Low prices are taking their toll

Print Friendly, PDF & Email

Eye from Albany
November 2004

Low prices are taking their toll
by Paul M. Bray

Low prices are killing us. You won’t hear this from your leaders in Albany or Washington, DC, but the price of gasoline, Wal-Mart prices, the China price and food prices are undermining our security, health and environment.

There is nothing wrong with being price conscious or frugal but this virtue has been systematically used in our “consumer” society by political and business forces in increasingly destructive ways. It has created a condition that is spiraling out of control.

Seduction by low prices for auto use has been a long-term affair. Even with the recent price spike in gasoline prices, driving remains generously subsidized to keep prices low and consumption up. State and federal gas and highway levies cover only one-third of highway costs. True costs including a distorted foreign policy, damage to the environment, traffic congestion and destruction of the landscape are generally ignored and more and more miles per capita are driven each year increasingly in gas wasteful S.U.V.s. We don’t pay as we go leaving no financial resources for energy efficient transit.

NY Times columnist Thomas L. Friedman recently wrote about costs of our foreign oil dependency when it comes to the war on terrorism. He declared: “If we had imposed a new gasoline tax after 9/11, demand would have been dampened and gas today would probably be $2 a gallon. But instead of the extra dollar going to Saudi Arabia-where it ends up with mullahs who build madrases that preach intolerance-that dollar would have gone to our Treasury to pay down our own deficit and financed our own schools. In fact, the Bush energy policy should be called No Mullah Left Behind”. Even at $2 a gallon gas is still a bargain in the USA compared to other western nations.

Addiction to low cost driving has been nurtured for almost a century. Seduction by low prices, real costs be damned, is now happening in other essential sectors of our lives as well.

In only a few decades the giant discount retailer Wal-Mart has rolled across the land with a neutron bomb effect on Main Streets of older communities. First generation malls where buildings that once housed stores like Caldors and Ames now stand empty. Driving the Wal-Mart predatory phenomena now moving into the grocery market is the lure of low prices. But what a consumer saves by the Wal-Mart price for dungerees or laundry detergent, comes at social costs like its low rate of pay and benefits to its employees.

Researchers at the University of California at Berkeley’s Labor Center looked into the number of Wal-Mart employees receiving public assistance because they weren’t paid adequately. Their conclusion was, “In effect, Wal-Mart is shifting part of its labor costs onto the public.” The public cost was estimated to be $86 million in Medicaid subsidies, food stamps and housing vouchers.

In his column, “Wal-Mart nation: the race to the bottom”, journalism professor Floyd J. McKay considered some of the other Wal-Mart effects. “Wal-Mart buys offshore, without apology and for the cheapest possible prices, from companies paying the lowest-possible wages. As jobs in America are lost to foreign sweatshops to feed the Wal-Mart engine, American workers are forced to accept jobs at lower pay, with bad working conditions. They are funneled to Wal-Mart’s promise of cheap goods, in effect patronizing the very companies that caused their economic misery.”

Yet, our addiction to low prices and consumer stuff may have more negative consequences than the Wal-Mart effect. A NY Times Magazine article, “The Chinese Century”, described the effects of the unmatchable economies of the Chinese labor system resulting in the “China price” meaning the “price American suppliers to other American businesses have to match to keep their customers. It is the price which Chinese manufacturers can deliver the same goods and services.”

The China price saves world manufacturers and American consumers enormous amounts of money. Gary Hufbauer, a senior fellow at the Institute for International Economics, is reported in the article calculating the savings at $500 for the average American household. “And people”, he state, “who spend more, get more back. Have a drawer full of $3 T-shirts, a DVD player in every room, a Christmas tree annually encircled with piles of toys? You probably have tons more stuff-and additional savings-thanks to the China price.”

Our industrial food system is also driven by low price addiction. Food quality and security are at stake as we’ve continued to loss local farms and become dependent on international sources for often heavily pesticide contaminated food products. Again, China is upping the ante when it comes to low prices. It is producing seven times more apples than are produced in the USA thereby being able to out-compete American orchards. Chinese grown tomatoes are trumping Italian pride in their local produce and finding their way to the Italian food market.

In the face of seductive low prices one can only wonder if we can make any difference when it comes to energy and food security and maintaining a healthy and diverse economy that leaves no worker behind. Brian Booth, the Market Manager for the Troy Waterfront Farmers’ Market, believes in health food and local agriculture with sustainable practices and technologies. To that end he declared we have to economically support “what we believe in by how and where we spend our money”. Yet we have a consumer society intent on acquiring endless stuff at bargain basement prices without paying attention to community interests.

Our only hope may rest in our ability, if we have it, to return to being more a nation of citizens using our economic levers with our community interests in the forefront. Some value setting leadership from public officials would be welcome, but don’t hold your breathe.

Update: Last month’s Eye had a column by Hon. Dominick Casolaro about the upset victory of African-born Democrat David Soares against Albany County District Attorney Paul Clyne. While most of Albany County’s Democratic establishment (with the notable exception of Albany’s Mayor Gerald Jennings) rushed to embrace Soares, Clyne stayed in the race on the Independent Line and at the very end threw his support to Republican candidate Roger Crusick. Soares was elected. Is this more than just a local joust? Maybe. Three aspects of this race stand out from a statewide perspective: the major roles Citizen Action and the Working Families Party played in supporting Soares, Soares’ strong support for reforming the Rockefeller Drug Laws making this a mini referendum on reform and the rising impact of Democrats in the suburbs.

Paul M. Bray is President of P.M.Bray LLC, a planning and environmental law firm in Albany, New York. His e-mail is pmbray@aol.com.