Tuesday, April 19, 2011

Book Review: Cheap

Shell, Ellen Ruppel. Cheap: The High Cost of Discount Culture. New York; Penguin Press, 2009.

This book is replete with half-baked economics, unwarranted conclusions, and self-righteous snobbery.

In the half-baked economics, her thesis is a prime example. She argues, rightly, that the wage-price cycle can work in reverse, with lower prices necessitating lower wages, which supports the pricing position of the discounters, who proceed to cut wages further. However, and this is where the half-baked part comes in: just because it happens does not mean that it is bad or unnecessary. Reducing real wages is part of dealing with an overvalued dollar. Achieving that without taking a huge hit to the standard of living is better than taking that hit without it.

For the unwarranted conclusions, she assumes that, just because worker protections in the United States happened during a time when socialist/Progressive policies were popular, that they are both a necessary and sufficient condition. She uses China as an example of how free markets cannot produce workers rights, arguing that, when the workers demand higher compensation in the form of better working conditions, the factory owners "just move the factories further inland." Of course, that begs the question of (a) why the people further inland would be willing to work in those same conditions and (b) what happens when there is no more "inland" to move to? It is not free markets that produces poor working conditions, it is poverty. Fix poverty through the free market, and working conditions will follow.

The self-righteous snobbery can be illustrated by her analysis of the food industry. She complains that factory farm pork is flaccid and flavorless compared to the rich, natural flavor and texture of free range pork. I, personally, would rather enjoy my heavily seasoned bacon a couple of times a month than have the "real thing" every couple of years, if I could get it at all. In a world where those in truly dire poverty are achieving a real standard of living, there will be fewer resources available for everyone.

As an aside, her offhand comment that in the last decade Americans have eaten more shrimp than tuna illustrates a bigger market failure than any she addresses. The tuna is a large, predatory fish nearly as high on the foodchain as sharks. It should be no more surprising to say that Americans eat more shrimp than tuna than to say they eat more rabbit than bear, or more chicken than eagle. We developed a taste unsustainable high on the foodchain. Shrimp, farmer or no, are a much better substitute.

As Michael Moncur said, "Every journalist has a book in him, which is an excellent place for it."



Blogger Yoel Natan said...

Lawlessness by industrialists needs to be addressed. Industrialists would like to work solely on Darwinian economics, but that's where the govt has to step in and say, no, you are not going to just move your factory inland and disease all Chinese to the last man, and pollute all of China instead of just the coast.

Industrialists and capitalists like to think that they are irreplaceable, but if they are taxed sufficiently, the state can train up a generation of responsible, law-abiding industrialists and capitalists, and they can pay for the upkeep of prisons for the lawless industrialists.

11:43 PM  
Blogger Octavo Dia said...

There's still a big difference between her claim, that free markets cannot provide worker protections, and reality. In the United States, for example, many companies go far beyond the legal requirements just to attract workers.

China is a special instance, because of its political system restricts free communication. India doesn't have nearly the worker problems that China does, because Indian workers are free to move to other provinces and spread reports of good and bad working conditions to each other. Chinese workers rights are more a problem of authoritarian government than free enterprise.

9:38 PM  

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