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Fair Trade as a Non-Solution

My exposure to “fair trade” products came slowly, beginning at a Coldplay concert in tenth grade when I first spotted Chris Martin’s “Make Trade Fair” arm doodles.

My response? “Woah!! Cool!!”

Five years later, as a junior in college, I was a bit more skeptical. My college had selected a particular brand of fair trade coffee to be the exclusive choice in our cafeteria and campus cafes — a decision that surely primed plenty of youngsters into self-righteous bliss.

Just a year prior, I might have responded with similar warm fuzzies, but after reading a few books the previous summer (this and this), I had a new perspective. Such get-rich-quick development strategies, I learned, were bound to be ineffectiveinefficient, and counterproductive.

Yet by expressing these sentiments, I found little solidarity. After speaking with various college faculty and fellow students about my concerns, I quickly realized that I was firmly on the fringe — a lone, cold-hearted calculator, critiquing anti-poverty initiatives that were filled to the brim with good intentions. How dare I?

But good intentions aren’t enough, and as economist Victor Claar argues in his new book, neither are manipulative trade initiatives. For Claar, author of Fair Trade: Its Prospects as a Poverty Solution, the fair trade movement simply “cannot deliver on what it promises,” and Christians would do well to pay heed.

As Claar makes abundantly clear — and as most of you know — my Christian-college experience was not an anomaly. Over the past decade, churches and various Christian institutions have grown increasingly confident in attaching themselves to such schemes, selling and promoting fair-trade products as a significant part of their outreach initiatives.

This rashness, however, is simply rashness.

As Claar explains:

Too often we simply throw things at a problem —because we do indeed have much to give — rather than find out first what is needed most and where we can serve most effectively. When needs are persistent rather than temporary, we must stay focused on our hope for the long-term improvement of the prospects of the subjects of our care.

Thus, Claar focuses the bulk of his critique on whether such initiatives truly achieve long-term and sustainable success and prosperity. Does fair trade actually lead to the enrichment of the lives it touches, or does it simply give people a temporary boost? Does it — or can it — lead to “transformational, lasting change,” or is it simply our way of giving away a few extra nickels for one week’s worth of bread and milk (not wholly insignificant, mind you)?

Given that coffee is perhaps the most popular of fair-trade commodities, Claar focuses his attention there, providing an initial overview of the coffee market itself, followed by a discussion of fair trade strategies as commonly applied. Here, we learn a few important things: (1) coffee is easy to grow, (2) its price is inelastic, and (3) the “market appeal” of one’s beans is essential for success. Additionally, and most importantly, (!!!) demand is dropping while supply is rising.

“Simply put,” Claar explains, “coffee growers are poor because there is too much coffee.”

Sounds like a good spot for some Western stimulus, eh?

The book offers plenty of arguments against such schemes, but this often unspoken reality illuminates the most central: Artificial, top-down fair trade programs toy with price signals and manipulate individuals to do the wrong thing in the wrong place at the wrong time. “Incentives matter,” says Claar. “Once the stakes of any economic game have changed, people alter their behavior accordingly.”

Such manipulation might indeed be helpful if the do-gooders of Equal Exchange could actually understand and predict market fluctuations, but they can’t. Thus, their activities spur coffee growers to follow distorted prices toward ends they might otherwise avoid. On the whole, this imposes a static view of opportunity on such farmers and inhibits them from rising above their circumstances. As Claar explains, it “keeps the poor shackled to activities that, while productive, will never lead to poverty reduction on a large scale — or even a modest one.”

This is not even to mention the other issues with fair trade that Claar examines: its overall expensiveness and inefficiency, its minimal impact on poverty (even if it works), and the questionable motives and actions of fair-trade sellers and middle men.

Fortunately, there is a real and lasting solution, which is the focus of Claar’s final chapter: “How Might a Caring Christian Respond?”

Instead of imposing our top-down plans on our neighbors across the globe, Claar suggests that we “work to make trade freer for everyone in our global community: a level playing field for all.” Although it might lack the punch, trendiness, convenience, and immediate satisfaction of buying the right pack of coffee beans at the right socially-conscious grocery store, it actually works (e.g. the 20th century).

Freeing up global markets (or simply allowing them to run organically as is) may not be sexy, but in the long run, it will lead to sustainable growth and will eventually direct those trapped in flooded markets to pursue more productive activities. In such impoverished areas, price signals are typically difficult enough to discern as it is. We would do well to work toward improving their accuracy rather than muddling it further.

But in addition to our call as Christians to care for the sick and assist the poor (an important one, to be sure) how does Claar’s approach feed into our overall view of humanity as a whole?

Claar answers the question with eloquence:

I am convinced that real, long-term hope for today’s global poor lies in our united prayerful anticipation of the day in which we will no longer think in terms of “us” (wealthy Westerners) and “them” (the global poor). Instead, the question that should gnaw at us most deeply is how we can each be effective forces to bring about a world in which such a distinction is no longer relevant — a world in which all people share together, with enduring personal dignity and freedom, the blessings and rich abundance of God’s gracious and innumerable gifts intended for us all.

If only I could scribble that on my arm!

To buy the book, go here.