80. Cheap: The High Cost of Discount Culture - Ellen Ruppel Shell

In this very thoroughly researched book, Shell argues that there are a lot of hidden costs that we pay in our obsession with low-cost goods. In addition, she argues that even though the prices of many consumer goods have gone down in the past few decades, the overall cost of living has gone up in other ways. For example:

"Compared with the early 1970's, in 2007 we spent 32 percent less on clothes, 18 percent less on food, 52 less on appliances, and 24 percent less on owning and maintaining a car ..."

"...any savings from low-priced consumer goods was more than wiped out by the rising costs of nondurable goods and services: a 76 percent increase in mortgage payments; a 74 percent increase in health insurance costs; a 25 percent increase in tax costs; and, because it barely existed in 1971, a monumental increase in child care costs."

This is in part why so many working class folks are overweight: it's hard to afford the cost of health insurance, but it's a lot easier to pay $3 for a basket of cholesterol-laden shrimp from Church's!

Shell really hits a wide range of issues in addressing our consumer culture. For example, the psychology of shopping and how retailers manipulate us is quite interesting: the MSRP or suggested retail price is not only arbitrary, but it's really set to convince us to buy a product because it's a "good deal" when it's 30% off. Some of this information is pretty basic, but Shell does a great job with setting forth specifics and anecdotes to prove her point. Also, retailers make a killing off of those rebates ... what percentage of people do you think actually send away for the rebate you get from buying a cell phone or other electronic? 5-10%!! That's why retailers are starting to use rebates more - because they know that people won't send away for them. In fact, if more than 30% of people send away for them, they figure that the process is way too easy and try to figure out ways to make it more complicated.

Shell also talks about down-side of globalization, like buying farm-raised shrimp from Thailand that have likely been treated with antibiotics and tended to by maltreated workers; or buying toys made in China that, as we all know now, were sprayed with lead paint. "... increasing the wages of, for example, apparel workers in Mexico by 25 or even 30 percent would raise the price of a shirt in the United States by 1.2 percent. That is, a 30 percent increase in wages for the workers results in a leap in price of a $20 shirt to $20.24. Surveys indicate that most American consumers are willing to accept this additional cost without fuss, especially if they understand the reasons for it. So far, several small producers have taken up the challenge, but few multinationals have been willing to put it to the test."

Lastly, check out this brilliant writing:

"Cheap fuel, cheap loans, cheap consumer goods do not pave the road to salvation. On the contrary, our Faustian pact with bargains contributed to the worst recession of two generations. The economics of Cheap cramps innovation, contributes to the decline of once flourishing industries, and threatens our proud heritage of craftsmanship. The ennoblement of Cheap marks a radical departure in American culture and a titanic shift in our national priorities."

This was a fascinating book - the style reminded me a bit of Malcolm Gladwell's (journalistic style of writing; basic premises, but great research to back them up). I plan to check out one of Shell's other books, The Hungry Gene: The Inside Story of the Obesity Industry, next week.