We desperately want things to be cheap. But at the same time we do not. As my six-year-old daughter recently remarked after some plastic toys broke not long after being brought back from the store, “Those cheap toys sure are cheap!” Sure, some terms, when used in slang, have their meanings turned upside down — like “bad,” which can mean in some instances, loosely, “good.” But cheap’s double meaning has always been there (or at least for a long time according to the Oxford English Dictionary). Cheap as conventionally understood is something to be avoided and simultaneously strived for. Maybe, deep down, we really do know better. Perhaps our subconscious is whispering “anything that appears too good to be true probably is” (or “there is no such thing as a free — or even cheap — lunch”). And so we use the same word to describe what we know in our heart to be two sides of the same coin. But that has not stopped us from demanding cheaper and cheaper stuff — as long as it doesn’t look, feel, or taste cheap.
I have been lecturing on the cost of cheap for a while now, particularly since my book The Real Cost of Cheap Food came out. It is not that I am against an economic system producing goods that we can afford. Indeed, that is precisely why I was compelled to write this book, because we cannot afford what the economic status quo is feeding us. As I will repeatedly show, cheap is terribly expensive.
I have been known to drop into big-box stores to conduct “research,” occasionally even buying particularly cheap wares to use as props for my lectures on the subject. Not long ago I visited Walmart — my Machu Picchu of sorts as I never leave the site disappointed. On this particular occasion I came across a microwave for less than US$10. Can you believe it: I regularly spend more buying a large bag of broccoli from a local grower at my neighborhood farmers’ market! We are talking about a device manufactured thousands of miles away in China, from plastics that while likely processed domestically were produced using petroleum from the Middle East. The steel to make the microwave oven’s cavity could have also come from China, as they lead all nations in steel production. The magnetron (the heart of the device): also likely manufactured in China, though no doubt some of the materials that went into making it were imported. I also bet coal supplied the vast majority of the electricity that ran and illuminated the factory where it was assembled and packaged (China also leads the world in coal production). And let us not forget about the material that went into manufacturing the cardboard it dwelt in while traveling across the Pacific and a handful of states before ending up at the Walmart in Fort Collins, Colorado (where I live). These materials could have also come from China, or maybe not. How could that US$10 have paid for all those costs? Simple: it could not have. Had I taken the microwave home, I might have bought it but I would not have paid for it. A particularly egregious aspect of today’s economy is that the individuals who most profit from it and who benefit from its cheap wares are not fully paying for their good fortune, leaving billions, and that is before factoring in future generations (trillions?), to foot the bill.
It is tempting to call these costs hidden. But are they? They may not have the immediacy of one’s house being on fire but they undoubtedly have a presence, in our taxes and polluted oceans, in our changing climate, and in the faces of those who pay for them daily through hunger, sickness, and conflict. A recently released report sponsored by the United Nations estimates that the 3,000 largest publicly traded corporations in the world cost us US$2.2 trillion — that’s trillion with a “t” — in environmental damage in 2008 alone. 1 And that is “just” costs to the environment, saying nothing of the price we pay for decreased public health, unjust labor practices, and low wages. Lest we forget, when a firm in, say, North America or Europe fails to pay its employees a suitable wage those employees often are able to qualify for government assistance programs. And who do you think pays for that?
Consumers do not give those costs much thought — or at least not enough to keep them from seeking out the next bargain. I doubt anyone that bought the US$10 microwave from Walmart thought while going through checkout, “I really should pay more for this,” not that paying more in itself guarantees anything other than more profits for the retail giant. As a social scientist I am also deeply interested in why this is. We might not be able to articulate in precise terms what the ecological footprint of the world’s largest 3,000 publicly traded companies cost us but we know — all of us — that those costs are there.
I give lectures on the cost of cheap. Recently, in an attempt to be more provocative, I have taken to starting these talks with the following three-question quiz.
- Do you believe in letting the market regulate itself?
If so, you might be a socialist.
- Do you think the right interests are being served by today’s economy?
If so, you might be a socialist.
- Do you measure market “success” by how cheaply an economy is able to produce stuff?
If so, you might be a socialist.
I have long been struck by how the term “socialist” has been used, particularly in the United States. As far as I can tell, it refers exclusively to someone who promotes redistributive policies that seek to spread the wealth. Under this scenario, the benefits generated by an economy are spread — are socialized — to various degrees across society. Yet benefits are not the only things that can be socialized. Costs can too. While quick to brand their intellectual adversaries as socialists, proponents of the economic status quo have yet to catch on to the fact that they are also deserving of the “socialist” tide. They strive to make society pay for the costs of this economic system while concentrating its benefits within the hands of a few. They are socialists too, though the type they promote I would argue is far more insidious, unjust, and unsustainable than that advocated by their antagonists. This brings me to the book’s tide: Cheaponomics — shorthand for cost-socializing socialism.
While this book is critical of the dog-eat-dog style of free market capitalism enveloping the world — what is commonly referred to as neoliberalism — the position it takes is not inherently political. It offers a big tent argument, which is to say my appeals are to those on both the political Right and Left. Granted, some will find this claim initially dubious, as criticism of the economic status quo has a history of orienting from so-called progressive or liberal camps. Yet, in the end, I believe conservatives will be just as appalled at the state of cheap once its exorbitant costs are laid out. These are not only costs we are paying for as taxpayers and citizens but which we are asking future generations to also bear. And as those on the Right rile against bankrupting future generations when talking about things like national debt I can only assume they will feel an equal visceral reaction to all forms of future “debt.” As I tell family members and friends that ally themselves with political conservatism and who claim to have never met a tax they liked: “When you socialize costs you necessitate higher taxes, either for present and/or future generations, because, in the end, someone has to pay for those costs.” Conservatives take note: by bankrupting future generations, through higher taxes, reduced individual well-being, diminished environmental integrity, lifeless communities, and rising levels of inequality, cheaponomics is the antithesis of fiscal (or any form of) responsibility.
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We adopted an economic strategy long ago that hinged on the production of ever-cheaper commodities. In an earlier book, Reclaiming Food Security, I detail how this practice first took root in nineteenth-century Great Britain in the context of food. The ruling class was confronted with the problem of how to feed the growing mass of workers streaming into cities from the countryside. Yet their motives were far from altruistic, having to do more with anxieties about social unrest. In short, the goal was not about feeding the poor well, but well enough to keep them from rioting in the streets. If calories were cheap, or so the reasoning went, employers would have a greater chance of getting away with paying their workers a pittance; a mindset that has not entirely been abandoned, as anyone that studies contemporary international food policy knows. I am not saying that prices of consumer goods today are artificially low to mask worker oppression. If anything, cheapness is less the mask and more the catalyst of depressed wages, environmental ruin, and taxpayer exploitation. Regardless of why and how it started, we have gotten locked into a system where one of its primary goals is to produce cheap stuff.
While supply-side economics has closely been aligned with the policies of President Ronald Reagan, which is why it is occasionally referred to as Reaganomics, economic policy since World War II has been preoccupied with the production of cheap goods — with, in other words, supply. This fixation upon retail price would be less problematic if we lived in a world where costs could be fully (and fairly) monetized while remaining affixed to the commodity or service from whence they came. Unfortunately, in a free market economy the incentives collectively encourage firms to externalize costs, as many as they can get away with. That which remains, what we call a commodity’s retail price, comes nowhere close to representing a thing’s total expense. But it is even worse than that, as firms under this model have an incentive to punch as many holes into the pricing system as possible, by, for example, offshoring, polluting, or employing undocumented laborers. It is what we call having a comparative advantage, even though it places certain populations — namely, those that have to pay for these socialized costs — at a tremendous disadvantage.
That is one approach to prosperity, what I call supply-side. The alternative, or at least one of them, which receives considerably less attention, is what I refer to as a demand-side approach to prosperity. There is one thing I have never been able to figure out: what are the benefits of cheap products if wages fall proportionately with — or even faster than — the price of goods? Sure, the price of, say, food has dropped considerably since 1970 in the United States, from taking up 14 percent of the average household’s disposable income to 9 percent today. But the hourly minimum wage during that same period, after adjusting for inflation, has dropped nearly 50 percent. And those low wages trigger still additional costs. It has been calculated that California taxpayers are spending US$86 million annually providing healthcare and other public assistance (food stamps, subsidized housing, and the like) to the state’s 44,000 Walmart employees. If competing retailers were to adopt Walmart’s wage and benefit levels the bill to this state’s taxpayers would increase US$410 million annually. 2 Low wages cost everyone. Cheaponomics is not about saving anything other than the present economic environment and the income inequalities it generates and is predicated upon. Cheap has become a substitute for equality of income. Cheaponomics creates a false sense of hope, which makes large income inequalities tolerable. As long as we think products will become continually cheaper the American dream remains within reach, even if our paystubs and the environment say otherwise. 3
What are we to do? The matter is admittedly complex. A demand-side approach to prosperity does involve paying people higher wages, recognizing that if people were paid better they could afford more accurately priced goods. But there is more to it than that. The great twentieth-century economist John Maynard Keynes accurately predicted some 80 years ago that by the dawn of the twenty-first century we would be witness to remarkable productivity increases. His predictive abilities faltered, however, by suggesting we would choose to take advantage of those increases in productivity by choosing leisure over work. Let us also remember how this addition in leisure time for each worker would have meant more opportunity for employment. An economy with a 20-hour work week can employ twice the number of people as one with a 40-hour work week. In this alternative universe over-consumption is neither possible, as a shortened work week would not allow it, or desired, recognizing that with everyone in the same boat the social pressures to over-consume become dramatically weakened. Considering the alternative, only a madman could have predicted the path ultimately taken: longer work hours so we can buy products that do nothing to enhance our well-being but which deplete our natural resources while destroying the health of ourselves and our planet. As it turns out, we are all crazy; though I am hopeful our insanity is temporary.
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Western thought dating back to Ancient Greece has been fascinated with knowledge. Epistemology — a branch of philosophy concerning the subject of knowledge — is not for the faint of heart. It is serious business. Books, careers, and university courses are devoted to this subject. And while we still do not seem to know if trees that fall in an uninhabited forest make a sound (or if I really am if I think), we continue to ponder weighty questions surrounding the nature and scope of human knowledge.
What, then, about ignorance? On this subject those books, careers, and courses are surprisingly silent. Fortunately, the sciences are starting to fill this void. For example, a team of cognitive neuroscientists at Emory University in Atlanta scanned the brains of 15 self-identified Democrats and 15 self-identified Republications while they read quotes attributed to President George Bush and the then Democratic presidential candidate John Kerry. Some quotes fell in line with the political ideology of Bush and Kerry, others did not. When confronted with contradictory information from “their” candidate the scans revealed not only that neural pathways linked to reasoning shut down but reward circuits kicked into overdrive to positively reinforce the faulty reason being produced. 4 This research, and endless others like it, point to something we can all personally attest to: that we selectively filter information by clinging onto data that support our beliefs while ignoring that which tells us we are dead wrong.
We need to be careful, however, not to take from this research the idea that our fates are sealed. While neural mechanisms might play a role in filtering information those biological structures did not originally determine whether the subjects were Bush or Kerry supporters. The same principles are at work with cheaponomics. Difference is scary. No one likes change. That is why we have come up with alternative fuels rather than alternatives to fuel; why we have focused on developing electric cars rather than on coming up with an entirely different method of human mobility; and why our attention has focused almost entirely on the last of the Three Rs of Environmentalism — Recycle — even though its ecological benefits pale in comparison to the first two (Reduce and Reuse). I suppose one could even point to certain evolutionary advantages that go along with change avoidance — after all, change is risky.
All of this talk about cognitive filtering and neural pathways, however, has one glaring omission. What about power? This is where the social sciences can add considerably to the conversation. As opposed to just an absence of knowledge, ignorance involves supporting social structures and practices as complex as those involved in knowledge production and maintenance. As Robert Proctor notes while describing the politics of cancer research in Cancer Wars, we must:
study the social construction of ignorance. The persistence of controversy is often not a natural consequence of imperfect knowledge but a political consequence of conflicting interests and structural apathies. Controversy can be engineered: ignorance and uncertainty can be manufactured, maintained, and disseminated. 5
Ignorance can be manufactured in the sense of knowledge that has been lost. As Nancy Tuna points out:
obstetricians in the United States, for example, no longer know how to turn a breech, not because such knowledge, in this case a knowing-how, is seen as false, but because medical practices, which are in large part fueled by business and malpractice concerns, have shifted knowledge practices in cases o...
