Review of Cheap: The High Cost of Discount Culture
By Ellen Ruppel Shell
from New York Times Sunday Book Review, July 19, 2009
Read why there's no such thing as cheap shrimp--and why a great number of other price tags are deceptive as well. We lecture our kids on social responsibility and then buy them toys assembled by destitute child workers on some far-flung foreign shore,
Apparently we're not even building better mousetraps anymore -- just cheaper ones.
Ellen Ruppel Shell has been studying the price, the value and the cost of things -- all sorts of things, bookcases and summer dresses and plastic wrap and key chains and tube socks and hammers. And shrimp, the subject of a brief, appalling tale that illustrates what she's up to in this important book. Until the 1970s or so, shrimp was a luxury for most Americans. Thanks to a huge boom in shrimp farming, especially in Thailand, supplies soared during the '80s, and prices started to fall. Now, Ruppel Shell reports in Cheap: The High Cost of Discount Culture, we eat shrimp as casually as we eat tuna fish -- more casually, in fact, since our consumption of shrimp actually outstrips our consumption of canned tuna. If you order shrimp at a midrange restaurant like Red Lobster, you get a hefty portion for about $16 --and if you're there during the annual "Endless Shrimp" promotion, you can keep on ordering until you topple right over into the garlic butter. It's still only $16.
The downside? According to Ruppel Shell, a contributing editor for The Atlantic, it's all downside, and billions of rubbery shrimp are the least of it. For a while, there were some newly affluent shrimp-farmers along the coast of Thailand as traditional operations were transformed into gigantic factories with the help of international lenders and investors. Massive onslaughts of chemicals made the factories productive, but fish -- like cows and pigs and chickens -- do not flourish in the long run under such extreme, artificial conditions. They get sick, and their ponds become black holes of pollution and toxic waste. "What followed was ruinous debt, environmental degradation, horrifying human rights abuses and violence that left millions destitute," Ruppel Shell writes. Moral: Despite whatÃ¢€™s jotted down on the restaurant check, there's no such thing as cheap shrimp.
And as Ruppel Shell makes clear in a brisk, persuasive set of examples, a great many other price tags are deceptive as well. At the big discount stores, most discounts are applied to everyday necessities like toothpaste and lettuce. Brand-name clothing and appliances may be no bargain at all. "Wal-Mart actually has higher than average prices on about one-third of the stock it carries," Ruppel Shell writes. "On those items for which prices are lower, the average savings is 37 cents, with about one-third of items carrying a savings of no more than 2 cents." The lower food prices, however, do impress a number of economists, who argue that the discounts benefit everyone by forcing down food prices all over town. "Even if you never shop at Wal-Mart, you are still better off with Wal-Mart nearby," the M.I.T. economist Jerry Hausman told Ruppel Shell, and he judged that effect to be "the equivalent of 25 percent of food spending." Yet his study compared only the cost -- not the quality -- of largely generic items. "How are consumers to know whether the lower price of chicken breasts at Wal-Mart" signifies "a good deal on a superior product or a bad deal on an inferior product?" Ruppel Shell wonders. Plainly it would be awkward to advise a struggling homemaker that she really ought to be spending more on her daughter's new shoes, and Ruppel Shell doesn't go that far. But she does show that the impact of rock-bottom prices on a stringent family budget is to some extent illusory. "Discounts don't compensate for the staggering and rising costs of essentials -- housing, education and health care," she emphasizes.
Cheap chicken, cheap shirts, cheap sneakers -- they're all being paid for by somebody, even if itÃ¢€™s not the person taking them home. More than a third of the working poor, Ruppel Shell notes, have jobs in retail, where the annual mean wage for a department store "associate" is $18,280. That's one reason we pay so little for those shirts and sneakers. WeÃ¢€™re also being subsidized by a distant labor force we never see, the Chinese and Mexicans and Vietnamese who work under well-Ã‚Âdocumented Dickensian conditions. [emphasis added] As Ruppel Shell acknowledges, sweatshops represent a step up from the miserable rural poverty these young men and women left behind. But the workers themselves have no leverage to demand higher wages or more humane treatment, since manufacturers can go almost anywhere in the world to find a more compliant work force. Of course, American companies claim to investigate and audit their overseas factories, but most abuses are never uncovered. The local bosses are very good at hiding offenses and falsifying documents. "We lecture our kids on social responsibility and then buy them toys assembled by destitute child workers on some far-flung foreign shore," Ruppel Shell writes. "Somehow the Age of Cheap has raised cognitive dissonance to a societal norm."
Robert Pollin, an economist at the University of Massachusetts, told Ruppel Shell that raising the wages of a worker in Mexico by 30 percent would add only 1.2 percent to the price of a shirt -- thatÃ¢€™s 24 cents on a $20 shirt. Most companies won't hear of it. Cost-cutting is the only value they recognize, in part because profit margins are so narrow that companies can't afford to compete on any basis except ever-lower prices. An American dream once fueled by ideas and entrepreneurship has been reduced to laying off workers and reducing risk. "When prices are kept too low, innovation is nearly impossible," the Harvard economist Robert Lawrence told Ruppel Shell. Apparently we're not even building better mousetraps anymore -- just cheaper ones.
Ruppel Shell doesn't conclude with any grand ideas for reshaping the world's economy, though she praises Wegmans and Costco, arguing that they manage to thrive without doing a lot of damage. But she doesn't need to formulate grand ideas here. She's delivered something much more valuable: a first-rate job of reporting and analysis. Pay full price for this book, if you can stand to. It's worth it.
Laura Shapiro is the author of three books including "Something From the Oven: Reinventing Dinner in 1950s America."