The Welfare State We're In, The website of the book by James Bartholomew
February 12, 2008
Tuesday
"The right to undercut is the privilege of the poor - of poor individuals, poor countries, poor businesses. It should not be undermined."

For those of us who have long been suspicious about 'fair trade', here is at least part of the argument for being so (slightly edited) :

...the Fair Trade doctrine is pernicious, for all its genuinely good intentions

....it is positively harmful to the world's poorest.

FT producer acquires his label by showing he is paying a "fair" wage, is treating his workforce well and ensuring that the children get education and medicines. Obviously, this favours those who have already moved out of the most basic poverty.

The prospects for the very poor are thus made worse since they cannot compete on such terms. The right to undercut is the privilege of the poor - of poor individuals, poor countries, poor businesses. It should not be undermined.

Moreover, to obtain a Fair Trade label, a producer must buy a licence and submit to inspection - in countries where corruption is notorious. To impose a licensing cost, a tax and a powerful bureaucracy on any producer hardly seems a natural way to help the poor. It is also a barrier to those wanting to start up on their own.

Coffee production provides useful examples of cost. For coffee production co-operatives of under 100 workers, the Fair Trade people charge £1,500 for certification and annual renewal costs of well over £800. Since the average Kenyan income is under £200 a year, this is not negligible. The system also creates a significant travelling inspectorate.

Whole British cities have been persuaded to declare themselves Fair Trade zones. Apart from concentrating on these products in their schools and so on, they say they will "encourage" such practices. We should always be suspicious about councils which talk about "encouragement". It usually means campaigns with, of course, the employment of officials to promote the message. Guess who pays.

This is from an article by the Daily Mail columnist Andrew Alexander last year. It brings home the point, in theory at least, that fair trade can hurt the poorest. They do not qualify for the fair trade label. They are thus excluded from being able to take the most direct way to get themselves out of their poverty.

I have another, less important objection to the phrase 'fair trade'. It is the implication - not unintentional, I believe - that other trade is 'unfair' and therefore bad or even immoral. On the contrary, to buy produce from the poorest in the world is not immoral. What is immoral, is only to buy from the well off - to prefer products that boast of being 'British made' for example - and thus take away from the poorest in the world the chance to become better off.

The full article by Alexander is here.

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November 23, 2007
Friday
"Fair trade favours those who have already moved out of the most basic poverty"

I have long been slightly resentful of "Fair Trade" labels because of the implicit suggestion that all other trade is unfair. The slogan has seemed anti-capitalist in making this implicit suggestion and since capitalism is the source of prosperity around the world and the reason that so much of humanity has been lifted out of absolute poverty, the suggestion seems to me both inappropriate and damaging.

I have also suspected that the Fair Trade labelling could also more damage specific groups of poor people. Now, today, Andrew Alexander has provided an indication of how this could work:

In fact, the Fair Trade doctrine is pernicious, for all its genuinely good intentions - such a common feature of "cures" for world poverty.

The doctrine may bring satisfaction to a substantial bureaucracy and a sense of virtue to consumers, but it is positively harmful to the world's poorest.

FT producer acquires his label by showing he is paying a "fair" wage, is treating his workforce well and ensuring that the children get education and medicines. Obviously, this favours those who have already moved out of the most basic poverty.

The prospects for the very poor are thus made worse since they cannot compete on such terms. The right to undercut is the privilege of the poor - of poor individuals, poor countries, poor businesses. It should not be undermined.

Moreover, to obtain a Fair Trade label, a producer must buy a licence and submit to inspection - in countries where corruption is notorious. To impose a licensing cost, a tax and a powerful bureaucracy on any producer hardly seems a natural way to help the poor. It is also a barrier to those wanting to start up on their own.

Coffee production provides useful examples of cost. For coffee production co-operatives of under 100 workers, the Fair Trade people charge £1,500 for certification and annual renewal costs of well over £800. Since the average Kenyan income is under £200 a year, this is not negligible. The system also creates a significant travelling inspectorate.

The full article is the Daily Mail.

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May 08, 2006
Monday
Failing state education on a spectacular scale

Gordon Brown would like to send taxpayers' money to provide more education in Africa, by which he means more state education. There are far better ways of helping Africa. Below is part of an article in yesterday's Sunday Telegraph. It graphically describes how money put into state education in Pakistan has been wasted on an astonishing scale.

Of course Africa is not Pakistan. But it is hardly renowned as a place where government corruption is unknown. And James Tooley's Newsnight report from Africa last year indicated that, on the contrary, money spent on state education in certain countries there was by no means well spent.

If poor people in Britain were taxed in order to hand over their money to African government to waste in anything like the way described below, it would be appalling.

Millions of children in Pakistan are denied even a basic education because of wide-scale corruption and inefficiency in the state system, an independent watchdog has revealed.


At one school, the playground is so full of rubbish dumped by neighbours that the stench is too foul for children to play, in another, the classrooms are used to store grain and at a third, 49 teachers draw salaries even though there are no pupils.

Yet a report by the Human Rights Commission of Pakistan claims that such cases are far from unusual, and that state education is so crippled by graft and its accounts so poorly monitored, that millions of pupils are receiving no meaningful education. About 40,000 "ghost schools" stand empty or are used for other purposes.

Of the often-squalid, crowded schools where teachers and pupils do actually meet, more than 60,000 (39 per cent) have no drinking water, 96,000 (62 per cent) have no electricity and 76,000 (49 per cent) have no lavatories, the report, published last month, reveals.

At Karachi's Haqqani Chowk School, 49 teachers are on the payroll, costing the school £7,170 a month, but no pupils are registered. At another primary school in the city, 40 teachers have been appointed to teach only 11 enrolled children.

"Most of the teachers in public-sector schools have secured postings to institutions where they need not attend every day, and at least 50 per cent of the teaching staff in public-sector schools are 'ghost teachers'," said Abdul Wahab Abbassi, a senior education official.

The absentee teachers handed between 30 and 40 per cent of their salaries to district education supervisors to ensure that they kept their "jobs", Mr Abbassi added.

In Sindh province, of which Karachi is the capital, 3,228 school buildings are used as autaqs - gathering places for men - or for grain storage, and their playgrounds as livestock pens.


Posted by James Bartholomew • Indexed in Education • Foreign aid • Waste in public services

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March 21, 2006
Tuesday
MIllions die because of government provision of water

We are regularly told in Britain that water is vital to the health of many millions of people in Africa and elsewhere. So it is. But never is it suggested that the reason there is such a problem with water in Africa is because water supply is run by governments, not private companies. That would be to undermine the 'government is best' assumption of virtually all broadcast media coverage in Britain.

Now, at last, comes a paper from the Globalization Institute putting the argument that millions of people in Africa have died because of this misguided belief that government is best.

These are the opening lines of the paper, by Mischa Balen, apparently a Labour Party activist:

Over a billion people worldwide do not have access to safe drinking water, and 2.6 billion people have no sanitation facilities. More than two million people die each year from diarrhoea, and over six million people are blind as a result of trachoma, a disease strongly related to lack of face washing. In Sub Saharan Africa, 42% of the population lacks access to decent water.

Other diseases which are caused by water poverty include scabies, typhoid and malaria. The need for clean water to prevent the spread of these and other diseases is therefore paramount.

This is one of the greatest problems humanity faces. It is a problem which is taking place under the auspices of the state sector: 95% of the world's population gets its water from state-run services. Government provision in water has overseen millions of deaths through poor quality and lack of sanitation.

Posted by James Bartholomew • Indexed in Foreign aid • Media, including BBC bias • Waste in public services

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July 10, 2005
Sunday
Are the world's rich countries turning Africa into the biggest welfare dependant in history?


Under pressure from the "Make Poverty History" campaign, Tony Blair and the other leaders of the world's richest nations have now agreed a massive increase in aid to Africa. Most people believe that such aid will do good, even if some is syphoned off into luxury houses and Swiss bank accounts. But a new piece of research suggests that this could be wrong. It suggests that the increase in aid might actually make Africa's problems worse.

A study of 86 developing countries by Dr Tomi Ovaska of Regina University in Canada shows a strong link between development aid and poor economic peformance. According to his work, every rise of one percentage point in the proportion of an economy's dependance on aid is associated with a 3.6 per cent drop in that country's output.

This does not necessarily prove that aid causes economies to fail. Statistics like this show a relationship and some will argue that the aid is the consequence of economic problems, not the other way around.

But people of good faith need to consider whether, instead, Western aid has unintentionally been a root cause of Africa's economic misery and that the increase now announced could make the Continent's suffering even worse.

Dr Ovaska looked at the economic record of developing countries around the world and studied how each one performed during five five-year periods between 1975 and 1998. He created various economic models to try to explain the enormously different rates of growth. Like many economists, he put in well-known factors that might help growth like investment, good government, education and so on. Among these variables, Dr Ovaska also put in increases and decreases in development aid.

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July 06, 2005
Wednesday
How foreign aid might be damaging Africa (Part Two)

A report published by the Globalization Institute suggests that aid to Africa actually reduces its economic growth. It is a radical claim and hard to prove. As ever, in reviewing the evidence, one must bear in mind that correlation does not prove causation. However I have not yet read the report and perhaps it succeeds in overcoming this difficulty.

The comments of Mr Mbeki (see posting below) certainly offer some possibly explanations of the mechanism of just how aid could, paradoxically, damage economic growth.

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July 04, 2005
Monday
How Live8 may actually increase starvation in Africa

Moeletsi Mbeki, brother of Thabo Mbeki and deputy chairman of the South African Institute of International Affairs, wrote an open letter to Bob Geldof in the Mail on Sunday. It was all the more devastating for being politely expressed by a man who lives in and really knows Africa:

I know that you and Tony Blair have been genuinely touched by the suffering of Africa.
But, ironically, the contribution you are making is exacerbating the problem.

Posted by James Bartholomew • Indexed in Foreign aid • Media, including BBC bias • Waste in public services

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July 02, 2005
Saturday
Private education in a remote part of Africa better than a comprehensive in Britain

This letter in the Daily Telegraph today provides good anecdotal support:


Sir - How to rescue Africa from Mr Blair's and Mr Brown's good intentions? James Bartholomew (Opinion, June 30) [this posting] cited Professor James Tooley's research to indicate how spending $7 billion a year of someone's money to give every African child free state education would shatter the standards of education already in place.

I can cite my own experience of simultaneously serving as a governor of a large comprehensive in Mr Blair's native ground of Islington while repeatedly visiting the remote Bakonzo people of the Ruwenzoru mountains in Uganda's far west. There, where virtually every child goes to one mission-founded school or another, paying tiny fees, the standards of literacy, grammar, maths, handwriting, general knowledge and, of course, scriptural history, were (and are) markedly higher than at the struggling Islington comprehensive, age for age, right through from 12 to 16.

Tom Stacey, London W8

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June 30, 2005
Thursday
What's wrong with free education for Africa

One of the ways in which Gordon Brown and Tony Blair think they can help Africa is by offering free education to everyone. It sounds like an obviously good thing. Wouldn't it be marvellous if every young African could learn to read, write and learn much else besides, as well as coming out of poverty? Of course. But there is a problem.

Professor James Tooley of Newcastle University has done a study of schooling in Africa and discovered something that will come as a surprise to many. There are a huge number of private schools there catering for the poor that do not appear in official statistics. They are not regulated and inspected or anything like that. Yet many extremely poor parents in the shanty town of Makoko on the Lagos lagoon in Nigeria make great financial sacrifices to send their children to them.

The danger to Africa is that if Messrs Brown and Blair persuade other members of the G8 to give, say, $7 billion a year to Africa to promote free education, it will have an unintended consequence. Many of the poor parents who send their children to fee-paying, private schools will be tempted to send them to a vastly increased number of free state schools. In the process, the fee-paying schools will be driven out of business or dramatically reduced in size.

What's wrong with that, you might ask?

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June 29, 2005
Wednesday
Newsnight: Tooley in Africa

While there is time, I recommend you have a look at the part of Newsnight last night about private education in a slum in Africa, presented by Professor James Tooley. The programme is here. The section concerned starts after 32 minutes - you can fast forward to it. I think this Newsnight will no longer be viewable after the next one appears tonight.

Posted by James Bartholomew • Indexed in Education • Foreign aid

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June 24, 2005
Friday
Private education in the third world

One of the many reservations I have about the Richard Curtis/Bob Geldof/Gordon Brown bandwagon to 'make poverty history' and have a million people pressurising the G8 is that they all, effectively, wish to bolster the state apparatus in African countries.

One of the areas where this could be counter-productive is education.

Professor James Tooley has been to third world private schools and reported on how the private schools often do more good for the poor than than the state schools.

Posted by James Bartholomew • Indexed in Education • Foreign aid

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June 16, 2005
Thursday
Bob Geldof''s attack on Ebay was illogical and excessive

Bob Geldof is becoming Britain's moral conscience. Bishops, vicars and cardinals have vacated the pulpit from which morality was once preached and in has stepped the veteran pop singer. He is beginning to look the part, too. His long greying locks, hunched shoulders and staring eyes suggest the pained experience and passion of some Old Testament prophet.

In his latest eruption of fury, he furiously attacked Ebay, the biggest online auction company in the world, for allowing auctions of tickets to the Live 8 concert. He said that "selling Live 8 tickets which are free is sick". He branded the sinners as "despicable" and denounced Ebay for acting "as an electronic pimp". He was like Moses coming down from the mountain and denouncing those who had started worshipping 'graven images'.

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