On kidneys and coffee

Regular readers of Zeitgeist have probably noticed that I write about trade a lot. Sure I enjoy it, but I also do it because understanding trade is also key to understanding how the world works. Commerce affects our lives in more ways than we imagine. Don’t believe me? Check out these two interesting trade-related stories from just the past week:

Legalizing the organ trade? Looking at the example of Singapore, Time wonders out loud what the world would look like if it was legal to buy and sell human organs. Your initial reaction is probably one of disgust. It’s a controversial issue, and there are legitimate concerns that allowing for the sale of organs exploits the poor at the benefit of the rich. But let me play Devil’s Advocate for a minute here: if you were on a 9-year waiting list for a kidney, wouldn’t you at least want to have the option to purchase one? What if we could regulate organ markets and monitor organ trade closely? What if it solved the chronic shortage of organs (or blood, for that matter) in the public health system? Why is it that we permit the sale of reproductive materials and not organs?

Fair trade coffee. Dave over at IPE Journal raises a ‘fair’ (HA) question: does fair trade really work, or is it another one of those well-meaning ideas that does more harm than good? Dave, here’s my answer: I am personally strongly opposed to initiatives like ‘fair trade’ which seek to intervene and ‘improve’ market outcomes in the absence of demonstrable market failure. The problem is that fair trade distorts the most accurate market signal (price) and encourages overproduction, because the price is kept artificially higher than the market says the beans are worth. This is not good for producers in the long run. Fair-trade certification is also a bit like a cartel, and it disadvantages farmers without the fair-trade credentials. No sir. Kudos to fair traders for their good intentions, but in my book, fair trade is free trade, and that’s what we should be working towards. I’m in good company on this issue, as well. (Aside: I always found it funny that the cafes on the campus of the London School of Economics had more fair trade products per capita than any place other place I'd ever seen.)

So there you have it: you can look at almost any issue from a trade/commerce perspective, from public health and the kidneys you can’t legally buy, to your daily caffeine fix and the coffee that you probably pay too much for.