri Lanka

It is up to us to address these issues by how we (in Britain, Europe and the USA) trade.  We must be mindful of that the rules and laws in India, for example, are for them to determine rather than for us to seek to impose any neo-colonial views onto them from outside.Which begs the questions: (i) why were 14 year olds working on Assam tea plantations if the law is no-one below 18 years old can work.  I accept that extreme poverty was the underlying reason given, which relates back to the inadequacy of wages paid and insufficient safety nets when wage-earners become ill or incapacitated; (ii) how are wages calculated?; (iii) where are the unions to protect the workers on  the tea estates in the BBC report?

My suspicions are as follows:

  • Minimum wages for plantation workers are lower than normal workers because they are meant to be provided with housing and ancillary housing-related and social benefits. However, these social benefits are expected to be on top of the minimum wage rather than deducted from it.  This means that some workers are being hit twice, i.e. by a lower minimum wage then having benefits-in-kind deducted, meaning very little cash is actually earned.
  • Many of the workers are regarded as itinerant, casual or whatever you wish to call them, so perhaps they do not have the benefit of trade union representation. Perhaps worryingly pickers are so poor that they cannot pay the unions anything, so fall even outside their interests.  It really would be worrying if workers could be regarded so poor that they were not getting union representation on a pro bono basis.  Unions are important to act as a bulwark against potentially stronger interests of the tea owners.
  • There is no living wage calculated for tea workers. While I accept that Britain is only just moving to a living wage in 2016, why has neither Fairtrade nor the Ethical Tea Partnership come up with a figure for a living wage?  This would at least underpin any criticism of pay in the sector.  Even saying that all pluckers must be paid the minimum wage in cash without deductions and all benefits to be on top would be a big protection.  Much of the issue seems to lie with how the benefits are valued – so a house is worth so many rupees, but who values it? and what value does it have without a working toilet, no potable water and a leaking roof – little or none?
  • Perhaps we are all guilty of normalising the status quo. Quaint, picturesque pictures of pluckers in local dress are good photos (as above), but like farmers in Africa or Eastern Europe these pretty images hide the poverty and hardship of actually toiling on the land.  Perhaps we feel this is how it is and feel powerless to change the system.  Perhaps we feel disconnected from the pluckers in India, Sri Lanka and Kenya, yet we are connected directly to them through what we pay for the tea on retailers’ shelves.  Should we just accept we pay too little for our cuppa?

Overall, I know this is a very complex area, with many nuances, but we should all feel more responsible for how we spend our money and the impacts our purchases can have on those who make the products in China, India and the UK.  We cannot always shrug our shoulders and say it is someone else’s problem.

What we will do in the short term is make sure we ask the right questions of our suppliers, which I admit we have naively not been doing.

So it will not just be questions about the environment, but also about pay, working conditions and union representation, because even if Steenbergs is a relatively powerless micro-business we can at least make do better in making sure our tea comes from sources that seem to be addressing wages and treating their people humanely, seriously and responsibly.

Declining Cork Farms – The Price of Progress?

Friday, July 24th, 2015
Cork Trees

A copse of cork trees in Alentejo

We have just returned from a fortnight in the baking heat of Alentejo.  The temperature ranged around 35oC, reaching 40oC on a couple of melting afternoons.  But the pool was our saviour.

Everywhere we looked there were cork trees, growing individually, in small groups or large plantations.  Their ancient-looking, gnarled branches seemed like witch’s fingers pointing crookedly to the blue skies.

Many of their stems were a deep red-brown colour, similar to the rusty coloured rich Alentejan soils.  This was where they have been skilfully cut to remove the corky layer of bark from their stems.  Harvesting is done every 9-10 years, so it’s roughly 1 in 9 that have this rich brown trunk.

Apparently, half of the world’s corks come from here.  It’s an industry started by Dom Pérignon, the monk Champagne maker, in the seventeenth century.  While Dom Pérignon is famed for wine-making, he also introduced the cork as the stopper of choice instead of wood.

Cork is perfect as it’s inert, sustainable and biodegradable.  It also makes a nice plup sound when pulled out.

Bark growing on cork tree

Bark growing on cork tree

Cork bark

Cork Drying In Yard

But now we replacing these with plastic stoppers or screw caps.  These are promoted because they have no different taste impact versus cork, plus for screw-caps convenience is given as a plus point.

However, I now can’t help feeling this is a mistake.

Cork is sustainable, renewable and biodegradable.  Cork supports unique ecosystems in the Alentejo, as well as supporting a rural economy.

Whereas plastic stoppers are just that plastic.  They are not “green” – neither recyclable nor sustainable nor renewable – and do not help rural economies.  Screw caps are recyclable in theory, but they certainly don’t help the Alentejo.

The consequence is that cork farms are being abandoned or cut down or not replanted after forest fires.

Progress?

I’m going to stop buying plastic tops and screw cap bottles, now.

Cork Trees in Alentejo

Cork Trees in Alentejo

Is social media really so benign?

Monday, June 25th, 2012

The penny finally dropped today about the creeping commercialisation of all of our private conversations and lives.  On the BBC Today programme today, Evan Davies said follow us on Twitter after a piece on Arcelor Mittal in Liberia, which questioned how well they were doing in creating economic well-being.  And I realised that that is advertising and that even though the BBC might not think it they are actually endorsing a commercial organisation, which is against their editorial policies (see 14.4.20, but I am sure that the BBC will argue that it is justified under 14.4.19 under “external sites it may be editorially justifiable to link to“).

Now you might say “get real”, I am and we have Facebook and Twitter on Steenbergs websites, but we are a commercial organisation and are using it for commercial purposes, yet I would love daily free links and endorsements by the BBC or other organisations in the same way that both Facebook and Twitter get, as they quietly become embedded into websites and the TV and we frame our daily lives through digital media.  You can follow the sport on the BBC with lots of Twitter links from outside into the BBC website and by following the Twitter tag #BBCtennis, which seems clearly to be endorsement to me.  Nice and useful, but in the end it is creating free capital for Twitter (or Facebook) that it can then use as content and ways of targeting, and marketing at, people, which enables them to generate excess profits and value by users giving media content away for free.  I accept the arguement that it is the free market that created these new modes of communication and media, and as a libertarian I do not like the concept of political regulation of media and communications, however I still believe we need more debate on how much influence, and reliance, can or should be given to just a few digital media channels rather than almost no discussion as is the current situation.

More and more we converse, chatter and debate online through emails (relatively private), as well as Facebook and Twitter that are much less private.  We seem mostly to be comfortable and complicit in the sharing of so much that used to closely held with friends and family and non-commercialised in general conversations between people face-to-face or over the phone, or by letter.  We have digitised ourselves, which has its own issues as “digital stuff” does not disappear after we have said it, but hangs around for a long time.  That is one issue.  But also, we seem okay with giving this knowledge away for free to somebody to commercialise themselves, whether that is our conversations or data about our habits and private lives; with media content via this blog or photography through Flickr, one has the option whether or not to give away such content as free, and I,for one, do believe in giving the content to others for their own commercial use as that is one of the benefits of I the Internet, however I have personally edited what I put onto the web and made choices about whether I accept that it will have become public and free for others to use, but I do not believe that our private conversations and activities should be so casually given up or are subject to the same degree of perosnal censorship.  Things are said much more casually over Facebook and Twitter without any mediation and without the capacity to retract mistakes or change views through time, as our words and pictures leave a trail that we cannot leave so easily behind or forget quickly enough.

I do not know the answer and can only pose the question about whether this is a good thing.  However, I reckon we will look back in the future and regret giving up so much privacy to a few monopolistic media-communications companies, while ironically at the same time focusing our anger at media businesses like News Corporation, which might no longer be as powerful as Facebook, Google and Twitter*, while being remarkably chilled about giving away our privacy and knowledge freely to such digital media companies.  And guess what you can actually follow the Leveson inquiry on Twitter because it is “advertised” on their government web site – nice to be promoted by the state and by a media enquiry as something valid, legimate and of integrity, but then Twitter is now regarded as an essential communications tool rather than part of the media!

Overall, there is not enough debate or concern about this area, because it is new, it works, is fun and useful and the answers are too difficult, so who actually cares – certainly not those (the political establishment) with the power to debate and take action on it?

* You can be sure that as the politicians are investigating the media and especially News Corporation that news publishing and its influence is no longer as powerful, so can now be regulated with inpunity.

Grants – What A Waste Of Time?

Tuesday, November 15th, 2011

We have been looking at investing money in automating many of our currently manual processes to include filling, capping and metal detection.  As part of this plan, we had looked into getting some grant support rather than doing it all through external lease finance or debt funding.  As a microbusiness, this would have enabled us to invest more now rather than doing it in a piecemeal fashion and taking more time to complete the project.  However, having provided an expression of interest, the response is that the old Rural scheme is winding down and will be replaced by a new scheme that is yet to be launched.  While applications can be made in the new year, these will go towards a national appraisal scheme rather than local appriasal and it would be June/Jule 2012 before any contract could be provided, if successful.  That is a long, long time away, especially for something that is uncertain in any case.  Also, by making appraisal national, there will be a bias from North to South, rather than looking at each regional on its local merits.  If this is how the government aims to kick start the economy, it is a remarkably slow process, and I have not even explained the bureaucratic appraisal process.  We will scale back our investment plans, do it ourself and give a big thumbs down to the government’s plans.

Youth Unemployment – The Real Issue

Sunday, November 13th, 2011

In amongst all the fantastical numbers that economists bandy around at the moment, there are some frightening figures that get lost in amongst the other seemingly more pressing numbers.  Amongst these, youth unemployment is the most worrying and is perhaps the biggest issue of all.

In the UK, youth unemployment is 21.3% against a total rate of 8.1%  (September 2011).  In Italy, youth unemployment is 29.3% with a national figure of 8.35% (August 2011).  Youth unemployment in Greece is 36% against a national level of 18.4% (August 2011) .  In Spain, youth unemployment is 46.2% with a national figure of 22.6% (September 2011). And this is not just an issue for those in Southern Europe, so in Sweden youth unemployment is 4 times higher than for workers aged 25 – 54, while in Ireland youth unemployment stands at 31.5% against a national level of 14.4% (October 2011) with 100 people emigrating every day at the highest levels since the Great Famine over 150 years ago.

Studies in the UK suggest that the cost of youth unemployment is £4.7 billion a year and £8.1 billion a year from reports by the Recruitment and Employment Confederation Taskforce as well as the London School of Economics.

This is a waste of the young peoples’ lives, dreams and hopes, as well as a mammoth waste of capital resources.  Even more than that it creates a very unstable structure for the welfare state:

  1. Failing to secure employment for a large proportion of young, let all the underemployment of many of those that find employment, is a failure of the education system, because expenditure on teaching is being frittered away by not getting graduating pupils into useful employment.  This means the wealth of the nation is being gradually eroded away through education that has no economic or intellectual value.  Apprenticeships could start to treat this scar.
  2. Then there is the structural issue for the welfare state.  At its simplest, the welfare state is pyramid scheme that relies on enough new employees entering the tax system to finance those who are retiring, needing geriatric care or other benefits.  However, if employees are not starting young and so failing to start paying taxes, then the whole structure will perhaps become irreperably destabilised, while at the other end employees are looking for more benefits from state funded pensions and geriatric care.  With high youth unemployment, the welfare machine cannot function for long before it will simply grind to a halt.  The simple truth is that the pension schemes written for public sector workers in the UK and across Europe cannot be funded as there are not enough people generating new money in our economies to finance them, and without getting the young to start creating real wealth we have not a hope of paying me a sou of my state pension, while my small private pension has shown no growth in years and will not keep me living for longer than a few days, so I expect that I will need to work until I drop.  Incentivising businesses to start recuiting the youth or schemes that will find the entrepreneurs of tomorrow are vital.

Every year more young people leave school, yet with funding cuts more will fail to find university courses to meet their needs and so exacerbating youth unemployment.  While older workers no longer need to retire and as pension schemes fail to provide people with the retirement they crave, job blocks will be created, preventing young people even starting on the employment process.

Unless this issue of youth unemployment is tackled head on and quickly, not only will there be a dangerous restlessness amongst the young unemployed, but the whole edifice of social welfare is liable to topple over under its own grandiose ambitions.

These are dangerous times and we ignore this issue at our peril.  Who will speak for the young?  Not the main political parties, not employers, not the unions, not religious leaders, so they will speak for themselves with protests without care for the consequences for the nation states of Europe, as we do not worry enough for them.

Update 16/11/2011: youth unemployment in the UK rose to 1.02 million or a rate of 21.9% for 16 – 24 year olds against a national rate of 8.3%.   This is a waste of our young, energetic and resourceful youth – who will stand up for them, rather than speak platitudes to them?  What is frightening is how the unemployment rate has grown strongly since 2000, so it is the collective failures of both previous Labour and now the current Lib-Con Governments rather than something that should be used for party politicking being any of the sides, i.e. they have all been pretty useless in addressing this issue.

Updated 19/11/2011:  Sara Blecher’s film on train surfing shows the nihilism that can enter the soul of the young when there is no hope and no father figures, or male role models to bring them into manhood.  It could be a bleak future, a Lord of the Flies’ world.  Let us all work to give the young back their dreams and hopes for the future and fight back the bleakness of self-destructive nihilism.

European Bailouts And The Structure Of The Financial System

Thursday, November 10th, 2011

There has been a lot of news recently about European bailouts, sit-ins and protests around St Paul’s (there is also an anti-capitalist camp by Grey’s Monument in Newcastle and probably elsewhere, but as usual London-Centric news of the UK largely ignores all those in the rest of Britain) and austerity measures in Greece, then maybe Italy, Governments changing in Greece and Ireland, soon Italy and so on.  But strangely very little is made of where all this money has gone – trillions of pounds, Euros and dollars have vanished, but where have they gone to.  I know that capitalism is about creative destruction but that is destruction on a colossal scale.

In any case since the crisis commenced in 2007 when the world woke up to bankruptcy at the heart the banking system and then later to poor credit of nation states like Greece, I have been pondering the causes and the solutions to the issues.  And while I have very few answers, I have changed my mind on a number of things and one of the main ones relates to the structure of the system, and in particular regulation.

Firstly, let me dispel an important myth.  At its heart, banking and investment banking is not a difficult area and is not that complex, nor is it that interesting and exciting.  Overall, it is a low risk and rather boring type of business activity; I expect some will take issue with that point of view however real banking is prudential and understated.  It does not make anything, but serves to facilitate other people to do things whether it is a government to build a school, or you or I to buy a house, or it looks after our wages until we can do the weekly shop or so we can save for our pensions.

This underlying dullness is perhaps the start of the problem as bankers and investment bankers have sought to make their lives more interesting, so they changed the nature of their business by taking on extra risk to make an excruciatingly boring way of life much more exciting.  The question then becomes how and why were they able to increase systemic risk within the financial system and so bring nation states to their knees with their reckless financial engineering.

I think the answer lies with the regulations put in place by governments, together with an unwitting collusion between governments, regulators and those in the financial sector.  What has happened is that unregulatable monopolies have been created by the regulations themselves; financial businesses appear complex because of the regulatory environment and as the regulations become more complex, financial institutions (whether investment bankers, bankers or auditors) work at ways to get round or benefit from the regulatory environment.  It is a bit like computer hackers and creators of viruses who are constantly trying to beat the firewalls and security systems that exist, appearing one step ahead as they seek mistakes and flaws in the Microsoft or antivirus programs.  And similar to the financial sector, because we (the uninitiated) do not know the language or understand the rules or know the players, therefore we cannot simply go up to them and say quite simply “stop messing with our computers” or “don’t use my savings or taxes as collateral for that”.

So my view is simple – reduce and simplify the regulatory environment for financial services, so that normal people can (a) understand what is going on; and (b) have a voice to be able to say “don’t use my money for that”.

Now most regulators and investment managers will pat me on the head and say “now, now, you simply do not understand the complexities, so why not go back to your day job”, but I say the problem is that those who are meant to be scrutinising the systems are actually part of the system nor do they own the money that is being used as capital, which belongs to depositors whether direct or indirectly via pension schemes or taxes etc, but benefit in terms of wages and salaries from keeping a complex status quo.  And to those who say it is complex – no it is not, investors are simply making judgments about what shares to buy when and where, or bonds or whatever – that is pretty basic stuff and is really a matter of investment quality, an understanding of human behaviour and, frankly, a good old punt*.  But it is a bet with other people’s money.  For example, MF Global collapsed because it made £4 billion in big bets on Eurozone sovereign debt that went wrong, while Bear Stearns collapsed due to overexposure to sub-prime mortgages.  The clue is that regulatory systems does not stop these investment banking collapses nor does it pick up credit issues due to poor loan quality with commercial banks until after the event like at Dexia, HBOS, Royal Bank of Scotland or the need for extra capital like at ING or WestLB – just as a few examples.  They are simply too close to the action, in fact they are part of the system itself and are not independent from it.

Will anyone change the system.  Of course not, because it would mean losing many highly paid and important people losing their jobs!  And also, because governments need these systems to create “money” for them to finance their own pipe dreams.

*  There are parts of the industry that try to minimise risks by manufacturing insurance-style instruments that seek to mitigate downside risk for some business areas or hedge, but most of these instruments are purely used within the financial sector to create extra return, or to use the flip-side of extra return to increase systemic risk.  It is that link between return and risk that most people seem to just ignore – to increase the profits of an essentially boring and low return business sector (accounting, banking, insurance) you need to increase the risk level, then the question is who gets the profits and who bears the increased risks, and it is this basic division between who has the upside and the downside that has created the problem we suffer from.

Food Waste, Food Poverty And Fareshare

Monday, October 3rd, 2011

Food waste is criminal, so it is brilliant when you hear or read of charities like FareShare that collect and distribute surplus food from retailers that would otherwise be thrown away.  FareShare works closely with companies like M&S, Nestlé and Sainsbury’s.  Food poverty is a big issue that needs to be addressed, while charities that look after people can benefit from any savings made by food charity so they can focus on spending money on areas that are important to them like their staffing.  Interesting articles on the BBC website that address waste include the following three:  http://www.bbc.co.uk/news/uk-15141327, http://www.bbc.co.uk/news/uk-15140518 and http://www.bbc.co.uk/news/magazine-10915739.  At Steenbergs, we are lucky in that our product waste is next to zero as our ingredients have long shelf lives and can be stored at room temperature.

So I became a little bemused, and angry, to discover that the local Boots stores, and for all I know all their shops across the country, have been told that all sandwiches beyond their display date must be chucked away.  In the past, they could be sold to staff at a discount, which is not great in the first place.  But why doesn’t Boots give these to charities like the Salvation Army who could make use of these for the benefit of people in food poverty?  And does this happen across all Boots stores?

Strange that Boots devotes a big part of their website to Corporate Social Responsibility, but this seems only to be a tick-box exercise to paint an image of caring through showing off how much money they have given, rather than starting from a caring attitude and empathy to other people.  When CSR becomes something to be met for bureaucratic reasons rather than from the heart, silly wastes like throwing out sandwiches shows the real soul of the corporation.

Sustainability and some final thoughts

Saturday, August 27th, 2011

In the end, politics, economics and perhaps even environmentalism are practical matters dressed up as intellectual theory, following on from my previous blog on the theory behind sustainability.

Economics is good at analysing what happens at the point when things of value are exchanged, but is not much good at anything else.  Real economics cannot tell you how to sustain you or your family.  For example, were you have a budget of £100 to spend on your weekly shop, it cannot tell you what is the best way to spend that money on in terms of your health, or taste or what you have in your cupboards or what takes your fancy as you walk around the store.  It cannot tell you why you prefer one brand over another or why we buy olive oil from one country of origin over another, because none of us really make rational decisions based on utility, however neat a theory.  In fact, many of our decisions are decidedly irrational – for example, it is cheaper and quite easy to cook meals from scratch yet we buy, for example, fish pie or pancakes ready-made rather than make them ourselves.  A rational economist might say that we do this because we can use our labour or time more effectively elsewhere, but how many actually do redeploy that small amount of money or time rationally to optimise their wage earning potential – very few, methinks.

For me, I think the best way to think about sustainability is to think of families rather than economics, or at least money economics.  To keep a family going into the future, you first need to have children, which is rarely an economic decision, because under most cost-benefit analyses there is no rational economic justification in having children, but our desire to continue and sustain our genes into the future simply overrides and ignores any financial considerations.  Then you need to consider how you equip your children to sustain themselves in the future and the key things are to give them the capabilities to navigate their way through their own futures, with all its ups and downs, twists and turns.  So we educate them formally to enable them to open up their minds and get employment, and informally we teach them a moral code of what is good and bad and that hard work, honesty, fairness and good manners will get them pretty much anything they desire in time, or at least laziness, dishonesty, unfairness and bad manners will not get you far in life.  We might try and give them some seed capital to buy a home, but they may not get much financial support until they themselves have had a family and we can bequeath them something after death.  Finally, throughout all of this we nurture and love them as best we can.  And so it is in real life with economic sustainability, we must focus on the means of giving people the capabilities to navigate future generations through future uncertainties rather than get bogged down with numbers, which are but meaningless figures on a page or spreadsheet – one can create almost any set of numbers or scenarios that you desire to justify any position you want but to what useful end.

But while Governments, quangoes and international bodies like the World Bank or the United Nations can help with this in certain areas, they are not the best placed to act as custodians of economic sustainability.  Firstly, they have no long term perspective as their terms of office are short and their times of influence are probably even shorter.  Secondly, Governments are remarkably bad custodians of peoples’ money, even as they need that money as it is their lifeblood.  They tax and spend with impunity because they are dealing with other peoples’ money rather than their own.  Milton Friedman perhaps explained this best as he wrote in his book “Free To Choose” – “There are four ways in which you can spend money.  You can spend your own money on yourself.  When you do that, why then you really watch out what you’re doing, and you try to get the most for your money.  Then you can spend your own money on somebody else. For example, I buy a birthday present for someone.  Well, then I’m not so careful about the content of the present, but I’m very careful about the cost.  Then, I can spend somebody else’s money on myself.  And if I spend somebody else’s money on myself, then I’m sure going to have a good lunch!  Finally, I can spend somebody else’s money on somebody else. And if I spend somebody else’s money on somebody else, I’m not concerned about how much it is, and I’m not concerned about what I get.   And that’s government.  And that’s close to 40% of our national income.”

These capacities of Government to tax and spend are the root of their power and without this ability to take and then distribute with seeming largesse, Governments are nothing.  Hence, sustainability becomes another self-justification for why Governments must tax and spend, even though individuals and private collectives may be better at optimising humankind’s response to sustainability.  This takes the environment out of sustainability and it simply becomes a matter of power and control over capital.  For me, economics and environmentalism are different ways of looking at resource allocation, where money has been hugely successful at getting people to organise themselves to do things they do not want to do for a cash reward and also to exploit the natural capital resources (but note per my previous blog that money does not buy happinness or well-being beyond $10,000, while people will do charity and community projects for little or no finacial reward).  Conversely, environmentalism explains that there are limits to the natural capital available and we must all be mindful of this.  They are different, but overlap where the externalities from the economy degrade nature and where natural capital is available for exploitation.  However, they are not the same thing and do not overlap at all times.  Hence, they are different ways of looking at the world we live in, and we must be careful in merging them together.

So we must keep sustainability away from economists, Governments and politicians and per Ostrom focus on personal and community selflessness over selfishness, and look to our children and future generations rather than just the here and now.  Similarly, I would argue money is economics, and that money and sustainability do not mix.  However, I expect politicians, economists and everyone to argue that they all mix perfectly happily together, so the future will be a great and wonderful place.