Friday, December 11, 2009

Are good bargains bad for the economy?

As I mentioned recently over at The 36-Hour Day, I didn't take advantage of a single deal on Black Friday or Cyber Monday.

It's not because I didn't want a shiny new gadget or a gorgeous new outfit. It's not that my kids weren't clamoring for the latest noisy toy. It's because my budget has taken a serious hit this year, and even some incredible deals weren't enough to make me whip out the credit card unless I was oogling something we really need. And, frankly, we're very lucky; while there's tons of stuff we want, there's very little that we actually need.

An article in Time Magazine points out that, in the long run, the insane post-Thanksgiving bargains might actually be bad for our wallets -- and for the economy.

"Part of what got us here was overspending, and that that overspending was fostered by a shopping culture that uses cheap goods to hook people on feeling like they're winning at something," Barbara Kiviat says. The plethora of cheap goods increases our more-stuff-for-less-money expectations, which leads to the production of even more cheap goods, which leads to, well, problems.

"It's short-term gratification and long-term pain," says Boston University professor Ellen Ruppel Shell, author of Cheap: The High Cost of Discount Culture. The constant push for ever-lower prices makes it more difficult for small stores to stay in business and makes it easier for big-box chains to avoid paying their workers a livable wage. It also forces manufacturers to sacrifice quality for price, which means we end up paying more to replace a flimsy item two or three times than we would have if we had just bought a more durable, more expensive item to begin with. In other words, you get what you pay for; as Tim Morrison points out in another Time piece, "What kind of bottomless plate of scampi do you really think 15 bucks can buy?"

And then there's the issue of debt. This time last year, people in the United States collectively held nearly $1 trillion in credit-card debt -- that's a 1 followed by 12 zeros, people -- about the same as the value of all of the goods and services produced by South Korea each year, according to Time.

Notice on the news how people crow about how much they've saved on holiday shopping, but not how much they spent? This year, I'm focused on how little I can spend and on being grateful for what I have. Which may be the best bargain I've picked up all year, so far.

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