OT: Fair-Trade Logo Apparel; article in NYT.
. . . some critics view the living wage as do-gooder mumbo-jumbo . . .(So much for human decency.) I don't understand the legalisms or economics of U.-sporting apparel hook-ups, but I wonder if anyone has an idea if UM can get involved in something as socially redeeming as this, without falling afoul of the Adidas relationship?
"I don't understand the legalisms or economics"
All you need to know about this post.
Neg bang deserved for being a dick. look at my more complete response below...
I love this "fair trade" argument, it makes no sense. Tell that to the poor mother in the Dominican Republic who wants to work for minimum wage but cannot find a job because someone getting paid 3.5x has taken the money that could be spent on several employees.
As long as companies are not abussing workers and using force to make sure they work, then I consider trade fair already. Everyone is entering into an agreement that they willingfully want.
If you want a redeeming quality of the UM contract, think of the thousands of jobs it is creating in poor communities that before then had nothing.
Yes, we all wish there was no poverty and everyone would have jobs to pay for all their needs, but growth takes time and the more we try to use political force to interfere with the efficiency of that growth the longer it will take.
Already think of the hundreds of millions that have been lifted out of poverty in the last decades.
I believe that is known as the 'race to the bottom' argument. Do you really want to make the argument that buying fair-trade coffee, for instance, is taking money AWAY from those hard working bean pickers?
Sure, as you can see China has really raced to the bottom by bringing half a billion people out of poverty.
The market is best at setting prices/costs, it tells us what other are willing to pay for a product.
So we all want cheaper products and we want everyone employed and we want everyone to earn 4x even if their market rate is 1x.
If you are willing to do a job for less then why should you not be allowed to do it? And as more jobs are created standard of living goes up which improves education which leads to higher paying jobs. Seems like a race up not to the bottom.
Buying free-trade does not take money AWAY from the bean pickers, it takes money away from the other person that is willing to do that job for a lower salary. Personally I think that if you as a consumer are willing to pay a higher price for an item because you know that the person that produced it was paid a higher wage, I am all for it, it should be your choice. But calling it "fair trade" is bs, there is nothing fair about it when you try to manipulate the market (most of the time not even understanding the economics of those countries).
As I said, as long as employees willingfully enter a contract and are not deceived by the company and then forced to work (as has happened in the past) then I consider that "fair trade." Creating fake salaries just because some person on the other side of the world thinks that salaries should be higher is not "fair."
What will happen to those jobs in the Dominican Republic when the company realizes it can produce cheaper in Africa?
We're wandering straight into the place we're not supposed to go. So I'm just going to disagree with you.
Needless to say, I think the last 30 years (and pretty much the entire history of economics leading up to the labor movement) prove you wrong.
Cool, agree to disagree, but I really have no idea how you've reached a different conclusion. If anything I would say that history has proved your point incorrect.
Best
Would the factory employ more workers (maybe paing more aggregate wages) if they paid workers 3X less because they could sell more shirts by pricing $3 less than Nike/ Adidas?
Who knows, but my guess is that by marketing as Fair Trade, they are better off than selling for $3 less than a well branded product, like Nike/ Adidas, especially to (generally) liberal college students.
I'd probably buy the Fair Trade, btw. It's more of a strategic decision than one to "help poor people".
EDIT:
as long as employees willingfully enter a contract and are not deceived by the company and then forced to work (as has happened in the past) then I consider that "fair trade."
I don't belive that is the general problem with sweatshops, it's the use of child labor, disgusting working conditions, and no responsibility to injured workers, all of which is highly illegal in developed nations, for a good reason.
1. It's hard to say people are "willfully" agreeing to work for less. That assumes there is some kind of choice. In fact, when people agree to work for these minimum rate or "market rates" they often have no other choice. Thus, the arguement that people are "willing" to work for 25 cents an hour, so I shouldn't worry about buying a product from a company that pays such a rate is a bit simplistic.
2. It's not that a person "willing" to work for less isn't allowed to work - they simply weren't hired by the company paying more (don't you think a person in the DR would rather get more money than less money for the same job?). You're assuming that because the company is paying a living wage as opposed to the lower market wage that the company is hiring less people. Not necessarily.
3. You don't think the company in the DR realizes it can produce the products for less elsewhere now? Really? The company is paying a living wage because that's the stragetic direction it choose - not b/c they do not realize they can pay workers less.
4. Perhaps the notion behind fair trade is to get the consumer to demand (through their purchases) products that come from companies who pay a liveable wage and encourage the other producers to do the same or risk losing market share.
1) There is most certainly a choice. The alternative choice to working in textiles is grinding poverty living off the land. So, point taken, that people are not choosing between bricklayer or seamstress - they are choosing dirt farmer or seamstress. Terrible poverty vs. less terrible poverty, which for most is an easy choice. 125 years ago 4/5 of American workers were farmhands doing back breaking labor for nothing, which is why they left for factories. Same in China. With my own eyes I have seen malnourished children sitting in the dirt because their parents coudn't make a living from rice farming. A couple of dollars a day from working in a factory is a big step up from starving.
2) Your micro point is valid, but the larger point remains - you cannot build a competitive industry on uncompetitive wages. Textile factory work sucks but you need lots of it to move to the next points of development.
3) Agree here - "fair" trade is a marketing pitch to people who like that sort of thing. Most consumers are not swayed by this argument and will always make a rational, efficient decision based on price. Put a Walmart next to a higher priced store and Walmart wins, because people vote with their dollars on what is most important to them, and 99% of the time it is price.
4) Except it doesn't work, outside of people already pre-disposed to the concept, or unless external actors like university regents impose market distortions. When the price goes up, demand goes down, no matter how noble the intentions.
Development isn't easy. It's a long, slow, ugly and dirty ride to a reasonable standard of living, and "fair trade" is no short-cut. If it makes you feel good, buy it. But don't expect it to replace competition.
1. 125 years ago there really wasn't an alternative to working the land. We all agree that people are in poverty. We may even agree that it's not a good thing. I just don't understand how buying fair trade products hurts those in poverty. It doesn't help everyone, but it certainly helps the person working the fair trade factory more than it helps another person working in a min wage factory. Perhaps the argument is that by taking a position in a fair trade factory the person is giving up a more stable and longer term position at a min wage factory. I doubt the validity behind that argument b/c as soon as that factory can find a cheaper way to produce, everyone loses the job. In the fair trade factory, the owner clearly isn't exclusively concerned about maxing profits (or else min wage would be paid).
2. My point, is that competitive wages can be determined by end-users. If universities and other consumers are willing to pay for fair trade products, then the fair trade wages are fine. The notion that people will always purchase the product that costs the lowest isn't true for every market - which is why the fair trade market exists. It may not be a thriving niche market, but I don't see how it hurts anyone either.
3. We all seem to be assuming that fair trade products cost more b/c higher wages are paid. In some instances, fair trade products are similarly priced - maybe the owners are simply accepting a smaller margin. It's not hard to imagine an owner willing to pay the workers a living wage will also accept a smaller profit. Sure, put WalMart next to a higher priced Target and WalMart wins, but the fair trade industry will tell you that comparing WalMart to a higher priced fair trade shop (assuming it is higher in price) is like comparing apples to oranges. The two are not targeting the same consumers. Maybe someone is arguing that paying a 3 dollar shirt at WalMart is also helping the poor, but I still don't see how paying 4 dollars for a fair trade shirt hurts anyone or slows growth. Perhaps, you're arguing that lower priced products sell more quantities (a buyer would purchase two cheap shirts instead of one fair trade shirt), which creates more min wage jobs to meet the demand, which gets more people out of poverty. I'm not sure any of that is true. If I need 1 shirt, I buy 1 shirt.
4. It only fails to work when people are purchasing purely based on price. But, as you mention, when universities or others factors are considered when making the purchase, it can work. Like you said, development is slow, so if fair trade development is slow, it's still a good thing.
I'm not claiming that fair-trade is a short-cut to country-wide development. I'm simply trying to argue that it's not hurting anyone - in fact, I think it benefits some people on a micro basis, which seems positive.
That only makes sense if the limiting factor is the money. If a company from the US has the resources to employ 100 workers in the Dominican Republic, they probably have the resources to employ 200. The limiting factor in a lot of these situations would seem to be the amount of work to be done.
I don't think fair trade is going to solve all the worlds problems or anything, but higher wages for workers isn't something I can see being a negative.
The limiting factor is always money. Pay more than market rates for inputs to production (including labor) and the market will punish you with lower sales, losses, and eventually bankruptcy. It may sound counterintuitive, but it is also bad for the worker in the long run, in three important ways:
1) Worker A gets a job earning 3X minimum wage for US Company. Like most people here would do, she decides to spend this windfall on a better life for herself and her children; buys a TV, motor scooter, enrolls the kids in a new school and starts to add on to the house (which is, by the way, the consumption pattern of almost all families emerging from poverty worldwide) . When US Company is forced to close the factory, she loses most everything and may still have to pay. The next job cannot cover inflated salary expectaions, and she still pays the interest on the scooter, probably loses it, and ruins credit and may be worse off than she started
2) Worker B, who would have traded labor at minimum wage, cannot get a job at the new factory. Also, she sees the scooter and TV and expects a "fair" wage that Worker A gets. She is resentful of Worker A. Japanese Company sees that wage expectations are unrealistically high and locates factory in Bangladesh instead. Worker B won't take or can't get a job at any wage, "fair" or "unfair."
3) The DR as a whole is left in a negative position. Reponding to US Company, they upgrade the roads to the factory based on the expectation of growth and higher tax revenues. Except when the factory leaves, they now have an expensive road to maintain without the benefits. Other factories won't come in, and now workers expect a "fair" wage, and they have lost the opportunity to build the bottom run on the ladder. You won't get a microchip fab later if you don't start with textiles now.
Textiles are the first step in almost every countries development path. I have been in textile factories in developing markets and I would not want to work in one. However, eventually economies and standards of living grow and the textile jobs are replaced with better jobs with higher value added. In the last 10 years Chinese companies have opened factories in Vietnam, Laos, and now Africa - because wages and standards in thier own country make them unprofitable!
"Fair Trade" is a marketing campaign, and a cynical one at that. The number of people willing to pay extra for "fair" products is limited and always disappoints the producers and those down the value chain and damages real, sustainable growth. Fair trade is counterproductive and should be ignored.
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spam
For those of you late to the party, ignore this comment and the two below it. There was a couple of spam posts pop up. The lesson learned: Never post about economics of major corporations.
This should be fun!
WTF did this come from? Haven't seen one of these around here in a while.
I first thought it was someone joking around but it's for real. There's a website with all the contact info.
EDIT: Comment this refers to was deleted, thankfully.
Jordanwhole international Co.,Ltd. is specialized in wholesale various world brand shoes,clothes and bags, which ranges from Adidas, Nike (Jordan1-24, Air Max 95,Air Max97,Air Max03,Air Max04,Air Max360, Air Max180, Air MaxTN, Shox TL, Shox TL, Shox TL2,Turbo, Shox NZ, Shox R4, Air Force 1, Rift, Nike Max One), Reebok, Puma, Adidas, Timberland, Gucci, Prada, Bape, ICE Cream, Lacoste T-shirts,bape clothing,Red Monkey Jeans,Gucci Shoes,etc.
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Spamming this site will do the exact opposite of what you hope to achieve. In fact, everyone hates you (and your site) now.
No politics please,
From the article:
Minimum wages are 15 cents an hour in Bangladesh and around 85 cents in the Dominican Republic and many cities in China — the Alta Gracia factory pays $2.83 an hour
The woman they interview that works at the factory makes $500 per month. It seems like this corporation just decided to cut the fat at the top instead of the bottom. Seems like they're priced to compete the big boys but with a good moral leg up on Nike and Adidas (article listed a price around $18). It also notes that they've surpassed Nike as the number 1 college supplier. This could make a go.
Hooray for triple bottom line thinking...
Anybody that thinks they are doing the "fair trade" thing b/c of actual morality is lying to themselves. It is a marketing ploy that is working.
I couldn't care less why they're doing it, as long as they're doing it. I don't think it's completely unreasonable that they might be doing it out of good will, though. Seems like a win-win-win to me.
I feel like thats excessive. They could probably employ a work force that is just as qualified, pay them 1.75 times the minimum wage, and then give the other half of what they were paying for labor (1.75 X minimum wage) to a charity in that country. Then they could market to all the bleeding hearts that they match all labor costs with donations to a certain charity (preferably involving children b/c college kids eat that shit up). I feel like that would be more effective than "fair trade". Further, by just paying 1.75 times the minimum wage, they could probably still legally call their practices "fair".
Charity is not an effective model for combatting poverty even though it might meet the immediate need of hungry bellies. It makes people feel good but sparks all sorts of dependency issues. It's "beveled guilt." The 3x vs 1.75x doesn't factor in because a living wage is calculated in relation to the cost of living in an area, focusng on necessities like shelter, food, transportation, etc.
A minimum wage doesn't necessary have a correlation to what constitutes a living wage. Thus, the term fair wage was created to include a rate that one could live from. Simply playing 1.75x the minimum wage doesn't necesarrily mean the worker is receiving a living wage.
In my mind, the analysis should be what is the minimum livable wage required in that region/country. Not simply, the minimum wage that the government decided upon at one point in time that may or maynot have an actual correlation to the current livable wage.
I don't believe that $7.25/hour min wage in the US is livable. By comparison, the min wage in the UK is equivalent to around $11.50.
While I don't disagree with you, what I said above was more from a marketing standpoint. Basically, I was suggesting that paying above minimum wage AND giving that amount to a charity, might go farther than just saying "fair" wage. Your post and the one above do make some good points of why the 3x wage is a more effective method though.
With respect to your comment about the $7.25, while I agree with you, the cost of living varies substantially accross the country. So if one was to say that a mandated minimum wage should reflect the absolute bottom line of livability for working a certain number of hours/week, setting such a wage at the national level seems pretty useless. Its hard for me to believe that anyone thinks that the current minimum wage is livable. I was under the impression that minimum wage was designed as a 2nd income. I could be wrong though.
The cost of living certainly varies across the country. States have the ability to set min wage rates above 7.25, but it has to be at least the federally mandated 7.25.
$7.25 x 40 hours a week x 52 weeks a year = 15k. Not a lot of money for any part of the country. In fact, I think 15k still puts you below the poverty line (which is another somewhat arbitrary line).
Edit: People who make min wage may have two jobs, but min wage is not supplemental income.
minimum wage, you probably need two jobs in order to make ends meet.
I'm not quite sure why you, and several others, are saying that this is a political discussion. It's economics, which can be, but isn't necessarily, related to politics.
FYI: Duke has no cheap t-shirt option like Steve and Barry or whatever replaced them. MDen prices are the only option.