Both of you have made nice points.

I think, though, how skeptical we should be about Fair Trade and aid will depend on which brands and organizations we support. Although USAID, for instance, gives a lot of humanitarian aid in the way Mark suggests, many other organizations are wiser and purchase the goods they distribute locally. Similarly, different Fair Trade organizations have different requirements. Some work only with small farmers organized into cooperatives, others require that wages and working conditions meet certain standards. I guess those of us with the leisure to do so should check into the particular labels that we support (and, of course, I should qualify my argument on this point!).

Thanks again! -Nicole

Instead, I’d like to briefly comment to Nicole’s reponse (hello again!) on (a). As a reminder, I didn’t disagree with her argument, but rather I felt her argument rested on a few unstated assumptions. One of these is that the extra funds raised from FairTrade would trickle down to the farmers (i.e., (a)). (I also thought that not only must monies trickle down, but that they had to be sufficient to offset potential profits from harvesting other crops, etc.)

I still think it might be worth being more explicit about this assumption being part of your picture. I remember looking into some research with Leif on humanitarian aid. In essence, the data is very difficult to come by on how much aid you purchase for your dollar as many agencies are reluctant to give full disclosure. From what I’ve seen, it isn’t close to $1 of aid for $1 donated. Part of this is because of administrative and promotional costs. Another problem is that often persons who go into assistance are driven primarily by (very honorable) idealism. I think it remains important to ask precisely what benefits are derived from any scheme. An argument in favour surely rests on the assumption that money into a scheme will trickle down. I wouldn’t take the assumption for granted as there is much evidence that much of funds — at least for different organizations and projects — goes astray.

Not being a pessimist: just trying to help!

I’m not sure that’s right. In fact, I think it can’t be right- the principles of justice apply to the basic structure, after all, not individually to particular policies. And usually particular policies can’t be looked at in isolation anyway- they have to be evaluated in light of a larger system. Can you point to some text where Rawls says this? I don’t think there is one, but if you can point to one I’ll be interested to see it. As to your later question, I don’t think we can tell if there _is_ an injustice in any particular case w/o looking at larger schemes. So, if free trade by itself would make, say, the employees of US Steel or whomever worse off than they would be without it, but the gain in over-all welfare is enough for us to compensate them for their loss and re-train them and the like, then they have not suffered any injustice. They don’t have a right to work in the steel industry per se, after all. So, I think you cannot evaluate the situation without looking at a larger set of issues than you want to, and I’m pretty sure that that would be Rawls’s view, too, but even if not he’d just be wrong.

I actually have a paper which tries to use a roughly Rawlsian theory of global justice to consider the case for free trade. Although it is still quite rough, I’ve posted it above (with my original post). It argues that unrestricted free trade is probably not the best policy. But I think there is a really tricky problem for Rawlsians that is unresolved in the paper (so, perhaps, it is not successful). The problem arises from the fact that we will never really know what is optimal for the poor (there are just too many combinations of possible policies). What then is it reasonable to do if we know that some policies will in fact be an improvement over the status quo but that they may not be in the package of best policies? I just assume that we should use those that appear to be best. But, then, there is the question of how long we should search before acting given that we don’t have infinite time. Perhaps if we searched longer we could find an even better policy. I’ll be terribly grateful for any thoughts!

a) Every principle “purports to describe how the world works”. Indeed, some principles, purport to describe how every possible world works. The PCA is one such. It is *not* an empirical claim.

b) No, I was not suggesting that DP and PCA are logically inconsistent. Given that PCA is necessary and DP normative that would have been a very odd claim. I was, of course, suggesting, as you surmise, that practicing Free Trade (as characterized by PCA) might be impermissible according to DP. I’m glad you now understand what I was trying to say.

c) Both Matts and Mark LeBar seem to think that we should not apply DP to particular policies but only to bundles of policies or “basic structures”. The argument is that even if Free Trade screws the poor we might be able to make it up to them in some other way.

That might be so but it misses the *philosophical* point. Rawls offers DP is a principle by which we assess the *justice* of *particular* policies. Injustice doesn’t go away just because you put in place mechanisms to compensate its victims. Thus, suppose someone proposed laws which forbade the poor from buying liquor. That *policy* would be inconsistent with DP– and unjust– even if some of the savings in welfare costs were used bettering the lot of the poor over all.

d) I see no evidence in any of this discussion that anyone understands how the economist’s argument for free trade (i.e. PCA) is supposed to work. The argument is not that dropping steel tariffs makes society so much better off that we can afford to pay welfare to unemployed steel workers. The argument is that society will be so much more prosperous that the steel workers will be able to find better paying jobs doing something other than steel working. Sound plausible to you? How about janitors, nannies and lawn-mowers or … fill in your own “worst” job. If that sounds unrealistic to you maybe you have more in common with Pat Buchanan than you have hitherto suspected.

But I don’t think that’s how the difference principle works, or at least it need not work that way. If there is a gain from free trade to aggregate welfare, as PCA says there should be under certain conditions, the question then would be how this gain should be spread around. If the gain is large enough it can be spread around so as to help those who lose from trade, assuming they are the least advantaged. Now, this policy will perhaps be distorting, but then the question is just whether the distortion is large enough to out-weight the gains from free trade. If not, then free trade, taken with other policies, is compatible with the DP. It’s not as if if we accept free trade we must then not put in place any policies to make sure that the gains are not shared by all or help the least advantaged. So, I fail to see where the supposed contradition is here.

Here’s how:

Suppose that we are contemplating entering into a trade agreement with another nation. The Difference Principle tells us that we ought not to do so if we suppose that the upshots will disadvantage our worst off citizens( however much they might advantage the citizenry in aggregate).

The Principle of Comparative Advantage tells us that, under *certain assumptions* about the nations involved, free trade between nations *must* be to the advantage of both nations. Note this is not a “merely descriptive” claim: given the assumptions, the PCA follows as a matter of logic.

Obviously any application of the PCA will assume some aggregative measure of national advantage just as any application of the DP must assume some measure of individual/class advantage. Equally obviously, if we are going to use the DP to normatively evaluate a policy of free trade we will have to find measures that commensurate the two principles.

The question then is, under such commensurate measures, and under the assumptions required by PCA, will a nation’s entering into trade arrangements disadvantage that nation’s worst off:
a) Always.
b) Sometimes.
c) Never.

Economists favor free trade on the grounds of PCA. But unless they have to hand a proof of (c), Rawlsian Liberals ought not to be so sure free trade is always a good thing.

As I said, I think the answer is (a), and that this explains why Rawls so ardently supported Pat Buchanan’s presidential bid.

I’ve always thought this too obvious to write up but the blog interest in this topic suggests otherwise.

Thanks for the great discussion! I appreciate all of the feedback. Here are some thoughts in response (though I’m feeling a bit tired and sick so I’m not sure how apt they will all be!).

First, regarding Thom’s thoughts:

There certainly are a lot of assumptions in the background including, I think, some of those you suggest. The only one that you mention that strikes me as somewhat questionable is (c). If we are willing to pay more for Fair Trade goods than regular goods then if markets are perfectly competitive won’t the price be sufficient to induce someone into purchasing Fair Trade goods (assuming, here, that the price we’re willing to pay covers additional production costs). Or was that the issue? Fair Trade goods may be more expensive to produce? In any case, it seems that at worst people will not produce Fair Trade goods if no one is willing to pay enough for the production costs to be worth it. But then they can continue to produce regular goods and offering to purchase Fair Trade goods won’t make them worse off.

Regarding a) I guess we just have to have faith that the benefits of the higher prices we’re paying are trickling down a bit to the small farmers (there seems to be some reason to think this given what NGOs like Oxfam
report and there are testimonials online from small farmers and farm workers about how Fair Trade has helped them but I don’t know of any rigorous studies of the issue).

Finally, regarding c), I guess if people can purchase more Fair Trade bananas for the prices they receive they might expand the market so much that it drives down prices (here we assume they don’t use the money to meet their basic needs, or whatnot). But, on the traditional assumptions they’ll only do this to maximize their utility and so, won’t they stop once they’ve brought supply up to the “optimal” level? I guess one might worry here about what optimal means but that’s a pretty general worry for economic arguments like this. In any case, if there are gains, the hope is that this argument shows that the result will be better for some and worse for no one.

Next, about Mark’s thoughts (nice to meet you!):

Mark says we have to worry about where the money we spend on Fair Trade comes from. He’s absolutely right! I’ve thought about this. But it seems likely that it’ll come from something that doesn’t help the poor as much. As long as that’s so, if the argument’s right, we should buy Fair Trade rather than do nothing (though there may be yet better things to do). But, then, the worry that there may be better things to do than any good alternative is a pretty general one. And a tough one!

Sean (also nice to meet you!) worries that non-Fair Trade farmers may starve before they get any better opportunities. And, he’s right. They might. They do. All the time. But, I guess I don’t think that’s an argument against helping some with Fair Trade (and I bet Sean would agree - no?).

Finally, Justin points us to Tyler’s discussion of the same topic on another site. Thanks Justin (and nice to meet you too - should I stop saying that on blogs? :). I guess I’m not quite sure how Tyler’s argument is supposed to go. It seems to express a concern about inequality. Some will not benefit from Fair Trade (and may not benefit from anything else either). To me, though, this doesn’t seem like a reason not to help those we can help. The fact that Fair Trade is becoming institutionalized (it relies on certification organizations, for instance) doesn’t seem too problematic. But maybe one could run an argument against helping some of the poor when doing so increases inequality (David Miller endorses such a view in Principles of Inequality). I have a paper arguing against that kind of view but I won’t go into it now.

In any case, thanks for helping me think through this a bit more! - Nicole

This isn’t a problem with your argument, per se, since you ‘make the standard economic assumptions’- but it does seem to raise a worry about the applicability of the points you raise to the decision I’ll make today as to whether to buy fair trade bananas.