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Internet eBay Launches Fair-Trade Site
Jason Mick (Blog) - May 21, 2008 1:53 PM
Print 57 comment(s) - last by Ringold.. on May 22 at 6:33 PM
Giving local-people a honest cut may soon get a lot easier

Fair-trade, the concept of giving indigenous people and foreign workers a reasonable price for their goods and services is a hot new concept.  In the past, America, Europe, and the rest of the industrialized world have taken advantage of the fact that in many third world countries labor and resources are cheap. 

Unfortunately, by using these countries economically, cycles of poverty and conflict have been perpetuated to a large extent in prior decades.  By giving the locals a cut closer to what they would get if they were in America, the local people benefit and, in theory, the world will be a more equitable and prosperous place.

Whether you share such opinions or not, these concepts are quickly catching on in the retail industry.  Chains such as clothing provider American Apparel have built names on being "fair-trade".  Now eBay, owners of the leading online auction site, are launching their own fair-trade-centric online store. 

Robert Chatwani, eBay's general manager of the project, announced that WorldofGood.com will launch this summer and offer a variety of fair-trade goods.  The site is being produced through a partnership with non-internet fair-trade company World of Good Inc., which the site draws its name from.  EBay has already created a community site that allows users to interact and announced fair-trade products, and products made from recycled goods.

The new site will focus purely on the shopping experience and will cater to "social change consumers", according to Chatwani.  He announced the new venture at the Dow Jones Environment Conference on Tuesday.

There's big money involved says Chatwani.  He estimated the socially equitable/green product market to total over $45B USD worldwide annually.  He feels that the site will draw a different kind of customer than eBay typically does.  He states, "Those people aren't on eBay. We believe only between 7 and 12 percent of these social change consumers are eBay users now ... so this could be accretive to the business."

The idea for the site hatched while Chatwani travelled on business to India with other eBay employees.  They met with local craftsmen and offered to sell their wares online for a fair price, substantially more than the pittance they would normally get.  The idea worked; the products sold.  Inspired eBay teamed with World of Good to explore larger-scale fair-trade ventures.  World of Good is committed to reducing third-world poverty.

Chatwani points that eBay has had a long history of promoting social progress.  He mentions that eBay has long been a low-carbon emission company.  Also it has had a hand in many past charitable efforts, he states.

Among eBay's other charity-leaning sites are MicroPlace a finance site which allows entrepreneurs to invest funds in developing countries.  EBay owns eBay Giving Works, an online sales site that lets shoppers and sellers donate a percentage of sales to charity.  The site has raised $120M USD for charity to date.

The biggest effort with the new fair-trade site will be to deliver full transparency.  Chatwani says the new site will provide detailed information on where the products came from, how they're produced, and what their environmental impact is.  The key to the sites success will be providing a variety of products.  Says Chatwani, "Our challenge is not so much about getting people to spend more. It's about introducing all forms of consumption."

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Dailytech = Daily Worker?
By the goat on 5/21/2008 2:10:54 PM , Rating: 3
http://en.wikipedia.org/wiki/Daily_Worker

I'm sure I will be voted own for this post but here goes. . .

These socialist programs sound great at first blush. But it is actually counter productive for everybody involved (except for maybe the retailer) Systems like this only serve to keep the pour from becoming self sufficient and to drain the pockets of people who feel guilty from having too much money.




RE: Dailytech = Daily Worker?
By Master Kenobi (blog) on 5/21/2008 2:23:08 PM , Rating: 2
More than likely people will mod you down simply because of the association. Tech News is Tech News. Daily Worker = eBay probably would have been a more accurate statement.


RE: Dailytech = Daily Worker?
By the goat on 5/21/2008 4:11:13 PM , Rating: 2
quote:
More than likely people will mod you down simply because of the association. Tech News is Tech News. Daily Worker = eBay probably would have been a more accurate statement.


Yea but "ebay" and "Daily Worker" sound nothing alike. "Dailytech" and "Daily Worker" on the other hand sounds amazingly similar. Coincidence? You be the judge. . . ;-)


RE: Dailytech = Daily Worker?
By mikefarinha on 5/21/2008 2:25:02 PM , Rating: 3
I agree with you a bit.

I admit that I'm not the most informed on this topic but my understanding is that these populations that remain in poverty due to mainly their tyrannical government, not the "evil" corporations.


RE: Dailytech = Daily Worker?
By mikefarinha on 5/21/2008 2:26:48 PM , Rating: 4
quote:
Systems like this only serve to keep the pour from becoming self sufficient and to drain the pockets of people who feel guilty from having too much money.


"A fool and his money are soon parted"


RE: Dailytech = Daily Worker?
By JasonMick (blog) on 5/21/2008 3:02:08 PM , Rating: 5
You're right giving people slightly less than the price they would get for their goods if they made them here in America is very damaging to their self esteem. Obviously you should give them just a a few cents in our money.

And its also keeping them very poor. I mean giving people more money for their useful products as opposed to a pitiance will only keep them poor, you know. And allowing indigineous peoples to make a decent living off their goods is very damaging to their self sufficiency.

I feel very guilty now for supporting such endeavours.

I should have stuck it to them and bought their services for as low a price as possible so they would develop a better sense of self esteem and learn a self sufficient work ethic!

I'm turning over a new leaf, every man for himself, no charity or handouts anymore! You want a fair deal? Well what makes you think you deserve one? You better earn it! And by earn it, I mean be born in the right country, obviously.

</end sarcasm>


RE: Dailytech = Daily Worker?
By JasonMick (blog) on 5/21/2008 3:04:25 PM , Rating: 2
and ps before you blast me, I acknowledge that many of these efforts are mismanaged and that the money doesn't actually go to the worker, gets taken by the local dictator etc.

That doesn't mean that we should stop trying though, just means we should be smarter about these kind of efforts.

There's nothing anymore communist about this than the local Christmas charity.

If you think we shouldn't be helping the third world, try reading some articles like this:

http://www.cnn.com/2008/WORLD/africa/05/21/ethiopi...


RE: Dailytech = Daily Worker?
By masher2 (blog) on 5/21/2008 3:12:21 PM , Rating: 5
> "That doesn't mean that we should stop trying though"

No matter how you slice it, these programs are one-half socialism, one-half charity....neither of which have ever been the least bit succesful in dispelling poverty.

I'll stick to what actually works: free market capitalism. Just a small dose of that has raised the average yearly salary for the Chinese from $400 to $5,000. Taiwan -- a nation with far less resources but far more capitalism -- is about six times higher, or some $30K/year.

Third-world workers aren't poor because industrialized nations are "exploiting" them. They're poor because their own countries lack efficient systems of government and business, and are riddled with corruption.


RE: Dailytech = Daily Worker?
By JasonMick (blog) on 5/21/08, Rating: 0
RE: Dailytech = Daily Worker?
By masher2 (blog) on 5/21/2008 3:49:36 PM , Rating: 4
> "Taiwan is to a large extent and industrialized nation, so your comparison is a bit silly"

Only to someone who wholly unversed in history. In 1949, when Taiwan split from China, it had the same substinence-agragrian economy as the mainland...the same people, with the same education, language, culture, etc. Taiwan had less land, though, and far less natural resources.

So why did Taiwain become a wealthy, industrialized nation, whereas the people of the mainland were locked for decades in a crippling, brutish lifestyle, often starving by the millions?

When you understand why one country prospered, and the other didn't, you'll understand why your socialistic gestures do more harm than good.


RE: Dailytech = Daily Worker?
By JasonMick (blog) on 5/21/08, Rating: 0
RE: Dailytech = Daily Worker?
By masher2 (blog) on 5/21/2008 4:15:10 PM , Rating: 5
> "Its merely people putting a price on an abstract idea -- social equity."

The point you're missing is that your charity isn't helping these people, it's hurting them. It's no different than feeding wild animals, which eventually become dependent on that food and lose their ability to survive on their own.

Paying above-market rates for unskilled labor is the absolute worst thing to do. First, its an incentive to keep that low-skilled job...which translates to a disincentive to acquire more skills and a better position.

Secondly, it keeps the supply of such unskilled labor high...which is the entire reason the wages are low in the first place. It short-circuits the normal pattern of people migrating to higher-skilled jobs, which not only raises their own wages, but by shrinking the supply pool for unskilled labor, raises those as well.

Still worse, most of the extra money you spend on such pudding-headed endeavors winds up in the pockets of corrupt governments, strengthening their hold over their people, and ensuring conditions will never change.


RE: Dailytech = Daily Worker?
By Reclaimer77 on 5/21/2008 4:40:12 PM , Rating: 1
quote:
Paying above-market rates for unskilled labor is the absolute worst thing to do. First, its an incentive to keep that low-skilled job...which translates to a disincentive to acquire more skills and a better position.


Exactly.

Its why Bush's " Guest worker " amnesty for illegals plan was such a bad idea. All it would do is create a government sponsored permanent cheap labor lower class and these people would never rise above it. Economic slavery.


RE: Dailytech = Daily Worker?
By masher2 (blog) on 5/21/2008 4:00:36 PM , Rating: 4
> "Countries in Africa are a prime example. And why is there so little money to go around? Because international businesses don't want to invest in these regions' infrastructure "

International businesses don't want to invest in African nations for the same reason rich Africans put their money overseas, rather than investing at home. Because of a continual process of some well-meaning socialist president -- or a not-so-well meaning general -- who comes to power, then nationalizes (aka: steals) all those investments.

Look what's happening in Venezuela now, for instance. Foreign companies who've invested billions to open up its mineral wealth are now being told they're "exploiting the people" and being forced by Chavez to sell out for pennies on the dollar. Would you invest your fortune in a country after that? It takes decades for confidence to recover after a move like that.

Such pudding-headed kneejerk moves are the reason Mexico is so poor. Every time foreign investors get a small amount of confidence in the country, the government nationalizes everything

Since 1950, over a trillion dollars of foreign investment has been poured into Africa, much of it from well-meaning First-world governments. Nearly all of it has gone straight down the toilet. And it will continue to do so, until the cycle of corruption and socialism is finally broken.


RE: Dailytech = Daily Worker?
By InternetGeek on 5/21/2008 11:52:59 PM , Rating: 1
Ehm, as a Venezuelan I can tell you these companies have been bought at a good price. Not cents though not NASDAQ/Down Jones values either. Basically, these companies started investing there because they would set up the infrastructure, they then are free to sell their oil at the price they wanted.

Which is what Chavez broke. Not a bad idea for Venezuela as a country, but not well received if you're an oil company with no investments in refination


RE: Dailytech = Daily Worker?
By masher2 (blog) on 5/22/2008 9:22:07 AM , Rating: 3
> "Not cents though not NASDAQ/Down Jones values either"

You make my point for me. Company assets were seized, and the compensation paid was substantially below their true value.

> "Not a bad idea for Venezuela as a country..."

A very bad idea for the country, as any student of history realizes. The pernicious effects of nationalizing assets have been well-documented by those dozens of nations which followed the same route.

Unfortunately, people seem chronically unable to learn from history. So Venezuela will spiral down this path for a few decades, ultimately realize the "grand experiment" has failed yet again, then wind up privatizing those assets back to the private sector.


RE: Dailytech = Daily Worker?
By JCheng on 5/22/2008 2:49:58 AM , Rating: 2
The price floor (or more accurately, price premium) is only one aspect of all the fair trade programs I'm aware of, though I'm admittedly far from an expert. Fair trade certification programs also make sure that international labor standards are met--no forced child labor in particular, which is otherwise not uncommon in parts of Africa and southeast Asia. They also ensure that some portion of the extra profit goes towards community development such as building schools or scholarships, to help the next generation break out of the cycle of poverty.

None of this is a substitute for capitalism or its prerequisites. Unfortunately I don't have the ability to stop governments from being corrupt, provide them unfettered access to capital, or give them a stable framework of property and contract law. But I don't mind using my wallet to express to big industries that social justice up and down the supply chain is an attribute I consider worth paying for. And paying a few cents extra for a cup of coffee that I know (probably) didn't involve any child working against his/her will is also worth it to me.

I don't think this makes me a fool or a socialist. I don't have any illusions that fair trade will make some African cocao worker's grandchildren rich. But it may very well help him and his children escape from slavery, and raise his wages due to increased price transparency.


RE: Dailytech = Daily Worker?
By Ringold on 5/22/2008 3:18:41 AM , Rating: 2
Meanwhile, the farmer across the village that wasn't blessed to get in to the program, what, suffers because some global demand was shifted from his coffee beans to the guy down the road who was willing to forego pesticides? (they often get dual-certification as 'organic' and fairtrade)

All this, as you admit, is on soft theoretical ground as being positive in the aggregate.

Instead, if people really want to throw money at a social cause, I would point out that microfinance has a proven track record and has solid theoretical underpinnings; extending credit markets where once there were none can have huge impacts.


RE: Dailytech = Daily Worker?
By mikefarinha on 5/21/2008 3:29:28 PM , Rating: 3
I did an internship with someone from Ethiopia.

Despite all the imagery in America about anorexic Ethiopians, Ethiopia is one of most affluent African countries. Their government isn't the greatest but it is far from the worst in Africa.

Do you remember about all the trouble last year with al Qaeda in Somalia? Probably not, heres a link: http://edition.cnn.com/2007/WORLD/africa/12/04/eth...

Ethiopia beat the snot out of their enemy, and has been for many years. My point being is that poverty is a much more complex than saying population x is in poverty so lets give them money.

Imagine if the US Government was utterly corrupt (put all joking aside) when Katrina hit Louisiana. Then imagine that all the financial aid came from European countries. If Louisiana didn't get enough financial aid to rebuild should we guilt the Europeans into giving more money?

Just because you give someone money doesn't mean you've helped them.

If this 'fair-trade' practice does grow substantially I could easily see that the government's of these impoverished countries simply raise their taxes to 'recoup' their losses... so you've just helped finance these peoples oppressors... Good Job! You can go drink your orange mocha frappucino now.

*Thank God for spell check in Firefox!*


RE: Dailytech = Daily Worker?
By masher2 (blog) on 5/21/2008 4:31:27 PM , Rating: 3
quote:
"If this 'fair-trade' practice does grow substantially I could easily see that the government's of these impoverished countries simply raise their taxes to 'recoup' their losses... so you've just helped finance these peoples oppressors... Good Job!"
You're absolutely right, and in fact we've seen it happen multiple times in places from Uganda to North Korea. Well-intentioned aid winds up in pockets of the oppressive government, the sole cause of the problem in the first place.


RE: Dailytech = Daily Worker?
By mikefarinha on 5/21/2008 3:09:40 PM , Rating: 3
Going over the deep-end a bit?

I'm sure that the people that benefit from this are quite grateful.

However this is like giving someone an aspirin to stop the pain, when what they really need is a bandage to stop the bleeding.

This is the latte-liberals mindset: Give a homeless guy $5 and feel good for the rest of the day, when in fact the homeless guy goes to buy more booze to drown his sorrows.... everyone wins right?

Who needs logic when we have emotion.


RE: Dailytech = Daily Worker?
By JasonMick (blog) on 5/21/2008 3:21:35 PM , Rating: 1
Isn't the end of that take on the old aphorism "Give a man a fish" to give the homeless guy a job instead if he is willing to work one (teach him to fish)?

You're not giving these people $5. You're giving them a job, and means of providing for themselves.

Its not like these people aren't willing to work hard to try to make a decent living. They're making useful goods. The problem is they're being ripped off all along the way.

Its obviously a complex issue, but blasting those that are trying to help while doing nothing yourself is just irresponsible, which is what bothers me.

If you're doing something to help, by all means criticize, but if you're doing nothing and are criticizing people who are at least to some extent trying it bothers me.

By all mean broader changes are needed, but if you're not willing to help don't complain about those who are.


RE: Dailytech = Daily Worker?
By mikefarinha on 5/21/2008 3:36:34 PM , Rating: 2
quote:
Isn't the end of that take on the old aphorism "Give a man a fish" to give the homeless guy a job instead if he is willing to work one (teach him to fish)?


I agree 100% with that saying. However the pond that he is fishing from is man-made, thus he isn't really learning anything useful.

Not that it matters, I do contribute to charity what I can. However I prefer to stick with traditional charities that have a record not ebay.com or overstock.com.


RE: Dailytech = Daily Worker?
By the goat on 5/21/2008 4:03:32 PM , Rating: 2
quote:
quote:
Isn't the end of that take on the old aphorism "Give a man a fish" to give the homeless guy a job instead if he is willing to work one (teach him to fish)?


I agree 100% with that saying. However the pond that he is fishing from is man-made, thus he isn't really learning anything useful.

That is exactly my point. Fair-Trade programs only allow the workers to make more money as long as the consumers are willing to support the artificially inflated high prices. If the consumers change their mind (which happens a lot) the bubble bursts and the price drops like a sack of dirt (yes I know everything falls at the same rate regardless of weight/mass). Meanwhile the worker has grown dependent on the the artificially high fair-trade pay.

Fair-trade programs don't teach people new skills that enable them to get better jobs. In fact it forces the pour to not switch to another job . This is because starting pay at the other job is most likely lower then the artificially inflated Fair-Trade pay. Even if the other job has much better future earnings potential, it doesn't make sense to switch.


RE: Dailytech = Daily Worker?
By masher2 (blog) on 5/21/2008 3:42:36 PM , Rating: 3
> "You're not giving these people $5. You're giving them a job"

No. They already have a job, else they'd have nothing to sell you in the first place.

> "The problem is they're being ripped off all along the way."

Ah, we again see the socialistic viewpoint that anyone who profits beside "the workers of the world" is exploiting them. How meretriciously trite.

If you want to help third-world workers -- promote capitalism, not socialism. And ask yourself why wages are so low in these countries, when other countries -- many with far fewer natural resources -- have salaries ten or even 100 times higher. Do you honestly believe its just a coincidence that the poorest nations on earth are also the most socialistic and corrupt?

Paying an artificially high price for goods made with unskilled labor just perpetuates the cycle, and helps about as much as donated aid does, when its stolen by warlords to fund arms purchases.

Education and capitalism. That -- other than a plane ticket out -- is the only thing that will really and truly help the third world.


RE: Dailytech = Daily Worker?
By mikefarinha on 5/21/08, Rating: 0
RE: Dailytech = Daily Worker?
By xsilver on 5/21/2008 11:49:01 PM , Rating: 2
because you are the wind beneath my wings.....

Ph^#$^@^$%$^@kkkkkkk -- sorry just had some vomit appear! ;)

What I find odd is that no one has yet to mention what happens in a mature capitalistic environment. Companies that are profitable get big, yes their employees get rich, either through IPO's or otherwise. As a corporation, the sole goal then is to provide wealth for investors. This leads to predatory or monopolistic or cartel enterprises if the opportunity arises. Companies then will also try to get into the pockets of goverments, which pass legislation that favours what the company is doing, including federal subsidies.
In the end in order for the company to make more money, it squeezes the bottom line of the lowest rung workers while the members of the board are allowed to set their own salary unopposed.
While not all of the above is true to all capitalistic ventures they'd all probably do it if given the chance.
Just trying to provide some balance of argument - masher loving = JUST SAY NO! ;)


RE: Dailytech = Daily Worker?
By JasonMick (blog) on 5/21/2008 3:53:28 PM , Rating: 1
quote:
Paying an artificially high price for goods made with unskilled labor just perpetuates the cycle, and helps about as much as donated aid does, when its stolen by warlords to fund arms purchases.


Perhaps also stop the global arms trade. US and foreign companies who trade weapons with these regions should be internationally sanctioned. China for one is profiting big off the arms trade.
There needs to be more accountability here.

I agree with you absolutely on your point of education and capitalism. Education is the real key, which you hit on. That's why India and China have finally started to lift out of poverty.

Unfortunately those countries already had rich educational histories in past centuries, something not necessarily true in Africa and South America.

Still money spent building education is not wasted. It'd be great to see American countries investing in providing technical education in Africa/South America on a large scale. I don't see that happening though, sadly. It wouldn't even be very expensive either, in American dollars.

Just to set the record straight fair-trade IS capitalist though as people here are willing to pay an extra pricing WILLINGLY for social-equity. If this was government regulated itd be another matter, but this is simply people putting a price on what they feel is social justice.

In pure capitalism anything can have a price, even emotion. Look at why some people buy certain products (not to name any brand names). It's very emotions based. You could sell people air if they were willing to buy it.


RE: Dailytech = Daily Worker?
By masher2 (blog) on 5/21/2008 4:26:20 PM , Rating: 3
> "Education is the real key, which you hit on. That's why India and China have finally started to lift out of poverty."

Sorry Jason, but that's not it at all. The Chinese educational system hasn't changed much at all in the last 25 years. What has changed is that China began to embrace free trade and limited capitalism. It privatized some industries, began to allow foreign investment (first only a few small zones such as Canton, then more widespread), and several other measures.

Education is obviously important -- but Cubans get a good education too, and most still work for a dollar a day. The difference in China is capitalism, plain and simple.


RE: Dailytech = Daily Worker?
By JasonMick (blog) on 5/21/2008 4:35:18 PM , Rating: 3
Yea, but as I've stated fair trade IS capitalism. So your arguing a moot point.

Is capitalism good? Yes.

Is fair trade capitalism? Yes.

Its merely putting a price on a concept -- social equity, and allowing the free market to decide whether people buy it or not.

I've yet to see you refute this key point, you've just basically been talking around it in all your comments.

I'm not debating the accuracy of what you're saying in the other aspects of your comments, but stop saying/infering that fair trade is communism when its obviously capitalist.


RE: Dailytech = Daily Worker?
By masher2 (blog) on 5/21/2008 4:53:08 PM , Rating: 3
> "stop saying/infering that fair trade is communism when its obviously capitalist. "

Come on Jason, surely you have a better grasp of capitalism than this. So-called "Fair" trade is obviously a hybrid: part free trade and part socialistic endeavor. But none of the of the excess amount paid over fair market value (the only part you're praising, in fact) is capitalistic in the slightest.

Furthermore, even calling fair-trade "voluntary" is open to debate, as there are already people out there trying to mandate these policies by government action and corporate boycott. This is no different than dozens of other socialistic endeavors...get your foot in the door first, then lock down the procedent with hard legislation.


RE: Dailytech = Daily Worker?
By JasonMick (blog) on 5/21/2008 5:04:36 PM , Rating: 2
quote:
Furthermore, even calling fair-trade "voluntary" is open to debate, as there are already people out there trying to mandate these policies by government action and corporate boycott. This is no different than dozens of other socialistic endeavors...get your foot in the door first, then lock down the procedent with hard legislation.


C'mon Mike, obviously that's a whole different story, and not what this article or my comments talk about. And obviously such measures would never pass as the majority of people don't want to pay higher prices.

quote:
But none of the of the excess amount paid over fair market value (the only part you're praising, in fact) is capitalistic in the slightest.


And you're the one who seems to be lacking an understanding of capitalism. The idea of a "fair market value" which you expose is a communist principle through and through. In a true free market, whats fair is whatever people are willing to pay for it for whatever reason. That quite the faux pas you made there for a supposed capitalism advocate.

The government is in no way involved in price fixing here so this is not socialism/communism. Period.

Its people buying a service based on abstract ideas. Even if you argue they're being duped its still capitalism. Are people who buy softdrinks at movies being duped into paying high prices? Sure, welcome to the free market.

This isn't a hybrid system AT ALL, theres no government involvement, period. You're the one who's attacking capitalism by suggesting that consumers who want to pay for a product shouldn't pay the price they're willing to pay for it because its "unfair" because its used to support social equity.

That's a pretty slippery slope statement there.


RE: Dailytech = Daily Worker?
By masher2 (blog) on 5/21/2008 5:34:31 PM , Rating: 3
> " And obviously such measures would never pass as the majority of people don't want to pay higher prices"

Err, similar measures already exist Jason. Which is why US consumers -- up until the mid 1990s -- paid higher prices for Chinese goods, because human rights violations kept us from granting the nation MFN status. Exact same principle...the higher price was the result of some muddle-headed belief that it was actually doing the Chinese people some good.

Fortunately, President Clinton realized that a policy of engagement in free trade was far more productive, and forced MFN status through, which ultimately did far more to help the Chinese people than our artificial meddling in the market.

> "The idea of a "fair market value" which you expose is a communist principle through and through"

I'm going to be charitable and assume you didn't really mean to type that.


RE: Dailytech = Daily Worker?
By mikefarinha on 5/21/2008 5:43:10 PM , Rating: 2
quote:
The government is in no way involved in price fixing here so this is not socialism/communism. Period.


Socialism isn't a form of government, it is a form of distributing resources. Democracy, Dictatorship, Monarchy... those are forms of government.

You don't need a government to have socialism. You can go live on a commune and live in a socialist society if it suits you.


RE: Dailytech = Daily Worker?
By mikefarinha on 5/21/2008 5:24:01 PM , Rating: 3
quote:
Yea, but as I've stated fair trade IS capitalism. So your arguing a moot point.

Is capitalism good? Yes.

Is fair trade capitalism? Yes.


Is capitalism good? Yes.

Is fair trade capitalism? No. Fair Trade is a form of charity.

It is just like when the Knights of Columbus give you a tootsie roll for a donation. You didn't buy the tootsie roll, you gave charity and were subsequently given a token of gratitude. This isn't capitalism.

The solutions of charity and fair trade don't address the problem they purport to solve. You need to understand the problem to come up with a proper solution. The problem isn't poverty, that is a symptom. The problem is tyrannical governments and socialism.


RE: Dailytech = Daily Worker?
By Reclaimer77 on 5/21/2008 4:33:43 PM , Rating: 1
quote:
It's very emotions based.


Just like all your arguments.


RE: Dailytech = Daily Worker?
By Suomynona on 5/21/2008 3:37:31 PM , Rating: 3
How is using a free market socialist? If enough people are willing to pay more for goods that are "fair trade" goods, then whoever is able to leverage this is a pretty successful capitalist. That's how the free market is supposed to work: demand exists for a certain product, and someone then provides that product. This is pretty much the opposite of socialism.


RE: Dailytech = Daily Worker?
By phxfreddy on 5/21/2008 8:20:05 PM , Rating: 2
Completely CORRECT this man is.

FAIR PRICE == What market bears ( == is identically equal)

How many countries do you have to cite to prove the point???

Japan,Korea,China and my beloved Brazil where I currently writing from!

Brazil is an example I can talk to you about endlessly. Unless all you want is symbolism in that a very few number get export oriented jobs then don't fall for this popular liberal / communist / fascist canard.

Some of these places the cost of living is very low. Thus its easy to complain "oh they only make a buck a day" but that does not calibrate for what cost of living in the aforesaid location.

The lib labor types think this is some sort of way of allowing higher wages in the USA. What it really does is help slow development which is the REAL way you equalize conditions so wages will actually grow.

But then you already knew they the libs hate globalization. Witness how they protest WTO meetings....with violent protest. These people are little dictators who think the world needs to conform to their demented wishes. You can see that in the hoax that is global warming and you can see it in this issue. Their dellusions are BEYOND compare and we will soon have a black president elected by affirmative action MERELY because they think we need one. Not because he appears to have something the country needs.

Where is the next Reagan? We're going to need him after this crowd gets down with the country.


Smells like exploitation
By amanojaku on 5/21/2008 2:29:03 PM , Rating: 3
quote:
There's big money involved says Chatwani. He estimated the socially equitable/green product market to total over $45B USD worldwide annually.


quote:
The biggest effort with the new fair-trade site will be to deliver full transparency. Chatwani says the new site will provide detailed information on where the products came from, how they're produced, and what their environmental impact is.


How altruistic! It's funny how an article discussing economic equality for the exploited mentions profit for the rich without discussing how the poor who produce the products are aided. No offense meant to Jason Mick; I'm referring to the CNET article.

Transparency down to what level? If I buy a shirt how do I know the person who made it is getting paid a salary on par with what an American would get? The American might get $5.85/hour; what does the foreigner get? How do we prove it? This is why I don't believe in outsourcing. I've never seen prices drop, but I HAVE seen executive salaries increase. Maybe I'm just a cynic.




RE: Smells like exploitation
By Smartless on 5/21/2008 2:44:35 PM , Rating: 1
Then again, American's getting a high minimum wage also indirectly contributed to why America is $1 trillion dollars in the red and why China is $1 trillion dollars in the black.

"American parts, Russian parts, ALL MADE IN TAIWAN!"

As for executives, I agree, the American CEO is gamble on who gets the big picture. And when then don't get it, oh well.... still get millions.


RE: Smells like exploitation
By amanojaku on 5/21/2008 3:00:35 PM , Rating: 2
quote:
Then again, American's getting a high minimum wage also indirectly contributed to why America is $1 trillion dollars in the red and why China is $1 trillion dollars in the black.


And you have references that prove this? I'm being serious, I would love to see how this is explained.

What I remember hearing is that America is in debt because it doesn't make sense to pay off the debt. No one is going to collect. If the bank kept giving me loans with no intent to get paid back I'd keep taking them because my own pockets are getting fatter with someone else's money.

As to the "high minimum wage" I dare you to say that to the face of a person earning minimum wage in any country. It's called minimum for a reason: you can barely survive on it.


RE: Smells like exploitation
By bighairycamel on 5/21/2008 4:04:26 PM , Rating: 2
quote:
What I remember hearing is that America is in debt because it doesn't make sense to pay off the debt. No one is going to collect. If the bank kept giving me loans with no intent to get paid back I'd keep taking them because my own pockets are getting fatter with someone else's money.


What you think they're getting that money for free? The only reason the lenders aren't collecting is because they know we will be paying interest out the arse for the next 50-100 years (maybe more i don't know), so in the long run they win.

The reason why it doesn't make "sense" for us to pay it back is because we can afford to pay the interest on it. What we can't afford is to pay the principle down.


RE: Smells like exploitation
By Smartless on 5/21/2008 4:13:50 PM , Rating: 2
http://www.washingtonpost.com/wp-dyn/content/artic...

http://www.focusweb.org/chinas-ecological-time-bom...

http://news.bbc.co.uk/1/hi/business/6106280.stm

http://www.nytimes.com/2007/07/11/business/worldbu...

I admit I'm no economist and the comment was very generalized but I did say indirectly. I do realize there are multitude of reasons why the situations are the way they are and the Chinese government has been very slow in dealing with it. But logically why do we buy stuff manufactured in China versus America? It's not the resources they have. You do realize China didn't have a minimum wage until 2004 but they were already an exporting monster by then. Taiwan didn't get a minimum wage until 2007.
http://www.china-embassy.org/eng//gyzg/t63347.htm

And like all the links above they agree with you on your point which I never disparaged, the debt can't be paid off without crashing the global economy. China right now is following a similar route that Japan did.
http://www.huffingtonpost.com/max-fraad-wolff/chin...


...
By Icelight on 5/21/2008 2:14:17 PM , Rating: 2
Yes, you too can experience fair trade. Ebay will only charge you, the poor citizen of a third world nation, twice for selling a product instead of three times like they do to the general public on their mother site. Of course, in order to adequately keep track of which third-world corporations are doing well, a feedback system will be implemented whereupon buyers can leave feedback towards each company. Negative feedback is, for obvious reasons, not allowed! Nigerians sold you gold chains that are, in fact, merely coloured plastic problems? Don't complain to us, we'll ignore it!




RE: ...
By mmntech on 5/21/2008 2:34:05 PM , Rating: 2
That's pretty much how it is.
I majored in Political Science and History in university with a specific focus on Latin America. In that context, fair trade has always seemed like a pipe dream to me. Even if you pay them the "fair" price for coffee, it's still half of what they'd make growing coca. Still, it makes urban liberals feel good about themselves and it give people like eBay, Starbucks, et al good PR. Rich westerners buying trinkets off eBay isn't exactly going to pull people out of poverty.


RE: ...
By phxfreddy on 5/21/2008 8:24:32 PM , Rating: 2
I'm studying Brasil from inside Brasil. Me likey!

Business is business. Economic activity occurs because it pays. If it does not pay it ends.

And ebay CAN pull people out of poverty. But its not the way you think. Ebay is very empowering. Its like business 101 for the masses. It works effectively. I'm self taught essentially via ebay.

Do not underestimate the effect of ebay ( which is in reality the effect of the net ) on this. There will come a day when unDemocrats will loose alot of their base because of the nature the business education that is happening......maybe even the R's too because libertarianism is where it is at for business!


Why doesn't the market level the playing field?
By crimson117 on 5/21/2008 4:54:58 PM , Rating: 2
India and the USA are good examples here...

We outsourced IT work to India because when we started, Indian techies would work for a lot less money than Americans would - their cost of living was lower, so they needed less money to live an equally good life.

However, as the Indian economy has grown, their wages have begun to catch up with American wages. It is not as good a deal as it used to be. And eventually it will hit a balance where it's no cheaper to outsource tech work to India that to just hire an American to do it.

A Fair Trade proponent might say "We're exploiting Indians by paying them just 1/10th of an American's wages for that same work. Let's embrace Fair Trade and instead pay them 9/10ths of an American's wages. We still get a discount from outsourcing, and now they get higher wages".

Embracing Fair Trade in that situation would just accelerate the onset of the balance between the two economies.

Whether that's a worthy goal or not, is up to you. Some think we should encourage our own economic dominance, others think we should encourage economic equity, others think we should just let the market sort it out.

To the Fair Trade supporters, why should we accelerate the market in this way?

If a craftsman currently gets $1 per item he crafts, and an American company sells it for $20 here, then that's where it stands. What's to stop another American company from offering the craftsman $2 per item, stil selling it for $20? He's now stolen the craftsman, controlled the supply, and get the marketshare. So the first company comes back and offers $3 to the craftsman, etc, etc, until the wage is balanced.

Why doesn't this happen - why do we need to artificially up the wages via Fair Trade? The only reason I can come up with is that there isn't actually enough demand to meet the supply. There are more than enough craftsman, and too few craft-consumers. If the craftsman demanded $2, there'd be plenty of others willing to do it for $1. So if the economy were left alone, those people would start developing more lucrative skills.




By BansheeX on 5/21/2008 7:43:11 PM , Rating: 2
quote:
Embracing Fair Trade in that situation would just accelerate the onset of the balance between the two economies.


This is a flawed correlation leading to a false expectation of results. Depends entirely on the type of government in that country, whether the people have rights and recourse, and what the level of taxation and inflation is. India was under British influence for a long time, then they went independent and turned to socialism (as many former colonies do) around 1950. 25 years of misery later, they became more free market capitalist and their economy has exploded ever since. India has a lot of cultural things working in their favor as well. They are hellbent on gold and they had a lot of contact with the West and are thus more receptive to Western types of government. In this case, their colonizer was British, so the English language is common there. Would America have outsourced IT to India if they had never been colonized by the British and gotten English? Probably not. Funny how history works.

quote:
Whether that's a worthy goal or not, is up to you. Some think we should encourage our own economic dominance, others think we should encourage economic equity, others think we should just let the market sort it out.


The latter. You turned on the light bulb in the second part of your post when you found the missing unaccounted variable, which is the disincentive it creates for the advancement of skills into other sectors, which will likely result in a slowing of prosperity relative to letting the market work. It's just more socialist academic insanity, the consistent belief that there is some way to fiddle with free market prices to increase overall prosperity faster.

There is no such thing as "exploitative" capitalism. Labor in demand is naturally bid up by competing businesses. The reason these people are poor is not because of companies wanting to hire them, it's stone age protectionist isolationist dictatorial governments like Burma that you never hear about or care about until some disaster kills millions of its people. Then you've got places like Zimbabwe where you have central banks repeating Weimar Republic and Continental dollar inflation mistakes, making everyone in the country a poor billionaire. Free trade can't stop something like that, people's savings which they hold in government declared fiat paper is literally being devalued just by printing more of it. Hell, we got a central bank, too, in 1913, and depression (deflationary, though, because we were on gold then, so the bastards couldn't print, but they COULD contract and sit on the gold).

http://www.flickr.com/photos/willster/2450992691/
http://youtube.com/watch?v=O7pnjzCuSv8


By Ringold on 5/22/2008 2:28:18 AM , Rating: 2
quote:
There is no such thing as "exploitative" capitalism. Labor in demand is naturally bid up by competing businesses.


Amen. You nailed it.

Sorry, everyone else, but the principles in question here really are not liberal or conservative perspectives on economics. BansheeX (Austrian? and I (Chicago?) are from two distinct schools of economic thought, and there are others beyond our own, but most of the fundamentals are identical. One can pick up books written by famous liberals, such as Krugman, or something by a famous conservative, like Sowell or Friedman. All would likely have to agree that the best way to help those in low-income countries is to simply shop as normal, because asides from agriculture and energy global markets work with some level of decency. If you want the markets to work better, the solution definitely is not creating a bunch of branded products that still exist within the old framework, it would be to write to your congressman/woman and tell them do what ever it takes to get the Doha round done (read: tell them to throw the damn farmer lobby under the bus).

No, that doesn't satisfy white-guilt, rich-guilt, green/carbon-guilt, or any other form of guilt. However, life isn't Hollywood, and economic theory doesn't exist to assuage peoples big hearts.


News article -- or blog?
By Ringold on 5/22/2008 4:10:26 AM , Rating: 2
quote:

Fair-trade, the concept of giving indigenous people and foreign workers a reasonable price for their goods and services is a hot new concept. In the past, America, Europe, and the rest of the industrialized world have taken advantage of the fact that in many third world countries labor and resources are cheap.

Unfortunately, by using these countries economically, cycles of poverty and conflict have been perpetuated to a large extent in prior decades. By giving the locals a cut closer to what they would get if they were in America, the local people benefit and, in theory, the world will be a more equitable and prosperous place.


Some times, I don't see what people complain about with DT's articles.

However, this was in the news column, and yet included a huge lead-in of opinion, which I have made bold.

The first paragraph I let off the hook only because it is true, though with CNN having fine-tuned my Bias-o-Meter, its language slants the wrong way. Would you prefer companies not utilize cheap labor? Would the Chinese prefer not to have been utilized? I'm sure the hundreds of millions joining a global middle class in China and India are quite happy to have been "taken advantage of". Wages are rising at stunning rates -- though productivity is, for now, raising at similar rates, keeping per-unit labor costs from rising too much.

However, the idea using them "economically" has somehow reinforced the vicious cycle of poverty is comical. The lack of them being "used" is part of the cause of the cycle, not disuse, and the reasons why impoverished areas of the world (read:Africa) haven't had much investment yet has nothing to do with capitalism, but the lack of it and the conditions (read:decent governance) necessary for its support. In the 1960s, the World Bank considered Africa's growth prospects superior to those of East Asia, and had a list of 7 African countries able to sustain 7% growth. Instead, from 1965-1990, Africa as a whole experienced zero real per-capita GDP growth, and much of the continent saw consistent negative growth. East Asia and India, on the other hand, allowed the conditions you seem to rail against, and, well, take your pick Jason Mick. Want to spend a week in South Korea, or Nigeria? It's worth pointing out that as far as endowments of resources go, East Asia got the relatively short end of the stick. They had similar initial starting conditions, the main difference is that one area saw almost all the area countries make free market reforms while the other area went in the opposite ideological direction.

Masher has already largely addressed the falacy that simply dumping money on them is necessarily the best lesson. Further, as I pointed out in another post, a lot of the agricultural FairTrade products get dual-certification as being organic, reducing the farmers potential output -- in effect, a feel-good measure subsidising the food shortage. (This is more an indictment against the whole organic movement rather than FairTrade itself, though.) Those few producers that manage to get in to the FairTrade scheme could do better, but the vast majority do not get in to such schemes. There isn't that much demand for these goods. It does, however, discourage farmers and low-value-added producers from diversifying and moving up the value ladder; why do that when American hippies are paying up for these other things?

Charitably, one could say that if that part of the story wasn't also false, then it is at least on quite soft theoretical ground. Simple Ricardian trade concepts I would think would suggest that any deviation from free trade as being undesirable compared to free trade -- but as you point out, this is a free trade product; it's designed to seperate those with little economics background and a big heart from their money, and it just happens to distort trade along the way. Masher characterizes it as socialism, I characterize it as pure capitalism that preys upon socialist beliefs and desires and happens to have distorting effect -- similar to socialist policies, but the origin and intent of the product is pure capitalist greed. (Note all the sponsored, and probably expensive, pay-per-click Google text ads that come up when googling 'FairTrade'. Tax deductible and all in the name of the common good, no doubt!)

At any rate, global warming science is even more solid than the underpinnings of FairTrade. I've seen Masher and BansheeX make solid points, and their citations of established theory and historical facts haven't been met with much in turn beyond emotion and assumption rather than historical evidence. At least in Global Warming debates, a whole slew of people pour out of the woodwork and at least give Masher a run for his money with all kinds of studies and data. No such thing happening here. If Global Warming is shunted to the Blog section, then an article that rings as an endorsement of an even more controversial product should be as well.

</end_economics_lecutre>

Not that I have anything against the article itself, though it just serves to further tempt me to waste a few years of my life teaching high school kids economics properly rather than allowing them to get it from their Democrat history teacher being pressed in to service to instruct a class she/he has no knowledge of themselves. If people understood what "floating rate" as opposed to "fixed rate" meant, the economy would be in great shape, and if they had a little Ricardo, Smith, Rand, Sowell, Mises or Friedman in their lives, this stuff would never be popular.




RE: News article -- or blog?
By masher2 (blog) on 5/22/2008 9:35:35 AM , Rating: 2
> "Masher characterizes it as socialism, I characterize it as pure capitalism that preys upon socialist beliefs and desires and happens to have distorting effect -- similar to socialist policies"

You express it very well. The reason that I characterize this as socialism, though, is that once such programs have the force of custom, a movement to enforce them via government mandate invariably springs up. So while they initially begin as a pseudo-capitalistic endeavor with socialistic effects, they quickly devolve into the very apotheosis of socialism itself.


RE: News article -- or blog?
By Ringold on 5/22/2008 6:33:31 PM , Rating: 2
True, I didn't consider the cultural feedback, that makes sense.


Green
By rsmech on 5/21/2008 2:20:25 PM , Rating: 2
Do they call it "Green" because of the environment or the cash?




Markets in everything
By killerroach on 5/21/2008 2:57:52 PM , Rating: 2
eBay first rose to the ranks of the business elite by catering to tech-savvy individuals looking for all sorts of random goods. Now, they're trying to raise their image by catering to tech-savvy people looking to assuage the guilt of being wealthy by allowing them to engage in well-intentioned, but usually largely symbolic, acts of commerce.

That's the beauty of the free market, though... if people think that it's worth it to them to pay extra for the privilege of feeling good about their contribution to society, and somebody's willing to take their money for that purpose, why not?




using info that was stolen...
By Screwballl on 5/21/2008 3:33:48 PM , Rating: 2
...from Craigslist. Ebay had a board member on with craigslist and is using stolen information and insider techniques to create a smaller local based sales that will be used to compete directly with Craigslist.
CL has already sued ebay for this




By Linden on 5/22/2008 3:57:22 AM , Rating: 2
I'm surprised it hasn't been mentioned yet. If it has forgive me for reading the posts too fast.

There is a means to bring more money to the impoverished farmers and artisans in these 'third world' areas that does not artificially manipulate the market and prop up inefficient or obsolete local economies. I can think of two examples: 1) There are coffee sellers now that buy directly from farmers, not the large corporate plantations, but small family units. By 'directly,' I mean the purchasing is not done through middlemen-brokers who often realize the profit from the true market prices, leaving only a pittance for the farmers. The coffee beans are purchased at the wholesale world market price but the farmers keep the balance that otherwise would have gone to the brokers. 2) There are many retail shops in the US now selling African and South American arts and crafts that have formed associations. The associations, and also sometimes the shop employees themselves, purchase crafts and artifacts directly from the craftsmen, importing the goods without brokers or distributors to their stores. As in example 1 above, the market prices - what people are willing to pay for the goods, are kept natural but the producers, the individual artisans, realize much more income.

Does the eBay scheme involve innovation such as this?




Ahhh... the bootstrap theory.
By bupkus on 5/22/2008 2:06:33 PM , Rating: 2
Perhaps we should all ascribe to the Star Trek law of not interfering in the evolution of other developing societies.

Lets see...
1. are you interfering with a society's evolution by rescuing a drowning person or should you allow him the opportunity to grow gills and evolve into a self sufficient organism?

2. if a child lives in an impoverished society should we build schools there or allow his parents to spontaneously develop the skills to teach his child advanced mathematics?

3. will fair-trade money going directly to a coffee plantation owner and his family and local workers elevate a regional economy allowing them to pay taxes and make requests of government officials with the respect that higher tax payers get? Example: here in Arizona the streets of Scottsdale are better paved than the streets of Phoenix.

4. if nothing else, could suppliers of coffee(any other products would also do) to western nations exert a greeter influence on corrupt government officials who depend on the poverty and ignorance of their peoples to retain power, and the ignorance of the U.S. government who can so easily be convinced that these otherwise poor are turning to communism or Fundamentalist Islam and labeled terrorists; so the US government can justify giving such 3rd world country credits to buy Made in the USA weapons so our tax dollars can create profits for weapons makers and extend slaughter to more peoples of the world all the time filling the re-election coffers of a current administration?

Gotta stop here, think I'm gonna spew.




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