Dr. David Cowan First of a 3-part discussion of so-called Fair Trade and Free trade
Imagine a village, any village you like. Put some children in the village, playing. Then put them to do some commercial work. Place some billboards advertising consumer products around their school for a utility installation, funded by the advertising revenues. Sounds terrible? Do you bemoan the intrusion of big business in children’s lives? Is this the Madmen of advertising taking things too far?
Okay, now imagine a village in Africa. Imagine the long walk to a river by adults and children to fetch water for the village. See how the children are missing school, because they are needed to get water. There is a small school, but no facilities to play. Sounds terrible? Do you bemoan the unfairness of the world? Isn’t there more we can do to help?
Now put the two villages together. Better yet, let me introduce you to someone who did just that, Trevor Field, a former advertising executive in South Africa. The story is told that on a fine summer’s day in 1989, pretty much on a whim, Trevor went with his father-in-law to an agricultural fair outside of Johannesburg, South Africa. He saw a pump attached to a children’s Merry-go-round. Seeing this amongst a bunch of junk at the fair, gave him an idea.
Trevor’s idea was to install a Merry-go-round in a poor village, remote from the river, the one I asked you to imagine. The children stopped going to the river, instead going to school. Because at break-time they play on the Merry-go-round, which pumps water from the river to their village. The water storage tank was built with billboards round it, so the revenues from the advertising could fund the maintenance of the system.
Called the PlayPump, the children can pump nearly 370 gallons an hour. There are now 700 in South Africa, a 100 more are now being installed in Mozambique, and Swaziland is next. Other countries will follow. There is no charity here, no handouts. This is business, and it is pragmatic. Private companies got involved because it was a good idea.
Our economic system is very good at rewarding innovative ideas; it is what keeps the economy running. It is called entrepreneurship. When we have a medical problem, we go to a doctor. When we have an economic problem, we should go to business, big and small, and to entrepreneurs like Trevor.
Now be honest, what was your first reaction? If you thought of bad things about business, you would be in a big crowd. The fact is that business and poverty have an uneasy relationship. Many of the people active in poverty issues are anti-business at worse, suspicious of business at best. The difficulties of poor villages and finding solutions to crippling poverty lie at the heart of the debate over fair trade and free trade.
Opponents to capitalism and globalization will tell you that problems are either caused or worsened by big business and selfish interests. They will tell you that we need governments and aid agencies to solve the problem. They will also tell you that competition, consumerism and unfair trade are all damaging to the poor. Defenders of business will tell you that they are creating wealth. They will also tell you that competition, consumption and free trade will ultimately make poor countries rich, like us.
Fair trade is touted one of things we can do about poverty has become very popular amongst campaigners, Christian communities and others. It starts with a rejection of one of the basic tenets of Capitalism by setting a “fair price”. Supporters of fair trade believe that by working at the producer level, and cutting out the “middleman”, we will achieve justice for producers in poor countries.
Fair trade goes back earlier than you might think. In fact, it goes back to 1946. Edna Ruth Byler, a volunteer with the Mennonite Central Committee, started importing crafts from Puerto Rico and selling them out of her car. From this modest beginning, fair trade had grown. On its 50-year anniversary, it had become a $2.6 billion business. From an initial focus on a few handcrafts and primarily coffee, the product range has expanded to toys, furniture, personal accessories other offerings.
Over the years, as awareness of poverty in developing countries has increased, Christian communities have embraced fair trade as almost a doctrinal statement. It seems a no-brainer: set a fair minimum price; get the revenue back to the original producer. This approach seems to capture the moral high ground for the fair trade advocates, Christian or not. Go to church and you’ll be offered fair trade coffee after the service. Drive into some towns, they’ll say they are a “fair trade town”. It wasn’t just Christians who took up the idea, but secular and political organizations wanting to show their moral strength.
By supporting fair trade as moral, the stigma is then attached to free trade, the system we all live under. There is no minimum price set in the free market. The price is set at what someone is willing to sell at, and at a price someone is willing to pay. The “market” is a process of discovery, where sellers and buyers meet at an agreed price. If something is too expensive, people either won’t buy or slow down their buying.
The idea of government or others deciding a non-market price was used only in controlled or planned economies like Socialism and Communism. As the old Communist joke goes: we pretend to work and you pretend to pay us. We know that Communism and Socialism don’t work, does fair trade? This question breaks down into two. First, we have to ask whether fair trade fixes the economic problem. Second, whether it a moral solution to the problem, and so a good thing for Christians to support.
The reality is that economically it doesn’t fix the problem. Opponents will tell you that it pushes producers into soft markets, because it is in essence a subsidized market, and we all know what happens with subsidies. More crucially though, we have to say, fair trade only tackles the symptoms. It does not get at the causes of the economic problem of poverty.