I spent last weekend at Arise Music Festival, a 3-day event held in the foothills near Loveland, Colorado. (That’s where the purple teepees you might see in the sidebar were).
Arise was a great time, full of great music, good vibes, and plenty of regenerative yoga. The vibe at Arise is pretty crunchy: old hippies and young fair-trade folks, slinging their ideologies amidst a crowd of dreadlocked dealers slinging their own cures for the ills of the world.
So I was walking around the festival, looking at what the vendors had on offer, when I saw something familiar.
I’d seen these scarves before. I’d bought the one in the middle in Thamel, the tourist district of Kathmandu, as a souvenir for my sister.
These, as you can see, are $12.
When I saw that, I laughed, and told my companion “I paid 100 rupees for that same exact scarf in Nepal. (That’s about $1).”
I walked up and double-checked: it was the same exact pattern I remembered. Look closely yourself — they’re identical. The owner of the stall came out to chat with me, and I asked her where they were from.
“I’ve got a friend in California who gets them,” she said. “It’s supposed to be all Fair Trade, ethically made or whatever.”
“Where from?” I asked.
“Nepal,” she said with a wry smile. She heard me talking before.
So, let’s unpack the economics here:
As a foreigner, in the tourist district of Kathmandu, I can buy this scarf for $1. I bargained it down to that price, at which point the shopkeeper wouldn’t go any lower, period.
So at $1, the shopkeeper must still get an acceptable margin: 25 to 50 rupees, I’d guess (.25 to .50 cents). Of course, he makes most of his money by selling them at higher prices to people who don’t bargain as hard, but still. He almost certainly made a little bit of money selling it to me. So let’s say he bought it wholesale from the manufacturer for 75 rupees ($0.75).
If the middlewoman in California can buy at that same price (which she may or may not be able to attain, depending on her connections), she stands to make a huge profit, even if she sells to her festival friend at a low price. The importer could sell those scarves for $3 a pop, and still make a 300 percent profit. Hell, if she buys at the same price I did, $1, she still stands to make a huge profit, percentage-wise.
After that, the festival lady can take that same item, sell it for $12, and she also makes a 300 percent profit.
And truthfully, whoever owns the factory making those things almost certainly makes more than a 300 percent profit on each. Although they might be sold under a Fair-Trade moniker by the time they reach the U.S., they are almost certainly being made in a low-rent factory in Nepal.
Simply by virtue of crossing from a developing country to a developed one, the consumer price of this identical item increased by over 1000 percent.
That’s a picture-perfect lesson in globalization.
Worth thinking on for a bit, especially as we will soon actually reach Nepal itself in my travel memoir, where we’ll see the true poverty of the country.