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Freedom and Chocolate--A Case Study

Freedom and Chocolate--A Case Study

Hello and good day!

For most of my adult life, I have been passionate about the idea of free trade.

I find something conceptually beautiful and almost magical about a system that requires people to serve others in pursuit of their own self interest. In a system where all buying and selling is voluntary, you can only earn a living and thrive to the extent that enough people appreciate what you are doing and voluntarily pay you for it.

The weakness in the system is that free trade is not a system of ethics.

If people get it in their heads that they should spend money on things that are bad for them, say drugs or unhealthy food, then people will be right there to supply it.

That is why free trade, in my opinion, has to be tempered by solid moral and spiritual foundations.

The system is ethically neutral and will churn out whatever people are willing to voluntary spend money on. This can cause things to become pretty unsavory if the culture goes off the rails.However for the purpose of getting people to work hard serving their fellow humans, it is the best system available.

That is my opinion at least.

Aside from finding it conceptually very satisfying, I also know from first hand, boots on the ground experience, that it is practically the best system.

Our chocolate company is a perfect case study in this regard.

For about 11 years, we didn't sell any chocolate to the public at all.We did wholesale to restaurants and chocolatiers and at our peak, we were doing business in about 40 countries.

Our supply chain started in the northern Peruvian jungle. Some of the cacao came to the US, where we sold raw cacao to a bunch of small batch, artisanal, bean to bar chocolate makers. Some of the cacao went to Switzerland to be turned into chocolate.

On the way to Switzerland, we dropped off cacao in a big warehouse in Amsterdam and we sold cacao to small batch artisanal chocolate makers throughout Europe, Asia, and the Middle East.

In Switzerland we made chocolate that was sold throughout Europe, Asia, and the Middle East and a bunch came back to the US for us to sell to restaurants and chocolatiers here in the United States.

There was a lot of government paperwork to fill out and that was a pain in the butt. However, for the most part, all of the countries we did business in were free.

Nobody told us what prices to buy and sell at.

None of the countries charged us taxes so oppressive that it scotched the whole operation. Boats and trucks came and went from all these places. Borders could be crossed.

Some places, like France in particular, had rules so stringent that we considered abandoning the whole thing. And that is what happens when regulations start to get oppressive, it puts a halt to service.

\Thankfully, we found a loophole in the rules and were able to sidestep the exact letter of the law.

That is another thing that happens when freedom of trade is taken away. People are forced to bend the rules and can get in legal trouble when all they are trying to do is make people happy with their products.

You aren't really doing anything wrong per se, you just aren't in compliance with some rule that isn't necessary in the first place.

What difference does it really make if you don't have a stamp in the right place on the form? Something similar happened after Brexit.

We had a long time customer in Scotland who always took a shipment of raw cacao from Amsterdam into Scotland. While Scotland was a part of the European Union, the shipping was very smooth.

After the UK left the EU, they put new import rules in place that made the whole thing a nightmare. As a result, we were right on the verge of calling it quits on Scotland.

This is particularly illustrative because literally nothing had changed other than the rules. Scotland and Amsterdam were in the same places they always were. The buyer and seller were the same. The product was exactly the same. The ports were the same.The shipping company was the same.

The only thing that changed was the government made it unnecessarily hard for two parties to buy and sell.

Chocolate lovers in Scotland would have suffered even though we were willing to do what it took to make them happy.

In the end we powered through. I personally had to figure out all the rules and put together a crazy amount of documentation. We couldn't bring ourselves to let down the good folks of Edinburgh.

Another good example is the place where we buy cacao in Peru.

On our own say so, and on the say so of our cacao farm partners, we were able to show up in the Peruvian jungle, set up a processing facility, and start buying cacao at a price voluntarily agreed upon by buyer and seller.

We put all that cacao on a truck, sent it to a port, and sent it around the world.   There were sanitary regulations to comply with, but they were reasonable. The Peruvian version of the IRS is hard to deal with, but they don't impose prices controls.

This cannot be done in the African countries who represent about 40% of the world's cacao production.A government body sets the buying and selling prices and grants a limited number of licenses to buy cacao in their countries. You cannot just show up and buy cacao at a freely negotiated price.

The result?

Environmental destruction, child slavery, and crappy chocolate.  

The government can be bribed by the big companies with licenses to screw the cacao farmers on price.  The cacao farmers have no choice but to accept the price because nobody else is allowed to come in and offer a better deal.

This is generally what happens when parties aren't free to voluntarily transact business. One side has more power and this allows them to dictate terms to the side.

We had our facilities inspected by the state of Washington. It was a sanitary inspection and we passed with flying colors.I think we can all agree that a sanitary inspection by some government authority makes good sense. If the government has a primordial job, it is to keep parties from harming one another.

We were very impressed with the way Washington state carries out their inspections. It was a common sense experience, worthy of a free society. The inspection was thorough, but there was nothing arbitrary about it.

Our kitchen is spic and span at all times. It has to be. It is open to the public. Our customers can come in at any time and see our products being made. That was clear and the inspector signed off on our operation.

Now imagine if there were tons of arbitrary rules that we didn't understand and therefore couldn't comply with. Even if people wanted to buy from us, they wouldn't be able to.

Anyhow, I think you get the point I am trying to make, so I won't belabor it anymore.

Free trade works very well for the production and distribution of goods and services that people are willing to voluntarily pay for.

It is quite magical really.

It sounds good on paper and works well in reality. But it isn't a system of morality. The system will churn out whatever people want.The things that people should desire is a problem of ethics and belongs to different sphere.

Thank you so much for your time today.

I hope that you have a truly blessed day!


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