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March 05, 2005

Fair Trade Flowers.

I really don’t get the point being made here, cannot quite understand why Fair Trade coffee and chocloate are OK but Fair Trade flowers not:

So I will still buy my Fairtrade coffee and bananas, knowing that my premium can help small farmers whom globalisation threatens to marginalise. But when it comes to flowers, I'm afraid I am walking on by. There are other symbols of love after all - didn't someone mention luxury chocolate?

I was very taken by an argument made by Owen about Fair Trade, that from the point of view of the consumer, it is entirely rational.....precisely because they make the decision to buy Fair Trade products means that they are increasing their utility by doing so. This presupposes, of course, that such buyers are rational and informed consumers...and there are endless arguments about whether this is in fact true of course. There are times when we are held to be complete sheep, led by the nose to buy things we don’t need by greedy capitalists and their advertising shills, so it is encouraging to see the argument, typical of neo-liberal economists, that we are all rational actors best capable of measuring our own marginal utility and spending our own money in our own way to maximise it.

None of this changes the question of whether Fair Trade is actually a good thing in its totality, for what is the grand effect? Fair Trade coffee, for example, (and do check Owen’s post for an interesting take on it in the comments) should raise the price to farmers of that product and raise the price to consumers of that product. That should raise supply and lower demand...leading to a fall in the price of non Fair Trade coffee. So those who buy such coffee are indeed making the recipients of their moral choice wealthier, at the cost of making other producers poorer.

Anyway, going back to the Grauniad piece all I can see is that her complaint is that the flexibility demanded by a market for fresh produce means that  compulsory overtime will sometimes be called for. Quite true but not enough of an issue to over ride the other moral issues, if of course you sign up to them at all.

My own opposition to the Fair Trade movement is based on something slightly different, which is that I think that it is looking at the problem in miniature, ignoring the larger issue. Within an economy wages are not set by the level of productivity within a firm or an industry. They are set by the general level of productivity across that entire economy (and please note there is no reason why such needs to be a national economy), as Paul Krugman has pointed out, when Chinese workers are as productive on average as American workers then they’ll be paid, on average, the same as American workers. So the larger goal, that of reducing poverty (which I assume we are all on board about) is best served by increasing the productivity of entire economies, not protecting specific methods of production. More mechanisation, more capital, more industry, more, dare I say it, capitalism red in tooth and claw, those very same things which increased productivity in our own countries. I regard, possiby unfairly, Fair Trade as a distraction from this larger issue.....for as Ms. Lawrence points out, part of the goal is to protect those small farmers who are least efficient and productive...precisely the opposite of what we should be trying to achieve.

March 5, 2005 in Economics | Permalink

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Comments

If you lived in such a country where you were being exploited and paid practially nothing by some rich american company (the richest american business is wealthier than 39 of the poorest countries put together) then these people offered to always pay you a price more than that so that you could afford to send your child to school and feed your family, would you do it? Of course you would. so whatever you may say about the "economical facts" or whatever, its a good deal for those who are paid by fairtrade companies. It IS morally right,i mean would you like to be paid a pound a day and have to feed you, your family etc on that?
You're just bugging me now man, i just spent 2 hours today promoting fairly traded products then we get people like you trying to stop everyone. Okay, it might not be a perfect solution, but its a step in the right direction, okay?
If everyone (inc. you) would just do their bit, sign a pledge, wear a band, then it would become far easier for Campaign groups (like World Wise)to actually make the world fairer.
I bet when your tucked up in your snugly little bed you never even think about the fact that poverty kills 30,000 people per day do you? You probably cannot even imagine 30,000 people can you?
I just dont like your attitude, man.
At all.

Posted by: Fiona | Mar 5, 2005 3:00:10 PM

If you lived in such a country where you were being exploited and paid practially nothing buy some rich american company (the richest american business is wealthier than 39 of the poorest countries put together) then these people offered to always pay you a price more than that so that you could afford to send your child to school and feed your family, would you do it? Of course you would. so whatever you may say about the "economical facts" or whatever, its a good deal for those who are paid by fairtrade companies. It IS morally right,i mean would you like to be paid a pound a day and have to feed you, your family etc on that?
You're just bugging me now man, i just spent 2 hours today promoting fairly traded products then we get people like you trying to stop everyone. Okay, it might not be a perfect solution, but its a step in the right direction, okay?
If everyone (inc. you) would just do their bit, sign a pledge, wear a band, then it would become far easier for Campaign groups (like World Wise)to actually make the world fairer.
I bet when your tucked up in your snugly little bed you never even think about the fact that poverty kills 30,000 people per day do you? You probably cannot even imagine 30,000 people can you?
I just dont like your attitude, man.
At all.

Tim adds: Might help if you read what I actually wrote rather than what you think I wrote.

Posted by: Fiona | Mar 5, 2005 3:01:43 PM

You're just bugging me now man

Fiona's got to be a piss take. Sign a pledge and wear a band and everything will turn out alright!

Posted by: Mark Holland | Mar 5, 2005 5:03:19 PM

So the larger goal, that of reducing poverty (which I assume we are all on board about) is best served by increasing the productivity of entire economies, not protecting specific methods of production.

As long as those specific methods of production are being protected due to consumer preferences, I don't see any justification for what you write above. It sounds an awful lot like you are trying to justify "social planning".

Posted by: Guy | Mar 5, 2005 8:44:18 PM

Fiona does have a point with her comment that if a FairTrade company offers to buy your produce then it is in your economic interest to sell it to them.

I buy a lot of FairTrade goods.

You might argue that it is imbalancing the market, and I won't disagree. But producers in the developing world are DENIED fair access to our markets. (Which is yet another reason for finding the EU to be morally offensive).

So although I agree it is a distortion, I prefer to think of it as a counterweight to other unfair trade practises.

The only truly Fair Trade is Free Trade. But whilst we don't have the latter, I think we need the former.

Posted by: David Wildgoose | Mar 7, 2005 9:14:49 AM

Tim argues that by increasing the income to say 5pc of coffee producers (those on Fair Trade) we are decreasing income to 95pc of coffee producers. So the argument is that by purchasing Fair Trade *more* people live under poverty.

Fair Trade is essentially a moralistic equivalent to the EU's CAP (or Japan, US, Canada etc equivs). If giving above-market prices to farmers in the EU impoversihes farmers outside the EU; then, at the same time, paying above-market prices to some coffee-farmers impoverishes all the other coffee farmers.

Fair Trade and Free Trade are mutually incompatible. Free Trade has no tariffs, no subsidies and no protectionism. Fair Trade has subsidies and protectionism (and tariffs - in the form of conditions - to join).

Posted by: Monjo | Mar 7, 2005 12:47:16 PM

may i just point out that i am not a piss-take. Just because i'm 15 and express myself in a very stupid style when i am pissed off and tipsy (which i was). Also i may not be filled in on all the facts because no one informs any children nowadays with an unbias opinion.
Thank you "Guy" that you did recognise one or two of my (few - which i'll admit) points.

Posted by: Fiona | Mar 8, 2005 8:18:19 PM