Sunday
May252014
by 
Bishop Hill
Bishop Hill Failtrade
May 25, 2014 Ethics Fairtrade is, like global warming and "sustainable development", one of those things that is drummed into schoolchildren as an unquestioned good. I even live in a "fairtrade county", whatever that means. The news that the Fairtrade movement is not actually managing to help poor farmers at all and may even be harming them is probably not news to many readers of this blog - I see I was critical of the idea as long ago as 2006 and no doubt there are other evil free-marketeers who have been banging on this particulary drum even longer. Tim Worstall's coverage of these new findings is excellent.
Reader Comments (35)
The Road To Hell Is Paved With Good Intentions
I, too, swallowed the nonsense some years ago until I looked up the details of the actual payment for coffee beans. Yes, Fair trade was paying a little more at the wholesale end ( <10% ) but that mostly went to middlemen, as Fairtrade lacked a network. Then I calculated the difference between the wholesale price to the farmer and the retail price, and realised that much of the extra was going in "overheads."
Even if the entire premium had gone then to the farmer it merely helped him go broke a little more slowly. The little extra wasn't based on what the farmer needed, it was how much "self satisfaction" it generated.
Ah, yes.
"Fairtrade"
I earn my meager crust in the physical commodities business, of which sugar and coffee are the main business areas. We have known this is crap for years. When discussed with people of a certain mindset outside of work, I am (of course) the evil capitalist who tears the heads off kittens for fun.
I guess we put this in the same list as palm oil and the EU CAP. Both proven to cause real and genuine harm to real and genuine people.
Dramagreens - I [self-snip] hate them. The [self-snip] [self-snip] [self-snip] [self-snip] selfish [self-snip].
It's always been obvious that "Fairtrade" is a brand name, not a description.
Holy Moly, UKIP wot's up?
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It's the same old same old. Well intentioned people, who would not necessarily think of themselves as anti-capitalist, think they've invented a better system which doesn't have the imperfections they observe in the current alternatives. Who knows, someday that might actually happen.
But the people doing the inventing, and the giving, are frequently completely removed and unaware of the merits of the current system and how it works. They are effectively guaranteed to fail once the 'middle-men' start gouging them.
The more successful 'high street' charities learn that they need to become more efficient, like corporations, in order to achieve their intermediate goals. Senior Greenpeace know this, even if most of their donors and apologists don't. (Standing-orders are so much better than rattled-tins.)
Of course some of them, like Oxfam, sadly, appear to have left the rails and decided that stopping global warming and economic development is more important than feeding people in the third world. I knew some good people who managed stores for them.
says The Guardian/Observer....Yet they still wish to deprive the very poor of the benefits of cheap, carbon-based energy sources.
That is some pretty rough trade, if you'll pardon the expression.
As Tim Worstall points out, countries become richer by increasing output per worker, but Fair Trade restrains that productivity growth. To put it into perspective, an agricultural labourer in the poorer countries will earn less than a twentieth of someone on the minimum wage in the UK. Doubling their wages will still leave those African or Central American workers in abject poverty by western standards.
Yet another "progressive" talking point is shown to be anything but.
I buy green coffee and home-roast it. One supplier makes an effort to actually visit coffee plantations each year. His company sold, and still does sell, "fair trade" coffees. But he realized that he could do much better by contracting directly with some of the plantation owners. He gives them significantly more money per pound than the "fair trade" middlemen. In return, the grower commits to deliver the highest quality coffee, and with the larger income, can invest in better processing equipment and facilities. Both sides win: the market doing what it does best.
Not only do we have Fair Trade counties but also Fair Trade towns within them, which all have large and expensive metal notices declaring the fact as you approach them, or cross from one county into another -paid for out of the rates, of course.
Bish
for us in the antipodes maybe a new post on the Eu elections. Particularly interested in whether UKIP energy policies will result in LIb/Lab/Con reviewing their positions on renewables especially offshore wind.....
Despite being an evil leftist, I am a destitute Scottish peasant who drinks Nescafé because I don't appreciate the finer things in life, like coffee beans (whatever they are).
Messenger, I haven't seen these signs; either I go around with my eyes shut (probably the case) or I live in an area where they haven't yet been installed. But from your description it sounds like a version of the nuclear free zone signs that the commies erected, with our money, in the 80s (I think it was). I notice that in the EU elections, there are still about 40% of the country who continue to vote for socialist/communist parties and candidates (total of the lab, libdem, green results). It beggars belief that there are so many who do so given the history of the 20th century and the people who died trying to keep the commies and the fascists away from our lives.
Fairtrade - high ideals, low results.
As has been aforementioned, CAP is the biggest barrier to "Fair Trade", then of course next up is Foreign Aid - by undercutting the prices of local produce, keeps farmers off the land and making babies in the camps, which begets more problems than it could ever solve.
"Fair trade", has the mucky paw prints of the UN all over it;
anti mechanization - check,
anti fossil fuels - check,
schemes open to widespread peculation - check,
job creation in the bureaucratic offices in the western world - check.
Help the local farmers?
- nope.
John- it shows how many rely on either state handouts, or realise that they'll either have to get a real job or have to do some work if a non-statist lefty party gets enough power to do the job.
Athelstan on May 26, 2014 at 9:27 AM
peculate - to steal or take dishonestly (money, especially public funds, or property entrusted to one's care); embezzle.
origin - literally, to make public property private
http://dictionary.reference.com/browse/peculate
What an appropriate word for our current times!
There are so many opportunities to use it: green taxes/subsidies, authority from renowned institutions, intellectual property, air fares to Rio, and even climate data!
If you would like a link to climate change then The Fairtrade Foundation receives a grant from Comic Relief for "Climate change Advocacy".
Just hope this percolates through to the man in the street
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ok,i'll get me coat
Just another example of the Green/Left taking the moral high ground on the basis of wishful thinking and dodgy data. First comes the ideology, then comes manipulated 'reality' to demonstrate the truth of that ideology. Hit me with your Hockey Stick (c/w bent statistics, hidden declines etc.) because it is self-evidently good and right and true. The latest example, hitting the headlines and lighting up the airwaves is Prof Piketty's 'Capital in the 21st century'. It purports to show how wealth inequality has increased massively since the 1980s. Miliband has been swooning over it. Needless to say it turns out to be based on invented, incorrect and 'tweaked' data. Sounds familiar? See here...
http://blogs.ft.com/money-supply/2014/05/23/data-problems-with-capital-in-the-21st-century/
Giving more money to one group or person means giving less to another - unless we increase the amount that we have to give.
Quite how encouraging the least efficient and less productive growers was supposed to - in the medium term - help anybody, was always beyond me. We know how to make people richer - ,allow them to become as productive as they can and allow them access to free markets in a (relatively) non-corrupt system.
Quite why the Left keeps making that hard/impossible is beyond me.
Not a surprise in truth is it? Stealing from Christopher Booker - IMO FairTrade is simply a manifestation and formalisation of groupthink - sign up to the brand and smugly proxy your beliefs/democratic mandate on how the world works to a bunch of shallow ideologues who in addition to tarting for cynical commercial sponsorship look to foist further baggage onto a campaign vehicle (TerryS above). It's also an opportunity for peculating local government officials to pour away more public funds and wrestle with putting up FairTrade signs and press releases to boost the municipal smugness index.
Cynical maybe - but all the ones I've asked actually know SFA about how coffee and tea are grown, harvested and cured and are utterly ignorant of the pricing structure - beyond parroting the standard FairTrade advertising straplines...
Medieval indulgences come to mind....
From the Ecclesiastical Uncle, an old retired bureaucrat in a field only remotely related to climate with minimal qualifications and only half a mind.
The emotional brain, perched generally but not exclusively upon shoulders supporting bra straps, perceives that THIS leads to THAT, and that THAT betters the lot of THEM and is therefore a good thing. So the more energetic strive for action and we have charities. Overwhelmed by the virtue of what they do, few look further to where they might discover that THAT leads to THE OTHER, which is evidently a curse on THOSE, who are greater in number than THEM, and which is of far greater magnitude than the good that THAT caused. Charities (and large scale idealistic cooperative movements such as Fairtrade), like subsidies, distort and cause harm. They are bad things.
Efforts to restrain the emotional brain are much hampered these days by political correctness - the inability to call a spade a spade (in both overt and covert senses) - and so charities are free to trumpet their ideals to the skies with the shrill power of a choir of angels. It is a mercy that their efficacy is restrained by the merciful skeptical inactivity of the silent majority and the small influence that this blog and other like centres have.
Lest it be supposed that these observations betray a sexist writer, please first observe that I used to be male but never, despite lapses in precautionary behaviour (I cannot claim the active making of any effort), went through the process of delivering a child into the world from my own flesh and bones, and then observe that I now concede that many males have seen virtue in the charitable thinking of such brains and now serve these charities. And that I also concede that such thinking now leads concerns that shape what happens.
Oh for the good old days when bred and milk were delivered by carts drawn by bored horses, and the man was at work while the wife tidied the house and looked after the children - and when politicians, in contrast to the henpecked crowd now in parliament, were leaders who saw a better future and strove for it with real expectations that it would be achieved!
Ecclesiastical Uncle
I agree. The feminisation and emotionalising of our society have gone hand in hand with political correctness. Modern PC is of course is an American creation. It is very easy to manipulate an emotionally focused population. It's how propaganda works.
The'leaders who saw a better future' are now American puppets. Thatcher / Lawson bled the private sector dry. Blair / Brown in the name of 'doing good' destroyed the public sector by indiscriminate expansion and left it with unserviceable. debt.
By appealing to charity, one can give birth to monsters like Gore / Obama / Mandelson / Blair etc.
Pathological Altruism. Thanks for the tip Bish.
Nonecological unfairtrade?
Charity is not the solution to poverty, but :
Correlation is not causation...
This study is stupid. You should also expect that Fairtrade is targeted to help the poorest.
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Well excuse me but the reason it is failing is due to the evil capitalist landowners and middlemen involved, not the well-meaning people who set it up. In any market there are always those who exploit and game the system unless prevented from doing so which is why state social protections; workers rights, minimum wages, free health care and other social safety nets are required to bring the poor out of poverty. It just doesn't happen if we leave it to landlords and industrialists most of whom would be perfectly happy to use slave or child labour. Yes those freetrade clinics were too expensive so the poor had to visit the local free clinic but in a truly free-market society there are no free clinics for the poor. The notion that poverty reduction can be achieved all by itself by some magic trickle-down effect is just utter claptrap. The only problem with the freetrade system is clearly that the capitalists involved were trusted rather than rigorously inspected and controlled: Perhaps due to the sheer volume of balderdash being published from dogmatic right wing think-tanks about markets being best left alone.
JamesG @10:15 PM
Did you actually read Tim's article? and well, you said it...
"there are always those who exploit and game the system" - and one is entitled to ask who's doing what in this case... would you classify Fairtraders as eeevil middlemen?
I'm no prescriptive free marketeer - since the mythical pure free market is a theoretical contrivance akin to a unicorn. Any market (even a Marxist one) will adjust depending on supply and demand. The superficial intentions of the "FairTraders" are clearly to improve the lot of the raggedy arsed farmers - but they seem to have not been looking at things from the farmer's (or even the day labourer's) perspective.... No mechanisation (AKA development...) seems to be a ticket to continued dirt poor subsistence - not a choice most poor farmers will take willingly.
FairTrade has been badly run and the throwing money in the general direction of poor people and smug tokenism it fosters is actually corrosive. Sheesh - even the Guardian article flags "Fairtrade's efforts to establish an auditing process that is more relevant to the lives of the poorest rural people" - facepalm ... what's their raison d'etre?
WHY do a professional charity need what must be effectively several hundred thousand pounds worth of academic investigation to tell them they're making it worse?
Tomo. Yes I read it - but with the disdain of someone who has read the dogmatic crap of the Adam Smith Institute many times. It wasn't that long ago they were telling us that legal loansharks shouldn't be regulated. Use of 'evil' was tongue in cheek though because it is clearly human nature to cheat people when they can get away with it. It is also human nature to be a hypocrite. Which is why I agree with you that the free market is a unicorn. The notion of natural supply and demand adjustment is also subject to a lot of supply-side chicanery too by the way. Adam Smith himself noticed this.
I already answered your last WHY question with my supposition that the charity made these mistakes of oversight because they actually believed some of the claptrap being written those such as the Adam Smith institute about markets working better with a hands-off approach. It wouldn't be the first time that mistake was made - it's what brought on the financial crisis in the first place.
I didn't read anything about no mechanisation being allowed (perhaps you just made it up) but then some crops don't lend themselves to mechanisation anyway and sometimes 'hand-picked' is a marketing slogan. In any event it mainly benefits the landowner. As such that is a strawman.
I'm not blind to the simple-minded economics of some do-gooders but I'm also not as willfully obtuse as too many right wingers about how it would all be so much better if do-gooders just left it all to the magic invisible hand.
JamesG, what is a right winger?
JamesG
The financial crash was an enormous crime carried out by American government and financial gangsters, some of it in the sewer of Wall street, the City of London. The reason capitalism doesn't work is it is a criminal enterprise.
This was just before it really went up.
America was conned - who will pay - Larry Elliott.
The South Sea Bubble ended in riots as trust was lost. Wall Street also duped the public
http://www.theguardian.com/business/2008/mar/17/economics.useconomy
You have been looking at how Fairtrade seemingly doesn't do what it clains to do - improve lives of poor people.
What about how local councils who've signed up to this ideological nonsense are squandering money on such poor value?
Ask anyone in your local council or education system how much more they pay for stuff we buy at Staples or Lidl, because they've committed to the "Fair trade" distribution system. Like any government patronage system, the extra money is being sucked up by middlemen and unnecessary bureaucrat wages.
kellydown +1 !!!
One has to wonder if the analysis has identified where the money is actually spent (and where effort is put in...) . It's clear to me (and anybody else that's spent any time in Africa) that to reach the near destitute (a concept actually alien I suspect to 97% of Guardian readers) one needs independent boots on the ground The plight of the landless labourers can be distressing but the reasons they are in their obvious predicament can hardly be wholly blamed on the "markets" and consumers of the products not paying enough guilt levy...
The study indicates an abject failure to adapt to conditions on the ground - which vary dramatically from country to country. Socialist regimes seem to be equally good at exploiting and abusing their poor people when compared to "right wing" dictatorships. I doubt the average African day labourer can tell the difference...
"The market" is no more an ideology than "evolution".
It's just a natural human social interaction and exists even in the most totalitarian circumstances, as anyone who's ever changed money on the black market in a police state with absurd "official" rates can testify.
Attempts to suppress the market or prevent humans trading freely in produce and commodities generally result in shortages and price distortions in the long term.
An article entitled, "Car Exec Loses Money On Electric Cars, Says 'I Hope You Don't Buy It,' " reports that the CEO of Fiat Chrysler has indicated that he is selling electric cars, but only because he has to.
The US government basically mandates the production of the cars and the price at which Fiat Chrysler can sell them. This is a shame because Fiat is struggling to keep Chrysler afloat, and being forced to sell cars at a loss is no way to improve the bottom line.
Here's more from the article: [The Exec] said he hopes that people don't buy his company's electric car, the Fiat 500e, which he is forced to sell at a loss because of state and federal mandates.
http://www.thedailybell.com/editorials/35334/Anthony-Wile-The-Lie-of-Moral-Mercantilism/