Earlier this month we asked our readers, are you a consumer or a citizen? It was sparked by comments from Robert B. Reich, who’s written a book called “Supercapitalism” that argues that we as consumers are in effect our own worst enemies—our collective desire to save a buck or earn more on our investments are contributing to the increasing “decline of democracy.” AlterNet has posted an excerpt from his book that expands on this idea of how we undermine our own best interests with, well, our other best interests.
Wal-Mart could afford to give its employees better pay and benefits, but would it remain competitive if it did? In 2005 its profit margin on sales was around 3.5 percent. This came to about $6,000 per employee. So at least in theory, Wal-Mart has some maneuverability. If it boosted wages and benefits of all full-time employees by $3.50 an hour, the extra cost would still total less than 3 percent of Wal-Mart’s sales in the United States. It could absorb that cost by raising its prices a bit or settling for somewhat lower profits. But few of us as Wal-Mart consumers would be happy to pay the higher prices. We might go elsewhere in search of better bargains. Certainly, few of us as Wal-Mart investors would be pleased with lower profits. We might move our money to where it could earn a higher return.
Reich argues that (with the exception of health care and housing) deregulated markets almost always benefit the consumer—when adjusted for inflation, prices are driven down over time by competition. Investors have benefited too. But things like job security, wages and benefits, education, the environment, and the preservation of “Main Street” have suffered as a natural consequence:
As power has shifted to us as consumers and investors, these issues have been eclipsed. We’ve entered into a Faustian bargain. Today’s economy can give us great deals largely because it punishes us in other ways. We can blame big corporations, but we’ve mostly made this bargain with ourselves.
“The Conflicted Consumer” [AlterNet]