Fair trade markets in everything?

by on August 12, 2014 at 2:15 pm in Economics, Law, Uncategorized | Permalink

“Fair Trade” Cocaine Is A Thing Now

For instance:

Even more intriguing is the use of marketing strategies that mimic corporate social responsibility initiatives. These may take the form of financial sponsorship of organizations likely to be viewed favorably by online drug consumers. For example, one Australian drug vendor recently advertised their enterprise as a: “Proud financial supporter of WikiLeaks and Bluelight.”

At the more extreme end of socially progressive marketing strategies used by online dealers are those that involve the promotion of drugs on the basis of supposedly “ethical”, “fair trade”, “organic” or “conflict-free” sources of supply:

“We are a team of libertarian cocaine dealers. We never buy coke from cartels! We never buy coke from police! We help farmers from Peru, Bolivia and some chemistry students in Brazil, Paraguay and Argentina. We do fair trade!”

Naturally, it is impossible to verify these claims.

For the pointer I thank Annie Lowrey.

1 Charles Kenny August 12, 2014 at 2:35 pm

The idea of fair trade cocaine was floated by Dan Keller a couple of weeks ago here as a response to the child refugee crisis:
http://www.oregonlive.com/opinion/index.ssf/2014/07/drug_users_endanger_central_am.html

2 affenkopf August 12, 2014 at 3:03 pm

This has been a thing in Berlin for about two years:
http://www.taz.de/!108590/
Once again proving that it truly is the hipster capital of the world.

3 Anonymous August 12, 2014 at 3:42 pm

“Proud financial supporter of WikiLeaks and Bluelight.”

So drug dealers now have higher moral standards than our governments.

4 T. Shaw August 12, 2014 at 4:13 pm

They always have had . . .

5 albatross August 12, 2014 at 5:33 pm

I eagerly await the debunking stories, showing why “fair trade” crack isn’t actually better for the world than the regular old crack you used to buy.

6 Mark Thorson August 12, 2014 at 9:26 pm

Paid for by the Cocaine Industry Association.

7 Yancey Ward August 13, 2014 at 10:47 am

Thread winner!

8 Nathan W August 12, 2014 at 5:38 pm

It would be entirely plausible to have a regulated fair trade system where the gains were distributed between the tax man and the farmer. This beats a system where the gains are distributed primarily to various stages of distribution and transportation, with a heavy cost to the taxpayer.

Alternative means of livelihood would be a primary consideration for all those involved. Whether or not you like what they do, it will be better to ensure that they can easily transition into employment or areas of business that they will have an interest in.

Where there is a demand there will be a supply. Let’s stop funnelling all the proceeds of these addictions into unproductive areas, and instead seek to coopt those involved into profitable activity within a regulated structure that will prevent the extremes without driving everything underground.

9 dan1111 August 13, 2014 at 3:23 am

This is an entirely plausible argument. However, the counter-argument is that legalization will increase use, causing increased harm. One needs to show that the benefits of legalization outweigh the harms (many people are dismissive of this argument with pot, but we are talking cocaine here).

Further, I’m not sure that economic arguments are sufficient. Is there a moral difference between $X of illegal profit and $X of state-sanction profit of an evil activity? Are we more responsible for evil in the latter situation than the former? Also an interesting question, and not one to be dismissed lightly.

10 albatross August 13, 2014 at 10:37 am

The other side of that argument is, would we rather have all that money from drug users (some of whom will wreck their lives and cause problems for the rest of the society with their drug use) going to above-ground companies, or to criminal gangs.

I wonder if there is some illegal-goods version of the resource curse going on in countries like El Salvador and Honduras. Nothing you can do in those countries is going to make you as much money as getting a little tiny cut of the money from the drugs flowing from South America to the US, and it’s not so hard to imagine that having all kinds of ugly effects on their economies, part of which come from the classic resource curse, part of which come from the fact that the resource in question is illegal and the trade is dominated by really scary, brutal gangs.

11 Brian August 13, 2014 at 2:56 pm

The harms from cocaine have been grossly exaggerated by the war on drugs folks for years. Another factor to consider when you’re weighing the harms of this “evil” activity. I’d be willing to bet a large sum that all things equal (i.e. if they received equal treatment under the law) that alcohol is far and away more dangerous than cocaine.

And really, I think the burden on anyone who wants to tell others what to do (when not directly harming someone else) ought to have the burden to show that the harms outweigh the benefits (and loss of freedom), not the other way around as you seem to have it. After all, do we really know that the benefits of letting people, say, sky dive, or mountain climb, or play football, or ride bikes, or ride motorcycles, or… really outweigh the harms?

12 Yancey Ward August 12, 2014 at 7:27 pm

I doubt crack heads care any more about being lied to than other consumers of “Fair Trade” goods.

13 Careless August 12, 2014 at 9:58 pm

I bet they care more when they’re expected to pay for it.

14 Yancey Ward August 13, 2014 at 10:48 am

You are probably right, a crack head is smarter in that regard.

15 CD August 13, 2014 at 12:54 am

I like the part about chemistry students.

16 Adrian Ratnapala August 13, 2014 at 2:15 am

Intriguing. The people who have a visceral liking for the name “libertarian” tend to have a visceral dislike for the term “fair trade”, and vice versa. Perhaps in Oz “libertarian” is starting to mean “small-l liberal”, in the sense of not connected to the Liberal Party. A term which free-market liberals and social-democrats both apply to themselves.

Judging by what they dealers claim about not buying from cops and cartels then I wildly guess they really are anarcho-capitalist types, slyly re-interpreting the term “fair-trade” as a way to talk down to their lefty customers.

17 Axa August 13, 2014 at 8:20 am

Fair-trade cocaine is almost an oxymoron. Marijuana can be grown commercially in a backyard greenhouse, that way you make sure it is conflict-free, organic , fair trade, etc.

I’m curious about cocaine. Read a little and found that most of global production still comes from Bolivia, Peru, Ecuador and Colombia. Why? plant adaptability? Coca plant species seems well adapted to thrive between the Amazon and the drier highlands, in theory plants could thrive anywhere between 20N and 20S latitude. Large areas with poor rule of law? I can only think why cocaine is not produced in Africa too. Large planted areas to produce leaves and then a few grams of powder cocaine? Bolivia stated they got 20K hectares of coca, approx half of it is consumed in leaf form and the rest could go into cocaine making. Sounds like a lot but if you compare it to any other major crop…..no. What happens with cocaine production that can’t be made in other countries or synthesize it in a home lab? Can economics explain this?

18 dan1111 August 13, 2014 at 8:34 am

The main reason is probably because cultivation and traditional use of coca are legal in those South American countries, making it much harder to prevent illegal cultivation.

19 albatross August 13, 2014 at 10:47 am

Adrian,

I think there’s value in being a little cynical about public do-gooding as a marketing strategy. It’s surely worthwhile to make sure the suppliers of your coffee (or cocaine, I guess) aren’t getting screwed over, but I tend to see fair-trade coffee as having a lot more to do with marketing than with helping anyone out, and I wouldn’t be surprised if more good would be done buying the cheaper coffee and giving the extra money charged for the free-trade stuff to a charity somewhere. (Though you then have the problem of evaluating effectiveness of charities there, which is generally pretty hard.)

20 albatross August 13, 2014 at 10:55 am

An interesting question: how hard would it be to make verifiable claims in an illegal market, keeping everyone anonymous except when they wanted to reveal something? Suppose my all-organic fair-trade no-animal-testing meth lab wants to advertise all those good properties to skeptical liberal meth-heads. I’m visualizing some kind of third-party accreditation that, yes, this meth is produced using *organic* cold medicine purchased from cold-medicine farmers who get paid a living wage. (No doubt living an idyllic life in the mountains somewhere, growing sudafed bushes and picking the berries for sale just like their ancestors have done for centuries.)

21 robert August 13, 2014 at 11:53 am

Jesus wept!

22 Claudia August 13, 2014 at 4:37 pm

LOL!! that’s brilliant. but while they offer fair trade, what about the working class end of the spectrum? why not offer both, fair and unfair trade? do they have a Basics range to cater for those in lower socioeconomic parts of society? People have to think about these things when planning out their product ranges – they can’t facilitate discrimination or hardship on their supply chain but they also certainly can’t discriminate against their varied consumer base either – not everyone can afford to maintain the much more expensive fair trade and organic moral high ground when buying their cocaine – people have to party! what next, we will have to run cocaine banks where people donate excess cocaine for those less fortunate who can no longer afford this basic necessity? fairer pricing of the market i say! more important in some respects than fair trade or unfair trade. It’s the people at home, not abroad, that must count first! /NPCA (National PARTY Cocaine Association)(not a real party) (at least not one you’d want an invite to)

23 Dave Tufte August 16, 2014 at 2:11 pm

I think there’s a much earlier precedent than this.

My understanding (and some exposure to the culture) is that interest in plant hallucinogens by the counterculture, in part, derived from the cornering of the acid market by Owsley Stanley (Bear). He produced lots of decent LSD, and basically gave it away in the 1960’s and early 1970’s.

Now, I’m speculating in this paragraph. Someone who wanted to deal hallucinogens at this time had no ability to charge a markup. So they used marketing to create an inelasticity of demand they could exploit. That marketing ploy was that plant hallucinogens generally, and “magic” mushrooms specifically, were better for you because they were organic.

Now, this paragraph isn’t speculation. This sort of marketing was common, but not yet dominant, when I was introduced to Dead Heads and the roadshow that followed the Grateful Dead on tour. This was in 1979. That informal marketing got more pervasive through the 1980’s (chemical hallucinogens were around, but through the 80’s people who liked them increasingly gravitated away from the Dead Head environment towards what started to be called raves). You can imagine my surprise as a budding economist Ph.D. student in the mid 80’s when I started to hear about organic marketing of produce. The people I knew who were into that stuff back then generally had some loose affinity to that Dead Head culture, although to be fair, most of them weren’t into the drugs.

So, for me, I’m not surprised at all that people thought up “fair trade” and later applied it to drugs, because I saw the same behavior in the opposite direction 30-35 years ago with “organic”. There really isn’t anything more here than culture moving to adjacent niches.

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