This new forum is kicking off with this thread-starter which presents an ethics/justice-themed proposal. The idea for this proposal came from a Genius Forum
thread, the more entrenched injustices of the world...,
starting from this post (beware that there's a lot of
other unrelated discussion in that thread). Sapius was the only person who engaged and encouraged me in that thread and I've invited him to join us here
at Thinking Strait - he's currently away on a two week trip so we may have to wait a while for his input.
All comments and critiques are welcome however I'm particularly interested in answers to the following questions:
1. Do you think that this is a practical scheme i.e. do the benefits outweigh the drawbacks and are there reasonable solutions to the described problems?
2. Can you think of any better solutions to the described drawbacks/problems than those already canvassed?
3. What do you think of the currently proposed ethics criteria and can you think of any others?
4. What do you think of the mechanics of the scheme and can you think of any better ways to administer it?
Without further ado, here is the proposal itself:
INTRODUCTION
One of the features of the modern globalised capitalist system is that unethical practices are often rewarded. For example, a multinational company that locates its factory in a third-world country might pay its factory (sweat-shop) workers a pittance and thereby greatly reduce the end price of its product. Consumers will typically - assuming adequate quality of the product - purchase the cheaper product in preference to a more expensive one - either being unaware or uncaring of its less ethical origins.
The purpose of this paper is to propose a scheme that turns this reward mechanism around so that ethical rather than unethical practices are rewarded.
THE SCHEME
The essential mechanism by which the proposed scheme functions is the subsidisation of ethically-produced products through the taxation imposed upon unethically-produced products. For this reason, the scheme has been named the Ethics Tax/Subsidy (ETS).
Taxes and subsidies would be applied at the retail level - i.e. by supermarkets and other shops that sell directly to the end-consumer - in a similar way to that of a goods and services tax (e.g. Australia's GST), but complicated due to the need for different goods to be taxed/subsidised at different rates (this drawback will be discussed later). The national government would collect net taxes and, if necessary, supply net subsidies, however the aim would be for the scheme to be revenue-neutral.
Each product on the market would be rated on a scale from highly ethical to neutral to highly unethical. A product's position on this scale would be converted into a percentage taxation/subsidy through an appropriate formula (yet to be determined). The following two sections discuss the product rating criteria and the product rating process.
PRODUCT RATING CRITERIA
Products would be rated against several criteria and those individual ratings would be summed to arrive at a net rating. It is suggested that an integral score between -3 and +3 be determined for each product. Following is a preliminary list of ethics criteria against which each product could be judged:
* Wages and profits. All stages of the production of a product would be evaluated in terms of the wages paid to those involved in the production, from farm labour to marketing. A standard for wages for each profession would be established: this would be independent of the country in which the work occurred. Significant discrepancies below the minimum wage for one or more professions involved in the manufacture and distribution of the product would cause its rating to be negative. Uniform adherence to standard wages would result in a neutral rating. Wages in excess of the minimum would result in a positive rating. Profiteering would also be examined with an eye to equal and fair sharing of profits at all levels of the production/supply chain. Should one group be found to be profiting more than other groups, a negative rating would ensue, unless it could be shown that the rest of the profit-eligible groups were willing for that group to receive extra profits - perhaps because it was reinvesting them in a worthwhile project.
* Working conditions. This again applies to all stages of the production of a product. A standard would be developed for acceptable working conditions - including working hours, break times, and holiday/maternity/sick leave. A negative rating would accrue when those conditions were not satisfied and a positive rating would accrue where those conditions were exceeded.
* Environmental concerns. A negative rating would accrue from such behaviour as emitting carbon and pollution in general, use of toxic materials, destruction of native forests, and species extinction. A positive rating would accrue from such behaviour as use of sustainable technologies for energy (solar, wind, hydro, etc), carbon sequestering (through the likes of planting trees), use of recycled products, and active protection of plant/animal species.
* Marketing. A negative rating would accrue from deceitful promotional practices, or from promotional practices aimed at youth when the product is inappropriate for youth. A positive rating might not be applicable to this criteria - the best that a product might achieve would be a neutral rating.
THE PRODUCT RATING PROCESS
It is proposed that a government-controlled bureaucratic body be formed to oversee the rating of products, and that the product rating process be completely transparent and open to public input. It is proposed that to achieve transparency and openness, the process occur on the web. An ETS website would be set up and each product on the market would have its own page, where information could be both submitted and read, as a clearing-house of sorts. The public and interested non-profit organisations could then perform the majority of research into each product and the bureaucrats would be responsible chiefly for interpreting and validating the research and actually performing the rating of each product. There would be an appeal process available to any company that believed that its product had received an unfair rating.
It would be necessary that all products of the same nature - say, bottles of shampoo - be fully rated before the tax/subsidy is applied to any one of them, because otherwise certain products may gain an unfair advantage over others. If, for example, Brand A shampoo is rated as unethical and a tax applied, prior to the rating of Brand B, then Brand B will enjoy a competitive advantage over Brand A, even though, had it been rated, it might have been rated as even less ethical than Brand A.
DRAWBACKS AND PROBLEMS
There are several difficulties associated with this scheme. This section discusses those difficulties and provides a few suggestions for alleviating them.
1. ETS imposes an extra administrative burden on shopkeepers, who have to apply a different tax/subsidy to every product on their shelves. Moreover, the tax/subsidy applied to each product is subject to change as the producers of each product align their production processes more or less ethically. One possibility for alleviating this problem is that technology be developed to allow for the downloading from the web of the current tax/subsidy levels for all products, to be incorporated with the technology that currently prints the price labels of products on the shelves, and with that of the cash registers. Shopkeepers could be required to update their applied ETS taxes/subsidies only once every six months.
2. Obtaining the information required to completely assess a product's ethics rating might be quite difficult - particularly with respect to wages and profits, and particularly when the product is manufactured in another (third world) country - it might be even difficult to discover where the product is manufactured in the first place. The openness of the product rating process is one means of overcoming this problem - employees and those in the know could potentially share information (perhaps anonymously) on the product's web page. Another tactic that might be required is to slightly increase the number of diplomatic staff in other countries and expand their role to include visiting factory and work sites to collect information directly from employees regarding how much they are being paid and their working conditions. Companies who refused to tolerate on-site visits would have their products rated negatively. The visits would be unannounced and unplanned.
3. A livelihood might be stripped from poor people whose only means of survival is the unethical production of goods. For example, poor people living in the Amazon basin might believe that they have no other means of survival than cutting down the native forest for farmland, and then selling their crops. Under ETS, those products would be taxed heavily, probably to the point of no longer being competitive. One means of alleviating this problem is trying to run ETS with a bias towards taxation, such that it has surplus funds. These surplus funds could be directed to help alleviate problems such as the one identified in this paragraph: the funds could be used to set up alternative means of making a living - such as perhaps in this case, eco-tourism.
CONCLUSION
This paper has proposed a scheme to reverse the tendency of the globalised capitalist market to reward unethical practices. The scheme is not without problems, however those problems are also not without reasonable solutions.
All comments and critiques are welcome however I'm particularly interested in answers to the following questions:
1. Do you think that this is a practical scheme i.e. do the benefits outweigh the drawbacks and are there reasonable solutions to the described problems?
2. Can you think of any better solutions to the described drawbacks/problems than those already canvassed?
3. What do you think of the currently proposed ethics criteria and can you think of any others?
4. What do you think of the mechanics of the scheme and can you think of any better ways to administer it?
Without further ado, here is the proposal itself:
INTRODUCTION
One of the features of the modern globalised capitalist system is that unethical practices are often rewarded. For example, a multinational company that locates its factory in a third-world country might pay its factory (sweat-shop) workers a pittance and thereby greatly reduce the end price of its product. Consumers will typically - assuming adequate quality of the product - purchase the cheaper product in preference to a more expensive one - either being unaware or uncaring of its less ethical origins.
The purpose of this paper is to propose a scheme that turns this reward mechanism around so that ethical rather than unethical practices are rewarded.
THE SCHEME
The essential mechanism by which the proposed scheme functions is the subsidisation of ethically-produced products through the taxation imposed upon unethically-produced products. For this reason, the scheme has been named the Ethics Tax/Subsidy (ETS).
Taxes and subsidies would be applied at the retail level - i.e. by supermarkets and other shops that sell directly to the end-consumer - in a similar way to that of a goods and services tax (e.g. Australia's GST), but complicated due to the need for different goods to be taxed/subsidised at different rates (this drawback will be discussed later). The national government would collect net taxes and, if necessary, supply net subsidies, however the aim would be for the scheme to be revenue-neutral.
Each product on the market would be rated on a scale from highly ethical to neutral to highly unethical. A product's position on this scale would be converted into a percentage taxation/subsidy through an appropriate formula (yet to be determined). The following two sections discuss the product rating criteria and the product rating process.
PRODUCT RATING CRITERIA
Products would be rated against several criteria and those individual ratings would be summed to arrive at a net rating. It is suggested that an integral score between -3 and +3 be determined for each product. Following is a preliminary list of ethics criteria against which each product could be judged:
* Wages and profits. All stages of the production of a product would be evaluated in terms of the wages paid to those involved in the production, from farm labour to marketing. A standard for wages for each profession would be established: this would be independent of the country in which the work occurred. Significant discrepancies below the minimum wage for one or more professions involved in the manufacture and distribution of the product would cause its rating to be negative. Uniform adherence to standard wages would result in a neutral rating. Wages in excess of the minimum would result in a positive rating. Profiteering would also be examined with an eye to equal and fair sharing of profits at all levels of the production/supply chain. Should one group be found to be profiting more than other groups, a negative rating would ensue, unless it could be shown that the rest of the profit-eligible groups were willing for that group to receive extra profits - perhaps because it was reinvesting them in a worthwhile project.
* Working conditions. This again applies to all stages of the production of a product. A standard would be developed for acceptable working conditions - including working hours, break times, and holiday/maternity/sick leave. A negative rating would accrue when those conditions were not satisfied and a positive rating would accrue where those conditions were exceeded.
* Environmental concerns. A negative rating would accrue from such behaviour as emitting carbon and pollution in general, use of toxic materials, destruction of native forests, and species extinction. A positive rating would accrue from such behaviour as use of sustainable technologies for energy (solar, wind, hydro, etc), carbon sequestering (through the likes of planting trees), use of recycled products, and active protection of plant/animal species.
* Marketing. A negative rating would accrue from deceitful promotional practices, or from promotional practices aimed at youth when the product is inappropriate for youth. A positive rating might not be applicable to this criteria - the best that a product might achieve would be a neutral rating.
THE PRODUCT RATING PROCESS
It is proposed that a government-controlled bureaucratic body be formed to oversee the rating of products, and that the product rating process be completely transparent and open to public input. It is proposed that to achieve transparency and openness, the process occur on the web. An ETS website would be set up and each product on the market would have its own page, where information could be both submitted and read, as a clearing-house of sorts. The public and interested non-profit organisations could then perform the majority of research into each product and the bureaucrats would be responsible chiefly for interpreting and validating the research and actually performing the rating of each product. There would be an appeal process available to any company that believed that its product had received an unfair rating.
It would be necessary that all products of the same nature - say, bottles of shampoo - be fully rated before the tax/subsidy is applied to any one of them, because otherwise certain products may gain an unfair advantage over others. If, for example, Brand A shampoo is rated as unethical and a tax applied, prior to the rating of Brand B, then Brand B will enjoy a competitive advantage over Brand A, even though, had it been rated, it might have been rated as even less ethical than Brand A.
DRAWBACKS AND PROBLEMS
There are several difficulties associated with this scheme. This section discusses those difficulties and provides a few suggestions for alleviating them.
1. ETS imposes an extra administrative burden on shopkeepers, who have to apply a different tax/subsidy to every product on their shelves. Moreover, the tax/subsidy applied to each product is subject to change as the producers of each product align their production processes more or less ethically. One possibility for alleviating this problem is that technology be developed to allow for the downloading from the web of the current tax/subsidy levels for all products, to be incorporated with the technology that currently prints the price labels of products on the shelves, and with that of the cash registers. Shopkeepers could be required to update their applied ETS taxes/subsidies only once every six months.
2. Obtaining the information required to completely assess a product's ethics rating might be quite difficult - particularly with respect to wages and profits, and particularly when the product is manufactured in another (third world) country - it might be even difficult to discover where the product is manufactured in the first place. The openness of the product rating process is one means of overcoming this problem - employees and those in the know could potentially share information (perhaps anonymously) on the product's web page. Another tactic that might be required is to slightly increase the number of diplomatic staff in other countries and expand their role to include visiting factory and work sites to collect information directly from employees regarding how much they are being paid and their working conditions. Companies who refused to tolerate on-site visits would have their products rated negatively. The visits would be unannounced and unplanned.
3. A livelihood might be stripped from poor people whose only means of survival is the unethical production of goods. For example, poor people living in the Amazon basin might believe that they have no other means of survival than cutting down the native forest for farmland, and then selling their crops. Under ETS, those products would be taxed heavily, probably to the point of no longer being competitive. One means of alleviating this problem is trying to run ETS with a bias towards taxation, such that it has surplus funds. These surplus funds could be directed to help alleviate problems such as the one identified in this paragraph: the funds could be used to set up alternative means of making a living - such as perhaps in this case, eco-tourism.
CONCLUSION
This paper has proposed a scheme to reverse the tendency of the globalised capitalist market to reward unethical practices. The scheme is not without problems, however those problems are also not without reasonable solutions.
