More Questions…

In some respects, the “consumer” is the most powerful political agent in international economic relations. That power, however, is rarely fully accepted or acknowledged—particularly when it comes to labor and environmental rights. The question I have is “Why?” – Why do consumers (particularly in the West) portray a relative ignorance regarding the products they buy and the businesses they support? One answer may be a “lack of awareness.” Perhaps consumers simply don’t connect their dollars to labor and environmental standards. If that’s the case, then the current strategy of the fair trade movement is failing. Why do many of its programs and projects focus on branding products that are fair trade rather than educating consumers about why fair trade is necessary? It seems to me that if consumers first believed that fair trade was necessary then they could demand it.

 Perhaps, it’s not a lack of awareness. Perhaps consumers simply don’t care. Massive educational campaigns have been launched to connect Nike Inc. to poor labor standards in China, Vietnam, Indonesia and Mexico. Despite these efforts, a simple Wikipedia search reveals that Nike’s annual revenues have increased from $6.4 billion in 1996 to nearly $17 billion in 2007. Maybe the consumer doesn’t believe that their one purchase has any real sway over the labor standards in a foreign place.

The questions of “why” or “do they care” are the subtext of the Hiscox article regarding labor standards and Jaffee’s article regarding fair trade coffee. Vogel’s article The Market for Virtue takes it a step further while posing the question to corporations and the realm of social responsibility. But policy analysts and economists haven’t quite put their finger on it either. So without fully developing the question or answering it, the response has been to create a fair trade movement that exists both “within and against the market.” (Jaffee, 34) But there are certainly risks of political and economic capture. Just ask the organic food movement.

Organic food is the fastest growing sector in American food production. Critics argue that due to this unprecedented demand, the early images of picturesque farms with healthy alternatives are fading. According to a 2006 article in the Economist, organic farms are now becoming larger and more industrial with harsher effects on the environment. The movement worked so well it took on a life of its own.

So that brings us back to the power of the consumer. A visit to London will show that Europe has a better handle on the fair trade movement than the United States. Many products are branded and local shops go out of their way to recognize changes they’ve made to support fair trade. The tide is turning at a slower rate here in the US where we shop at Wal-Mart and buy the new Nike’s every Saturday. In order to harvest the power of the consumer the fair trade movement must determine what the fundamental question is, and I have a thought on the answer. When Barack Obama gave his inaugural address last year, I was struck by one sentence…it’s the only one I remember clearly. “We will not apologize for our way of life, nor will we waver in its defense.” He was talking about terrorism, but I think it reveals how consumers (Americans in particular) treat their economic decisions. It’s not a question of “do we know” or “do we care” it’s a messy mixture of both. Sometimes we know and we buy the product anyway and sometimes we don’t. If the fair-trade movement is actually going to be successful then it must work on changing the culture and incentives that are associated with it. Just ask the organic food movement…

Consumers in charge?

Targeting consumer behavior to curve violation of labor and environmental laws sounds like a clever idea.  However, it reminds me of the eternal question about direct democracy: Are people too ignorant to govern themselves? The same fear that worried the founders of this country – and thus their decision for a representative rather than a direct democracy – concerns me when it comes to depending on consumer behavior to make companies abide by the law. Besides having to overcome the challenges of gaining access to accurate information, relying on this consumer-driven mechanism requires a judgment call that people make once they become informed. I consider this judgment element problematic because it is subjective… and much like the fathers of this nation, I would rather not take the risk. Here is an example to illustrate my point.

A few months ago, I sat in a class where a professor had us split into five groups. Each group represented a segment of a fictitious commodity chain of a banana. That is, one group represented the farmers, another group represented the owners of the land where the bananas grow, then the export company, then the import company, and finally the retailer- in this case a supermarket. Based on the assumption that one banana would sell for $0.40 in the supermarket in the US, each group had to come up with two numbers: The first was the portion of the $0.40 that each actor SHOULD earn (note, normative terms) and the second was the portion that we thought they currently earn. To my surprise and concern, the group that represented the farmers said that, in ideal terms, they (the farmers) should earn $0.03 per banana. It happens that, per the information provided by the professor, they currently earn $0.02.

I will not comment on the specificities, background, or context of this activity for it makes the future of development work look calamitous. Coming from the ultimate banana republic – Honduras – I know that $0.03 per banana is misery’s wage. Perhaps my classmates have never seen a banana farmer, their families, or living conditions. Those classmates might not know the type of lifestyle that $0.03 per banana affords. I give them the benefit of the doubt and assume that there is a problem of misinformation. However, their judgment based on the information that everyone had in the class – five actors in the commodity chain and the banana is sold for $0.40 – concerns me. Their judgment of a fair division of the $0.40 was that the people who produce the item receive the lowest percentage.

All this to say… yes, it sounds like a great idea to organize consumers and have them drive the campaign towards better labor and environmental standards. I am sure that many people can and would make great contributions by purchasing fair-trade items and boycotting the “ugly and dirty” ones. But, with the same amount of information, other people will decide that other human beings should continue to live in misery. If that is the case, then I do not want that responsibility and power in consumers’ hands.