Fair Trade sounds like a good idea. By fixing the market, farmers in underdeveloped countries get a "fair" price instead of a lower free market price. A report by the Adam Smith Institute sets out, not altogether successfully, to explode the myth. But the main points it makes are conclusions that follow automatically from any economic analysis that looks at the overall picture. They flesh out concerns about Fair Trade that I have had for a long time. Fair trade schemes create little sanctuaries where people are better off than those around, who do not benefit from those schemes. Where demand for produce is limited, the result is that those outside the fair trade schemes are liable to be worse off than they would otherwise be. Fair trade could never be a scheme of universal applicability whereby people could be lifted out of chronic poverty. It would not make poverty history. Worse still, higher prices are inevitably claimed by landowners in the form of higher rents. Where t...
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