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Enslaved by free markets

Promising freedom to a select few, free markets appear to have enslaved the vast majority. Is this what we wanted? As Fairtrade Fortnight begins, Simon Leadbetter explores what free markets have ever done for us.

Julian Parrott’s recent article poured scorn on the bloated excesses of capitalism. Some readers can probably make a perfectly eloquent case for laissez-faire economics, or support the monetarist policies of the 1980s. You may work in private industry and take exception to some of the comments or profoundly disagree with the points made.

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Promising freedom to a select few, free markets appear to have enslaved the vast majority. Is this what we wanted? As Fairtrade Fortnight begins, Simon Leadbetter explores what free markets have ever done for us.

Julian Parrott’s recent article poured scorn on the bloated excesses of capitalism. Some readers can probably make a perfectly eloquent case for laissez-faire economics, or support the monetarist policies of the 1980s. You may work in private industry and take exception to some of the comments or profoundly disagree with the points made.

However, Parrott’s article was a good primer for the debate we need to have about the kind of capitalism we want. Capitalism has many forms, with the US/UK Chicago School-style (smaller state) differing hugely from the Scandinavian brand (larger state). Both of which are being out-performed by Asian models dominated by the inexorable rise of state capitalism (the state is everything) in China and India.

The global economy effectively started its slow and subsequently rapid collapse in 2007, with Northern Rock being one of the first to go. The economy remains weak five years on. The Eurozone remains in deep crisis and the UK hovers over a double dip recession with public debt reaching £1 trillion and quarterly growth going negative at the end of 2011. The current system is clearly broken and a “business as usual” attitude cannot be the answer.

What is the point of free markets?

Put simply, the free market system allows goods and services to move efficiently between producers and buyers. Money in the form of cash, credit, debt or equity provides the instrument for exchange.

In theory, competition means that successful businesses that cost-effectively create products and services that people want secure more sales make greater profits and receive capital from investors to grow. Innovation is key, as fast-growth start-ups disrupt complacent incumbents, which forces them to adapt and improve or die. Again, investors play an important role by providing funds to these fledgling businesses, risking their money on the promise of future higher returns. Darwinism and capitalism fit together perfectly; the companies most able to adapt survive, while those who do not become extinct. This happens on a local, regional, national and international scale.

Free markets rely on a few basic foundations: the rule of law, an appropriately skilled workforce, social stability (to maintain markets in which to sell), and the confidence to invest. Free flow of information allows the ‘best’ product ‘win’ and anti-trust or fair competition laws ensure existing dominant players do not abuse their market position. Both are critical. Free markets also necessitate ‘moral hazard’, which simply means that if you take the risk, you gain the reward for success and pay the price for failure.
Conversely, the enemies of free markets are lawlessness, an unskilled workforce, social unrest, distorted information and a lack of moral hazard for key sectors of the economy.

Many free market thinkers despise the State, seeing it as a dead hand on the perfect functioning of markets. They see the role of the State as simply securing the borders and providing law and order to society, while vigorously protecting their intellectual property. Take this to the extreme and everything and everybody is for sale. From privatising health and education, selling over-sexualised products to eight year olds or weapons to oppressive regimes; it’s all the same for a true free market believer.

Clearly, this is not right. As Martin Luther King said, “It may be true that the law can’t change the heart, but it can restrain the heartless”. The State is concerned with the law and the wellbeing of society as a whole and we need a strong State to protect us from the worst excesses and moral vacuum of some aspects of capitalism. Values have to come into the debate at some point, but whose values and to what degree? Is this the capitalism we want?

Many commentators and business leaders take it as read that manufacturing will move to the developing world. They argue that the UK’s future lies in knowledge-based work as we lack the scale of a domestic market and the low cost workforce required by a manufacturing economy. We can create a sustainable economic model through intelligent innovations in services, science and technology, and the exporting of capital to invest in manufacturing elsewhere. While we agree that we need more people in education and training for longer as well as returning to education and training to be reskilled as new industries emerge, do we really want to participate in a race to the bottom where we pay increasingly less to people everywhere? Is this the capitalism we want?

Very few would argue that we are at risk of a period of great social unrest in the UK over the next few years. We are going through a period of unprecedented austerity where many of the losers are the poorest in society. Free markets need consumers and if a significant percentage of the population does not have disposable income, then many companies that rely on their custom will fail. The UK is the sixth largest economy in the world. Not bad for a small and windy island off the northeast coast of Europe. Do we really want parts of Britain to descend into a poverty, hopelessness and chaos that would put parts of the developing world to shame? Is this the capitalism we want?

Most people remain unaware of the propaganda machine built by the media industry and corporations. Every year, tens of millions are spent by large corporations profiling every action that we and our children take, all to inform an overly aggressive advertising industry whose capability to manipulate behaviour would make Goebbels proud. The aim? To make you unhappy with what you have, consume significantly more and replace goods more quickly. Do you really want corporations to decide what your child thinks and buys? Is this the capitalism we want?

The vast majority of media in this country is privately-owned and advertiser-funded, so we get the media the advertisers want us to have; he who pays the piper plays the tune. Similarly, patent-frenzy, oppressive libel laws, corporate sponsorship, advertising and political lobbying and their dependants in the media sit in a cosy cartel, guaranteeing that information is far from free-flowing, severely distorting the perfect operation of the market. Disruptive start-ups that could provide better products and services are silenced, crushed or bought. Do we really want large corporations and the pornographer/tax-exile owned press baron throwbacks to a long gone media age to control our news agenda and political discourse? Is this the capitalism we want?

And finally, moral hazard. A staggering number of new businesses fail in the first year with their owners losing everything. In that time, they will have spent money that flows into the economy, disrupted complacent incumbents and enjoyed both the stresses and elation of creating something new. These are the people who have risked all on the hope of gaining greatly. A small number succeed, grow, and are justly rewarded. An even smaller number go on to become the leading businesses of the future economy. Our friends in financial service, however, get the best of both worlds in a ‘heads we win, tails you lose’ model. Many commentators think investment banks were acting irrationally by taking spectacular risks, but in reality, their behaviour was entirely rational. Perhaps realising that they had become too big to be allowed to fail, they threw caution to the wind and bet our economy and the financial security of billions in the great casino called global finance. They have happily privatised massive profits for a few and nationalised massive losses for the many. Is this the capitalism we want?

So, what is the point of free markets?

To allow for the free flowing of goods and services and the increased wellbeing of everyone in society.  We could not be further from this objective if we had originally set out to be.

For free markets to work, we must invest more in our workforce, give people a living wage to ensure a domestic market, break up all monopolies, demand honesty and transparency in advertising, and allow business of any kind to fail. If they are too big then, we should break them up or own them; after all, we, the taxpayers, are the ones taking risks as the stakeholders of last resort.

There are many companies and organisations doing exceptional work in building a more sustainable form of capitalism, such as the Fairtrade Foundation the Ethical Superstore for Fairtrade goods, Good Energy supplying 100% renewable energy, and our growing number of ethical IFAs who can help your money do more good than harm.

Simon Leadbetter is the founder and publisher of Blue & Green Tomorrow. He has held senior roles at Northcliffe, The Daily Telegraph, Santander, Barclaycard, AXA, Prudential and Fidelity. In 2004, he founded a marketing agency that worked amongst others with The Guardian, Vodafone, E.On and Liverpool Victoria. He sold this agency in 2006 and as Chief Marketing Officer for two VC-backed start-ups launched the online platform Cleantech Intelligence (which underpinned the The Guardian’s Cleantech 100) and StrategyEye Cleantech. Most recently, he was Marketing Director of Emap, the UK’s largest B2B publisher, and the founder of Blue & Green Communications Limited.

Economy

How Going Green Can Save A Company Money

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going green can save company money
Shutterstock Licensed Photot - By GOLFX

What is going green?

Going green means to live life in a way that is environmentally friendly for an entire population. It is the conservation of energy, water, and air. Going green means using products and resources that will not contaminate or pollute the air. It means being educated and well informed about the surroundings, and how to best protect them. It means recycling products that may not be biodegradable. Companies, as well as people, that adhere to going green can help to ensure a safer life for humanity.

The first step in going green

There are actually no step by step instructions for going green. The only requirement needed is making the decision to become environmentally conscious. It takes a caring attitude, and a willingness to make the change. It has been found that companies have improved their profit margins by going green. They have saved money on many of the frivolous things they they thought were a necessity. Besides saving money, companies are operating more efficiently than before going green. Companies have become aware of their ecological responsibility by pursuing the knowledge needed to make decisions that would change lifestyles and help sustain the earth’s natural resources for present and future generations.

Making needed changes within the company

After making the decision to go green, there are several things that can be changed in the workplace. A good place to start would be conserving energy used by electrical appliances. First, turning off the computer will save over the long run. Just letting it sleep still uses energy overnight. Turn off all other appliances like coffee maker, or anything that plugs in. Pull the socket from the outlet to stop unnecessary energy loss. Appliances continue to use electricity although they are switched off, and not unplugged. Get in the habit of turning off the lights whenever you leave a room. Change to fluorescent light bulbs, and lighting throughout the building. Have any leaks sealed on the premises to avoid the escape of heat or air.

Reducing the common paper waste

paper waste

Shutterstock Licensed Photo – By Yury Zap

Modern technologies and state of the art equipment, and tools have almost eliminated the use of paper in the office. Instead of sending out newsletters, brochures, written memos and reminders, you can now do all of these and more by technology while saving on the use of paper. Send out digital documents and emails to communicate with staff and other employees. By using this virtual bookkeeping technique, you will save a bundle on paper. When it is necessary to use paper for printing purposes or other services, choose the already recycled paper. It is smartly labeled and easy to find in any office supply store. It is called the Post Consumer Waste paper, or PCW paper. This will show that your company is dedicated to the preservation of natural resources. By using PCW paper, everyone helps to save the trees which provides and emits many important nutrients into the atmosphere.

Make money by spreading the word

Companies realize that consumers like to buy, or invest in whatever the latest trend may be. They also cater to companies that are doing great things for the quality of life of all people. People want to know that the companies that they cater to are doing their part for the environment and ecology. By going green, you can tell consumers of your experiences with helping them and communities be eco-friendly. This is a sound public relations technique to bring revenue to your brand. Boost the impact that your company makes on the environment. Go green, save and make money while essentially preserving what is normally taken for granted. The benefits of having a green company are enormous for consumers as well as the companies that engage in the process.

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Energy

5 Easy Things You Can Do to Make Your Home More Sustainable

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sustainable homes
Shutterstock Licensed Photot - By Diyana Dimitrova

Increasing your home’s energy efficiency is one of the smartest moves you can make as a homeowner. It will lower your bills, increase the resale value of your property, and help minimize our planet’s fast-approaching climate crisis. While major home retrofits can seem daunting, there are plenty of quick and cost-effective ways to start reducing your carbon footprint today. Here are five easy projects to make your home more sustainable.

1. Weather stripping

If you’re looking to make your home more energy efficient, an energy audit is a highly recommended first step. This will reveal where your home is lacking in regards to sustainability suggests the best plan of attack.

Some form of weather stripping is nearly always advised because it is so easy and inexpensive yet can yield such transformative results. The audit will provide information about air leaks which you can couple with your own knowledge of your home’s ventilation needs to develop a strategic plan.

Make sure you choose the appropriate type of weather stripping for each location in your home. Areas that receive a lot of wear and tear, like popular doorways, are best served by slightly more expensive vinyl or metal options. Immobile cracks or infrequently opened windows can be treated with inexpensive foams or caulking. Depending on the age and quality of your home, the resulting energy savings can be as much as 20 percent.

2. Programmable thermostats

Programmable thermostats

Shutterstock Licensed Photo – By Olivier Le Moal

Programmable thermostats have tremendous potential to save money and minimize unnecessary energy usage. About 45 percent of a home’s energy is earmarked for heating and cooling needs with a large fraction of that wasted on unoccupied spaces. Programmable thermostats can automatically lower the heat overnight or shut off the air conditioning when you go to work.

Every degree Fahrenheit you lower the thermostat equates to 1 percent less energy use, which amounts to considerable savings over the course of a year. When used correctly, programmable thermostats reduce heating and cooling bills by 10 to 30 percent. Of course, the same result can be achieved by manually adjusting your thermostats to coincide with your activities, just make sure you remember to do it!

3. Low-flow water hardware

With the current focus on carbon emissions and climate change, we typically equate environmental stability to lower energy use, but fresh water shortage is an equal threat. Installing low-flow hardware for toilets and showers, particularly in drought prone areas, is an inexpensive and easy way to cut water consumption by 50 percent and save as much as $145 per year.

Older toilets use up to 6 gallons of water per flush, the equivalent of an astounding 20.1 gallons per person each day. This makes them the biggest consumer of indoor water. New low-flow toilets are standardized at 1.6 gallons per flush and can save more than 20,000 gallons a year in a 4-member household.

Similarly, low-flow shower heads can decrease water consumption by 40 percent or more while also lowering water heating bills and reducing CO2 emissions. Unlike early versions, new low-flow models are equipped with excellent pressure technology so your shower will be no less satisfying.

4. Energy efficient light bulbs

An average household dedicates about 5 percent of its energy use to lighting, but this value is dropping thanks to new lighting technology. Incandescent bulbs are quickly becoming a thing of the past. These inefficient light sources give off 90 percent of their energy as heat which is not only impractical from a lighting standpoint, but also raises energy bills even further during hot weather.

New LED and compact fluorescent options are far more efficient and longer lasting. Though the upfront costs are higher, the long term environmental and financial benefits are well worth it. Energy efficient light bulbs use as much as 80 percent less energy than traditional incandescent and last 3 to 25 times longer producing savings of about $6 per year per bulb.

5. Installing solar panels

Adding solar panels may not be the easiest, or least expensive, sustainability upgrade for your home, but it will certainly have the greatest impact on both your energy bills and your environmental footprint. Installing solar panels can run about $15,000 – $20,000 upfront, though a number of government incentives are bringing these numbers down. Alternatively, panels can also be leased for a much lower initial investment.

Once operational, a solar system saves about $600 per year over the course of its 25 to 30-year lifespan, and this figure will grow as energy prices rise. Solar installations require little to no maintenance and increase the value of your home.

From an environmental standpoint, the average five-kilowatt residential system can reduce household CO2 emissions by 15,000 pounds every year. Using your solar system to power an electric vehicle is the ultimate sustainable solution serving to reduce total CO2 emissions by as much as 70%!

These days, being environmentally responsible is the hallmark of a good global citizen and it need not require major sacrifices in regards to your lifestyle or your wallet. In fact, increasing your home’s sustainability is apt to make your residence more livable and save you money in the long run. The five projects listed here are just a few of the easy ways to reduce both your environmental footprint and your energy bills. So, give one or more of them a try; with a small budget and a little know-how, there is no reason you can’t start today.

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