Sunday, October 3, 2010

Cheap: The High Cost of Discount Culture by Ellen Ruppel Shell

Cheapness and Unions

In order to reduce the price of an item, it is necessary to cut the cost of producing the item. Traditionally, the easiet way to cut production costs is to cut the cost of labor. Replace the people with machines. Replace the people with people who are paid less. Replace the people with not only people who are paid less, but with people who cannot complain about the unsafe conditions in which they work (making the conditions safer would, of course, cost money and thus raise the price of the item).

Unions exist to insure that people make what they view is a reasonable wage and to insure that they work in safe working conditions. In the Middle Ages, craftsmen's guilds existed. These guilds trained their employees to industry standards through a master/apprentice relationship. They provided some assistence to elderly craftsmen and their widows and children. A master craftsman produced work of a certain quality although not necessarily at a low price. These guilds evolved into labor unions.

Unions can beviewed as a double-edged sword. If you are a union employee, you are guaranteed a certain protection from being fired (although not from being laid off), safe working conditions, usually a decent health plan, and a pension. On the other hand, all of this drives up production costs, which is why companies have begun outsourcing and union-busting. While this trend means cheaper items, it does come at a price. To quote Shell:

Wages and benefits were sinking, and job security a happy memory. A focus on deregulation and unfettered free markets had made unions and their protectors almost a thing of the past, particularly in the private sector. Global markets, in which goods were produced far away from the eyes and sensibilities of those who purchased them, made it difficult or even impossible to enforce environmental precautions, worker protections, or health and safety regulations. Few of us knew where our food was being grown and processed. But this ignorance was not so much a matter of not knowing where to look as of our simply averting our eyes." (p. 184).

However, Shell goes on to point out (also on p. 184) that while we are not subsidizing people through their union benefits, we are subsidizing giant agrobusinesses . These agrobusinesses are passing on the subsidies to consumers through lower food prices. However, their workers are not well-paid, and there have been numerous example of environmental harm from agrobusiness farming techniques.

Some questions to consider:

Can subsidizing agrobusinesses be viewed as the good of the many (cheap food) outweighing the good of the few (the employees, the environment).

Is the lack of job security and the outsourcing of manufacturing jobs actually good for the American economy? Is it forcing us to become a more creative, technologically-driven culture?

Is there anything really wrong with buying cheap stuff? It does let us save money.

Let the comments begin!


Oscar W. said...

Having read a bit about rules that limit the options of European companies to fire employees and horror stories about some organizations in the U.S., I admit there is some value in not guaranteeing cradle-to-grave job security. I do think we have to do a better job of facilitating movement into new careers via better adult education, more stringent anti-age discrimination laws, and other steps. This also includes fostering new industries and services that are likely to employ a lot of Americans. There's got to be a happy medium.

Anonymous said...

People have forgotten labor union history and how workers suffered not only on the job but to gain the basic rights of decent pay and some protections. Those bad old days of millworkers and other jobs didn't go away because of time passing or something. Workers fought, were beaten, lost jobs to scabs and suffered. Today's dismissal of unions will lead us to being servants of megacorporations who have little choice of where else to find employment. Think before dismissing unions and what the give workers.

Anonymous said...

Now that we know that purchasing cheap items is usually the result of cheap labor and sometimes horrible working conditions in a poor country cheap products seem less appealing. Sometimes however one wants a product that will not be needed for a long time and so is looking for price vs quality. Purchasing cheaply at the cost of other's suffering just seems wrong but for some of those workers they think they are getting opportunities they never had before. It is a quandary. Fair Trade seems to be the just answer but the prices, especially for clothes and coffee, can be expensive. Shopping can become a moral issue.