Why is FAIR TRADE better than FREE TRADE?

[Lumpenproletariat]

Labor Day Tribute to America's crybaby wage-earner victims


Everyone agrees with Trump, unanimously, that "fair trade" is good and "free trade" is bad.

Democrats and Republicans alike preach this religion, from the Bernie Sanders and Michael Moore and BLM employer-bashers to the Donald Trump MAGA China-bashers. It's now the universal religious dogma of all the Red/Blue fanatics and crusaders and pundits and idiot masses that American workers are poor victims of "unfair trade" who have to be protected from the greedy capitalist pigs and the dirty foreigners trying to steal our jobs.

Trump is turning more to this theme as we approach election day, because Americans slurp up this religion, and it seems to have won him just enough votes in the rust-belt states to put him over the top in 2016.

And Biden/Democrats have no rebuttal to Trump other than to agree with his ideology but also accuse him of not doing enough to promote this crusade to protect the downtrodden American worker victims of "unfair" trade, accusing him of not pandering enough to them and giving them enough protection against the dirty foreign competitors, or even lying when he claims to have "saved" their jobs.

And yet, no one can give a reason why "fair trade" is better than "free trade" once the slogans are set aside and we just look at the economics.



So, what is the difference between "fair trade" and "free trade"?

FAIR trade = higher labor cost = higher cost of production = higher prices = lower standard of living for all consumers.

FREE trade = more competition, especially wage competition and lower labor cost = lower cost of production = lower prices to all consumers.


Since FREE TRADE makes everyone better off (except a few uncompetitive workers) -- i.e., increases production and makes even most workers better off because they are consumers who must pay higher prices under FAIR TRADE, why does everyone still preach the religion of FAIR trade, as if it makes the nation better off, when a higher cost of living is not better but is worse? Why does everyone choose a higher cost of living and thus lower living standard?

The only answer is HATE. It's gut-level, instinctive, hate of employers and desperate job-seekers who are willing to work for less in order to get hired. Or hate directed at those who are more competitive because they would reduce cost, and the FAIR-trade disciple worships only the compensation to workers, with no regard for consumers who have to pay the higher cost. Those who preach FAIR trade disregard the cost to consumers, which is impersonal data, in their mind, as they obsess romantically on the workers, who are a high-profile segment of the economy, as a class separate from non-workers. And class warfare is the essence of the "fair trade" romanticism.


The FAIR trade devotees fall into two classes:

1) CRYBABY wage-earners who directly benefit from the higher wage, and

2) CRYBABY-PANDERERS who obsess on pandering to these crybaby wage-earners and fail to notice that they are making 100% of consumers worse off, which is the whole country, so that virtually everyone is made worse off (though perhaps 1% of workers are crybaby wage-earners who gain a net benefit from the higher wage level, gaining more from the higher wage than they lose because of the higher prices they must pay).


Definition of "CRYBABY"

It's reasonable to label someone a "crybaby" who insists on driving up the costs for everyone in order to gain a benefit for him/herself, or for his/her special interest group.


The fundamental point of FAIR trade is to exclude desperate workers from getting hired, by disallowing them to be hired at the (lower) price employers are willing to pay them. Most of them could get hired if they could offer their labor at a lower compensation level, thus competing with the higher-paid workers who are able to get hired at the higher compensation levels. Not all job-seekers are able to get hired at those higher compensation levels, and so they would accept work at a lower level in order to get hired, since the alternative is no job at all. For them, a low-paying job is better than no job at all. For them, FAIR trade means no job at all, whereas FREE trade would mean getting hired at a lower compensation level, and this is made illegal under FAIR trade. I.e., it's "fair" for those who are able to get hired at the higher compensation level, but it shuts out those who have difficulty getting hired, by making it illegal for them to be hired at a lower price employers are willing to pay them.


So those who benefit from FAIR trade are the overpaid crybabies who insist on keeping the wage level high, so they are paid higher than they are worth (supply & demand) while shutting out the desperate job-seekers who cannot get hired at that higher compensation level.

What other benefit does FAIR trade offer over Free trade, other than to pander to the uncompetitive overpaid wage-earners by shutting out those who want to compete at a lower wage level in order to get hired?



Whatever the economic ideology, it cannot be denied that higher labor cost with no improvement in job performance = higher cost of production and thus LESS PRODUCTION = higher prices everyone must pay and less consumption = lower living standard overall.

 

[ZiprHead]

More simplistic babble with far too many words.

 

[laughing dog]

Fair trade is simply free trade with some extra ethical considerations in place. It is naive to think that "free trade" occurs in a legal or ethical vacuum.

 

[Lumpenproletariat]

Fair trade is simply free trade with some extra ethical considerations in place. It is naive to think that "free trade" occurs in a legal or ethical vacuum.

It's not "ethical" if it makes people worse off rather than better off. Such as reducing the overall living standard by driving up costs in order to pander to a minority who are uncompetitive.

 

[Rhea]

Fair trade is simply free trade with some extra ethical considerations in place. It is naive to think that "free trade" occurs in a legal or ethical vacuum.

It's not "ethical" if it makes people worse off rather than better off. Such as reducing the overall living standard by driving up costs in order to pander to a minority who are uncompetitive.

Fair trade does not make people worse off. It minimizes the hoarding and bullying that leaves large numbers with nothing.
It overcomes the divides like those seen in feudalism, slavery and sweatshops.

Many people are willing to pay a little more to avoid businesses whose model relies on wage slavery and human misery.
Other people are fine with overworked minions bringing them their cake.

 

[laughing dog]

Fair trade is simply free trade with some extra ethical considerations in place. It is naive to think that "free trade" occurs in a legal or ethical vacuum.

It's not "ethical" if it makes people worse off rather than better off. Such as reducing the overall living standard by driving up costs in order to pander to a minority who are uncompetitive.

Fair trade does not make people worse off. It minimizes the hoarding and bullying that leaves large numbers with nothing.
It overcomes the divides like those seen in feudalism, slavery and sweatshops.

Many people are willing to pay a little more to avoid businesses whose model relies on wage slavery and human misery.
Other people are fine with overworked minions bringing them their cake.

More importantly, L's standard (not if it makes people worse off) rebuts his premise that free trade is better, because free trade typically does make some people worse off.

In economics the argument is that free trade has the potential to make everyone better off but no one argues that it reaches that potential - there are always losers. So, Lumpenprolariat's argument works against free trade as well since it makes some people worse off.

 

[Rhea]

One thing that “free trade” exploits that “Fair Trade” does not, is the human instinct to accept a job that has you starve more slowly, even if you are still starving.

Some folks claim that since the person took the job, the employer is doing Good because without that employer the people would have no job. What fair trade says is that if a business relies on slowly starving employees to get their low price, it has no place in human society competing for price against a business that pays a living wage.

 

[Jarhyn]

Fair trade is better because it recognizes an asymmetry in economic leverage, while not leveraging the asymmetry. It recognizes that the only way consent can be achieved is with a symmetrically informed consent.

We all recognize that asymmetry in power and/or information spoils consent. This is the reason children cannot consent to sex with an adult: an asymmetry in power or information or both. There is no reason this should not extend to countries and state level economics.

Fair trade is international economics wherein leverage is abandoned for the sake of the party with less power.

 

[Tigers!]

I am in favour of bi-lateral fair trade agreements rather than multi-lateral or global. With bi-lateral fair trade you can, as others have noted previously, take into account differences across countries, cultures, strengths and weaknesses etc.

Fair trade should be a give & take with no parties feeling taken advantage of or signing under some form of duress.

 

[ZiprHead]

Paying less than a living wage means you feel your right to conduct business is more important than the lives of the workers you employ.

 

[Lumpenproletariat]

In the end, it's FREE trade which makes the poor better off, not FAIR trade eliminating their job.

Fair trade is simply free trade with some extra ethical considerations in place. It is naive to think that "free trade" occurs in a legal or ethical vacuum.

It's not "ethical" if it makes people worse off rather than better off. Such as reducing the overall living standard by driving up costs in order to pander to a minority who are uncompetitive.

Fair trade does not make people worse off.

Yes it does because it increases the prices everyone must pay. Higher cost of living = worse off.

It minimizes the hoarding and bullying that leaves large numbers with nothing.

No, it results in LESS total production, which necessarily means less for everyone. "Fair" trade forces companies to pay higher costs = higher prices and less production. This means more numbers with less. How can you have more for people when there is less produced? You don't provide more to people by reducing the production. If there are "large numbers" with "nothing" or very little, you don't make them better off by reducing the total production. And yet "Fair" trade necessarily reduces the production because of the higher costs it imposes onto the producers. You're not going to get anything to those "large numbers with nothing" by causing the production to DEcrease. You have to make it INcrease in order to help those "large numbers" in need.

It overcomes the divides like those seen in feudalism, slavery and sweatshops.

No, "fair" trade makes conditions worse for all of those. It increases the numbers who can't get hired and thus makes them more vulnerable. It eliminates jobs for many who could otherwise get hired. It eliminates jobs for poor people who are then reduced to begging on the street, when before they were needed, even though their pay was low. It's worse to be a vulnerable beggar than a low-paid worker in a sweatshop. The workers in the sweatshops are made worse off by "fair" trade, because their job is eliminated altogether. A sweatshop job is better than no job at all, and that's the only alternative offered to them by "fair" trade, not a better job in a better workplace.

Many people are willing to pay a little more to avoid businesses whose model relies on wage slavery and human misery.

You can call it "wage slavery" and "human misery" and other emotional outburst slogans, to make you feel good, but when "fair" trade is done dealing with it, that "slavery" and "misery" is made worse, not better. Making people even worse off is no solution to "slavery" and "misery" or whatever you want to call it. And "fair" trade only makes it worse, not better. And those people "willing to pay a little more" are not making anyone better off, by forcing businesses to be shut down and people thrown out of their jobs. None of those people "willing to pay a little more" have any evidence that their crusade has done anything to alleviate "slavery" or "misery" -- they are deluded by the phony slogans.

Other people are fine with overworked minions bringing them their cake.

Those "minions" are made better off by having a competitive economy which needs them, rather than the meaningless slogans of "fair" trade based on Marxist crybaby economics, and the reduced production required by "fair" trade.

 

[Rhea]

You assume fair trade eliminates jobs.

I think your argument for that is bankrupt, skips a huge number of factors and assumes the conclusion you want.

I’ve heard people try to argue that lavishly rich Barons trickling pennies to the destitute is a grand idea that benefits everyone, especially those slowly starving. Their argument for it is the same as yours; shallow and appears to be merely an apology for greed and manifest destiny.

 

[fromderinside]

It's up to governments to decide what makes a 'winning' buyer, seller, worker, employer. Once each government sets it's frame free trade should be no problems since individual populations buy into the rules under which they choose to play. Free trade between Country A and B may be completely different from free trade between country A and C. All nations retain the right to adjust the cost/prices of products within their nation through various means including taxation. Does anyone give a damn whether the price of a commodity is this or that in another nation? We don't look to Belize to determine the price of bananas at markets in Los Angeles/CA/US.

 

[Lumpenproletariat]

It's called "COMPETITION" -- always best, long-term, for everyone.

Lost your job due to competition? Get over it! It's called "progress" etc. Trump's Crybaby Economics is not the answer.

More importantly, L's standard (not if it makes people worse off) rebuts his premise that free trade is better, because free trade typically does make some people worse off.

Just as an uncompetitive business might fail, due to competition, likewise some uncompetitive workers also can do worse if they don't adjust to the competition.

However, EVERYONE is made better off by free trade competition, in the longer term, because everyone benefits from the higher living standard and higher production due to competition.

E.g., improved technology can eliminate someone's job, making them worse off for now. But overall that person benefits from all the better technology taking place, now and over many decades of time, so that it's better for everyone to be subject to the competition and be forced to adjust to it.

So the "some people" made worse off by free trade competition are made better off eventually. More competition is always better, despite the short-term negative result to some.

In economics the argument is that free trade has the potential to make everyone better off but no one argues that it reaches that potential - there are always losers.

Only a few short-term losers, because of competition. Which is best. The alternative is to subsidize every failing business, and "create" phony makework jobs for the riff-raff, to guarantee that no one has to compete. But the cost of trying to save the uncompetitive ends up making society generally worse off -- for everyone eventually.

So, L's argument works against free trade as well since it makes some people worse off.

Free trade makes EVERYONE better off, eventually (except a few who lose their job and immediately commit suicide, etc.), while FAIR trade always imposes higher costs onto everyone and reduces total production and increases the cost of living -- to EVERYONE, into the future permanently, as it necessarily continues to curtail production and reward the uncompetitive instead of incentivizing producers to improve.

 

[DBT]

It's not that workers are uncompetitive, but that business looks for cheap labour. The name of the game is cut costs and increase profits.

 

[Lumpenproletariat]

Allowing free choice cannot make it worse, even in the worst of all possible worlds where everyone starves no matter what.

One thing that “free trade” exploits that “Fair Trade” does not, is the human instinct to accept a job that has you starve more slowly, even if you are still starving.

Meaning "fair" trade is worse, because it denies you the choice to starve slower rather than faster, given that those are the only alternatives and starvation is inevitable no matter what. Given that this is the real situation, then without trade you'll starve anyway, sooner, but with trade it's possible to delay this, and free trade lets you choose between these, whereas fair trade imposes on you the sooner starvation with no choice.

In the real world starvation is not inevitable (or not for 99.9% of us). But even in a hypothetical world where it is, and it's only a question of sooner or later, there's nothing preferable about denying the starving one a choice of delaying the starvation by taking a low-paying job. Just as death is inevitable, but still it's preferable to delay it if possible. And yet even you insist that it's better to die sooner rather than later, that doesn't mean we should be denied the choice to delay it. If sooner is better, we're still free to choose that, so nothing is gained by denying us the choice.

So the "starve more slowly" argument gives no reason why fair trade is better, except to impose the sooner starvation without leaving one to choose the slower one instead. But free trade insures that there is less starvation and more life, if either is possible, because it increases the total production needed for increasing life and reducing some of the starvation.

Some folks claim that since the person took the job, the employer is doing Good because without that employer the people would have no job. What fair trade says is that if a business relies on slowly starving employees to get their low price, it has no place in human society competing for price against a business that pays a living wage.

And fair trade is wrong in denying a place to that business, because that business is making the world better than it would be otherwise. By snuffing out that business you are increasing the total starvation and suffering in the world.

The business paying "a living wage" has to charge higher prices in order to afford that higher cost, which means it produces less and makes all its customers worse off, or poorer than the business which cuts its labor cost so it can charge lower prices.


Allowing free choice increases the chance of improvement.

Free trade allows both businesses to operate, if they can, while fair trade cracks down on one of them, shutting down its production and reducing the living standard of all its customers and denying jobs to those workers who would choose that low-paying job as their best hope to survive.

There's no way that reducing the total production can produce a net benefit for society. All you can argue is that the world is so awful anyway that it's better to stop kidding ourselves and for everyone to just starve immediately rather than pretending anything can improve it.

Free trade = let people try to improve it, if they think maybe it's possible (even when it's not).

Fair trade = everyone starve now, immediately, and stop pretending anything can be improved.

 

[laughing dog]

The claim that free trade makes everyone better off in the long run is purely an article of faith and nothing else. There are no theoretical reasons to believe that every single person is better off nor is there empirical research to support the claim.

BTW, there is nothing inconsistent with fair trade also being free trade. Fair trade can exist as free trade with standards. All trade has standards. For example, when there is free trade in lumber, buyers can insist that the lumber is not warped or comes from dead trees. The idea that fair trade is opposed to free trade is simply nonsense.

 

[Lumpenproletariat]

No, the poor benefit from doing transactions with the rich.

Calling it "asymmetry" or other fancy term does not turn it into something bad.

Fair trade is better because it recognizes an asymmetry in economic leverage, while not leveraging the asymmetry.

No, free trade also recognizes the asymmetry.

And maybe free trade does leverage the asymmetry, which is good, while fair trade tries to eliminate the asymmetry, and the cost of this makes everything worse, not better. The obsession on "asymmetry" causes unnecessary cost and makes us worse off.

It recognizes that the only way consent can be achieved is with a symmetrically informed consent.

It pretends this. It doesn't "recognize" it because it's not true. Someone with less power can consent to terms agreed to with someone who has more power. Nonequals can bargain with each other and make a deal which is in their mutual interest. It's not true that the consent has to be "symmetrically informed" in order to be achieved. Millions, even billions of poor people are made better off by doing business with the rich and powerful, improving their lives by engaging in business and consenting to terms which are not ideal but which make them better off than they would be otherwise.

We all recognize that asymmetry in power and/or information spoils consent.

No we don't all recognize this, and it's not so. Consent is good even though the parties are unequal. All that's necessary is that the parties are free to make their choice without being forced by the other with threats of retaliation which would make them worse off than they would have been otherwise.

As long as the other party is not threatening to make you worse off than you would be if they did not exist, they are not doing you harm, and the consent is good for you even though you're weaker.

This is the reason children cannot consent to sex with an adult: an asymmetry in power or information or both.

No, it's neither. The "asymmetry" is not the reason anything is wrong, or should be illegal. You might make an argument that the "asymmetry" causes something wrong to become even worse than it would be if there were no "asymmetry" between them. E.g., if an educated rich and powerful adult murders a poor person, maybe it's worse or deserves worse punishment than if it had been a poor depraved uneducated 15-year-old who did the same crime. However, it's not this asymmetry of the two which makes the act a crime. You still have to show the damage done by the act before you can call it wrong or harmful and make it illegal.

And you cannot show how it's wrong or harmful and should be made illegal for a poor person to choose to work for $1/day, even if the employer is rich and powerful. If the poor person is a child, possibly the decision to do that work is wrong -- usually it's the parents who should decide that -- but the reason it's wrong is not that the employer was rich and powerful. So it's not the "asymmetry" which made it wrong. It's a wrong decision anyway, regardless of the asymmetry, and usually the parents, but maybe also the state, could overrule the child's decision. Not because of the asymmetry, but because it was a wrong choice regardless of the asymmetry.

If all you can show is that there is this "asymmetry" and nothing else, then there is nothing wrong about it, and it should not be made illegal. So if you're going to forbid a transaction between 2 unequal parties, like a child being recruited by an adult for sex, you have to show something bad about what they're doing, and not just that the two are unequal.

There is no reason this should not extend to countries and state level economics.

There is every reason this should not extend to anything. It's a false theory about what is right and wrong and what should be made illegal. No transaction should be made illegal, or branded as wrong, simply because there is "asymmetry" between the parties to the transaction. No matter how great is the inequality. If Bill Gates wants to pay a poor desperate adult immigrant to mow his lawn for $1, and the immigrant wants the job, there is nothing wrong with that.

Fair trade is international economics wherein leverage is abandoned for the sake of the party with less power.

Yes, it makes legitimate leverage illegal, thus making everyone worse off (when it's enforced, which it usually is not and should not be).

But no, fair trade does this harm not "for the sake of" the poor, but only on the PRETENSE of helping the poor, or parties with less power, while not really benefiting them, because it stomps on poor people by denying them free choice to take a job out of desperation, which is a legitimate choice for the poor to make.

"Fair trade" is mostly preaching meaningless slogans, with little practical effect. It's mostly pure employer-bashing and Crybaby Economics whining by the uncompetitive, and when anything practical comes from it, the result is damage inflicted onto everyone from the higher costs we all have to pay as a result of the whining and bad decisions, like trade protectionism, from the phony hypocrites and preachers of fair trade, like Donald Trump and other demagogues who use it to increase their power by gaining votes from the idiot masses.

 

[Loren Pechtel]

Paying less than a living wage means you feel your right to conduct business is more important than the lives of the workers you employ.

Using the term "living wage" says you care more about ideals than reality. "Living wage" is a dog-whistle for more than they produce.

That being said, the problem with "free" trade is that while it might be free at the macro level it often is not at the micro level.

 

[DBT]

As it stands, most of the worlds wealth is flowing into the hands of a small percentage of the world's population. That the reality. It is an unsustainable reality.