While I appreciate your posting of this link is surely done out of time constraint, I would like to point out that this strategy can be more problematic that you might have considered.

In support of this position I would like to point out the comprehensive response that I wrote to Adam Smith Report; the executive summary and link to the full paper is provided below. While I fall on the pro-fair trade side of this discussion (believing broadly in the need for ‘contextually specific’ and the ‘appropriate’ governance of market forces which must remain the central system of economic organisation) I want to reiterate the point made by Marc Sidwell that views on this emotive debate must be grounded in evidence.

I agree the Fair Trade movement has been lax in providing statistically representative evidence on the effects they have achieved. However, after reviewing the Adam Smith paper I was staggered by the the over whelming lack of either empirical evidence cited in the report, or for that matter, indication that analysis had employed anything beyond a very basic understanding of economic theory (or how theory relates to real world problems). As a more personal extension of this position, I would like to comment that projecting such poorly founded discourse, is in my view, ‘irresponsible’ - especially where sources are misrepresented and basic scholarship found lacking (see the appendix of my own analysis for the errors made in the AS report). I hope anyone placing faith in the views of the Adam Smith Institute will ask some very searching questions about the rigour and validity of this paper when forming opinions on the subject of Fair Trade (I make no comment on the other work of the institute with which I am not well acquainted). Let’s be guided by a pragmatic approach to solving real world questions, not the blind faith in economic doctrine and ideological blinkering To bring me to where I started, lets not accept arguments that fit our wider views without critical appraisal - the results of which we might never see, but nevertheless could well mean a great deal to someone, somewhere….

See:
http://www.brass.cf.ac.uk/uploads/TheFairTradeCupResponsetoAdamSmithD9_1.pdf

Executive Summary
Overall the analysis in this paper agrees with the Adam Smith Institute in that:
· There is a serious need for ongoing research and evaluation of Fair Trade (and indeed any poverty reduction or developmental intervention) to ensure that resources are not wasted in well intended yet inefficient, or, utility reducing strategies.
· Fair Trade should not be accepted or promoted as, the only or the best
consumption based strategy for alleviating poverty. There are many worthy certification schemes and charities that are well deserving of support.
· The provision of appropriate incentives for producers and consumers inside a regime of international trade is strongly linked to incidences of economic growth and poverty reduction.

However, our own analysis leads us to seriously question other aspects of the Adam Smith Report in that:

1. The specific arguments against Fair Trade lack a credible basis in either empirical evidence or theoretical understanding because:
· Many of them are no more than assertions bereft of any attempt to cite
evidence.
· While some points do reference appropriately rigorous academic and
institutional research, other evidence is of a lower and arguably
insufficient standard of credibility.
2. There is a lack of cohesion as many of the criticisms of Fair Trade contradict the suggestion that patronage is allocated to other mechanisms instead.
3. Any idea of positive benefit from Fair Trade governance remains unexplored.
4. The lack of sophistication extends to the evidence cited in support of the argument that universal liberalisation is the best way to reduce poverty.

Ultimately it is suggested that the Adam Smith report:
· Fails to establish suitable grounds for the rejection of Fair Trade.
· Fails to establish an appropriately credible case in favour of trade
liberalisation.
· Fails to take an appropriately rigorous attitude to the evaluation of what are incredibly important issues.

In place of the approach taken in the Adam Smith report this analysis suggests that:
1. The cases of China, India and Hong Kong show that it is the appropriate management of local economies in their interaction with the wider world that is the best way to reduce poverty. Far from universal liberalisation this has often included the active management of price incentives as well as direct investment to build the capabilities of local business and the poor.

2. Financially poor actors should not always be expected to voluntarily respond to market incentives because:
· The developing world is characterised by levels of risk and instability that can make long term planning difficult to carry out.
· By definition the poor lack the capabilities necessary to meet the
immediate and longer term costs of diversification into more beneficial incomes strategies.
· The developing world often lacks the market incentive structures necessary to promote the structural change that might be necessary to reduce poverty.
3. Poor commodity producers are likely to be assisted in their effort to make the necessary diversification decisions through the provision of:
· Prices that cover the cost of sustainable production for as much output as possible, with the aim of reducing immediate levels of poverty and
building the capabilities of those unable to benefit from market discipline.
· Long term contracts that offer a more stable environment in which to make decisions about the diversification of income strategies.
· The payment of upfront credit and an additional social premium to build
capabilities which can be used to facilitate diversification.

Ultimately it is concluded that:
· The case against Fair Trade is not strong enough to recommend a rejection of such a well established mechanism which is empirically proven to help with the reduction of poverty in a significant number of cases.
· The management of market incentives systems cannot be rejected wholesale, but instead individual strategies must be evaluated on the specifics of individual cases and contexts. This applies equally to state intervention and the Fair Trade minimum prices.
· The most appropriate response to criticisms of Fair Trade is to continue a broad based program of research with the aim of making recommending reform of the governance mechanisms.

I didn’t link to the Samizdata article because it was a tad unsavoury.

After writing this article, I came across one from Murray Rothbard in 1992, “Repudiating the National Debt”.
http://www.mises.org/article.aspx?Id=1423
http://www.lewrockwell.com/rothbard/rothbard198.html
http://www.lewrockwell.com/rothbard/rothbard190.html

Rothbard first ponders whether bankruptcy laws are just. Then he explains that government debt is unjust and wrong, using much the same reasoning as I have above.

In the comments at http://econlog.econlib.org/archives/2004/01/government_vs_p.html, someone points out some good rhetoric: “The classic republican argument is that taxation without representation is unjust. Those who have to pay the enormous deficits [people not yet born] get no say in determining those deficits and have to shoulder the interest costs and higher taxes to cover them.”

I’d really like someone to write an article arguing this for Varsity or The Cambridge Student next term.

“When national debts have once been accumulated to a certain degree, there is scarce, I believe, a single instance of their having been fairly and completely paid. The liberation of the public revenue, if it has ever been brought about at all, has always been brought about by a bankruptcy; sometimes by an avowed one, but always by a real one, though frequently by a pretended payment. The raising of the denomination of the coin has been the most usual expedient by which a real public bankruptcy has been disguised under the appearance of a pretended payment.”

WoN, Book 5, Chapter 3, “Of Public Debts”

“By 1946, our national debt was an humongous 250% of GDP - even worse than the 100% we’re facing now. Yet, although it took us three decades, by 1974 we’d got it down to a manageable 50% of GDP. So how did we do that?

…

Well, what do you know? Although over these three decades we reduced our debt burden from 250% of income to 50%, we actually made no net repayment at all. In fact, we doubled our outstanding debt.

The trick?

Oh, you guessed.

Over those three decades, money GDP increased nearly sevenfold, so as a percentage of GDP, debt fell sharply.

But here’s the scary bit - of that sevenfold increase in money GDP, the vast bulk comprised inflation. In fact, over the period as a whole, inflation eroded the real value of government debt by nearly three-quarters.

Or as we creditors say, HMG defaulted on three-quarters of what it owed to the poor schmucks who’d been stupid enough to lend.

In ten years time, please don’t say you weren’t warned.”

I now think that the minimum wage could possibly be justified, only in conjunction with another welfare system, if the increase in wellbeing of those remaining employed was sufficiently larger than the decrease in wellbeing of those who became unemployed. This would depend what proportion of people previously earning less than the minimum wage became unemployed, how much the incomes of those becoming unemployed decreased, and how much the incomes of those remaining employed increased. It would be a bit unfair on those who lost their jobs. It could even be the case, however, that the increase in income tax paid by those remaining employed could be redistributed to those who lost their jobs, increasing their net income as well. However, this is probably impossible: it would require means testing and therefore would likely increase the poverty trap, causing people remaining employed to choose not to work.

I consider all this very unlikely though. The minimum wage is almost certainly bad. I believe a negative income tax on its own is a far superior wealth redistribution tool.

I’d probably vote against it.

(For the benefit of other readers, the bill proposes to allow employees to “opt out” of the minimum wage. Obviously opting out would quickly become a condition of employment, and employers would say to current employees “opt out or we’ll sack you”, and workers that didn’t want to opt out would be out-competed by those that did, so in practice everyone would opt out. (In its first reading, a Labour MP said that would be “unfair competition”, but there’s no such thing.)

In other words, the bill is to abolish the minimum wage. I notice, apart from that one interjection, no one spoke against it. Nevertheless, I’d probably vote against it.)

In the long run there should be a decent welfare system, and then we wouldn’t need the minimum wage. But I see no reason in the mean time to abolish the minimum wage and cause hardship.

(Of course, the reason the minimum wage was brought in is because, though it is a sub-optimal welfare system, its cost does not fall so much on the Treasury.)

But supporting the minimum wage in the short run should not make us lose sight of its fundamental badness. It might not be as bad as 70%-110% marginal tax rates, but it is bad. (”A man who is holding down a menial job and thereby supporting a wife and children is doing something authentically important with his life.”) These compromises mustn’t reduce the haste with which we should pursue the reduction of marginal tax rates for the poor to 0%-20%, through, say, a negative income tax. And ultimately the minimum wage should be abolished.