Tuesday, August 7, 2012

The Cost of Low Prices

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

Summary: From the shuttered factories of the rust belt to the look-alike strip malls of the sun belt-and almost everywhere in between-America has been transformed by its relentless fixation on low price. This pervasive yet little examined obsession is arguably the most powerful and devastating market force of our time-the engine of globalization, outsourcing, planned obsolescence, and economic instability in an increasingly unsettled world.

Low price is so alluring that we may have forgotten how thoroughly we once distrusted it. Ellen Ruppel Shell traces the birth of the bargain as we know it from the Industrial Revolution to the assembly line and beyond, homing in on a number of colorful characters, such as Gene Verkauf (his name is Yiddish for "to sell"), founder of E. J. Korvette, the discount chain that helped wean customers off traditional notions of value. The rise of the chain store in post-Depression America led to the extolling of convenience over quality, and big-box retailers completed the reeducation of the American consumer by making them prize low price in the way they once prized durability and craftsmanship.

The effects of this insidious perceptual shift are vast: a blighted landscape, escalating debt (both personal and national), stagnating incomes, fraying communities, and a host of other socioeconomic ills. That's a long list of charges, and it runs counter to orthodox economics which argues that low price powers productivity by stimulating a brisk free market. But Shell marshals evidence from a wide range of fields-history, sociology, marketing, psychology, even economics itself-to upend the conventional wisdom. Cheap also unveils the fascinating and unsettling illogic that underpins our bargain-hunting reflex and explains how our deep-rooted need for bargains colors every aspect of our psyches and social lives. In this myth-shattering, closely reasoned, and exhaustively reported investigation, Shell exposes the astronomically high cost of cheap.

Review: An informative and slightly depressing overview of the cost of cheap pricing, discounts, and getting the best deal.

I had known about Wal-Mart, its low prices, and how the hired help were treated. I did not realize how much low prices hurts the worker and wages nor how much our views towards low prices has changed over the years. This book provides a good, albeit rather brief, historical overview of the changing views of Americans towards low prices, discounts, and value. I personally would not mind reading a book that provided a more in depth history. It is fascinating to see how events in history, including war and invention, have brought about the current craze for low prices.

[author] is rather even handed with her treatment of corporations and while it is obvious that she is not their biggest fan, she does not decry them as pure evil. I learned quite a bit about discounts and low prices and I must admit that I will be weary of bargains and deals in the future. What was most fascinating was perceived value and how too low of a cost could hinder someone from buying something even if the item was perfectly fine. I would have preferred a few more real world examples. 


Recommendation: I would recommend this book to those interested in sociology, corporations, or Wal-Mart.

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