Economics Questions

Re: Is fair trade protectionism?

Arend — Mon, 25 Jan 2010 08:18:58 GMT

Jonathan M. F. Catalán:

What's the difference between the two?

In the first case you use the word "force" in the right way, in the second case you do not.

Brings me back to IP, IP actually asks two (or maybe even more) questions namely the economic analysis on fair trade, and the libertarian analysis on free trade. Although maybe the bulk of the people here are austro-libertarians, we should not mix these two analyses up. Libertarian question: is there coercion involved? Austrian/economic question: given the answer regarding the libertarian question, what does this fair trade institution mean for human action (theoretically and empirically)?

Re: Is fair trade protectionism?

Jon Irenicus — Mon, 25 Jan 2010 05:25:07 GMT

If it's a matter of policy, it is. If it is a voluntarily undertaken thing, like a firm patronising African farmers at "fair wages" to appease its consumers, it's not.

Re: Is fair trade protectionism?

Jonathan M. F. Catalán — Mon, 25 Jan 2010 05:19:22 GMT

Randy,

What is against libertarianism is having a government force a company to print on their product where it was produced. I understand your argument that by doing so you only help the consumer make a better choice, but all the same you could apply the same logic to a wide variety of regulations which I am sure you would not support. The fact of the matter is that individuals do not operate with perfect information, and this includes labeling where the product was manufactured.

Now, if there was a large consumer movement where they opted to purchase products that were labeled, thus forcing manufacturers who did not label products to change their procedures, then that is a different question entirely.

What's the difference between the two?

In the first case, the company was not necessarily responding to consumer demand, and thus did not make the decision to change manufacturing procedures voluntarily. Quite to the contrary, they were coerced into accepting a regulation. In the second case, the company voluntarily began to print the source of their good to meet consumer demand.

Re: Is fair trade protectionism?

Randy345 — Mon, 25 Jan 2010 05:03:44 GMT

Some of my remarks to your post that I made on Facebook may not have been understood without going to your post or following the thread all the way through. Although I agree that labeling a product as "fair trade" is subjective and puts the connotation that anything without this label should not be bought.This is totally against free or fair trade..All I am saying that a label of origin of a foreign product is in no way unconstitutional or even immoral.Giving a United States citizen free choice in how they spend their money should not be discouraged. Ron Paul just voted against military aid to Haiti and I agree with him.It's not the federal government's job to be spending our money,which by the way we have to borrow,on another country.To the post that no one is forcing these people to work for slave wages or less is asinine and a childish remark. What are we to do let them starve was clearly rhetorical. I have donated to Haitian relief and currently donate locally to a food bank.Here's the point.It's my money not someone else's. A label on country of origin only gives me information that "I" can spend "MY"money the way I wish.How that can offend anybody that believes in Menger or Mises or a libertarian view I just don"t understand.

Re: Is fair trade protectionism?

Jonathan M. F. Catalán — Sun, 24 Jan 2010 23:14:40 GMT

Some interesting discussion is occurring on the LvMI's Facebook page, where this thread was posted. Since I can't post on the fan page (I can't post as myself), I want to address some of the posts here.

Randy Taylor said:

"I live in the real world where people outside our borders work in deplorable conditions for slave wages or less.They are not subject to environmental laws or any the safety regs. that protect you and me in this country.I stand by my statement that requiring a label of origin cannot be construed as protectionism."

Then:

"Nope they can starve to death." (ed.: In reference to the suggestion that nobody is forcing them to work for that wage.)

Is that person working in deplorable conditions better off when you buy the product the firm that employs him producers, or when you opt for another product? In other words, by boycotting that product do you directly or indirectly improve his standards of living? The answer is "no". The only way to allow the workers' standard of living to increase is to allow companies to increase wealth. This is done through investment of accumulated capital.

It is painful to know that while in the first world workers have it relatively well, third world workers are being "exploited" (only in the sense that they work under conditions few Americans would work in themselves). But, what allows the United States to get away with certain labor regulations, such as outlawing child labor, is the fact that the United States already went through two hundred years of capital accumulation, investment and creation of wealth (for those poor families who can no longer employ their children to help maintain a respectable standard of living, well they are worse off, aren't they?). The third world has not gone through this process (a process which globalization makes a lot faster, since certain technologies no longer have to await capital accumulation, as they can simply be imported), and limiting their ability to go through this process will hamper long-run increases in the overall standards of living.

Before boycotting something, both the seen and unseen should be considered, and then you should come up with your decision.

Re: Is fair trade protectionism?

Arend — Sun, 24 Jan 2010 22:46:01 GMT

Fair trade is pretty much like charity (from the buyer's point of view). From the seller's point of view it's a marketing tool to sustain one's business in an environment of international division of labour. Large parts of the 2nd world farming is uncompetitive in an international market, but the transition is difficult (families of which generations were farmers, no knowledge/education to seek an other trade etc.). It's a tragedy in a way, but the market in the form of 'fair' trade steps in and makes the transition somewhat more bearable.

Re: Is fair trade protectionism?

Jonathan M. F. Catalán — Sun, 24 Jan 2010 19:40:42 GMT

Nielsio:

Meh; if they are using tax-money to indoctrinate everyone into believing in this kind of stuff then I think it's still a form of protectionism.

I agree, which is why I said Fair Trade is OK if it's merely an egalitarian social movement.

Re: Is fair trade protectionism?

abskebabs — Sun, 24 Jan 2010 19:35:23 GMT

You may find the following quite useful:

http://www.adamsmith.org/images/pdf/unfair_trade.pdf

Re: Is fair trade protectionism?

Nielsio — Sun, 24 Jan 2010 19:28:01 GMT

Jonathan M. F. Catalán:

But, if there is a social movement in which the consumer begins to opt for higher priced goods for whatever egalitarian reason, then there is no protectionism involved.

Meh; if they are using tax-money to indoctrinate everyone into believing in this kind of stuff then I think it's still a form of protectionism.

One terrible thing about 'fair trade' is that they don't want people to buy products that children worked on. This means they would rather you buy a product from an adult than from a child. Who do you think needs your help more?

Re: Is fair trade protectionism?

AnonLLF — Sun, 24 Jan 2010 19:09:28 GMT

Thanks.That makes alot of sense.I had skimmed over the wiki article before .I had had doubts that all of it was enforced.

Is there any way to know by looking at the products which are not voluntary?

Re: Is fair trade protectionism?

Jonathan M. F. Catalán — Sun, 24 Jan 2010 19:03:13 GMT

Fair Trade can be both; some Fair Trade is voluntary. It no longer becomes voluntary when the government begins to take part in the program, and perhaps forces sellers to sell certain products. So, whether or not it is protectionism can change case by case. But, if there is a social movement in which the consumer begins to opt for higher priced goods for whatever egalitarian reason, then there is no protectionism involved. For an example of where it becomes political, see: http://en.wikipedia.org/wiki/Fair_Trade#Politics

Is fair trade protectionism?

AnonLLF — Sun, 24 Jan 2010 18:55:21 GMT

I've always thought fair trade( as in the goods with the labels "this is a fair trade product blah blah blah") is protectionism specifically a price floor?

Am I correct? Is it forced or is it voluntary? I'm sure it is forced. I'm asking this for my understanding .

This seems like a stupid question but I don't see this mentioned many places.

It seems to be much passed up as an area to discuss. As the latest lefty trend it needs to be solidly put down.