Karl William's commentary on the power of neo-classical economics and the challenges that face fair trade NGO's.

1. FAIR TRADE
not
BAND AIDS!

6. FLO is a group of 24 organizations working
to secure a better deal for producers. It
owns the FAIRTRADE Mark - the product
label that certifies international Fairtrade
standards have been met.

7. Fairtrade standards are designed to tackle
poverty and empower producers in the
poorest countries in the world. The standards
apply to both producers and traders.

8. 5 KEY OBJECTIVES:
1. ensure that producers receive prices that cover
their average costs of sustainable production

9. 2. provide an additional Fairtrade Premium which can
be invested in projects that enhance social, economic
and environmental development;

10. 3. enable pre-financing for
producers who require it

11. 4. facilitate long-term trading partnerships and
enable greater producer control over the
trading process

12. 5. set clear minimum and progressive criteria to
ensure that the conditions of production and trade of
all Fairtrade certified products are socially,
economically fair and environmentally responsible.

13. Principles specific to small producer organizations
….don’t depend on hired workers all the time, but run their farm mainly by using
their own and their family’s labour ……... Profits should be equally distributed
among the producers………. All members have a voice and vote in the decision-
making process of the organization.

14. Principles specific to hired labour
…. Forced labour and child labour is prohibited…… the right to join an independent
union to collectively negotiate their working conditions ….. Working conditions are
equitable for all workers. Salaries must be equal or higher than the regional average
or than the minimum wage. Health and safety measures must be established in
order to avoid work-related injuries.

15. In 2007 Fairtrade sales amounted to approximately €2.3 billion
worldwide, a 47 % year-to-year increase over 2006. At the end
of 2008 there were 872 Certified Producer Organizations in 58
developing countries. That represents more than 1.5 million
producers, about 7.5 million people, including dependents,
who are benefiting directly from Fairtrade.

31. Sources products from worker and
farmer owned cooperatives and
accredited fair trade factories
First non-food company in
Australia (and second in the world)
to be accredited fair trade.

35. Nick’s difficulties:
-Supplier suspended for 3 months b/c didn’t
address gender bias. But this is Pakistan!!!
Couldn’t find (willing) woman.
-Stitching centre min of 15 years, but Nick’s
manager’s daughter was 14 years. FLO
busted

45. PART 2
DEALING WITH THE ROOT CAUSES
OF UNFAIR TRADE
(a)Conventional neoclassical objections to
current Fair Trade initiatives
(b1) Geoist insights into Third World aid
(b2) Geoism’s True Cost Economics
(b3) The ultimate cause of sweat-shop
conditions – unemployment. And its
solution!

46. CONVENTIONAL NEOCLASSICAL OBJECTIONS TO
CURRENT FAIR TRADE INITIATIVES
•Price distortion
•Impact on conventional producers debate
•Bias towards cooperatives
•Retail pricing debate

47. CONVENTIONAL ECONOMIC ARGUMENTS
Price Distortion
Similar to other farm subsidies, fair trade
attempts to set a price floor for a good that is
in many cases above the market price and
therefore encourages, as fair trade opponents
claim, existing producers to produce more
and new producers to enter the market,
leading to excess supply, leading to lower
prices in the non-Fair Trade market.

48. CONVENTIONAL ECONOMIC
ARGUMENTS
Impact on conventional producers
debate
Fairtrade does not address the basic
problem, which is that too much coffee is
being produced in the first place. Instead, it
could even encourage more production.”

49. CONVENTIONAL ECONOMIC
ARGUMENTS
Bias towards cooperatives
Certification is predicated on political
assumptions about the best way to organise
labour. In particular, for some commodities
certification is available only to co-operatives of
small producers, who are deemed to be most
likely to give workers a fair deal when deciding
how to spend the Fairtrade premium. Coffee
plantations or large family firms cannot be
certified.

50. CONVENTIONAL ECONOMIC ARGUMENTS
Retail pricing debate
Retailers add their own enormous mark-ups to Fairtrade
products and mislead consumers into thinking that all of
the premium they are paying is passed on. The
Economist estimated that only 10% of the premium paid
for Fairtrade coffee in a coffee bar trickles down to the
producer. Fairtrade coffee, like the organic produce sold
in supermarkets, is used by retailers as a means of
identifying price-insensitive consumers who will pay
more.

51. THE GEOIST PARADIGM I
Third World aid
If the poor don’t own the land on
which they live, what will happen to
their unavoidable rent when good
people from the First World try to
better their lot by building:

52. ….. dams, wells and irrigation
infrastructure?

53. …. hospitals and clinics?

54. ….. schools?

55. ….. roads, bridges, trains,
telecommunications, electricity etc. etc.
etc.?!!!

56. THE GEOIST PARADIGM II
True Cost Economics and the
application of fully-costed
natural resource charges, thus
building in the proper costs
into the shelf prices

57. - Carbon emissions and other
pollutants

58. -Applying the full cost of water to such
underpriced items as:

59. Factoring in the full cost of petrol to things such as:
- addressing the food miles issue) -pollutants -noise -road
maintenance -traffic accidents & injuries -oil spills -unsightliness
of roads (compared to pedestrianised enclaves) -maintaining standing
armies to protect/invade oil fields etc.

60. - Applying natural
resource charges
on pesticides,
herbicides,
fungicides,
weedicides,
synthetic fertilisers
etc., depending on
their rated ill
effects

61. - hammering, through the tax system,
agricultural practices which lead to soil erosion

62. - Making producers and users of excessive packaging
pay for the resultant use (and perhaps pollution of) landfill

63. - As moral sentiments don’t seem to discourage many of those putting
our biodiversity at risk (GM, land clearing etc. ), let’s send them
monetary signals! The Monsantos of this world should also put up an
Ecological Security Deposit in case they bugger things up.

64. THE GEOIST PARADIGM III
The ultimate cause of sweat-shop
conditions – unemployment.
And its solution!

65. •Tax shift –
the double
incentivisation

66. •Tax shift – the double
incentivisation
•Reducing/
eliminating the
market price of
land and any
associated
borrowing
costs.

67. •Tax shift – the double
incentivisation
•Reducing/eliminating the market
price of land and any associated
borrowing costs.
•Slashing the
wastage of tax
compliance
and collection
costs

68. •Tax shift – the double
incentivisation
•Reducing/eliminating the market
price of land and any associated
borrowing costs.
•Slashing the wastage of tax
compliance and collection costs
•Practically
eliminating
tax evasion
(incl. foreign)

69. •Tax shift – the double
incentivisation
•Reducing/eliminating the
market price of land and any
associated borrowing costs.
•Slashing the wastage of tax
compliance and collection
costs
•Practically eliminating tax
evasion (incl. foreign)
•TCE - the cost of
employing labour
becomes a relatively
more affordable and
attractive input.
Resource efficient, not
labour efficient

70. •Tax shift – the double
incentivisation
•Reducing/eliminating the
market price of land and
any associated borrowing
costs.
•Slashing the wastage of
tax compliance and
collection costs
•Practically eliminating tax
evasion (incl. foreign)
•TCE - the cost of
employing labour
becomes a relatively more
affordable and attractive
input. Resource efficient,
not labour efficient
Boosting employment by self-funded
infrastructure rollout

71. But the *real* puzzle lies
unanswered…….

72. This one’s back
to you.
What, then, is the
real puzzle, the
great mystery,
the ultimate
head-f*cker, the
underlying
reason why
these proposals
haven’t been
adopted?