Fair Trade or simply UNFAIR aid? How your TOMS help create poverty

I believe most of you reading this blog are in agreement with me that buying locally made products supports and maintains a strong local economy. I also believe that price is the only reason an American would buy a made in China product over a made in USA one.

Imagine that you have a choice between two identical sweaters, one made here, one made in China. The price is the same, the quality is the same and they’re sitting next to each other on the same shelf at the store. I bet you would pick the one made in USA.

Now, let’s say the imported sweater is ten dollars cheaper. Some of you would now switch, some would not, claiming that ten dollars off of an 80 dollar sweater doesn’t matter. But what if the made in China sweater was free? Yes, completely FREE of charge! Now, which one would you pick?

Hold that thought for a second and let’s turn our heads toward developing countries, applying the same logic. What do you think happens when companies like TOMS overflow a developing market with free shoes? What do you think happens when your donated clothes arrive in a less fortunate country? Do the people there still go shopping for locally and sustainably made?

Let’s talk about TOMS a bit, just because they’re probably the most famous of all “social entrepreneurs”. You think you’re doing a great thing, buying one overpriced pair, while TOMS donates another to a child in need.

Unfortunately, the reality looks a bit different. Instead of helping, you’re actually:

  1. Buying a pair of shoes you don’t need i.e. wasting resources (come on, admit it).
  2. Making the American CEO of TOMS richer.
  3. Importing a pair of shoes from China. (Go ahead, check the tag. Pretty much all pairs are made in Chinese non-fair-trade-certified factories and shipped across the ocean disrupting marine life.)
  4. Helping destroy local shoe making businesses in developing countries.

Oops. Not so great.

Now, I don’t think TOMS was started with some evil intention to keep third world countries poor, nor do I think you wanted to help them do that, when you bought your shoes. I simply think TOMS misunderstood their own efforts and lots of people believed (or believe) in their concept.

For generations “we” have tried giving aid to poor countries in order to “help” them out of poverty. And obviously, it’s not helping. I haven’t heard any sunshine stories about how riches ever came from aid (talking about all that free stuff).

And it makes sense. No one would invest in a local rice plantation if there were bags of free imported rice available. No one would want to start a local manufacturing plant if everything people needed (and wanted) was already available for free.

2016-04-25_161137 USECRL4702_001_
Is that you Angelina? (Copyright Povertyinc.org)

The cool thing is that we can make better choices in our everyday lives to make sure we don’t contribute to the broken aid system! Here are some ideas on what you can do to make a positive impact:

  1. Stop randomly donating money. Make sure you know what your money is used for, and who profits the most from it. If you are unsure, you’re better off keeping your dollars away from any organization or church meddling in another country’s business. This does not include properly handled emergency aid.
  2. Stop over-shopping. By limiting your shopping, especially of clothes and shoes, you can avoid “donations” that contribute to the mountains of items overflowing developing countries. Quality over quantity, you know. If you need to donate, give it to a local homeless shelter or a resale shop.
  3. Shop second hand. Keep other people’s bad choices from ending up as donations!
  4. Shop fair. The only way to HELP developing countries grow strong economies is to purchase their fairly made (non-sweat-shop) products (i.e them creating jobs). I’m talking about fair trade clothing from Kenya, organic chocolate from Peru, unique jewelry made by artisans in Haiti* or something as simple as choosing the local beer and hotel chain when you travel. You know; doing it fair, shopping it small and keeping it real.

Without local manufacturing and thriving businesses, a community, no matter which country it’s in, can never rise above poverty.

If you were tempted (or secretly picked) the “free” made in China sweater instead of the 80 dollar American one in the scenario at the beginning of this post – you know this is true.

The Poverty Inc. movie inspired this post.

* To me, the optimal “fair” shopping is when you shop items made close to where you live, minimizing shipments. So if you’re in Europe, support African Fair Trade, if you’re in the States go for Central American goods etc.

12 thoughts on “Fair Trade or simply UNFAIR aid? How your TOMS help create poverty

  1. Joel Salatin tells a story about sitting by someone at an event who said they hated Christians because they were always dumping aid in Africa and slowing the local economies. (They also provide education and doctors but that is another issue.) Good job drawing attention to unintended consequences.

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  2. I understand the concern about Tom’s shoes and the alleged story of putting the local shoe manufacturers out of business. However, the children that get these shoes really don’t have shoes at all. And it highly unlikely that they are ever going to buy shoes (no money). So, you are not putting any shoe manufacturers out of business. And the upsidekids have shoes, that is good. Definitely better if the shoes were made in the USA.
    The other story I had heard was that after the terrible Haiti earthquake, people from the US sent so much clothing that it crushed the stores trying to sell clothing. Now this could also be another urban myth as well. It is hard to tell when the stories coming from other countries are true and there is no easy way to verify them. I find that these economic-urban-myth-stories – are usually put out by Libertarian/Free Trade advocates. Do your own research, any philanthropy will have a negative story closely following it – kind of like trolling. -Jack A

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    1. One of my friends had a similar reaction “How will the kids get shoes then?”. Of course, the way to change the fact that they don’t have money for shoes (and other, more important things I’m sure we don’t even know about) is to create jobs.

      It would be so cool and truly helping, if Toms were made in USA (in for example a less fortunate part of the country) or if they were made in a developing country they wanted to “help”, I think. Creating jobs where it’s needed – instead of adding another product to a Chinese mega factory, like they are.

      I believe the donated clothing after the earthquake in Haiti definitely crushed their market (I’ve seen a lot of footage). As far as I know the biggest issue was the USA didn’t stop “helping” immediately, but lingered in Haiti long after the initial emergency was over. They also killed local solar panel initiatives and rice/crop businesses by not “getting out of there”. Whenever there’s a CEO making billions off of the “aid”, that’s trolling (to me).

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      1. I definitely see your point, but the answer is much more complex. Yes America has to create more jobs, Yes Toms’ shoes should make their shoes in America. The shoes that they give to dirt poor people – they don’t get these jobs, they don’t get money, if they didn’t get shoes from Tom’s – they would live without shoes. That is the complex reality. If Tom’s did not make an issue of providing shoes to the poor, we would not even now that these extremely dirt poor people even existed. Charity is good. This one shines a light on a problem we refuse to acknowledge. Jack A

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        1. Hi Jack. I obviously don’t agree, hence this whole post. I think the idea that “Charity is good” is the whole reason the movie Poverty.Inc was made. And it was that documentary that inspired me to blog about this. It’s on I-tunes.

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  3. In principle I agree we; can’t donate our way out of poverty. That type of aid should be targeted for (natural) disasters and isolated occurrences that require immediate and urgent support.
    We need to invest in education and support ‘locals’ to help themselves.

    The one-for-one concept is widely debated and with good reason but there is always two sides of the coin..?

    TOMS for example are doing a lot of good. It seems.
    They are providing training for medical assistants to help mothers give birth safely, giving medical care for people with lesser eye sight, supporting water cleaning systems for villages where they source their coffee beans, training school staff to fast respond on bullying. And giving shoes to those in need.

    Things they might not be able to afford or have available otherwise.

    And they are aiming to increase productions close to the places they aid. To stimulate local production and promote jobs.

    I believe it’s a bit ignorant to say that the people should just go buy locally made products (e.g. shoes) for themselves and their children when probably they can’t even afford to by enough food for their families. Isn’t it better then that the children get shoes rather than having to walk barefoot until they can afford to buy shoes themselves? I would think so, if they were my children.

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    1. Great comment! Love all the conversations this post has started.

      Frankly, TOMS started all the other philanthropy after they were criticized for the “one for one” concept, in order to keep their helping image. And like you write, while still giving shoes. Let’s not forget they are a for-profit organization and there is a lot of money in “helping”. But is it really?

      In all fairness, white man’s greed, exploitation and notion that he knows better and is “superior” to other countries and cultures is what has created the vast majority of extreme poverty in the world in the first place. He was never invited anywhere.

      I think it’s a bit ignorant to think that westerners (white man) has the right, the knowledge and the tools needed to “help” another country’s population. Again, he wasn’t asked to come, to help or to give shoes. He just decided he should, as he still sees himself as superior and is fearing the empowerment of for example Africa. If he was to stop meddling in their business (that also means pulling his interests out of natural resources keeping all the profits for himself), would there be poor kids without shoes? Short term – absolutely! Long term – I doubt it. If shoes are a top priority, the locals will figure it out. But who says it is?

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      1. I haven’t seen Poverty, Inc, It seems like it’s about big banks and giant corporations making billions of dollars, it seems like bit of a jump to get to Tom’s shoes. I will see Poverty, Inc, if you see the movie “The True Cost” by Andrew Morgan – it’s about the what goes into making these cheap foreign clothes. -Jack A

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        1. I’ve already seen True Cost. It’s very straight-forward and good I think. Also that movie shows the benefits of Fair Trade like People Tree Brand. It’s not really a jump to get to Toms, they talk about them a lot in the movie, just like Bono and his Christmas song and celebrity charity. It’s a good watch :)

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