Does the ‘fairness’ of Fairtrade coffee matter?
According to The Weekend Australian, regular commenter Sinclair Davidson and Tim Wilson of the Institute of Public Affairs are going to the Australian Competition and Consumer Commission, alleging that Oxfam has engaged in misleading or deceptive conduct over its Fairtrade coffee. According to Oxfam:
The term Fairtrade refers to an independently audited product certification and labelling system that ensures those who grow and produce coffee get a fair go. It does this by:
Paying farmers and workers a fair price for their work
Helping them gain skills and knowledge to develop their businesses in the global economy
Providing a certification and labelling system to ensure Fairtrade standards are met and that the benefits of Fairtrade get back to the farmer who produced the product
But according to Tim, drawing in part on this Cato article:
there was evidence that Fairtrade products could do more harm than good for coffee producers in undeveloped nations. He cited reports alleging producers had been charged thousands of dollars to become certified Fairtrade providers and some labourers received as little as $3 a day.
I know nothing about how much Fairtrade affects coffee producers, but if we were to be a little cynical about Fairtrade consumers it perhaps doesn’t matter much whether it is good for producers or not. As I have long argued (eg here and here) there is a market for political gestures, and how effective the gesture is likely to be doesn’t seem to be a huge part of the calculation.
Business has seen the opportunity. In Tim Harford’s The Undercover Economist, in an interesting chapter on the retail coffee market, he notes how a UK coffee chain was able to price discriminate by offering Fairtrade coffee - it was a useful way of identifying those customers prepared to pay more than the standard price because they could add altruistic feeling to the sugar and milk in their coffee. I’m not sure whether local cafes price discriminate or not with Fairtrade coffee, but even if not it is still for them presumably a useful branding exercise to attract customers who want to appear to have a ’social conscience’.
If Fairtrade is really selling a benefit to the coffee drinker rather than the coffee producer, it is perhaps no more deceptive than the other branding exercises designed to create image associations with particular products that have little to do with their intrinsic qualities or characteristics.
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In other coffee news, the best item in yesterday’s Age was a brief report saying that Brunetti’s, the best cafe in Carlton, the place that puts the latte into latte leftism, is to stay. The threat that it may be forced to move or close by a landlord massively increasing the rent even made it to the ABC TV evening news, such is Brunetti’s status in inner Melbourne. Clearly the landlord had been stung badly by the negative publicity, as notices have appeared in Brunetti’s windows trying to salvage her reputation, as part of the deal finally struck by which Brunetti’s would stay where it is. I wonder how many thousands she knocked off her rental ask to try to get her reputation back?
April 29th, 2007 20:59
In our complaint to the ACCC we make two substantive comments. One, we allege that Oxfam have engaged in misleading and deceptive conduct by claiming workers receive a fair price for their work, when some workers have been known to receive less than the minimum wage. (We also point to reports that fairtrade coffee has been planted in protected rainforest areas, in vilation of the Fairtrade standard). Second, we allege that the Fairtrade label requires that a fairtrade premium be charged to customers. This, we argue, constitutes retail price maintainence which is illegal under the Trade Practices Act. We also argue that the notion itself does not assist farmers in poor economies - that, however, is not necessarily unlawful. This is a value-laden argument that I suspect the ACCC will not want to enter.
We believe this goes beyond a branding exercise (this is a coffee cartel and not a single company selling its own product) and while I agree that there is a market for political gestures, I suspect this one is sailing too close to the wind (if not actually unlawful, as we allege).
April 29th, 2007 21:16
“I know nothing about how much Fairtrade affects coffee producers …. presumably a useful branding exercise to attract customers who want to appear to have a ’social conscience’”
What a mean thing to say. Who would you be performing to - the checkout person at Coles? I buy fairtrade coffee because presumably it benefits the growers, who are poor - that’s all.
A while back I mentioned the packet of cashews I bought at DJs labelled Product of Australia - I’m fairly sure those cashews come from Vietnam. It’s just typical of the misleading labelling on nearly every product in the supermarket, so why isn’t Sinclair complaining about that?
What a pity I didn’t walk down Faraday St in my first visit to Carlton, earlier this year. I traipsed down the disappointing and vulgar Lygon St , but was pleased to find a shop there called Koko Black which served a very nice iced chocolate. Recommended.
April 29th, 2007 21:16
Sinclair’s point is quite correct - there is a big difference between misleading and deceptive conduct and branding based on a political gesture.
Those who sell organic food and claim the food is more healthy must be similarly held to account. It is a lie, just as it is a lie that the Fairtrade Coffee program pays higher prices to growers.
April 29th, 2007 21:28
Sinclair - I only just saw your comment. As someone who has always bought the coffee I never thought it meant they were paid a ‘fair’ price (what would that mean?) - just a better price than they would have otherwise. I also didn’t expect the Fairtrade people to pay whatever these “minimum wages” are - I just expected the people producing the coffee would get some extra money from we who bought it.
Can you explain this bit: “we allege that the Fairtrade label requires that a fairtrade premium be charged to customers. This, we argue, constitutes retail price maintainence” - the consumers are prepared to pay more in order to give the producers more money - there’s plenty of other coffee in the market.
April 29th, 2007 21:33
David - I think if the organic stuff (fresh fruit and vegetables) is good quality and fresh it probably is slightly healthier. But I also buy it as much for the way the land is treated - usually organic growers are constantly building up soil fertility, which I think is an improvement on the more commercial practices.
April 29th, 2007 22:00
“What a pity I didn’t walk down Faraday St in my first visit to Carlton, earlier this year. I traipsed down the disappointing and vulgar Lygon St”
Indeed, Lygon St between the city and Grattan St is just a tourist trap, and even ‘my’ part of Lygon St, from the University Cafe to Elgin St, is generally mediocre for food. But the coffee is good.
April 29th, 2007 22:25
Russell
There is no evidence that organic farming per se is better tasting, is better for the environment, for land quality or for consumer’s health. Indeed, misleading advertising by the organics movement has been stamped upon in the UK by the Advertising Standards Authority and by the Food Standards Agency. What claims they can actually make are pretty limited.
Quite apart from Sinclair’s misleading advertising issue - my main difficulties with fair trade are that: it is economically inefficient (by blunting price signals to farmers who would otherwise be encouraged to move to alternative products); ineffective (by forcing producers to select certain production techniques - such as cooperative production, supposedly more sustainable production techniques); and unfair (membership fees are high while a significant amount of the fees go to the promotional activities of the Fairtrade accreditation organisations; why should an employee in a company or country not so lucky to be included within the label be treated differently from a worker who happens to be- what’s so special about a South American cooperative labourer compared to a Vietnamese coffee worker on a new efficient coffee plantation?)
If people want to buy organic or fair trade good luck to them. But they would be deluded in thinking they are pursuing healthier, better tasting, greener, or even fairer.
April 29th, 2007 22:26
“But the coffee is good.” - good? not if it’s not Fair Trade.
and another thing - I was led to believe that Perth would be as cosmopolitan as Melbourne and Sydney if only we had retail trading on Sundays. Only to find lots and lots of closed shops in Melbourne on Sundays - even places mentioned on tourist maps!. According to the map I was supposed to have a sandwich or something in some old cafe in the Block Arcade - closed. (Luckily in some other arcade across the street was another Koko Black, so another nourishing iced chocolate was consumed.)
April 29th, 2007 22:35
Procrustes - that’s unfair, because I’m too lazy to find the evidence that organic farming is better for the land. But it is - a more sustainable way of producing food too - aren’t artificial fertilizers made from oil somehow?
Re FairTrade - yes I can see the problem in propping up some coffee producer in Timor if producers in Vietnam are producing coffee much, much cheaper. But I’m happy to pay more for the Timor coffee in the hope that the producers lives there will be maintained while they move to some other crop. Or, if they can’t produce anything cheaper than elsewhere, I’d be happy to just go on paying more for their coffee.
April 30th, 2007 00:00
Russell
Let me begin by addressing an argument on your own terms. Bizarrely, organic farming is allowed to use copper based fungicides - isn’t copper a non-renewable resource too? My gosh, what will they do when the copper runs out?
In any case, the sustainability argument is just nonsensical - new technology will replace the current fertilisers before we ever run out of oil.
Moreover, organic farming is hardly sustainable - if all food production had to switch to organic methods the amount of land needed to feed the world’s population would require massive conversion of forest land to agriculture – do you think that is that a good bargain in sustainability terms?
The only evidence I am of about organic farms being better for land use relates to management practices that have nothing to do with whether the farm is “organic” (in terms of pesticide and fertiliser use). So a farm that used the integrated farm management practices as well as pesticides and non-organic fertilisers would have the same outcomes as purely organic farm (and be just as expensive as organic) (see “The March of Unreason” by Dick Taverne)
If the warm inner glow is what you’re after, you could make yourself even happier in your support for Timorese farmers by donating the price difference between an organic coffee and a non-organic coffee brand to an effective aid organisation. Particularly one that did not cream off most of the takings for its own ends.
There is evidence that the retailers use “fair trade” labelling to market segment – ie to identify less price sensitive buyers so they can skim consumer surplus off them (see Tim Harford, referred to above).
There is also evidence that the Fair trade organisations spend as much as half the fees they collect on their promotional activities (see Institute of Economic Affairs “Half A Cheer for Fair Trade”). After all these rents and overheads, there wouldn’t be much left to actually distribute to those you are intending to help.
As you have already recognised, fair trade blunts the price signals to those Timorese farmers. The problem of low coffee prices is too much coffee but you want the Timorese farmers to stay in the game.
April 30th, 2007 00:46
This strikes me as nothing more than a cheap and sleazy publicity stunt on the part of the IPA and its supporters. After all, according to the weekend Australian article cited in Andrew’s post:
Begin quote.
“In order to lodge the complaint, Mr Wilson purchased a 250g pack of Fairtrade organic decaf ground coffee from the online Oxfam shop.
“We purchased this product in good faith, with the aim of lifting people out of poverty while enjoying our favourite brew,” Mr Wilson said, in his letter to ACCC chairman Graeme Samuel.
Mr Wilson and Professor Davidson have long held doubts about whether Fairtrade products help coffee, tea and cocoa producers in undeveloped nations. Sales of such products in Australia total about $8million.”
End quote.
How can one of the two people involved in making the complaint purchase an item in good faith in order to make a complaint? How can one of the two people involved in making the complaint purchase an item in good faith when they have long held doubts about the product?
April 30th, 2007 00:49
I should note that the article in the Weekend Australian that I quoted from in my earlier comment (number 11 on this thread) was written by Caroline Overington.
April 30th, 2007 02:08
Damien
Whether it is cheap and sleazy is neither here no there - fair trade is an irrational con job in terms of equity, efficiency and effectiveness.
I say good luck to them.
April 30th, 2007 07:45
Damien, in order to lodge a complaint you have to have been aggrieved - it’s called ’standing’. That is why we have bought the coffee. The article spoke a lot about Fairtrade coffee and the more general issues. We have made specific allegations that relate to specific sections of the TPA that we believe to be in breech.
April 30th, 2007 08:06
Russell — organic farming is worse for the environment, because the yields are not as high. Hence you use more land. Thus, if you buy organic coffee (or other organic products for that matter), then you are responsible for more land destruction than otherwise would be the case. No doubt thats an orthogonal issue to “Fair Trade” although buyers often seem to correlate them in their heads.
April 30th, 2007 10:04
Sinclair and Tim, interesting, although I can’t help thinking if there are better uses for your time.
For once, I second something Russell said - can you clarify what you mean when you say that use of the Fairtrade lable requires customers to pay a premium? Is this part of the agreement? If so, against what brand/type of coffee is the premium to be assessed? It doesn’t seem to make any sense.
Also, Procrustes, I’m not sure I agree that Fairtrade is inefficient per se. Misleading conduct is one thing, but if resources are used to produce a product that satisfies consumer wants, then it is efficient, even if the same resources could be employed making more of something else or more of the same thing in a different way (eg by not using cooperatives).
April 30th, 2007 10:07
Andrew Norton wrote:
As I have long argued (eg here and here) there is a market for political gestures, and how effective the gesture is likely to be doesn’t seem to be a huge part of the calculation.
Not only for people on the left though. While Fair trade coffee might be a scam (and it wouldn’t surprise me, given the retail outlets it turns up in), the biggest fraud in political gesturing has always been “family friendly” - something the right need to start stamping out. I wonder whether the ACCC can start regulating the names of political parties where they represent clear breaches of advertising codes?
April 30th, 2007 11:10
I don’t think Andrew’s point is necessarily about ‘performing’ for anyone Russell… it’s about the warm inner glow of knowing you are a noble and compassionate person, concerned for others and prepared to pay extra money because of that compassion/concern.
People who believe in ‘fair trade’ are not, in general, terribly concerned about logic or facts, so I don’t imagine Sinclair’s case will have any effect on the utility they gain from buying the stuff. It is an amusing stunt though.
April 30th, 2007 11:41
I have no problem with fair trade as a concept that is voluntary. If people want to throw their money away without adding much to development so be it.
The problem is that I do not see it as a sustainable mechanism for development. If you rig the rules in favour of a select few you can always provide evidence that the system works. It is the people who are locked out that I am concerned about.
I am also concerned about the ‘voluntary’ nature of these sorts of standards. They start voluntary, and then are adopted by industries due to heavying from NGOs. NGOs then go to Government and point out industries are adopting them and they are the good basis for regulation. If you need evidence for this, look at timber standards.
And on top of all this, we all know that only free trade provides a sustainable mechanism for lifting people out of poverty.
April 30th, 2007 12:00
My bad, resale price maintainenece, not retail price maintainence. From our letter,
April 30th, 2007 12:48
Those of us who have a deeper interest in coffee would look at Fair Trade coffee from several perspectives. First, any action to channel additional funds to growers should be supported, but I am not convinced that Fair Trade is the only way this can be done. Second, Fair Trade does not specifically guarantee quality, it can contribute to quality in the long term but many coffee consumers have been disappointed by the quality of many Fair Trade coffees.
I would like to see a greater encouragement of ‘fairly traded’ coffees like we are starting to see among artisan roasters in Australia where they rely on a relationship with the grower and are able to deliver in terms of quality and return to the grower a much better income than is possible through the fair trade system.
I think the Davidson/Wilson action is silly at some levels, but it is useful in illuminating the deficiencies of the Fair Trade system
Oh and Procrustes, you stated that there is “no evidence that organic farming per se is better tasting, is better for the environment, for land quality or for consumer’s health”
That is a sweeping statement with the potential to encompass all manner of errors.
April 30th, 2007 12:54
Leopold - Andrew did write “customers who want to appear to have a ’social conscience’.” - not “customers who want to feel they have a superior social conscience”, so I guess he did mean ‘performing’.
I don’t think buying fairtrade products would make anyone feel noble or compassionate (its a few cents after all!) - you make the decision once to buy fairtrade and never think about it again - it’s just shopping. Like having donations to charity deducted from your paypacket - it’s the least and easiest way to do some small thing, but hardly noble since you’re not even aware of it - it makes no difference to you.
I read the trash from the Cato Institute and read this “It is true that the Fair Trade coffee system … has improved living standards for many participating coffee growers” - and this - “participation in Fair Trade networks has undoubtedly generated benefits for many producers.” So it seems I got what I wanted from buying the coffee.
Organic - I’m not a purist, if soil is lacking something then add it. But the best and most sustainable way to produce food is in a mixed operation where manure from humanely raised animals - chickens, goats etc - is used to enrich the soil, green crops are grown and turned in, mixed cropping rather than monocultures, using the least toxic pesticides etc will result in increasing soil fertility naturally - and plants grown in humus rich soils need less water. This type of food production will be more labour intensive and expensive, but it’s the best way to do it, and we can afford it.
April 30th, 2007 13:21
Russell, you need to decorrelate what you think are the best methods of farming and “natural” methods. We need the highest yielding crops that don’t destroy the enivornment. If that means lumping piles of artificial nitrogen on the soil in places, then thats better than not lumping nitrogen on in twice as many places. There was a good discussion on this a few years ago in Nature if I remember correctly.
April 30th, 2007 13:33
Conrad - you remind me of the lastest furore in WA when the health minister suggested that too many women were going for caesareans rather than natural births. Apparently convenience is much more important than ‘natural’ these days.
We need sustainable and healthy food produced by sustainable and healthy communities. There are market gardens near me - the land is just acres and acres of exposed sand. The sprinklers never stop going, the plants are drenched in artificial fertilizers and pesticides (if you’ve seen strawberries grown commercially you might never eat one again). It isn’t really sustainable and it isn’t healthy.
April 30th, 2007 13:57
Surely warm inner glow and public display are possible consumer benefits, with different coffee drinkers gaining one or both.
April 30th, 2007 14:07
Hard to believe it could be more than a luke-warm glow, and have you ever noticed anyone indulging in such a ‘public display’ of buying fairtrade coffee? How did they do it?
April 30th, 2007 14:10
Andrew you could suggest to them that inside the package would be a “I buy Fair trade” sticker that you could stick on your lapel - like when you give to charities rattling a tin on a corner.
April 30th, 2007 14:50
Presumably we could imagine a simpler labelling system than ‘Fairtrade’: you could just have a sign at the front of the supermarket telling shoppers ‘If you want to help the poor, buy anything that doesn’t have a Made in Australia label on it’.
Following that rule of thumb would help lower world inequality, since I’m pretty sure there’s hardly anything in the typical supermarket that comes from a country with a higher GDP than Australia.
April 30th, 2007 15:56
Following that rule of thumb would help lower world inequality, since I’m pretty sure there’s hardly anything in the typical supermarket that comes from a country with a higher GDP than Australia.
Beneficial side effect: Dick Smith’s head would explode. It’s a win-win situation.
April 30th, 2007 17:46
Russell,
I think you are misunderstanding me. I think we should be producing healthy food in a manner that is sustainable. However, there are trade-offs to be made. For example, if organic foods produce half the yield, and everybody wants to eat only that, then we need twice the land area to produce the same amount, or we all starve (or at least eat less) — this is even under the assumption that the land currently unused is equally as productive. Twice the land area means the destruction of huge amounts of the environment, if such land even exists. This simply isn’t a practicle solution in most countries of the world (especially where people already don’t get enough food), and nor does make environmental sense.
No doubt there are a few crops out there that yield very similar amounts when produced organically (even if it takes more effort), or whose consumption is so small, land area doesn’t matter (perhaps this applies to cashew nuts), but that isn’t the case for rice, wheat, and all the other things that people have to eat.
April 30th, 2007 17:56
Very cunning Andrew, since it is we on the left who have many scruples who have to weigh up our desire to buy Australian made (as opposed to Australian ‘produced’ apparently) against helping the foreign poor by buying their goods, as against buying organic etc etc.
I can only bear occasional visits to ‘the typical supermarket’ but nearly everything I buy there comes from countries with I imagine higher GDP than Australia’s: peanut butter from the USA (why did Sanitarium start using plastic containers? - plastic vs glass, more decisions), tamari (gluten free and salt reduced) from Japan, chocolate from Belgium or Switzerland (they have to be considered as just “The EU”) etc etc
April 30th, 2007 18:00
Conrad - what if the food, being properly produced, was more expensive, and therefore people wasted less. Huge, vast amounts of food are bought and thrown out - people should be more ‘economical’. Maybe we’re clearing too much, to produce too much, just to throw it away. Then there’s the issue of how much grain is fed to animals …..
April 30th, 2007 19:34
“Hard to believe it could be more than a luke-warm glow, and have you ever noticed anyone indulging in such a ‘public display’ of buying fairtrade coffee? How did they do it?”
They go onto blogs and tell everyone “I buy fairtrade coffee because presumably it benefits the growers, who are poor”.
Or they get all smug at dinner parties and say, when the coffee is brought out, probably with their eyes closed, “Actually, I only drink Fair Trade coffee. Is that Fair Trade coffee?” and they wear t-shirts that have printed in big letters “Make Trade Fair” and they express their disgust with people who don’t give to charity collectors/beggars with dirty looks and making “Tsk, tsk” sounds.
The way I see it is that buying Fair Trade is another way of conforming to and gaining status in the Left-Wing sub-culture.
April 30th, 2007 19:41
Sinclair, how does the link you provided in comment number 20 on this thread have anything to do with resale price maintennance? It does noit appear to place any restrictions on the retail price of fairtrade coffee in destination countries. All it does is place restrictions on the price paid to producers of the coffee.
April 30th, 2007 19:54
James - until Andrew posted on this topic I’m certain that nobody knew I bought FairTrade coffee - why would anyone care - but as it was the topic, I responded as, probably, the only person in the discussion who did buy it. I’m finding it very hard to believe that anyone has ever flaunted their purchase of FairTrade goods before you or Andrew - have they? I suppose my friends and I are a ‘left-wing sub-culture’ but to think buying Fairtrade groceries would gain anyone status is just laughable. I honestly can’t remember ever hearing it discussed, at all.
People who wear t-shirts with ‘Make Trade Fair’ on them are presumably campaigning on an issue (probably the whole globalisation thing) they think is important. Why would you think it was about status?
April 30th, 2007 20:59
By fixing a price that must be paid to a third party in return for a logo constitutes resale price maintaince under the TPA. The breech occurs, we allege, when the FLO specifies a price to be paid to farmers in return for the use of the Fairtrade logo. (This is a subtly different issue than the normal retail price maintainence economists think of).
April 30th, 2007 21:03
I’m a bit out, Damien, that you’re so dismissive of Tim and I performing our civic duty and reporting our suspicions of potentially unlawful behaviour to the authorities.
April 30th, 2007 21:36
Come off it Sinclair. If he is quoted correctly, Tim claims that he bought the coffee in good faith, fully expecting it to help coffee producers in developiung countries. However, apparently he also bought it because he needed to do so if he was to make a compaint. The two are inconsistent.
According to Clarke and Corones (2005, p. 494):
“In the TPA, resale price maintenance is defined so as to cover those forms of VPF [vertical price fixing] that occur when a supplier fixes, or attempts to fix, or refuses to supply because it has been unable to fix, the minimum sale price of the goods or services sold by its dealers.”
The full definiotion of RPM under the TPA is contained in section 96(3). (See Clarke and Corones (1995, p. 508).)
If you interpret the commodity to be free trade coffee, unless there is a provision in the sale contracts for Australian purchasers that prevents them from reselling the coffee at a price below some specified minimum, then RPM has not taken place. The link you provided did not suggest that such restrictions exist.
If you interpret the commodity as being the free trade certification itself, then I suspect that an argument could be made that retailers who have that certification for some of their coffee can sell it to others at whatever price they see fit, so long as it applies only to the coffee beans that have been certified. As such, the certification will only be useful if it is applied to those coffee beans. This takes you back to the case in which the fair trade coffee is the commodity.
So precisely how does fair trade coffee involve RPM under the TPA?
April 30th, 2007 21:38
The full reference for the book I mentioned in my previous comment on this thread (comment number 38) is:
Clarke, P and SJ Corones (2005), Competition law and policy: Cases and materials (second edition), Oxford University Press, Hong Kong.
April 30th, 2007 22:20
If you read the Act, as opposed to a secondary source, you’ll find a deeming provision that covers Australian importers as if they had committed the original act. You’re concentrating too much on the ephemera and not enough on the alleged breeches of the Act. We have have made three allegations of breech. Our letter is fully referenced to the TPA and links to actions that we allege violate the TPA. It is now up to the appropriate authority to investigate any breech of the law and take appropriate action.
April 30th, 2007 22:29
Sinclair, why don’t you make the letter public? Just going by your comments, it is hard to see how the deeming feature has any relevance. You still have to answer the basic question of how the faitrade organisation breaches the RPM provisions. In what way does it restrict purchasers from subsequently selling the coffee (or some other product) at a price below some specified minimum? What precise product are you talking about? If you are talking about the logo itself, why does your argument apply to fairtrade coffee and not to other products that try to distinguish themselves through branding? Do trademarks violate the RPM provisions of the TPA?
May 1st, 2007 03:02
“Why would you think it was about status?”
For the reasons already outlined on this thread, so-called “Fair Trade” doesn’t benefit improvished people.
All I can think is that the people who buy this stuff, rather than engage in a critical analysis of the effects of their decision (which, admittedly, are marginal anyway), prefer just to buy it in ignorance, and in so doing signal to their Left-wing friends that they are thoroughly concerned, serious, compassionate, Left-wing Citizens of the World. Since they haven’t analysed it critically, they can tell themselves “presumably it benefits the growers”.
May 1st, 2007 06:26
The labelling organisation does not actually sell coffee, they sell labels. One of the conditions on selling the label is a price restriction, Tim and I believe that price restriction is unlawful constituting resale price maintanence under the TPA. Our allegation is not aginst the labelling organisation, but the Australian importer, who is deemed under the act to have done the deed. Now, if the ACCC believe us they will act against the importer and if they don’t they won’t act against the importer on that component of our allegation.
This argument does not apply to organisations branding their own products with their own logos. I have no problem (as you realise) with organisations attempting to increase the value add of their product, or the perceptions of their products. If the logo required increased employee benefits and increased environmental standards only, it would not violate the TPA resale price maintanence provisions. Tim and I allege that the price floor aspect of the logo does violate the TPA.
May 1st, 2007 13:44
Sinclair, they are selling a certification service. In order to be certified, you need to pay producers more so that they can ensure farmers gert a higher price. The certification attaches to coffee that meets this crteria. If you like, you could view the certification as being able to be re-sold to other parties at any price, but those parties would be unable to use it for anything other than the certified coffeee.
This is similar to a product endorsement. If company X hires person Y to endorse their product, is it resale price maintennance if they then cannot sell that endorsement to company Z for use with product W at any price?
May 1st, 2007 13:48
I don’t think your product endorsement analogy works. Now I might be wrong. Maybe the ACCC or the judge will believe your type of argument - time will tell.
May 1st, 2007 14:41
[...] Norton provides some excellent cliometrics on the recent allegation that Fair Trade Coffee isn’t as fair as it’s cracked up to be, [...]
May 1st, 2007 20:28
Interesting finding that Fair Trade actually does help imporve some people’s lives. A 2002 study by Loraine Ronchi of the Poverty Research Unit at Sussex University study “The Impact of Fair Trade on Producers and their Organisations: A case study with Coocafe in Costa Rica”, reviewed 10 years of Fair Trade development with Costa Rican coffee farmers. http://www.fairtrade.net/uploads/media/ronchi_ft_impact_cococafe_costa_rica.pdf
The study found that… “Fair Trade can be said to have accomplished its goal of improving the returns to small producers and positively affecting their quality of life and the health of the organisations that represent them locally, nationally and beyond.”
Specifically the study found,
The FLO model in use with Coocafé sets minimum standards: a floor price and premium for coffee and the requirement that purchases are made from democratically organised small producer organisations. We have seen that in the case of the Costa Rican consortium, some Fair Trade partners, the ATOs in particular, have gone far beyond these criteria in their provision of capacity building and support for Coocafé and its nine primary level co-operatives.
…Although the primary co-operatives still rely on the price differential Fair Trade gives them over their competitors, especially in the current climate of coffee crisis, the consortium itself has furthered itself along the path of autonomy in terms of organisational strength. This is particularly true since the Fair Trade facilitated establishment of its export arm. The co-operatives, with the breathing space allowed them by the steady and oft-superior Fair Trade price, have been able to continue to operate efficiently during a period of crisis for co-operatives and private beneficios alike in the coffee sector. Furthermore, the benefits of belonging to a larger organisation under the common guise of access to Fair Trade markets has improved their leadership and impact on their producer members and the communities.
May 3rd, 2007 03:58
Abolish the ACCC…
May 3rd, 2007 21:42
“Now, if the ACCC believe us they will act against the importer and if they don’t they won’t act against the importer on that component of our allegation.”
Or, Sinclair, they might conclude that your complaint is a stunt designed to make a political point: fair trade bad, free trade good.
Why don’t you complain to them about free range eggs while you’re at it?
May 4th, 2007 07:46
I don’t know about free-range eggs. Please provide information about their allegedly unlawful practices directly to the ACCC.
May 4th, 2007 12:41
Sinclair, how serious is your complaint?
May 4th, 2007 14:11
To add to Sacha’s question: given that everyone’s time is limited and presumably you want to have an influence in the most important areas, why did you pick this? What level of harm is the FairTrade marketing system doing? Aren’t there much bigger fish to fry?
May 4th, 2007 14:45
Sacha - we have actually lodged a formal complaint to the ACCC, and they have responded saying they are looking into our allegations. In our letter we specificed actions and the sections of the TPA that we believe those actions have been violated. In other words, this is a serious complaint. Russell, your point is similar to Rajat’s above. How valuable is my time? To whom? I chose to allocate some of my time to this (all up it took a couple of hours of my time).
May 4th, 2007 15:40
A couple of hours lost to the kind of good works which would have earned you the right kind of karma ……
May 4th, 2007 16:03
Making sure that large multinational corporations do the right thing by consumers is good work. But if you’re concerned about how I do spend most of my time (on “important” issues), then look at page 20 of the Fin Review today. You’ll see an article about the high corporate tax burden and a report into Australian corporate tax. I wrote that report and it’ll come out early next week. So keep an eye out. Or read some of the papers here.
May 4th, 2007 16:06
When I bought my coffee at university today I noticed a small sign I had not noticed before: Fairtrade coffee 30 cents extra, leaving a hefty profit for the retailer in a market perhaps unusually likely to go for this kind of thing.
May 4th, 2007 16:23
“I noticed a small sign I had not noticed before” - so this has been an exercise in what we used to call consciousness raising!
You’re not the first to notice the ripoff:
http://www.ft.com/cms/s/4f7add7e-4126-11da-a208-00000e2511c8.html
May 4th, 2007 16:36
Russell - Yes, I used Tim Harford’s British observation in my original post. But I hadn’t noticed whether the same thing happened here or not; now I can point to at least one example.
May 4th, 2007 16:58
So you did - I came across it again researching the topic - I have all these accounts of the benefits to coffee growers, I’m just too lazy to type them up here. (Maybe Sinclair will be reincarnated as a Timorese coffee grower).
I don’t suppose you bought the Fair Trade coffee? Pity you can’t avail yourself of the warm inner glow and higher status, for just 30 cents - pretty cheap at the price.
May 4th, 2007 17:01
If this were any other complaint against any other multinational like McDonalds, we wouldn’t be hearing all this querying of Sinclair’s priorities. Sinclair would be probably be getting a Man of the Year award from the usual luvvies if the complaint was against McDonalds. But because it’s against ‘Fair trade’ out come the knives. Well, sucked in. The silly law is there and righties have as much right to use it for their political objectives as lefties. If you don’t like it, abolish these consumer protection provisions and let it all be handled by contract.
May 4th, 2007 17:21
“Man of the Year award from the usual luvvies” - that would be Person of the Year ….
May 4th, 2007 17:34
Jason, as far as we know FairTrade was set up to improve the lives of poor people. There are articles in The Economist, Financial Times etc that say it doesn’t do what it’s supporters do and there are articles in peer reviewed journals that say that it does. Let’s say that that point is in dispute. But to compare Fair Trade with McDonalds is silly - they aim to do different things, and indeed do different things. Given what came out of that whole McLibel episode I think McDonalds might have more to do to rehabilitate it’s reputation than the Fair Trade enterprise.
(I’m deprived of any warm glow from boycotting McDonalds, unlike Nestle or Nike, since I never saw any attraction in their product - although that reminds me that a long, long time ago, when travelling in foreign parts I used the Golden Arches as a guide to where you would find both a) a place to cash American Express travellers cheques, and b) a shop that would sell Mars Bars)
May 4th, 2007 19:05
Jason, we don’t yet know whether or not the consumer protection and reseale price maintennance provisions of the TPA have been violated. All we know is that Sinclair and Tim think they have been violated. I suspect that the ACCC takes all complaints it recieves seriously, regardless of their initial view of the validity oif the complaint. they are, after all, a very professional organisation.
My suspicion is that neither complaint has any merit. However, as I have not seen the details of the complaint and I am not an expert in trade practices law, it is quite possible that my suspicion is incorrect.
May 4th, 2007 19:06
Disclosure for my previous comment (number 63 on this thread): I used to work for the ACCC.
May 4th, 2007 21:05
Joshua Gans is someone whose blog does not get the exposure it desreves. Maybe he has lots of lurkers and few commentators. This is what he had to say. Now Joshua is not a liberatarian.
May 4th, 2007 21:17
Now Russell, you know that the road to hell was paved with good intention. The single wheat desk was set up to imprive the lot of Australian wheat farmers. Need I say more?
May 4th, 2007 23:04
You’d need to say a lot more: nobody is forced to buy Fair Trade coffee.
As for ‘the road to hell was paved with good intention’ (from your beloved 18th c. ?) the highway to hell is paved with bad intentions. Keep us informed of the ACCC’s response.
As for Gans and his road congestion charge, he should come to Perth where the government builds new bridges, tunnels and roads and we zip along them with no tolls or extra charges. They seem to have made some mistakes in Sydney and Melbourne.
May 4th, 2007 23:08
I’m not sure that Uncle Milton is right about this being a stunt to send the message “fair trade bad”. An alternative interpretation is that Sinclair and Tim are hoping that Oxfam will need to spend large amounts of money defending the case, providing evidence etc and that this money will then not be available to them to distribute drugs to people suffering from HIV, assist in educating girls, afforestation projects and all the other activities the iPA finds so offensive. In other words it is a SLAPP suit pure and simple. As an Oxfam donor it frustrates me some of my donations will have to be diverted to this, but presumably Sinclair and Tim hope I’ll get frustrated enough to stop donating entirely.
May 4th, 2007 23:21
fs - hopefully Oxfam won’t have to spend anything, the ACCC isn’t a court is it?
May 4th, 2007 23:43
From an unpublished letter (as best I can see) to the Australian
The bit in bold (added) is the argument that supports sweatshops everywhere. But the Fairtrade argument isn’t that they run sweatshops, but that farmers are paid fairly.
Oxfam’s response is here.
May 5th, 2007 04:42
Sinclair, how does paying workers wages that are higher than they can get elsewhere support sweatshops? This does not appear to make any sense whatsoever.
May 5th, 2007 04:45
Sinclair, according to the Oxfam letter for which you provided a link in comment 70 on this thread:
“This latest attack on Oxfam by the IPA was timed to coincide with the start of Fair Trade Fortnight, which celebrates the success of Fairtrade around the world and how it helps lift people out of poverty. It is sad and disappointing that the IPA and Tim Wilson chose to try to ambush this important worldwide event.”
Was this timing deliberate? If so, that would seem to confirm that this is nothing more than a cheap and sleazy publicity stunt on the part of the IPA and its supporters.
May 5th, 2007 07:47
Workers in sweatshops often earn more than they otherwise would, but not as much as they could if they were in the first world. I don’t disapprove of sweatshops, but I suspect Fairtrade coffee drinkers would. So this is the argument that supports sweatshops (not provides support which I think you’re wondering about).
Damien, the rest is character assassination. Providing information to the authorities cannot be ‘cheap and sleazy’. Admit it, when you worked for the ACCC (have you worked for every commie-agency in Australia?) didn’t live in hope that the public would provide information that assisted your efforts? Now, all of a sudden, when the target has ‘good intentions’ this is sleazy?
May 5th, 2007 13:52
From the post: “I’m not sure whether local cafes price discriminate or not with Fairtrade coffee, but even if not it is still for them presumably a useful branding exercise to attract customers who want to appear to have a ’social conscience’.”
In Toby’s Estate cafes (well, at least the one in Potts Pt), one can buy coffee beans, and at least one of the varieties of beans is branded “fairtrade” (I forget which variety - perhaps Timor Leste?). We bought some beans from it a few weeks ago but I’ve forgotten whether the fairtrade beans charged a premium on the non-fairtrade beans.
May 5th, 2007 13:56
Just an extra comment about that quote - I agree that the branding of “fairtrade” has an element of attracting customers who want to either do something positive or show that they’re doing something positive, or buy into a “doing something positive system”.
It’s easy for Sinclair’s complaint to be seen as a political gesture - which it may or may not be - and I’m interested in seeing whether it has merit. I dislike ideological warfare instead of (attempting) to understand the actual situation.
May 5th, 2007 14:01
About the thwarted increase in Brunetti’s rent - I would have thought that if Brunetti’s customers liked the cafe it so much, they could pay sufficient premiums for the “Brunetti’s experience”. Maybe they don’t like the cafe that much.
I certainly pay premiums for the right ambiance.
May 5th, 2007 15:02
Sinclair, I don’t get the bit about sweatshops - the reason I object to sweatshops is the huge difference in the cost of producing the product (especially the wages component), and the cost to the consumer is pocketed as profit which is distributed to already wealthy people. It’s the obscene size of the profit being taken by the rich that is wrong. There’s no comparison with the Fair Trade enterprise. Fair Trade isn’t a tool for funnelling profit to rich people - the money is going the other way.
May 5th, 2007 15:07
Sorry, I’m not being clear. The argument that workers are earning more than they otherwise would have is the argument used to justify sweatshops.
May 5th, 2007 15:30
It’s clear - it’s just not a good argument even when deployed in that different context; and there’s no comparison with Fair Trade because the exploitation thing doesn’t apply. This is charity - it operates precisely to give some people a bit more money. Can you not see the difference between charity and business?
May 5th, 2007 15:32
Russell, what real-life ways would you use to improve the wages of sweatshop workers?
May 5th, 2007 15:45
I’m not the person to ask. Ask the workers if they care whether the organisation paying them below minimum wage, but 25% more than elsewhere, is a for-profit or a charity.
May 5th, 2007 15:52
Boycott the products with campaigns that point out exactly why they are immoral - it works.
I’m asking myself why Andrew/Sinclair and I think so differently about this - and one aspect goes right back to Andrew’s remark that people buy Fair Trade to show off their superior principles. Plus it gives them a warm inner glow of self-approval. Leopold amplified this into status seeking and a desire to feel noble and compassionate. Sinclair thinks the road to hell is paved with good intentions.
So, we have a lot of criticism of good intentions. (BTW Sinclair I’ve always taken that to mean just having good intentions isn’t enough, you have to actually do good things - just what the Fair Trade people are doing!). Apparently people only say they are concerned with justice, equality etc - really that’s just a front for nasty self-aggrandising actions.
Why would people say that? Because they never want a discussion of what’s going on to be in moral terms - we must never use words like greed, duty, charity, justice or equality. There is nothing but market forces - everything else is a sham designed to fleece the bleeding hearts.
I don’t believe it. I think some people are obsessed with money and obsessed with counting. Given a very simple choice, rather than just act according to what seems just or generous without even thinking about it (because it really doesn’t affect you), these people devote their intellectual gifts to trying to find some obscure way to attack the organisation that offers them that choice. It just seems mean.
May 5th, 2007 16:10
Have you asked the people who have the jobs what they want? Perhaps you need to spend some more time in Cambodia and Bangladesh and Tanzania.
Just because a person has a low paid job, doesn’t mean you should take their job away from them, declare youself a moral crusader and lecture poor rural peasants about how happy they are now that they aren’t being “exploited” (read: employed).
If you could find a place of employment in Cambodia that pays U$50 a month I know of plenty of people (friends and friends of friends) who would be more than happy to take that job and would consider you their life long friend because of the help you’ve given them.
Do you want to help them?
May 5th, 2007 16:21
I actually agree with that. What concerns me is the counter-argument to any criticism that says, “But we intend to help the poor. We have good intentions and anyone who criticises us is ’sleazy’”. I don’t think we’re criticising ‘good intentions’ per se, we’re criticising people who use their ‘good intentions’ as a justification for any and all of their actions.
We have to disagree on that. I don’t think that price floors in agricultural markets help the poor at all - not in the long run.
May 5th, 2007 16:54
“Boycott the products with campaigns that point out exactly why they are immoral - it works.”
Does boycotting these products lead to the workers producing them getting higher wages?
May 5th, 2007 19:23
Sinclair,
Thanks for the clarification on sweatshops. It had occurred to me this evening that that might be want you meant, but clearly this was after I had posted the comment. Like you, I don’t necessarily have a problem with sweatshops if they improve the welfare of the workers. However, I don’t think that fairtrade coffee farming qualifies as a sweatshop. It already existed prior to fairtrade coffee and it still exists alongside fairtrade coffee. The only difference is the price paid to the workers.
How is fairtrade coffee equivalent to a price floor? Fairtrade coffee does not prevent the sale of non-fairtrade coffee at lower prices.
You didn’t answer my question about the timing of the complaint!!!
The reason I label it as chrap and sleazy is because I am not convinced that it is a genuine complaint. I wonder whether the complaint was simply aimed at gaining publicity for the IPA? I suspec t that this is the case. This is a separate issue from the question of whether or not the complaints might be valid. As I have indicated previously, I do not think the complaints are likely to be valid. However, I have not seen the letter outlining the complaints and I am not an expert in trade practices law. Indeede, I am not a lawyer. As such, I may be wrong about the likely validity of the complaints.
May 5th, 2007 19:32
As a clarification, when I was thinking about it earlier tis evening, it occured to me that you probably meant that sweatshops are often defended on the grounds that they offer jobs with higher wages to locals than they could previously get. Since the locals choose these jobs, they clearly prefer them. I agree with this line of reasoning. I just don’t think that the term sweatshop applies to fairtrade coffee because the jobs are not new or different. The only thing that has changed is the wage paid to workers.
May 5th, 2007 19:51
Of course, thinking about it further, if the fairtrade coffee allows for price discrimination in developing countries and that increases the profits of cafes and coffee companies, then for people who associate sweatshops with comnpanies pocketing huge profits while paying low wages, perhaps fiartrade coffee farming does qualify asd a sweatshop. Nonethelkess, this does not mean that fairtrade coffee is not doing what it claims. Workers on fairtrade coffee farms get paid more than they would on non-fairtrade coffee farms. As such they are better off. Whether or not workers on non-fairtrade coffee farms are worse off will depend on the impact of fairtrade coffee on the overall demand for coffee and the conditions in the labour markets in coffee producing countries. As a clarification on one of my earlier comments (number 87 in this thread), only the first sentence relates to my thoughts from earlier this evening. The part from “Since the locals —” onwards are subsequent thoughts.
May 5th, 2007 20:33
“I don’t think we’re criticising ‘good intentions’ per se, we’re criticising people who use their ‘good intentions’ as a justification for any and all of their actions.”
No, there was no allowance that people chose FairTrade just because they thought “Oh, I’ll buy this one because the grower will get more money”, and that’s all. It was all about the buyer benefitting themselves, psychologically, by buying it.
I think what you can’t stand is that Fair Trade introduces morality into the economic equation; and I’m starting to wonder if it isn’t because of some sort of refusal to feel guilty when you know you should - for being so mean. I thnk you need to read Dickens’ A Christmas Carol - and then reread it once every year!
Ditto about sweatshops - you need to expand your view to see that the immorality lies with the wealthy owners of capital who exploit workers in poor countries - when I lived in Indonesia you couldn’t belong to a union if you worked in one of those foreign owned sweatshops, and if you tried to form one you were ‘disappeared’ (tortured and then murdered). The fact that really poor people apply to work in sweatshops doesn’t make it right. They do it to eat.
I’ve looked at the literature on Fair Trade and it would be hard to say that it has done much harm - there are accounts of the good that it has done (children going to school whereas they hadn’t previously etc), whereas most of the opponents are claiming, as you are, some possible harm in the future. But in the grand scheme of things, an insignificant part of modern economic life that nobody would bother to waste their time writing to the ACCC about unless they had a very strong ideological prejudice against Fair Trade. And I suspect the prejudice is based on meanness, and a fear that you can’t, morally, justify your views.
Damien: “sweatshops are often defended on the grounds that they offer jobs with higher wages to locals than they could previously get. Since the locals choose these jobs, they clearly prefer them. I agree with this line of reasoning” and miss the moral point. It is not immoral for a local entrepreneur to employ people in a low wage sweatshop if the entrepreneur’s wealth is 5 or 10 times the workers’. It is immoral when the owner’s wealth is 100,000 times the workers’.
I’m blaming the Christian Brothers: you can go to a Catholic school, and maybe get better marks, but the Catholic schools never did have much truck with the Bible, so Sinclair probably never read “And now abideth faith, hope, charity, these three; but the greatest of these is charity.”
May 5th, 2007 20:35
Damien - have you been drinking?
May 5th, 2007 21:45
No. I have not been drinking. Have you?
Would you prefer to have these opportunities removed from from the locals? You need to specify the counterfactual and then determine how feasible it is. I have no problem with people boycotting products that are produced in so called sweatshops in an attempt to get the company to poay more money to thewir employees. But to ban these so called sweatshops might well harm the developing country. The transaction is a Pareto improvement. The workers are better off, The companies shareholders are better off. The consumers are better off. I think you are too quick to condemn something as immoral. What share of revenue should go to workers? What should go to capital? Define fair. Put a number on it.
Your comment in 89 makes you sound like a Marxist. Evil capitalists exploiting noble labour. It is possible that these so called sweatshops do more to improve the welfare of local agencies than many charities. So what if they do it to make a profit in the process? Presumably this provides an incentive for other firms to follow suit. This in turn would allow the wages to bid up over time. Things like trade barriers that restrict the ability of this process to work are potentially very damaging to underdeveloped countries. Unless there is a very good reason for trade barriers, such as concern over health effects with things like BSE, then developed countries would enhance their foreign aid by lowering protection.
It should be clear from my earlier comments that I do not have a problem with things like fair trade coffee. Just like I don’t have any problem with Dolphin safe tuna and other attempts by manufacturers to produce a product that might be desirable to people and achieve other goals. It is called the operatioon of the free market. In the absence of market failures, it improves social welfare.
By the way, you might as well add the Marist Brothers to your list. I went to a Marist Brothers school for much of my school education.
May 5th, 2007 22:13
Maybe I am using a different definition of sweatshops, but I am used to the term where the place in question is driving down wages, rather than up. This is clear in the developed world. Companies shift from employing people on the minimum wage (or higher) to employing a different group in sweatshops. The individuals taking the job gain a small benefit, but the people who lose their jobs in the legal factories suffer a major loss.
The situation is more complex in the developing world where the factories the sweatshops are replacing are usually those in a different country with different economic conditions.
Consequently I am completely opposed to sweatshops in the developed world, but think a more nuanced response is required in the developing world depending on circumstances. However, fairtrade raises overall wages for workers in the industry, rather than reducing them. It’s the exact opposite.
BTW, when did the IPA become opposed to deforestation. I thought they had never met a clearfelling operation they didn’t like.
May 5th, 2007 22:46
Well, Russell, three things.
1) I imagine most people who buy fair trade coffee do think ‘“Oh, I’ll buy this one because the grower will get more money”. Practically no-one would consciously say to themselves ‘I do this thing so as to feel that I’m a good person/show others I am a good person’ - they do it (in their heartfelt view) because they ARE good people and it’s a good thing to do. No-one is suggesting other wise. After all, if you knew you were just doing it to feel good about yourself, you wouldn’t be able to feel good about yourself.
2) I dislike ‘fair trade’ as a term, because it is associated with policies advocated by organised labour that are not fair at all, but rather deeply unfair. They are designed not to ‘help the poor’ but to transfer jobs and incomes from poor countries like Mexico and Indonesia to rich countries like Australia and the US. ‘Fair trade’ (as advocated by Dougie Cameron et al) is one of the most inegalitarian policy propositions ever put forwards, and as such I’m inclined to dislike the use of the term on principle. Given the frequent protestations about ’social justice’ from those advocating these offensive proposals, I’m also inclined to take with a large grain of salt similar assertions from coffee buyers.
In relation to coffee, I haven’t seen the numbers run, but my initial thought is that the most likely effect of ‘fairtrade coffee’ is just a redistribution of income between coffee growers, with some worse off and some better off, rather than any net improvement for coffee growers or for overall poverty. Any benefits would be very, very marginal.
3) And just to clarify - I have doubts as to whether I understood you rightly: a worker being paid sweatshop wages by Nike is evil; the same worker being paid sweatshop wages by Oxfam is fine?
May 5th, 2007 23:25
Marist Brothers! every reason to take to the bottle then …..
Sorry, it must be the party next door that made me think those typos were alcohol induced - otherwise I would have just assumed you were typing in dim light.
Who said I wanted to ban sweatshops? I am saying it is immoral for wealthy companies to pay workers a pittance - and I mean a pittance in the local context - when they are making huge profits out of those workers. They could pay the workers a bit more, they could provide health care, they could build and run a school for the local children, they could pay some attention to OH&S standards in their premises etc etc. Nothing to with with Marxism - it’s morality. Greed is not good.
May 5th, 2007 23:41
nearly there … 100 comments, (not that I’m counting)
Leopold, Nike’s sweatshops were very well documented and the campaigns against Nike had a salutary effect on others. If you find Oxfam is running sweatshops please let me know. I’ve only heard of the good they’ve done running programs that train women to produce craft goods, or get children out of factories and into schools etc.
The wages and coffee thing is obviously a furphy - it’s a subsistence situation: anything the growers / workers get from Fair Trade is a bonus. The anti-Fair Trade fanatics make it sound like the Fair Trade organisations goes in with the aim of under-cutting awards or something. It’s ridiculous.
I’m not sure what the fair trade argument is from Doug Cameron - something about a level playing field in wages and conditions? Anyway I’d be very surprised if organised labour in Australia has any objection to Oxfam’s Fair Trade project.
May 5th, 2007 23:46
I’ll get to 100 by myself
Leopold, upon reading you again I see:
“they do it (in their heartfelt view) because they ARE good people and it’s a good thing to do”
No, we do not have the heartfelt view that we ARE good people. If you’re given a choice and do the right thing it doesn’t necessarily make you a good person.
May 5th, 2007 23:52
Russell, Sorry for the “Marxist” jibe. I agree with much of what you say. However, even if the companies don’t provide these things, the workers are still better off than if they weren’t there. Furthermore, I don’t really think that workets in developed countries lose out in the long run. There might be some short term loss, but ultimately, they find different types of jobs. Both developed and developing countries might potentially gain from such a redistribution of jobs.
May 5th, 2007 23:58
‘the workers are still better off than if they weren’t there”
Not always - things didn’t work out too well in Bhopal.
May 6th, 2007 00:02
I must admit that I do not think that a persons decision to consume either fairtrade or non-feaitrade coffee tells you much about whether or not a person is a good person. I’m not even sure that it is relevant. As a general rule, I work on the premise that most people are good people. As such, most peoplw who consume fairtrade coffee are good people and most people who do not consumer faitrade coffee are also good people.
May 6th, 2007 00:06
They didn’t work out too well in sites of industrial accidents in developed countries either. For example, Harrisbug, Chernobyl, and others. there is also the people who used to work in asbestos mines. Industrial accidents happen. They should be avoided wherever possible reegardless of the location. What has this got to do with development?
May 6th, 2007 00:11
There is a question about appropriate safety standards. Are the appropriate standards in the under-developed countries the same as they are in developed countries? To what extent are safety standards determined by the demands of the population? Is it appropriate for the developed world to tell the developing world that certain activities should be banned on safety grounds, even if doing so makes it harder for their citizens to earn a living? I don’t know the answer to this question.
May 6th, 2007 00:15
100, we can stop now.
Damien I was just using Bhopal as an example of how companies can get away with unsafe practices in poor countries - so they do. Immoral. (I’m going to use the word in every comment).
Wikipedia has: “As a long-term cause of the catastrophe, authorities had tried and failed to persuade Carbide to build the plant away from densely populated areas. Carbide explained their refusal on the expense such a move would incur …. In the early 1980s, the demand for pesticides had fallen: the factory was making a loss and overproducing MIC that was not being sold, leading to a series of cost-cutting measures from around 1982 onwards. These measures affected the two interrelated areas of workers and their conditions, and the equipment and safety regulations installed at the plant” http://en.wikipedia.org/wiki/Bhopal_Disaster
May 6th, 2007 08:54
I’m blaming the Christian Brothers: you can go to a Catholic school, and maybe get better marks, but the Catholic schools never did have much truck with the Bible, so Sinclair probably never read “And now abideth faith, hope, charity, these three; but the greatest of these is charity.”
Sorry, I have read the entire Bible, both the original and the unauthorised sequel. There is nothing wrong with giving money to charity, or spending your own money in any manner you chose, but there is something wrong when charities misrepresent their product. We allege this has happened in the case of Fairtrade coffee. Now the macro claim about the long run effects are probably not actionable (and I have said so before, indeed Oxfam picked on that suggesting that I don’t think our complaint is serious) but we document specific (alleged) violations of the Fairtrade claim and we point to the sections of the Act that prohibit making specific claims that are likely to mislead consumers.
The timing was fortunate and oppourtunistic. We did not plan the submission on the basis of Fairtrade fortnight and then embarrassing Oxfam. We undertook the complaint and discovered expost that Fairtrade fortnight was about to occur and timed the release for the end of the week, as opposed to the beginning of the week. Damien this is a serious complaint that would have occurred anyway. Exploiting farmers is not illegal (perhaps immoral - but that is a value judgement), exploiting consumers in some circumstances is illegal, and Tim and I allege those circumstance have arisen.
May 6th, 2007 08:57
Sorry, meant to put blockquotes around the first sentence from Russel’s comment. Andrew looks like you’re getting your own thread of doom.
May 6th, 2007 09:51
Sinclair - Yes, looks that way. As it still seems civil, I will let it run for a little longer.
May 6th, 2007 12:22
“but there is something wrong when charities misrepresent their product” - - if the Fair Trade people have misrepresented their product, do you think they did so knowingly?
I might disagree with “There is nothing wrong with … spending your own money in any manner you chose” but at 106 comments let’s leave it for another time.
May 6th, 2007 12:32
If they did not know, they should have known. Afterall, the claim is that monitoring takes place.
May 7th, 2007 00:15
Russell, I don’t understand your major point, which seems to be that the owners of sweatshops make inordinate profits from their sweatshops. Now, I’m interested in people having as good lives as they possibly can, which in the case of people who might potentially work in sweatshops, probably means that those people have as good wages as possible. It seems to me that you think that the level of profits of the owners of these businesses is inordinate.
The question it seems to me that you have to answer, is what would be a reasonable level of profits? What distinguishes reasonable from unreasonable? (This is not to say what I think constitutes a “reasonable” level of profits.) What is that basis of your conceptualisation of “reasonable profits”?
It seems to me that the core of this discussion, which I havn’t seen addressed in your comments, is that sweatshops pay people better wages than they otherwise would receive (if they worked elsewhere). The offer to the worker is better than elsewhere. The fact that it is not as good as many people in the west might like probably doesn’t matter much to the people being employed (this is my guess). How can I, or anyone else, “make” companies pay people more?
“I’m not sure what the fair trade argument is from Doug Cameron - something about a level playing field in wages and conditions? Anyway I’d be very surprised if organised labour in Australia has any objection to Oxfam’s Fair Trade project.”
The “fair trade” thing from Doug Cameron (amongst others) that you often hear about is not the coffee “Fair Trade” thing - my understanding about the Doug Cameron et al version of it is that there’s an insistence on minimum labour standards and perhaps environmental standards (unsure of that) before free trade deals are put into effect. In one sense, these “fair trade” deals could be seen as protectionist, which is often why they’re pilloried.
May 7th, 2007 13:20
Sacha - “The offer to the worker is better than elsewhere. The fact that it is not as good as many people in the west might like probably doesn’t matter much to the people being employed” is similar to Leopold’s question “a worker being paid sweatshop wages by Nike is evil; the same worker being paid sweatshop wages by Oxfam is fine?”
My point is that morality isn’t inherent in the dollars and cents, it lies with the person creating the exchange. If Oxfam finds enough money out of its funds to pay some women $1 a day to run a women’s co-op producing craft goods, that’s a good thing; if Nike sets up a factory there and pays women $1 a day, and from their labour makes huge profits, it’s immoral. As to when the line is crossed, well, that varies (and I suppose it’s much easier to judge in others!) but excess is fairly obvious. (Not thinking of fridges filled with champagne as much as gold plated taps etc)
“How can I, or anyone else, “make” companies pay people more?” Creating a demand for Fair Trade products? Naming and shaming companies that exploit their workers?
May 7th, 2007 15:06
If Russell used the words “not nice” instead of “immoral” then the conversation may make sense to more people.
I agree it’s nice to give people money.
But the offer still holds to employ my associates in Cambodia Russell. Only $50/month will make them more than happy. In some cases it will be a 66% pay increase! And if you aren’t able to do that at the moment… do you think the world may be just a bit better if we allow Nike to do it?
Just until you get your funding together.
May 7th, 2007 15:11
If it is immoral to have money and not give it away… then is it also immoral to not earn that money in the first place when you have an opportunity? The consequence is the same and both outcomes are a result of a free choice.
I could choose to work hard and make lots of money. Then I would apparently be “immoral” if I didn’t give x% of it away.
Instead I chose to quit my job and travel the world as a homeless unemployed bum. Consequently I’m not making much money and not giving much to the poor. I am making a decision that makes me better off (ie more happy) but provides less help to the poor. By the above standards (ie it is immoral not to sacrifice my happiness for poor people), it seems that I am more immoral than Nike.
Sorry.
August 11th, 2007 18:34
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July 25th, 2008 11:44
[...] On “Fair Trade” may I suggest the following pieces from Spiked-Online, Andrew Norton, Cafe Hayek and Cato at Liberty. « July 4, 1968. Forty years on! (An Australian [...]