Category Archives: Food Security

An Idea Whose Time Has Gone

Brettonwoods

As an avid yet completely unschooled armchair economist, I am ading my way through Benn Steil’s ‘The Battle of Bretton Woods: John Maynard Keynes, Harry Dexter White, and the Making of a New World Order’. I use the word wading, as lacking any training in economics, I find about half of it goes over my head. But far be that from creating impediment to my opinion formation, which I shall espouse in this space I created for that very purpose.

According to Steil, The much touted Gold Standard, oft wistfully harked after and seen as a panacea for our current financial ills, came into being officially only in the early nineteenth century, and spluttered in and out of existence between the early twentieth century and 1931 for Britain, and a bit later for other countries. According to Maynard Keynes, its demise was a good thing. That banks were leveraging off gold in the latter stages of its use meant that it had ceased to have the anchoring effect most of its current day proponents believe it enjoyed. Keynes apparently felt that it overly constricted money supply in any case, and placed a brake on economic development.

What struck me as interesting however, was Steil’s almost offhand reference to the demise of Laissez-faire capitalism in its true form toward the end of the nineteenth century. This was the period in which government control started to be exerted on the labour market, limiting exploitation of labour, including the outlawing of child labour below the age of 15 (if my memory serves) and restricting working hours to a bunny-hugging 16 hours a day. (I’ll check the facts and get back to you on the exact numbers). As Ha-Jooon Chang points out in his book ’23 Things They Don’t Tell You about Capitalism’ since that time, there has been no such thing as a Free-market economy. ANY form of government control against the exploitation of anyone or anything renders the notion of a Free-market obsolete. So the rise of the labour unions lead to the demise of Laissez-faire Capitalism as we know it, at least in places where the trade unions enjoy any form of legal support. The rights of the workers heralds the emergence of a middle class, the size and economic power previously unknown. The economic ravages of  the First World War effectively bankrupt Great Britain and most of Europe, pushing Great Britain from the position of cash-flush Bankers To The World, to debt-ridden charity cases. The great stately homes of Great Britain started to suffer after the first World War, as the armies of staff required to keep them running became simply unaffordable to all but a privileged few. Britain battled along during the 20’s, whilst the USA enjoyed a roaring time, right up until 1929, when things went a bit pear-shaped.

The USA’s economy tanked during the Great Depression, as it came to be known, and pulled Great Britain and Europe in with it. Just as it was recovering, World War II started, and Great Britain started the war off on a poor financial footing, unlike in the previous World War. America stayed out of the war, but sold munitions and armaments to Great Britain, sucking up whatever liquidity they still had left, and once Britain was sucked dry, entering the Loan/Lease arrangement, which placed Britain very heavily in the debt of the USA. The Bretton Woods conference saw the USA use that leverage, to push the US Dollar as the world reserve currency, against the British desire to create a separate international reserve currency. The USA won, and went on to become the financial superpower that they did, whilst the effectively bankrupt Great Britain lost most of its colonies and sank into its current status of being a US satellite.

The 50’s and 60’S were good days for the US, with a burgeoning manufacturing sector and unfettered access to world markets, thanks to the trade agreements drawn up at Bretton Woods. The US were the manufacturers, and the world was its market place. Strong trade unions and an affluent middle class kept the economic machinery spinning.

But by the late 70’s the powers that be were no longer satisfied with the money they were making, and wanted more. Ham-strung by unions, the Captains Of Industry started looking for ways to reduce input costs, particularly labour. They started externalizing labour and pollution to avoid legislation starting to come into effect, moving the problem to other countries. The era of Reagan and Thatcher saw the second coming of Laissez-faire Capitalsim, in the form of Globalization, championed later by Bush Snr and Clinton, then carried forward to its current extremes by Bush Jnr., ably abetted by Dave Cameron et al.

The Globalization push was a return to Laissez-faire Capitalism, circumventing the restrictions placed on business by government, all the while pushing for less and less government intervention, the results of which we saw played out in the 2008 crash. Since then, the world Stock Exchanges continue to post record highs, and companies are showing record profits, but the poor and middle class are being pushed further and further into the quagmire of debt.

So severe is this attack, that fully employed workers at stores such as Walmart are relying on food stamps for survival. The Working Poor, they are called. Yet Walmart is not a struggling company, if their share prices over the past five years are anything to go by:

WalmartSource: http://stock.walmart.com/stock-information – accessed 6/5/2014

Corporate greed means more money for the investors, (whom we HAVE to keep happy), more money for the CEO’s, and less for everyone else. What would happen if we did away with publicly listed companies, and returned to privately listed or owned ones? – You could still own shares even if you weren’t an employee, but you would be part of the company, rather than merely riding it for profit.

Barclays Bank are currently squeezing ABSA bank, one of its subsidiaries, in South Africa. After ABSA announced that they were to reduce their workforce by some 3500 staff, I wrote to the CEO, Maria Ramos, telling her that I was closing my account with them. I told her that as a person who had been raised in a working class background, and married as she was to Trevor Manuel, a trade unionist who went on to become the longest serving Finance Minister in the world, and one of the shining starts of the ANC government, she should know that the bank was a part of the community. That the jobs she was doing away with meant 3500 homes losing a salary, to some or many, possibly the only salary they have. I said that there are things more important than money, and the bank’s place as a member of the community meant it was beholden to that community as much or more than to share holders. To  my surprise, she responded, telling me that the jobs to be deleted were posts of those retiring or being transferred elsewhere. We discussed it for a while, and I agreed to not withdraw my $2 savings from her bank, if she promised to honour her commitment to not put people out on the street.

The point of the above being that we have all bought into the Profits Above All Else ideology. Why is that? Why do profits matter more than people? Why do they matter more than our communities? Why is it okay for us that the Chinese labourers are being screwed in ways that we would not accept ourselves to be screwed, just so we can have the next new widget? That the Chinese government are prepared to allow their people to be abused is one thing. That we allow it is another. We have in many ways returned to where we were in the mid nineteenth century. It is time for a counter swing. What would that look like?

The Occupy Movement was a start. That it was quelled by the governments of the countries involved shows you where they see their bread buttered. More recently in South Africa, the Police turned on striking miners who were no risk to life or property and shot 34 of them in what appears to be a conspiracy to kill, as detailed in the documentary film currently on circuit: Miners Shot Down. That the Minister Of Police allegedly colluded with the Mine Bosses, one of whom, Cyril Ramaphosa, was a leading figure in the the Trade Unions during the fight against Apartheid, places large questions around the separation of powers. Why were the police involved in a labour dispute? What subsequently unfolded resulting in the unprovoked killing of 34 miners is a matter that should see decision makers facing jail time. We await the outcome of the Markiana Commission of Enquiry. The track record of these various Commissions investigating government complicity in crime does not inspire us with much confidence, yet hope springs eternal, and I digress.

Why do governments side with Big Business? Surely, they should side with the electorate, the people who put them into power? It is obvious that the relationship between Big Business and governments is far too cosy, and that the kind of people we have in power are from the breeding stock of the sort doing the screwing, so to speak. We’re being screwed, by the very types we then choose to represent our interests in government. What we need, is a parliament of Regular Joes. And Josephines. Follow the model of Sweden, and slash the big salaries, slash the perks, do away with the motorcades, the fancy houses and private jets. Politicians are not super-human. Many appear to be vaguely human at all. Lets get people who want to do the job because they care about the country, about our communities, about putting the world to rights, rather than lining their own pockets and setting themselves up for comfortable retirements with cushy jobs from indebted business pals. It’s enough now.

I believe that we are seeing the end stage of Globalization, and I’m looking forward to a good funeral. Let’s end this madness, take back our communities, and get a sense of priority rooted in life that matters. Let’s demand government accountability. Let’s break the stranglehold that business has on us. We are destroying our planet and our communities in the name of short-term profits. It’s insane and it must stop.

 

Our To-do List (A work in progress)

I realize that there are so many websites & blogs out there, all saying much the same as this – that we need to vision a new future etc etc – but no clear idea on what that looks like. I’m hearing speeches and reading opinion pieces every day with terse reminders along the lines of – ‘If we don’t do something soon, we’re all screwed’, yet offering nothing concrete by way of action plans. There is a massive disconnect between the perceived need and the actions on the ground that will achieve them.I’m starting here.

-1- Often in South Africa, there is money allocated to tackle the problem, lots of money, but it gets returned to treasury unspent every year, as the money was not tapped. Reasons for this include unnavigable Red Tape and a procurement process which is (inadvertently) designed to destroy initiative and quality service delivery. The systems were designed that way to try to stop tender corruption – a laudable effort, which seems by all accounts to have failed, if one considers the slew of corruption exposes that come to light every month. The system was designed with the best intentions in mind, but doesn’t work. It’s time to redesign it from the ground up. Government has the money available to make many of the interventions needed, but they are not being made. That is insane. Starting with a ‘Two-envelope’ system is a good starting point – in the first envelope is your methodology, team and track record. Only if you make it through that first cut can your second envelope be opened, which presents your tender bid. That eliminates all the fly-by-nights and ‘crazies’ who are currently destroying the market. A second idea wold be to use the French system of choosing the tender price closest to the average price of all submissions. We have the money – we aren’t spending it – we can afford to pay to have the job done properly, rather than the current ‘race for the bottom’ where by the time you have slashed your prices to get the work, you can’t afford to do the job properly. As it stands, the system is myopic and counter productive

Action Plan No. 1 – Scrap the State Procurement Policy, and start again.

To do: Write letters to the paper, contact your local Councilor, work your networks. Devise a better system, then start publicizing it.

-2- The private sector is hoping the sun will come out tomorrow. I am one of the growing number of people who seem to think it won’t. Well, not like that, anyway. The 2003-2008 boom was no boom, it was a bubble. The party’s over. We were spending money we simply didn’t have. Now our collective credit card is ‘maxed’ and we have to stay home, watch telly and live off beans on toast. Welcome to the Post-Peak Credit World.

I hang out with property developers, a couple of whom have become close friends. One in particular was earning an astonishing amount of money every month during the boom. Its all gone. He has nothing to show for it. He’s just as happy now- but he wasn’t at the time he was losing it all. I have met obscenely wealthy people – obscene is the correct word – seldom any happier than you or I. I won’t labour the point, its all been said before – ‘Money can’t buy happiness’.

Which is fine and well if you still have an income. Every week, we are hearing of companies laying off staff or closing entirely. For those affected, it is a very scary experience. Fear of losing their home, how to feed the family – all very real concerns. The market cannot soak up the casualties, and with a smaller economy, there will be higher unemployment rates, notably amongst a sector of the labour market which is unused to the idea. I was chatting to a guy this week who is scared rigid – he’s just been laid off. He is going to try his hand at jobbing – a bit of this – a bit of that – have 2 or 3 jobs, rather than one full-time job. Maybe that is the way we are heading. The labour market is set to become more fluid and less structured, with more people working as freelancers and jobbers, and the idea of a rigid structured job working 8-5 becoming less commonplace. That may be an important paradigm shift to get our heads around:

Action Plan 2 – change the way you think about your employment.

To do: Diversify & skill up into new marketable niches.

-3- We are trying to imagine what the new economy will look like. We know it is based on a low-growth or zero-growth economy – maybe the term ‘replacement economy’ is appropriate – that we will have to stop hankering after the mindless accumulation of ‘stuff’ and rather live more simply: buy a new kitchen when the old one collapses, buy a new car when the old one is no longer economical to repair – or trade it for a bike – you get the drift. This is always held up as a horrific doomsday scenario, but is it? I’m not an economist, so I will tread lightly here, but from what I am reading from economist’s work, it is not necessarily the end of the world. Read Richard Heinberg’s The End Of Growth for a Post-Peak Credit scenario. He concludes with an optimistic note:

The transition to a no-growth economy (or one in which growth is defined in a fundamentally different way) is inevitable, but it will go much better if we plan for it rather than simply watching in dismay as institutions we have come to rely upon fail, and then try to improvise a survival strategy in their absence.

And then a warning if we don’t make the shift:

In effect, we have to create a desirable “new normal” that fits the constraints imposed by depleting natural resources. Maintaining the “old normal” is not an option; if we do not find new goals for ourselves and plan our transition from a growth-based economy to a healthy equilibrium economy, we will by default create a much less desirable “new normal” whose emergence we are already beginning to see in the forms of persistent high unemployment, a widening gap between rich and poor, and ever more frequent and worsening financial and environmental crises—all of which translate to profound distress for individuals, families, and communities.

Action Plan 3 – change the way you think about our economy and your expectations of consumption.

-4- As a Built Environment professional, we are facing this very reality at the moment – there is precious-little private sector work, and the public sector work is in such short supply that by the time you have won the ‘race to the bottom’ to slash your fees enough to win the tender, you can’t afford to do a decent job.

So what will the future hold for the likes of us? – There will still be buildings built and areas developed to house the ever-growing population, but what will it look like, and how will we afford it? Property Development has always been a high-risk – high-reward industry. Take away the reward, and the only way it will be done is if someone else shoulders the risk. That would be the government, and let’s be honest – their track record for creating inspirational places to live is nothing to crow about. Nope – we need a third way. Desperately.

We are currently engaged with a new breed of property developer, the likes of whom I have never encountered before, but wish I met every day. we are working on a large development which will make an enormous change to the way our city functions and approaches inherent shortfalls and problems. The success lies in cross-subsidization, and that is an incredible part of the plan. It does not look at lifting the cream off small high-profit components and trying to scrape off the loss-leaders, he takes a holistic approach and views the entire system as a whole, which functions as a healthy whole, or not at all. It speaks directly to Alan Savory’s work. This guy truly is an inspiration. 400,000 homes are to be built using this approach – (which would mop up the social housing backlog of our city if it were to happen tomorrow), and despite the chorus of derision from the Doubting Thomas’s, the project is looking less and less like a pipe dream and much more like a sure thing. It will mean living in mixed social and economic neighbourhoods, and will change the ways we think about our communities. Rather than living in niches, in which we surround ourselves with people of similar status and standing, we will be exposed to a far greater cross section of our society.

Keith Writes about the Tools Of Disconnection in his book ‘A Matter Of Scale‘, listing them as the means by which Industrialized Machinery has cleaved us from our world, community and reality. When one begins to understand the importance of community to our psychological well-being, we see how essential it is to reintegrate ourselves as a community, and function within that realm.

Action Plan 4 – change the way you think about your community – how it is comprised and your place in it.

-5- Food Production. My next post will be on food production and the planet’s carrying capacity. Reading Jared Diamond’s ‘Guns, Germs & Steel’ has sent me in paroxysms of despair, as it becomes very clear that the earth has a carrying capacity of between 1 and 2 billion people, depending upon whom you listen to. That means 5-6 billion people will be left without a chair when the music stops, and that is a truly terrifying concept for all of us, regardless of which side of the divide you think you will end up on (and be honest, you hope and believe that you and your family will make it – we all do) I hope we all do too. It is a long argument which I shall paraphrase in the next posting, but the bottom line is – learn to grow your own food. Practice now while you can afford to fail, because in a few years time, you will eat or starve by your efforts. Before the industrial revolution, and indeed for the past 9000 years or so, it has been thus, and so shall it be again. You will need secure land, water, food and time. Start reading up on it, join classes or web groups, and start scanning your neighbourhood for suitable allotments. The City of Cape Town has already made it policy that each neighbourhood will have 1 good park, and the other Public Open Spaces within the area will be made available for other uses, particularly for Urban Agriculture.

Action Plan 5 – learn to grow your own food, and find ways to secure space to do so.