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Fair Trade = Free Trade

Hilzoy at Obsidian Wings has a post up on the economics of Fair Trade products, which makes a point I've been meaning to make for some time:

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.

Republic of Palau recently criticised, among others, Hilzoy for stating the blindingly obvious in her earlier post on products whose production makes the world a worse place, which includes coffee and chocolate. She did conclude that she was glad that real-world information was finally being made available to Americans who might want to base decisions on that information. I found myself being skeptical, thinking that for every American who would decide to abstain from chocolate or switch to fair trade products, there would be three who would make a point of buying as much chocolate as they could, eat it at chocolate abstainers in a deliberately offensive manner (see: Vegetarianism, responses to), claim that fair trade chocolate is really granola and publish "research" claiming that fair trade chocolate makes you gay (I wonder if those people know how much soy cheap chocolate contains). Hilzoy has this to say about responses like that:

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.

As is her standard, Hilzoy is very thorough, meeting several other objections that might be raised including the all-important one about liberal self-righteousness. Read the whole thing.


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