Volume 2, Number 38
13 March 2002

Should the Rich Take Jobs from the Poor?

Dear Friends,

"Thousands of Thai farmers have been performing black magic rituals in front of the US embassy in Bangkok protesting the United States and World Trade Organization (WTO). They have burned effigies of President Bush and head of WTO Mike Moore.

"Jasmine rice is one of the most sought after strains of rice in the world and is grown by over 5 million families in Thailand many of whom are in debt and very poor. In 1999 the average income of farming households was 26,822 baht (US$600) significantly lower than the average household earning of 78,875 baht (about $1800). If the small-scale farmers in Thailand lose the markets for jasmine rice, in particular its main buyer the US, then the viability of their livelihood will be threatened in the future." (Bangkok Post, 2/27/02).

Into this poverty-stricken situation stepped Chris Deren, an Amercan entrepreneur who had obtained seeds for rice very similar to jasmine. Helped by the University of Arkansas, and funded by the U.S. Department of Agriculture, he genetically mutated the rice with gamma rays so he could plant crops suitable to the American climate and capable of being mechanically harvested. The crop can be planted in U.S. soil in any season, does not depend on seasonal fluctuations, and ripens in 90 days. Furthermore, Deren claims that "his rice is just as aromatic and delicious as Thai jasmine rice."

But Gate Kong Ngam, a Thai peasant farmer, says, "Jasmine rice belongs to Thai communities, and Thai farmers. Our grandfathers, grandmothers, great grandfathers, and great grandmothers have been growing it for millions of years" (Bangkok Post, 2/27/02). If Deren's rice takes over the American market, over 5 million small-farmer families in Thailand will lose their means of livelihood.

Now look to Mexico: With the North American Free Trade Agreement (NAFTA), U.S. farmers can sell corn in Mexico, putting out of business Mexican farmers who plod out their existences on small farms with obsolete (by American standards) equipment.

What should be done about this?

But wait a bit! The same is happening right within the United States. "All along the nation's back roads," the New York Times reported (2/16/02), hundreds of towns ... are teetering in the recession, and some worry that they may never recover. Uranium mining has stopped in Falls City, Tex. In Loving County, Tex., oil exploration has stalled. For farmers in Pima, Ariz., and Bartow, Ga., cotton prices have sunk to 30-year lows. ... Ranchers who raise goats for angora wool are victims of low prices and competition from New Zealand and Argentina. Stretched across the southern tier, from Arizona and New Mexico through Texas and Georgia and into Virginia, these small rural communities form the base of the national supply chain. They produce most of the oil and much of the ore, fiber and food. In past recessions, even if they did not bounce back entirely, at least they survived. But this time around, as the overall economy begins to show some signs of healing, things are ominously different in many of these towns."

Where does the competition come from? From China, Russia, and other former Soviet republics, plus less developed countries in Africa and Latin America. True, the U.S. poor are not on the poverty level of the Thai, but does that make much difference to them?

The consumer is king

No matter what we hear, and what else we would like, the world is tending toward a free market. Some believe it is only "the rich" who want this, but evidence is strong that poorer manufactures, of steel, textiles, and even farming, would like to crack the markets of the more developed countries, because with their low wages they can produce more cheaply than we can. Many Americans resist this - demanding tariffs on steel and textiles, and boycotting sweatshops. Yet steel, textiles, and sweatshops may be the only jobs available for the poorest of the poor if (for example) we drive them out of farming rice. If we deny them these, they will turn to whatever they can — including prostitution and sex slavery. No, in many ways, we do not live in a pleasant world.

In economics, however, the consumer is king. Economics teaches how the world functions (in the economic sphere), not how it should function. Here, the consumer rules. Some feel that multinational corporations rule, or governments rule, or rich people rule. Some feel that workers should rule, or stakeholders (employees as well as consumers and stockholders) should rule. Maybe so, but these are "should's," not "are's." History shows that over long periods, consumers overcome multinational corporations that urge us to buy Edsels. It is to recognize consumer sovereignty that the world is deregulating.

When consumers rule, we pay more attention to the Mexican urban poor, who want cheap corn for their tortillas. With Nafta, they can buy that from the United States, and their children become better fed. What about the Mexican farmer? Well, he must either seek off-farm employment or improve productivity to compete with American farmers (cheap labor is his advantage). The same for Thai producers of jasmine rice. If American consumers can buy the same (or better) product more cheaply, they will do so. (Try to stop them!) Then thousands of years of Thai rice-growing may come to an end. Thai farmers must move into manufacturing or service jobs, And finally, so must small-town Americans.

Small-town Americans have long been adapting. A century and a half ago, the U.S. population was over 50% farmer. Now it is less than 2%.

If we were asking this question a century ago, it would be: Should automobile producers hold off, in order to save the jobs of horse farmers and buggy makers?

What we must do versus what we want to do

It has been easier to dislodge the King (or Queen) of England from his (or her) power than it is to dislodge the consumer. Nor should we. A world of consumer power is a world from bottom up — a classic liberal world.

But is there nothing we can do to alleviate the pain of those who lose? Of course, there is much. First, we in the more developed world can buy the manufactures of those in the less developed world. Political pressures have led our President to declare duties on steel up to 30%. This is a despicable act, which we should all protest strongly. We also protect textiles much more than we should. Second, we can provide technical assistance and capital to those who must change their lifelines. We can invest in Thailand and hire their erstwhile farmers. We can also invest in small towns in the United States — in the many industries where location is not a significant factor. Third, we can promote training schools, both at home and abroad, where new skills for a new world can be learned. Whatever we do, we must assist the transition, not try to hold it back.

What can I do, I keep asking myself? At age 81, for all the above I have "been there, done that." Now the best I can do is keep teaching in the university as long so I am able, and keep producing The Quaker Economist, to urge the world to move in salubrious ways.

What are you doing? If you are disagreeing with me, Fine! That is the way I learn. Please let me know about it.

Yours in friendship,

Jack Powelson

Readers' Comments:

Please send comments on this or any TQE, at any time. Selected comments will be appended to the appropriate letter as they are received. Please indicate in the subject line the number of the Letter to which you refer! The email address is tqe-comment followed by @quaker.org. All published letters will be edited for spelling, grammar, clarity, and brevity. Please mention your home meeting, church, synagogue (or ...), and where you live.

Repetition does not make a truth. Saying the consumer is king over and over does not make consumerism the equivalent of an ethical or moral principal. It may reveal the "true religion" of today however, led by a Wall Street Messiah. The dominance of most economic bully pulpit preachers does not make them speakers of truth, and certainly not of human compassion.

I believe that truth is found in a compassionate economics that places value in all workers, that does not exploit just because one can, that applies rules of fairness and equality regardless of where geographically one may be operating. The policy of free trade too often becomes unbridled greed and ignores such principles of justice and equality.

Your opening examples of "adjustments" in agriculture due to free trade are good illustrations of an economy that has lost its way. They illustrate how far removed most of the world has become from the most basic of all human needs, food. They illustrate how distorted an economy can become when it does not properly value that most basic of all needs by compensating very highly what should be the most treasured industry and occupation in the world, farming and the farmer.

No, pure economics is and should not be a religion as you seem to have made it. It will always be missing compassion and humanity as long as it can disconnect the parts from the whole.

— Anonymous.

As an exception to my rule, I have kept this comment anonymous because I do not want to seem critical of a real person. By referring to an economics that has lost its way, and a true economics as compassionate, this respondent seems not to understand that economics is an instrument, like a hammer. A hammer can be used to build a beautiful house, or it can bash in someone's head. Hammers and economics have no values or compassion. — Jack

Has anyone factored into this equation the true cost of the water that would be needed to grow such a large amount of rice in the United States? If the process does not rely on seasonal fluctuations, Deren may well be assuming he will use a large amount of water from our rapidly depleting aquifers. And then, of course, there are a host of Environmental factors resulting from irrigation, again multiplied by the scale of this sort of endeavor. Basing the cost of the rice merely on the short-term dollar investment and return would be a mistake. Before being able to decide which rice to buy, I would want to know what is the true cost we would pay in the long term?

— Merlyn Holmes, Unitarian, Boulder (CO).

Is it possible to "look ahead" on this issue, much as one would use that strategy in a chess game? Suppose consumers decide the issue and producing jasmine rice in Thailand is no longer a viable occupation. What "moves" would the former Thai farmers have available to them? Unlike workers in developed countries who are displaced from an industry, they have few options which are *under their control.* You have suggested what we in the developed world can do to alleviate their suffering, but I'm interested, too, in what means of self-determination those former Thai farmers could have.

— Ann Dixon, Boulder (CO) Meeting of Friends

How did consumers become king? My conclusion is that it is the very fact that consumers are not organized like workers, etc., that put them on top, assisted by competing providers. Each consumer has to be persuaded individually to buy this brand rather than that brand. Empirical tests are required and undertaken every day: this tastes good, that one has too much salt. Does this sound like a liberal society, with choice and decision power at the base? If consumers are not king, are the institutions of liberal society likely to evolve? Where consumers have not been king, as in Russia through the early 1990s, autocrats have been. As a consequence consumers were treated shabbily in an economic sense and atrociously in a political sense. Their humanity was denied by their relative lack of choice. Consumers value choice, and choice creates the possibility of freedom.

— J.D. von Pischke, a Friend from Reston (VA).

What about the agricultural subsidies that keep prices in the US higher than world market prices and/or protect the export of stuff that could not be exported without them? Are you sure the consumer is king? If he is, he's a very modern king, more a figurehead than a ruler. Absent those subsidies, would the Thai farmer have this problem?

— Tom Cooper, Lafayette (CA).

The only way a multinational corporation becomes big is by fulfilling the wants of others. If it doesn't do that it's not going to survive. Isn't it the height of presumption for us to sit back and say, "Oh, but providing all those Thais with Coca-Cola is destroying their culture?" It's like the Thais telling us that we shouldn't be patronizing all those Thai restaurants in the USA because it's destroying our wonderful culture of hamburgers and potato chips.

Critics seem to look upon the MNC as some externality that is sucking the well-being out of society. They fail to recognize that the MNC is an integral part of society, simply an aggregate of people fulfilling others' wants. And they overlook the fact that in the typical large business enterprise most of the revenues, say from 30 to 70%, goes to the workers, while the "evil capitalist owners" get from 2 to 10%, sometimes nothing at all.

— Don Marsh, Seattle (WA).

Our mutual friend, David Edinger, lent me a copy of your book, Seeking Truth Together this week, and I have just finished a first read-through. I enjoyed your analysis of so many problems which are of perennial concern to Friends — and I appreciate your courage in offering analyses which run counter to conventional Quaker wisdom, backed with solid economic thinking.

— Josh Brown, Pastor, West Richmond (IN) Friends Meeting

I have read two of your books, The Moral Economy and Centuries of Economic Endeavor. It seems to me you make an excellent case for showing that the dispersion of power and development of mutual trust as people negotiate as equals, trusting they will not be taken advantage of, are prerequisites to the free market. If so it would seem that the example America portrays by our actions and our description of the basis of our way of life would the best way of bringing about free trade, while on the other hand bullying others to our way might be the least effective.

— Lyle E. Smith, Motor Friends Church, Milo (IA)

I was intrigued (but confused and unpersuaded) by Messrs Belmont and Austin and their points at the bottom of TQE #37. I would be interested in seeing further discussion of this, especially by Chapter 11 cases where it was decided for the foreign company.

Are Belmont and Austin referring to cases where the environmental law was simply a scheme to protect local industry? In that case it might be very revealing to look at such a case in detail and demonstrate that virtue was triumphant in the overthrow of an "environmental" law.

— Geoffrey Williams, Bethesda (MD) Friends Meeting.

Thanks for Letter #38 which we find provocative and perplexing in that no answer seems to suggest itself to a problem brought on by (supposedly) good intentions.

— Joe Roberts, Noblesville (IN) Friends Meeting.

The automotive industry destroyed my grandfather's harness shop. Capitalism is finished. Communism is the answer.

— Guy Grand (A grand guy.) "The Magic Christian"

Note: I don't know what this all means, but it came anonymously c/o Maurice Boyd, Friends Meeting of Washington (DC). — Jack

Thanks for your objective report on NAFTA and the Moyers show (in TQE #37). It is a breath of fresh air for these days when we are inundated with ideological views in all sectors of the press and government.

— Lorna Knowlton, Boulder (CO).

The US could help Thai farmers be more efficient if it wanted to. That's not the purpose of US policy. US policy purpose is to make US as rich as possible. If that's done by any means necessary and a few millions starve in other countries because of it, just don't tell the voters. We elect our politicians to make the country rich and not tell us what they had to do to people in other countries to make it rich, so on Clinton's desk it said "It's the economy, stupid". As Pogo said, "we have met the enemy and he is us."

— Doug Fenner, Queensland, Australia.

You recommend law and international treaties as correctives to the abuse of power by multinational corporations. I agree, but it seems to me that, as things currently stand, those legalities are worked out by the agents of those very same corporate entities. The by-laws of the international trading organizations and political financing regulations could do much better toward preventing the abuse of office.

Thanks for your thoughts and the opportunity to reply.

— Riley Lynch, Seattle (WA).


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Publisher: Russ Nelson, St. Lawrence Valley (NY) Friends Meeting

Editorial Board

  • Roger Conant, Mount Toby Meeting, Northampton, MA.
  • Virginia Flagg, San Diego (CA) Friends Meeting.
  • Merlyn Holmes, Boulder, Colorado.
  • Janet Minshall, Anneewakee Creek Friends Worship Group, Douglasvillle (GA).
  • Jack Powelson, Boulder (CO) Meeting of Friends, Principal Editor.
  • J.D. von Pischke, a Friend from Reston, VA.
  • Geoffrey Williams, Attender at New York Fifteenth Street Meeting.

Members of the Editorial Board receive Letters several days in advance for their criticisms, but they do not necessarily endorse the contents of any of them.

This newsletter was formerly known as The Classic Liberal Quaker.

Copyright (c) 2002 by Jack Powelson. All rights reserved. Permission is hereby granted for non-commercial reproduction.

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