Over here in jolly old
England, the Fairtrade Foundation are
currently holding their eighteenth 'Fairtrade Fortnight'--an annual campaign in
early-March time, seeking to promote the charity. For those unfamiliar, the Fairtrade
Foundation is a non-governmental labeling initiative, whose logo's presence on
a good guarantees the consumer of certain wage standards for the third-world
labour involved. This little logo is successful in persuading consumers to pay hefty
premiums on bananas, chocolate, coffee etc.
All in all, Fairtrade Fortnight often amounts to somewhat of a non-event, receiving very little media coverage; however, in spite of this fact, a strong emphasis is placed upon its celebration by primary and secondary schools. As a volunteer mentor at a local primary school, I witnessed this phenomenon first hand.
To mark the start of the fortnight, the normal morning numeracy session was swept aside to make room for a talk on Ecuadorian banana farmers. Then came the activity. The children were put into groups of five and assigned to one of the following occupations: plantation owner, plantation worker, shipping worker, distributor or supermarket owner. With a representative for each of the roles present at every table, they were then asked to negotiate as to how the revenue per unit sold should be split between them, i.e., what amount of the 45p per banana was to be taken by the plantation owner, the plantation worker etc.
"45p between 5 of us" one of the kids mused. "Well it has to be fair..."
After a few minutes, the kids fell silent, and the teacher asked each group for an answer to the activity question. On every single table, an identical consensus had emerged--well, the answer was obvious, wasn't it? 45p divided by 5: that's 9p each!
Free traders vs. Fairtraders?
In recent years, the IEA and the Adam Smith Institute, both London-based free-market think tanks, have, in reports, articles and interviews, persistently sought to find fault with the Fairtraders.
Admittedly, the Fairtrade movement is largely a pet project of the political left (hence the emphasis on wage 'fairness'), but as a successful arrangement based entirely on voluntarism, it should draw no criticism from economic liberals. And yet it does:
'Fairtrade locks poor people into agriculture, producing the same crops...an abundance of employment opportunities in agriculture should not be a priority in developing countries. Fair trade...simply ignores one key necessity for labour productivity growth: successful migration out of agriculture and rural areas.' - Institute for Economic Affairs
Of course it cannot be denied that for workers to escape poverty, labour productivity must grow. But the productivity of the workers has grown, at least in nominal terms. This is an important fact to remember--for while both the quantity and quality of the produce has remained the same, its market value has increased, due to its association with the Fairtrade brand. And while it is easy to think of this as somehow artificial, or undeserved (the IEA calls the premium paid on Fairtrade goods a 'hand out'), it must be remembered that this price increase is a product of free-market forces and therefore defies such descriptions.
What about the dreaded job lock effect? The assertion (that 'Fairtrade locks poor people into agriculture') certainly sounds damning. But this forgets the basic freedoms that one derives from an increase in income--the freedom to save, to travel, to invest in one's self and one's family. And if, having exploited said freedoms, the Fairtrade farmer still finds his current job to be the most competitively paid, then what of it? Surely it will be in the service of his personal interests that he will remain 'locked into agriculture'?
'...An abundance of employment opportunities in agriculture should not be a priority in developing countries'. Are we to take it that the writer of this statement knows what kind and quantity of employment ought best to be provided by the private market? A strange argument indeed, coming from the representative of an institution that supposedly champions the
. Austrian School
The idea that agriculture must be set aside to achieve economic growth is an empirical argument, for it is a generalisation from the trends observed in the development of other economies. But urban development need not come at the expense of agriculture in this case--this is not, after all, subsistence farming; there is a sizeable foreign market for the produce.
Another popular argument goes like this:
On that particular issue, I can offer the Fairtraders no defence. However, it is worth asking why an organisation committed to the advancement of free-market economics has adopted the role of charity watchdog.
Again, far from offending free-market principles, the Fairtrade movement exemplifies them in its initiative. And though it may be an imperfect system in one or a dozen ways, it does not deserve attack by anyone functioning as a so-called custodian of liberty. In fact, by attacking the Fairtraders, the IEA and the Adam Smith Institute do themselves and the serious issues behind which they stand a disservice.
The harmless hobbies of the left-wing should not be targets of the libertarian--let such battles be fought instead by wretched for-the-sake-of-it contrarians (of the likes of Katie Hopkins).
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