Connected Capitalism?

In the first week of 2013 I decided to begin the year by reading a book that promotes capitalism. Why? Because my goal this year is to read outside my comfort zone. 

The book of choice:  Neville Isdell & David Beasley “Inside Coca Cola: A CEO’s Life Story of Building the World’s Most Popular Brand” (2011, St Martins Press, New York).

Why this book? Well, last year my sister and I argued about the benefits and problems of capitalism which in itself is not unusual because we both agree to disagree about most things political especially when it comes to money and society. Anyhow, we were discussing how we had quite polar opposite views and ended up in a slightly heated discussion about Coca Cola (Coke).

Prior to this particular discussion I had watched a documentary on the depletion of water tables in rural India that the local communities blamed on the production of Coke in their area. However, my sister had just read the book cited above. She insisted I read the book before bagging Coke. I was at her house just a few days ago, saw the book in a pile and took it as my holiday reading. Its at least an interesting perspective. 

In this book, Isdell (former CEO of Coca Cola) argues that there was no proof that Coke created the depletion of the water tables in India and that the report he'd read indicated that depletion was the result of overuse by farmers in these areas and that the water tables have continued to decline at the same rate since Coke has withdrawn from the area. What Isdell does not say is - who funded the report, how were the water tables measured before and after Coke operated in the region, how was water use by farmers measured, what was the amount of water required to sustain the Coke plant to name a few questions. 

Given he states he has an explicit bias to Coke, I am still not willing to take his word for it. 

Additionally, he promotes Coke as a moral corporate citizen. Whatever that means. In his mind, it appears to mean that certain percentage of Coke's profits are redistributed to the communities within which Coke operates. I was amused to see him argue (and to be fair, he argued well, even if I do disagree), that spending $25 million building a Coke bottling factory in Afghanistan was more beneficial to the community than building a Hospital.  His reasons were simply that the Coke bottling plant would provide 350 jobs which meant the government could collect employee and company taxes to build and sustain their own Hospital and employees could afford to pay for medical treatment. So his argument is that 350 employees would sustain the building and operation costs of a Hospital in Afghanistan so that they could then pay to use the services they have already subsidised through their taxes? Oh, right. 

Moreover, introducing an unnecessary product into a destabilised country claiming some moral victory when this was simply for profitability and acquisition of majority market share in Afghanistan is not responsible. What about the waste caused by the production of coke (including the plastics in which the drinks are sold), the extraction of resources to develop the technology used to make the product saleable, the lack of health benefits to a country that is suffering...I could go on. 

But Isdell claims that this is necessary to alleviate poverty. No. Building Coke bottling operations in developing countries is not in the best interest of the community, no matter which way you view it. It creates more problems than it solves. It uses precious water resources in these countries to make an inferior product and then charges those communities for the consumption of the inferior product even though the superior product - water, is or at least ought to be freely available. 

Isdell calls this 'connected capitalism' - the partnership between corporations, NGO's and governments who work together to create profits in order to resolve poverty. There already exists terms for this kind of partnership - 'Crony Capitalism' and 'Fascism'. Business and government should never be in partnership with each other since history tells us it leads to bribery, corruption and the implementation of the Police state as corporations force governments to enact laws that protect their business interests. It creates class divisions and ensures that poverty always remains to legitimise corporate profit making. 

Poverty is the result of inequality

Okay blog readers, brief plug first: if any of you do not watch or have not heard of Native Affairs, highly recommended viewing. Mondays 08:30pm on Maori TV. It’s a current affairs show – the best, to be honest.  This week, the main topic was poverty, specifically in relation to living conditions.  You can watch past episodes online, just click on this link: http://www.maoritelevision.com/default.aspx?tabid=636&pid=212.

The definition of poverty differs according to whose doing the measuring. Typically, in NZ we measure relative poverty, simply meaning that we measure according to the ‘minimum level of income deemed necessary to achieve an adequate standard of living’. We can therefore see that poverty derives from the inequality in respect of  the distribution of incomes. So while there are many people out there proffering solutions such as community gardens to feed the poor or housing projects to shelter them, within a monetary economic system, the only way of restoring equality and eliminating poverty is through the redistribution of wealth.

But what government is willing to advocate for that?

I acknowledge that there are many groups out there trying to ‘fix’ poverty or individuals wanting to ‘fix’ it. But only the government is in a position to make the changes necessary. The government must look at income distribution and tax if they have any real intent to solve poverty in NZ. (see link at the bottom of the page for an interesting blog on tax)

Let us look at the minimum wage, because it is not just beneficiaries living in poverty. The argument is that we cannot raise the minimum wage because of the adverse effect it would have on small business. Well, while we are busy protecting small businesses from going bust by increasing the minimum wage, we are also subsidising medium and large corporations who pay many of their employee’s minimum wages and punishing those who are working for crumbs. Low-income earners are entitled to claim subsidies such as accommodation supplements, working for family tax credits and food vouchers. In an attempt to blind the public to who the taxpayer is really subsidising, the government posit these social security schemes as being benefits to our low-income earners and claim this as some great deed that we as taxpayers are subsidising the incomes of low wage employee’s. Bullshit. We are subsidising businesses so that they can pay the employee less than their labour is worth so that they can make a bigger profit. Taxpayers are doing no more than topping up the wages of low income earners because the government privileges businesses over people. As a result, the government cut further spending in the social services (including health and education) because of the allocation of our taxes to subsidise businesses who cry wolf at the thought of paying a living wage to an employee for their labour. Interestingly, these business owners are usually the same people harping on about individual responsibility, welfare statism and a free market even though they are products of the same labels they use to chastise the poor.  

So my point is, while community gardens and housing projects will feed the poor and provide shelter, they do not address the inequality issue. Redistribution of wealth will help solve the inequality issue, but land ownership and an insistence on private ownership of land, will always ensure that inequality prevails. Think about it – we as human beings are always occupying a physical space. Yet, every space we occupy has some rights, interests or obligations attached to it. We cannot simply choose to opt out of society – because even if we did, someone or some entity has rights and interests in every inch of the land. So if we wanted to just go to sleep somewhere either local government would prevent us from doing so on council owned land, DOC would prevent us from doing so on conservation land, homeowners, renters and business owners would prevent us from doing so on their privately owned land. Yet we must sleep. In commodifying land, we have taken out of the commons a resource necessary for all land dwelling species to survive. Successive governments have arbitrarily determined the boundaries and the rights and interests that can be attached to land notwithstanding that land is not a manufactured good whose origin can be traced to a particular person. Additionally, land ownership has forced people to participate in a society that they were contingently born into even if that means participating to the detriment of their own well-being. 

Highly recommended read on NZ tax system as regressive not progressive: http://pantograph-punch.com/from-each-according-to-his-need-how-our-tax-system-punishes-the-poor/ 

Also checkout: http://www.cpag.org.nz  there are some great resources on this site.

Food in schools

This week the Labour Party announced that it would be supporting the provision of food in low decile schools, in a way coat tailing on the election policy of the Mana Party.

This has spawned a lot of debate between those who think it promotes a lack of parental responsibility and those who think no child should ever go hungry, irrespective of their background.  

The argument behind providing food in schools is that it is estimated around 270,000 children are turning up to school without having had breakfast and without lunch. In a country that prides itself on fair equality of opportunity, the figure is astounding. Some will argue that the State has a duty to ensure that its citizens, especially the children, are not deprived of food. Critics of that argument suggest that it is the role of parents to provide food for their children and not the role of the State. 

So who should be responsible for feeding children during school hours?

Matt Nolan, an economist, who writes on the TVHE blog, suggests that as children are forced to be in an institution for most of the day, we ought to make sure that the institution provides the services required. His baseline for his argument is as follows: 

“We need to think about primary and secondary school education more clearly to get a good idea about the policy of free lunches.  Why do we provide this sort of education, and what does public provision achieve?  We provide this type of education to ensure there is equality of opportunity for individuals in society.  On that note, having shared lunches at school ensures the same thing – we know that appropriate nutrition at a young age is essential for the physical and mental development of an individual.  We know that, especially in low decile schools, there is a definite “underinvestment” in this attribute for kids"

see: http://www.tvhe.co.nz/2012/09/10/free-food-in-schools-equality-of-opportunity/

I agree with this argument. The State specifies certain learning outcomes and in order to achieve those outcomes, every child needs to have the same starting point. While food is not the only factor influencing how a child learns, it is certainly a key factor for ensuring they have the energy to learn.

My issue with the policy proposed by Labour is that it does not go far enough. My view is that lunches provided by the State should be provided in all public and integrated schools. Without detracting from the issue of child poverty, my concern is that while some parents can afford to send their children to school with lunch, are they sending them with the appropriate food? Children’s lunchboxes are often packed with sugar.  The impact of sugar on a child's learning, in my view, has an effect similar to a child who has little to no lunch. When a child comes crashing down off the sugar, they are lethargic and lack the energy required to learn. It is common knowledge that in many Scandinavian countries, food in schools is standard practice, and this correlates to the relatively good health outcomes in those countries as well. Therefore, by providing lunches in all state funded schools, we could address the correlative issues of hunger and health.

Criticisms that I have heard or read about suggest that feeding children in schools does nothing to address parental responsibility. The assumption is that parents will get lazy and rely on the State to feed their child or children. That attitude is the result of a punitive mind and a lack of compassion through an inability to understand the complexity of the issues faced by parents raising children in poverty. Additionally, they label parents who are unable to feed their children as lazy, useless and negligent, as well as alcoholics, drug addicts, smokers, gamblers and so on. These “labels” do not belong to poor parents. Wealthy parents can also be lazy, useless, negligent, alcoholics. Drug addicts, smokers etc.  My point is that publicising these attitudes affects children and has a huge impact on their confidence. 

When I was at primary school and my mother was on a benefit, if we had no food for lunch, I would pretend I was sick so I didn't have to go to school, or at lunchtime I would go wait down the road outside the school grounds and tell my friends I was waiting for my lunch to be dropped off, or I would go hide in the cloak bay until the lunch bell rang and everyone had finished eating. Children feel the shame of their parents not being able to feed them and that shame comes from people characterising poor parents according to the labels mentioned above. 

Moving on, with all the socio-economic indicators aside, no parent wants to be in a situation where they are unable to provide lunch for their child or children at school. In fact, I would go as far as to say, that being unable to provide such necessities is likely to be a huge factor exacerbating the stresses that cause the above-mentioned problems. 

Punitive measures suggested by the critics of state funded lunches for children, would rather have poor parents criminalised for not providing lunch for their children or stopping their benefit. My view is that by addressing child poverty through penalising parents is counterproductive. Such penalties add further stress to these families, and stress does not make for good outcomes. 

Providing food in schools as a standard practice is more a rehabilitative approach. It signals to poorer families that the State will take care of the child at school and provide all that is necessary for that child during their time in the school and encourages the parents to take responsibility while the child or children are in the home. Critics will argue that this is highly idealistic. However, if the government makes clear that the raising of the child is a shared responsibility, then the parents can focus on ensuring that they can provide at the least the necessities at home removing the stress of wondering how they are going to provide those necessities for the child at school. The stress is diminished through knowing the State is supporting you, and through that co-operation, parents may start to see hope in their future and in their children's future.  I am not denying that some parents may still take advantage of the situation, but children should not bear the penalty of the choices made by their parents.