Wednesday, January 11, 2006

Morals are cashable commodities

Consumers don't often get rewarded for making right "moral" choices when allocating their limited resources to a range of products. Often it is the case that when we add attributes to our criteria for any products or services, it limits/narrows our options, and nobody likes to have fewer options than his/her fellow man. However, others do argue that in making the right "moral" choices in what goods and services we consume, "virtue is its own reward". I find this latter belief untrue in principle, but useful to teach in practice.
The concept of fair trade is an ethical as well as a moral one. Ethical for companies to support and moral for the consumers on the shop floor, who have the option to buy in favour of fair trade or otherwise.

I have my mind set in favour of fair trade and can't stomach the proposed wild goose chase that constitutes free trade (a matter I have discussed at length here).

However, there is an issue in the fair trade arena that threatens to nullify its benefit over the long run. The issue is that, fair trade products are differently priced to non-fair trade products (they normally cost more). Price discrimination is a common tactic used to segment the markets between the rich and the "no so rich", and in this case, fair trade products are priced to cater for the richer end of the market because they cost more.
The argument used to justify higher fair trade prices is so that poor third world farmers can earn a bit more money without compromising the profit margins of the large supermarkets selling the products (due to higher input costs). A deeper look at this, however, suggests that in addition to the luxuries afforded by the wealthy, supporting fair trade looks to be another. What about the lower middle class and below who, in the west, earn enough to support a poor farmer in a developing country through the purchase of his/her produce? It appears that incorporating pricing strategies in matters that are mostly driven by a noble intention to help the poor distorts the outcome and compromises the cause all together.
This raises the question:

1. Is the moral issue of fairness, especially where the livelihoods of other humans are at stake, another cash cow?
This I ask because supermarkets make margins for their "trouble" but there is no compelling evidence that supports a view that fair trade farmers are now happily living in a better deal world.
In terms of restoring the global wealth imbalance, fair trade is just but one small engine chugging along, one of the final frontiers in the "war against global imbalance". However, there is a compelling argument in favour of development but critiquing fair trade as a viable vehicle over the long run, given its vulnerability to exploitation. Read it here.

What are your comments?


Anonymous Afro said...

brilliant post. I know its very serious and all, but may i laugh at this line...""virtue is its own reward". I find this latter belief untrue in principle, but useful to teach in practice." that was funny to me. o.k i will stop being silly...

Very good points about pricing, i really cant add more. very succinctly put. :)

Monday, January 23, 2006 11:26:00 pm  

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