Gordon Laird’s new book, The Price of a Bargain: The Quest for Cheap and the Death of Globalization, looks at the global forces that have given rise to cheap goods. In the process, he identifies a series of instabilities that will very likely bring this phase of cheap consumer goods to a close, while also shifting the economic center of the world away from the United States toward China and the Middle East.
Triple Pundit talked to Baird, a media fellow emeritus for the Sheldon Chumir Foundation for Ethics in Leadership and an author whose other books include Power: Journeys Across an Energy Nation and Return of the Trojan Horse, about The Price of a Bargain.
Triple Pundit: What is The Price of a Bargain about?
Gordon Laird: At some level, it’s about interdependence. Since the 1970s, globalization has accelerated. It created new value for many people and conjoined national economies in the process, but also created new risk and crisis. Whether we like it or not, our world has been entwined in ways that are still mysterious to us, in ways that link our fortunes with those of Chinese factory workers. And a surprising amount of our prosperity is leveraged on having access to cheap energy, offshore labor, shipping, and consumer credit.
The very reality of the modern service economy—where as much as 70 percent of all economic activity is dependent on consumer spending—is a Las Vegas gamble: we’re betting that we can keep growing the economy, keep getting stuff cheaper, and, as some would suggest, America might even muster a full recovery back to the boom markets of the mid-2000s. But a series of generational challenges from climate change to energy shortages to hobbling consumer and government debt suggest that we may have already passed our peak as a society defined by shopping and consumption.
3P: What’s the book’s genesis?
GL: The book goes back to my time as a student in China. I was there during the democracy movement, and the Tiananmen massacre. The trajectory of China has been a part of my life. The book also emerged from years [covering] I’ve done on energy, homelessness, transportation, and climate change. I was interested in the trends that emerged out of the 1990s: not only the rise of Walmart as the world’s largest company, but the way that globalization itself became a tool of affordable consumerism. Global trade is now largely characterized by our pursuit of cheap stuff. Not just dollar store stuff, but luxury items like flat-screen TVs, as well as affordable resources, labor, and consumer credit.
3P: In the book, you talk a lot about Walmart’s role in bringing bargains to consumers.
GL: The rise of Walmart represents one part of the world that we’re still trying to figure out. Here’s a company that makes really nothing of its own, and is able to leverage resources and markets in a way that’s been innovative, highly disruptive, and pretty unsustainable all at the same time. Like General Motors and Ford were in their time, Walmart is one of the defining companies of our time. I don’t pick on Walmart because it’s an easy target, but because it changed our economic paradigm in ways that make us both more dependent and more dysfunctional, and, to Walmart’s credit, has created significant consumer value in the process.
3P: In the book, you seem to suggest that the paradigm is changing again.
GL: Can we really keep doing what we’ve been doing? I think the financial crash of 2008 was an answer to that. No, we can’t. Many consumers are overspent. The crisis of 2008 was a crisis of insolvency.
The truth is that we are becoming captives in our own economy. In order to keep the status quo, the amount of stimulus and bailout required is incredibly high. The United States is trapped within its own business model.
Many consumers are not succeeding within today’s economy —foreclosures, unemployment, homelessness, child poverty are different ways of measuring the fact that a great many households are not secure, not resilient in the face of change. The same is true of the planet.
3P: You’re suggesting that consumerism threatens the planet’s climate and other ecosystems.
GL: Despite the fact the Walmart model of human development is inevitably a planetary liability, whether we like it or not, market mechanisms are also what will save us. What is happening in Copenhagen, as with any serious discussion of climate change, is about reworking our economies from the inside out, using market-based tools. Whether it’s cap and trade or carbon taxes, what we’re talking about is trying to train markets and economic dynamics in a way that will service better outcomes for the planet, and at the same time level the playing field against the kind of subsidies that had a lot to do with what made the 20th century so great—like cheap transportation and resources.
It’s actually an incredible moment: not long after market dysfunction created the biggest economic crisis in more than a generation, we’re now looking to revamp the marketplace to help bring true pricing, innovation and resourcefulness to the issue of climate change. We need leadership, regulation, and public policy to bridge this paradox.
People can be credited for being skeptical, and many progressives in particular would prefer not to sully themselves with capitalism. But I don’t think we have the luxury of choosing our circumstances, or our tools. It will be one of the great challenges of our time: how do we make markets work for us, in a way that doesn’t exclude people, remains accountable, and achieves environmental security.
The good news is that an economy that prices carbon is also one that is more efficient, more local, and more adaptable to globalization’s uncertain future.
3P: Political leaders in North American have been reassuring us lately that a recovery is in process.
GL: In North America, what’s called a recovery, which is not quite a recovery, is actually a longer-term process of change, which is also part of our emerging debate about what our markets are actually good for, and how we should shape them.
Recovery isn’t about going back to normal 2007. Today’s recession that began in 2007 and intensified in 2008 is really part of a phase change, it’s really telling us about how many households are overspent. The consumer is a fundamental resource in today’s economy. It remains to be seen whether the consumer is a renewable resource. I’m not predicting imminent collapse in that regard, but I think it’s unwise for people to go back to shopping like they did in 2005. That’s just silly.
3P: In the book, you raise the question, “Can we survive the bargain?” What you really seem to be talking about is pricing products so that external costs, such as pollution, are accounted for.
GL: There are many subsidies within our economies that really don’t deserve to be there. We have broad systemic things, like the amount of public dollars put in to transportation infrastructure, such as the Port of Los Angeles. Much of Southern California is hooked in to the logistics and transportation economy, and it’s really not serving them very well right now. And we also have indirect subsidies, such as the destructive lack of regulation and accountability in many of our financial markets. Our irrationally high tolerance of risk has not only created expensive kinds of crisis in the 21st century, but have also consumed public dollars that should have been put towards investments into real issues, such as climate change, homelessness, and the revival of local economies.
One of the real challenges in the 21st century is trying to find the true price of things, or at the very least to eliminate the most obvious and gross subsidies.
We hear things like Buy Nothing Day and other campaigns that try to alert us to the consequences of our actions as consumers, but we can’t do it alone as consumers. It’s not just about buying less, as much as that’s become painfully important for many households. It’s about how governments themselves imagine what prosperity is actually about.