Back when I wrote this post about boycotting most chocolate, I considered writing a follow-up, since I honestly believe that conservatives, especially libertarians, ought to find these sorts of boycotts much easier to accept than they seem to. However, between one thing and another, I didn't get around to it. Today, however, I found (via Brad Plumer) an article in the Economist that I think is wrong, in the very way I had planned to write about. So: here goes.
The Economist makes various points about certain sorts of food that are supposed to be environmentally, socially, or in some similar way better. Organic foods aren't really better for the environment, it argues, citing only "an outspoken advocate of the use of synthetic fertilisers to increase crop yields." (Brad finds counterarguments.) In general, I am completely open to these sorts of arguments. If I have been buying X because I think it's better for the environment, and it turns out that it isn't better for the environment after all, then my supposed reason for buying X vanishes. I'm glad to learn about stuff like that, since my point is to do what's best for the environment.
Likewise -- and more controversially -- I generally do not refrain from buying things on the grounds that the people who pay them are not well enough paid, unless there is an alternative that allows me to buy stuff made by people like the badly paid workers, only better paid. (I.e.: I will patronize cooperatives in Peru over Peruvian sweatshops, but will not switch from products made in Peruvian sweatshops to products made by well-paid Swiss workers on social justice grounds. I just don't see how that would help Peruvian workers at all.)
However, I will absolutely refrain from buying things -- like the chocolate referred to in my earlier post -- that are created using child labor or slaves, or that are horrible for the environment. And I also prefer to buy things made by companies that have decent labor standards. For these reasons, I tend to prefer Fairtrade products when they're available. About this sort of choice the Economist has this to say:
"What about Fairtrade? Its aim is to address “the injustice of low prices” by guaranteeing that producers receive a fair price “however unfair the conventional market is”, according to FLO International's website. In essence, it means paying producers an above-market “Fairtrade” price for their produce, provided they meet particular labour and production standards. In the case of coffee, for example, Fairtrade farmers receive a minimum of $1.26 per pound for their coffee, or $0.05 above the market price if it exceeds that floor. This premium is passed back to the producers to spend on development programmes. The market for Fairtrade products is much smaller than that for organic products, but is growing much faster: it increased by 37% to reach €1.1 billion ($1.4 billion) in 2005. Who could object to that?
Economists, for a start. The standard economic argument against Fairtrade goes like this: the low price of commodities such as coffee is due to overproduction, and ought to be a signal to producers to switch to growing other crops. Paying a guaranteed Fairtrade premium—in effect, a subsidy—both prevents this signal from getting through and, by raising the average price paid for coffee, encourages more producers to enter the market. This then drives down the price of non-Fairtrade coffee even further, making non-Fairtrade farmers poorer. Fairtrade does not address the basic problem, argues Tim Harford, author of “The Undercover Economist” (2005), which is that too much coffee is being produced in the first place. Instead, it could even encourage more production."
This seems to me to miss the point of what most people are doing when they buy Fairtrade. If you check out the Fairtrade website the article refers to, it lists a number of aims. I'm sure addressing "the injustice of low prices" is somewhere on the site, but my cursory examination doesn't reveal it. Rather, the emphasis is on fair trade conditions, eliminating middlemen so that more money goes to producers, decent labor standards, and environmental sustainability. (See this list of aims on the US Fair Trade site, for instance.)
This is important. If, in buying FairTrade stuff, what I was trying to do was just to raise prices, then the Economist's argument might, for all I know, be right. But that's not what I'm doing at all. What I am doing, I think, is exactly what standard economic theory says that consumers do: namely, registering my preferences through my purchasing choices.
I mean: this is such a completely unremarkable thing to do, especially to market-oriented conservatives, that I'm constantly baffled at the pushback it gets. One of the whole points of the market is that, absent market failures, it's a wonderful mechanism for transmitting information about consumer preferences to producers, and for giving producers an incentive to meet those preferences. For instance, I drink Diet Coke, and I prefer to drink it in cans, even though it would undoubtedly be cheaper if I bought it in those big two liter bottles. I assume that it's because there are enough people like me in the US that Diet Coke is available in cans. If people preferred it in some other form -- in little Diet Coke-soaked sponges that we could suck on, or Barney-shaped dinosaur containers, or IV drips, or whatever -- then I assume those would probably appear. But when I buy Diet Coke in cans, I don't normally hear about how strange and spooky it is for me to be trying to influence the market by buying the things I prefer. I don't get long lectures on how my decision to buy Diet Coke in cans will paradoxically cause cans to become unavailable. People normally just say: oh, right, cans. Fine. Some conservatives say: thank God you're allowing the market to register your choices, instead of setting up a central planning mechanism to decide on Diet Coke delivery systems. Some liberals add: I hope you recycle them. (I do.) But normally that's the end of it.
Just as I prefer Diet Coke in cans, I also prefer any product I buy not to be manufactured using child labor, or by slaves. Call me weird, but I do. And I see absolutely no difference, in principle, between taking this preference as a reason not to buy such products and taking my preference for Diet Coke in cans as a reason to buy Diet Coke in cans, except that since we generally don't know a lot about the labor used to manufacture the products we buy, it's not so instinctive. As far as I'm concerned, making decisions about what to buy in the absence of information about the conditions in which it was produced is sort of like buying food in the days before those lovely nutritional labels appeared: you do the best you can and hope it's enough, but more information would definitely be better, since it's information that allows me to more accurately register the preferences I actually have.
And this means that I tend to regard the idea that my buying fair Trade coffee causes Fair Trade prices go up and non-Fair Trade prices to go down as completely unremarkable. I mean, I bet that because of my and others' preferences, Diet Coke in ordinary-sized cans is a lot more profitable than Diet Coke sold in 100 gallon cans. So what? All that shows is that when people value X more than Y, then they will tend to pay more for X, and the price of X will rise. In what way, I ask myself, is this an objection to buying X if you prefer it? And why, in particular, should I think that the fact that Fair Trade coffee, which has a number of features that people value, will command a higher price if those people buy it, while kinds of coffee that have features people don't value will command a lower one, is an objection, rather than just the way markets work?
I think the pushback comes from the fact that this is such a liberal thing to do. But one of the points I was trying to make at the end of my earlier post was: it should be a conservative thing to do as well. Anyone who has a preference for products not produced using child labor should welcome the opportunity to register that fact through the market. And market-oriented or libertarian conservatives, in particular, should (I think) regard this as by far the best way to register these preferences. After all, the alternatives, as with Diet Coke delivery systems, generally involve some sort of state action by which our preferences can be enforced. One does not have to choose between these two: one can both advocate for child labor laws throughout the world and refuse to buy stuff made with child labor. But anyone who feels leery of the governmental solutions has, I would have thought, a special reason to hope that the market-oriented solution works, and to encourage it.
One last point: over at Unfogged, Fontana Labs wrote (in response to my earlier post):
"This is difficult territory for me because I loathe people who make a show of their virtue with self-righteous lectures about where that came from and of course consistency pressures on this sort of reasoning lead one to be unable to do much of anything, but, on the other hand, kids with machetes. "
I don't like those people much myself. How fortunate, then, that I can just decide only to buy Cadbury or FT chocolate without turning into one ;) I mean: really, all you have to think is: "but, on the other hand, kids with machetes." You don't have to go around hectoring people, or sighing audibly when they make some choice that you wouldn't make. Nor, for that matter, do you have to become a liberal. You certainly don't have to devote any appreciable amount of time or emotional energy to the task of not buying Hershey's chocolate -- I have been not buying any for hours now without even noticing -- or be wracked by liberal guilt.
If I thought I had to choose between my sense of humor and having kids yanked out of school and sent to pick cocoa, or dragooned into armies, or hacked with machetes, I hope I'd choose the kids, but it would be a gloomy and miserable choice to have to make. Luckily, though, it hasn't come to that.