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Cheap: The High Cost of Discount Culture (Hardcover)

Great Insights into Consumer Culture, July 8, 2009
By Wayne Johnston (Fort Lee, NJ)

I've always considered myself a sophisticated consumer, able to see through the marketing ploys of restaurants, car dealers, department stores, etc. to obtain real value. But then on the drive home from work I heard Ellen Shell on the radio, bought Cheap, and, almost despite myself, read it in two days.
It's frightening, eye opening, and not at all what I expected. I now know that the marketers are one step ahead of even the most savvy shoppers. By masking the true costs and value of merchandise, our perceptions of value are based to a surprising extent on the marketers manipulations. The disturbing thing here is that this occurs at virtually all price points. Whether we shop discount "big box" stores or high end department stores with "designer" merchandise, our perceptions of "beating the system" are illusory. Opening with a fascinating history of discounting, from the days where "cheap" was an insult to its rise as the holy grail of the mass marketer, CHEAP moves on to the economics and psychology that drive our purchasing patterns. It goes much farther, though, looking at the impact on the cultures and environments where these bargains are produced. In an increasingly globalized economy, we can't afford to ignore these impacts as--CHEAP ably shows--they are already at our doorstep. Extremely well written and thought provoking, this book offers a fresh and alarming perspective not only on our current economic condition, but on our own often self defeating behavior.
It's forever changed the way I'll shop...for the better.

Insightful and Well Researched, July 13, 2009
By James Kirwin (East Coast USA)

I like to read in bed and because the Wife is sensitive to light, I have bought numerous battery operated reading lights - all made in China. No matter what brands I purchase or how much I spend, within a couple of months the lights break and I'm left using a flashlight to read in bed until I go out and buy another. A reading light is quite a simple device consisting of a battery, LED, and wires all linked together in a circuit. This circuit is then encased in plastic, metal or a combination of the two. Although simple, these lights break within a few months. Sometimes the cases break, other times the soldering fails somewhere in the circuit. I try to repair them but the repairs inevitably fail after a few weeks. Over the past 5 years alone I have probably spent $150 on reading lights.

After reading Cheap: The High Cost of Discount Culture by Ellen Ruppell Shell I now understand that my frustration is the result of the replacement of quality goods by shoddy ones made in China in order to maximize profit and minimize expense. This exchange of shoddy for quality has happened as Americans have pursued low price at the expense of all else. We save money in the short term by pursuing low prices but lose much in the process including long lasting quality goods and decent paying jobs.

Shell writes for the Atlantic and is a professor of journalism at Boston University. Throughout the book I searched for Shell's anti-capitalist bias, but didn't find it anywhere. Instead she writes "Trade is and must be free," and believes that regulation and unionization is not the answer to our obsession with low prices. She quotes Adam Smith liberally and suggests that Smith himself would not be pleased with the junk on the shelves of America's superstores. She writes that Smith advocated a system whereby workers earned a decent wage to purchase a decent life, and supporting that system were Smith's heroes - consumers buying the goods and services made by the workers at fair prices. These prices weren't inflated: the consumer received a quality product that performed the job it was intended to do.

Shell discusses the usual suspects - Wal-mart, dollar stores and discount chain stores - but she zeroes in on Ikea as a firm that has built a mythos around itself to shield it from the fact that it uses illegally harvested hardwoods from the Russian Far East and Asia (Ikea is the third largest consumer of wood in the world), and sources production to some of the lowest paying companies on the planet. Shell cites a table that sells for $69. A master craftsman admitted that he couldn't buy the wood for that price, let alone build the table. Ikea headquarters exudes an aura of cultishness that is more reminiscent of Scientology than of a business. There workers design products that are meant to be made and ship cheaply - not to be comfortable. The products are given cutesy names that slaps a "happy face" onto what in essence is a soulless product.

While every move by American giant like Wal-mart is subjected to scrutiny by environmentally minded intelligentsia, she notes that Ikea is given a pass:

"Wal-mart's relentless march toward world retail domination provokes scathing exposes in books, articles, and documentaries. But most media responses to Ikea verge on the hagiographic, swallowing whole the well-polished rags-to-riches story the company wrote for itself."

Everything Ikea does is geared towards lowering its costs. Ikea's store placement outside of cities and away from public transit, as well as its refusal to deliver makes its customers drive to it is a conscious decision by the firm to minimize the cost per square foot of its stores by buying cheap land. It ships disassembled products to save on shipping and on manufacturing. It regularly squeezes its suppliers, thereby preventing workers in some of the poorest places on the planet from getting better wages while encouraging environmental abuses.

Shell's criticism of Ikea hits home because I've bought from there. In fact the table that I'm writing on is from Ikea. Its wood grain is quite dense, unlike that from plantation farmed trees. Of course only its legs are wood; it's top is wood veneer and already shows signs of wear after just three years. Did the legs come from illegally logged old-growth forest in Siberia or Indonesia? How environmentally friendly can this table be if it is already falling apart after 3 years and will need replacement in another year or two? It's not friendly to the environment - but it is to Ikea's profits if I'm stupid enough to go there and buy another table. No, it's replacement will be a nice, well-worn American table from a second-hand shop.

Shell makes a convincing case that America's love affair with shoddy goods is bad for the environment and living standards abroad. Unfortunately she could have made a better case that shopping at Wal-mart and Ikea leads to lower living standards at home. Shell mentions a worker in furniture manufacturing who was laid off by an American furniture maker and picked up by Ikea - at much lower wages and benefits. However families who shop at Wal-mart save roughly $2700 a year on their purchases, and since Wal-mart caters to the lower demographics the savings is a significant part of the demographic's income. Shell argues that this savings is less than the family would have made had Wal-mart and the discount chains not driven jobs abroad, and because the jobs are gone forever Wal-mart consumers are locked into a decreasing standard of living that no amount of savings can justify.

Shell's work is heavily footnoted but because the footnotes aren't referenced in the text, I ended up reading them on their own after finishing the book. This is a small quibble with an otherwise fine and thought provoking book, but it would have made her arguments even stronger had the footnotes been referenced.

Shell's writing style is easy to read and her ideas are well supported and researched. Her conclusion that it is up to Americans to recognize that things that fall apart quickly - like reading lamps - don't provide good value in the long run leaves the decision whether or not to improve the situation up to us.

She believes that we need to educate ourselves on the products we consume - where they come from, how they are made, and what we consume is in line with our values. If we are comfortable buying cheap crap that falls apart, sending our dollars to the Chinese government that funds oppressive regimes in the Sudan, Burma and North Korea, then we have no one to blame but ourselves.

Overall this book is must reading for anyone interested in modern American consumerism.