#17 Beyond the Tag: Understanding the True Price with Michel Scholte

Brace yourself for a paradigm shift in how we perceive pricing as we welcome Michel Scholte, co-founder of True Price and Impact Institute. Discover the groundbreaking concept of "True Price" that integrates social and environmental costs into everyday pricing, challenging current market norms. Michel shares his personal journey, deeply influenced by experiences of global poverty and inequality, and argues passionately for consumer-friendly systems that truly reflect the costs of goods and services while tackling the exploitation and environmental harm often overlooked in traditional pricing models.

Coffee lovers, take note—there's more to your cup than meets the eye. We unravel the hidden social and environmental costs embedded in the conventional coffee value chain, from child labor to carbon emissions, that often go unnoticed. Uncover how certification labels can sometimes mislead, and why consumer awareness is critical in addressing these broader societal and environmental issues. This exploration invites a rethinking of market systems to foster well-being for all, highlighting the importance of informed consumer choices.

Explore the transformative power of true pricing in business, showcasing how companies like Tony's Chocolonely are paving the way by incorporating societal costs into their pricing models. Understand the shared responsibility of consumers, businesses, and governments in creating a fairer market structure. We dive into how aligning prices with sustainability and human rights can revolutionize markets, emphasizing the role of fair trade and responsible pricing. Concluding with hope, we paint an optimistic picture of a future driven by ethical consumption and fair trade success stories.

https://trueprice.org/

https://www.impactinstitute.com.au/

Please visit our website, www.businessandsociety.net, for more inspiration.

Transcript

SenthilHost

00:04

Hey, it's Senthil here. Welcome to the Business and Society podcast. Every fortnight we speak to a world-leading thinker to better understand the role of business and society. Joining me today is Michel Scholte. Michel is the co-founder of True Price and Impact Institute. Michel has some very bold ideas about the current pricing models we see in the marketplace and challenges some of the economic notions that are widely prevailing today. I sat with him to understand his work at True Price. Michel, a very warm welcome to our podcast and delighted to have you with us today. Michel, what is True Price? The name implies that something is wrong with the current pricing model. 

MichelGuest

00:51

Well, thank you, first of all, for being here and for allowing me to share this, and it's a real, real honor. 

00:58

Yeah, True Price. Yeah, as you say, we currently have false prices, a price crisis, meaning that we actually do not incorporate the things that we should value, such as the dignity of work, the sustainability of nature, and therefore the extraction and exploitation is cheaper than actually incorporating dignity into the production and consumption practices grounded in dignity, such as paying a wage that is sufficient for a family to get by, or such, as you know, not polluting, extracting nature. Even if you would like to, it's very complicated and well, actually, your competitors, they may dodge this, they may not do this, and you are more expensive. So there's a huge penalty on more well, I would say, superior products, and also for consumers, it's more expensive to buy products that are actually better. So I think that's very perverse. There have been decades of Nobel Prizes being awarded to this idea, but actually we noticed that there's no tangible, concrete movement on the ground that makes this practical for businesses, for consumers, for governments and therefore, we started True Price Interesting. 

SenthilHost

02:39

How old is this idea, Michel? We live in an era where there's a lot of discussion about inflation. You are proposing a counter-narrative. 

MichelGuest

02:47

Oh, for sure, for sure, I mean this is not actually a novel idea. The concept of externalities as I said, many renowned economists have been writing about this for 200 years ago, including Adam Smith, obviously, who, uh, who well considered this idea that well, there should be some sort of moral foundation to markets. More recently, actually, Nordhaus for the social cost of carbon, but that was actually after we started this movement, now that is almost what's 14 years ago… so almost 15 years ago, and that is now kind of making more waves this idea that we should incorporate the future welfare loss into current day prices to anticipate on certain costs that are not incorporated into markets. So there's lots and lots of thinking about this and also more and more in our policy frameworks, but still actual, tangible, consumer-oriented information infrastructures with transactions. That is actually lacking. 

SenthilHost

03:59

Well, let's unpack that in a moment. I got to know about your work from Nick Romeo’s, the Alternative. Nick also appeared in our podcast and he argued that True Price is one of the powerful ideas to build a just economy. Tell us your story before we get in and understand the technicalities of the term True Price. 

MichelGuest

04:23

Yeah, well, really, really special author. Let me just, yeah, indeed, kind of take it from where we started as a kind of well, myself and my good friend Adrian de Groot Ruiz we both, I think we're in on a relatively young age struggling with that problem that I just well shared this idea that actually, if you want to make more I would say superior products for society, then it's more costly. And myself, when I was a teenager, you know, well, we were relatively deprived, I would say, for Dutch standards. My mother, you know, had three children, didn't have, you know, the proper formal qualifications, education-wise, was a journalist and you know, I think we would rely on kind of the food stamps and all sorts of other, um, your kind of solidarity systems. 

05:25

And I said to my mother you're so smart, why are we poor? And she's basically not literally, but she always, uh, stressed that, look, there's people really poor and we are not, that we are not those people. We are really lucky to be born here. And, um, you know she actually said, won the lottery. But if you really want to see poor people help them out, and you know I was kind of, yeah, taken, sucked into this, I would now call it a neocolonial idea that you know African countries. They are really poor. And I went, I collected money with my paper job, went to Ghana and I collected money with my paper job, went to Ghana actually, when I was still in high school Two months I was allowed to write a kind of thesis around this question and I searched for the real poor people. And I met my host family's mother, madam Grace, and she laughed when I told her I was searching for really poor people and she laughed like you're looking for poor people, oh, come on. 

SenthilHost

06:28

Are you kidding? 

MichelGuest

06:29

me, but actually she worked for USAID in development projects and she took me to a small village in Swazi and, yeah, that was really the situation they were in with a hardworking cocoa farmer village, had to walk five kilometers to get water from a polluted pond, you know, it was just very striking. And actually what I noticed is that I was now suddenly the person who had some sort of authority. Simply because the color of my skin. I felt it was so, um, weird and so wrong that I, as a teenager was, you know, welcomed, rewarded bananas, welcomed by the head of the um community, you know, and I felt like I well, at least, should do something to address this fact that children are dying from diarrhea, um, out of nothing. And you know, and I noticed, when I went back to um my high school and I had to study this for my thesis, that actually this wasn't a coincidence that those uh farmer communities were in poverty, and I also noticed that the cocoa value chain actually run through Amsterdam and then in the harbors of Amsterdam, in the production locations in Belgium and in the Netherlands or in Switzerland, there were made billions of euros of profits and at the same time, these farmers are, you know, extremely poor still because they don't get enough for their production. And I just couldn't grapple this. Water pump projects collected six and a half thousand euros, which is kind of equivalent to dollars now with the current kind of currency ratio. 

08:30

But I felt really like you know, I'm trapped in this system of giving some breadcrumbs to poor people, with a very obvious colonial past where these structures also existed. So I was wondering whether this even fundamentally changed. Also noting the you know, enslavement on a larger scale, well out of poverty, actually, unfortunately, by many farmer communities, and at the same time, we make billions over the back of those communities. And I was, like you know, rather just be exploitative, right, rather just be, you know, ruthless, inhumane, then acting as if you want to make the world better and at the same time just milking the cow. I couldn't stand this. 

09:23

Now, I felt so cynical and so used um. So, yeah, I actually um, went to university. Instead of going for economics, I went to sociology. I felt like we need to redefine the fundamental foundations of what we consider economics and rewrite the concept of a price. And actually, I went into a think tank. I met my co-founder, adrian, who is still my homie and also kind of the person that I work with, and he was an econometrician. He started his PhD when I started my bachelor's and we both went to a think tank. 

10:02

I was lucky enough to join a very prestigious group of thinkers and former, you know, minister, presidents, executive of large companies, including Unilever, and we were actually used to writing policy recommendations to governments, including the Dutch government, but the political mandate actually vanished due to a bit more, um, call it anti sustainability, anti-climate, um right-wing, um party that came in power and we thought what can we do for really addressing this problem? At heart? I actually wasn't so sad that, um, this concept of sustainability and, you know, development aid, that this became a little bit more controversial because I saw the you know the iron irony in it and the cynical side of it too. So I felt like this is the moment to really address this concept. And now somehow this idea of a True Price fell in the room and it struck me like lightning. 

SenthilHost

11:02

Sorry, I mean, which year was this, was it? 

MichelGuest

11:05

this is 10 years back, I would say 2010, so this is 15 years ago yeah, right, right, okay, yeah, interesting. 

SenthilHost

11:15

And look, there are many ways to make the changes you want to see in the, in the african communities you have seen. Let's take cocoa farmers, for example. Why did you take in price and pricing, in externalities et cetera? As you rightly said, it was the idea in history books and economics books for a long time, but it's such a massive challenge. You want to change the world. I mean, the majority of the world runs on the economic model of efficiency, getting the best price. In Australia, we just had the Boxing Day sale, which is equivalent to the Black Friday sale in the United States, where you get superb discounts and stuff. What you're saying is that's very wrong. It has to be like 2x or 3x of the current price. Why did you choose this aspect, which is really hard according to me? 

MichelGuest

12:05

Yeah, it's a good question. So ultimately, prices are actually very right in a way right and it's also a widely shared concept. And price markets have been successful in alleviating poverty and addressing lots of societal needs and individual needs for hundreds of years. And that is, you know, just showing the power of markets and the power of prices. I mean, it's probably arguably the most effective way to, and a proven way to, alleviate suffering. And that is, I think, why we are now in the world in a, I would say, unprecedented glitch of history, where we have the well unseen flourishing  of um, of the human species. 

12:52

I think that's something to really bear in mind, that, you know, price markets have huge potential and have shown and proven to be a huge force for good and well, sadly, if prices are kind of not optimal, not incorporating all the voices, so to say and I can kind of unpeel that onion a bit but then those prices are univocal are just ultimately serving one voice more than others…so right, prices should really be multivocal instead of univocal

13:19

What I mean with that is that if it just serves the interest of a small group of relatively wealthy people and also some other voices, but not addressing all the voices, all the people that are affected by those prices, then the prices can tragically also exploit. And so I don't think we should talk about. I mean you could, but it's not about the morality of the consumer, you know, or that you should feel guilty because you buy a exploitative chocolate bar or a headset from whatever Black Friday or Black Friday aftermath, or that you are a store that should somehow burn in hell. It's not about that… for me…it's more about the price system. If we adjust that, then the natural preferences of market players can actually also lead to well-being for all. 

SenthilHost

14:28

Let's take a cup of coffee. Could you help our audience understand, if you walk into a cafe in Amsterdam, how much a conventional cup of coffee costs and how much is the True Price of a cup of coffee, and why that difference? 

MichelGuest

14:44

Definitely. So, we worked with the largest kind of retailer in the Netherlands who have a coffee-to most popular coffee to go, arguably in the Netherlands Albert Heijn and we noticed that their coffee at, you know, train stations, for example, cost two euros, you know, equivalent to two dollars euros, you know equivalent to two dollars. Now, if you um kind of incorporate and this is a coffee that is mixed origin from Ethiopia and from Brazil beans that are cultivated by farmer communities and exported, ultimately processed in the Netherlands and, you know, kind of served in this to-go store at train stations. Now, in this whole value chain, unfortunately, there is, for example, in Ethiopia, child labor, people out of poverty needing to ask their children not to go to school but to work in the fields. But also we see, under earning for farmers not getting sufficient income and not getting a living income. But we also notice that there's carbon emissions due to the exportation, you know, extremely polluting diesel. Also microparticles floating in the air, giving people cancer, leading also to climate change, all sorts of pollutive extractive water extraction in scarce regions not being replenished, not having drip irrigation, pesticides that are used. This sounds like total dystopia, but this is actually a relatively average cup of coffee that is served under a conventional label. 

16:33

Now, actually, this in particular, this one, was actually using a label, a certification. It was not Fairtrade. But, and you know, we we looked into this value chain and we actually were super surprised that there was a label there. It was basically certifying, well, it was certifying child labor, it was certifying the pollution to climate. You know no wonder that consumers are cynical. I think it's no wonder that consumers distrust companies. We know that from studies. There's huge distrust and I think it's fair, because trust is ultimately about do you want to rely on this institution? Do you believe the underlying claims? And I think they're fair to say no, we don't. We actually looked into the literature of this particular value chain and we couldn't. The only evidence we found about this certification scheme is that they have some sort of forestry projects, but that wasn't attributed to this particular, you know, value chain. There was no, there was no link whatsoever to these farmers. It was basically some sort of proxy certification that worked with volumes, but we couldn't actually conclude that this coffee wasn't having these externalities, as they say. You know, it's not internally to the price, it's externally. It's. You know, the burden, the invoice for nature is put to society. 

18:02

So we made the calculations and came to the conclusion that there's an additional for this cup of coffee five cents for two euros. And you may think, oh, that's not so much, but it's actually a pretty high externality because, well, the initial price, two euros, it's a pretty big additional cost. Two and a half percent, it's pretty big additional cost 2.5%. Now if you would add also the milk, you have a cappuccino. There would be an additional 20 cents or so. And that is because there's lots of nitrogen emitted, monoculture, extraction or kind of the death of species, birds, others. And again you may think, and this is a european milk. You may think, where does this come from? And and. 

18:58

But the point is that we make all of these transactions with all of these cups of coffee, not just by one consumer once a year, but we do this billions and billions of consumers every minute all around the world, and that leads to these massive problems that we see today and these you know, extreme poverty communities every day, despite their hard work. So yeah, we showed that to the consumers in the store and they were actually allowed to choose whether they would or would not pay, and what we saw is that there was a 20% voluntary payment, so it was a mandatory choice. They could opt out or opt in. One out of five consumers said I am willing to pay for this invoice for nature, invoice for these kind of coffee farmers that are currently facing extreme poverty. I think that's a very nice result. We were able to raise 10,000 or so, I think, or more with all of these, and it were just three purchase points during two months. 

SenthilHost

20:12

Let's suppose you implement this True Price in a generic context. Who bears the cost? Is it consumers, is it businesses, where that cost is distributed, or the cost of True Price. 

MichelGuest

20:25

I mean, this is a very, very fair point and it should be asked all the time, and we should be extremely skeptical about the intention of every one of us. At the same time, you know, I feel like we can also point fingers until infinity and not get anywhere, and I think, you know, that kind of sentiment is sometimes blocking. Nonetheless, yeah, well, and we believe that everyone should pay its fair share. You know, I believe that even if everyone is pointing fingers to each other, it's better to, you know, take responsibility than to dodge your responsibility. I believe if you, you know, enjoy the coffee and you have the budget, you should pay. Even if the you know corporation that offers you the coffee is ruthlessly exploitative and makes billions of profits, I still think you have the responsibility. But maybe it's because I was a fan of Spider-Man and I just live by his motto with great power comes great responsibility. The ability to respond to the needs of people for me is a normal thing and I think, luckily, many billions of youngsters are, you know, kind of trained by this idea, and that is why we see so many people actually taking their responsibility. But, you know, if you feel like I'm not, I don't want to be, you know, the sucker here. I don't want to, you know, indirectly pay for the profits of companies. I also believe we should have a choice. So opt out or, you know, make sure that the company actually incorporates the societal costs. The company should also do their fair share. 

21:58

Now, an illustration of that was in 2013. So, well, 12 years ago oh my god, time's flying um, there was a red chocolate bar that, uh, you know, sent an email to us. I was still a student, we, you know, we're struggling with this idea. No one really took us serious. They thought we were crazy, making things more expensive. Professors said it wasn't possible. Retailers said it's against competition. There's even an entrepreneur from America who said this is a form of communism. You know, you dictate prices and you know, we, we saw that system go bankrupt, you know. So we were kind of struggling and there was an email, um, from, actually, Tony Chocolonely, and they were. 

22:42

They're now a famous chocolate brand, but in those days they were very small and they said you know, we want to get, well, crack the nuts of the call it sustainability of our beans and we need some support, and you seem to have the calculation models for that. So help us out, and we did. We made the calculations that there was, sadly, for a bar that retailed and it was a premium bar 100 grams those days. Now it's 80 grams, that retails for three euros well, dollar equivalent three dollars that there was still 80 cents of societal costs involved in the milk, sugar and cocoa production and that was 40% better than the alternative. And that was due to their certification. They were actually Fairtrade certified, but again, and they paid a Fairtrade premium. But it wasn't enough, and so they actually, based on these calculations, added 1.5 million euros to the purchase department to ensure that there was an average living income for these cocoa farmers in Ghana and Ivory Coast, based on the calculations, based on the data. So they added an additional premium to the Fairtrade premium and they also, well, this cost was absorbed by themselves partly, and so they themselves absorbed some of this. But also they asked their consumers to chip in and then they used this to kind of further improve their value chain. 

24:14

Now, what this teaches us is designing transformative programs to address the under-earning and incorporating that into transactions. So transparency, transformation, transaction that can be an eternal virtuous triangle. We were able to, well, make an average uh, living income payment for those farmers. That um is kind of um met, instead of having, you know, the poverty and I know this is not um perfect there was still, it's it's kind of average. So there's still people below and there's well, many and well much less people above the living income distribution. But you know, it just shows that you can actually do something and companies can use it as a tangible tool and they don't have to wait for their consumers to chip in, and also consumers, they don't, they don't… instead of pointing fingers, they can just ask concretely of companies to improve this, to also pay their fair share, and also companies, governments actually with their taxes, governments can actually also do their fair share. 

SenthilHost

25:24

Interesting. Let's go back to that coffee example, Michel. You said the conventional coffee costs two euros and the True Price of that, excluding milk, is plus 0.5 cents. And you also said, when you piloted this, one in five consumers were willing to pay this or opt for this True Price. That's very encouraging. I'm keen to know what's the kind of interest you're seeing with businesses who has the most power in the entire value chain, at least for some of the commodities you talked about. 

MichelGuest

25:58

Yeah, that's a good question and yeah, so, businesses, what is their appetite for True Pricing? Now, I mean, there's no universal answer to that. It's really dependent on what is their target group, what is their product and also what is their leadership, what is their regulatory context, and so it varies very well, widely, what their preferences are. But let me give another example and I would say a successful example, where we have one market, I would say a successful example where we, you know we have one market. There's government procurement, and that is a very important market for business, at 10% of GDP exists of government spending and, in a way, relations with businesses. It's a competitive and also strictly regulated context and there should be fair competition there. But governments can actually ask for certain criteria and in 2014, and now this is like it was ratified in 2016, the European Commission adopted their procurement law and in that law, there's actually explicit reference to environmental costs that can be incorporated by public procurement professionals in their procurement, and there's also additional language on human rights. So we've been propagating this for over a decade now that procurement professionals should incorporate through pricing, simply out of policy coherence, simply because it's extremely inefficient to, on the one hand, have social welfare programs and on the other hand, have poverty wages and you actually procure the cheapest, seemingly cheapest and I would say falsely cheapest product that reproduce poverty through exploitive wages. At the same time you have social welfare or development projects. Like, how on earth can you make that kind of well, make that type of policy? 

28:10

So you know the fiscal authority in the Netherlands. They're one of the largest employers. They decided to, in their procurement of catering and coffee, ask the market and that is a very big procurement. It's eight years of call it um, providing eight-year contract providing catering to you know, thousands of locations or hundreds of locations actually um and coffee, um, kind of booth and um. Well, actually the successful bidders. They have a plan to make their product true priced, their offer True Price in the coming eight years. It's a huge push to the market. 

28:52

And it's just to illustrate, we now work with the state of New York in a similar context for school lunches to ensure that there's a fair deal for workers, there's a fair deal for the environment, so that those businesses that add value locally they will actually win, rather than those businesses I call them zombie companies that are often not rooted locally, that often don't really care about anything but their own wallet. And they often now win because this is the perfect formula to win in a context where prices are false. Now, if we consider the True Price, um, then I think we have lots of potential to well, um, create local value. And this is with Cornell university. It's still in the kind of early stages, but just you know, shows that there's lots of potential there for business. True pricing. 

SenthilHost

29:52

Interesting. I mean you said school lunches. Is that correct? That elicits a new question in me. So, True Price? You don't choose a commodity and set a price for it, but say if I give you a product, you basically factor in all these externalities and just tell me, Senthil, this is the True Price of this pencil. Is that correct? 

MichelGuest

30:13

your work. 

SenthilHost

30:15

Okay, that's very interesting, got it, but I'm sure you will face some criticisms. I was doing research for this discussion, and I realized that people sometimes ask questions like I mean, how can you define a price for, say, things like carbon, water? These are very, very hard things to quantify, quantify. Would you have some response to it? 

MichelGuest

30:41

yeah, yeah it's true, and it's a very good question, like what is the you know foundation for that? Isn't it super subjective, isn't it super arbitrary? And I think, to an extent it is? 

30:53

it is subjective, it is arbitrary and also, well, isn't it tragically know, paving the way to hell, as Popper famously stated with good intentions, because you actually, you know, commodify things that shouldn't be commodified. You actually normalize things that you should normalize, right? Maybe it's over there somewhere, the book by Professor Sandel on you know um, The Moral Limits of Markets and the price, um, I think it's something like the price of everything, or we shouldn't, uh, be pricing everything because, yeah, you can, tragically, um well, devalue things that are now valued. Kind of, from a moral perspective, this is extremely normative and constructed and in a way subjective too, and also arbitrary. And, for example, profit another information system to this date in the Dutch list exchange, there's 20 definitions of profits. We may consider it objective, but it's actually super, not objective for prices. Any price specialist knows how you know, or completely random sometimes, or, you know, sometimes arbitrary certain prices are. It just depends on where it lies in the shelves. The same product in a package that looks a bit more flashy or fancy is much more expensive than the other. So prices are anything but objective or super, you know, subjective. So you know this is not different for a True Price. And also the methodological foundation, what we do. 

32:33

We take ratified international norms by the United Nations and so, in 1946, Eleanor Roosevelt an American, I would say, visionary leader, I think one of the most visionary leaders we've had in our history she carried forward the Universal Declaration of Human Rights that was accepted by all the countries in the world as the normative foundations for dignity, to ensure that people are no longer and sadly we haven't succeeded but are less exploited by governments such as what we saw in the Holocaust in the 1940s with the Second World War. This was a direct response to protect people against Nazi exploitation and ruthlessness. So, these are ratified norms and we can put it into the corner, into some sort of, you know, social justice, but it's not about, you know, morally high, moral high ground or some sort of higher cause. It's really the basics of dignity that everyone agrees with. Ultimately, human rights is rights, are protecting us against, you know, nazism and all sorts of other extremely exploitative schemes. That was the foundations of these norms. 

33:49

Now, in the decades that followed, these universal norms, ratified norms, disseminated into conferences of parties for, for example, climate, for, for example, biodiversity, for, for example, labor. Why do I position it in this way and make this explicit, because somehow I feel that, you know, yesterday, for example, Donald Trump was elected stepping out of the climate convention and we see kind of this universal backlash somehow in many countries around the world against these fundamental rights, and that's because, I think, fairly so, you know, these norms, floated away from its origin, it's really about protecting ourselves from the most well ruthless exploitation. It's the basis of dignity, it's, it's, it's nothing you know morally highbrow, it's. It's really something, um, fundamental. 

34:46

And we did, with True Price and with the True Price standard, we took these norms and basically tried to, in kind of um, distill what is the duty, if you have a duty to protect and respect those rights, what is then the duty to pay in a market context? 

35:05

Because we are talking about markets, we are talking about business and consumers with transactions. So then it's, you know, I think, a fair question what would be the price in that market context? What would be the bill if you would respect and protect these universally ratified norms, which is, I would say, actually framework that originated in, you know, the United States, um, that has been carried forward by many countries, I think United Nations, as the, you know, global institution, is probably one of the few globally recognized institutions that we can rely on when it comes to the question of dignity. And you know just, you know using that as the foundation for the True Price standard. I think it may be subjective, but at least it's something that we have all agreed upon in more or less democratic manner have all agreed upon in more or less democratic manner. 

SenthilHost

36:02

Right, there are many countries. For many policymakers, inflation and fighting cost of living reminds as one of the key priorities. In this context... how confident are you about the future of True Price? Because your narrative is completely counter to that, saying that forget about cheap prices, pay True Price, which is the another extreme. So I'm keen to know what are your thoughts about the future of this idea, or your movement. 

MichelGuest

36:36

I would very much disagree with the fact that our narrative is against this. I think this is exactly showing and proving our point and, by the way, what we do is we calculate what is the cost to compensate, restore and prevent the kind of infringements of those rights, including the underpayment and under earning of workers. And I think that is already pointing out that the fact that we have insufficient spending power is because we do not actually pay living wages or living income, and so that is, I would say, one of the root causes of having this cost of living crisis in the first place. And we take that, you know um, question um and try to address that um, and so ensuring that people get sufficient money in the first place is part of the True Price. Also, we say it should be transparent, and that is the start of it, and then use that for transformation and transaction, and then transaction is something, if that's possible and it doesn't make and that is really at the heart of our movement if it doesn't make, basic goods more expensive and less accessible. That is really important. We believe that you should actually adjust your price mix in a way that you make the more sustainable product more affordable and the unsustainable, or let's say more pollutive and the worst product, less, let's say, affordable and less accessible. So we turn it around. So we say we it's actually a program that wants to make sustainable product more affordable and so it's exactly the opposite. 

38:20

We believe that housing that mobility, that food should be more cheap and that people should have a right to it as well. And that you can do with smart pricing by companies themselves. They can adjust the price mix. For example, extractive products, let's say a poverty banana that is non-certified make that banana more expensive in the supermarket than the fair trade alternative in the supermarket. Let them pick margins on exploitative products and make the more kind of fair trade, certified products which have better wages, which have better nature, more kind of community friendly nature arrangements, make those products cheaper. I think that makes total sense. And if you do that for all the products, actually that is not pricing sustainability out of the market. 

39:20

Now there's many other things, such as government policies. We shouldn't forget that prices, as I said, is not free. It's actually something that is very much influenced by policies of governments. For example, in agriculture, there's in the world $600 billion of subsidies going mostly to income support to farmers. Now, this is not actually linked to criteria for, for example, paying living income, living wages, nor to ensuring that there's no pollution or exploitation of the environment. Only 50 billion of that is linked to sustainability. Now, if we use that budget for income support to those communities that aren't having sufficient income for sustainability, we can actually ensure that, for example, food is affordable for all. 

40:10

We made a publication with a large consortium of scientists where we looked into this and we noticed and that is an additional point next to subsidies, for example, health care expenditures due to, let's say, unhealthy and unsustainable food is a staggering six trillion us dollars annually. 

40:34

Now, if we would have more and that is now seemingly expensive more healthy foods, and we know and that is now seemingly expensive more healthy foods, and we know that it is actually more expensive, unfortunately it's, I don't know it's kind of 10 cents or so per person per day on average globally per euro, so it's kind of pretty big call it costs addition that needs to be paid for more sustainable food on average for the world, let's say, food plate. If you use that 6 trillion US dollars instead of spending that on healthcare, using that for supporting lower income groups, for buying more sustainable food. That is, yeah, I would say, completely logical, it's policy coherent and it can make food more affordable. Now, this is just to illustrate on food, but you can do all sorts of policy interventions by governments for all the other things that are now, you know, getting completely out of control and making it impossible for people with not sufficient budget to have a basic well having their basic needs met, and so that is, I think, the response to the cost of living crisis smarter policies. 

SenthilHost

41:59

I see. So the summary idea there is your intention is not to add further pressure on the inflationary situation, but rather price it accordingly. So the products that has worst negative externality should be priced out of the market. Most sustainable products become more affordable, so that becomes the norm. So that's a fantastic idea. Thank you so much for explaining that. Well, I know that we are a bit out of time, but I'll ask you one last question before we sign off. Would you recommend a book or two to our listeners? It could be on any subject a book or two to our listeners. It could be on any subject.

MichelGuest

42:37

Well, obviously, The Alternative, um, I think uh is a good one, uh, of Nick Romeo, I think that's a real um yeah, but obviously he has already been in your podcast and so I think um, that may be uh already, may have been already recommended. I think Mariano Mazzucato is a very important figure in the global discussion around economics. I think many of her books, like the Value of Everything, for example, is very good. I think she addresses well the normative foundations, gives lots of tangible solutions to governments to address the kind of challenges of today's markets and I think, finally, the book of Michael Sandel, I think, the Moral Limits to Markets What Money Can't Buy. I think that's a very nice book too. 

43:45

Um, it's, it's kind of a provocation also. People may think it's against what we stand for, but it's actually not. We also don't believe that everything should be priced. For example, well, things that like art or I think as long as it's out of markets, you shouldn't price that right. And also, if you price it, then I I feel you should um not reduce it to the price. For example, labor, we don't reduce people only to its price. Luckily, in many markets, many countries in the world, we also have still rights to it. We don't consider them just walking FTEs, we also consider them humans in itself, and so I would put this nuance to his book. But he does point out that there's this huge commodification trend and he just illustrates the need to price responsibly. So these books I can wholeheartedly recommend. 

SenthilHost

44:44

Great, excellent, Michel, thank you so much for taking your time and answering all these questions, and I wish you the very best. 

MichelGuest

44:53

Thank you so much. Thank you for this occasion and also you good luck. I mean, I hope everyone buys more Fairtrade products, because I think it's a very important movement. It's one of the best alternatives. So, um, yeah, keep pushing and we will be successful. No doubt it's inevitable. Thank you you.