Monday, December 11, 2006

comments on fair trade

I've written several letters to the editor of the Economist over the years, but they never get published (until now!--meaning right here).

The Economist is a periodical I normally enjoy reading because they cover international news in a broadly clever and cohesive manner. I violently disagree with them about many issues, notably the Iraq War.

I am also a sceptic of "free trade", at least the way it is practiced in the real world (in theory free trade is great, just like communism). My first objection is that trade is never free, it has never been and will never be (in the sense that all parties compete on equal footing). There are a million ways that corporations and governments ensure inequality (usually, but not always, with the hope of benefiting themselves). Secondly, despite the beautiful rhetoric of Adam Smith, I can discern no "invisible hand" guiding markets and market participants to act in ways that benefit all. Rather I see an iron boot of the super wealthy descending on the vast majority of workers, crushing an ever increasing number of people hopes and dreams underfoot.

This week they offered their views on organics, fair trade, and locally grown foods in a leader and special report. Here is my letter in reply:

Economist Editor,

Your recent leader and special report on “ethical food” leaves this reader puzzled. On the one hand there are different (and possibly conflicting) societal goods that organic, fair trade, and locally grown food can provide. You are also right to question (or at any rate ask) what a consumer is getting for the extra cost of any given food label. You note the problem where the meaning or interpretation of “organic” seems to be evolving (some might say devolving) as larger corporations adopt it.

Yet where an NGO has created a clear and transparent (certainly more so than before) set of labor and production standards and built a brand around it as Fair Trade coffee managed, you attack them (wrongly) for misleading consumers and (bizarrely) for preferring co-ops over coffee plantations. You should rather be advocating for greater involvement and competition among international standard setting groups to press for improved labor standards in this and other industries.

While it might be hard to imagine, I’d willingly pay a 10-15% premium for the gasoline I buy, if I could be assured that it was extracted in the most environmentally sensitive manner possible and improving (rather than damaging) the daily lives of those living close by the oil well. Of course I’d prefer if my government enacted a stiff carbon tax to spur private sector investment in alternatives to oil, but alas my preference is being ignored currently.

As with any brand it costs money to build and maintain the brand, if Fair Trade Coffee were a profit maximizing corporation I doubt you would care about “political assumptions about ways of organizing labor”. You have never criticized any traditional corporation’s (non-monopoly) branded product for overcharging consumers, as according to economic theory in a competitive market brands add value up to whatever amount the market will bear. Apparently by your standard one can never pay an oil executive too much or a coffee grower too little.


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