Tomorrow evening economist Victor Claar will be leading an Acton on Tap where he will talk about fair trade. As a Christian and an economist, Claar brings a unique perspective to the discussion. He will be asking a number of key questions including: Is fair trade truly the best way to help the poor, and, if not, then what can we do instead?

The blog, Common Sense Concept, recently reviewed Claar’s new book, Fair Trade? Its Prospects as a Poverty Solution. This rerview provides a sneak peak of the discussion ahead at this week’s Acton on Tap:

But good intentions aren’t enough, and as economist Victor Claar in his new book, neither are manipulative trade initiatives. For Claar, author of Fair Trade: Its Prospects as a Poverty Solution, the fair trade movement simply “cannot deliver on what it promises,” and Christians would do well to pay heed.

[…]

Thus, Claar focuses the bulk of his critique on whether such initiatives truly achieve long-term and sustainable success and prosperity. Does fair trade actually lead to the enrichment of the lives it touches, or does it simply give them a temporary boost? Does it — or can it — lead to “transformational, lasting change,” or is it simply our way of giving them a few extra nickels for that week’s bread and milk (not wholly insignificant, mind you)?

Given that coffee is perhaps the most popular of fair-trade commodities, Claar focuses his attention there, providing an initial overview of the coffee market itself, followed by a discussion of fair trade strategies as commonly applied. Here, we learn a few important things: (1) coffee is easy to grow, (2) its price is inelastic, and (3) the “market appeal” of one’s beans is essential for success. Additionally, and most importantly, (!!!) demand is dropping while supply is rising.

“Simply put,” Claar explains, “coffee growers are poor because there is too much coffee.”

[…]

The book offers plenty of arguments against such schemes, but this often unspoken reality illuminates the most central: Artificial, top-down fair trade programs toy with price signals and manipulate individuals to do the wrong thing in the wrong place at the wrong time. “Incentives matter,” says Claar. “Once the stakes of any economic game have changed, people alter their behavior accordingly.”

Join us on Tuesday, May 17, from 6:30-8:00 PM at the Derby Station (2237 Wealthy St. SE, East Grand Rapids 49506) as what is sure to be a very enlightening and lively discussion.

For more information on tomorrow’s Acton on Tap click here.

Click here to read the entire blog post on Common Sense Concept.

  • Andy

    Right now demand is higher trhan supply not the situation a few years back. Either way small scale farmers are price takers and need to get up the supply chain by forming cops and eventually owing more of the value in coffee.
    Fairtrade is far more than minimum price. For years what they really need was pre-finnace to get them out of debt from local banks.
    Adam Smith… free market guru talked about requiring a balance of supply and demand. Fairtrade has that! It still has no influnce on the speculators who are driving up all commodity prices just now.

  • mckinney

    I think Claar misses the point about fair trade: it’s not about helping the poor, but about helping Americans feel better about themselves.

    If socialists cared about the poor at all, they would promote capitalism. 

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