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21 April 2010

Book Review: Cheap: The High Cost of Discount Culture

Cheap: The High Cost of Discount Culture
by Ellen Ruppel Shell 

I will never shop again.

I am thrifty. I hate to spend money. Though I have tried not to become dependent on big box stores, I do go to Target and Whole Foods on a fairly regular basis. I love a good deal. But how much do my good deals really cost?  
Cheap educated me. And though my initial statement was a blatant exaggeration, it is solidly true that I have spent most of my mental energy while reading this book trying to formulate a plan to cut all of my ties to the world of discounting.

Sound crazy? It probably does. And that's why America is so effed up. We have no idea the damage we are doing, to ourselves, to our economy, to people in other countries we'll never meet, by rejoicing at a deal on cheap merchandise. As Shell writes in the opening note to readers, her warning, "Cheap fuel, cheap loans, cheap consumer goods do not pave the road to salvation. On the contrary, our Faustian pact with bargains contributed to the worst recession of two generations. The economics of Cheap cramps innovation, contributes to the decline of once flourishing industries, and threatens our proud heritage of craftsmanship. The ennoblement of Cheap marks a radical departure in American culture and a titanic shift in our national priorities."

See, we didn't used to be Cheap. When chain stores, CHAIN STORES, took their first wobbling steps on American soil, people were outraged. Anti-chain protesters in the 1920s represented almost 7 percent of the nation's population. A Shreveport, LA radio man, William Henderson, warned that chains would have the "... ruinous and devastating effect of sending the profits of business out of our local communities to a common center, Wall Street ... We have insisted that the payment of starvation wages such as the chain-store system fosters must be eradicated."

Obviously, Henderson and the 7-percenters lost. Chains took hold. Then came the discounters. Chains weren't enough profit and then Eugene Ferkauf came along, pioneering the low-margin, low-service, high-turnover model that our discounters still follow. Merchandise sells itself and employees are eminently replaceable because they are no longer experienced sales professionals but, rather, low-skill merchandise stockers and checkers. So down went wages. But logic said it was ok that wages went down because prices were going down too. So onward.

Woolworth's got into the act with Woolco, a chain that pioneered the "oversized, free-standing store with acres of free parking and the promise of one-stop shopping for a wide selection of merchandise at the lowest possible price." Shell continues, "The beauty part was this: By cutting back on customer service and most other frills, discounters not only saved money but created the impression that their merchandise was cheap due not to low quality but to low overhead." While this was partially true (wages being low, real estate in the middle of nowhere being sold at an incentive) quality levels sank dramatically; because the discounters were so big and powerful, they started pressuring suppliers to lower prices. And suppliers did this by squeezing more out of less. And quality, and craftsmanship, inevitably suffered.

But who cares if my toaster blew up? I'll just go to the Woolco and buy another one. Onward!

And so it goes. No one listened in the late seventies when Jimmy Carter railed against the direction America was taking; "...too many of us now tend to worship self-indulgence and consumption ... (the) piling up of material goods leads to an emptiness of lives which have no confidence or purpose." But that wasn't Carter's zinger. The zinger, the whole reason for Cheap, in my opinion, is this; Americans have "a mistaken idea of freedom [as] the right to grasp for ourselves some advantage over others."

Boom. 


Cricket. Cricket. Cricket.   Did someone say something?

And onward.

Shell writes, "Harvard cultural historian Lizabeth Cohen has pointed out that mass market consumption offers the facade of social equality without forcing society to go through the hard work of redistributing wealth. Low prices lead consumers to think they can get what they want without out necessarily getting what they want - or need. The ancient Roman phrase for this is panem et circenses, bread and circuses, the art of plying citizens with pleasures to distract them from pain. Today, low prices are the circus."

Some Americans are, at this very moment, writhing and foaming at the mouth due to President Obama's "socialist" agenda. Put Carter's zinger together with Cohen's astute observation and one comes closer to seeing the reason why.

So we're ok that Wal-Mart CEO Lee Scott Jr. took home in his bi-weekly paycheck in February 2009 what his average employee would earn in a lifetime. We don't get angry when Scott states that retail doesn't have a responsibility towards its employees; it has a loyalty to low prices, all the time, no matter what. And to get these low prices, one has to do more than treat employees like indentured servants; one has to cut quality, safety, environmental responsibility and human dignity. As Shell puts it, "As citizens, we recognize this 'collateral damage,' deplore it, and frequently decry it. But as consumers we habitually downplay and ignore it. We rail against exploitation of low-paid workers in Asia as we drive twenty minutes to the Big Box to save three bucks on tube socks and a dollar on underpants. We fume over the mistreatment of animals by agribusiness but freak out at an uptick in food prices. We lecture our kids about social responsibility and then buy them toys assembled by destitute child workers on some far flung foreign shore. Maintaining cognitive dissonance is one way to navigate a world of contradictions, and on an individual basis, there's much to be said for this. But somehow the Age of Cheap has raised cognitive dissonance to a societal norm."

We've lost our sense of thrift. We've lost our patience; we want something, we get it now. We don't care where it came from or that we can't pay for it. Now. Now. Now. Cheap. Cheap. Cheap. Shell writes, "A thrifty person does not drive miles to save three bucks on tube socks. A cheap person might. ... Cheap is about scratching the itch, about making real the impossible dream of having one's cake and eating it, too."

So the world is, in the words of a salesclerk at Bergdorf Goodman as he watched customers pawing through a discount bin of handbags, "off its axis." We've lost touch with the provenance of our furniture, our clothing, even our food. Craft is hard to find now. Shell writes, "Craftsmanship cements a relationship of trust between buyer and seller, worker and employer, and expects something of both. It is about caring about the work and its application. It is what distinguishes the work of humans from the work of machines ..."

Cheap things resist involvement. We'll put an IKEA bookcase out on the curb because it's easier to buy a new one than disassemble and move an old one. Cheap encourages disposable. Disposable encourages waste. So we don't fix small appliances anymore. We don't even know how. We throw them away and buy new ones. Because we can. Because they are Cheap.

And recession just encourages Cheap. Wal-Mart's sales have increased substantially during the current economic downturn; discounters profit when America hits bottom. "Poverty in America is market potential unrealized," said Andrew Young, a Wal-Mart spokesperson. This may explain why Wal-Mart lobbies not only against unions but against health care reform and other worker protections. The poor benefit the discounters just as much, or more, than the discounters benefit the poor. Though whether Cheap benefits the poor is a loaded theory ripe for arguing, which I will not do here.

And then there's food. Coming straight off Michael Pollan's writings, I was ready for the food issues. Food farmed, harvested and processed in enormous quantities and sold at very low prices is probably not, in the strictest definition, food. Low prices cause low overhead which causes lack of oversight, which causes contamination, infestation and infection. Add to that; goverment subsidies help agribusiness keep prices low; but they also help agribusiness squeeze the small farmer out of business and create a monopoly where consumers don't have an alternative to the low-quality, high-quantity food they create. And as bad as it is in American, it's worse overseas. Pulling people off the farm floods city centers with the unemployed (who are desperate enough to take jobs standing knee-deep in noxious clothing dye to make my 2 dollar tshirt ... but I digress). These displaced workers often end up in the United States, too, stressing our welfare and unemployment system. But we won't pay for them. Or even help them. Even though our penchant for cheap food put them there.

Broad swath I just cut, admittedly. But the pattern is unavoidable. And we just won't see it. We refuse to see it. Because we don't want to pay too much for anything. Because that wouldn't be fair.

But Americans spend less for food than do citizens of any other developed nation; and few people at the McDonald's drive-thru ever stop to think about that 99 cent burger they just ate (in their car, but I again digress). How on earth can anyone possibly raise a cow, feed it, butcher it, process it, freeze it, truck it across country and reheat it for 99 cents?  Then there are the environmental effects of the agribusiness system (most tellingly disgusting is one process for eradicating manure; liquifying it and spraying it into the air, letting it fall where ever it falls). Then there are imports from countries with even less oversight and care than we have here. But really. How can it possibly be cheaper to buy garlic imported from China than garlic grown in California if I live in Missouri? But it is. And we buy. But we fail to ask why or process the idea that it cannot possibly be a good thing in the long run. Cognitive dissonance again.

Perhaps by now you are thinking that it would be too expensive to change the system; after all, we are all on a budget and we need affordable goods. Ok. Robert Pollin, professor of labor economics, did a study just for you. If the wages of apparel workers in Mexico were raised by by 25 or even 30 percent it would raise the price of a shirt in the United States by 1.2 percent. A 30 percent raise for a worker would cause a $20 shirt to cost $20.24. We won't stop to pick up a quarter in a parking lot but we'll keep half the world in indentured servitude for that same quarter. Less one penny. Cognitive dissonance one more time.

But we are caught in a cycle. And we need innovation.

"What is happening is that we are creating low-income workers who become low-wage consumers who seek low-priced goods. Stores are built strategically to cater to these low-wage earners, filled with products that are there for the single reason that they are affordable. This is diabolical strategy, an evil strategy. What it comes down to is one group of workers eating another while the big boys in corporate sit back and watch the carnage." Robert Bruno

"Henry Ford is lionized for connecting the dots between worker prosperity and profitability. He understood that when workers are paid enough to purchase the fruits of their labor, companies thrive and communities prosper. When workers no longer have the means to buy what they make - or, for that matter, what other decently treated workers make - companies fail and economies crumble." - Ellen Ruppel Shell

"The discipline of the capitalist is the same as that of the frugalist. He differs from the latter in that he has no regard for the objects through which productive power is acquired. He does not hesitate to exploit natural resources, lands, dumb animals and even his fellowman. Capital to such a man is an abstract fund, made up of perishable elements which are constantly replaced. The frugalist takes a vital interest in his tools, in his land, and in the goods he produces. He has a definite attachment to each. He dislikes to see an old coat wear out, and old wagon break down, or an old horse go lame. He always thinks of concrete things, wants them and nothing else. He desires not land, but a given farm; not horses or cattle and machines, but particular breeds and implements; not a shelter, but a home ... He rejects as unworthy what is below standard and despises as luxurious what is above or outside of it. Dominated by activities, he thinks of capital as a means to a particular end." Simon Nelson Patten - 1905

So onward. As frugalists. As consumers who demand different, better and more fair. Pay the extra 3 bucks for the free trade products, the produce from your local farmer, the eggs from your local chickens, the milk from your local dairy. Start there. And onward.