Fairtrade fails and deceives: Part One

"Fairtrade is about better prices, decent working conditions, local sustainability, and fair terms of trade for farmers and workers in the developing world. By requiring companies to pay sustainable prices (which must never fall lower than the market price), Fairtrade addresses the injustices of conventional trade, which traditionally discriminates against the poorest, weakest producers. It enables them to improve their position and have more control over their lives"

That’s the legend sold with Fairtrade, on the Fairtrade Foundation website. It is about to be heavily promoted big time in the UK through Fairtrade Fortnight. However, Fairtrade isn't fair, or good, it is ignoring basic economics and is highly deceptive. It is hindering development far more than it helps.

It is often treated by the likes of the Green Party as an alternative to free trade, so it excuses protectionism (bans and tariffs on imports). You see they are ignorant of economics too.

What Fairtrade actually is about is an ideology of guilt-mongering to brand products on the basis of being “ethical” which are marked up for the “good” of all those involved, grossly distorting price signals and producing perverse results. In the Sunday Telegraph today, the Adam Smith Institute has announced the release of a damning report about “Fairtrade” called, aptly, “Unfair trade”. The Institute states “At best, Fairtrade is a marketing device that does the poor little good. At worst, it may inadvertently be harming some of the planet’s most vulnerable people”.

How so, you say? How can it be unfair to pay producers more for making what they do, in such poor countries? Well the report points to a number of major issues:

• Fairtrade pays farmers to maintain uncompetitive farming methods rather than using modern techniques that can enhance production. Environmentalists might argue that those techniques are more environmentally sustainable, but the Fairtrade Foundation admits it has no programmes to encourage the use of technology in farming, of any kind. It even gives counterproductive advice, encouraging crop mixing, which hinders mechanisation.
• A fraction of the Fairtrade premium charged to consumers reaches the producer, retailers pocket the rest as Fairtrade products are perceived as high yield and less price sensitive. In short, customers are more willing to pay for the “Fairtrade” label, oblivious as to whether the premium reaches the producer. The Fairtrade Foundation insists it ensures farmers are paid more than they would otherwise (no doubt retailers are too!), but do consumers accept the premium paid to everyone is fair?
• Fairtrade only accredits farmers if they join together as co-operatives. Farmers working for Café Britt in Costa Rica are self-employed small business people who own the land they farm, but this is “unacceptable to ideologues at FLO international” Fairtrade’s certifiers. Café Britt has been refused Fairtrade status, even though its Costa Rican farmers have increased incomes by processing, roasting, packaging and branding locally as well. Fairtrade coffee, by contrast, is roasted and packaged in the EU.
• The Fairtrade Foundation is seeking to dominate the trade, by seeking to monopolise the concept of “ethically branded” produce by persuading local authorities, companies, schools and the like to declare themselves “pro Fairtrade” at the expense of other brands claiming the same thing (like Café Britt). This has effectively limited the range of "pro producer" activities as the brand itself limits innovation to that approved by the brand. It also inflates the price by not having competing "fairtrade" brands.
• Fairtrade supporters ignore the real causes of poverty amongst many growers by pursuing an ideological crusade against world market prices and multinational corporations. According to the Sunday Telegraph, coffee growers in Kenya interviewed by Alex Singleton of the Globalisation Institute told of being forced to used the monopoly milling and fertilizer companies, imposed by the state, and the high tariffs on imported tools that could assist production. Of course this could be addressed by free trade, but Fairtrade supporters are not interested in confronting poor country governments.
• Fairtrade encourages poorer quality produce. As many farmers sell produce in both Fairtrade and open markets, farmers will often sell their best produce on the open market to secure the best price (as the open market is quality driven), and sell poorer quality produce on the Fairtrade market, as the price is guaranteed. The effect this has on quality for those selling entirely on the Fairtrade market is questionable at best.

Fairtrade is another example of good intentions paving a road to hell, as it is driven by an ideology distant from reality. It is driven by faith that the world would be a far better place if only those mean old markets paid people more for what they produce (low prices are unfair!!), with even more ideological baggage along with that. Part of it is environmental – the old adage that organic is better than mechanisation, and fertilisers are “bad”. Part of it is simply socialism – companies are bad, so farmers should all be in co-operatives. Beyond that is the basic rejection of the price mechanism.

Ah, you say, but if I want to pay more so that a farmer gets more, shouldn't I be allowed to? Of course you should. I'd let you set fire to your money if you wanted to (you're not allowed), but that doesn't mean you should necessarily feel better, or those that don't buy fairtrade are immoral - the truth may be quite the opposite.

So what does ignoring the price mechanism do?

Report on the environment - how shallow is it?

So what about the "Environment New Zealand 2007" report? Is it a piece of robust well researched analysis that is balanced, or does it contain some of its own spin? Well it is lengthy, so as I said before I've read the transport section - since environmentalists have a particular dedication to that sector - to see what it says.

Most of the chapter on transport contains a lot of statistics, which themselves are quite interesting. Nothing too surprising there, as increases in wealth parallel increases in car ownership, the size of cars owned (which also reflects demographics of baby boomer families wanting larger vehicles) and kilometres driven. This all is a good thing, as it means more people have access to flexible transport options. It also shows that only 5% of trips to work are by public transport, with twice as many people working at home. Funny how the ones taking the most environmentally friendly option don't get subsidised for it (neither do the 6% who walk to work).

However, in with all the stats come some less evidence based claims:

1. “Public transport generally provides a lower-cost and more environmentally friendly transport choice than using a private car.”
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How? If it is lower cost, then people will use it and pay a fare to recover the fixed and marginal costs of public transport. However, they don’t. In fact 95% don’t find it “lower cost” if you include value of time and comfort. Moreover, it is hardly lower cost when it requires subsidies of between 50% and 70% in many cases. When did you last get a subsidy to drive your car to work? Of course there are externalities, but this claim doesn't say that.

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2. The environmentally friendly claim is made again “Public transport offers benefits to the environment in the form of less air pollution, lower fuel consumption, and less traffic congestion compared with private transport.”

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Really? For starters it is a messy statement, triple counting one benefit. Lower fuel consumption isn't an environmental benefit, but the cause of less air pollution, and congestion is about delays, not pollution. So we are talking about air pollution only. Secondly, the government's own Surface Transport Costs and Charges study changes the view on this...

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That states that an average bus in Auckland at the AM peak emits over 18x the emissions of the average car. Now according to that study, the average car typically has occupancy levels of around 1.4, with buses have average occupancy of around 18 people, which means that cars - on average- emit less pollution per passenger carried than buses on average in Auckland. Now trains ARE cleaner, but they have a bigger problem - train fares are only 30-50% of the cost of running the trains, and it is damned expensive replacing them and building their corridors (which don't get well used).

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So the claim that public transport IS better for the environment is questionable. The truth is that it depends on it being well patronised, and funnily enough commercially run services tend to be more than subsidised ones, because subsidised ones don't HAVE to make money from fares alone.

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In fact the Surface Transport Costs and Charges study does expose some of the favourite Green Party myths about transport in New Zealand:

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1. On a per person basis the same pollution is created by 3 people travelling in a car on a long distance trip as is every person travelling on a bus or a train. So the average family holiday by car is more environmentally friendly than the average family holiday by bus or train.

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2. The environmental costs of long haul freight, for the primarily rural movements analysed, are similar in magnitude between trucks and trains. On top of that "Current charges (mainly RUC) are in most cases greater than the level of marginal provider/external costs (principally accident externalities and marginal road wear)." So in short, trucks already more than cover the costs they impose in most cases.

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3. ACC charges significantly over recover the costs of accidents attributable to cars (112%), trucks (587%) and buses (345%), but under recover costs from motor cycle users (18%). So it is nonsense to claim the costs of road accidents are not paid for by road users, except one group.

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Yes there are problems, congestion is by far the biggest "unpaid "cost, but this is because of poor management of networks and bad investment decisions. Most environmental costs comprise air pollution (which is getting better) and are on local roads (due to slow speeds and exposure to people).

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It simply isn't as bad as is made out

Greens spinning and hiding the truth

If you just listened to Russel Norman on the release of the Ministry for the Environment's report "Environment New Zealand 2007" you'd think things are bleak, you'd think cars are one of the main sources of blame and that the government is acting contrary to the report. Plus, of course, you'd think the now released "Chapter 13" is damning. Chapter 13 is just a summary, with a few broad recommendations.

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Sadly, scaremongering is one of the key currencies of the Greens, so I thought I'd actually READ Chapter 13, and given that transport is a field of mine I'd read the chapter on transport and read the chapter on air pollution (since previous government studies indicated that the environment impacts of transport are predominantly air pollution). You too can read the reports here. I wanted to know if the reports really DO damn road transport.

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So what HAS Russel claimed the reports have said? Well the claims are across a couple of press releases here and here. These are his key points on transport:

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CLAIM: Russel says the report "makes some inconvenient recommendations for action such as national environmental regulation and more public transport", and on the Youtube video he says it repeatedly calls for more public transport and that building a big motorway in Auckland goes against the report.

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FACT: The report DOES call for public transport to have a biggest share of trips, but does NOT call for no more road building. It doesn't at all mention reducing spending on roads.

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CLAIM: Russel says "This report shows that people want more convenient sustainable transport options. This means fast, cheap and comfortable public transport as well as safer cycling and walking." "Shows" but doesn't say. In fact it says nothing about people wanting more public transport at all, nothing about stopping road building.

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In fact if you read the MAIN report, you'll find plenty of inconvenient truths that Russel ignored:

• “Levels of PM10 particulates at roadside locations in Auckland appear to have fallen over the past 10 years" PM10 are particulates, the air pollution that causes the greatest damage to health.
• "Benzene levels at monitored locations are at an acceptable level. Levels are higher near busy roads than in residential areas, but appear to be improving. This improvement is probably due to changes in vehicle fuel composition. Lead was eliminated from New Zealand petrol in 1996, so airborne lead levels are now very low.” So more good news.
• The worst one appears to be “Levels of nitrogen dioxide are at an acceptable level around New Zealand, with the exception of some locations in Auckland affected by traffic emissions. Emissions of nitrogen dioxide in Auckland appear to be increasing". Hardly devastating.
• Despite the war on cars of the Greens the report also points out that “Home heating is the main cause of air pollution in populated areas in the winter" Hmm don't see anything about people's home fires in the Green party statements, bit of an inconvenient truth that it ISN'T transport, but rather home heating in most parts of the country outside Auckland that creates most air pollution.
• Vehicle ownership has increased, as have km driven (although down in the last year), and the vehicles people buy are getting bigger, yet this is largely a function of wealth. A good thing.
• Fuel is cleaner now that it has ever been, with sulphur levels now 96% less than they were four years ago. Sulphur is the key source of particulates from transport emissions.
• 10% of road vehicles create 40% of pollution, largely because they are badly tuned. Responding to this issue alone would make a worthwhile difference.

The real inconvenient truth is that air pollution is, by and large, getting better. Not that the Greens would admit it.

The report doesn't call for an end to road building, does not rank car traffic as the leading cause of air pollution and does not advocate the Green's pets of rail transport, or ANYTHING about shifting freight from trucks to rail or shipping.

In fact, it shows that while people own more cars, travel more km by car, most indicators of air pollution are improving, and besides much of the problem is caused by home heating. So what does that make the Greens other than masters of spin and scaremongering?

The transport chapter is here.

The air pollution chapter is here

A mate and his girlfriend are having sex

Do you:

a) Watch

b) Not Watch

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so says an interactive DVD produced for AFL players to improve their attitudes to women according to the NZ Herald. Of course it left out:

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c) Offer to join in to double team her

d) Ask her if she's bi and you can bring your girlfriend over for an orgy

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Both being quite legitimate options if they all consent. Similarly with the question:

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You are called by a mate's girlfriend into her bedroom because she thinks you are her boyfriend.

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Do you:
a - Go and hop into bed and pretend to be him.
b - Walk away.

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Well hold on. Why not go, be yourself and see what she says. After all, what the hell are you doing at her house (or his house where she lives) and he isn't around? She might be keen for a shag anyway.

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Poor lads, you can see them watching all confused, with questions like:

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You are with a girl who has had too much to drink. Do you:
a - Get her some water.
b - Call her a taxi.
c - Take her back to your place for sex.

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Watch the heads scratch when they wonder if this is a "place them in the right order" question, and wonder where the "is she hot" question gets answered. However, you can understand why it needs to be done. They are largely men full of testosterone and not a lot else, and surrounded by a culture whereby easy women hang off them, and they are bound to go for what they can.

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I'm sure this will change things significantly hmmmm. Although is it not just enough to ask for them to not force themselves on women, and not take advantage of women who are unable to consent? Rather than roleplaying situations which are, frankly, not offering the more likely and adventurous options. After all, it is awfully sexist to assume only men have filthy minds, plenty of women I expect would happily consent to be gangbanged by AFL players!

Flashing for Hillary?

Hillary either hasn't a sense of humour, or didn't find the girl hot, or maybe she knows now this probably just happens to Obama?