Shell, a Boston University facultymember, Atlantic magazine contributorand author of The Hungry Gene: The InsideStory of the Obesity Industry, explains that the balance of power that onceexisted between buyer and seller has been lostto the advantage of the seller.“In the Age of Cheap we are all tourists” in a modern world bazaar, “blindlyreliant on the seller to wring out the best price,” she writes.
This leadsto mistrust, which leads to buyermiscalculation. Something like Gresham’sLaw (bad money drives out good) takes over. When we can’t tell whether aproduct is shoddy or good, eventually shoddy drives out good, and we end uppaying too much for shoddy in a corrupted marketplace.
The author concedes that the impulse toward lowerprices is basically good; department-store pioneer John Wanamaker showed thatlower prices could improve the lives of ordinary citizens. But it was a morewidely acclaimed retail pioneer, Frank W. Woolworth, who first understood whattoday’s discounters know in their bones: Price trumps quality. The corollary tothat, in Woolworth’s blunt words, is, “We must have cheap labor or we cannotsell cheap goods.”
At the end of the 19th century, critics of cheap,including President William McKinley (“Cheap merchandise means cheap men, andcheap men mean a cheap country”), raised the alarm, but their voices weredrowned out by the new century’s clamor for ever-lower prices in the emergingconsumer culture. E.J. Korvette, the postwar price slasher, was one of thefirst to answer the clamor.
A series of seismic changes came about, though theydid not necessarily register on any meters at the time. One of the biggest,other than the outsourcing of jobs overseas, was the shift in focus from theobject to the deal. Retailers, always preferring to sell you what they haverather than what you want (the essence of discounting), were able to convincebuyers that if the deal was good, the object under consideration was lesscritical to the transaction.
Another big change was the gradual disassociation ofthe consumer from the worker/citizen, as if they were not one and the same. Akind of cognitive dissonance lets us accept what we know is absurd: that pricescan continually be cut without also necessitating cuts in quality, safety,variety, environmental responsibility, human dignityor our own wages.
Not surprisingly, Shell frequently uses Wal-Mart asan example. After a Wal-Mart store opens in an area, University of Californiaresearch shows, wages and benefits fall in other industries throughout thearea. She is equally critical of IKEA, which “succeeds the way all discountersdo: by passing much of its costs on to us.”
One trade expert puts it succinctly: “The severeexploitation of China’sfactory workers and the contraction of the American middle class are two sidesof the same coin.”
Economic arguments aside, Cheap is interesting simply as social and commercial history. Youwill be amazed at the ingenious devices corporations have invented to bamboozleand deceive youor to let you deceive yourself. Mail-in rebates, for instance:Companies make out big-time because only between 5% and 10% of us bother toredeem them, yet we tell ourselves we still received a good deal.
The chapter on the psychology of pricing, “WinnerTake Nothing,” may be worthyou should excuse the too-obvious wordplaytheprice of the book alone. It is fascinating. Why, for example, is “9” the mostseductive, and therefore common, number used in pricing?
Some observers may take Shell’s book as an elitistrant, though it is not. She does not have a solution to the problem, other thana not-very-realistic call to consumer action, but she leaves no doubt thatthere is a serious socioeconomic problem involving declining standards ofliving, beleaguered communities, rising debt and poisoned environments.
