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Fair Trade: Its Real Impact On The Working Poor

Author

Listed:
  • Leonid A. Krasnozhon

    (Loyola University New Orleans)

  • David Simpson

    (Loyola University New Orleans)

  • Walter E. Block

    (Loyola University New Orleans)

Abstract

Fair trade gains popularity, while free trade is undergoing more and more criticism. Since international free trade supposedly pollutes the environment, promotes the utilization of sweatshops, exploits child labor, and impoverishes developing countries, fair trade is a preferable alternative (World Fair Trade Organization, 2011). By reviewing empirical studies and examining regulations concerning fair trade practices, this paper provides a comparative analysis of both free and fair trade in light of its impact on the working poor. We argue that the benefits of fair trade are concentrated among interest groups—mainly retailers and regulating organizations—while its costs are widely spread across the global economy. We also show that the distributive politics of fair trade violate conventional trade, and that fair trade, unlike free trade, inhibits economic progress rather than stimulating it.

Suggested Citation

  • Leonid A. Krasnozhon & David Simpson & Walter E. Block, 2015. "Fair Trade: Its Real Impact On The Working Poor," Review of Social and Economic Issues, Romanian-American University, vol. 1(2), pages 5-28, march.
    • Handle: RePEc:rau:rseijr:v:1:y:2015:i:2:p:5-28
    as

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    File URL: http://www.rebe.rau.ro/RePEc/rau/rseijr/SP15/RSEI-SP15-A1.pdf
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    References listed on IDEAS

    as
    1. David Skarbek & Emily Skarbek & Brian Skarbek & Erin Skarbek, 2012. "Sweatshops, Opportunity Costs, and Non-Monetary Compensation: Evidence from El Salvador," American Journal of Economics and Sociology, Wiley Blackwell, vol. 71(3), pages 539-561, July.
    2. Powell,Benjamin, 2014. "Out of Poverty," Cambridge Books, Cambridge University Press, number 9781107688933.
    3. Susmita Dasgupta & Benoit Laplante & Hua Wang & David Wheeler, 2002. "Confronting the Environmental Kuznets Curve," Journal of Economic Perspectives, American Economic Association, vol. 16(1), pages 147-168, Winter.
    4. Benjamin Powell & Matt Zwolinski, 2012. "The Ethical and Economic Case Against Sweatshop Labor: A Critical Assessment," Journal of Business Ethics, Springer, vol. 107(4), pages 449-472, June.
    5. Brian Aitken & Ann Harrison & Robert E. Lipsey, 2022. "Wages and foreign ownership A comparative study of Mexico, Venezuela, and the United States," World Scientific Book Chapters, in: Globalization, Firms, and Workers, chapter 4, pages 61-87, World Scientific Publishing Co. Pte. Ltd..
    6. Zwolinski, Matt, 2008. "The Ethics of Price Gouging," Business Ethics Quarterly, Cambridge University Press, vol. 18(3), pages 347-378, July.
    7. Powell,Benjamin, 2014. "Out of Poverty," Cambridge Books, Cambridge University Press, number 9781107029903.
    8. Zwolinski, Matt, 2007. "Sweatshops, Choice, and Exploitation," Business Ethics Quarterly, Cambridge University Press, vol. 17(4), pages 689-727, October.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Brandon M. Tate & Walter E. Block, 2022. "Buyer Beware: A Critique of the #BuyBlack Movement," Journal of Private Enterprise, The Association of Private Enterprise Education, vol. 37(Winter 20), pages 77-89.

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