Focus Topic: Trade in Used Clothing

Source

How would you feel if you had to get your clothes from the flea market? How about if that was your only practical choice because of income constraints or because of distance? And what if you had to purchase underwear from there too?

I came across a short article in the Stylist a couple of weeks ago in their “elsewhere” section in which they briefly discussed this subject. The article spoke about women (and men) potentially putting themselves at risk by purchasing and using used underwear. For this very reason the Zimbabwean government has just brought in a new law that prevents such sales due to health and safety concerns, following in the footsteps of Ghana who implemented such measures in 1994.

As a woman, it is a chore sometimes to go out and buy underwear. I tend to go to my good old favourite, M&S. It’s been tried and tested, I know their range, I know it will fit and I know that I won’t need to spend valuable time trying on – that is just pure hassle. But even then, there are sometimes I go into the store, during sale periods of course, and I don’t find my size. Now just imagine what some women in developing countries must be facing! In amongst the piles and piles of clothes, they must rummage for something suitable. I’m sure not much thought goes into whether they should get the matching pair or not.

I am uncertain if I fully agree with the ban. I understand the welfare reasons behind it, but it will have different impacts on the different groups in society. The individual traders who once made a living from this source must now find alternative means and women who genuinely do not have the means to purchase new wear will now be left worse off. In addition I agree with this line of argument:

As rational agents, we aim to maximise our consumption based on our budget constraints. Therefore if second hand clothes come in at cheaper than their local substitutes, demand will respond accordingly (Source: Unknown).

Source

The international market for second hand clothes is large. Some estimates show it to be worth more than $1 billion a year making up 0.5% of the total value of trade textiles. This industry’s success has correlated with the decline of the once prosperous sub-Saharan African textiles industry. The rise of the second hand market has not been the main cause of this decline, there were other contributing factors including major structural policy changes, the introduction of the Multi Fibre Agreements (MFA) and increased liberalisation of the market which brought competition from Asia.   

Nevertheless, second hand clothes will for the time being at least remain on the scene in sub-Saharan markets. In some instances residents have shown a preference for second hand clothes because they are of better quality (perceived or otherwise) and cheaper than the imports received from China. The decline of the textile industry means that at present only about 5% of cotton produced on the continent is transformed into a form of textile. The rest is exported.

Sources:

Guardian - Oxfam Clothing

Baden and Barber (2005), The Impact of Second Hand Clothing on Developing Countries, Oxfam

Focus Topic: Artisanal Mining

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More than 50 countries in the world are classified as “resource rich” by the IMF and yet 1.5 million people in these countries live on less than $2 a day. Although there are many financial benefits to be gained from the extractive industries, in most cases these gains have not filtered down to the average citizen, the people that need it most. Africa as a whole and the countries within it, are particularly susceptible to the “resource curse”.

There are two sides to the extractive industry: 1) the industrial side operated by large multinationals and machinery and 2) the artisanal or small-scale miner. In the first instance, despite the fact that the large industrialised companies operate most of the sector and own most of the land, reports have shown that in some instances they employ few nationals.

For many countries, artisanal mining (ASM) is of great significance. In Sub-Saharan Africa, ASM directly employs over 10 million people (Global Briefing Magazine). Many studies have shown that ASM has an important role to play in poverty alleviation especially because of the number of people it employs (Reports include “Global Report on Artisanal and Small-Scale Mining” from the International Institute for Environment and Development). However, it tends to not have such a good reputation because of the environmental costs and poor health and safety standards. With limited enforcement of environmental regulations and inadequate protected access to land, the priority for subsistence miners is to make ends meet rather than protect the environment.  The challenge therefore for many governments and agencies alike is how to secure the benefits for poverty reduction.

Artisanal Mining Operations in Africa,May 2010 

(table available from http://www.afribiz.info/content/artisanal-mining-operations-in-africa) .

Country	Location/Name	Owner/Operator
Angola	Luali River Area	Gold
Burundi	Murehe	Tin
Burundi	Murehe	Tungsten
Cameroon	Various Locations	Diamond
Cameroon	Various Locations	Gold
Central African Republic	Bandas Greenstone Belt	Gold
Central African Republic	Bangana Area	Diamond
Central African Republic	Bogoin-Boali Greenstone Belt	Gold
Central African Republic	Bria Area	Diamond
Central African Republic	Carnot Area	Diamond
Central African Republic	Kotto Area	Diamond
Central African Republic	Quadda Area	Diamond
Chad	Mayo Dala Department	Gold
Congo РBrazzaville	Kell̩, Covette-Ouest Department	Diamond
Congo – Brazzaville	Likouala Department	Diamond
Congo – Brazzaville	Yangadou, Sangha Department	Diamond
Congo – Kinshasa	Kasaï Occidental Provinces, in Bandundu Province, at Bafwansende and Kisangani in Haut-Congo Province, at Lubutu in Maniema Province, at Kota-Koli, Yakoma, and Gbadolite in Equateur Province), in Nord Kivu Province, and at Luozi in Bas-Congo Province	Diamond
Equatorial Guinea	Aconibe, Coro, and Mongomo	Gold
Ghana	Birim Valley	Diamond
Madagascar	Mananjary	Emerald
Madagascar	Andilamena and Vatomandry	Ruby
Madagascar	Ilakaka and Sakara	Sapphire
Morocco	Errachidia, Figuig, and Ouarzazate	Barite
Niger	Liptako Region	Gold
Nigeria	Dutse Nkura	Tin
Nigeria	Jos Region	Nitrogen, Tantulum
Rwanda	Cyangugu	Sapphire
Rwanda	Nyungwe Forest	Gold
Zambia	Eastern Province	Beryl
Zambia	Iteshi Teshi; Mumbwa	Citrine
Zambia	Kalunga Wbeba, Hofmeyer	Tourmaline
Zambia	Katete	Aquamarine
Zambia	Kitwe	Emerald
Zambia	Siavunga	Garnet
Zimbabwe	Gwanda	Gold
Zimbabwe	Kamativi	Tin

References: 

http://en.wikipedia.org/wiki/Artisanal_mining

http://www.pactworld.org/galleries/default-file/Women%20in%20Artisanal%20Mining%20in%20the%20DRC.pdf

http://pubs.iied.org/pdfs/G00723.pdf

http://www.afribiz.info/content/artisanal-mining-operations-in-africa

Focus Topic: Is it cost effective to recycle?

Source

The final chapter of Landsburg’s “The Armchair Economist” provided me with some food for thought. He discusses if there is a need to protect the environment and if this will bring economic benefits.

Economics is the study of scarce resources and how people respond to incentives. The person with the greatest incentive in general is willing to pay the higher price to gain that resource. That’s why in a perfectly competitive (open market where everyone knows everything that is happening), the allocation of property rights is seen as inefficient/unnecessary. If an individual is given a property right say for example, to pollute but has no need to pollute that individual would rather sell that right to another individual who does pollute and who is willing to pay the price to obtain that right. Therefore, regardless of initial allocation of rights, whether split equally between the two individuals or not, the final outcome will always be the same.

The same can be said of recycling. Taken from a purely economic standpoint, due consideration must be made of both sides (to recycle and not to recycle) without factoring ANY moral judgements.  The side that will come out victorious is that with the greatest merits.

Here I reproduce in part, Landsburg’s argument:

“Economics is the science of competing preferences. Environmentalism goes beyond science when it elevates matters of preference to matters of morality. A proposal to pave a wilderness and put up a parking lot is an occasion for conflict between those who prefer wilderness and those who prefer convenient parking. In the ensuing struggle, each side attempts to impose its preferences by manipulating the political and economic systems. Because one side must win and one side must lose, the battle is hard-fought and sometimes bitter.” (pg 224)

A common argument for protecting the environment is for the benefit of future generations. However, Landsburg argues that “… do we have any reason to think that future generations will prefer inheriting the wilderness to inheriting the profits …?”

We must remember that in a market, there are buyers and sellers. If we stop buying something, the producer will soon go out of business which will lead to all sorts of problems including unemployment and in the case of recycling, possibly a reduction in the amount of forests as the number of trees planted goes down.

Of course we do not live in a perfect market. Among other things the deterioration of the environment could have implications for the potential of future profits .

So what do you think? Should we be recycling more? 

Focus Topic: Migration

Migration into the UK has become a hot topic of the moment mainly because of the low employment rates among UK nationals. Recent data shows that unemployment now stands at 2.6 million, the highest level since 1994 (Source: BBC). Unemployment seems to be particularly troublesome between the ages of 18 and 24. Mayor Boris Johnson has added to the debate by claiming that the youth find themselves in this predicament because they lack the energy, drive and determination that so many of the migrants have. But is it really that simple? Is it just a case of cultural differences and expectations that prevent UK nationals seeking employment?

I must admit that to a certain degree there is a case to be heard here. The different characteristics of migrants and UK nationals do play a role in how they respond to current job opportunities.  Several studies have confirmed this. Migrants have been noted to be more flexible and entrepreneurial, factors which can go a long way in locking down a job. More importantly however, studies also highlight that migrants tend to have a higher level of education, which would explain why migrants have higher paying jobs than UK nationals in some sectors.

In general, most research has shown that migration into the UK has little effect overall on UK resident’s wages. Although if separate industries are put under analysis, individuals in the higher paid jobs tend to benefit whilst those at the lower end of the pay spectrum loose out. I guess this is the main reason why there is much concern about “migrants taking jobs away”. In this instance, where competition is stronger, an increase in the labour supply will depress wages for everyone. If this has the effect of reducing the wages below a point where UK nationals are willing to work, then it could increase unemployment. However, there is also evidence that shows this effect is very minimal.

So what does this all mean for UK nationals? Should we all try and find a new lease of life, become more self-confident and flexible? Even if that was the case, there are still no guarantees that we would get the job. A recent article published in the Evening Standard (23/01/2012) entitled “Why can’t a Brit get a Job at Pret?” (available here)  describes how a  British brand only has 19% of its staff as British. The Evening Standard follows the application of 4 British young workers as they try and get a job within the chain. But they all fall at the first hurdle and none are invited for interview. Joshi Hermann, the writer of the article, gets the opportunity to work in one of the stores and explains quite interestingly that an applicant’s final fate rests in the hands of the current staff. Pret calls this a democratic process. Now, if the majority of staff members are from one region, wouldn’t they tend to side with someone that they have some type of cultural affinity with? Even if it is unspoken.

Without concrete figures, this is all speculation.

For further information see articles by Glover et. al, Dustmann and the UK Border Agency.