Damien Grant: Let's just trade, it's fairer

Buying a tablet computer may do more for the world's poor than buying a Fair Trade blanket. Photo / Thinkstock

Why can we buy Fair Trade coffee but not Fair Trade electronics? The question came to mind recently when I wandered past the Trade Aid store in Ponsonby, admiring the wooden toys and other trinkets made by the worthy poor.

Around the corner in Grey Lynn is another business, All Good Organics, which recently won a Fair Trade award for innovation. It mostly imports bananas.

The Warehouse also sells goods imported from the Third World. Not just clothes but electronics, software and other high-end products without a Fair Trade sticker or organic banana to be seen.

There is a conceit, often held by those who peddle the Fair Trade and other similar banners, that the world's poor are unable to earn a decent living on their own but must rely on paternalistic charity from Western consumers.

This isn't true. If you want to do something to help the world's poor, your money will be better spent on a new iPad than a Tibetan blanket, as recent research demonstrates.

The University of London sent two researchers into Ethiopia and Uganda for four years to study, among other effects, the impact of Fair Trade on the poor.

They published a comprehensive report in April and the results were disappointing. Fair Trade firms are meant to pay farmers a higher-than-market price on the assumption more cash to small farm holders was the route to alleviating poverty.

However, the truly poor are farm workers who toil for the landowners and see no benefit from Fair Trade. The researchers were "unable to find any evidence that Fair Trade has made a positive difference to the wages and working conditions of those employed".

At the same time, Cambridge University Press printed economist Benjamin Powell's book, Out of Poverty, which provides a detailed analysis of how so-called sweat shops provide choice and opportunity for poor Third World workers.

Powell documents that workers choose to work in the factories because it is a better economic decision than the alternatives.

Forced labour, even in truly awful nations, is incredibly rare. Firms are compelled to pay more than a worker would earn in the field. Buying their goods means those workers have options and this is a good thing.

Factories do not just need sweat workers, however. They also need accountants, IT workers, managers and the other essential minions of a capitalist economy.

Factories bring more than low-paid jobs. They bring knowledge, opportunity and an incentive for parents to educate their children.

Fair Trade offers nothing but the prospect, often unfulfilled, of a marginal improvement on a pitiful income making low-value goods.

Free trade allows a real opportunity for prosperity for the world's remaining underprivileged and explains why countries like Singapore and South Korea have, on some measures, a higher annual income than New Zealand.

Perhaps in time we will be selling them Fair Trade sheepskin rugs.