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Why Bargains are Bad

by Marq de Villiers

Bargain-hunting has become a cultural obsession (my father in law, bless him, used to drive a good way across town so he could buy day-old bread that a flyer had promised was a nickel a loaf cheaper; my neighbor trolls the Internet for wine a dollar cheaper, or a lawnmower he can get for a hundreds buck off — whether or not he needs another lawnmower). Thrift hasn’t disappeared; it just mutated into the endless search for cheaper stuff.

This search has had many savagely negative effects: it has persuaded manufacturers to set price, rather than quality or service, as the single prime necessity. It no longer matters that something lasts, or does what it was supposed to for longer than it takes to unwrap it, as long as it was cheaper than the competition. This means that things can no longer be fixed, only thrown away, and the next cheap thing bought in its stead. It has driven down wages, and led to the globalized search for an ever cheaper work force. It has led to a world in which advertising tells greater and greater lies. It has led to a world in which predatory discounters routinely drive smaller businesses into bankruptcy, devastating small towns everywhere. It rewards scale. It led to Wal-Mart, the world’s largest retailer, and arch pusher of vast amounts of Adam Smith’s unnecessary things.

Much has been made recently of Wal-Mart’s plans to reduce its environmental impact, and to enforce environmental and social standards on the millions of suppliers that fill its stores. Wal-Mart has switched to environmentally benign light bulbs in its stores. Its trucks are no longer kept idling while their drivers take a lunch break. But meanwhile, Wal-Mart still keeps its prices as low as possible. It works this way: a factory in a small town, say Winchester, Virginia, makes, say, rubber goods. Call it, oh, Rubbermaid for short. It is a good-sized firm, and it has always operated in a socially responsibly way — it has a stable workforce, pays livable wages, makes products that endure, and sells a good many of them to Wal-Mart. By 1994, the company was doing so well that it was voted the most-admired American company by Fortune magazine.

But a few years later, as Joe Bageant put it in Deer Hunting with Jesus, “North America’s largest plastic products company was a foundering corporation, brought down by the boys from Benton, Arkansas… In 2001, Wal-Mart’s executive management team heavied up on Rubbermaid, demanding ridiculously low prices despite an 80 per cent increase in the cost of raw materials, and personal pleas from Rubbermaid CEO Joseph Galli. Galli begged. Wal-Mart stood firm. Later, when Rubbermaid refused to go along with Wal-Mart’s utterly unworkable price, Wal-Mart dropped the hammer. It pulled Rubbermaid products off the shelves, replacing them with knockoffs… After seeing its sales drop 30 per cent, Rubbermaid caved.” Rubbermaid shut down 69 of its 400 facilities, fired eleven thousand workers and planned to shift half its production to what it delicately called “low-cost countries.” Five years later, Rubbermaid’s profit was up — net income of $108 million. But the workers were still out of work, and the town devastated. “The fact that stock rises — and its owners along with it — in the wake of mass firings says more about what corporations consider an asset than a million mealy-mouthed Human Resources brochures and Wal-Mart smocks,” as Laura Penny so trenchantly put it.

What is gained? It is easier to see what is lost. Workmanship and product integrity are lost. Paying jobs are lost, and workers who feel good about themselves and where they work. A good corporate citizen is lost, and with it a tax base for another small town. In a larger sense, a culture that understood standards, workmanship, and the value of craft is degraded, along with the sturdy but apparently obsolete capitalist notion that competition leads to stronger, more highly evolved industries through the process of “creative destruction.” Instead, we get price wars and the relentless erosion of standards. We get big box stores with no roots and no conscience. We get the commodification of jobs that has ravaged the middle class.

So ask again, who benefits? Here’s the answer: when Caterpillar moved its operations to right-to-work (i.e. anti-union) states with low wages, its employees could no longer afford to buy houses or send their kids to college, but the company’s profit jumped, in 2006, by more than 70 per cent, and the CEO got more than $14 million in what is laughingly called “compensation.” You can call it compensation, if you like. I call it swindling.

So what happens when we stop shopping?

This is the great conundrum. The economy is built on consumption and the early obsolescence of things provide jobs, and keep the economy ticking over. How do you manage a transition, if people stop spending? Before, you could always rely on technological advance. People could stop buying buggies, and the buggy manufacturers went out of business, but people bought cars instead, and car makers prospered. But what happens if they stop buying something — and buy nothing to replace it? If men stopped shaving, thousands of workers would be laid off, because their jobs are to make razors and razor blades and batteries for shavers, and shaving cream and lotions, and devising marketing campaigns for shaving systems. This dilemma is replicated in every industry, in every town, in every region, in every country. Andrew Revkin, The New York Times’s wise ecology correspondent, pondered the question not long ago, though he put it this way: How do you grow an economy without the jobs and the taxes that these unnecessary things produce? And he added: “The market, unfortunately, does not differentiate between good and bad. If the people want junk, the market will provide. So we have to fall back on the conscience of our business leaders.” In which he was surely being sardonic.

But in Revkin’s question lie the seeds of an answer. He asked, how do you grow an economy without the taxes and jobs… ? The beginning of the answer surely is, don’t grow. As Tim Jackson puts it, “consuming less may be the single biggest thing you can do to save carbon emissions, and yet no one dares to mention it. Because if we did, it would threaten economic growth, the very thing that is causing the problem in the first place.”

Marq de Villiers is an award-winning writer of books and articles on exploration, history, politics, and travel. He is also a graduate of the London School of Economics, and his latest book puts his training in economics to good use. Our Way Out: Principles for a Post-Apocalyptic World offers a refreshing menu of economic options for an overly consumptive population living on an environmentally stressed planet.

4 Responses to “Why Bargains are Bad”

  1. Tim Gieseke says:

    It is life’s journey to grow, so to “not grow” is to not live. People must also do something during their life’s moments. Henry David Thoreau did a lot of things, he grew and he caused the growth of other things. Into adult hood people can still grow and into economic maturing an economic system can still grow. The ecological system after 150 million years is still growing. Growing does not always mean an adult has to surpass the definition of obese or an economy must generate more GDP at all costs. Growing means growing. I can consume conversation and information and my mind, ideas, thoughts, personality, intuitive, faith, consciousness can all grow. If we as a society can not understand that this is good growth or even that it is growth, then we will continue to grow into obese people that consume within an obese economy. Obesity is growth.

  2. Karen Williams says:

    My objections to comments by Andrew Revkin and Tim Jackson:

    Andrew Revkin – The people do not ‘want’ junk. They are manipulated into it by various means from the manufacturers, all of which either openly, or with hints, tell us we are worth less and may well be treated unkindly if we do not have the newest or smartest looking clothes or articles, thereby, playing on our fear and insecurities. Many cannot regularly change better quality, more expensive goods, or risk any damage to the more expensive goods, so they look for the cheapest, not because they directly want this but because those with more power have, by their actions and adverts, supported to the bad side of human nature, making so many people more vulnerable and in search of any relief. It is just another less obvious method of swindling.
    Tim Jackson – Economic growth is just the macro end of this whole moral issue. Many dare not to mention reducing it (consumption), not simply because it would threaten the economic growth that the corporations and governments seek in order to maintain their positions, but because we can no longer exist without the corporations who provide our necessities. If we stop buying their ‘products’ (I dare not say ‘goods’), they will stop producing our necessities and that has us by the neck! The question is not ‘how to we grow an economy without the taxes and jobs’ but, it is the ‘catch 22’ question – ‘how do we grow the corporations as they want to grow?’, which fattens them (to bad obesity) as they eat into the majority of us or ‘how do we survive without their blackmail and manipulation’ which would also eat into the majority of us, because we depend on them?’ We cannot bite the hand that feedeth and they are well aware, indeed, they have created it with their mis-use of power over the vulnerable part of human nature, and this works towards bad, not good ends. We all need to know and recognise this, if we are to try to improve it.

  3. fireofenergy says:

    We are not quite ready to “stop growing”, even in the face of all the problems associated with it. Fossil fueled depletion into an overheated world need not apply, but is our only option if we continue with the capitalist (or any other “ism” based) social systems known today. However, we must continue hope for a new system to emerge that does not base resources on a bottom line achieved only by the cheapest wage countries, one that does not create inferior products made from (cheaper) non-environmentally conscious extraction methods, and one that does not have to impose rations on the global population due to its eventual folly.
    This new system could be called “A machine economy based on the efficient extraction and distribution of resources devoid of profit”. At first, factories that use advanced machine automation create “things” that require installation jobs. Solar panels and batteries fit the bill. Since these things would be created for almost free, 24/7, installers fill the unemployment gap and industrialism begins anew in ALL parts of the world within current systems. As automation continues, everyone begins to receive “benefits” by virtue of their existence. Free water, free food, free housing… free entertainment and air!
    You see, if we can automate the infrastructure (and use electric cars, hydroponics, leds, etc for more energy efficiency) we can do away with the notion of die offs due to economic collapse. People, instead go to work on coordination in order to, at first maintain and tech upgrade the infrastructure… for free (because, at some point in time, there will be no money due to the collapse of present economic systems) and then, to completely automate almost “everything else”. Machines build themselves, they build buildings out of, say, carbon graphine and machines make room for the environment too by relying on a newly created electrical infrastructure based upon natural gas, algae, solar, wind and batteries…

    And, ultimately, by LFTR, the far better way to split the atom. Yes, it will take the awesome power of a type of reactor invented wholly fifty years ago to enable the steady state comprising of some 10 to 15 billion people without ration!

  4. Bob Drysdale says:

    If we look back to Herman Daly’s comment at the beginning of May he makes the point that economic expansion is promoted by those who think they can cure poverty without sharing.
    Tim Jackson has commented that our present economic system is based on persuading people to buy things they don’t need with money they don’t have to impress people they don’t care about.
    If we stop buying what we don’t need then we will certainly throw lots of people out of work and many organizations which manufacture and promote junk will go out of business. So we end up with more workers than there are jobs producing what we need.
    The obvious solution is the spread the work more thinly by reducing the working week. Maynard Keynes suggested back in the 1930’s that we would soon be able to produce all our material needs by working an average 15 hour week and there is an organization in the UK currently promoting a 22 hour week. (www.neweconomics.org).
    So if you create 50% unemployment by eliminating all the jobs producing things we don’t need, then you can absorb that workforce by cutting the working week from forty hours to twenty hours. We still have all the goods we need and everyone is meaningfully employed. Simple eh!!
    Of course we then come face to face with the problem of sharing.