The Destructive ‘Fair Trade’ Movement

September 25, 2010 06:59

Another well intentioned leftist scheme causing unintended consequences. How your ‘ethical’ shopping can hurt.

By Adam Shaw at American Thinker


The fashionable and anti-capitalist “Fair Trade” movement is well intentioned, but by misdiagnosing the problem, it only hurts those whom it seeks to protect.

Unfortunately, beneath the language of “fairness” and “empowerment,” the Fair Trade movement is not one that has faith in the free market, and it believes that free trade is exploitative. It therefore seeks to fix the market, but it ultimately does the opposite. To illustrate this, it is worth examining one of the exports that Fair Trade has sought to influence: coffee.

However, the Fair Trade movement has misdiagnosed the problem — in part due to its anti-capitalist foundations — seeking instead to place the blame on the free market. As a result, it tries to make the market “compassionate,” and by doing so, it makes supply/demand difficulties even worse.

Instead of easing supply, Fair Trade floods the market. This may be fine in the short term for those who are lucky enough to be inside the Fair Trade catchment areas, but it makes the situation even worse for those outside.

Advocates of Fair Trade have argued that it is possible to sell coffee to customers at higher prices, as they have a unique selling point that adds value to the product — that of being “ethical.” However, their approach only damages the industry further.

To conclude, Fair Trade is well-intentioned, but good intentions do not solve poverty. The coffee industry needs to limit supply and stimulate demand. Fair Trade does the opposite — flooding the market with subsidized coffee and decreasing demand, and as a result, it must be rejected.


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