Futures Markets and Social Justice

Global consumers often complain that futures markets exploit prices and lead to the accumulation of wealth for a few select traders. It is hard in America to imagine a world without futures markets. Farmers checking the price of corn on the CBOT is as common as the morning cup of coffee.

As Catholics we believe in what we call "social justice". The concept of fair trade has developed over the years. What is free trade? What does it mean to buy a fair trade product? Why should you care? The following references from the catechism explain the essentials of social justice regarding fair trade.

2434 A just wage is the legitimate fruit of work. To refuse or withhold it can be a grave injustice.221 In determining fair pay both the needs and the contributions of each person must be taken into account. "Remuneration for work should guarantee man the opportunity to provide a dignified livelihood for himself and his family on the material, social, cultural and spiritual level, taking into account the role and the productivity of each, the state of the business, and the common good."222 Agreement between the parties is not sufficient to justify morally the amount to be received in wages.

2434 A just wage is the legitimate fruit of work. To refuse or withhold it can be a grave injustice.221 In determining fair pay both the needs and the contributions of each person must be taken into account. "Remuneration for work should guarantee man the opportunity to provide a dignified livelihood for himself and his family on the material, social, cultural and spiritual level, taking into account the role and the productivity of each, the state of the business, and the common good."222 Agreement between the parties is not sufficient to justify morally the amount to be received in wages.

2439 Rich nations have a grave moral responsibility toward those which are unable to ensure the means of their development by themselves or have been prevented from doing so by tragic historical events. It is a duty in solidarity and charity; it is also an obligation in justice if the prosperity of the rich nations has come from resources that have not been paid for fairly.

Let's look at an example of free trade in action. Many of the commodities that we commonly consume are items such as cocoa and coffee. Futures exchanges exist for these markets but their structure and distance often prevents producers from being able to hedge their crops directly.

For example: Ethiopia is one of the largest producers of coffee world wide. In fact Ethiopian Arabica beans are often considered to be one of the world's finest coffees. Ethiopian farmers however have often been economically depressed because of a lack of choices regarding who to sell their coffee to. A documentary growing in popularity called "Black Gold" is available in eight parts on you tube. To watch all of the movie will take about an hour. It is an excellent film and the school will be purchasing a copy of the film.




After you've had the chance to watch "Black Gold" you may be asking yourself what is the solution? Someone might just have an idea.

Easch year in Monterey California the TED conference takes place. TED is an avenue to spread "ideas worth sharing". It is a great honor to be invited by TED to speak.

In 2007 economist Eleni Gabre-Madhin was invited to present regarding her efforts to establish a futures exchange in Addis Ababa Ethiopia. When most of us think of Ethiopia we think of grinding poverty. Can a futures exchange in Ethiopia help eradicated poverty by bringing the best prices to her numerous farmers? Listen to her presentation. The good thing is that every TED talk is limited to 18 minutes. Brevity is the soul of wit and if it can't be said in a few minutes it shouldn't be said at all.



Please comment below: Will this idea work? What will be the benefits to farmers? Share your thoughts. What should PND do about fair trade? Should we sell fair trade coffee for students before school? Other ideas?