business, society

Who gives a fuck about altruistic values in an economic downturn?

So over the last couple of years, the good times have been rolling with big city bonuses, spiraling asset values and cheap money for everyone to borrow. Globalisation has started racheting up a notch and technology hasn’t exactly been kicking back and chilling with a dooby watching Dude Where’s My Car either.

During this boom something weird happened, we all grew a conscience.

Walk with me down memory lane, cast your mind back to 2005 – 2006…

We’re all wearing bands on our wrists marking us as a benevolent tribe. Inviting our friends round to feast on fair trade products whilst discussing the hybrid car we are thinking about purchasing. We stop chatting about becoming carbon neutral only to watch Live 8 on the TV. We are staying awake at night worrying about Global Warming. We shake our heads at those not using a ‘bag for life’ or for the super chav/budding environmentalists those “I’m not a plastic bag” bags.

As an aside, imagine how ridiculous the World would be if everything was labelled with what it isn’t rather than what it is. For example on the front of buses “I am not the 214,271,8,242 etc ad nausem”.

Now it’s easy to be philantrophic when you’re rich, look at the huge amounts that Bill Gates and Warren Buffett can give away without batting an eyelid. 2005-2006 in the UK was a period when the population was feeling relatively wealthy (low inflation, low interest rates, increasing property values) and feeling more obliged to spread the wealth. In fact, over £10.9 billion was donated in total during this period.

You may have guessed but times they are a-changing, a few of the wheels on the economic bandwagon are coming loose and it’s not going to be about if the wheels come off, but whether they come off just as we roll into a Little Chef (and thus enjoy a stodgy and overpriced soft landing) or just as we’re on a hairpin (and in the words of the pikeys in Snatch, get proper fucked).

Now either way, with increasing commodity prices (i.e. higher household expenditure), the impact of the interest rate rises, slowing salary increases and other squeezes on household disposable income our charitable donations are likely to tame somewhat as individuals.

I predicted the biggest faller will be Fair Trade goods. Already, Fair Trade Coffee trades far in advance of the market rate (the whole point I guess) but this distorts the free market. There is surely an element of income elasticity of demand for Fair Trade Coffee (and Fair Trade products in general) to consider in a downturn, i.e. when income goes down, demand for these goods goes down as consumers switch to alternatives that are at market price. SO I guess the point that I’m getting at is that godliness comes at a price and that when the economy turns, I expect people to crawl back to their market equilibrium coffee. Check out this site on coffee pricing, it’s pretty interesting.

The interesting one is alternative-energy and self-sufficiency in a downturn. Whilst I expect activity in this market to reduce, the wise person should actually wait for the market to go down and then invest in kick-ass self-sufficiency to opt out of spirling energy costs…thinking about it.

1 Comment

• On 01.28.08 The Worship St Irregulars » Something changed… wrote these pithy words:

  [...] are likely to become de rigeur. The impacts on charity of a downturn have already been touched upon in an article on this website by Chairman [...]

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