Why Pakistani workers are making 29p an hour sewing for boohoo

Whether or not anyone at boohoo knew that people in Pakistan were being paid 29p an hour - as The Guardian alleges - is not the important point. Nor even is it that such a sum would be below the Pakistani minimum wage:

The fast fashion brand Boohoo is selling clothes made by Pakistani factory workers who say they face appalling conditions and earn as little as 29p an hour, an investigation by the Guardian has found.

In interviews in the industrial city of Faisalabad, workers at two factories claimed they were paid 10,000PKR (£47) a month, well below the legal monthly minimum wage for unskilled labour of 17,500PKR, while making clothes to be sold by Boohoo.

The important line is this:

One of more than a dozen workers interviewed said: “I know we are exploited and paid less than the legal minimum, but we can’t do anything … if I leave the job another person will be ready to replace me.”

The important thing to acknowledge, to know, is that £47 a month is a step up for many people in that country. It is only by grasping that that it is possible to gain that better world - the one with less poverty in it - that we all desire. For it is as Paul Krugman pointed out:

But matters are not that simple, and the moral lines are not that clear. In fact, let me make a counter-accusation: The lofty moral tone of the opponents of globalization is possible only because they have chosen not to think their position through. While fat-cat capitalists might benefit from globalization, the biggest beneficiaries are, yes, Third World workers.

As that unnamed worker points out, these sweatshop jobs are better:

Workers in those shirt and sneaker factories are, inevitably, paid very little and expected to endure terrible working conditions. I say "inevitably" because their employers are not in business for their (or their workers') health; they pay as little as possible, and that minimum is determined by the other opportunities available to workers. And these are still extremely poor countries, where living on a garbage heap is attractive compared with the alternatives.

We are in that Marxist world of there being a considerable reserve army of labour willing to do whatever in order to gain access to an income.

These improvements have not taken place because well-meaning people in the West have done anything to help--foreign aid, never large, has lately shrunk to virtually nothing. Nor is it the result of the benign policies of national governments, which are as callous and corrupt as ever. It is the indirect and unintended result of the actions of soulless multinationals and rapacious local entrepreneurs, whose only concern was to take advantage of the profit opportunities offered by cheap labor. It is not an edifying spectacle; but no matter how base the motives of those involved, the result has been to move hundreds of millions of people from abject poverty to something still awful but nonetheless significantly better.

Or as Deirdrie McCloskey has been known to note, the only thing worse than being exploited by a capitalist is not being exploited by a capitalist.

Sweatshop jobs are better than no-sweatshop jobs. We all do indeed desire that the poor of the world become richer. The manner by which we do so is to buy goods made by poor people in poor countries. For that increases the demand for labour there, something which solves that Marxian problem and raises wages.

Sweatshop jobs are, that is, the solution to the identified problem of poverty. We might prefer to be fastidious and skate over that fact but it is still a fact. After all, Bangladesh has followed this route and GDP per capita - not everything but a good guide to living standards - has tripled in recent decades. Not just improving lives there but reducing global inequality at the same time.

For sustainability's sake we need more industrial agriculture and more supermarkets

There is often a certain gap between the results of scientific inquiry and what we’re told are said results. The idea that all the people to come will eat the fluffy animals out of house and home being a case in point:

The global food system is on course to drive rapid and widespread ecological damage with almost 90% of land animals likely to lose some of their habitat by 2050, research has found.

A study published in the journal Nature Sustainability shows that unless the food industry is rapidly transformed, changing what people eat and how it is produced, the world faces widespread biodiversity loss in the coming decades.

The study’s lead author, David Williams from Leeds University, said without fundamental changes, millions of square kilometres of natural habitats could be lost by 2050.

He said: “Ultimately, we need to change what we eat and how it is produced if we are going to save wildlife on a global scale.”

Likely suggestions are that we all go vegetarian and also that there be “international planning of agricultural land use”. We would translate that last as the revival of colonialism. White folks in the global north - possibly located in Leeds - get to tell poor brown folks in the global south where they can plant their half acre of maize. We suggest that this is not an advance in human civilisation. That even before we consider the success of all those Soviet attempts at the planning of farming. Tsarist Russia exported grain, today’s same areas export grain, the interim, when it was all planned, imported grain.

However, the paper itself tells us something different:

The projected severity of agricultural land-cover change on habitat area means that proactive policies to reduce future demand for agricultural land will probably be required to mitigate widespread biodiversity declines. To investigate the potential of such proactive approaches, we developed a scenario that implemented four changes to food systems: closing crop yield gaps globally, a global transition to healthier diets, halving food loss and waste, and global agricultural land-use planning to avoid competition between food production and habitat protection.

OK:

The impacts of individual approaches varied regionally. Closing yield gaps was projected to have the largest overall benefits

Right:

Transitioning to healthier diets and reducing food waste were projected to have considerable benefits,

Excellent:

In contrast, projected benefits from global land-use planning were far smaller,

So the colonialism part is the least effective and therefore - obviously - is the bit that should be done last if there is still some gap to be filled. The we all become vegetarians bit is also a second order success. We can leave that to one side perhaps until we’ve, again, seen whether there is a gap that still needs to be filled.

Filling the yield gap is code for “industrial farming”. Instead of those poor, brown, global south, folk trying to raise maize on a half-acre with nothing but hand tools and sweat we want 500 acre fields and vast tractors like they use in Iowa. For that’s how we raise yields to those of Iowa.

Food waste, as the FAO keeps telling us, comes in two flavours. Yes, there’s the mystery pizza at the back of the fridge that’s a result of the hyper-consumerism of the BOGOF sale. But this is trivial in comparison to the 50% of all food wasted between farm and fork in places without supermarkets. For properly defined a supermarket is the efficient logistics chain that gets food from farm to fork. to fork from farm

So, our first two answers are fire up the monster tractors, GM the heck out of the crops, call Monsanto for the herbicides, spray the land with fertilizers, and get Sainsbury’s, Tesco, Walmart and Carrefour - possibly Dreyfus, Bunge and Cargill as well - handling that job of moving the resultant greater production around. That is, we’d like more industry, more technology, more capitalism, more markets in our food system. Entirely the opposite of what is usually suggested of course.

And here’s the thing. That is the scientific answer. Raise yields, waste less and then see what fraction of the problem still remains. And aren’t we all supposed to follow the science these days?

Well, if you start from a foolishness

Starting out with a foolishness is not - probably not perhaps - the correct way to go about understanding the world around us. At which point we give you Richard Murphy:

So, if the ONS claim the national debt is around £2.1 trillion at present, it isn’t. Allowing for the UK government owning around £800 billion of its own debt the figure reduces to maybe £1.3 trillion, give or take a bit. But that, I hasten to add, is not the end of the story.

....

And remember, government backed saving is so popular that right now people will buy government gilts, or bonds, due to be repaid in 40 years time with a negative interest rate, which means they will get back less than they actually save now. And people still buy it.

It is possible to believe one or other of those two things but to believe both at the same time might require three whole professorships of illogic.

For note the second thing being said. That even at current prices people are just gasping to own gilts. Note then the first thing - so few people wish to own gilts that the government has had to buy a third of them to make sure they actually get sold.

That is, the reasoning is being done from a manipulated price. This does not work.

Start again from a more rational point. What would be the price of gilts if the government did not own one third of the issuance? Rather higher we would say. So, what’s the real price which illustrates the private sector demand for gilts? Rather higher than the current one. We cannot, therefore, use the current, manipulated, price of gilts to illustrate the gasping desire of the private sector to own gilts. For to do so is to reason from the manipulated price, something that will always lead us into error.

It isn’t, of course, just Murphy making this mistake. It’s a general societal delusion. Government borrowing is cheap right now so why not do more of it? Perhaps, maybe, that’s even the right thing to do. But we cannot reason to that point from the current price of government borrowing. Because that is, worldwide, a manipulated price.

Don’t forget, the whole point and aim of QE is to manipulate the price of money. We cannot then go around using that manipulated price as an input to our decisions about the use of money or debt issuance. To do so is to fail to understand the most basic thing about a price system - it is market prices that are the necessary information source, not manipulated ones.

We consider this to be something of a victory actually

There is often value in inverting an argument to see what falls out of the pockets. As with this:

The number of children living in temporary accommodation has risen by more than 75% since the Tories came to power in 2010, despite the government’s repeated claims to be tackling homelessness and child poverty.

We’d insist upon claiming that as a victory.

Figures unearthed by Labour from the Ministry of Housing, Communities and Local Government show the number of children without a permanent home rose from 72,590 in the second quarter of 2010 to 128,200 in the first quarter of 2020.

Imagine the absence of the Tories’ tackling of homelessness. There would, presumably, be 128,200 children sleeping on the streets. Or, a more limited claim, 40% more than there would have been under previous policies to provide temporary homes. Reading Mayhew or Dickens we get at least the impression that the past was in fact like that in certain times and places.

So, the Tories have saved 130,000, or perhaps 50,000, children from that fate. We do not consider this a failure of policies against homelessness. Nor should anyone else of course.

The larger point here being that the number of people being aided by a welfare state is not evidence of the failure of that welfare state. It’s evidence of the effectiveness of course. We do not say that the NHS is failing because it provides more hip replacements. We do not say the education system is a failure because more children are taught to read - although it would be a nice surprise to be told that the NHS was providing more such operations, the schools producing more literates.

A rise in the number of beneficiaries of a welfare system is not evidence of the paucity of that system, it’s evidence of the effectiveness of it - or at least its generosity.

The bizarre way that governments spend money

A current commitment from the government is that fibre broadband should reach every house:

UK Budget Speech reaffirms £5bn commitment to full-fibre broadband

But also:

The OneWeb satellite broadband company is back launching again, putting up 36 new satellites on Friday from the Vostochny Cosmodrome in Eastern Russia.

The spacecraft are to join the 74 already in orbit.

OneWeb is now owned principally by the Indian conglomerate Bharti Global and the UK government after they bought the enterprise out of bankruptcy this year.

Fifteen more launches of satellites must follow Friday's deployment to complete the internet delivery service.

The government is also spending pots of money on satellite internet delivery. The industry itself is spending billions upon 5G, something which can produce broadband speeds over spectrum rather than fibre. All of which is what makes that fibre broadband pledge such a weird thing to be insisting upon.

It’s possible to argue that all dwellings should, in theory at least, be able to access high speed internet. We don’t agree, as we’ve pointed out before. If individuals living in the boonies don’t think it worth paying the costs to get connected then that means the costs of getting connected aren’t worth it. This is true whether it’s those consumers or us all more generally through tax and government doing the paying.

But put that aside for a moment. We’re in the middle of a vast technological change. What we will be able to do in just two or three years is hugely different from what we can do now. And yet government is insisting upon delivery of the goal using the old technology.

That is, even if the insistence is to be “everyone’s connected at high speed” we shouldn’t be insisting upon fibre being the method just as these new possible methods all come online.

Government picking the method by which something is done is even worse than the mistake of insisting that the thing must be done.

Patents on drugs seem to be working rather well

We all know the spiel - but, but, the capitalists are making money out of drugs! Therefore abolish capitalism and all the rest. This always failing rather as the entire point of drug patents is to gain the private sector’s energy in creating public goods. It costs $ a billion and more to create, test and get licenced a new drug. If everyone can copy it on day one no profit can be made and therefore the $ billion and change will not be spent.

Therefore no new drugs.

It often is worth looking at a question from the other end of the societal telescope though. What do the capitalists think about this? From a stock market note on Astra Zeneca:

Rare diseases are, by definition, uncommon. In the past spending millions, perhaps billions, on researching a drug to treat a few tens of thousands of patients worldwide didn't make financial sense. Instead attention focused on treatments for common diseases, like asthma, with patients stretching into the tens of millions. As a result, only around 5% of designated rare diseases have approved treatments.

More recently that attitude has shifted. While major diseases may have large markets, they also attract lots of competition. That means individual drugs companies can end up with a relatively small slice of a large pie. Competition in rare diseases is far lower - a drug company which develops a treatment for a previously unaddressed illness will likely end up serving the entire market and can probably attach a hefty price tag to boot. It's also unlikely a competitor will develop a more effective alternative, since competition is so much lower. Increased interest in the sector means the global rare disease market is forecasted to grow by a low double-digit percentage.

The patent system is producing drugs for common conditions. It’s also producing competition for such drugs which tempers the price - and thus profits to be made - that can be charged for those more common diseases. This is pushing the capital, the effort, out into cures for less common diseases.

We appear to have a system which produces the desired end result. Those vast productive powers of the capitalist, greed incentivised, system producing more treatments for the things that ail us.

Of course, it’s entirely possible to still criticise the system. But any critique really does have to start from the observation that the current system is actually working.

Because the Federal Drug Administration likes killing people, that's why

A piece in The Guardian asks an interesting and important question:

An app could catch 98.5% of all Covid-19 infections. Why isn't it available?

Adrienne Matei

These inventions could help our coronavirus crisis now. But delays mean they may not be adopted until the worst of the pandemic is behind us

So why these delays? One technology is that cough into your phone idea. Another is a sterilizable and thus reusable N95 mask. The article actually gives us the answer too:

According to Adam Wentworth, a research engineer working on the mask, they are still fundraising to create the final prototype. Whenever the fundraising is complete – there is no fixed deadline – they would have to submit it for approval by the Food and Drug Administration and the National Institute for Occupational Safety and Health. This is a process that could take around six months, even with emergency prioritization.

It is the FDA that is causing the delays. As Alex Tabbarok has been pointing out with ever increasing volume. Not preparing paperwork in advance. Not bringing forward a scheduled meeting - no, really, in the middle of a pandemic the FDA would not, until really shouted at, bring forward a scheduled vaccine approval meeting - and even banning a home testing kit because, umm, because.

The problem is bureaucracy. Well, it’s either just that or the FDA has, as an institution, a predeliction for killing people. The solution, whichever the cause, being the evisceration of said bureaucracy of course. We’d even chip in for the necessary - metaphorical, of course - gralloching knife.

As we’ve been known to point out sometimes the problem really is too much government.

Time for the annual moan

Well, given the propensity of humans to moan about absolutely anything - like living high on the hog in one of the richest societies ever - perhaps we’d better be specific about which moan this is. Today it’s not gender, racism, hyper-consumerism or any of those more usual ones. Today it’s that other people spend their money as they wish:

Unions have described companies who pay their chief executives huge multiples of their workers average salary as obscene, and called on ministers and shareholders to act to end the “runaway train” of inequality in corporate Britain.

A report by the High Pay Centre thinktank on Tuesday revealed that Ocado, the online supermarket, had the biggest pay gap between those at the top and those on the shop floor.

How fearfully dreadful it is that shareholders should be generous to those they employ, eh?

For this is shareholders’ money. It does not belong to the High Pay Centre, for them to determine its distribution. It does not belong to the society more generally either. It is private property - it belongs to the people who own the company. The very definition of private property being that the owner gets to decide on what is done with it.

Having dealt with the moral issue here there’s also the empirical:

Despite excelling in technologies, organisational management, and human resource management, Japanese firms seem to have lower earning power because CEOs, who are responsible for corporate management, do not prioritise profit maximisation. Such tendency leads to a loss of shareholders’ equity and inefficient usage of firm resources, causing a major negative macroeconomic impact.

Places - like Japan - which have much lower CEO multiples and near no share or options component to pay do very much worse by their shareholders than those with that more Anglo Saxon pay structure.

It’s shareholders’ money and they seem to be spending it rationally, in their own interest. Why are people moaning about it?

Powering Our Zero Future

Santa’s reindeer delivered the long-delayed energy white paper on December 14th. It is full of good cheer: zero carbon, more jobs, more prosperity, cheaper greener energy for all.  As Alok Sharma concludes his introduction, “The UK is leading from the front in the transition to clean energy, while ensuring that we leave no one behind”. (p.3) The 170 pages include no executive summary but plenty of tubs are thumped.  The first question, though, is whether this is a white paper at all.  According to Parliament, “White papers are policy documents produced by the Government that set out their proposals for future legislation.” 

In this case the proposals for future legislation are skimpy and refers to only two proposals.  Using coal for electricity generation is already due to cease by 2025; Sharma is making the bold decision to cease by 2024. (p.41) Secondly, when the government legislated in 2017 to allow electricity storage. they forgot to define the word “storage”. “We will legislate when Parliamentary time allows to define electricity storage in law”. (p.73) This leads into a rather confused discussion of networks. We should be proud, it seems, of our 284,000 kilometres of gas pipelines and open up electricity networks to competition but whether this refers to operating sections of the national grid or running parallel power cables down gas pipelines or digging up our road to create new networks is not clear. Apparently “competition in network assets is key to reducing network costs” (p.76) and legislation will be required for that. If that means a vast expenditure on competing networks, I hope you will forgive an old accountant for being sceptical. 

The “key commitments”, which should have begun the paper, appear on page 87 and summarise these legislative promises as well as other visions and areas for consultation.  The “digital infrastructure” will be, like Test & Trace, “world-beating”.  “Transport is an important aspect of our everyday lives and fundamental in connecting us together” and “the Department for Transport will publish its plan to decarbonise the UK’s entire transport system in spring 2021.” (p.88) Decarbonising the entire transport system in spring 2021, is indeed a challenging target. 

In substance, this is not a white paper, but this government does not care for green ones as they only encourage backbench MPs, not to mention the plebs, to contribute their ideas and challenge those of the government. This paper undoubtedly includes great ideas, but it does not translate those into credible quantified forecasts.  The section on modelling merely states that they are going to learn how to do that and would welcome some help. (pp.60-63).  The only forecast chart, intriguingly, shows that all sources of carbon emissions will be above zero by 2050 but their total will be zero (Figure 4.1, p.61). Maybe, carbon capture from the atmosphere might account for that but that is not mentioned nor has it been commercially attempted. 

The extensive chapter on the oil and gas industry (pp.132-147) says very little but indicates that this important industry has been lobbying hard.  It reads like the 19th century horse and buggy industry lobbying for protection from automobiles. The most key commitment is “We will support the UK oil and gas sector to repurpose its existing infrastructure in support of clean energy technologies.” (p.147) Whilst it does not say so, that probably accounts for at least part of the Business Department’s (BEIS) enthusiasm for hydrogen which Big Oil can make out from natural gas and bury the carbon in its disused oil wells.  But at what cost to the taxpayer? 

In contrast with the attention given to the redundant need for oil and gas, minimal attention is given to nuclear.  France derives 75% of its electricity from nuclear and Hungary 49%. The most positive support quoted from the Prime Minister’s ten point plan “Nuclear power provides a reliable source of low-carbon electricity. We are pursuing large-scale nuclear, whilst also looking to the future of nuclear power in the UK through further investment in Small Modular Reactors and Advanced Modular Reactors.” (p.12).  BEIS has received briefings from one of the most cost efficient new technologies, due to be operating in Canada by the end of the decade, namely molten salt reactors but elected not to mention them at all.  Figure 3.4 (p.44) forecasts nuclear to grow by two or three times by 2050. 

Perhaps the greatest surprise in the paper is its expectation that electricity will provide less than half of our energy needs in 2050. (p.73) According to Figure 1.4 (p.7) hydrogen and biomass/fossil fuels, with carbon capture and storage (CCS), will provide about 25% each and a small amount from removing carbon from the atmosphere although how that delivers electricity stumps me.  The Figure makes no mention of nuclear or renewables, presumably because their energy is delivered by electricity, but in that case why is the biomass/fossil fuel energy not included in electricity? How else could it be delivered? Presumably all the miles of gas piping will be converted to hydrogen for home heating and hot water fuel cells although this is not stated nor does the paper mention hydrogen fuels cells at all. 

The paper’s magic bullets are hydrogen and CCS.  The latter enables natural gas and biomass (wood or other material of biological origin) to be used in electricity generation if the carbon dioxide is captured and stored somewhere 

The trouble with hydrogen, be it produced from natural gas (blue) or water electrolysis (green), is that it takes more electricity to produce than it replaces.  A report for the IEA in 2018 stated “Producing all of today’s dedicated hydrogen output [70 million tonnes] from electricity would result in an electricity demand of 3,600 TWh, more than the total annual electricity generation of the European Union.” On that basis the above target for hydrogen would be unrealistic although it has been suggested that the UK import the hydrogen leaving the CCS problem with the producing countries.  But that would be more like 19th century imperialism than leading the world towards net zero carbon. 

On the other hand, the renewables sector has an affinity with the production of green hydrogen in that renewable electricity is generated in peaks and troughs; the surplus electricity at peak production could generate hydrogen for storage for later use.  Its use for storage is a big plus for hydrogen.  

Unfortunately, the white paper does not explore these issues or the comparative costs of the various methods of generating energy and electricity. This cavalier approach to the economic realities makes it all the odder that the paper can predict the detailed effects on consumers (favourable of course), not to mention jobs, exports and economic growth. But then it is Christmas.

Owen Jones and statistics

It’s not entirely obvious that Owen Jones manages to understand the numbers he uses to support his prejudices:

Not only is the private rented sector chronically lacking in security, it is a rip-off: if they’re on gross median pay in London, young people can expect to hand over nearly half of their pre-tax earnings to a landlord.

Well, no, not really:

In every London borough the average rent for a one-bedroom house or flat on the private market is at least 30% of median pre-tax pay in London. The average across the capital is that a one-bedroom dwelling cost the equivalent of almost half (46.4%) the gross-median pay in London.

It is the median household that pays such a portion of the median individual income. The average (mean, median or mode) household size is greater than one person. This before we even start to think about several people doing a flat- or house- share on a larger property.

We’d also be hard put to think of any time in the past when a one bedroomed dwelling has been an expected part - for single and sole occupancy - of the young Londoner’s experience. It never was true of even those heady days of council housing as the single and lone individual never did gain access to such - not without subletting they didn’t.

Even then the statistic is nonsense as that very claim about median rents means that half the properties out there are cheaper than that. Oh, and when measuring affordability we should be using the - much higher - mean income anyway.

Still, how would it be possible to show that the UK’s neoliberal economy was such a failure if one had to rely upon truth and accuracy? Answer us that one.