McCain's Economic Engine eBay Slashes 1,600 Jobs
Throughout the 2008 campaign, John McCain has proclaimed online auction giant eBay the solution to recession and poverty in the United States. But on Monday, McCain's already laughable vision of eBay as the future of the American economy took another hit. By announcing it was slashing 10% of its 16,000 person work force, eBay revealed it was no longer a job creation engine even for its own employees.
Back in April, McCain told an audience in economically hard-hit Inez, Kentucky, "You have a right to expect us to show as much concern for helping you create more and better choices to make for yourselves as we show any other community in America." And one of those better choices, according to John McCain, is to become a seller on the auction site, eBay:
"Today, for example, 1.3 million people in the world make a living off eBay, most of those are in the United State of America."
"We have about - around the world, about 1.3 million people make most, if not all, of their living selling on eBay."
That John McCain, who more than once admitted his limited knowledge of the economy, would parrot one of his most senior campaign aides is unsurprising. But that he would cite eBay as the way forward for a community where 37% live in poverty and 40% of the wage income comes from mining seems remarkably callous, even by McCain's standards.
No doubt, tens of thousands off people make a good living as eBay sellers. As eBay's Whitman told CBS' Stahl, "people can supplement their income from several thousand dollars a month to...I think our top seller on eBay grosses $20 million." But for a country slipping into recession and facing the loss of thousands of good paying manufacturing jobs in a rapidly globalizing economy, a high-speed Internet connection and an eBay virtual storefront is hardly a substitute.
To be sure, McCain's magical eBay economic tonic produces stunned incredulity among economists. As Bloomberg reported in June, the feedback isn't pretty. While McCain, who has admitted knowing little about economics and even less about computers, may envision a nation of web-based auctioneers, "new people selling stuff out of their closet on EBay isn't growing the economy."
That's the message from economist Betsey Stevenson, a professor at the Wharton School of Business.
"In terms of jobs, there's no net increase in GDP that comes from trading stuff that's already made. To trade things that are produced in other countries just to swap them,'' -- conveys a message, "that America can't produce anything and that's a very dismal view of the U.S. economy."
Lehman Brothers' Ethan Harris noted that while eBay no doubt transformed an "incredibly inefficient market for junk and turned it into a very efficient market for junk," at the end of the day:
"It's an example of good old-fashioned U.S. ingenuity, but selling used products is a limited business model."
With his eBay stunt, John McCain has been selling something, all right. Actually, two things. First, McCain hoped the shiny veneer of Whitman's ex-company would provide him with the facade of economic knowledge. Later, with the debunked tale of selling an Alaska state jet on eBay, McCain's running mate Sarah Palin tried to pad her reformer credentials.
Sadly for John McCain - and even more tragic for the workers and seller community of eBay - McCain's elixir was snake oil. Or put another way, eBay was McCain's little economic engine that couldn't.