Corporate International Environmental Trade Policies
The Western world donates billions of dollars in aid every year to poverty stricken nations, yet in many cases, this aid doesn't seem to do much good, especially for the environment. Theories abound as to why, but the ultimate question is, "what are some sustainable corporate international environmental trade policies?" Understanding of policies start with the basic presupposition that when the poor are cared for through personal property rights, they have incentives to care for their land. This issue is close to Mark Ritchie's heart because he lived in Afghanistan and traveled extensively to other third world nations. Additionally, he spent a majority of his life as a successful businessman and consequently he is able to speak authoritatively to this subject:
Counter Trade Intermediaries
There are many roads to environmental stewardship; it is the natural consquence of personal property rights given to the poor. One of the best methods is to purchase their products, assuming that they are producing items of value. The purchase of valueless products only creates dependency.
The carpet bazaar is like any bazaar in Afghanistan; everything is negotiable. When they see an American coming, they mentally multiply all their prices by a factor of about three. This makes negotiating a fascinating challenge, which James and I wouldn't think of passing up. Sitting on short little stools, we bent over and inspected the colors, shearing, and knot density of one carpet after another spread over the floor. The merchants quickly discovered that we were not going to pay ridiculously inflated prices. The Afghans respect a good, hard-nosed negotiator.
Free Trade Versus Trade Blocs
I admit that a buyer doesn't appear very generous when he is trying every trick he knows to whittle away at a seller's profit margin, while at the same time the seller tries to extract every last af from the buyer's pocket. But it would hardly be appropriate to say to someone, "I'm paying you double what it's worth because I pity your decrepit economic condition," though you'd be hard-pressed to find a seller offended by the insult. Charity in this case is disruptive; it would lead the producer to conclude that his product is worth more than it really is a conclusion that can be fatal, and a trap that I would soon fall into.
Some years later, a partner and I capitalized two young college students who had grown up in this part of the world. They were going to provide a market for these carpet weavers by buying their goods and selling them in the States. The students had been influenced by the prevailing attitude of the day, that the wealth of the West was gained at the expense of the poor and that these economies suffered because the West took advantage of them.
Thus they felt perfectly free to pay a handsome premium for the product at the local level. The increased profit margin meant that the carpet weavers did not have to keep such tight control over their costs and, therefore, increased their production. At the same time, more had to be charged in the States, which made it difficult for us to be competitive at the retail level.
It was impossible for the young entrepreneurs to hide their consternation when, after the loss of a third of a million dollars, we had to shut down the operation. "Does everything always have to be a profit with you guys?" they asked. What these students didn't realize was that the people who were hurt the most were the poor carpet weavers. For two years they had been selling their carpets at the unrealistic prices we paid them. When we no longer bought their carpets their production crumbled; they were unable to compete with those who had been "oppressed" into producing at the lower, but fairer, prices. We had set out to help but ended up doing more harm than good.
Excerpt from God in the Pits, The Enron-Jihad Edition, by Mark Andrew Ritchie
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