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May 22, 2008

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Danny Gamache

Thanks for this post. I've been very intrigued by the idea of fair-trade. Our campus, like many others I'm sure, has a group of fair-trade fanatics. Sometimes I worry about how "fair" that fair-trade really is. It would be interesting to hear your thoughts on this.

Michael W. Kruse

Danny you may know about this stuff than I do. I'm highly ambivalant "fair-trade" initiatives. There clearly is exploitation of workers in some places. No humane person wants others to live in the conditions many workers endure. And yet, in many places, the alternative to the degrading work is hunger, prostitution and even death.

Some of the environmental, labor, and other regulations ensure that only locally wealthy farmers can participate, thus harming poorer farmers. I need to see specific cases to make an assessment.

I think championing free trade in the sense of ending government corpution, formalizing property rights, and opening up markets to products from emerging nations are probably far better routes. I'm not sure the poorest nations can spring directly into free trade and certain types protectionism against certain goods could be legitimate in the beginning but I think the end game is a society with growing economy based on trade.

What drew me to this story was eBay seeing a market for this type of service. What are your thoughts?

Danny Gamache

In general I think fair trade is getting better. Fair trade providers seem to have ironed out some of the early concerns.

The main advantage I see in fair trade is how it cuts out some of the middlemen who hold significant monopsony power over the farmers. One of my concerns is about which local farmers get to be part of a fair trade cooperative and which ones don't.

I certainly agree with all of your suggestions. Unfortunately not all markets have enough competition to work efficiently.

Michael W. Kruse

"Unfortunately not all markets have enough competition to work efficiently."

Yes. Precisely. I think in terms of a patient in the hospital whose immune system is week. You will restrict that patient from certain environments and inject her with certain drugs. But you only do this toward the goal of being able to re-enter normal environments without need of supplements.

I think the goal for emerging nations should be open market economies. I suspect that some fair-trade policies can be intermediate steps on the way to "health."

I will say this, however. I'm suspicious of the political motivation of many for calling the measures "fair" trade, thus implying that "free" trade is somewhere inherently unfair or sinister. Free trade, by definition, is non-coerced exchange within a context of protected property rights and respect for personal liberties. Capitalists from capitalist nations have frequently exploited workers in emerging nations that had not legal protection and could not freely negotiate their wages (among other things). Exploiters defended their actions in the name of "free trade," which it was not. Therefore, the answer to the injustice is truly free trade. Free trade is fair trade.

I fear for many "fair trade" language becomes a back door way of de-legitimizing trade and justifying government dominated economies.

VanSkaamper

I fear for many "fair trade" language becomes a back door way of de-legitimizing trade and justifying government dominated economies.

Well put, Michael.

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