As many of you know, my self-declared remit here is quite wide. I post on many topics from philosophy of religion through to the social and psychological aspects of religion, from philosophy in general through to politics, economics, morality and beyond. Hopefully, this makes reading the blog a wide and varied thing and appeals to a broader audience. I know I have many readers here who disagree with what I say and come on here to tell me such. Long may that continue, as long as they put their points across reasonably, then this is what it is all about.
Today, I will probably ramble a little bit and cover a few such topics. I went to meet a friend for a meal in the pub the other night. He is a tremendously thoughtful and interesting guy connected to the Royal Navy, with a wealth of very interesting experience. We went around the houses, from Brexit to free market economics, negative externalities to the role of the Armed Forces. I will hopefully detail some of that conversation to you.
Let me remind you of what negative externalities are.
One of the issues for free market economics to work properly and fairly, if such a thing can do such, is that the consumers need full knowledge of the products on offer. But this is impossible. If we all knew the ins and outs of the production of every good, we could make our consumer choices based on much greater ethical knowledge. Companies that are screwing over workers and needlessly polluting would come under the consumer microscope.
But the only way this could be achieved would be through regulation! As such, consumers have no real idea what goes on behind the scenes, and what the production of most of the products they buy entails. Therefore, before we even get off the ground here, the free market model is victim to being taken advantage of by unscrupulous companies (or, in fact, virtually every company in some way). Since consumers define the supply and demand of goods, then if they are disadvantaged in knowledge of that system and of those goods, we have a problem.
One big economic term to bring into play here is negative externality. A negative externality is a cost borne out in the production (and thus consumption) of a good which is external to the company and consumer producing and consuming. This cost is borne out by a third party. The most obvious ones are environmental. For example, an oil company may produce billions of barrels of oil, which gets used for any number of things. The extraction and consumption leads to pollution which contributes to global warming (and maybe biodiversity loss from oil seepage and deforestation), which in turn causes costs to other countries and societies in any number of other ways. This is then sorted out by the governments, paid for by the taxpayer. In other words, third-party taxpayers and individuals are subsidising the production and consumption of that oil by others.
It may also be health. Asthma costs healthcare systems (and lives) and is a silent, invisible problem. We know much of it comes from poor air quality. We may have someone who is unable to work, costs the NHS (or similar) lots of money for their illness (or indeed, is merely a cost to themselves), and yet does not drive or consume the products causing the illness. And yet they and third-party taxpayers are paying to support the healthcare provision and congestion and air quality issues on the roads.
Or perhaps the idea that roads are being used predominantly by haulage companies which move products; and these roads are built and maintained by taxpayers, many of whom do not use the products being transported. The free market does not do negative externalities. Some of this revenue might come from corporate taxes, but there are some companies who pay equal such taxes but do not use the roads at all.
These are fairly simple and basic problems but there are so many, and I could talk about negative externalities for a long time. Suffice it to say that the free market struggles to be able to account for such costs at all. Corporations will seek to minimise costs and maximise profits, so offering out of the goodness of their hearts to pay for what they are costing in their production will simply never happen, without regulation.
In fact, if we look through history, we see that government regulation had to be enforced to end terrible working scenarios. Without regulation, of course, we could or would have these things, as a tiny example:
- drugs being able to be sold
- drugs being able to be sold to children as young as a day old
- children working
- no such thing as maternity leave
- massive gender inequality
- slave trade
- unregulated and unqualified stocks and share market trading
- unhindered pollution of the world
- unsafe products
So on and so forth. The simple fact of the matter is that the free market is a collection of disparate entities and systems – it is a mechanism – and, as such, it has no jurisdiction in the world of morality. It cannot arbitrate moral disputes. It cannot stop moral misdemeanours from happening. The best it can hope for is that consumers take an ethical stance in their consumption, that they become ethical consumers. But this can take decades, centuries or may never happen. Slavery went on for how long before the government had to step in? The US went to civil war over it! What chance would a free market, un-regulated set of corporations have in sorting it out? How much pain would have to be sustained by the world or consumers until they consumed their way to an ethical equilibrium?
Free marketeers in Britain in the Victorian period, such as coal mine proprietors, argued for the maintenance of child labour, that anyone of any age could work to provide for low cost, low skilled workforce which kept the product cheap, since that was the wish of the consumer. It took rafts of government regulation over many decades to bring an end to child labour, which then (through further regulation) allowed children to get an education, and improve the general workforce for greater economic gain!
These regulations which prop up our economies are effectively invisible wires of regulation which allow the free market or economies to operate soundly.
One of the subjects about which we talked was piracy in and around Somalia, and concerned garnering support from other nations towards action and cooperation, strategically planning solutions to the problem.
It was in this arena and context that people in the armed forces must surely question their motivations for fighting for the flag when things seem to derive to economics. Here we have the British navy attempting to stop pirates from a pretty economically, politically and socially decimated foreign nation from robbing and kidnapping the cargo ships that pass by.
The quandary, and rightly so, for my friend was the provenance of these ships. These vessels are owned by massive multinational corporations and they are transporting goods made in a foreign country by a foreign or multinational corporation to another country for their foreign nationals to buy.
Here we have foreign national or international waters being policed by the Royal Navy (amongst others), but to the benefit of whom? Who gains?
Well, this is twofold: first, the corporations, and by this, I mean the transport and logistics companies as well as the companies that own the goods being transported. Second, the end consumer.
What does piracy do? Well, it adds a cost. But in this scenario, that cost is a negative externality, being external to all the corporations involved, and picked up by the Royal Navy (RN) – the British taxpayer.
You have the employees of the RN thinking “who am I risking my life for?”, and the answer is…the shareholders of the corporations making their massive profits. The British taxpayer picks up the bill for the profit of those multinational corporations.
Indeed, if you look at any recent war that has involved Western nations, economics appears to have been the driving force: Iraq (oil), Kuwait (oil), Libya (oil) and so on. Afghanistan was a sort of crusade to find the big bad guy and everyone is now regretting it. Zimbabwe and Robert Mugabe? No one, least of all Britain, gave a shit. Why? Because there were no natural resources or economic drivers to get involved.
One term you hear an awful lot these days (indeed the UK ambassador used this term to the UN the other day concerning the nerve agent attack) is “rules-based system” or similar. There is this idea that Western nations are upholding the fabric of the rules-based system that allows the world to operate successfully (or economically…).
Arguably, then, and surely the free marketeer would agree, those logistic corporations should people the boats with their own private security and pass those costs on to the supply chain and the goods themselves. This is part of the cost of producing and selling those goods.
Interestingly, according to my friend, this is indeed what has made the biggest difference and has seen a drop in piracy (they have apparently moved more towards smuggling), arming ships with their own private security forces has had a tremendous effect. Getting onto those massive ships is tough enough from small speedboats and craft. It is a dangerous thing to go with massive ladders and risks. Add someone at the top with a gun, and it gets more difficult. Another interesting aside is that my friend said that the RN, in their rules-based Britishness, would capture pirates, strip them of their weapons, and send them on their merry way back to shore, imploring them not to do it again. He said that Russian and South Korean boats used to blow the pirates out of the water without a second thought, and no one was any the wiser.
A marked (moral) difference.
But what about the rule of law in these very nefarious areas of the world? Who is responsible for maintaining the rules-based system? This is where it gets a bit murky, and where supra-national organisations get involved. It is where countries agree to participate in order to have some kind of insurance provision. Political collectivism and cooperation can certainly lead to a better moral framework. When we are accountable to others, we end up making more considerate decisions and upholding more socially and out-group considerate rules. It’s one of the reasons I am a fan of remaining in the EU – it will hold us to account more. We know this from our government, even before the referendum, trying to extricate themselves from environmental and workers’ rights legislation in the name of free market, small government economics. They failed, but leaving that framework, and finding that we will need to attract inward investment, but with added costs of tariffs, we will need to make production in the UK a low-cost enterprise. This will only be done by lowering tax and lowering regulation, hitting both workers and the environment.
That is not up for debate. That will happen.
So there is an argument that the world, outside of national borders and in international waters, needs to be policed. How best to do this is up for grabs, perhaps. My suggestion would be that international aid is well spent to improve other countries’ opportunities for the benefit of the whole world. In terms of immigration and the EU debate, I long argued with UKIP supporters who claimed we should get rid of the entire international aid budget that this is silly. If immigration is your thing, then you need to stop people wanting to come to the UK because it is better for them and their family. The best way to do this is to make their home nation more (economically) attractive and stable. International aid, if well spent and strategic, is one way of doing this.
If one looks over time at the role the Armed Forces have played (in any nation), it is one embroiled in the desire and search for economic prosperity. The British Empire and the employment of our Armed Forces seemed to be entirely about shoving our flag in foreign soils and claiming that the place was now ours, and so were the resources and workers.
We don’t like that so much now, because all those workers want to come to the “motherland”. The UKIP voter loves the idea of the glory days of the Empire and the economic powerhouse of Victorian Britain, but doesn’t like dealing with the ramifications thereof.
There seems to be a naive prevailing idea in modern thought that Armed Forces are essentially police forces that operate abroad and that police forces are law enforcement agencies that uphold moral law and good behaviour. However, it is more accurate to see the Armed Forces as a set of entities that are furthering the interests of, in this case, the UK. And “interests” merely means “economic interests”. As you can see, this doesn’t necessarily mean a prima facie defence 0f British national organisations, but can nebulously mean any multinational that can command some kind of influence over the average British consumer.
This is how the government officially set out their mission statement:
We have 7 military tasks:
- defending the UK and its overseas territories
- providing strategic intelligence
- providing nuclear deterrence
- supporting civil emergency organisations in times of crisis
- defending our interests by projecting power strategically and through expeditionary interventions
- providing a defence contribution to UK influence
- providing security for stabilisation
Our priorities 2015 to 2020 are to:
- protect our people
- project our global influence
- promote our prosperity
- maintain a strategic base and integrated global support network, and manage the Department of State
Economics is clearly massively important for the stability, wellbeing and successful lives of nationals. It’s just an odd thing to think that people are laying down their lives for the economic prosperity of a (multinational) corporation. The quaint idea of “queen and country” can be derived down to “profit”.
H/T to Ed Buckner for this quote:
I spent 33 years and four months in active military service and during that period I spent most of my time as a high class muscle man for Big Business, for Wall Street and the bankers. In short, I was a racketeer, a gangster for capitalism. I helped make Mexico and especially Tampico safe for American oil interests in 1914. I helped make Haiti and Cuba a decent place for the National City Bank boys to collect revenues in. I helped in the raping of half a dozen Central American republics for the benefit of Wall Street. I helped purify Nicaragua for the International Banking House of Brown Brothers in 1902-1912. I brought light to the Dominican Republic for the American sugar interests in 1916. I helped make Honduras right for the American fruit companies in 1903. In China in 1927 I helped see to it that Standard Oil went on its way unmolested. Looking back on it, I might have given Al Capone a few hints. The best he could do was to operate his racket in three districts. I operated on three continents.
As ever, let me know your thoughts.
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