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Monday, December 20

The high cost of cheap

One thing I hate doing is making major revisions to an essay once I've published it, but as I noted in the update to yesterday's post on Mexico/NAFTA, the response to the first version of the essay from a blogger friend prodded me to pare the number of themes I'd stuffed into it.

Then I was left with the chore of shaping the parings into a new essay. Often it's at this stage that I procrastinate to the point where the planned essay gets lost in a pile of other unfinished essays. But this time synchronicity, in the form of an opinion piece that popped up on Google News titled The high price we pay for cheap food (see quotes below), inspired me to knuckle down. The writing, by top British chef and restaurateur Arthur Potts Dawson, is very much concerned with the theme of this essay.

I'll start with a clarification. The connection I saw between the degraded concept of value and my discussion of Mexico is that a number of American retirees are willing to abandon their country because it's cheaper to live in Mexico. The trend will accelerate when Americans retire in greater numbers and the drug-war violence in the country eventually subsides. I neglected to mention that many such Americans take up residency in Mexico as much for the climate as for financial reasons or because they love Mexico. However, I saw in the willingness of Americans to leave the USA because they could live more cheaply in another country as another warning sign that the American quest for the cheapest deal had been carried to such lengths that it was eroding the concept of value across the board in the USA.

The erosion is evident in the Wal-Mart Syndrome: the store's cheap merchandise encourages American consumers to purchase things they don't really need; replace items, such as electronics and appliances, that are still serviceable; and frequently replace poorly-made personal items such as clothing.

Thus, the cheapness of Wal-Mart merchandise is an expensive illusion. This was brought home to me years ago when I accompanied a French friend to the women's suit section of an American department store. Cursing a blue streak in French while a cowed sales clerk looked on, she exposed shoddy workmanship and materials by ripping open linings and seams, poking her finger into badly-made buttonholes and yanking at wool to show how poorly it held its shape.

"These suits will not last two seasons," she fumed in English to the clerk. "This is robbing the American working woman!"

I don't know how many Frenchwomen like her are left. The gorgeous wool suit she wore to the store had been handmade in France by a dressmaker who used the finest materials. But I do know the suit still looked new after 12 seasons of hard wear, and it was cut in a way that it still looked fashionable -- or should I say 'elegant,' which is the secret to always being in fashion. You are not going to find that kind of bargain by shopping in even the better American clothing stores, let alone the Wal-Mart types.

The rejoinder is that when the consumer has to frequently replace poorly-made clothing this is good for sales, which in turn is good for the garment and fashion industries. But the argument overlooks the greatest hidden cost in that kind of business model, which is the degradation of the concept of value. The cost is evident in the views of the American Jim Rogers, a commodities investor and the co-founder of the Quantum Fund, who told CNBC in 2008:

"If you were smart in 1807 you moved to London, if you were smart in 1907 you moved to New York City, and if you are smart in 2007 you move to Asia."

Following his own advice he had moved to Singapore:
Rogers said that people in China are extremely motivated and driven and he wants to be in that type of environment, so his daughters are motivated and driven. He also stated that this is how America and Europe used to be. He chose not to move to Chinese cities like Hong Kong or Shanghai due to the high levels of pollution causing potential health problems for his family; hence, he chose Singapore.
I'm not sure that Mr Rogers is teaching his daughters motivation and drive because both characteristics require endurance. He is very definitely teaching them to think of citizenship in a democracy as cheap -- the same democracy that carried China on its back to its economic 'miracle,' the same democracy that gave him the freedom to earn a fortune even though he did not come from an elite background.

Mr Rogers is demonstrating to his offspring that when one's citizenship in the USA is no longer perceived as financially rewarding, the smart American simply abandons his country rather than putting effort into preserving it. (Although I'll bet Mr Rogers has made sure that he and his daughters have hung onto their American passports.)

So I would not agree with Mr Rogers's definition of "smart," which confuses expediency with value. A society cannot flourish if it's that much confused.

I'll close with a few passages from Dawson's op-ed but I urge you to read the entire piece, watch the video at the CNN website of a speech he gave, and follow the links provided there.

Dawson is specifically concerned with the loss of a nation's food security when the lure of cheap groceries concentrates responsibility for food provision in a few supermarket chains, which has happened in England. In light of Britain's present weather crisis, which has virtually suspended rail, road, and air transport in the country and caused concerns that food (and fuel) shortages are looming in some parts, Dawson's warning is prescient.
The high price we pay for cheap food
By Arthur Potts Dawson
Special to CNN
December 19, 2010

CNN Editor's Note
TED is a nonprofit organization devoted to "Ideas worth spreading," which it distributes through talks posted on its website. Chef Arthur Potts Dawson, who gave the talk above [see video] at the TED Global conference in July, started eco-friendly London restaurants Acorn House and Water House, which have rooftop gardens, low-energy refrigerators and compost and other green systems. He recently launched The People's Supermarket, a member-run cooperative supporting British farms.


In Britain the big supermarkets dominate our food chain. British supermarkets are some of the best in the world at controlling, manipulating and delivering cheap food. Controlling food and its distribution takes a huge amount of money and energy, but because the British food producer could not keep up with the supermarkets' demands for ever-lower prices, the supermarkets have moved to buying globally.

They turned to the products provided by cheap labor in northern and southern Africa, South America and Asia. But in shifting from Britain to the world, our supermarkets managed to destabilize Britain's food infrastructure. The supermarkets have left behind farmers, milk producers and fishermen. They all have knowledge they should be passing down, but there is no new blood wanting to pick up the rake, the fishing net or the gate latch at 4 a.m.

There is no money in food production in Britain: The supermarkets have taken the potential for a decent living away. The cost to produce milk is higher than the supermarkets are willing to pay. The cost of meat is too high, and the cost of fish is too high.

But the supermarkets reply that they are only trying to "give the customers what they want," so they must go abroad. In this statement is the manipulation. We as customers are led to believe that the low costs we pay are borne by the supermarkets. Well, think again.

It is the producers in this country who are paid such low prices by the supermarkets for their produce that they are going out of business by the hundreds every year, and with it goes their knowledge. The supermarkets are not delivering cheap food, it is the farmers and producers of Britain, and now the world -- and at a cost to the environment too. Increased yield means increased use of fertilizers, pesticides and antibiotics in animals.

About 30% of fresh food is thrown away in supermarkets every day, although they will deny it. British households are throwing an estimated 30% of their food away too. Where are we going with this over-producing, over-consuming super-cheap food system? We are going global with a huge reliance on oil.

But when the oil stops flowing, and our systems fail, no safety procedures are in place to help us. No localized food networks, and no agricultural schools developing our next wave of farmers -- this in a country where the average age for a farmer is 64.

It feels to me as if we are becoming so overly reliant on our supermarket system, that when it breaks down, all we can turn to is military intervention.

Surely we should be striving to teach and educate people how to feed themselves. How to grow food and distribute it locally. How to barter for food items that can bring the essential vitamins and minerals for healthy life.

Dawson's writing reminded me that the Locavore movement is growing by leaps and bounds in the USA. See this November 29, 2010 report, Locavores Moving the Markets by Freakonomics columnist Stephen J. Dubner at The New York Times.

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