Fair Trade v Free Trade
The new cafeteria was dedicated today at my daughter's school. The students presented skits and choir songs to celebrate and several important people gave long talks about how the dedication ceremony was to be by the students, for the students.
The students were collecting money for poor children in Bolivia and promoting "Fair Trade", a line of overpriced products imported from third world countries, supposedly priced to give the farmers in those countries a fairer price for their products.
I can't help but wonder how much of the money will actually get to the intended recipients.
The best thing that could be done for the farmers and workers in the third world would be not to promote fair trade but to allow free trade. The European farmers are so heavily subsidized that European sugar and milk is cheaper in Africa than the local products. Remove these subsidies, eliminate tariffs, and allow all producers to compete on a level playing field. That would be the way to help.
Something would also need to be done about corruption as well. Corruption is a major problem in many third world countries today. Aid often ends up lining the pockets of dictators, grain is sold on the open market instead of be delivered to the needy. The leaders live in luxury while the people starve.
After the markets are open, the people need to be encouraged to revolt and install a democratic republic in their countries, based upon the principles of liberty that America was built on, so that they can take advantage of the free markets.
European farmers and consumers may be hurt in the short run, with lower profits for the farmers and higher prices for the consumers (the higher prices for the consumers would only be at the cash register. The real prices would be lower, because less tax revenue would be going to pay for the products).
Eventully the situation would balance out, in favor of the third world and Europe. and America as well, I should think! Increased profit for the third world would increase the funds the people have available for consumer good, creating a demand for American and European industrial products. Greater technology would increase productivity on the third world farms, lowering prices for the European and American markets.
As a bonus, I believe that the increased prosperity would encourage peace in the world, as then the people would have more to lose, and would then be too dependent on the other countries for their prosperity. The people would be less likely to tolerate dictators, as a threat to the new-found prosperity as well.
The preceding is my opinion based on an incomplete knowledge of free market theory and supply side economics, as promoted by Adam Smith and Jean Baptiste Says.
Learn more at The Proceedings of the Friesian School,
Fourth Series
The students were collecting money for poor children in Bolivia and promoting "Fair Trade", a line of overpriced products imported from third world countries, supposedly priced to give the farmers in those countries a fairer price for their products.
I can't help but wonder how much of the money will actually get to the intended recipients.
The best thing that could be done for the farmers and workers in the third world would be not to promote fair trade but to allow free trade. The European farmers are so heavily subsidized that European sugar and milk is cheaper in Africa than the local products. Remove these subsidies, eliminate tariffs, and allow all producers to compete on a level playing field. That would be the way to help.
Something would also need to be done about corruption as well. Corruption is a major problem in many third world countries today. Aid often ends up lining the pockets of dictators, grain is sold on the open market instead of be delivered to the needy. The leaders live in luxury while the people starve.
After the markets are open, the people need to be encouraged to revolt and install a democratic republic in their countries, based upon the principles of liberty that America was built on, so that they can take advantage of the free markets.
European farmers and consumers may be hurt in the short run, with lower profits for the farmers and higher prices for the consumers (the higher prices for the consumers would only be at the cash register. The real prices would be lower, because less tax revenue would be going to pay for the products).
Eventully the situation would balance out, in favor of the third world and Europe. and America as well, I should think! Increased profit for the third world would increase the funds the people have available for consumer good, creating a demand for American and European industrial products. Greater technology would increase productivity on the third world farms, lowering prices for the European and American markets.
As a bonus, I believe that the increased prosperity would encourage peace in the world, as then the people would have more to lose, and would then be too dependent on the other countries for their prosperity. The people would be less likely to tolerate dictators, as a threat to the new-found prosperity as well.
The preceding is my opinion based on an incomplete knowledge of free market theory and supply side economics, as promoted by Adam Smith and Jean Baptiste Says.
Learn more at The Proceedings of the Friesian School,
Fourth Series
posted by
Mainer in Exile | 8:24 PM
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