Fair Trade

http://www.facebook.com/notes/mohan-gopalan/saving-the-world-while-shopping-for-groceries/488497880630

http://www.youtube.com/watch?v=8firb73r67g&feature=related

I've been thinking about issues of fair trade over the past couple of days. For a good intro to the topic, Mohan's written a very quick summary of the issues, as well as a helpful (small) list of fair trade items which can be bought locally (1st link). I also came across a youtube (7-part) video on globalization and fair trade (second link, first part of the video).

The biggest point I've been thinking about is how the major contributors to this wealth inequality are: (1) the quest for lower prices; and (2) the pursuit of luxury.

To a large extent, these two are two sides of the same coin. The quest for lower consumer prices have led factories, particularly those in the third-world, to make extremely disadvantageous deals with big businesses. The "free hand" of the market might say that people in these poorer countries are willing to work for less, and thus it is entirely "fair" to give them exactly what they ask for. But as any lawyer will tell you, what works fine in theory (i.e. the free hand of the market) doesn't work in reality because of the fact of differences in bargaining position. The fact is that if the factories in India or Indonesia don't lower their prices, the big businesses are sinmply going to take their business elsewhere, to places where they will lower their prices. This leads producers all over the world down a slippery slope. They eventually decide to accept the lower price because they think that other factories elsewhere will lower their price even if they don't. The result created, which we see today, is that factories everywhere are willing to work at extremely low costs to the big businesses. This results, of course, in an extremely high profit margin for these same big businesses, even after we factor in the cost savings to the consumer.

Consumer, is that what you want? Can you, in good conscience, purchase your cheap products knowing that in many places in the world, people are exploited to produce goods at the cheap prices you enjoy?

The pursuit of luxury is the other side of the coin because it represents affluence. While some people struggle to feed their children, or to send them through a primary school education, people in well-off countries are able to spend extravagant amounts of money on clothes, cars, houses, and so on. Now, it is not my intention to suggest that these are bad things. The point I am making, though, is that this attitude of extravagant consumption is what motivates the exploitation that is going on. This statement needs justification.

Human civilizations through the ages have always had their symbols of wealth. Walk through the Asian Civilization Museum and you'll have a good idea about how very different societies have had common ways of asserting their status and wealth in that particular community. In ours, it happens to be things like clothes, cars, and houses. I believe this reflects a deeper condition of the human race, that we seek the praise and honour of our fellow humans, but thats another issue. Now the problem with this, is that in the world we live in today, there are too many affluent people. Whereas people used to compete within their villages as to who was wealthier, or perhaps within the region, globalization has made us realize that there are people who are much wealthier than us. The only way we can succeed in this game, to make our mark in this global village, is to make money, and to make more of it. We need to show that we can spend extravagantly; and the only way we can afford to spend extravagantly, is if we earn extravagant amounts of money. And how do we achieve this? If we're businessmen, we look for the cheapest deals, and sell our product at the best prices. No brainer. However, in the process of creating wealth for ourselves, we fail to see that there are other people around. We forget that our actions have consequences on our community.

This is why businessmen in Indonesia have little qualms about exploiting their fellow Indonesians to make money from these big fashion companies (see the video). We don't start out wanting to exploit people: we start out wanting a better life for ourselves. However, this individualistic pursuit ends inevitably in the disruption of the community. The pursuit of extravagant wealth by individuals in rich countries have led to the disruption in the global community.

Whereas people in agricultural communities used to be able to make a living by surviving in an agricultural economy, that is now hardly possible given that the shape of the economy in most countries have changed drastically. Older agricultural communities probably could survive on barter, or on better prices for their produce. But now, what used to be a reasonable price to pay for produce, we now consider extremely expensive, thanks to the fact that businesses have pushed prices down so low. And the latter can happen only because they have already taken advantage of poorer communities in other parts of the world.

So fair trade attempts to address these inequalities by giving these people in poorer countries a better price for their produce. Yes, these products are more expensive, but thats because you are paying a fair price to these primary labourers. You are giving these people a better standard of living so they can set food on their table, send their kids to school etc.

When we think of making the world a better place, many think of philanthropic giving, or doing mission work. These only attempt to address the symptoms of poverty. What we need to give them, is a working economy. I know that there's very little thats' 'free trade' in Singapore, but if more of us want to see free trade in Singapore, the businesses who want this money will eventually do it. Another way we can support free trade is to purchase things that are made around the region instead of importing it from Western countries. When we do that, we support jobs in the countries of this region. Stop exploitation. Buy free trade.