As part of everyday economics, we asked you to tell us which topics you want us to cover. You voted, and from this last round, the second most popular suggestion comes from Elizabeth, who asks, "How does the purchase of fair trade goods affect wages in developing countries?" That's an excellent question. Fair trade is one of several types of activities aimed at increasing living standards in the poorest countries. So let's step back to discuss these issues broadly. Most importantly, it's worthwhile to remember that although working conditions in poor countries are distressing from a Western vantage point, the jobs that we find objectionable are voluntarily chosen by the workers in those countries. That awful factory job is the best available option for that person. If that job disappears, that poor peasant must take his second best option, a job that he judged to be worse than the awful factory job. So while we might find the working conditions intolerable, that's because we now have better options. If our goal is to help that worker, we surely don't want to destroy that job. That said, let's look at fair trade. To use the fair trade label, one must comply with the standards and certification requirements of one of a handful of fair trade organizations. Importantly, large producers and producers in more wealthy countries are better equipped than smaller producers to meet fair trade requirements. For example, fair trade coffee comes from relatively wealthy countries like Costa Rica, as opposed to the poorest of the poor countries like Ethiopia. So by choosing Fairtrade coffee, you choose not to buy from the poorest producers. Is that fair? How about the workers who are able to produce Fairtrade coffee? Do their wages improve? Studies so far show no conclusive evidence that Fairtrade workers receive any...
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