Sunday, November 29, 2009

Barbara Kiviat

Barbara Kiviat is a business and economics correspondent for Time magazine. As such she gets paid to write commentary like the following:
The price wars have gone nuclear. From Target's $3 coffeemakers to Best Buy's half-price stoves to Staples's $300 laptops, the theme of this holiday shopping season is, without a doubt, "we sell for less." Even Wal-Mart's commitment to "every day" low prices isn't preventing it from going lower. An online skirmish with that started with $9 hardcover books (books normally sold for three times that amount) has dominoed into other categories, driving down prices on everything from mobile phones to Easy-Bake ovens. The deals are everywhere.

Well, pardon my saying so, but I don't want them. I don't want to pay less. If anything, I'd rather pay a little more. Crazy talk, I know.

Where is this coming from? Well, it began with some reading I've been doing about the trade-offs we make for ultra-cheap goods — the child workers in Bangladesh who sew our clothes and brush their teeth with ash since they can't afford toothpaste, the oceanic dead zones that come with $5 factory-farmed salmon filets. They're the sorts of stories that make a person think that buying carts full of cheap stuff — ensuring the production of even more cheap stuff — shouldn't be the social goal we've made it out to be.
From this passage I can infer at least two things. Ms. Kiviat probably:
  • Is a liar
  • Doesn't understand the problem of child labor
  • Doesn't like capitalism
How else to explain what could possess her to pen such drivel? First off, I in no way believe that she prefers to pay more for the items she purchases. Given the choice between a book which costs $10 and one which costs $20 am I really supposed to believe she prefers the latter? That price plays no role in her calculus while shopping? It defies credulity.

Second, how is boycotting cheap goods going to help the child worker in Bangladesh? If no one purchases the goods they make they will rapidly lose their employment and their already wretched lives will probably become even more miserable. I suppose Kiviat believes the solution is simply to charge more for the product and pay the children more. But if you raise wages then there is no longer a compelling reason to set up business in Bangladesh. You are eliminating the very thing which enables them to compete.

Third, isn't the production of more cheap goods desirable? After all, the more I can buy with my dollar the higher standard of living I can attain? Isn't this a massive priority for almost all humans? And who benefits more from cheap goods than the poor? This, the product of capitalism, is to be celebrated rather than scorned.
Now, I do realize it's an odd time to lobby for higher prices. We're coming off the worst recession in a quarter century. One in ten Americans is out of work and plenty of people feel like they need low prices to be able to buy anything at all.

But I also realize that part of what got us here was overspending, and that that overspending was fostered by a shopping culture that uses cheap goods to hook people on feeling like they're winning at something. As a country, we held nearly $1 trillion in credit-card debt this time last year — about the same as the value of all the goods and services produced in South Korea annually. We've bought so much stuff that we've struggled to find places to fit it all. The U.S. went from having 300 million square feet of self-storage space in 1984 to 2.4 billion square feet in 2008, according to the Self Storage Association, a 700% surge. By 2005, one in five new houses came with three garage bays — the third, real-estate agents explain, to store all the "toys."
Overspending on cheap goods isn't what got us here. What got us here was poor government policy which promoted the overconsumption of housing, typically the most expensive item a person will purchase in their lifetime. And the housing binge didn't occur because of a price war, rather it corresponded with massive price increases!

In addition, why is the fact that Americans require more storage space to hold all of our goods a bad thing? Does the author live in a studio apartment with only the barest of essentials to survive? Why is a low standard of living considered a virtue?
...And that leads to my second argument for higher prices: if stuff costs more, we'll buy less of it (that's the demand curve in action). If we are forced to buy fewer things, then perhaps we'll start to break this mentality that the way to happiness is to own more.
While Kiviat earlier cited the problem of overspending I have no idea how raising prices would help solve this. After all, if you raise the amount of money it costs for people to attain the goods they desire it stands to reason it would result in people spending even more.

But I don't think a desire for thrift and savings is what really animates Kiviat, rather it is her desire to see people own less stuff and break a seeming connection between happiness and material goods. Like John Lennon said, all you need is love, right? What she really desires is for people to alter their value system. Why this is so important to her I haven't a clue.
I'm not the only one singing this song. Anti-consumerism groups like Adbusters and the Church of Stop Shopping have been buoyed by the recent hiccup in the Age of Excess and are protesting against shopping centers with renewed zeal. The Center for the New American Dream, which promotes responsible consumption, is out in full force this holiday season, explaining how to give gifts that don't include buying things at the store (for example: coupons for free babysitting).

"We have this cycle we've developed — work intensively, buy more, repeat," says Carolyn Danckaert, New American Dream's director of home and community programs. "At a certain point, the accumulation of stuff starts to drive your life." As Juliet Schor, an economist at Boston University who helps run the group, points out in her book The Overspent American, when workers became more productive over the second half of the 20th century, we as a society chose to take the benefit as more stuff. We could have also decided to, say, work a little less.
The fact that a bunch of far left groups agree with her (Adbusters gave us this flag which is a staple of any WTO/IMF/World Bank protest) strikes me as less than compelling evidence of the correctness of her argument, whatever that may be. As for the quote by Schor, yes, I suppose we could have decided to work a little less. But evidently people prefer additional money to additional leisure time. I'm not quite sure why Schor is so upset over individuals making such decisions which have absolutely no impact on her.
The lure of cheap goods, though, is incredibly strong, even once we've reached the point of substantial creature comfort. In her book Cheap: The High Culture of Discount Culture, writer Ellen Ruppel Shell devotes the better part of two chapters to how inexpensive goods mess with our minds. She describes one experiment in which researchers used brain scans to show that the joy of a discounted item comes before it's bought; by the time a person is at home with his new thing, the luster is gone. On Black Friday, I watched shoppers on TV proudly state how much they were saving on this and that. No one mentioned how much they were spending.
The joy of cheap goods is ephemeral, so what? So is the joy of chocolate, cocaine and roller coaster rides. People still like them. And given that Kiviat is on record as advocating higher prices, those people she watching on Black Friday likely would have been spending more if it were up to her, or at least spending the same and having less to show for it. Not sure how that would be some kind of triumph.
Or how long they expected any of their stuff to last. For that's the other big trade-off we make for low-priced goods — often cheap simply means cheap. Shell likes to tell the story of how she once bought three blenders in quick succession; the flimsy blades were no match for the ice that goes into smoothies. When "this costs less" is the marketing trope that most catches our attention, quality easily falls by the wayside — a state of affairs that Shell concludes bothers no one as much as the low-income people inexpensive goods ostensibly benefit the most since they can't always afford a replacement.

All of which is why in this year's mad present-buying rush, I'm not celebrating the notion that I get to pay less. I'd rather have the sorts of things that only come with a higher price.
Look, I'm a huge proponent of going for quality and value over the cheap and flimsy, but I'm also aware that not everyone is able to pay for quality and must make do with the cheaper option. Not everyone has the luxury of choice. It would be nice if Kiviat could appreciate this reality.

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