Shopping ’Til We Drop

The global supply chain digs shale from from the hostile terrain of northern Alberta, refines it, ships it halfway around the world and back again, and in the process turns it into thousands of distinct consumer items, from dollar store plastic sharks to laptop computers.

Some see this continual transformation of the world’s raw materials into things that consumers can use as a Hayekian cornucopia. It is the culmination of the free market system: the self-organized coordination of the work of millions of individuals, dancers in the most complex ballet every choreographed. It has brought goods previously reserved for the rich into the lives of people throughout North America and Europe; it is the greatest anti-poverty program in the history of the world, lifting hundreds of millions of people in emerging economies, especially in China, out of the grinding desperation of rural life.

Others see something more sinister at work. Faced with seemingly impossible bargains—a school backpack for $2.50, a gallon jar of pickles for $2.97—they sense that something is wrong; that the price on the tag is artificial, deceptive; that we are not paying, in some sense, the true price of what we buy. The modern supply chain is a gargantuan digestive tract that inhales scarce resources and excretes massive amounts of plastic crap into garbage dumps around the planet. Far from the self-organized independent actions of individuals, it is a system of central control in which companies like Walmart have drawn on the power of technology to manage their empires down to the last detail, in which the thermostats in every single Walmart store are controlled directly from Bentonville.

Both pictures have some truth. Nothing can be this massive without having multiple faces, but in The Price of a Bargain: The Quest for Cheap and the Death of Globalization, Gordon Laird definitely leans toward the sinister camp. While he does note that “the supply chain has brought us many gifts,” he is more concerned that it has done so with “a global legacy of unresolved problems”: environmental horrors in the backwaters of rural Asia, unregulated emissions of shipping fleets in the world’s oceans, conflict and oppression of the labour force in China, global warming.

But, argues Laird, the era of the global supply chain is almost over. We have gone on our spending binge, and now we must face the hangover. As the environmental consequences of lax standards come home to roost, as sources of cheap energy, cheap credit and even cheap labour threaten to dry up, we are nearing the death of globalization. “The golden age of affordable consumerism was short. We will very likely never shop this hard again.” Laird sees a dialectic in which globalization sows the seeds of its own destruction: “Our bargain-addicted consumer economy is dangerously leveraged on a series of innovations and inventions not built to last.

Specifically, the fundamentals of growth—cheap credit, offshore labour, affordable energy and transport—will be depleted or become unavailable during the twenty-first century.” He is not alone: ex-CIBC economist Jeff Rubin and John Ralston Saul both broadly share his opinion about the future of global trade, which is that there will be less of it and that it will leave many difficult problems in its wake.

Gordon Laird travelled across the country for his earlier Power: Journeys across an Energy Nation. In The Prince of a Bargain he goes further afield as our tour guide for a trip along the global supply chain. He starts by browsing with us through piles of cheap consumer goods at Las Vegas trade shows for discount stores, then takes us to Shenzhen in China where many of the goods are made, shows us around the port of Los Angeles where a never-ending stream of standardized containers flows off the ships and onto trucks, and flies us back to the very beginning of the chain, to the muskeg of northern Alberta where the largest industrial project on the planet is run with Walmart–like precision to extract oil from tar sands. He also ventures to the Mexico-U.S. border to track the migration of workers driven by the shifting labour patterns of globalization. He supplements this field work with wide reading (his list of sources is 25 pages long and contains about 400 items) and a good selection of interviews. The Price of a Bargain is a valuable contribution to the continuing debate on global trade, its impact and its future.

But while Laird’s willingness to travel and read is obvious, the book would be better if he had sat longer, alone and quiet, to distil the complexity he presents into a coherent picture. As it is, his portrayal is confusing and sometimes contradictory. The book is strong on data, weak on synthesis.

An example. Early on he claims that Walmart is “the greatest ever post-industrial company, one that had aggregated incredible power and savings without having to bother with owning factories, energy, or natural resources”; yet later he describes Wal-mart as “a bastion of vertical integration in a world of dissolution. ‘For Wal-Mart, it is still cheaper to build than to buy, and to employ workers rather than subcontract them.’” It is a clear contradiction, which Laird ignores.

The chapter titled “China Crisis” illustrates the strengths and the weaknesses of the book. Laird’s field work is admirable; he not only visits Shenzhen, the hub of China’s export zone and the destination of many journalists, but also ventures into the more remote and rural Hunan province where industrialization is more recent. Laird speaks Mandarin and was a student in China at the time of the Tiananmen Square protests, so he is able to interview people such as Han Dongfang, an exiled labour activist and radio broadcaster. His reading means that he can throw out figures aplenty: Shenzhen has turned from a village into an 11 million-strong city in just 30 years; a factory in Hunan province can be erected in as few as 45 days; China now has three of the five largest container ports in the world; Walmart sourced only $2 billion worth of products from China in 1998, but $30 billion in 2008; nearly 90 percent of all USB flash drives are manufactured in China, along with nearly 80 percent of the world’s toys; the number of mass protests in China soared from 10,000 in 1993 to 60,000 in 2003; and there is currently at least one strike involving more than 1,000 workers every day in the Pearl River Delta export area alone. So there is lots to think about here, both from Laird’s experiences and from the statistics he has amassed.

But on the analytical side, he comes up short. Laird portrays a China with rapidly increasing average wealth, and also rapidly increasing inequality. This combination has brought with it civil unrest, violence, crime, corruption, child labour and even slavery, so that China risks an “abrupt, disruptive, and likely violent” failure. It is not obvious how these developments fit together, and the book offers no mechanism for connecting them. Yet they have been companions in the past as well, and economists such as Amartya Sen have tackled the question of why. Last year, in the New York Times, Sen explained how the inequality that accompanies industrialization can make the rural poor worse off not just relatively, but absolutely as well. In 1943, as urban Bengalis spent their new income, the price of staple foods shot up—just as Chinese food costs jumped by more than 23 percent in 2008—leaving the rural poor to face higher food prices with no more money than before. The result was a famine in which more than two million people died. Sen reflects that, “Tragedies like this happen repeatedly in the world,” and it is clear that this dynamic is at work in China. As I read that short piece, much of what I’d learned about industrial revolutions past and present came into focus. Unfortunately, The Price of a Bargain is short on such pithy insights.

It is not clear, in fact, whether the end of cheap labour is near at all. On one hand, Laird argues that “China has sought out ways to increase wages and improve labour laws in order to keep value at home instead of subsidizing [western] consumers … the cheap, available labour that long filled our big-box stores with bargains is gradually becoming a threatened resource, one for which there is yet no ready alternative.” All well and good. But on the other hand, Laird suggests that the benefits of globalization may not be as large as had been expected, that more than half of China’s population is still rural and that “the number of chronically poor may have been vastly underestimated … The number of people in China living below the World Bank’s dollar-a-day poverty line is 300 million”—which certainly sounds like a lot of cheap labour. Such apparent contradictions leave the reader floundering.

The unrelenting downward price pressure of Walmart and others squeezes costs out of the supply chain, from employee health insurance and wages to the cost of dealing with waste and environmental wreckage to the cost of maintaining order and compliant behaviour among its outsourced Chinese workforce. But someone has to pay these costs, sooner or later, and this tension creates a conflict between our interests as consumers and as citizens. When we go to the store, we satisfy our consumer preference for low price, but we have few mechanisms to express our preferences as citizens, which may be for inherently shared public goods such as clean air and decent labour standards. Our citizen selves get trampled as our consumer selves rush to the sales.

If Laird is right that the death of globalization is near, then this conflict between our citizen selves and our consumer selves is coming to an end, and we will have to face the aftermath of globalization, rather than the excesses of globalization in its present form. However, Laird’s case that the immense global trade system is dying is not made convincingly in the book, leaving the reader wondering why the author is rushing into such an indeterminate future instead of dealing with the excesses of the present system.

I have no argument with the claim that globalization’s remorseless cost cutting is storing up trouble of many kinds. Laird quotes James Fallows’s version of a common economics dictum: “this … can’t go on indefinitely, and therefore won’t. But the way it ends—suddenly versus gradually, for predictable reasons versus during a panic—will make an enormous difference.” The prospect of sudden, discontinuous change is clearly at the back of Laird’s mind throughout the book: “We have to look at the world … as something that performs and responds more like a stressed ecosystem, something full of non-linear change.” He wields analogies of sudden change throughout, but students of chemistry may remember Le Chatelier’s principle: if a chemical system is changed (say, by increasing the temperature), the system responds so as to counteract the effect of the change (by absorbing heat). Changes are generally dampened, not amplified, and I am not convinced by Laird’s predictions of systemic failure. Nevertheless, the experiences of 2008 and 2009 certainly tell me to keep an open mind.

The anti-globalization movement sparked an earlier wave of books about our consumer culture, highlighted by Naomi Klein’s No Logo. Klein noted that there were two big retail developments in the 1990s: “the deeply unhip big-box bargain stores that provide the essentials of life and monopolize a disproportionate share of the market (Wal-Mart et al.) and the extra-premium ‘attitude’ brands that provide the essentials of lifestyle and monopolize ever-expanding stretches of cultural space (Nike et al.).” But she famously focused most of her book on the “brand bullies” and the contrast between the cost of their shoes and their sweatshop production methods.

A more recent wave of books focused on consumption has circled around the big-box bargain stores, and Walmart in particular. These stores may not have the cachet of Nike, but they have a scale that is second to none. Discount stores have moved to centre stage in the 21st century.

The Price of a Bargain reaches book stores just after Ellen Ruppel Shell’s Cheap: The High Cost of Discount Culture, which has attracted a lot of interest and comment south of the border. The books cover some of the same ground—Wal-mart, dollar stores and the Las Vegas discount fairs, the Chinese industrial revolution and more—but The Price of a Bargain is the better of the two because Laird has chosen the right subject. Laird investigates the supply chain, while Shell analyzes consumer demand. It is not a mystery why we prefer to pay less rather than more, and yet much of Shell’s book is occupied with presenting this preference as a kind of fad and the growth of discount stores as a product of warped consumer psychology. No, the emergence of discount stores is a function of supply-side changes—the technology of globalization and supply chain management—and not the result of cultural changes in our attitude to bargains or the neuro-scientific shaping of our consumer preferences. Furthermore, Laird looks at his subject in a properly global fashion, whereas Shell takes a remorselessly parochial viewpoint, portraying consumerism, discount culture and even the industrial revolution as distinctively American.

Despite his book’s limitations, the vignettes Laird has collected—particularly of the Las Vegas discount store trade shows and the Alberta tar sands—will stay with me. He provides an illuminating gallery of portraits of this globalized world in which, for the moment at least, we live.