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Thursday, January 27, 2011

The stupid economy (part 3)...

AN English businessman in Canada, Ian Ward, saw his markets for British Columbian timber and salmon in the Persian Gulf suddenly dissipate with the Iran-Iraq war of the 1980s. And international timber prices fell. He couldn’t have foreseen or prevented it.

And it was at that point that he discovered the demand for disposable chopsticks.

Chopsticks go back 5,000 years in China. As status objects, they have been crafted from gold, precious jade, coral and ivory. Everyday utensils are usually made of plastic, resin, bamboo or poplar wood. And you can get “portable” chopsticks, even collapsible chopsticks, that fit into a specially-made case or cloth bag so you can use your own chopsticks when you are eating out. For show-offs, Luis Vuitton makes an upmarket set of rosewood chopsticks in a carry case that retails at over $400.

The shared-toothbrush reflex seems to kick in more strongly in Asia than in Europe. We seldom think about the places restaurant utensils might previously have been put. And to take our own knife, fork and spoon to a friend’s place for meal would be thought odd, even insulting. In Asia, communicability is a bigger issue… all those surgical face masks when there’s a bug in the air? They can seem odd in the West but they almost certainly prevent more contagion than our fear of used toothbrushes.

Back in the 1870s, cheap, disposable chopsticks were enterprisingly developed by a frugal Japanese artisan as a way of turning his wood scraps into a useful product. It made sensible use of wood that otherwise would be wasted, and fitted with Japanese cultural sensitivities.

The idea caught on. And not just in Japan.

Restaurant customers throughout Asia liked the idea of pristine utensils in little paper packages to accompany every meal. By the latter part of the 20th century there was a staggering demand in Asia for 80 billion pairs a year. Factories struggled to meet the demand and forests were felled. Throwaway chopsticks had become an industry calling for 16 million mature poplars a year and, by that time, with Asian economies on the rise, most of the wood was coming from China. It didn’t help that less than half of the raw timber cut was suitable for chopstick making.

Ian Ward saw all this and, looking around, realised he was surrounded by what could be the opportunity of a lifetime: the aspen forests of western North America… poplar wood!

The Rocky Mountains region is dominated by pine forest, broken by tracts of pale, straight-grained aspen. This is timber country. Forestry skills and lumber mills… with ports for shipping product across the Pacific.

In the America State of Minnesota, a slump in steel had seen unemployment soar and the Governor, Rudy Perpich, saw his hometown, Hibbing, as a great setting for a chopstick factory that Ian Ward saw employing 120 people, churning out seven million pairs of chopsticks a day and bringing in $5 million a year. It wouldn’t hurt his chances of re-election, even if there were accusations of pork-barrelling.

Several millions of government-sourced funds were soon found to help get the ball rolling and it’s said that 3,000 people — impelled by the fall of the steel-centred local economy — joined the queue for the first 30 jobs the company advertised.

There was no environmental lobby rushing to the defence of the 60 or so bird species that thrive the nutritious habitat provided by the groves of straight-grained aspen. There was no outcry on behalf of an ecosystem that sustained countless insects and more than 50 species of mammal —including bears, moose, elk, deer, rabbits, beavers, porcupines, squirrels, chipmunks and gophers — and provided forage for farms as well as for wildlife. In the grasslands, aspens are often the only natural source of shade and shelter.

Instead, local optimism ran rampant. But, after two years, the specially-built machines fell silent, stalled by a $7 million debt. The market was virtually all China’s.

What could have gone wrong? There were some start-up glitches with the machinery and other small issues that might reasonably be expected. But the killing blow was delivered by currency speculators who pushed up the relative value of the American dollar, making the chopsticks ever-so marginally dearer, and pushed shipping costs fractionally higher. And, because of the enormous volumes involved in the big chopsticks challenge, the slight difference in the cost of a single pair of chopsticks translated into a tremendous price hike for Asian importers looking to buy scores of container loads of them.

You could say that the greed and opportunism of the currency speculators saved the aspen forests. Or that their greed and opportunism killed a few hundred jobs and an entrepreneur’s dream. Either way, the currency traders were indifferent. They were pursuing blinkered self-interest in a way that’s sanctioned by our notions of economic freedom.

There’s a story you can unravel if you look at the history leading up to the recent financial crash that goes straight back to the racist basis of “subprime” mortgaging practices… time and again, opportunistic greed spills over into social destruction.

Now, to its great credit, China is discouraging the use of disposable chopsticks altogether… because of their environmental impacts. And that’s not an idea that occurred to any of the players in the story of the Minnesota chopsticks story.

Britain’s Institution of Mechanical Engineers recently published a report called Population: one planet, too many people?. It demonstrates that we already have all of the technology and know-how we need to peaceably accommodate nine billion people on the planet. We already have the technology to move to a low-carbon energy economy — what we need to address is “market failures” that stand in the way of its adoption. And, it argues, instead of razing slums and re-building, we would do far better to help the world’s massive urban slums to improve and develop organically towards healthier standards of living and economic vitality.

And a newly published report of a massive five-year modelling study undertaken jointly by France’s INRA (National Institute for Agricultural Research)and CIRAD (the Centre de CoopĂ©ration Internationale en Recherche Agronomique pour le Developpement) — both major European agricultural and development agencies — concludes that feeding the project nine billion isn’t an insurmountable objective either.

The study looked at the sustainable capacity of the world to provide everyone — everyone, the whole projected peak world population of nine billion human souls — with 3,000 calories a day, including 500 calories from animal sources.

And, it’s do-able.

The necessary steps include ways to curb world price fluctuations. The rich, they say, have to stop consuming as much as they do and reduce their wastage from the current average level of 800 calories per person per day. Even as farming methods take greater account of environmental necessities, including reduced use of fossil fuels, the production levels are achievable. The strategy would involve, rather than pest-prone large-scale monoculture, helping farmers to lift production while maintaining biodiversity.

It calls for food scientists to organise globally, as climate science has been able to do.

Together, the two pieces of very significant research point — not to any technical or scientific obstacles but to the aimless social effects of our tolerance for profit-taking by individuals in ways that harm society at large. And perhaps it slips the collective mind that legality isn’t quite the same as morality.

In a time of unlimited surpluses, that may not matter quite so much. But, though we certainly have “enough”, we don’t have those buffering surpluses any more. And the problem isn’t projected population figures — population growth is topping out, right now. Nor is the problem to do with living space, technology or limited productive capacity. It’s nothing that complicated… it’s our unconcern. But food prices are rising , critically in many poorer countries, triggering risings and riots... and a part of the pressure comes from pension plan investments in the wealthy West, and speculation in the commodity market.

As for disposable chopsticks… maybe it’s time to think twice about buying more and more short-life, over-packaged cosmetic niceties and novelty goods we don’t need, no matter how good an idea they seemed in the first place.

Eating’s more important.


Also see:
Part 1    -     Part 2    -    Economic history in a teacup

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