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Fair Trade Hypocrisy
By Chris | November 8, 2007
The cover story in the most recent copy of my campus magazine, Statements, highlights the Fair Trade movement. The article, by Sara Kentzler, begins:
“Imagine farmers struggling every day to sell their crops. Their families go unfed, and for their young children school is an outlandish dream. The products these experienced farmers sell are of impeccable quality and grown in prime soils, yet they are being cheated out of the credit–and profits–they deserve.
Fair trade is a social movement that encourages higher standards for international labor, mainly in underdeveloped countries trading with powerhouses such as the U.S and Europe. The efforts are aimed at giving struggling farmers the willpower and knowledge to get into the world market with a strong foothold. Simply put, fair trade is about respect.”
To paraphrase, Ms. Kentzler is saying:
- Trade is inherently unfair. It allows rich powerful nations to exploit poor workers in developing countries.
- Workers are being cheated because they don’t get paid what Ms. Kentzler thinks they should.
- Buying from farmers at the prevailing market price disrespects them.
- If you are a decent human being, you will join the fair trade movement.
The advisor of my campus’ Fair Trade Advocates club notes in the article that a “surprising” number of departments including women’s studies, apparel marketing, anthropology and agriculture support the movement. Isn’t the department that actually studies trade glaringly absent from this list? Economists disagree about a lot of things, but they overwhelmingly support free trade. Nearly 88 percent of surveyed economists support eliminating tariffs and other barriers to trade while 85.2 percent favor eliminating agricultural subsidies. And while Fair Trade isn’t a government distortion of trade, shaming consumers into purchasing Fair Trade products has the same effect. Prices are artificially raised, and organizational busybodies decide which farmers are deserving of the higher price. More producers are drawn into the market, and prices for non-Fair Trade farmers fall.
Supporters of Fair Trade might argue that imperfect competition allows middlemen to exploit farmers. But, that is not reason enough to pay some farmers a premium over the prevailing price and then control every microcosm of their business and family lives. Why not take a less glamorous role and fight corruption or collusion by buying coffee from any farmer at the prevailing market price?
Others might recognize the futility of Fair Trade as a charitable exercise, yet argue that socially conscious products are just another example of capitalism fulfilling people’s wants and desires. Isn’t that a good thing? Not in this case. People are presumably buying Fair Trade coffee because they believe it makes the world a better place. If it makes the world worse, imperfect information and economic ignorance mean that too many Fair Trade products are being purchased. Buying Fair Trade products might make people feel warm and fuzzy inside; but they, and the world, would be better off feeling warm and fuzzy while actually helping people.
What angers me most about Fair Trade is that it promotes the already intuitive notion that trade is inherently unfair. When socially conscious consumers drink their Fair Trade coffee a few farmers are hurt. When these same consumers vote for protectionist policies under the same rationale, billions of dollars in potential gains from trade disappear.
As a consumer, I normally buy goods based on quality and value. But, when I need a caffeine fix, I can’t ignore the Fair Trade poster in my campus coffee shop’s window. The coffee might not taste much different, but complacently abdicating the moral high ground to the notion of “fair trade” creates some serious negative externalities in the marketplace of ideas.
Learn more about the Fair Trade from Wikipedia and the Economist.
Topics: College, Economics | 1 Comment »
November 28th, 2009 at 1:47 pm
Great post. Very enlightening.