20 December 2011

If you can't afford the tip you can't afford the meal; a Blog Off post

Every two weeks the blogosphere comes to life when bloggers of every stripe weigh in on the same topic. The topic this time is If you can't afford the tip you can't afford the meal. Here's my take.

Since about 1980 or so, the United States and the whole of the developed world has been locked in a race to the bottom. Though it's most apparent in North America, it's evident in Europe, Japan and Australia too. Competition based on innovation and smarts seems to have been replaced by competition based on low cost.

We were sold a bill of goods called the Information Economy and rather than working in factories, we'd work with our brains and usher in a new era of prosperity. But in the course of exporting our manufacturing base, the so called job creators failed to bring about this new prosperity. What they did bring forth was the big box store and the promise of ever cheaper consumer goods.

But how cheap are those cheap consumer goods and what effect do they have across our economies? In Robert Greenwald's documentary Wal-Mart: The High Cost of Low Price, the film maker explores in depth how big boxes, and Wal-Mart in particular, depress wages, impose high social costs and gut local businesses. A 75 cent bottle of shampoo is a shiny object few can resist and the act of buying it sets in motion a whole host of unintended consequences.

The first consequence is that the margin on that bottle of shampoo is so low that Wal-Mart can't afford to pay the cashier who's checking you out anything close to a living wage. Another consequence is that the company who actually made that bottle of shampoo is making so little money that they have to cut wages, benefits or to leave for the developing world.

Every time that happens by the way, it's another job exported to Mexico or China; countries where living wages and environmental regulations are considered to be quaint ideas at best.

When manufacturing jobs go away, what jobs remain are positions as cashiers at Wal-Mart. A society can't support a robust middle class on the back of Wal-Mart or any of the big boxes.

Yet the draw of that 75 cent bottle of shampoo is so strong that municipalities fight to lure in big boxes. The suburbs in the US are covered with strip malls built around them. It doesn't matter if they're Wal-Marts, Targets, Office Maxes or Pet Smarts, they have the same effect. The promise of low prices brings with it a host of social ills that range from low wages to non-existent healthcare benefits.

Furthermore, the obsession with low prices extends out from the retail sector. It extends into government where gutted education budgets and calls to eliminate the postal service are met with applause. It extends into other businesses where staff reductions and increased productivity to accommodate them are considered to be normal. It bleeds into the professions too and everyone from doctors to designers feels the same pressure to compete on price rather than value.

So what is there to do? Well, for starters stop spending money in big boxes. I have never been a fan of them and I've always been suspicious of bottom line prices. I don't buy 75 cent bottles of shampoo. I buy $4 bottles of shampoo at a grocery store where the cashiers make a living wage and have health insurance. Now that we're part of a thoroughly consumerist culture, pay attention to how and where you spend your money. I consider it to be an obligation to spend my money locally and as painful as it can be sometimes, to pay full prices. When I buy anything I think about its repercussions. What am I supporting with my dollars? Where is my money going once I spend it? Is it staying in the local economy and helping to support my neighbors or is it swelling the coffers of someone far removed from me? What do you think? How far can the push for cheap go?



  1. I live in a small town in Southern California. Three stores closed this month in our little 2 block downtown and 2 more have just put up store closing sale signs. I try to try to shop locally and call neighborhood craftsmen for all work and repairs to my home--no national chains. I may seem like it costs more, but there is accountability. Your blog has made me ask what more I can do.

  2. Thank you for letting me know that.

  3. This is great, Paul. BTW, Wal-Mart would like to invade Brooklyn, but Brooklyn says raspberries to Wal-Mart.

  4. Well, I’ll be damned, great minds DO think alike! I never look at the other blog offs until I’ve posted my own, which I naturally write in advance of need. When I saw the subject for this week’s blog, I really thought you meant it more in the sense of people not wanting to pay designers for their expertise, or picking the brains of a designer, then going online and getting certain products for less, after the designer has put his efforts into making sure the selection is correct for the intended use. That sort of thing.

    But as I looked at the subject, it just seemed to me that it should really be something on the subject of the people at the top living off the misery of everyone else, which is where I took it in my own blog. As for Wal-Mart… c’mon. I cannot tell you how this outfit appalls me.

  5. Thanks for the comments Andrea and Joe!

  6. Thanks for this post Paul.

    I am a big believer in buying local. I try to buy local and in season foods, grass fed meat etc. I buy local craft brewed beer and it's awesome! Philadelphia Brewing Co, Yards Beer, and Victory Brewing company are just 3 of the many really great local breweries. There used to be hundreds before prohibition and they employed a lot of people!

    I'd love to see some very local solutions to issues like energy use for public and residential buildings, and local transportation. Many cities and small towns all over the world are doing this now and they are actually MAKING money and building jobs for their kids futures.

    I like knowing who I am buying things from and that the money I spend stays in my community or region, employing other people, and making our part of the world a better place.

    This is one of the things I love about remodeling existing housing stock. People get a great bang for the buck this way. Buy an older home in a great neighborhood close to the amenities your family needs.

    It makes me happy to keep older homes working well for their owners. And whenever possible we try to source products services and materials which are local for the renovation projects our company designs and builds.

    Diane Menke
    Myers Constructs Inc.

  7. Thanks for your comment Diane. The "buy local" movement is really starting to gain traction in the US and it's thrilling to watch.

  8. Paul, I referenced Walmart in my post as well... more from a neutral "herding mentality" sort of way... Most people don't think through the real cost... they just want what they want at any cost. (Notice how I used "they" verses "we?")

    My favorite quote from the movie Armageddon, "You know we're sitting on four million pounds of fuel, one nuclear weapon and a thing that has 270,000 moving parts built by the lowest bidder. Makes you feel good, doesn't it?"

    Great thoughtful post, as always!

  9. Great post, Paul and I agree that we need to reflect more on who gets a share of our money.


Talk to me!