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Internet eBay Launches Fair-Trade Site
Jason Mick (Blog) - May 21, 2008 1:53 PM
Print E-mail del.icio.us 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.