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Part 3- Fair Trade vs. Free Trade: A Christian Choice?

David Cowan - January 30th, 2012

Part 3 of 3…

This is the third installment of Cowan’s three-part series.

To Read Parts 1 and 2 Click HERE

Certainly Christians should feel compelled to act to make things better, but one should not confuse the policy option one believes will bring about such a change with the compulsion one feels. Our motive to act may be good and produce bad results, or conversely it may be bad and produce good results. Even then, can one policy be more Christian than another?

What then can we do in this economy as Christians? Well, there’s some big picture stuff and small picture stuff we can do.

First, big picture stuff, we should have more cultural confidence that poor nations can help themselves, rather than beholden to a need for our generosity, what economist New York University William Easterly calls the new “White Man’s Burden”. The white man’s burden is the curse that our youthful idealism and aching hearts will be the catalyst for change. Less romantically, their economies will change through a process of restructuring, institution building and legal reform.

Second, more big picture stuff, our church leaders need to have dialogue with all economic parties. The IMF and World Bank, for all their faults, have sought to work for the poor. Commercial banking organisations like Citicorp have pioneered efforts in microfinance (more about that in a minute), in order to help the poor help themselves. Corporations and wealthy individuals have contributed directly to poverty programmes. Implementing policies to tackle poverty is not the preserve of the political ‘left’ or the charity organisations, themselves as much hidebound by bureaucracy and wastage.

Third, some small picture stuff, we can invest our money in developing countries. There is something called microfinance, which involves helping the poor to help themselves through small business loans. As little as 50 bucks can go a long way to get a business off the ground. There are online services that can help you do this. You get paid your money back with a return, and you can always reinvest that. Maybe your own church can collect money to invest in a few projects. This is so much better than simple charity or hand-outs, because it helps create wealth. Believe it or not, the poor are very good at repaying their loans, especially the women. Charity can then be concentrated on helping those who cannot help themselves, so I’m not ruling out a role for charity. Wealth creation in these countries will positively impact those who need charity though.

Fourth and last, and small picture stuff, we can give up some of our time to help the poor in our own neighborhoods. It often appears that it is easier to pay our poverty Indulgences than to give up our time to help. A few cents is nothing compared to how much we cherish our time.

In our free trade economy, major businesses create markets and wealth. They also play a critical role in rebuilding societies after major shocks, like natural disasters or civil war. Socialism and dependency on the state causes people to abdicate care by passing it into the hands of the welfare organizations and government, and that this abdication is a major cause of selfishness of the worse sort.

The suggestions above are just a start to how you might think about the positive role of free trade, and doubt the effectiveness of fair trade and its underlying philosophy. There are many issues at stake. Our job security in America, corruption at all levels, economic downturns, oil prices and dependency, environmental impact, and a whole host of issues worth an article each. To resolve such problems involves policy-makers, who may be Christians and indeed hopefully many of them are, but it is not the task of the churches or theologians to just say “Amen”.

Part 2- Fair Trade vs. Free Trade: A Christian Choice?

David Cowan - January 23rd, 2012

Part 2 of 3…

This is the second installment of Cowan’s three-part series.

To Read Part 1 Click HERE

The scale of the fair trade market is tiny compared to the global economy. To which supporters might say at least it’s a start. Yes, it’s a start, but a bad start. Firstly, it favors only those few producers who are able to enter the market. More importantly it fails to deal with the real economic problems that the country the producer is in suffers from. The real problems are corruption in government and in communities, and legal systems that prevent entrepreneurs from rising up in the communities.

There are communities where someone like Trevor would have to pay protection money, just to stay alive. There are countries business regulations are so cumbersome, it would have taken months or even years to get such a venture off the ground.

We can also ask just how good fair trade is for us, as consumers. What the front-men of fair trade are doing is getting us to consume things we don’t need, just as much as the free trade system they are critical of in the first place. A lot of the “new” products they produce are dust collectors. The quality of which is very questionable in many cases. It seems odd that fair trade campaigners attack consumerism by promoting their own, economically questionable, form of consumerism.

I was asked in a class I was teaching a while back, should we not promote local crafts like these in these poor countries? The student asking the question thought it was great that he could go to Africa and see such colorful crafts, and visit real villages. My response was swift. I don’t want to be cynical, but what we are asking consumers in America to do is become poverty tourists. We are to go to poor countries and admire their simple crafts and way of life. Maybe, just maybe, the poor we are looking at want big flat screen TVs too!

If you travel along the klongs of Bangkok, the network of rivers and poor housing of that sprawling city, you can peer into people shacks and see color TVs blaring out. They may live in poverty, but they want many of the same things we want. We don’t get these things by working on such a small scale as fair trade, we get what we want by participating in a major and complex free trade economic system. The problems we see in poor countries need sound economic solutions, not piecemeal, however well intended, solutions.

So much for the economics, what about the morality? If economically fair trade doesn’t do much to help, and there are better ways to help on a small scale, then where is the moral high ground? It is hard to see fair trade becoming the major system of trade, because it is still essentially based on Socialist principles. It aspires to be an alternative to free trade, by rejecting free trade. Can you name one successful socialist economy? It doesn’t exist. Fair trade is the economic equivalent of throwing a few cents to a beggar on the street, rather than finding a way to get the beggar off the street and back into society.

Even more perplexing, where is the faith? My concern is that fair trade is part of a secular search for economic salvation, which is what Socialism and Communism were in the last century. It is new Indulgences for a new Age. Like the Indulgences of the medieval period, reviled so much by the Reformers, fair trade till receipts are becoming secular certificates easing our peace of mind. The poor souls are being taken care of because we have shown how much we care by buying their products. Is this cynical? No, it is being realistic.

In liberal churches, fair trade has effectively attained doctrinal status. Increasingly now, evangelical churches are promoting fair trade goods. We should not fall into this trap. I believe we should recognize an economic realism. This does not mean blessing Capitalism, it just means working with it. Historically, Capitalism has lifted more people out of poverty than any other economic system. Recent economic problems don’t change that, though it will mean that consumers in wealthy countries will become less prepared to pay the subsidy cost of fair trade goods.

What is confused is the notion that given a certain economic problem we ought to do a particular theological thing about it. From the premise that poverty is a bad thing we are offered specific solutions theologically blessed for the greater welfare of all, such as fair trade. The market, it can be argued, is a more efficient means to achieve a proper outcome for the rational economic actor, but this is an economic or political result not a theological one.

As Christians, we are called to live in the world, not to set ourselves apart from it. We help the poor when we participate fully in our economy, as it is and not as we would like it to be. The economy reflects who we are, and if we don’t like what we see then don’t blame the system. The problem is the moral quality of the people. The economy is like a knife. You can use it to cut bread to share or to kill someone. It depends on the person wielding the knife.

Part 3 to Follow…

Part 1- Fair Trade vs. Free Trade: A Christian Choice?

David Cowan - January 17th, 2012

Part 1 of 3

Imagine a village, any village you like. Put some children in the village, playing. Then put them to do some commercial work. Place some billboards advertising consumer products around their school for a utility installation, funded by the advertising revenues. Sounds terrible? Do you bemoan the intrusion of big business in children’s lives? Is this the Madmen of advertising taking things too far?

Okay, now imagine a village in Africa. Imagine the long walk to a river by adults and children to fetch water for the village. See how the children are missing school, because they are needed to get water. There is a small school, but no facilities to play. Sounds terrible? Do you bemoan the unfairness of the world? Isn’t there more we can do to help?

Now put the two villages together. Better yet, let me introduce you to someone who did just that, Trevor Field, a former advertising executive in South Africa. The story is told that on a fine summer’s day in 1989, pretty much on a whim, Trevor went with his father-in-law to an agricultural fair outside of Johannesburg, South Africa. He saw a pump attached to a children’s Merry-go-round. Seeing this amongst a bunch of junk at the fair, gave him an idea.

Trevor’s idea was to install a Merry-go-round in a poor village, remote from the river, the one I asked you to imagine. The children stopped going to the river, instead going to school. Because at break-time they play on the Merry-go-round, which pumps water from the river to their village. The water storage tank was built with billboards round it, so the revenues from the advertising could fund the maintenance of the system.

Called the PlayPump, the children can pump nearly 370 gallons an hour. There are now 700 in South Africa, a 100 more are now being installed in Mozambique, and Swaziland is next. Other countries will follow. There is no charity here, no handouts. This is business, and it is pragmatic. Private companies got involved because it was a good idea.

Our economic system is very good at rewarding innovative ideas; it is what keeps the economy running. It is called entrepreneurship. When we have a medical problem, we go to a doctor. When we have an economic problem, we should go to business, big and small, and to entrepreneurs like Trevor.

Now be honest, what was your first reaction? If you thought of bad things about business, you would be in a big crowd. The fact is that business and poverty have an uneasy relationship. Many of the people active in poverty issues are anti-business at worse, suspicious of business at best. The difficulties of poor villages and finding solutions to crippling poverty lie at the heart of the debate over fair trade and free trade.

Opponents to capitalism and globalization will tell you that problems are either caused or worsened by big business and selfish interests. They will tell you that we need governments and aid agencies to solve the problem. They will also tell you that competition, consumerism and unfair trade are all damaging to the poor. Defenders of business will tell you that they are creating wealth. They will also tell you that competition, consumption and free trade will ultimately make poor countries rich, like us.

Whatever the outcome of this argument is, we Christians, believe we have to do something about poverty. It is a direct call from Jesus. Fair trade as one of things we can do has become very popular amongst Christians and Christian communities. It starts with a rejection of one of the basic tenets of Capitalism by setting a “fair price”. Supporters of fair trade believe that by working at the producer level, and cutting out the “middleman”, we will achieve justice for producers in poor countries.

Fair trade goes back earlier than you might think. In fact, it goes back to 1946. Edna Ruth Byler, a volunteer with the Mennonite Central Committee, started importing crafts from Puerto Rico and selling them out of her car. From this modest beginning, fair trade had grown. On its 50-year anniversary, it had become a $2.6 billion business. From an initial focus on a few handcrafts and primarily coffee, the product range has expanded to toys, furniture, personal accessories other offerings.

Over the years, as awareness of poverty in developing countries has increased, Christian communities have embraced fair trade. It seems a no-brainer: set a fair minimum price; get the revenue back to the original producer. This approach seems to capture the moral high ground for the fair trade advocates, Christian or not. Go to church and you’ll be offered fair trade coffee after the service. Drive into some towns, they’ll say they are a “fair trade town”. It wasn’t just Christians who took up the idea, but secular and political organizations wanting to show their moral strength.

By supporting fair trade as moral, the stigma is then attached to free trade, the system we all live under. There is no minimum price set in the free market. The price is set at what someone is willing to sell at, and at a price someone is willing to pay. The “market” is a process of discovery, where sellers and buyers meet at an agreed price. If something is too expensive, people either won’t buy or slow down their buying.

The idea of government or others deciding a non-market price was used only in controlled or planned economies like Socialism and Communism. As the old Communist joke goes: we pretend to work and you pretend to pay us. We know that Communism and Socialism don’t work, does fair trade? This question breaks down into two. First, we have to ask whether fair trade fixes the economic problem. Second, whether it a moral solution to the problem, and so a good thing for Christians to support.

The reality is that economically it doesn’t fix the problem. Opponents will tell you that it pushes producers into soft markets, because it is in essence a subsidized market, and we all know what happens with subsidies. More crucially though, we have to say, fair trade only tackles the symptoms. It does not get at the causes of the economic problem of poverty.

Part 2 to follow…

The Upside of Recession by David Cowan

David Cowan - December 20th, 2011

The Upside of Recession? It Shows Who Your Friends Are

So, how are you doing in this recession? Whether you are doing well or not so well, have you measured your current financial situation against friendship?

In “Economic Parables: The Monetary Teachings of Jesus Christ,” I argued that the economy reflects who we are as individuals and as a society. The notion that the economy manipulates us misses the point, because in fact it is people who manipulate the economy at all levels. However, pointing to fat cats and greed at the top also misses the point. In the economy we all act, and the economy gives us a measure of our actions, both good and bad.

One outcome of this is that when people run into financial difficulties they soon find out who their friends are. We learn to distinguish between true friends and hangers-on. Ask anyone who has been famous or successful, and they will tell you that at times of difficulty “friends” have rapidly deserted them. But you don’t need to be wildly famous or successful to find this out.

In good times, we have money to spend on attracting friends, amusing them and even pretending we are happy when we are not. Recessionary times highlight the cracks in the structure of our life. It isn’t just about saving up for a rainy day, but figuring out how we conduct ourselves in the good times and prepare ourselves for the inevitable bad times. In recessionary times people have to dig deep, not just within themselves but within relationships.

The economy highlights this. When the economy is good, and we feel we are master of our universe, we make decisions as if there were to be no downside. The current recession exposes this reality, not just for individuals but for society.

The sadness of modern life is that the anonymity of urban life and the increasing dependency on government for welfare and care demonstrates how profoundly we have lost relationship. Family and friends have been destroyed by the notion that in times of difficulty increasing numbers of people have to turn to the government for help, instead of a network of friendships and family ties.

The current debt crisis reveals how much we depend on government and how little many individuals showed responsibility. In recessionary times many of the people we can turn to have problems of their own, and then we find out who our friends truly are.

On a national scale it is the same. Americans have to dig deep and decide what kind of nation it is in the 21^st Century.

The Real Meaning of Advent in a Recession

David Cowan - December 14th, 2011

By David Cowan

What started out as a financial crash has started to hit the real economy hard, and some are looking for easy salvation. As we contemplate in our Advent season with Christmas just ahead, the stores are not so full, jobs being cut, the idea of lots of presents under the tree and a joyous Christmas seems distant for many of us. Yet, wait, there is reason for joy and hope amid all the doom and gloom.

The reason for hope and joy is the original reason for Christmas: the gift promised us in the form of the Christ child who was born on Christmas Day. The great thing is, this gift is free, costs us nothing at all, not even the dollar the automaker’s chief executives are prepared to take as a salary. To celebrate this Christmas, to receive this gift, costs us nothing at all.

We are used to shopping and parties leading up to Christmas, with decorations out before Thanksgiving. Yet, in the early days of Christianity, Advent was a season of penance. It was a time to think of WHY we needed the hope that Jesus brought to us in a lowly stable. The feeling of joy didn’t happen until Christmas morn.

Maybe we can learn from this. We can learn that Advent, instead of being a long prelude of festivities and shopping leading up to Christmas day itself, is a time to reflect. It is a time to reflect on what we wait for, trembling with the joy of a child, on Christmas Morn: Unto us a Child is Born!

So, what shall we do this Advent? Well, can I suggest three things?

First of all, we should celebrate a joyous Christmas regardless of our economic situation. It costs nothing, and last long after the wrappings are in the dumpster, and it is a daily event, unlike the decorations we will put away for another year.

Secondly, we should look forward to years to come, not with fear of an unknown Recession, but with the hope that the Christ child brought into the world. If we take on the hope that God is beside us in these troubled times, then we need not fear.

Lastly, we should remember that the joy of Christmas Day stays with us all year round. Daily we have the opportunity to look at the world anew with the full faith and credit of Jesus Christ.

The point to remember is that Christmas is what we make of it. It is that unique time of the year that is all about the joyous atmosphere, and the opportunity to look back as well as forward.

So, maybe the downturn in the economy offers us all the opportunity to realise in this coming season of Advent that while times were good, we forgot to prepare for the bad times. We can ask ourselves whether we honestly saved for a rainy day, like our grandparents did. We can also ask ourselves whether we clung to Jesus as surely in the good times as we certainly need to do now that times are not so good.

This Advent season why not look at your material and spiritual bank balances? We may not have much in left the material bank, but we always have to make sure we have enough in the spiritual bank. If we have financial problems, we need to seek help from debt counsellors and others. If we are doing well, then we can see how we can help others get through this.

David Cowan on Serving Two Masters and the Economy

admin - December 12th, 2011

This Week’s Video: David Cowan on Serving Two Masters.

Order “Business Ethics Today: Stealing.”

Click HERE for a recap of the 2011 Business Ethics Today: Conference.

American Airlines and the Ethics of Bankruptcy

Phil Clements - December 7th, 2011

“Competitive” vs. “Inspired” Infiniti Ads: Follow up to 11/16/11 Blog

Phil Clements - December 4th, 2011

In follow up to the recent Infiniti car ads, you may also consider the following:

There were two ads done by the same agency for the Infiniti winter event.  Our LAST BLOG touched on the ad labeled “Competitive.”  The other ad is labeled “Inspired.” Both video’s with a bit of background can be found HERE. From a business ethics perspective the contrast between the two adds is compelling.

Please comment on the following:

1. Does the “Inspired” ad communicate the Christmas season as well, or better than the “Competitive” ad?

2. Does the “Inspired” ad give equivalent incentive to buy the car?

Clearwire Makes Payment: Follow Up to 11/22/11 Blog

Phil Clements - December 1st, 2011

Clearwire update!

Wall Street Journal reported today that Clearwire Corp. made the interest payments noted in the first article on time! (To view the original blog post click HERE) While the latest report credits the payment to an agreement with Sprint Nextel Corp., we should not miss the fact that management made it happen and fulfilled the terms of the agreement with the creditor.  Credit belongs to management here, not to the deal.

For those of us of the Christian persuasion, we would say that this entire story points to God’s providence.

What are your thoughts on this outcome?

To view the entire WSJ article click HERE.

Wayne Grudem on 8th Commandment and Human Flourishing

admin - November 29th, 2011

Interested in hearing more? You can find the complete chapter, co-written by Barry Asmus and Wayne Grudem, which is entitled “Property Rights Inherent in the Eighth Commandment are Necessary for Human Flourishing” in the recently published work, Business Ethics Today: Stealing. Order your copy today HERE!