Fair Trade - More Liberal Mumbo Jumbo
Throughout our history there are examples of those opposed to trade. Today both liberals and conservatives call for restrictions on trade for their own reasons.
Liberals now talk about fair trade. The word "fair" is so overused it has lost any meaning it ever had. That makes it a great word for liberals because they can use it for whatever they want. It doesn't have to mean anything and that fits well with most of what liberals rant about. Don't worry - I'll get to the conservatives in a little while.
Since it has no meaning, it is mainly used to impose restrictions on trade from other countries. These countries are almost always poorer than we are. Apparently liberals in American want to protect poor people in other countries from the dangers of working to earn money.
But let's get more into it. I searched Google for "fair trade" and came up with this site: http://www.fairtradefederation.org/
There are some great bits on this site. For example:
FAIR WAGES: ... workers are paid at least that country's minimum wage. Since the minimum wage is often not enough for basic survival, whenever feasible, workers are paid a living wage, which enables them to cover basic needs, including food, shelter, education and health care for their families. Paying fair wages does not necessarily mean that products cost the consumer more. Since Fair Trade Organizations bypass exploitative middlemen and work directly with producers, they are able to cut costs and return a greater percentage of the retail price to the producers.
So the first part of fair trade is that workers are paid fair wages. And fair wages are "at least" the minimum wage. This doesn't even make sense. If there is a minimum wage, workers can't be paid less than that amount anyway. So that one's meaningless. But now we're not satisfied with minimum wage anymore, so "whenever feasible" they get a "living wage."
Um, who decides when it's feasible? And what's "living wage" anyway? if the wage they're getting is not a living wage, then presumably the workers die. That's not good business for an employer, so the employer will always pay a living wage. What the liberals are really saying is that they want the workers to get more than a living wage, but they use the term "living wage" because it sounds better. Now I'm sure the workers all want to get paid a better wage, but they do have to eat. So if they're not getting any wage because these liberals love them so much they want to cut off any trade to protect them from earning enough to eat. You gotta love the do-gooder liberal methods.
My favorite part is the reference to the "exploitative middlemen." Isn't that a common attack on Jews? And I thought there were a lot of liberal Jews. This is a complete denial of a whole segment of the world economy - those rotten middlemen. I wonder why these liberals don't save defendants from having to deal with those exploitative criminal defense lawyers who dare to charge a fee to try to keep them from jail.
And before I move on, I like the fact that this does notnecessarily mean it will cost the consumer more. Right. Not necessarily. It will cost more in almost every case, but there will be one or two cases where it costs the same. Liberals are uninterested in consumers. It's all about the poor workers (who never consume anything).
Next:
COOPERATIVE WORKPLACES
Cooperatives and producer associations provide a healthy alternative to large-scale manufacturing and sweatshops conditions, where unprotected workers earn below minimum wage and most of the profits flow to foreign investors and local elites who have little interest in ensuring the long term health of the communities in which they work. Fair Trade Organizations work primarily with small businesses, worker owned and democratically run cooperatives and associations which bring significant benefits to workers and their communities. By banding together, workers are able to access credit, reduce raw material costs and establish higher and more just prices for their products. Workers earn a greater return on their labor, and profits are distributed more equitably and often reinvested in community projects such as health clinics, child care, education and literacy training. Workers learn important leadership and organizing skills, enabling self-reliant grassroots-driven development. Safe and healthy working conditions are maintained and producers gain greater control and decision making power over the use of their local resources.
Remember before where it won't raise the cost to consumers? Now it says the workers can "establish higher and more just prices for their products." And who gets to decide what makes the price "just." If the price is higher, isn't the consumer going to think that's unjust?
Read that paragraph with a cynical eye and you will see communism leaping out at you. This is also a complete denial of the benefits entrepreneurs bring to society. Bill Gates doesn't run his company democratically, but strangely you rarely hear all those starving Microsoft millionaires complaining about how they were exploited. The computer industry is a shining example of what happens when entrepreneurs are not shackled by excessive regulation. The combination of freedom and opportunity creates wealth beyond anything cooperative institutions could ever create.
But wait, there's more ...
CONSUMER EDUCATION
Fair Trade Organizations educate consumers about the importance of purchasing fairly traded products which support living wages and healthy working conditions. By defining fair trade and conducting business in a manner that respects workers' rights and the environment, the fair trade movement strives to educate consumers about the often hidden human costs of their "bargains." By providing information about producers' history, culture and living conditions, Fair Trade Organizations enhance cross-cultural understanding and respect between consumers and communities in the developing world. They also educate consumers and policy makers about inequities in the global trading system.
You see, all those Walmart, Target and Home Depot shoppers don't really want lower prices. They want to pay more. I can see the circulars in next Sunday's paper: "Sale - everything in our store is now 25% more expensive, to make sure Apu in Bangladesh can buy an extra serving of rice for his family next week." Yeah, that store's going to do well.
That's enough. I'm sick of that pablum.
Meanwhile a more traditional liberal attack on free trade appeared in Wednesday's Wall Street Journal. Democratic Senator Byron Dorgan wrote a letter defending his anti-trade book. As he puts it, his "book takes on the $800 billion-a-year, out-of-control trade deficits ... [and] pulls back the curtain on incompetent trade agreements that sell our country short by paving the way for outsourcing American jobs and running up crushing trade deficits." Dorgan says that these trade deficits will have significant and dangerous consequences to our economy and our future.
So trade deficits are both out-of-control and crushing. For a bit of history on trade deficits, see http://economics.about.com/od/foreigntrade/a/trade_deficit_h.htm. Wikipedia also has a good summary at: http://en.wikipedia.org/wiki/Balance_of_trade#United_States_trade_deficit
In short, our last trade surplus was in 1975, about $12 billion. By 1987 our trade deficit had "swelled" to $155 billion. And in the last five years our trade deficit has exploded to nearly $800 billion. For those of us old enough to remember, trade deficits in the 1980s were used to support Japan-bashing rhetoric. The trade deficit was destroying America. Let's think about this a bit. Hmm. What was life like in 1975, 1987, and how does that compare to today? Since we actually had a trade surplus, life must have been much better in 1975 than it is today, right? And since the trade deficit is now four times as large as 1987, we must be doing much worse now.
Let's talk about jobs in this context. I used http://data.bls.gov/PDQ/servlet/SurveyOutputServlet for some statistics. In the golden year of 1975, unemployment was at 8% and rising. In 1987 it was below 7% and declining. Now it's below 5% and declining. To quote Johnnie Cochrane: "If it doesn't fit - you must acquit." The trade deficit is not guilty. On most measures of the economy, we are much better off today than we were 30 and 20 years ago. My brother has a great quip on trade deficits. "They give us stuff. We give them paper." Hey, if those suckers want to give us stuff for paper, let's keep that ball rolling.
But you do have to give Dorgan credit for consistency. I did a search and found this from the Times Union on December 21, 1994:
These statistics paint a very ugly picture of a trade strategy that is weakening this country. We are seeing a trade deficit that is nearly running out of control, especially with Japan and China.'' said Sen. Byron Dorgan, D-N.D., who fought unsuccessfully earlier this month to block congressional passage of GATT.
Twelve years later and Dorgan is still beating the same drum. You'd think after 12 solid years of these out-of-control trade deficits we'd really have crashed by now. Meanwhile his home state of North Dakota is struggling under the pressure of these trade deficits with its unemployment rate now down to 2.4%. Poor North Dakota. Wait a minute. Low unemployment is a good thing. Hmm. I wonder what New York's trade deficit is with North Dakota. Maybe we need some Dakota bashing here.
As for the current fun of China bashing. In the 80s it was Japan bashing. In the 90s it was NAFTA and Mexico bashing -- remember the giant sucking sound? The Mexicans are still wondering where their jobs are. Now there's a blend of bashing China for manufacturing and India for services. With all the liberals concern for the poor, where's their concern for the poor in those countries? All of this trade is very good for the people in those countries who are really poor. I'm sick of people whining about the poor in our country. One of poverty's biggest problems here now is obesity. Please. I have poor clients. They've got running water, cable TV, cell phones, etc. Their problems are primarily social, not economic. I want to know how come the Canadians keep getting off without any Canada bashing.
I'll get to the so-called conservatives and their trade idiocy in the next post.
Liberals now talk about fair trade. The word "fair" is so overused it has lost any meaning it ever had. That makes it a great word for liberals because they can use it for whatever they want. It doesn't have to mean anything and that fits well with most of what liberals rant about. Don't worry - I'll get to the conservatives in a little while.
Since it has no meaning, it is mainly used to impose restrictions on trade from other countries. These countries are almost always poorer than we are. Apparently liberals in American want to protect poor people in other countries from the dangers of working to earn money.
But let's get more into it. I searched Google for "fair trade" and came up with this site: http://www.fairtradefederation.org/
There are some great bits on this site. For example:
So the first part of fair trade is that workers are paid fair wages. And fair wages are "at least" the minimum wage. This doesn't even make sense. If there is a minimum wage, workers can't be paid less than that amount anyway. So that one's meaningless. But now we're not satisfied with minimum wage anymore, so "whenever feasible" they get a "living wage."
Um, who decides when it's feasible? And what's "living wage" anyway? if the wage they're getting is not a living wage, then presumably the workers die. That's not good business for an employer, so the employer will always pay a living wage. What the liberals are really saying is that they want the workers to get more than a living wage, but they use the term "living wage" because it sounds better. Now I'm sure the workers all want to get paid a better wage, but they do have to eat. So if they're not getting any wage because these liberals love them so much they want to cut off any trade to protect them from earning enough to eat. You gotta love the do-gooder liberal methods.
My favorite part is the reference to the "exploitative middlemen." Isn't that a common attack on Jews? And I thought there were a lot of liberal Jews. This is a complete denial of a whole segment of the world economy - those rotten middlemen. I wonder why these liberals don't save defendants from having to deal with those exploitative criminal defense lawyers who dare to charge a fee to try to keep them from jail.
And before I move on, I like the fact that this does not
Next:
Cooperatives and producer associations provide a healthy alternative to large-scale manufacturing and sweatshops conditions, where unprotected workers earn below minimum wage and most of the profits flow to foreign investors and local elites who have little interest in ensuring the long term health of the communities in which they work. Fair Trade Organizations work primarily with small businesses, worker owned and democratically run cooperatives and associations which bring significant benefits to workers and their communities. By banding together, workers are able to access credit, reduce raw material costs and establish higher and more just prices for their products. Workers earn a greater return on their labor, and profits are distributed more equitably and often reinvested in community projects such as health clinics, child care, education and literacy training. Workers learn important leadership and organizing skills, enabling self-reliant grassroots-driven development. Safe and healthy working conditions are maintained and producers gain greater control and decision making power over the use of their local resources.
Remember before where it won't raise the cost to consumers? Now it says the workers can "establish higher and more just prices for their products." And who gets to decide what makes the price "just." If the price is higher, isn't the consumer going to think that's unjust?
Read that paragraph with a cynical eye and you will see communism leaping out at you. This is also a complete denial of the benefits entrepreneurs bring to society. Bill Gates doesn't run his company democratically, but strangely you rarely hear all those starving Microsoft millionaires complaining about how they were exploited. The computer industry is a shining example of what happens when entrepreneurs are not shackled by excessive regulation. The combination of freedom and opportunity creates wealth beyond anything cooperative institutions could ever create.
But wait, there's more ...
Fair Trade Organizations educate consumers about the importance of purchasing fairly traded products which support living wages and healthy working conditions. By defining fair trade and conducting business in a manner that respects workers' rights and the environment, the fair trade movement strives to educate consumers about the often hidden human costs of their "bargains." By providing information about producers' history, culture and living conditions, Fair Trade Organizations enhance cross-cultural understanding and respect between consumers and communities in the developing world. They also educate consumers and policy makers about inequities in the global trading system.
You see, all those Walmart, Target and Home Depot shoppers don't really want lower prices. They want to pay more. I can see the circulars in next Sunday's paper: "Sale - everything in our store is now 25% more expensive, to make sure Apu in Bangladesh can buy an extra serving of rice for his family next week." Yeah, that store's going to do well.
That's enough. I'm sick of that pablum.
Meanwhile a more traditional liberal attack on free trade appeared in Wednesday's Wall Street Journal. Democratic Senator Byron Dorgan wrote a letter defending his anti-trade book. As he puts it, his "book takes on the $800 billion-a-year, out-of-control trade deficits ... [and] pulls back the curtain on incompetent trade agreements that sell our country short by paving the way for outsourcing American jobs and running up crushing trade deficits." Dorgan says that these trade deficits will have significant and dangerous consequences to our economy and our future.
So trade deficits are both out-of-control and crushing. For a bit of history on trade deficits, see http://economics.about.com/od/foreigntrade/a/trade_deficit_h.htm. Wikipedia also has a good summary at: http://en.wikipedia.org/wiki/Balance_of_trade#United_States_trade_deficit
In short, our last trade surplus was in 1975, about $12 billion. By 1987 our trade deficit had "swelled" to $155 billion. And in the last five years our trade deficit has exploded to nearly $800 billion. For those of us old enough to remember, trade deficits in the 1980s were used to support Japan-bashing rhetoric. The trade deficit was destroying America. Let's think about this a bit. Hmm. What was life like in 1975, 1987, and how does that compare to today? Since we actually had a trade surplus, life must have been much better in 1975 than it is today, right? And since the trade deficit is now four times as large as 1987, we must be doing much worse now.
Let's talk about jobs in this context. I used http://data.bls.gov/PDQ/servlet/SurveyOutputServlet for some statistics. In the golden year of 1975, unemployment was at 8% and rising. In 1987 it was below 7% and declining. Now it's below 5% and declining. To quote Johnnie Cochrane: "If it doesn't fit - you must acquit." The trade deficit is not guilty. On most measures of the economy, we are much better off today than we were 30 and 20 years ago. My brother has a great quip on trade deficits. "They give us stuff. We give them paper." Hey, if those suckers want to give us stuff for paper, let's keep that ball rolling.
But you do have to give Dorgan credit for consistency. I did a search and found this from the Times Union on December 21, 1994:
Twelve years later and Dorgan is still beating the same drum. You'd think after 12 solid years of these out-of-control trade deficits we'd really have crashed by now. Meanwhile his home state of North Dakota is struggling under the pressure of these trade deficits with its unemployment rate now down to 2.4%. Poor North Dakota. Wait a minute. Low unemployment is a good thing. Hmm. I wonder what New York's trade deficit is with North Dakota. Maybe we need some Dakota bashing here.
As for the current fun of China bashing. In the 80s it was Japan bashing. In the 90s it was NAFTA and Mexico bashing -- remember the giant sucking sound? The Mexicans are still wondering where their jobs are. Now there's a blend of bashing China for manufacturing and India for services. With all the liberals concern for the poor, where's their concern for the poor in those countries? All of this trade is very good for the people in those countries who are really poor. I'm sick of people whining about the poor in our country. One of poverty's biggest problems here now is obesity. Please. I have poor clients. They've got running water, cable TV, cell phones, etc. Their problems are primarily social, not economic. I want to know how come the Canadians keep getting off without any Canada bashing.
I'll get to the so-called conservatives and their trade idiocy in the next post.
posted by Albany Lawyer at 8:47 PM
5 Comments:
Good post Warren
It’s amazing that this same argument has been going on for ages. It disposes of the belief that there has been evolution in human thought when it comes to economic and social concerns. The contradictory statements of the modern liberals are so ludicrous, it hard to believe they actually believe the crap that comes out of their mouth, but I’m afraid their victims do regardless.
Of course it’s just a con-game being foisted upon the masses for the financial and political benefit of those elite Fair Traders and their do-gooder politicians. Leave it too them to regulate trade, the middle class and poor consumers and workers will both be harmed everywhere, as it has been proven they have already.
Frédéric Bastiat, a classical liberal (the opposite of a modern liberal) was debunking the same nonsense about trade back in the mid-19th Century by the socialists (the equivalent of a modern liberal) in France. He wrote about the "exploitative middlemen" nonsense too:
“The socialists are merely being ridiculous when they rant against the middleman. Does he impose his services by force? Has he other means at his disposal than to say: "I shall cost you something in the way of pains, but I shall save you more"? How, then, can he be called a parasite, or even a middleman?“
Would the middleman exist at all if he was a detriment to the consumer’s interests? Since the world is full of middlemen; brokers, distributors, merchants ect…, I guess they perform a positive function that the producers will not or cannot perform with the same efficiency in the market that the consumer demands.
Of course, what the Fair Traders really want is their own parasitic middlemen entered into the equation, the government bureaucracies, tariffs and regulations. And like Bastiat also said: “which of the two—the merchant or the public official—is the less demanding parasite?”
This post is one of the silliest things I've read on the intertubes in a while. You write that the term "fair trade" as used by "liberals" means imposing restrictions on foreign trade. You then proceed to use text from the Fair Trade Federation as your proof.
Just to let you know: The Fair Trade Federation is an organization that exists to promote foreign trade (just not in a way that you like), so maybe it wasn't such a good idea to use them as an example of an organization trying to hinder trade. (I'm not associated with them in any way, but it's obvious from perusing their site that they exist for the purpose of bringing goods from the developing world to the developed world, otherwise known as "foreign trade".)
To address just a few of the "points" in your post:
So the first part of fair trade is that workers are paid fair wages. And fair wages are "at least" the minimum wage. This doesn't even make sense. If there is a minimum wage, workers can't be paid less than that amount anyway. So that one's meaningless. But now we're not satisfied with minimum wage anymore, so "whenever feasible" they get a "living wage."
You are either being deliberately obtuse here, or you are showing a surprising lack of understanding. Obviously, the point is that the minimum wage serves as a starting point. Members of the Fair Trade Federation look to exceed this wage when it is not appropriate in their eyes, where others typically look to exploit it.
Um, who decides when it's feasible? And what's "living wage" anyway?
You are being deliberately obtuse again when you say "and what's 'living wage' anyway?" Give me a break. They explain it right after they mention it: "...workers are paid a living wage, which enables them to cover basic needs, including food, shelter, education and health care for their families." What is so hard to understand here? Just because you don't like their definition doesn't mean you should play dumb, as though it was not explained.
if the wage they're getting is not a living wage, then presumably the workers die. That's not good business for an employer, so the employer will always pay a living wage.
That made me laugh out loud. You should try saying that out loud, in front of people, to understand how absurd that sounds.
What you are saying is that you don't like the Fair Trade Federation's definition of "living wage", and would like to substitute your own. Since you say that "if the wage they're getting is not a living wage, then presumably the workers die," then I guess your definition is "enough so that the workers don't die."
What the liberals are really saying is that they want the workers to get more than a living wage, but they use the term "living wage" because it sounds better.
First of all, "the liberals" aren't saying anything, the Fair Trade Federation is. You might consider them "liberal," but I wasn't aware that they were now known as "the liberals," as though they were elected to represent all "liberals," whatever that means.
That sneaky Fair Trade Federation, framing "living wage" as "[enabling workers] to cover basic needs, including food, shelter, education and health care for their families," instead of your definition, "enough so that the workers don't die." Well, you've sure caught them on that one. It certainly is quite the public service you have provided, uncovering their secret meaning of the phrase "living wage," which they hide in plain sight in the second sentence of the text you cite.
Imagine the gall of those "liberals" as you call them, defining "living wage" as anything more than what staves off death for another day! How unreasonable!
When I hear someone say, "I make a living doing X," I don't think, "Oh, that person makes at least enough to sustain their biological life functions." Duh, that much is obvious. Making a living is not the same as making enough to not die. If you cannot understand this, there is not much hope for you.
Now I'm sure the workers all want to get paid a better wage, but they do have to eat. So if they're not getting any wage because these liberals love them so much they want to cut off any trade to protect them from earning enough to eat. You gotta love the do-gooder liberal methods.
This paragraph doesn't even make sense. The first sentence is self-evident. Yes, I will agree that workers want to get paid a better wage (duh), and they do want to eat (double duh).
The second sentence is some kind of run-on/question/statement thing, which is quite difficult to parse. I think what you are trying to say is that "liberals" want to cut off all trade, therefore the worker won't be able to eat, let alone receive better wages. I notice that you don't mention at all why "fair trade" as advocated by the Fair Trade Federation (your sterling example, not mine) somehow means that they want to starve workers. To the contrary, the text that you cite from the Fair Trade Federation states just the opposite.
That's a really tight argument you make there--that an organization whose members commit to pay a living wage, which they define as "[enabling workers] to cover basic needs, including food, shelter, education and health care for their families," somehow means that in actuality, they support policies that would starve these same workers. I looked on their site for any indication that they want to "cut off trade", but found just the opposite.
I can't go on, the ridiculousness just keeps rolling on through the rest of your post, and I'd like to get some work done tonight.
Let me know if you ever thought about this: If the Fair Trade Federation members have things so wrong, shouldn't the market take care of it?
Farmers and craftspeople in developing countries wouldn't work with Federation members if they were getting a raw deal. Consumers wouldn't buy the products from member companies if they were getting a raw deal. A company wouldn't become a member in the first place, agreeing to adhere to the Federation's principles, if they didn't think they could sell the products they were importing. The whole thing is voluntary all around. Seems to me the whole project would just vanish if it were disadvantageous to consumers, members, and producers, but it hasn't. People choose this alternative, even though they have to go out of their way to do so. Why is this?
Responding to Rescate ...
I merely used the Fair Trade Federation website to define the term "fair trade" and the concepts surrounding fair trade. I did not suggest that the FTF aims to impose "fair trade" rules through government regulation, and I was not attacking FTF itself.
Rescate avoids the reality that many liberals in Congress and elsewhere in Congress seek to impose so-called "fair trade" rules. I agree that the Fair Trade Federation should be free to try using its methods in markets, and if it works and the markets support that, great. We can assume from Rescate's comment that he does not advocate imposing "fair trade" rules on markets, but merely supports voluntary approaches like the FTF's. If so, then we actually agree.
I can't just let the semantic argument about living wage pass though. Living wage is a term coined by liberals to support a position that does not make economic sense. They coined the term in a calculated manner to be appealing politically. The term "living wage" is an empty one that has no meaning in economics. It's a fiction used to advance certain political goals of the left, mainly the far left.
Agree with most of what Warren says. Liberals usually ignore the fact that the free market is what creates wealth.
However, I don't totally agree with his attack on the Fair Trade movement, which is, after all, an attempt to convince consumers to VOLUNTARILY purchase certain items rather than others out of a sense of social responsibility. Consumers get to weight the Fair Trade certification against price, quality, advertising, pretty packaging, and all the other factors that lead to a buying decision.
I agree that the attack against "exploitive" middlemen is silly. Middlemen perform valuable functions or the free market would have eliminated them. These include packaging, distribution, and maintaining inventory (which limits price flucuations). These services all have costs.
Can't agree with Warren's living wage critique. Companies will pay a subsistence wage if they can, which is just enough keep the workers alive. I wouldn't call that "living", would you? Would that be good enough for your family?
Responding to Dave L's comment:
I'm not attacking those who seek to advance "fair trade" as a voluntary thing. It's those who want to impose "fair trade" as a government tool for protectionism.
Turning to living wage, I do agree that companies will pay as little as they have to pay. If we keep maintaining and erecting trade barriers against products and services from poorer countries, the workers there will have fewer opportunities and the companies that are there will have less competition for labor and so will pay less.
If a worker doesn't like the wage offered by the company that employs him, he can leave the job. And if it's the best he can do, then he can suck it up and do his best to raise his kids so they can do better. My ancestors did it and so did yours.
Over the course of human history, there really was any government mandated "living wage" or minimum wage requirement. Somehow our ancestors got us here without that. And somehow today's liberals think we need it now.
As the owner of a small business, I want to know whether the government will guarantee a living wage to me and other small business owners. So far all I can see is government imposing requirements on me, with no benefits to me - except of course the privilege of paying taxes. Ever wonder why small business owners aren't clamoring for a higher minimum wage? Because it's hard enough to run a business without the government telling you how you have to do it.
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