Sudhirendar Sharma
With online retailers in fierce competition to lure internet-savvy consumers, markets are abuzz with a wide range of cheap products on offer. The convenience of online shopping has helped consumers throw caution during economic slowdown to the winds.
Though cheap products have always been enticing, they carry special meaning when the going gets tough for the middle-class shoppers. Deep discounts on popular brands release pent-up demand; the sudden surge at the e-commerce gateways is therefore no surprise. Less expensive means people buy more than what they really need or want.But ‘cheapness’ has been an enigma. While one avoids buying anything considered ‘cheap’, striving for cheaper and cheaper stuff remains alluring nonetheless. So much so that after a real bargain the stuff is showcased to friends and family for guessing its real ‘price’. Lowest possible price paid for a quality product is exhibited as an individual’s shopping prowess.
‘Cheapness is an illusion’, says Michael Carolan, a Professor of Sociology at the Colorado State University, USA. Whether you buy it from sales or otherwise, the real cost of low price is alarmingly high, argues Carolan, because low price neither reflects the real cost of production nor accounts for all (environmental) factors contributing to the production process.
But what has a shopper got to do with it? A bottle of aerated beverage might seem cheap but it consumes anywhere between 168 to 309 liters of water to produce a bottle of beverage in the first place. A consumer pays for the ubiquitous bottled beverage without realizing that his water bill is soaring on account of dwindling supplies from aquifers sucked dry by the bottling plant.
The shopper may not pay at the time of purchase but eventually one has to, as initially externalized cost and risks of production finally get socialized. Raj Patel, author of Stuffed and Starved, has enlisted things that aren’t as cheap as one may think. It might shock many that searching through Google is one among them.
While Google denies it, it is now known that two Google searches produce the equivalent greenhouse gases of making a cup of tea. Some years ago, The London Telegraph had reported that global information technology contributes 2 per cent of all greenhouse gases. One cannot imagine paying the ‘real’ price of online searches, whatever be its environmental costs.
Given the egregious economy wherein the sellers and buyers do not fully pay for their good fortune, it is left for the future generations to foot the inflated bills. The cumulative cost to future generations, a UN study estimated in 2008, could be as high as US$2.2 trillion on account of environmental damages caused by some 3,000 largest publicly traded corporations in the world.
Come to think of it, cheap in itself could be terribly expensive in the long run. But in a free market economy the incentive to externalize costs is so huge that both, the seller and the buyer, get into an unapologetic understanding to get away with it. It offers a comparative advantage to both, however, at tremendous cost to those who have to pay for it now or later.
Carolan questions the economics status quo in his authoritative book ‘Cheaponomics’ (Earthscan), arguing that a system that socializes costs for the benefit of few can do little to actually enhance well-being for the majority. Be it cheap food at the supermarket or a new car in the showroom, both invariably erode community and destabilize the climate.
The story doesn’t end here. The lure of cheaper products entices communities to part with their social spaces to accommodate glitzy supermarkets. Playing grounds, community parks and water-bodies disappear to make room for shopping malls and e-commerce warehouses. Cheaponomics offers a false sense of hope making large social and income inequalities tolerable.
By way of such comprises, including healthcare and housing subsidies to the people employed at such shopping marts, the California taxpayers have been subsidizing Walmart to the tune of $100 million. Imagine, if such subsidies were to be granted to our neighborhood stores!
Cheapomomics survives on rising levels of inequality in the society, labor producing cheap electronic goods in China or cheap apparels in Bangladesh are doing so at an enormous cost to their personal well-being, living and working under most abject conditions. With the world a big market, the real cost of cheap products will have to be borne by every consumer, now or later.
Cheaper products reduce choice but encourage over consumption, adding to urban chaos through mass wastage. The question that begs an answer is: can the consumer pay the true costs of goods and services? Real cost may make goods expensive in the short term but not over the long term as these would be designed to last longer, argues Carolan. Governments ought to incentivize accurate pricing and enable affordability as the key to price rationalization in the market. In the words of Amartya Sen, affordability is about enabling, about capabilities and holistic well-being rather than the shallow freedom of cheap goods!
(Dr Sudhirendar is Director, The Eco-logical Foundation, New Delhi.)
