Buy Nothing Day: The High Cost of a Bargain

gordon_laird_price_of_a_bargainThis excerpt from The Price of a Bargain by Canadian journalist Gordon Laird is presented in honor of Buy Nothing Day. Happy anti shopping!

For better and for worse, ours is the age of the bargaineers – the engineers of bargains – whose factories extend from rice paddies to suburban basements everywhere. Each year we are drawn to their doors by the millions. And if it’s not Wal-Mart that reels us in, then it’s its big-box brethren – Costco, Home Depot, Best Buy, Ikea, Tesco – or smaller fish like the local dollar store. There are never single, isolated bargains. Most of us stalk value on a serial basis, sometimes in full contravention of common sense. Row upon row, aisle upon aisle, this realm of affordability, selection, and discount is a dominant force in today’s world.

From family-owned discount stores to the world’s largest company, it’s all there: your next iPod, laptop, snack food, and the stuffed animal you take to a sick relative in hospital. This is you, even before you know it. And all of it is priced to sell. Nearly everything from clothing to electronics has miraculously decreased in price since the early 1990s. And if you’re not getting it cheaper, then you’ve probably gained on quantity or quality, the outcome of a global economy that’s been on rollback for the past two decades.

When we buy at our local dollar store or big-box mall, we embrace revolution: the most advanced logistics, marketing, and manufacturing net work ever invented. At one time our most expensive commodities – oil, diamonds, metals – were the core business of the planet’s largest and most powerful corporations. Now snack food, paper goods, and pet supplies are the world’s best-selling products and have been the unlikely building blocks of globalization since the 1990s. By 2008 Wal-Mart’s $405 billion in annual revenue surpassed the gross domestic product of Saudi Arabia, underlining the degree to which affordable consumerism has come to dominate global trade.

It’s all part of a global shopping marathon that helped turn the world’s developed nations into consumer economies. By the time Wal-Mart became the world’s largest company in 2002, consumer spending comprised roughly 70 percent of all employment and economic activity within developed nations. Economists call this the service economy, and it is anchored largely by economic activity in finance, technology, and retail and wholesale trade, as well as all the other non-manufacturing business in media, entertainment, airlines, hotels, and restaurants. Personal savings were all but eliminated in the process, and by 2006 the average American household spent more than it earned – the lowest savings rate in seventy-three years, equalled only during the Great Depression, when nearly one in four adults were unemployed.

Unlike the Great Depression, the erosion of household fortunes and the massive accumulation of personal debt weren’t merely a symptom of economic crisis but an integral part of growth itself. In this economy, one dominated by retailers, financial services, and offshore manufacture, the overextension of shoppers fuelled broad-based prosperity – not just in America but around the world. Leveraged on inflated housing prices and generous credit card limits, this unprecedented bonanza of consumer liquidity hit like a gusher of oil. As shipping traffic and trade deficits boomed, American retail spending increased 43 percent per capita between 1992 and 2005. Other Western nations followed suit with service-dominated economies that long ago eclipsed traditional industry and agriculture – including Canada, which saw a 50 percent increase in retail sales between 1994 and 2007. Americans haven’t been the only ones spending their way to prosperity: during the early 2000s, countries such as Italy, Britain, Canada, and France actually outpaced the United States in growth of consumer debt.

The shift from production to consumption during the late twentieth century represents a transformation in consumerism, trade, and society not seen in several generations. Where Henry Ford changed history with the invention of the assembly line in 1913, the quest for cheap reworked everything from global commerce to local economies in order to squeeze out untapped resources and savings.

The global financial crisis of 2008 was the first large-scale acknowledgement that unsustainable consumer debt lies at the core of Western economies. And with empty malls and bankrupt retailers piling up at the end of the millennium’s first decade, it’s clear that, in an age of climate change and energy anxiety, consumers themselves are a diminishing resource.

Excerpted from The Price of a Bargain by Gordon Laird. Copyright © 2009 by the author and reprinted by permission of Palgrave Macmillan, a division of Macmillan Publishers Limited. All rights reserved.

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3 responses

  1. I fail to see why the behavior being outlined here constitutes “spending the way to prosperity”.

    Is being net in debt a prosperous condition? Is depleting natural resources and energy in an unsustainable way good either? Better values, terms and metrics need to be applied to define sustainability and progress toward livable conditions for human society, economy and environment.

    By such metrics I would think humanity is collectively backsliding.

    It would be nice to see such work explored more directly in this article, or in the book it is derived from.

  2. I like the idea outlined earlier this week – Buy Something Responsible Day. “buy nothing day” is a gimmick. I know it means well, but the way our economy is set up it makes a lot more sense to buy something meaningful and stimulating of green business than to try and boycott the system – that aint gonna work!

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