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The Author Speaks

Why a Low Price Isn’t Always a Good Deal

Ellen Ruppel Shell, a self-described cheapskate talks about her new book, 'Cheap: The High Cost of Discount Culture.'

Q. What do American companies do about it?

A. While I was in Shanghai, I tried to get in touch with the American Chamber of Commerce [AmCham] to discuss their view on workers' rights. They declined to get back to me, but AmCham—which represents Nike, Intel, Microsoft and Wal-Mart, among many other companies—lobbied assiduously against regulations that would enforce worker protections. For example, one regulation would guarantee workers a binding agreement to ensure timely payment at a minimum rate. AmCham threatened to curtail investment and lay off workers in China if reforms were instated.

Q. Has discount culture contributed to the current economic crisis in this country?

A. Well, we live in a culture that insists that we can have it our way immediately, at all times, whatever it is we want. This culture encourages consumption, and low prices have made everything seem within our reach. That perception got us deeply in debt. Over 60 percent of us own houses, and we used them as piggy banks, taking out loans based on the value of our house or the projected value, all fueled by the idea that we needed objects and we could buy them cheaply if we just had a little more money.

Q. Was income increasing to finance greater consumption or repay new loans?

A. By 2008, the inflation-adjusted median family income had dropped by almost $1,200 from the 1970s. At the same time, spending increased by over $4,600, while corporate profits doubled. How is it possible that our inflation-adjusted incomes are going down, but we’re spending more and corporate profits are doubling?

Q. What’s the answer?

A. Part of that is that while consumer goods got cheaper, we were neglecting our wages and benefits. I can’t really emphasize that enough. What helped keep those wages and benefits low without us revolting and protesting was the decline in prices of consumer goods. We could get T-shirts for really cheap, so it seemed like everything was OK, when in actuality the price of many of the things we must buy, like education and health care, soared. We have these very enormous and growing costs on big purchases, and we’ve kind of been distracted by the low costs of small purchases.

Q. But isn’t high-quality stuff often priced beyond the reach of most people?

A. There’s this false dichotomy between quality and price, the idea being that you have to pay a very high price for quality. That wasn’t the case 30 years ago. You weren’t necessarily looking for the lowest price, but you’d get quality for a reasonable price, and you’d also get reasonable service at many places. Once, you could go to a mid-priced store and be served by knowledgeable sales people. You would stand in the dressing room and they’d bring you stuff, and they’d tell you what they thought—whether you liked it or not!

Q. Is that impossible today?

A. We could demand that kind of service for a moderate price, but we’ve been trained to assume that that level of service has to come with a high price. Our expectations have been lowered. Brent Hull, a Texas-based architectural designer [quoted] in the book, said to me, “We don’t think we deserve quality anymore. We think that’s only for rich people.” There’s some truth to that.

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