Dialogue: Ellen Ruppel Shell on Our Obsession With Cheap

This week, I'll be having an email dialogue with Ellen Ruppel Shell, whose new book, "Cheap", argues that cheapness is often no bargain.

Dear Megan,

It seems we have several things in common--I, too, spent a college summer working in the Catskills--as a waitress in an Italian themed hotel where I served three meals a day to a very demanding clientele and shared a room (though admittedly not a bed) with eight other waitresses. The gig ended abruptly in scandal; one of my roommates was caught in flagrante delicto with the cook during working hours. In the spirit of fairness, the entire waitressing staff was fired without pay and sent home--I think the bus boys took over the serving duties until replacements were mustered.

These memories are light years away from the subject at hand--which seems to be Bagis clothes hangers and Kura loft beds and banana leaf Gullholmen chairs made by happy workers in China and Vietnam. IKEA does not play a large role in CHEAP but I was lucky enough to spend a few days there--one at corporate headquarters in the lovely and historic costal city of Helsingborg, Sweden, and a couple at the charming and remote town of Almhult, where the company was founded and where today stand its design headquarters, quality control center and--most impressively--the airplane hangar-like studio where the iconic IKEA catalogue is shot. (More copies distributed around the globe each year than the Bible!) Many of us think of IKEA as the world's largest furniture maker, but in fact, the company makes very little of anything. It's the world's largest furniture retailer, its much vaunted Swedish "style" hammered out by tens of thousands of workers mostly in the employ of other companies. China is the company's largest supplier, but IKEA has suppliers in fifty-two countries, including the United States, where to great fanfare it installed a factory in Danville, Virginia last year that builds coffee tables made quite literally of particle board and cardboard.

I chose to visit IKEA because it seems like the anti-Wal-Mart, a classy, progressive company where value and good values coexist. It flaunts what business scholars call "brand personality traits" to convey an image of youth, friendliness, and hipness which, along with its famous design, combine to make low price furnishings acceptable to a crowd that would never consider buying a night gown--let alone a night table-- at Wal-Mart. Target, H+M and a number of other low price purveyors work almost as hard to undermine the very sensible assumption that low price is a signal of low quality. But no company does it better than IKEA.

IKEA challenges its designers to create to a specific price point--say 50 cents for a mug, or $100 for a table and two chairs.  And every year, the price is to go lower. This "making the impossible possible" (a refrain I heard again and again in Almhult)--requires that IKEA cut corners, just like any other discounter. There's no miracle here--founding chairman Ingvar Kamprad--today one of the world's richest men living in tax exile in Switzerland--had a dream of applying what he described as "shrewd logistics to offer home furnishings at such low prices that the masses can afford to buy them." What this means of course is that the masses who make those furnishings are treated pretty much the way other makers of low price goods are treated. It also means that environmental considerations take a far back seat to price. So we can trace to IKEA the by now familiar reports of environmental degradation and labor abuses, things we've not only come to take for granted, but to rationalize. After all, workers in China and other low wage countries are better off laboring in factories under less than savory conditions than staying home and starving on the family farm, right? At least, that's what we are told, and told, and told again, even by well meaning thinkers like New York Times columnist Nicholas Kristof, who earlier this year penned a column entitled "Where Sweatshops are a Dream." The thinking goes like this: poorly paid, overworked and even abused workers in the developing world are on the first step of a path similar to the one that led Americans from the abuses of the Industrial Revolution to the glorious opportunities we enjoy today. But such arguments, while compelling, tend to oversimplify history. Workers rights in the US were forged in a crucible that was highly visible to consumers--many of whom were either workers themselves, or knew someone who was. It is this identification that led to public outrage and eventually to reforms. But the thousands of labor linked incidents killing and injuring workers in China, Cambodia, Vietnam and other low wage countries happen out of sight--and out of mind--of most American and European consumers. All we see is the price, and few of us stop to think about how it got so very, very low.

Presented by

Megan McArdle is a columnist at Bloomberg View and a former senior editor at The Atlantic. Her new book is The Up Side of Down.

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