I would like to start a new “internet meme”. The topic today is “Modern Myths”. What popular myths do you know? What things do many people take for granted, but are actually false?

1. Full employment/zero unemployment is achievable.
It isn’t. The market never clears instantly, so there will always be a natural rate of unemployment. Of course we should aim to reduce unemployment as much as possible, but I recently found out that some people believed zero unemployment was achievable.

2. Growth is possible without job losses.
It isn’t. There is nothing bad about people losing jobs (except for them, in the short run), because ultimately they can do other things, the economy becomes more efficient, more wealth is produced and everyone is better off.
But I used to think that of course it would be better if growth could be achieved without job losses.
I read recently a very simple argument that growth is not even possible without job losses. For growth to occur, labour has to become more productive. Therefore, a company will be able to do the same work with fewer people. Therefore, job losses.

3. Genetically modified food is bad. “Natural” means good.
I do not quite understand the opposition to genetically modified food. For some reason, people think that “natural” or “organic” means good and “artificial” means bad. Of course there is no link: there are plenty of natural poisons, and natural foods which are bad for you. There are plenty of foods with added chemicals which are fine. Perhaps it is because people do not understand that all food, whether “natural” or “unnatural”, is made of chemicals, which can be isolated and are identical whether grown naturally or synthesised in a lab.
People campaign against GM food trials on the grounds that it could escape and grow in the wild (”contamination”). But this begging the question: it is not contamination unless the food is bad in the first place. Why would it be? Genomes, whether natural or altered in a lab, are fundamentally the same. What is the problem?

The issue of fair trade arouses many emotions. However, for all the good it does, many of its successes are mediocre in comparison with what could be achieved by allowing free markets.

Fair trade is very cheap and relatively easy to implement. This is because its aim is relatively simple: to provide a ‘fair wage’ to third world producers. Admittedly, the phrase ‘fair wage’ can arouse suspicion, but, in general, this is a sensible estimate based on standard prices in the place or region the products are being imported from.

A good example of fair trade at work is with coffee; especially considering that many coffee companies now proudly proclaim that they only use fair trade products. A fair wage for the average coffee plantation and its workers is approximately double the price for each bag of coffee beans. To the average coffee shop consumer, this works out at about an extra penny on each cup of coffee. Although this probably seems suspect, when one considers the number of coffee beans in a bag, and the number used in the average cup of coffee, one can appreciate that this figure is correct.

As a result, we can see that fair trade is very cheap for the average consumer, and relatively easy to implement. However, it is legitimate to ask two questions: (1) Is this really the best solution we can provide to help third world producers; and (2) Does the implementation of economic controls maximise the potential economic benefits? The answer to both questions is no.

If we want to provide producers with the best possible opportunity to maximise their economic potential, it is necessary to provide them with free trade, not fair trade. It is a sad fact, but we do not live in the capitalist world that those on the Left blame for many of the world’s problems. The prime example is, of course, the European Union. Its range of protectionist measures, epitomised by the Common Agricultural Policy, undermines the global markets, not to mention ripping off the consumer. Every year, hundreds of tons of food is destroyed in order to keep prices artificially high. At the same time, market competition from outside the EU is restricted. Is it then any wonder that third world consumers do not have the opportunity to earn a decent wage?

Ultimately, fair trade is part of the problem rather than the solution. This is because it seeks to use the same type of protectionist measures that makes it necessary in the first place to provide producers with a decent standard of living. Free trade can ensure that producers get the proper price for their products. If this proves to be too low, the producers can then change their economic activity to meet the needs of the consumer.

As it is, even if producers receive a ‘fair wage’ through fair trade, it does not maximise their potential income, and does not guarantee useful economic activity. What is more, because of the nature of fair trade, it legitimates and provides added precedent for the protectionist economic policy of various countries, and institutions like EU. It is ironic that it is these protectionist policies that make fair trade necessary to ensure a decent wage for third world producers. How can we stand by and let this sort of social injustice continue by failing to allow free markets? It is time that we acknowledged that it is time to dispose of fair trade in favour of real free trade.