By Nicholas Horton
Libertas Exemplar, August 22, 2008
Most of us have been told at some point in our lives “life’s not fair.” Whether it was our parents, the media, or a school teacher, we have learned that not everything is equal in this world. Some are rich, some are poor; some are educated, some are uneducated; some work hard to make a living, some simply rely on the hard work of others and wait on their government handout to come in the mail.
Despite this universal truth of unfairness, there is a movement on the left to equalize everyone and everything. From “free” healthcare for everyone to farm subsidies, equality is placed above quality. The left even wants to equalize profits. In America, we call this ‘fairness.’ In Europe they call it socialism.
In a recent attack on capitalism and freedom, the left has devised the innocently labeled “Fair Trade” movement. It seems that many coffee farmers in South America have been receiving prices for their coffee that are less than their costs of production. This is obviously a moral outrage, according to the left—no one should ever be paid less for a less quality product.
Therefore, a movement has launched to support these poor farmers despite their unsuccessfulness. The Fair Trade movement is essentially strong-arming Americans into buying their coffee, using moral manipulation. However, the real problem with Fair Trade is not cold-hearted capitalists, but poor quality production.
In typical liberal fashion, the left has decided to throw money at the problem rather than digging to find the source of the problem. Gene Callahan of The Freeman concentrates on two such causes of poverty among coffee farmers:
In some cases a particular farmer could run his business profitably except that he is competing against others who receive some form of state-granted privilege. This privilege could be a direct subsidy from their government, or a favorable trade agreement with a coffee-importing country. That is clearly unjust, but [Callahan] contend that the best way to address such injustice is to eliminate the favoritism, rather than trying to compensate for it.
The other reason is even simpler; there are too many coffee producers in the market. Trying to be a coffee farmer in South America is like trying to be a used car dealer in America; the market is highly concentrated and it can be tough to generate business. The demand for coffee beans simply cannot keep up with the supply, and therefore some producers are suffering. Apparently the Fair Traders would rather pay a 5-cent-per-pound premium to keep a failed business in operation instead of encouraging farmers to seek other employment.
Once again, the left says, “Just throw money at the problem, and it will fix itself.” Like it or not, the U.S. is making a shift towards ethanol and corn is in very high-demand right now, with prices that will only continue to rise. If the United States makes a majority shift towards ethanol, we will be forced to import corn to keep up with demand. We should be encouraging these poverty-stricken farmers to transition to corn production, not encouraging them to continue in a losing coffee venture.
The left is correct about one thing; being a coffee farmer in South America is difficult and it is impoverishing. Yet the left’s alleged solutions are only perpetuating the problem. Their methods are encouraging these farmers to stay in a failing industry. Continuing to operate a money-losing business is not only irrational, but it also sinks these farmers further and further into debt.
In his article, Callahan also cites the extreme level of co-dependency that the Fair Trade movement promotes – a movement that aligns itself with the left’s campaign to create dependency on government and dependency on others:
It is ludicrous to imagine that a social arrangement is sustainable in which anyone who chooses to persist in a money-losing occupation is entitled to be supported in his obstinacy by the rest of society.
“Fair Trade” is fair in name only; it does not address the true injustices in the coffee industry, but uses guilt to manipulate bleeding-hearts to purchase expensive coffee in order to sustain unsuccessful, impoverishing businesses. In a very real sense, “Fair Trade” actually feeds the poverty cycle by telling these unsuccessful farmers, “you’re doing great; here’s an extra 5 cents per pound that won’t even cover your production costs. Please stay in this industry and continue to lose money.” Not only is “Fair Trade” unfair, it feeds the unnatural dependency of these farmers on government and strong-armed leftists.
The paradox of “Fair Trade” is simple supply and demand economics. Should the movement achieve its ultimate goal and keep these farmers in the coffee market, the supply will increase while demand remains constant. Prices will fall as the market becomes more saturated and it will be even harder to compete. On the other hand, should farmers begin to receive the high price that “Fair Traders” are demanding for the coffee, the price increase will hurt consumption, translating to fewer sales for the farmers. In every way, “Fair Trade” is a losing proposition.
There is a movement even on Harding University’s campus to embrace the Fair Trade movement and pay more for coffee of equal or less value than the competitively priced alternatives. This seems to be nothing more than a conscience stroke for well-meaning liberals, insistent on lining the pockets of the Fair Trade organization in the name of compassion. Of course that is a decision they are entitled to make—people should always be allowed to spend their money as they see fit, even in today’s socialist era. However, people should always be informed and consider the consequences of their spending. Hopefully this article will encourage critical thinking and responsible stewardship.