Wednesday, January 16, 2008

Johan on "Fair Trade"

Johan Norberg finds the proof:

At current world market prices (118 cents/lb), Rättvisemärkt gets more than three quarters of the extra money you pay for that cup of fair coffee, the coffee farmers get no more than about 23 percent. This huge margin means that if you are going to spend ten dollars on coffee, the farmers would get more if you bought conventional rather than fair trade coffee.

We keep getting drawn to these feel good, morals-on-our-sleeve, unity/solidarity type movements, only to find the outcomes don't match the desired intent. Unfortunately, these types of movements cannot provide the desired intent because the mechanism by which they work is contrary to the stated goal.

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