Yobel Market is a very cool online marketplace dedicated to promoting freedom and dignity in poverty-stricken areas through fairly traded, sustainably created artisan goods. They also run a thoughtful blog and recently ran a good piece called Fair Trade vs. Free Trade. This is a topic we at PovertyCure have been exploring for some time now and is one of special interest to me personally, so I thought I'd get a dialogue going with Joseph and Sarah right here on our blog.
Hi Joseph and Sarah,
Nice article. I love your website here and fully support your mission. I liked what you had to say about the power of the consumer dollars. One of my favorite terms for it is the "dollar democracy." Marcela Escobari, Director of International Development at Harvard had this to say on it when we interviewed her last fall:
In this globalized world, we can affect by what we eat, by what we buy, by the companies that we invest in, the set of values that we believe in … If we all made these small choices consistent with our values, the impact would be, um, a lot bigger than the World Bank, IMF, and bilateral aid put together. “Do I believe in child labor? No, I don’t. Do I believe in paying fair wages? Absolutely. Yet, if I don’t use my buying power to back up those decisions, I am giving a message to those board members and those owners of businesses, that I don’t care and I’m not willing to pay for that. So, in those little decisions … we have a huge amount of power.
Every day, we have a vote that we make with every dollar that we spend; not just once every 4 years, when we vote for politicians. What world do we want to live in? What are the basic values that we believe in? And we get to put that into action in every single purchase that we make. Every day, people have the power to change the world … in every instance, when we decide how we spend that dollar. What cause do we support? That has repercussions in every single part of society. If firms know that I don’t stand for unfair wages or child labor because I’m not willing to support with my pension fund and with my purchases, they will take that in consideration. They will listen. And then, we will have a world that is more consistent with the values that people say they have. That’s where the power is.
On the Fair Trade side, you make some good points but you overlook the severity of the economic problem with the Fair Trade model of centralized price manipulation. By setting an artificially high price for commodity X, you are sending a false signal to producers that that commodity is in higher demand than it actually is. This attracts more producers producing more of that commodity than the market really wanted, resulting an oversupply. This oversupply causes the real global price of that commodity to go down, meaning non-fair trade farmers get LESS for their labor BECAUSE of Fair Trade. Therefore, the more popular Fair Trade is, the poorer farmers outside the exclusive Fair Trade club become. And it's not an easy club to get into. Farmers have to pay hefty annual dues to be a part of the network, and even once they're in, they generally produce more coffee than the association is willing to buy from them, so they end up selling the rest on the regular, "unfair" market even though it's the same coffee produced by the same people making the same wages working in the same conditions. Kind of silly isn't it? We actually partnered with economist Victor Claar on a book about this called Fair Trade? Its Prospects as a Poverty Solution. Check it out.
A more effective alternative for conscientious consumers is Direct Trade, where cafes and coffee sellers are sourcing directly from the farmers, thus ensuring both the standards of labor and the quality of the product, not through lobbied government agencies or shadowy international entities, but through personal human relationships. Like farmers markets, we're finally starting to go back to our roots with regard to understanding what a "market" really is, a network of human relationships, a spatial gathering place where people gather and enter into mutually beneficial exchanges. How cool.
In today's globalized world of the internet and low-cost travel, the purist's ideal of a true free market (not to be confused with the crony capitalism that continues to dominate so many of our big industries) has never been more attainable. Similarly, the conscientious consumer has never wielded so much power as he or she does today. The question is, will we make that daily, hourly decision to open our eyes to the world around us, to use our purchasing power to "vote" for our values with every dollar that we spend? Or will we choose instead to vote for convenience and artificially cheap junk subsidized by domestic government subsidies or by international slave labor? The choice is ours, and this author will be the first to admit, it ain't always easy.
P.S. We'd love to have you in our Partner Network. Check it out and let us know if you have any questions.
[a beautiful coffee plantation we visited in Kenya]
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