Dialogue: Ellen Ruppel Shell on Our Obsession With Cheap

By Megan McArdle


Dear Megan,





Part of the reason these prices are so low is that American interests work mightily to keep them that way, by scaling back protections for workers and sharply curtailing the role of unions in the developing world. That is, the workers in these countries want to fight back--and would--were American interests not so intent on keeping them in their place. Some of these workers return to their farms, but many others cannot make the fare. They're stuck--they work in factories not because they believe it will pull them up, but because they quite literally cannot get out. And if those workers try to improve their lot by demanding better conditions or overtime pay, the factories can and often do move go elsewhere--further and further beyond the reach of rule of law. This "race to the bottom" may serve workers temporarily, but over the long term, it leads to income disparity and--for many workers a cycle of hopeless entrapment and poverty.

Roughly 25 percent of the global workforce is now Chinese. Given such enormous firepower, China inevitably sets the norm for wages and working standards in the global supply chain. American corporate interests have chipped away at those standards and wages in order to maximize profits and influence, as well as to serve their shareholders. The chronic disregard for workers' rights in China's foreign-invested private sector threatens wages and working conditions around the globe, including the hard-won gains of American workers. This helps explain why incomes for 90 percent of Americans have remained essentially flat in the US since the 1970s. The environmental degradation also comes back to haunt us--Chinese made furniture--half of all furniture in the world is made there--has stoked a cut and consume cycle that is eating through the world's forests at an a rate unprecedented in human history. Deforestation accounts for over 18 percent of global carbon emissions--more than the entire global transport system or the global industrial manufacturing sector.

The weaker the rule of law, the fewer the protections, the more corrupt and abusive the system, the lower the price. And that's the system we're buying into when we buy into those "everyday low" prices, be they at Wal-Mart or IKEA. Megan, you said in an earlier post that there are worse things threatening America than the obesity epidemic. I agree, but I don't think that living with grandma's furniture--ugly as it might be--is one of them. The more we know about how and where and of what our consumer goods are made, the wiser our purchasing decisions will be, on both a personal and a political level. This is not to suggest that we should all rush out to buy weighty, expensive stuff--far from it! In fact, some very inexpensive and portable old standbys--like boards and cinder block book cases for wandering graduate students--might well be worth considering over the far more expensive--and only superficially more tasteful--IKEA option.

Thanks, Megan, for the opportunity....I look forward to responding to more of your thoughts on CHEAP.



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