The ambulance chasers at Leigh Day are having a go at British American Tobacco and the manner in which children work on smallholder farms producing tobacco in Malawi.
Hmm, well, yes, OK, but what is it that anyone wants anyone to do?
Even Dickens did not describe harder toil. Life for the child of a tenant farmer who works the tobacco fields of Malawi is unimaginably arduous: up at 4am for several hours of labour with no breakfast, cutting into the earth with a heavy hoe.
School – if they go to school – is a brief respite. The first and often only meal of the day, maize porridge, is eaten when they get home, before more digging. Sleep is on the bare earth under a straw roof.
Now, however, British American Tobacco is facing a watershed legal action on behalf of potentially hundreds of these children and their families. Human rights lawyers Leigh Day argue that the company is getting rich while the children and their parents who do this backbreaking work are trapped in grinding poverty, which they say amounts to “unjust enrichment”.
BAT says it tells farmers not to make their children work. The lawyers say they have no choice. Most children are deprived of an education, which should be a path out, because their families struggle to afford even the small fees, exercise books and uniforms required.
Malawian tobacco growing is pretty much a free market. Anyone can grow it – providing they’ve access to land of course – and anyone can sell it. The auction system is pretty transparent and so on. There’s no grand export tax to depress the price to producers.
So, what do we know about markets? The marginal producer earns shit. Because that’s what the marginal producer is in a free market system, someone who earns shit and is thus always just on the cusp of leaving the market altogether.
What happens to the children of marginal producers in an agricultural economy? They have to help out on the farm. This being a problem we’d like to solve.
The long term solution is that Malawi should have an industrial revolution. This is the same thing that stopped you and me from having to go gleaning in the wheat fields, the same thing that stopped little Chinee kids from having to do so in the rice paddies.
While we wait for one of those to turn up what is it that should be done? Well, Leigh Day appears to be arguing that BAT should be paying more money for the tobacco. So that the kiddies don’t have to work in the fields. Which is gross economic stupidity of the finest kind of course.
So, tobacco prices rise do they? Then more is produced and the marginal producer ends up exactly where they are now. The only way it is possible for higher prices not to call forth more supply is if there are restrictions imposed upon who may grow tobacco. As, say, the American system has long done, tobacco quotas. At which point what happens? The quotas get divorced from the growing, the rentiers own the quota and the marginal producer is let earning near nothing again.
Al Gore used to own tobacco quota and he wasn’t out there hoeing the plants now, was he?
That is, there is no solution within the tobacco industry to this. The only solution is the arising of another industry that pays better wages. You know, like has happened near everywhere else in the world?
But don’t expect Leigh Day to take that point on board, not when there’s a multinational to sue on a no win no fee basis.