Eat Your Greens – The truth behind “fair trade” and “ethically sourced” goods.

Although I’m only about two months late in reporting it, The Economist has done it again with a wonderful piece on buying “Fairtrade”, “ethically sourced” and “local” foods.

The main premise of the article is:

The aims of much of the ethical-food movement – to protect the environment, to encourage development and to redress the distortions in global trade – are admirable. The problems lie in the means, not the ends. No amount of Fairtrade coffee will eliminate poverty, and all the organic asparagus in the world will not save the planet. Some of the stuff sold under an ethical label may even leave the world in a worse state and its poor farmers poorer than they otherwise would be.

If farmers aren’t getting enough for their produce, then it’s mainly due to oversupply – they shouldn’t be artificially encouraged to produce it by being paid more – and by paying more, well meaning Westerners are actually subsidising their retailer rather than the farmers in any case.

If goods are being transported by truck in a piecemeal fashion from small farm to small retailer – then what impact do those logistical “food miles” have on global warming? Large supermarkets have the most efficient and environmentally friendly means of transporting goods (ie: in a large scale, in large semi-trailers, in large warehouses, to large retail outlets). These large scale deployments seek to lower cost, thereby lowering the energy usage and environmentakl footprint.

U2’s business practices

For many, many years we have admired U2’s business practices. This band has succeeded in not only writing and recording multi-million selling albums and lucrative world tours, but their ability to create corporate structures which allow them stable and quality income streams which can even out the rollercoaster ride which is typical in the music industry.

Today, we read a very interesting Bloomberg analysis of U2’s business operations.

It’s a really good read, but the point is, it outlines that the reality of U2/Bono’s private personae is far different to the pro-charity public face. It’s well and good for him to be asking Peter Costello to give more of Australia’s tax money to charity, but Bono himself minimises paying taxes in Ireland. It’s well and good for Bono to be talking about giving money to the poor, but Bono himself doesn’t have any significant record of donations. Funnily enough, in terms of promoting the welfare of the underprivileged, U2 never paid a cent to the 400 or so extras which spent a gruelling 12 hours shooting the new U2 film clip at the Corner Hotel in Richmond during their recent Vertigo Tour. The best Bono could do is, once filming had finished, yell: “You deserve a couple of beers” and shouted the bar. As Andrew Bolt wrote: “Want to save the world? Yes, yes! Want to pay for it? No, no!

This is the same U2 that sued the PRS in the UK in 1994 in an effort to gain a greater share of publishing royalties and the right to negotiate their own performance licences – getting 80% of the fee from a gig and leaving the remaining 20% to support acts (rather than the 50/50 split which preceded it. That they brought legal action against the PRS to remove themselves from a collectivist organisation is the ultimate in business freedom; their stance should be admired by free thinking people around the world. But how this contrasts with the left’s obsession and heritage in collectivist thought is humerous, to say the least.

U2’s tactics are totally justified in that they are able to do it – they look after their own interests, ensure their talent and work is rewarded sufficiently and well done to them for doing so. They have the power, cache and talent to demand such mechanisms and they are rewarded for it.

But for Bono to claim that others aren’t doing enough for the poor or that countries like Australia and the US should give more taxpayer money to charity reeks of the highest hypocrisy. Again, they should be admired and congraulated for their global capitalism – it has created jobs, wealth and has brought joy to the lives of literally millions. But it is equally as wrong for them to use their position of power to then espouse a philosophy at diametric odds with their own personal actions.

It’s not to say their capitalist behaviour is in general at odds with kindness and charity. Not all all. Personal contributions and donations are a complementary factor of personal freedom and self-interest. If I make money, I should have the right to decide where it goes to and how much should go. It is, however, the notion that a central, collectivist organisation such as a Government (or for that matter a copyright collection agency) should decide and distribute a donation on my behalf which is highly disturbing. It is that element of Bono’s stance which is illogical and downright rude.

“Participation is the new consumption” – from

participation is the new consumption

I LOVE IT. Consumption has consumed itself. Nothing is original. Affluence has become affluenza. The only thing which is original and unique is the journey that you take in life.

Participate. Join in. Does this mean we are about to see a resurgence in participatory democracy? Will membership based organisations all of a sudden reverse their global decline? Is travel going to become far less “tourist”? Will people become bloggers or have bloggers become people? Is it all about family again? Dare I suggest it, have churches such as the pentacostals led global trends?

Or is it as simple as saying goodbye conspicuous consumption, hello “joining in” to holidays, events, membership based organisations, knitting clubs and other things that we “do” rather than “buy”?

There’s definitely going to be a shift in expenditure from goods to services in a digital economy.

EMI = Every Mistake Imaginable

The past few weeks have been somewhat tumultuous in the music industry, with the departure of two of the music industry’s best regarded executives, David Munns and Alain Levy from EMI and the closure of Sir Richard Branson’s V2 record label in the USA (home of the White Stripes, among others).


It’s interesting how a total lack of recognition and adaption of a new business model is slowly killing the recorded music industry from the inside. Live music is still firing, music publishing is fine – but records – oh records, what a sorry state they’re in. A sad state of affairs, but few in that industry are acknowledging the fragmentation and movement from physical distribution to distributed consumption. The former is about a central factory making and distributing artefacts and physical products. The latter is the central factory placing content on a variety of channels and allowing people to consume at will; they choose the time, place and channel.

Every industry will move thorugh these phases:
1. Reduction in the cost of production due to technology and globalisation
2. Increase in number of producers / democratisation of production
3. Increase in number of channels due to digitasation and high cost of physical channels
4. Increase in ability to distribute through channels as internet speeds get higher and computing power gets better / cheaper.
5. Fragmentation of channels and consumption meaning large “culture driving companies” will struggle to impose their products
6. Changes in marketing and advertising – increased personalisation of marketing as fragmentation will lead to a need for greater relevance and “chase” of smaller markets
7. Decoupling of product from time or place (goodbye seasonality, hello songs from twenty years ago randomly appearing in the bottom rungs of charts).

What other ramifications?

Dubai or Not Dubai

The Economist has published an interesting report on the growing pains, opportunities and stories of an emerging global city – Dubai. It raises an interesting point about freedoms in the City-State.

Even Skype, the free internet-phone service, is banned in order to protect the local telecoms provider. It remains to be seen whether such restrictions will continue as the UAE inches toward democracy

Such restrictions are a key barometer of the future successes of such a city. If the Government believes that press and communications freedoms should be restricted for the “greater good”, then they are promoting a genuine false economy. They should take a leaf out of Hong Kong’s book, where particularly under Sir John Cowperthwaite they might not have had a legislative freedom but they had truly the greatest economic and social freedoms in the world – and how they prospered.


One of the greatest thinkers, revolutionaries, philosophers, leaders and liberal evangelists this world has known, Milton Friedman, has died at the age of 94.

Milton Friedman - One of the Greatest Thinkers the World Has Known

The winner of the 1976 Nobel Prize in Economics, Friedman was one of the founders of the “Chicago School” of Economics, a group of then “radical” free marketeers and liberals who advocated market solutions to the most pressing economic and social problems of the day. A great departure from the prevailing Keynesian economic paradigm, Friedman’s theories and ideas for small government and greater personal freedom and responsibility have slowly clawed their way back into prominence among academics and policy makers – and the world is a far greater place because of it.

Truly a great humanist and advocate of human freedom through economic freedom, Friedman was a natural heir to the greatest thinker in economic and social philosophy, Adam Smith. He was seen as such a radical in proposing such capitalist and free-market ideas that he was put on the cover of TIME Magazine in 1969 (that summer of radicalism and free love) with the headline, “MAVERICK MESSIAH”.

He was known as the “economics” in “Reagonomics”, long working as an economic adviser to Ronald Reagan. Former British PM, Baroness Margaret Thatcher released a statement upon hearing of Friedman’s passing: “Milton Friedman revived the economics of liberty, when it had been all but forgotten. He was an intellectual freedom fighter”. Former Governor of the US Reserve Bank, Alan Greenspan, said: “My world will not be the same”. Austrian born Governor of California, Arnold Schwarzenegger (himself an Economics graduand), said: “When I was first exposed to [Friedman’s] powerful writings about money, free markets and individual freedom, it was like getting hit by a thunderbolt. I wound up giving copies of his books and ‘Free to Choose’ videos to hundreds of my friends and acquaintances.” Gary Becker, 1992 Nobel Prize Winner, said: “He was the single most important force for setting out the argument for why free-market economists do better. Those ideas impact everybody.”

One of Friedman’s best quotes was when confronted by socialists and lefties: “Your objective is the same as mine – greater individual freedom”, he would say. “The difference is that I know how to achieve that objective and you do not.” It is easy to dismiss Friedman’s achievements as a reinforcement of the norm. However, when Friedman was proposing his ideas, it was in an environment of hostility, ignorance and socialist groupthink. Friedman not only broke the mold, but changed the world. His students themselves have won a staggering total of 12 Nobel Prizes.

His official biography

Some tributes:
The Boston Globe
The Financial Times
New York Times
USA Today
Chicago Business News
Fox News – Interview from 2004
A Personal Account from the Von Mises Institute

Friedman’s ideas and leadership have improved the lives of EVERY PERSON on this planet and will continue to do so for years to come. He is a giant in world history and deserves to be treated as such. He will be sorely missed.

Friedman’s Nobel Presentation

Capitalism & Freedom
Free To Choose

POSTSCRIPT: Andrew Norton has an excellent personal obituary to “Uncle Milton” on his blog here.

Rail Nationalisation?

The Bracks Government today announced that it was buying back it’s lease with Pacific National to operate the Victorian country rail network. This nationalisation sets a horrible precedent. Instead Pacific National bearing the burden of an under-utilised rail network, now Victorian taxpayers are going to bear the burden.

Pacific National has blamed poor grain cartage, which makes sense considering there has been three years of drought and low harvest yields. But for the Government to take the ownership back makes no sense at all.

It’s a worry that Bracks may well use this third term to buy services which are better and more efficiently run by the private sector. Further, racking up a hefty debt to pay for it all.

What could be next on his wish list?
Power stations?
Phone companies?
Media Companies?

Rex Connor, eat your heart out.

The ATO is planning on taxing gold farmers?!

Virtual world: tax man cometh – BizTech – Technology –

The Australian Tax Office is with it… In another sign that the virtual worlds and real worlds are colliding, the ATO is warning that Gold Farmers are likely to be taxed on earnings from online games.

How they will track virtual currencies I don’t know. This is a very interesting development as the years progress and various currencies and e-currencies begin to displace country based currencies. Keep an eye out.

The Gold Rush – Virtual goods and virtual wealth

There are huge changes in the relationship between the online and real worlds (the real world being referred to in cyberspace and in this piece henceforth as “RL” – real life).

Gold farmers have been around for a while, those people who make a career out of performing certain tasks such as mining gold in computer games such as World of Warcraft and then selling it online on exchanges such as eBay and so on.

But little did I know that gold farming as a job was just so popular. It is estimated that in China alone, there are over 100,000 full time gold farmers. 100,000 people who operate in an often organised, hierarchical, productivity based job (which can even be unionised)!

It’s remarkable that these people perform tasks in an online world and then sell the fruits of their labour in RL. There is a multi, multi million dollar economy built around these industries. We will see a lot more of this, as people operate in semi-RL labour environments, existing through media such as Second Life, World of Warcraft and Star Wars Galaxies and then transferring these skills or other outputs to RL.

RL is so behind the times. Universities, for example, could have truly virtual classrooms, with people all over the world attending lectures by famous people, both living and dead. Worried about missing the social element of uni? Don’t be – emergent gaming allowances will mean people can play around as much as they like, just like in RL. And in terms of collaboration, can you imagine that? Your avatar existing in any environment, with any skills, strengths, etc. It could expand education into so many different fields, and seriously cut the cost of education delivery.

It will fundamentally change the way people socialise, work and learn. It’s already changed the way they play.
And has RL a lesson to teach these games? What about doing it the other way? Gaming companies and virtual lifestyles could be placing clues, keys, tasks and quests in RL which could be collected by a mobile phone, PDA or laptop and then transferred into the games.

/lol, it’s a serious business.

On a final note, check out this doco on Gold Farmers for more info. It’s REALLY interesting.