Just say no to fair trade

Former Yale University President Kingman Brewster once said, "Universities should be safe havens where ruthless examination of realities will not be distorted by the aim to please or inhibited by the risk of displeasure." It would be nice if that were still true. Yet in the unenlightened trample to rush into whatever the current "socially responsible" policy of the month is, the modern university has become anything but what Mr. Brewster had hoped for. The latest episode to demonstrate this is the poorly thought out stampede to bring Fair Trade Coffee to the campus.

The basic premise of Fair Trade Coffee is to pay struggling coffee-farmers in Latin America an above-market price for their crop. Increasing the cost of a cup of coffee a few cents could provide a greater livelihood for thousands of farmers who are struggling to make ends meet.

The Fair Trade Coffee proposal can be criticized from a number of angles. It would move the setting of prices away from the unbiased "invisible hand" of the markets and into the hands of a human "specialist," a technique which, when attempted in communist China and Russia, didn't work. It could lead to corruption and inefficiency because success for coffee farmers would no longer be dependent on their productivity, but on their inclusion in an exclusive club.

Yet the most compelling reason to oppose Fair Trade Coffee is when subjected to even a little scrutiny, it would not benefit those it is intended to lift out of poverty. In fact, the "problem" with coffee today is simple - increased productivity has caused far too much of it to be produced. The solution is just as obvious: If less coffee were produced, prices would rise above the cost of production and "socially enlightened consumerism" would no longer be needed.

Unfortunately, the Fair Trade Coffee proposal essentially amounts to setting a price floor for certain kinds of coffee, which any student of economics knows will increase the supply while not doing anything to increase the demand. So the basic problem-there is more coffee being produced than the world desires to consume -will remain. At the same time, if people switch over to Fair Trade Coffee, the demand for "free-trade" coffee will decrease, further depressing the price.

The few producers who manage to squirm their way into the Fair Trade Coffee "union" may prosper for a short time due to the charity of others, but will leave behind millions of other workers in Vietnam and elsewhere who are guilty of nothing more than cheaply and efficiently producing a product the world demands. This could create a perverse situation in which coffee production ends up in the areas that are least suited to produce it.

In fact, this country has already faced a similar situation to the one now confronting Latin America. Not all that long ago, the overwhelming majority of Americans lived and worked on a farm. Increasing agricultural productivity combined with the integration of world markets put significant pressure on these farmers. Yet we responded, not by myopically demanding that 90 percent of the population was destined forever to go into agriculture, but by building universities to educate people so that they could become the engineers, scientists and service workers of today.

It is true that the logic of economics can at times seem immune to the tremendous weight of human suffering, but it does not have to be so heartless. If student leaders really want to help poor Latin-American farmers, they should table their currently misleading and counterproductive proposal, and instead set up a voluntary system whereby students could sign up to contribute some portion of their meal-plan points to a fund that could be given to a reliable aid organization to assist coffee farmers. These farmers could switch to a different occupation or crop, one where they will not be dependent on the continuing charity of others to survive.

The Residence Halls Association led an effort to enact a similar fund to aid the victims of Hurricane Katrina. This would go a long way to not only providing a long-term solution to the coffee crisis, but also towards transforming this university into a place worthy of Mr. Brewster's praise.

Alex Frey is a senior electrical engineering major. He can be reached at frey@umd.edu