Posts Tagged Victor Claar

The Fairest Trade of All

In light of my recent posts on the inadequacy of fair trade (1, 2, 3 & 4), I thought this recent debate on the topic was well worth sharing. The discussion includes AEI’s Claude Barfield, World Fair Trade Organization’s Paul Myers, and Henderson State University’s Victor Claar.

Watch it here:

Barfield provides a good historical backdrop, but Claar, whose comments begin at 33 minutes, provides a strong and thorough critique of fair trade’s failures in both fairness and economic results.

Some of my favorite lines from Claar, in no particular order:

  • “The fairest trade of all is trade that is genuinely free—free from political logrolling by politicians desperate for votes, free from opportunistic lobbying by industries like U.S. sugar and cotton, and free from the harm to the global poor that well-intentioned rich Northerners like us can sometimes bring.”
  • “When the price of something is low–like coffee, or sugar, or cotton–market forces normally direct people to make less of it and move onto something else. But fair trade interferes with the signal that prices ordinarily provide; Fair Trade can never serve as a sustainable long-term development strategy because it will never make people significantly richer than they are today.”
  • “Putting at least some faith in markets to be a powerful force for change in the lives of the poor does not amount to abdicating our concern for the poor–instead opting to cavalierly put our hope in little more than faeries and magic dust. Just as we trust gravity to keeps us all affixed securely to the ground, and just as the principles of particle physics assure you that the chair you are sitting in right now will not let you slip through its seat to the floor, markets work invisibly, but in ways that we understand reasonably well…The laws of physics are part of God’s providence; so are the laws of economics. And we fail miserably in our obligations to our Creator when we ignore the fundamental truths of economics in our efforts to aid the poor—even if our efforts flow from the very best intentions.”

One other item of note is how little argumentation Myers delivers in his primary remarks, throughout which he manages to disregard economic efficiency (because the poor benefit from waste?), downplay petty old “freedom” (because the poor prefer enslavement?) and elevate “rules and regulations” (because the problem is obviously too much access to markets?)—all without providing a substantive argument for how price manipulation benefits the poor and how price accuracy (is there a better word?) hurts them. He provides plenty of anecdotes about how the poor need jobs and affordable goods (is this news?), but provides no cohesive argument for why fair trade fulfills these needs and free trade perpetuates them.

Fair Trade: Its Prospects as a Poverty Solution, Victor Claar, Acton InstituteI’m guessing this lapse was largely unintentional, and that, aptly representing Thomas Sowell’s “unconstrained vision,” Myers simply assumes that the (supposed) morality of fair trade is self-evident—that those who oppose it must simply value economic efficiency over the interests of the poor (and, to be fair, some do). Thus, fluffy anecdotes and pious platitudes about the struggles of the poor suffice for a moral indictment of free trade. Unfortunately, most free traders believe what they believe precisely because  they think it benefits the poor. Myers should start his argument there (when he gets around to making one).

If these assumptions about Myers’ vacuous, emotion-driven remarks are true, then Claar’s later emphasis of Matthew 22:37 is even more relevant than intended.

How do we truly love our neighbor if we are aiming only to elevate our own personal, abstract notions of fairness without checking them against reason or results? How do we truly love the Lord our God if we rely only on our “hearts” and “souls” and not also on our minds? Further, as I’ve indicated elsewhere (1, 2, 3), what does it say about our “hearts” and “souls” if they are detached from an intentionally holistic love of God that looks beyond earthly emotions and assumptions?

Click here to read my review of Victor Claar’s monograph, Fair Trade: Its Prospects as a Poverty Solution.

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A Real Fair Trade Solution: Kill the Big Ag Behemoth

I have routinely criticized “fair trade” schemes as ineffective, inefficient and counterproductive — a convoluted form of temporary charity that would be better if treated as temporary charity.

The real problems that cause poverty are deep and complicated, and they cannot be fixed by magical price inflation by Westerners (particularly when our own view of value is as distorted as it is).

As I pointed out in my review of Victor Claar’s book on the subject, one of these problems is often the nature of the given market. When it comes to coffee, for example, Claar explains that “coffee growers are poor because there is too much coffee.” The solution is hardly, “more coffee!”

Many of these realities are difficult to change for good reason: accurate, voluntarily determined prices reflect the real preferences of real people who are just trying to create real value. This includes both the consumer and the creator (the coffee grower). Yet other realities are stubborn because they are involuntarily determined.

This is where we should be setting our sights, and this week at AEI’s newly rebranded project, Values and Capitalism (formerly Common Sense Concept), I focus on one of the biggies: agricultural subsidies.

Here’s a taste:

Although the aims of “fair traders” are often noble (e.g. when “equality of outcome” doesn’t masquerade as “fairness”), their efforts would be much better spent tackling the real problems that impact economic development in the long term. If we’re looking for a game of Demolish the Western Privilege Machine, agricultural subsidies are a marvelous piñata.

The price distortion caused by such subsidies is summed up nicely by Daniel Sumner in an AEI paper on the subject:

Farm commodity subsidies—including price and income supports—crop insurance subsidies, and disaster aid encourage US production and disadvantage farmers who attempt to compete with subsidized production from the United States. These programs stimulate more production when Read the rest of this entry »

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Fair Trade Fast Food: Why Not Manipulate Americans?

McDonald's, worker, employee, fast foodWhat would happen if we had fair trade fast food here in America? What if benevolent do-gooders from Europe and Asia tried to intervene on behalf of American minimum-wage workers and offer a “fair wage” for serving burgers and fries?

Further, what would have happened to me — a former McDonald’s employee — if I had made 5 bucks an hour extra, all out of some well-meaning foreigner’s arbitrary sense of “social justice”? Would I have ever gone to college, or would I have stayed put? Would McDonald’s have remained a competitive job creator, or would it have caved and crumbled next to those who avoided such “compassionate” scheming? Would it have become more difficult for low-skilled workers like myself to get a job in the first place?

These questions (and more) are at the center of my recent post at Common Sense Concept, in which I argue (once again) that fair trade distorts reality and confuses our vocational processes.

But why all the fuss? Wasn’t I, as a minimum-wage worker, being unjustly trampled by “the Man” (in a yellow suit, no less!)? Why did all those privileged cooks and servers at Red Robin deserve more money than me? Was it the “arrogance” of their Mt. Vesuvius burger? In the grand scheme of suburban teenager-hood, why was I of all people doomed to enter that realm of grease and irritable soccer moms?

For [some], my contract with McDonald’s might just as well have been labeled “unjust” and “unfair.” This was not, after all, a “living wage.” Shouldn’t somebody somewhere have stepped in to fill the “gaps” and stop McDonald’s from “exploiting” me? How was I, as a mere teenager, ever to rise above my circumstances without Read the rest of this entry »

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#ActonU: The Week in Tweets

As already notedActon Institute, Grand Rapids, MI, I spent the bulk of last week attending Acton University, an event I would highly recommend to anyone interested in the intersection of economics and religion. Although I will likely blog at length about some of the sessions I attended (or at least the topics discussed therein), I figured I’d dump my Twitter “notes” on the blog in the meantime. (The event was discussed at #ActonU.)

My apologies in advance for any abbreviations, misspellings, unnecessary exclamation points or other frivolous and/or undesirable elements of the Twitterverse. You can follow the blog on Twitter here or follow my personal Twitter feed here.

Tuesday, June 14

Evening Program: Kick-off — Rev. Robert Sirico

  • Autonomy is important, lest we become the communist man – a mere blur in society. -Sirico
  • Christianity amplifies, clarifies, & outlines the implications of the individual and the other. -Sirico
  • The human person is the most sacred thing that presents itself to our senses other than God himself. -Sirico
  • The believers at Antioch were moved, whether they knew it or not, by their view of human dignity. -Sirico
  • The question of the human person is at the center of economics, culture and family. -Rev. Sirico
  • RT @mikejmill Acton University started tonight. Biggest year ever. 625 participants from 70 countries…plus 40 faculty.

Wednesday, June 15

Christian Anthropology — Samuel Gregg

  • “Power corrupts, but PowerPoint corrupts even more.” -Samuel Gregg
  • The Christian view of reason is much “richer” than the secularist’s. -Gregg
  • If reason is merely instrumental, there can be no real basis for freedom or basic rights. -Gregg
  • Our genes and environment may influence our actions, but they do not determine our *choices* -Gregg
  • “Freedom is much more than choosing; it’s choosing to live in the truth.” -Gregg
  • Dominion is not an excuse to be destructive and stewardship is not a call to be passive. -Gregg
  • Reading Marx is like reading an Old Testament prophet who replaces the Messianic message with mere secularist ideology. -Gregg

Frederic Bastiat: Christian and Apostle of the Market — Todd Flanders

  • Bastiat anticipated Catholic Social Teaching on socialism by half a century. -Todd Flanders
  • RT @EricTeetsel The difference between a good economist & a bad one is simple: a good economist sees the present & what must be foreseen …
  • “Destruction is not profitable.” -Bastiat #yathink?
  • Standing armies may be necessary but let’s not pretend they are not an economic advantage. -Bastiat paraphrased by Flanders
  • Destroying value for the sake of creating work is akin to shunning the most basic of divine providence. -Flanders
  • Bastiat at the point of death: “I see, I know, I believe; I am a Christian.”
  • Some guy just compared Charles I’s scaffold speech with Bastiat’s view of the law and voter enfranchisement. Awesome.

Ayn Rand and Christianity — Rev. Robert Sirico

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Fair Trade as a Non-Solution: A Christian Response to Price Manipulation

Fair Trade? Its Prospects as a Poverty Solution, Victor Claar, Acton Institute, coffeeFair trade products have become increasingly popular, particularly in churches and various Christian communities. To investigate the merits of this approach, economist and friend of the blog Victor Claar recently wrote Fair Trade: Its Prospects as a Poverty Solution.

This week at Common Sense Concept, I review Claar’s book and echo the key criticisms therein.

A significant part of the book — and a big part of its significance — is its objective examination of coffee markets and the fair trade scheme as a whole:

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.”

From there, Claar dives into analysis, considering each detail as it relates to common Christian concerns. I’ve read plenty of books that critique fair trade in general terms, but Claar’s views on the proper Christian response are a unique addition to the discussion.

Overall, Claar views such schemes as a means for reinforcing barriers rather than removing them:

Instead of imposing our top-down plans on our neighbors across the globe, Claar suggests that we “work to make trade freer for everyone in our global community: a level playing field for all.” Although it might lack the punch, trendiness, convenience, and immediate satisfaction of buying the right pack of coffee beans at the right socially-conscious grocery store, it actually works (e.g. the 20th century).

To read the full review, click here.

Read the rest of this entry »

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10 Hot Dogs, 8 Buns: The Moral Implications of Consumer Demand

Victor Claar recently posted an amusing video over at his blog which humorously illuminates our role in keeping producers in check.

You can watch the video here:

Since I don’t suspect this video was intended to serve as a serious indictment of Oscar Mayer or Wonder Bread, I don’t intend to get too serious with my comments.

I do, however, think it’s a fun opportunity to stop and think about consumer demand. Oscar Mayer and Wonder Bread will probably decide to ignore this guy’s complaint, and presumably there is a good reason to do so. But what if another hot dog company emerges that decides to do things differently? What if someone else finds an equally profitable way to package hot dogs in groups of 8? If the actual consumer demand is significant enough, the assumption is that consumers will migrate from 10-packs to 8-packs accordingly.

But this concept becomes much more important when we look at it on a deeper level. Free societies not only present us with material choices; they also present us with Read the rest of this entry »

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Envy and Economics: Grieving the Good of Others

Victor ClaarLast Monday I had the great pleasure of participating in an event at the American Enterprise Institute titled “Grieving the Good of Others: Envy and Economics.” The event was organized by AEI’s Project on Values and Capitalism.

The primary speaker was Victor Claar, associate professor of economics at Henderson State University and co-author of the book Economics in Christian Perspective: Theory, Policy, and Life Choices (my review is forthcoming).

Claar offered many insights on envy, discussing its implications both as a personal sin and an economic motivator. Although he briefly touched on the envious impulse behind Marxism (a common tack), the majority of his talk focused on how unequal outcomes in capitalism can lead to envy.

The question? What, if anything, are we to do about that? Can we actually limit envy by forcefully suppressing “opportunities” for it to manifest? What are the secondary impacts of such a scheme?

After Claar’s talk, I was allowed a few minutes to respond along with AEI’s Emily Batman. In my response, I pulled the scope back a bit and talked about the overall limits economic policymaking has on shaping individual morality. To make my point, I talked about authentic morality vs. artificial morality, drawing a few economic parallels along the way (e.g. authentic prices vs. artificial ones).

Following our responses was a Q&A session, which led to its own assortment of insights.

I encourage you to check out the event for yourself, which is posted online in Read the rest of this entry »

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