Why Big Shopping Bargains Are Bad News For America

[one...two...tree 2,762]

By Barbara Kiviat

The price wars have gone nuclear. From Target's $3 coffeemakers to Best Buy's half-price washing machines to Staples's $350 laptops, the theme of this holiday shopping season is, without a doubt, "we sell for less." Even Wal-Mart's commitment to "every day" low prices isn't preventing it from going lower. An online skirmish with Amazon.com that started with $9 hardcover books (books normally sold for three times that amount) has dominoed into other categories, driving down prices on everything from mobile phones to Easy-Bake ovens. The deals are everywhere.

Well, pardon my saying so, but I don't want them. I don't want to pay less. If anything, I'd rather pay a little more.

Crazy talk, I know. Where is this coming from? Well, it began with some reading I've been doing about the trade-offs we make for ultra-cheap goods—the child workers in Bangladesh who sew our clothes and brush their teeth with ash since they can't afford toothpaste, the oceanic dead zones that come with $5 factory-farmed salmon filets. They're the sorts of stories that make a person think that buying carts full of cheap stuff—ensuring the production of even more cheap stuff—shouldn't be the social goal we've made it out to be.

Now, I do realize it's an odd time to lobby for higher prices. We're coming off the worst recession in a quarter century. One in ten Americans is out of work and plenty of people feel like they need low prices to be able to buy anything at all.

But I also realize that part of what got us here was overspending, and that that overspending was fostered by a shopping culture that uses cheap goods to hook people on feeling like they're winning at something. As a country, we held nearly $1 trillion in credit-card debt this time last year—about the same as the value of all the goods and services produced in South Korea annually. We've bought so much stuff that we've struggled to find places to fit it all. The U.S. went from having 300 million square feet of self-storage space in 1984 to 2.4 billion square feet in 2008, according to the Self Storage Association, a 700% surge. By 2005, one in five new houses came with three garage bays—the third, real-estate agents explained, to store all the "toys."

Consumer spending and debt have been on the decline of late, that's true. But the most recent numbers show signs of a return to our old ways. In October, consumer spending rose 0.7% over the previous month, according to the Commerce Department, which is particularly interesting since personal income only edged up 0.2%. It seems it's going to take more than economic calamity for us to realize that perhaps we should be more prudent with our money.

And that leads to my second argument for higher prices: if stuff costs more, we'll buy less of it (that's the demand curve in action). If we are forced to buy fewer things, then perhaps we'll start to break this mentality that the way to happiness is to own more.

I'm not the only one singing this song. Anti-consumerism groups like Adbusters and the Church of Stop Shopping have been buoyed by the recent hiccup in the Age of Excess and are protesting against shopping centers with renewed zeal. The Center for the New American Dream, which promotes responsible consumption, is out in full force this holiday season, explaining how to give gifts that don't include buying things at the store (for example: coupons for free babysitting).

"We have this cycle we've developed—work intensively, buy more, repeat," says Carolyn Danckaert, New American Dream's director of home and communities programs. "At a certain point, the accumulation of stuff starts to drive your life." As Juliet Schor, an economist at Boston College who helps run the group, points out in her book The Overworked American, when workers became more productive over the second half of the 20th century, we as a society chose to take the benefit as more stuff. We could have also decided to, say, work a little less.

The lure of cheap goods, though, is incredibly strong, even once we've reached the point of substantial creature comfort. In her book Cheap: The High Cost of Discount Culture, writer Ellen Ruppel Shell devotes the better part of two chapters to how inexpensive goods mess with our minds. She describes one experiment in which researchers used brain scans to show that the joy of a discounted item comes before it's bought; by the time a person is at home with his new thing, the luster is gone. On Black Friday, I watched shoppers on TV proudly state how much they were saving on this and that. No one mentioned how much they were spending.

Or how long they expected any of their stuff to last. For that's the other big trade-off we make for low-priced goods—often cheap simply means cheap. Shell likes to tell the story of how she once bought three blenders in quick succession; the flimsy blades were no match for the ice that goes into smoothies. When "low cost" is the marketing trope we most respond to, quality easily falls by the wayside. And that state of affairs, Shell concludes based on the response to her book, bothers no one as much as the less affluent people who inexpensive goods are supposed to benefit the most. They can't always afford a replacement.

All of which is why in this year's mad present-buying rush, I'm not celebrating the notion that I get to pay less. I'd rather have the sorts of things that only come with a higher price.

http://www.time.com/...1943252,00.html

[Ban Hammer 13,491]

well goodie, one can always pay more for something. no one is forcing them to buy things on sale, shop at wal-mart, target, best buy, and so on.

[^_^ 5,021]

True. Boutique stores intended to market overpriced ####### to dumbasbricks hippies never did go out of style.

[faust-yusov 103]

True. Boutique stores intended to market overpriced ####### to dumbasbricks hippies never did go out of style.

I think the existence of exploitative labor is pretty well agreed upon.

[SuperDuper! 230]

Good article. Nowhere though does it mention the work of the theoretical "Invisible Hand" known to guide free-market capitalism. It's not like we could wake up one morning and change how our system of goods and services is manufactured, priced and delivered. We have the current system and walmart because that is what the market wants. Check back in 100 years and see how things turned out and changed.

[james&olya 1,121]

Good article. Nowhere though does it mention the work of the theoretical "Invisible Hand" known to guide free-market capitalism. It's not like we could wake up one morning and change how our system of goods and services is manufactured, priced and delivered. We have the current system and walmart because that is what the market wants. Check back in 100 years and see how things turned out and changed.

The social structures, markets, tax programs, etc that make up how our society functions economically will lead, over many years and even decades, to results possibly never anticipated by many of those whose votes had a hand in their creation. Current demands for ever lower taxes will lead inevitably to lower spending on the social services and benefits that in the past have helped level the playing field for the less fortunate. This, coupled with the current worship of consumerism and the globalization of markets that allows the current low prices will lead to an America that may be a hollow shadow of what we have grown up with! The middle class is threatened and may shrink drastically! And it is not the poor that are the chief threat. The division of the 'pie' is increasingly awarding hugely larger portions to the very few at the top. Those in the middle are being squeezed toward the bottom as a result. The handlers of the tea partiers are enjoying enormous success in inducing millions of gullible individuals to vote against their own economic self-interest. Where we go now is the question. I fear for the future of this great country!

[Gary and Alla 3,694]

If someone wants to pay more, then by all means do so! I am pro-choice!

[peejay 327]

If someone wants to pay more, then by all means do so! I am pro-choice!

If you got bucks in the bank...better deflation than inflation. More bang for the buck.

Unfortunately the current clowns running the show like inflation. In that case...you had better spend it before it disappears.

[Gary and Alla 3,694]

I think the existence of exploitative labor is pretty well agreed upon.

Right.

Exploitive labor occurs when illegal immigrants are hired by American business so American business can stuff their pockets with the savings they make by not paying payroll tax, minimum wage and worker protections. Yet the liberals will whine about "exploitive labor" in a perfectly legal business like Walmart employing legal residents and citizens, paying payroll taxes, providing a workplace in compliance with OSHA safety regulations, in compliance with EEO rules, in compliance with sexual harrassment laws and provide benefits to boot. You will find more illegal immigrants and underpaid Americans in small boutique shops than in Walmart.

People will jump all over Walmart and try to punish them, but do nothing to punish people that exploit illegals for personal gain.

[SuperDuper! 230]

The social structures, markets, tax programs, etc that make up how our society functions economically will lead, over many years and even decades, to results possibly never anticipated by many of those whose votes had a hand in their creation. Current demands for ever lower taxes will lead inevitably to lower spending on the social services and benefits that in the past have helped level the playing field for the less fortunate. This, coupled with the current worship of consumerism and the globalization of markets that allows the current low prices will lead to an America that may be a hollow shadow of what we have grown up with! The middle class is threatened and may shrink drastically! And it is not the poor that are the chief threat. The division of the 'pie' is increasingly awarding hugely larger portions to the very few at the top. Those in the middle are being squeezed toward the bottom as a result. The handlers of the tea partiers are enjoying enormous success in inducing millions of gullible individuals to vote against their own economic self-interest. Where we go now is the question. I fear for the future of this great country!

+1

All great points. Love your passion. You are dead on and correct. We are in a downward economic cycle for many years to come. Are we another Japan, now?

I look at the young children and often wonder how they will be able to prosper and thrive economically in the coming decades.

The outlook is grim with a chance of doom. And I am an optimist in life.

Happy new year, sinners.

[Ban Hammer 13,491]

+1

All great points. Love your passion. You are dead on and correct. We are in a downward economic cycle for many years to come. Are we another Japan, now?

I look at the young children and often wonder how they will be able to prosper and thrive economically in the coming decades.

The outlook is grim with a chance of doom. And I am an optimist in life.

Happy new year, sinners.

[Gary and Alla 3,694]

The social structures, markets, tax programs, etc that make up how our society functions economically will lead, over many years and even decades, to results possibly never anticipated by many of those whose votes had a hand in their creation. Current demands for ever lower taxes will lead inevitably to lower spending on the social services and benefits that in the past have helped level the playing field for the less fortunate. This, coupled with the current worship of consumerism and the globalization of markets that allows the current low prices will lead to an America that may be a hollow shadow of what we have grown up with! The middle class is threatened and may shrink drastically! And it is not the poor that are the chief threat. The division of the 'pie' is increasingly awarding hugely larger portions to the very few at the top. Those in the middle are being squeezed toward the bottom as a result. The handlers of the tea partiers are enjoying enormous success in inducing millions of gullible individuals to vote against their own economic self-interest. Where we go now is the question. I fear for the future of this great country!

The solution is the FAIR TAX!

When something says "Made in Viet Nam" or Indonesia or India or whatever...what it REALLY says is "Made where I didn't have to pay payrol;l tax, healthcare benefits, SS, OSHA compliance regulations, etc., etc."

You CANNOT tax businesses, you cannot put the expense of medical care on them. They are not a bottomless pt of money to pay for social programs. They WILL leave when iot becomes more economical to make things elsewhere. Service industries will be left and they will increasingly use illegal immigrants to avoid paying for these things. We will eat up the low prices that result.

We have to make the US the "go to" place for manufacturing as it once was. Just being the place where the goods are sold is no longer good enough to keep business here. In our modern world it is just way too easy to move the laboir intensive work overseas.

We need to eliminate completely our system of income taxes and taxes on business. we shoudl replace it with a tax on cosumer goods at the retail level. Let people keep all the money they earn and tax them when they choose to spend it. Businesses from all over the world will come here and bring their jobs. Billions and billions of US dollars held in off-shore banks will come home to roost. Even prostitutes and drug dealers will pay tax.

Read up on it. I suggest "the Fair Tax Book"

[james&olya 1,121]

The solution is the FAIR TAX!

When something says "Made in Viet Nam" or Indonesia or India or whatever...what it REALLY says is "Made where I didn't have to pay payrol;l tax, healthcare benefits, SS, OSHA compliance regulations, etc., etc."

You CANNOT tax businesses, you cannot put the expense of medical care on them. They are not a bottomless pt of money to pay for social programs. They WILL leave when iot becomes more economical to make things elsewhere. Service industries will be left and they will increasingly use illegal immigrants to avoid paying for these things. We will eat up the low prices that result.

Sounds like a race to the bottom. Maybe this is where we are all headed. I wish there was another way!

I don't share your enthusiasm for the national sales tax. I think it would also have significant problems.

Edited January 3, 2011 by james&olya

[Gary and Alla 3,694]

Sounds like a race to the bottom. Maybe this is where we are all headed. I wish there was another way!

I don't share your enthusiasm for the national sales tax. I think it would also have significant problems.

In all Fairness (pardon the pun) have you studied the proposed FAIR TAX? What problems do you think it would cause? I mean, I suppose any tax system could have problems (democracy is the worst form of government except for all the others) but what do you think would be the problems associated with it?

[james&olya 1,121]

In all Fairness (pardon the pun) have you studied the proposed FAIR TAX? What problems do you think it would cause? I mean, I suppose any tax system could have problems (democracy is the worst form of government except for all the others) but what do you think would be the problems associated with it?

I have not read widely on it. But I think you are going to have a problem getting acceptance of the tax being applied across the board to a broad enough range of financial transactions to be able to generate revenues sufficient to fund the government. Of course, calls for this tax then usually include calls for drastic cuts in government spending. That is really a separate issue though revenues obviously cannot continue to lag expenditures without serious consequences. It also tends to be a relatively regressive tax, though our current system with all its loopholes is also not the progressive tax some would argue that it is.