Think True Cost

The pandemic has been a disruptive event in many ways. One of them is that it changed the way we shop; although in this case I thing it mainly accelerated the velocity of a change that has been taking place for some time. I’d like to briefly explore the cost of that today.
Somewhat, well more than somewhat, of necessity we changed the way we shop starting about last March. We ordered much more online and for home delivery. Today I want to concentrate on the retailing aspect of that however it also changed restaurants greatly. (Perhaps another article for another day.)

Americans bought more and more goods online. Some of it from the same brick and mortar retailers via their online operations but increasingly from Amazon. I know Amazon has competition but it is certainly the dominant entity. (Can you even think of who number 2 is?) This has been in the making for several years but the pandemic accelerated the growth and I don’t think its end will suddenly putting  the growth into a full reverse.

Big retailers love the trend rather they be Amazon, Walmart or one of the other giants in online/storefront retail. Why? That’s easy; it’s cheaper for them. Economies of scale kick in after a bit and in a “new frontier” it is easier for an employer to exploit their labor force. You start out non-union and often stay that way for decades if not forever. Government oversight is close to non-existent especially if you are one of the big boys with deep political donation pockets.

Consumers get low prices and snappy service without having to get out of their bunny slippers. That’s the apparent upside. Sadly, the picture is not so rosy if we analyze the situation a bit. First off, the consumer is also the labor force in most cases. Chances are good that the family making the computer clicks to buy also derives its income primarily from a paycheck. In too many cases that paycheck is not as big as it was years ago. Lost factory jobs that paid around $30 per hour plus benefits or more are now replaced with jobs under $15 per hour and sans benefits.

The giants have put a lot of mom and pop local businesses out of business through one or more of their business practices. That translates to lost jobs, lost local tax revenue and empty storefronts. Working for a mom and pop where the boss knows you (and likely your family) is vastly preferable to being an employee number in a computer at corporate HQ!

To lure the giants to build facilities on their turf state and local governments forgive all sorts of tax and fee revenues often for 15 years and sometimes longer. That’s less money for schools, fire, police, roads etc. that the giants make use of but don’t pay for. John and Jane Public, whose pay just went down, have to pick up the tab.
The online operations in particular often sell (I am willing to say unwittingly) knockoffs instead of the genuine good. In this case the consumer is basically defrauded and the real manufacturer is the victim of a theft. If, as is most often the case, the supplier of the knockoff is foreign the crimes go unpunished.

The reality is that the employees of the giants in this retail metamorphosis often have to rely on social safety net programs because their paycheck simply doesn’t give them a living wage. We collectively pay for those programs. One of the big arguments against things like the fight for $15 is that it will drive up the retail cost of goods for all. The majority of us are already paying a much higher cost than the one at the register; the add on is just hidden.

The winners in this game are the few at the very top who own the giants. They get huge tax breaks and cheap labor which they are free to abuse pretty much without any government oversight. This is a major cause of the dangerous inequity America is experiencing. Mom and pops pay every conceivable tax and fee and are the targets of inspectors who have 100% authority over them with effectively close to 0% oversight.

The new barons are reverse Robin Hoods effectively stealing from the poor to further enrich themselves. As to their business acumen I don’t think they have the talent of a Henry Ford who paid his factory workers more than his competitors so that they could afford to buy Ford automobiles. Mr. Ford was hardly a good guy, but he was smart enough to know he needed consumers as well as workers.

I’m not going to ask my readers to stop patronizing the online monsters; that is unrealistic. We – and that certainly includes me – are inherently lazy creatures and it’s just too convenient. What I’m asking you to do is think about what things truly cost you – because chances are you are the one paying the tab – and that you have a moral obligation to pay a fair price. If labor receives fair compensation and humane working conditions we all win in the long run.

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One thought on “Think True Cost”

  1. The pinnacle of the American experience was the post World War II period until the late ’70s. During that period some 30 percent of the American workforce was unionized, and the top marginal income tax rate was as high as 91%. As I have been screaming for decades, wealth does NOT “trickle-down”…wealth “bubbles-up”! I’m reminded of a song from the ’60s: “Desert Pete”, popularized by the Kingston Trio. Look it up on You-tube.

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