In Economics, the word fair does not exist. I was tempted not to title the post this but I feel as if the creators of fair trade products would also think that being good the environment is fair. To clarify, “fair” doesn’t exist because Hitler thought what he was doing was fair. Fair cannot be measured. An Economist’s job is to take a certain policy and say whether or not it efficiently solves a problem. An example of this is the minimum wage laws.
So is fair trade good to the environment? Let’s see what Jacob Leibenluft has to say over at Slate Magazine:
“[This is the definition of a fair trade item.]Traditionally, the fair-trade designation has been associated more closely with labor standards than the environment, suggesting that workers in far-off places are enjoying better wages and conditions than they would for producing products under conventional labels. But any product that’s certified as fair trade must also meet a set of environmental standards determined by a group called Fairtrade Labelling Organizations International.
Still, critics have raised some big concerns. The first, pointed out by regular Slate contributor Tim Harford, is that the promise of higher wages through fair-trade arrangements may provide farmers with an incentive to overproduce (subscription required).
A second worry is that fair-trade products, by definition, are produced outside the country, so they need to travel a fair distance to get to your home. If the items are shipped by sea, the impact may not be so bad—as the Lantern has pointed out before, the emissions impact of long ocean hauls may be less than trucking a product within the United States.”
He goes on to say that the point is you cannot have global climate change and poverty reduction. This article misses a different point to further sort through all this fair trade. Fair trade is one of those things that makes you feel good about yourself, while paying a farmer a little more. The problem is that you are not allowing the market to truly set there wages.
Not only do they over produce but they have less of an incentive to meet quality standards. They often rake bug parts and twigs within their bags of coffee beans. In fact, I am not sure what the inspection system is, but if they are by total bag weight it would be an incentive for them not to go through the beans.
Another problem I have with this organization is that they try to get the government to be on their side. Due to pressure McDonald’s even uses a part of fair trade coffee in their new blend. Starbucks and other places have been using it for a while now. From what I understand many of the organizations created to collect and distribute the money, eat over half of it on operational fees.
Who even says the current wages are bad? We pay them for what they produce. It is what everyone did as a country 100 years ago.
This is us trying to be a nanny state to the world. So next time you go to buy a coffee ask for Free Trade, not Fair Trade. Too bad it doesn’t exist.