Ellen Ruppel Shell, author of the new book "Cheap: The High Cost of Discount Culture," answers questions from NewsHour viewers about what effect our love of bargains has on wages, the environment and international trade.
PAUL SOLMAN: So, hi everybody. I'm Paul Solman the economics
correspondent for the NewsHour with Jim Lehrer and I'm here today with Ellen Ruppel
You are the author of the new book "Cheap: The High Cost Discount
Culture," reviewed several times in the New York Times already and profiled
Monday night by us on the NewsHour, and Ellen is here to answer viewer
questions. So first of all, welcome!
ELLEN RUPPEL SHELL: Thank you for having me again,
Ellen Ruppel Shell Author of 'Cheap'
Portion size ... has ballooned in the last 20-30 years. In fact, the size of plates is bigger than it was 30 years ago. A connection with a push towards low price and the idea of quantity being value and obesity is absolutely crystal clear.
Cheap food and obesity
PAUL SOLMAN: Yeah, we had a lot of fun at Target. Let's
continue to have more fun! So, first question. Bob Friedman from Los Angeles,
Calif., writes: "Can you explain how the preference for cheap fits into the
runaway obesity found in our culture?" Ellen Shell?
ELLEN RUPPEL SHELL: You know I think a lot of us don't
realize that our preference for low cost food, or I should say, how we've been
marketed towards low cost food because in fact oftentimes the food that we eat
and we buy is not really all that low price to us the consumer, but we don't realize
that it can be quite low price for the manufacturer.
So starch and as we all
know now, high fructose corn syrup sweetener and many fats are very, very cheap
and so portions are blown up with the addition of those three things. So
portion size as I think we're all aware of has ballooned in the last 20-30
years. In fact, the size of plates is bigger than it was 30 years ago. So
portions have gotten quite big when we eat out at restaurants and the more we
eat out in restaurants, fast food or otherwise, the more likely we are to be
obese. So in fact there is a connection with a push towards low price and the
idea of quantity being value and obesity is absolutely crystal clear.
PAUL SOLMAN: Nice. Mary Ellen Hendrick from Pueblo,
Colo., asks and I quote: "It would be much more of a pleasure for me to
purchase food in a place like a French food," and I think she means market here, "fresher food, more vendors, less at a time, I guess less food at a time,
probably more expensive though. What would happen to workers and the food economy
if we shifted to buying this way versus a grocery store," and I guess I would
extrapolate here not just a grocery store but a Wal-Mart which sells something
like 20 percent of all groceries in the United States I think I read, a superstore
much larger than the French food market or fresh food stores, perhaps what this
ELLEN RUPPEL SHELL: Well what Mary Ellen is talking
about is of course a very important thing. The French (as do most developed
countries) spend a lot, a significantly higher proportion of their budget on
food than the American consumers. Part of the reason that they're able to do
that of course is because they have a good social system like education,
health care and things like that so they're not paying the very high rates for
health insurance or to send their children to daycare and university. They get,
those things are usually subsidized in places like France.
But to get back to
her question, the French also subsidize fruit and vegetable growing and that's
something we do much less of in the United States. So even though it is more
expensive for people to get hold of food of all kinds it's relatively less
expensive for them to buy the foods that are healthier than it is for us. So
whereas we subsidize commodities like soya beans, corn and the meat industry,
the French, to use an example, subsidizes the fruit and vegetable industry and
all farmers get that, but in the fruit and vegetable industry the small farmer in
So relatively speaking the prices for those things in France are
actually lower than they are for us. So it is actually within the workers grasp
in France to access that healthy diet where with us it is less, it is less easy
for the workers especially those who are working for Wal-Mart wages, the stores
that so many of us buy our groceries in.
PAUL SOLMAN: So to follow up on Mary Ellen Hendrick's
question here. Is France subsidizing vegetables and fruits because they're good
for French consumers or because French farmers, which was what I had thought,
just have, are a very powerful interest group and they happen to grow a lot of
vegetables in particular and also fruit?
ELLEN RUPPEL SHELL: Well, I tell you Paul, there's actually
a history of France, since Napoleon, subsidizing a healthy diet.
PAUL SOLMAN: Really?
ELLEN RUPPEL SHELL: Yeah. And I happen to know this
since I wrote "The Hungry Gene," which is a book on obesity. And they
have a sense, Napoleon was interested the reason being that in Napoleon's time
they tried to conscript an army and they found that people were malnourished.
So they made it a kind of national goal to produce better nourished citizens so
they could be better soldiers and so they have a history of subsidizing
nutrition in their country, a long history and at the same time there's
certainly like the farmer in France are a powerful lobbying group and anyone
who's been to France has been able to reap the benefits of that in the
wonderful produce and vegetables that are available there. So it's both of
PAUL SOLMAN: Ha! I certainly didn't know about the
former and I think in this country it's always been framed in the economics
discussions in this country that the French are being protectionist of an
interest group, not that they're being protective of the French consumer from a
nutrition point of view.
ELLEN RUPPEL SHELL: Well, unfortunately you know
when people get into this pro- and anti-trade, you know they become ahistorical
and ideological, and it's oftentimes a lot more complicated and it's a lot more
interesting than people think.
Ellen Ruppel Shell Author of "Cheap"
The other thing that I think people don't think too much about we think is a very low airline, air point tickets, low-priced flight, is that per passenger mile flying by airplane is the most polluting thing you can do.
PAUL SOLMAN: Very interesting. Well, that is
interesting. David from Phoenix, Ariz., asks the third question: "Talk about
cheap! In the airline business people buy the lowest price ticket online. To compete
in that type of market airlines are cutting some questionable corners. Do you
think it's time for more regulation of the airline business?" I'm not sure you
were thinking that you would be getting into answering questions like this when
you wrote this book, but here it is!
ELLEN RUPPEL SHELL: Well you know it's an important
question and of course the airlines were deregulated under the Reagan administration.
PAUL SOLMAN: Well no wait, they were first
deregulated under the Carter administration in '78.
ELLEN RUPPEL SHELL: True. True. But, but we all remember
what happened under Reagan. Really deregulated under Reagan and pardon me, you're
the expert on economics, Paul.
PAUL SOLMAN: I just want to keep it on the straight
and narrow here Ellen. We can't have an insider forum for economics and pin it
all on Reagan!
ELLEN RUPPEL SHELL: No, no, you're right, you're right.
It certainly has foreshadowing in the Carter Administration.
PAUL SOLMAN: Well Alfred Kahn became the famous
deregulatory czar of the airlines in 1978. We've interviewed him numerous times
on the NewsHour you can just Google my name and his and you'll get right to it.
ELLEN RUPPEL SHELL: Absolutely. No, I bow to your
greater wisdom on this one and I didn't write about aviation in this book but I
can tell you that there is no question that deregulation has led to all sorts
of interesting practices some pro I think, and some con. I recently got a call
from someone in the airline industry who was very disturbed about deregulation
leading to what he called this broken hub system.
PAUL SOLMAN: Yes.
ELLEN RUPPEL SHELL: Which you know sounds really
good in a lot of ways - it's more efficient - but as he pointed out to me, it
used to be the case that major airlines, major carriers used to have to go to
the small places, the out of the way places if they wanted the golden route to say
New York City or Los Angeles. They had to pay their dues by flying to the
smaller airports. His concern was now those smaller airports are being served
by airlines sometimes that pull the short straw and in this hub-and-spoke
system where a smaller airline or less experienced pilot might be flying between
those smaller venues, and the large airlines are no longer required to fly to
these. So he raised some concerns about safety. This was a guy who spent 30
years in the airline industry and had actually read my book "Cheap"
and thought that I should have discussed that.
Now I can't verify that but
certainly all of us have experienced the consequences of these very, very strong
price pressures on the airlines. I was reading recently I think this weekend in
the New York Times about people having 12 hours on the tarmac waiting to take
off and not being able to take off. The airline claimed it was because the
airport didn't want them to unload their passengers, the airport said, "No,
this is not true. There was a reason why the airline didn't want to." But there's
really in terms of service and in terms of the amenity, in terms of what I
think is most important to the business traveler side and safety is the
guarantee that you're going to get places or at least (not guarantee because
weather we can't control) but some assurance that you're going to get places at
a certain time is not necessarily the case in many carriers anymore.
kind of thing, the kind of thing that in the past and the airlines might have
been penalized for either by having to refund money or provide vouchers for overnight
stays, those kinds of disincentives have become much less common and so I think
we've all see what's happened in terms of whether it's baggage not going
through or flights not getting through on time. The other thing that I think
people don't think too much about we think is a very low airline, air point
tickets, low-priced flight, is that per passenger mile flying by airplane is
the most polluting thing you can do. OK? It's actually worse than driving a
car. Being on a train which Paul told me today is probably one of the best
things you can do in terms of pollution per mile. So as more and more of us
crowd those skies we're not only adding to delays and inconvenience and
potentially to safety problems, but we're contributing to the pollution problem
PAUL SOLMAN: But isn't the story with airlines at least
to some extent that you get what you pay for? I mean the extent to which it's
cheaper as a viewer once pointed out in a letter to us years ago, the extent to
which it's cheaper is often the extent to which you're having to do stuff
yourself. Or you having to for example book tickets online yourself, that's
literally cheaper because they'll charge for a phone reservation now as opposed
to being online. But all the waiting time for example when an answering machine
comes on, that's your time.
ELLEN RUPPEL SHELL: Absolutely and certainly we know
in researching this book the one thing that we discount tremendously is our
time. We've become you know sort of an unpaid workhorse.
PAUL SOLMAN: Right.
ELLEN RUPPEL SHELL: Absolutely. So whether you're booking
your own flight and trying to get the best deal or trying to shave off a few
dollars here or there and trying to beat that, you know the system online, or
whether you're waiting longer for your flight or having a flight that took longer
than it should. That's certainly a big part of it, but there is another thing
layered on that you know maybe we're willing to pay for our sodas or dinners in
the airplane, and we're willing to do without a pillow or a blanket, but there
are some other things that I think a lot of don't think about that we're losing
in this rush towards cheaper and cheaper airline tickets.
PAUL SOLMAN: Right. And I remember always thinking
about the safety record of a new airline. In fact wasn't it... It's what's now
AirTran which name now escapes me as to what it was called before, some bargain
name for an airline and it had this terrible accident which was associated with
its... how cheaply it handled the cargo that it was stowing. I can't remember
whether it was oxygen tanks I think that blew up...
ELLEN RUPPEL SHELL: It was an oxygen tank in the
PAUL SOLMAN: Right. And afterwards the investigation
suggested it was precisely because of the cheap way in which they did this that
they left themselves vulnerable to you know, to a terrible accident which
actually killed people.
ELLEN RUPPEL SHELL: Right. We've known for a very
long time that you know the skills and experience... Every time a skilled pair
of hands touches something it increases the cost. So the higher skilled the
worker the more experienced worker, it least theoretically the more, the higher
the wage this person can demand and once we start cleaning those folks out we
are taking risks.
PAUL SOLMAN: Right. Okay, let's go to question four.
There are only six of them altogether here. So. Maybe seven, I'm sorry. Linda
Tompkins [from] Saratoga, Calif., asks: Having grown up in the '50s and '60s
when consumption was more modest, Linda writes I'm overwhelmed by the amount of
goods in stores today. I often wonder where all this merchandise goes. Surely
it isn't all sold? Where does the out of date, out of fashion, out of season,
un-purchased merchandise ultimately go? I'm thinking about the movie "The Lady
and the Tramp" and how they eat the leftovers from the Italian restaurant but
it can't all go to a couple of dogs in a cartoon movie, right?
ELLEN RUPPEL SHELL: I love that image. Remember the
PAUL SOLMAN: Oh yeah, sure! The guy is whipping up
this huge bowl of spaghetti for the two of them!
ELLEN RUPPEL SHELL: Right. And them both sucking on
the same strand of spaghetti.
PAUL SOLMAN: Yes. Yes. Yes. They kiss for the first
time I think!
ELLEN RUPPEL SHELL: Exactly right and they sort of
nudge the meatballs at each other back and forth with their noses. Great movie!
I love that movie. Um. Well, yeah, you know that's a very, very good question.
We certainly have more, there's more selection than there ever has been before.
There's something like 10,000 new products made every year. I don't know if I've
got that exactly right but there a huge number of new products are out every
year. Sometimes with just slightly different features, sometimes features that
don't really matter, to get us to buy new things. I mean if we own... Anybody
who has a teenager knows a year old cell phone is like an antique. You know we...
to the kids right? We are always looking for new things and that's certainly
part of the cheap story - the idea that you can buy things constantly for less
and less money, new things, shiny new baubles is part of the story. But she's
asking where does this stuff go?
Well anybody who's been to Africa, and I've
been there and you probably have Paul, you see for example where old
electronics, unsold electronics and certainly unsold clothing goes. It gets
wrapped, it gets sent down the chain so of course... Let's first take the example
of clothing which is something I do know a little bit about. It'll get sent to
typically to a full price store, it'll get discounted, then it will go to a
basement store, then perhaps after a certain amount of discounting it won't
sell. Eventually it'll get sent to the charity, you know, and at that point
they are put in great big bales and sent oftentimes either sold in the charity
stores or then put in giant bales and sent to Africa in the form of aid or some
nominal amount of money. So ultimately at least in the clothing supply chain it's
not burned or put in landfill, if the viewer is concerned about that.
You know other
things could get sent to at some point I've met for example people in what we
called the junk business or the garbage business or could even be called
recycling. They focus and will buy these things at a very low price and sell them
either independently or through eBay which is another source of unsold; you know
maybe unwanted or returned goods. If you buy a big-screen TV and return it to
the store, the box has been opened or maybe a little bit dented; this could be
the outcome for that. So I think you mentioned food earlier Paul. I actually
don't know what happens to food when it's past it's sell by date.
PAUL SOLMAN: A lot of it goes to charity. I mean I
know, I know a variety of restaurants and bakeries that I've run into over the
years, one I was actually going to do driving for to deliver to places that
needed it when the bread had passed, you know, its sell-by date and of course often
discounted bread also. You know day-old bagels for example in a bag; you know
that kind of thing at half price.
ELLEN RUPPEL SHELL: Absolutely. So I think depending
on the commodity we're talking about it probably has a different lineage. You know
it ends up in a different place.
Paul Solman NewsHour with Jim Lehrer
One of the things that I felt was most interesting when we went around the Target together a couple of weeks ago, was your suggestion that you take a time-out. Count to 10! We give ourselves a chance to calm down and think about what we're doing.
Learning to say no to impulses
PAUL SOLMAN: OK. Let's go to question five: Wes is
the name here, no last name and no address: "Because our incomes are declining,
how can we not buy from Wal-Mart or stores like it to keep up?" Even if it's
less well made, or not as tasty, or a mangrove disappears... This is... You were
talking on NewsHour Monday night about how shrimp farms in Thailand cause
mangrove groves to disappear and therefore cause all kinds of environment
devastation there. And Wes concludes: "What other responsible choice do we tried
people have to stretch our money?"
ELLEN RUPPEL SHELL: Well of course if we're going to
be idealistic, maybe even talking about it we can all do what Michelle Obama
did and plant our own garden, and that's a little less utopian than you think
because the seed business as I'm sure you know Paul is one of the businesses
that has really benefited by the recession. That people are actually starting
to grow their own food to some degree. It's becoming much more popular and in
fact some people are even going into urban areas, urban gardening, even urban
chicken farming is...
PAUL SOLMAN: That's been taking off, yes.
ELLEN RUPPEL SHELL: Absolutely. So it's interesting.
So there's certainly an interest in this. But of course Wes is also saying that
he's tired and maybe overworked and is in no position to grow a garden or raise
chickens or anything else. Maybe he's working 10 hours a day as it is.
PAUL SOLMAN: Hey it's not easy to raise chickens.
You have to... You know they're pests to people around them, that was the
recent article I think that you might have been referring to, was one talking
about the problems of urban chicken farming from the point of view of the
neighbors It's not easy to do and you have to have some place to do it. I mean
you know if you have an apartment for example. Maybe Wes lives in a small
apartment and doesn't have land of his own, then forget chickens or rutabagas
or anything else.
ELLEN RUPPEL SHELL: Absolutely and I kind of raised
that a little tongue-in-cheek. I don't expect most Americans to start raising
chickens. A small garden even on your terrace or even on a windowsill for herbs
and things like that can be helpful. I mean I'm a cook so I grow my own herbs
in part because they're so damned expensive to buy in the stores and it's just
easier for me to grow them and it's not a lot of work.
So there are things like
that that we can do to stretch our money as he put it and they're kind of the
tried and true kinds of things. First of all I'm not saying that people cannot
go to Sanford which is the Wal-Mart supermarket
chain to buy some of their goods but what I'm saying is that Wal-Mart is not
always a low-price purveyor and that Wal-Mart, the low prices at Wal-Mart are
there in part because of the squeezing down of the supply chain and the low
wages they pay their workers. So it does have consequences not just for that
store but for the entire community.
So when Wes complains about his income
declining you know there's data to show that when Wal-Mart entered the
community income across that community tends to go down. So there are
consequences of this. Some communities for example Damariscotta in Maine, that's
a region that actually lobbied to keep Wal-Mart out. It's a... not a low income
region but definitely a moderate income region in Maine that decided they couldn't
afford to have a Wal-Mart in their community. So there are communities who say:
Look we don't want this because even though we might pay a little bit less for
some of our goods we can't really afford to have our incomes go down anymore.
Because that's the big picture. The small picture that Wes is talking about,
you know there are all sorts of things that we can do to cut our costs within a
family. You know every time we enter a store we're likely to buy more than we went
into buy, OK? So if you can, possibly plan ahead and made lists and buy in
bulk. For example you know what a coop or a buy-low cost goods when you know
the merchant who owns the store and you know that he's giving you good value
and you make those kinds of decisions.
Planning ahead you can actually get away
with spending no more, sometimes less money than what it would have cost by
all the signage in a discount store when you walk in maybe to buy a can of
beans and you come out with your shopping cart filled with all sorts of things
you never expected you would buy because of all the signs screaming "Discount,
Buy Now, Last Minute, Offers Just This Week." Many of us, we go into discount
stores and spend a lot more than we intended to when we went in. That's much
less likely to happen if you go to for example a fruit co-op if there's one in
the community, or if you live in the mid-west or the west, I think they call it
by other names.
But there are things you can do to reduce your food costs
fairly effectively. Another thing of course is to take a look at what you're
eating and modify what you're eating to some degree, just in a gentle way to
cut out the kinds of things that are probably not providing you with not much
nutrition and possibly not much enjoyment and are surprisingly expensive.
PAUL SOLMAN: You know one of the things that I felt
was most interesting when we went around the Target together a couple of weeks
ago, was your suggestion - it seemed so obvious once you said it that had not
really occurred to me ever before - which is when you go into a place that has
lots of goods, as one of the questions was referring to earlier, being
overwhelmed by the amount of stuff that's there, not to mention the signage that
tells you that it's the cheapest thing ever and you've got to get it now and
all the rest, that you take a time-out, as we say for little kids.
We all know
that this is the first thing you're taught to do when you for example lose your
temper, right? Count to 10! We even know how high we're supposed to count,
right? It doesn't take very long for the primitive animal brain... We'll get to
our last question in a moment, or next to last question in a moment and then to
the final question which deals with this animal brain issue.
But we know that
if we take a deep breath - that's the other cliche, right, we give ourselves a
chance to calm down and think about what we're doing and that's what you were
suggesting one does in Target. I think it was in a moment that we were looking
at a $24.99, $24.99 candle in a glass. Remember that?
ELLEN RUPPEL SHELL: Right, I can't forget that.
PAUL SOLMAN: Yeah. It was unbelievable. You looked
at it and you thought, well maybe this is probably 50 cents worth of stuff and you
would never in a billion years think to buy it except that here's this display
of candles, they smell nice, it was on sale, I think there was one on sale for
like $13.99 - made it look like a tremendous bargain, you know,. And if you
walked away from that aisle for 10, a count of 10, you'd never go back!
ELLEN RUPPEL SHELL: That's absolutely true, Paul,
and one of the things you just mentioned is packaging and I don't talk about
that in the book "Cheap," but I have written on packaging before. It's
a fascinating area, it really is. If you took a cake mix out of the box and put
it on the shelf in the bag that it comes in the likelihood of people buying
that would go way way down. We're attracted by bright and shiny things just
like kids as you said before and lots of times what we're getting especially in
the food sector is really not value for money.
The more we buy, the less
adulterated thing are, the less likely we are to be fooled into overpaying for
them. When we go to Wal-Mart and we go to these stores that have huge amounts
of processed food we think we're saving money because of the, it's the kind of
mental shortcut that we make: We're in Wal-Mart, everything's cheap. Lots of
times we're not.
So just as you said Paul, if you take that minute to look at
that frozen food item or that box of treats, actually look at the label and see
what's in it, many, many times you're going to find that there's not much
beneath that label. You know that it's sugar and water, that it's as I said
before - starch, fat, salt and other cheap materials sort of thrown together
and actually offered to you at a kind of premium price. A little knowledge goes
a long way. It's just wonderful that "Julie and Julia" is coming out.
Whether or not you like you know the film it does give you an idea that you can
be self-taught at least to some degree to understand what it is that you put in
your mouth and its value.
Ellen Ruppel Shell Author of 'Cheap'
What I'm suggesting to small business owners like Ashley is: Compete on quality and service, and see how that works for you.
Service and quality over price
PAUL SOLMAN: Let's... We have two more questions here.
Let's do this a little quicker because I think you and I could talk for a very
long time about all these things and these are all provocative and interesting
questions. Here's Ashley Moore from Knoxville, Tenn., who asks: "I lost my
job last November and decided to start my own clothing business crafting
quality clothing made with locally produced components," just as we would assume
you Ellen Shell would approve of, would encourage even.
Ashley writes, "I
soon discovered that this is a huge challenge. Zippers don't appear to be made
in the U.S. anymore - too expensive I guess. The only zippers I can find are made
in China. Even if I found zippers in the U.S. they would be more expensive. I'd
happily raise my prices but after a number of informal surveys I discovered
that consumers are swayed by price. How do I convince potential customers, many
of whom are hurting economically, just like Wes above there, that my more
expensive skirt is actually a much better buy than a cute one for $13.99 at
ELLEN RUPPEL SHELL: Right. Right. Well you know that
is the $64,000 question. I haven't researched whether zippers are made in the
PAUL SOLMAN: You're showing your age by the way, it's
got to be about a $6.4 million question at this point! That was the 50s for
ELLEN RUPPEL SHELL: Right. Right. But just a quick
look on the internet does tell me, which I'm doing right now, that actually
zippers... There are some places where you can get zippers in the United States
but there's a good chance that they would cost more than the Chinese zipper. I
wouldn't be the least bit surprised about that. So the viewer's question is how
can I, you know, how can I convince people...
PAUL SOLMAN: I think Ashley is writing: How do you
convince Wes to buy Ashley's skirts? You know!
ELLEN RUPPEL SHELL: Right. Right. Well you know the
small business owners and this is an old story to Paul... Small business owners
sell themselves on quality and service. They can't compete on price, they just can't.
When you've got a Wal-Mart or a Target that has such economies of scale... I've
costed for example owners of small hardware stores and they simply cannot
compete very often on price, with like the Home Depots of the world.
PAUL SOLMAN: By the way it's a very interesting
reason as to the... The main reason why that is, is because the larger you get,
the more of a volume discount you can get from your suppliers. That is one of
the perhaps it is the major reason for mergers in all sorts of industries
retail and otherwise because if you're as big as Home Depot or as big as Wal-Mart
or Target you can get to that size you can really muscle your suppliers and get
much much lower prices from them. Of course they're cutting costs to get the
prices down for you, that's the famous "race to the bottom." But that's
the economy of scale you're talking about.
ELLEN RUPPEL SHELL: Absolutely. So you know this
person who is... Ashley who is trying to sell her skirts is not going to be able
to get the deal on zippers that Target can get if she buys them from China or
she buys them in the United States.
PAUL SOLMAN: Right.
ELLEN RUPPEL SHELL: Which she can do though is she
can investigate the quality of zippers because zippers are actually something...
an example I used in the book... Zippers chronically break on cheap clothing
and it's a huge frustration because once you've got for example a pair of
shorts at Target for $10 if that zipper breaks you pretty much throw out the
garment because it's relatively expensive to replace that zipper, to have a
seamstress replace it. If you're handy enough to do it yourself you're putting
in an hour of your time and also having to buy the zippers. So it becomes not
very cost effective to replace zippers. Many consumers know that zippers go off
their track on cheap clothing or they break on cheap clothing. That little thing
at the end breaks off.
PAUL SOLMAN: Right.
ELLEN RUPPEL SHELL: So this is a selling point for
Ashley to say: Look, I'm going to guarantee my clothes right down to the
zipper. And that would be something I'm going to not only help you fit this
thing, I'm going to alter it for you which is... Young women know by the way
about alteration because it's all over the hourly shows about how you need to
get your clothes altered now, which requires seamstresses or tailors, which is
an expensive add-on.
If Ashley was able to apply, you know offer that more affordably
she would have a definite, definite leg up. So what I'm suggesting to small
business owners like Ashley is: Compete on quality and service, and see how
that works for you. It certainly works in restaurants. We all know that... Not
all of us run to McDonald's you know for every single meal. You know there are
many high-end restaurants that do very well, thank you very much
PAUL SOLMAN: Yeah and I would... Just today I'm
going to the Apple Store to get... My computer broke down; I'm going to get it
fixed. Man! Did they give you personal service? You do not go through an
answering machine. Bang! They understand this extremely well. Their computers
are more expensive than other computers right? And I'm a captive audience.
ELLEN RUPPEL SHELL: Oh absolutely.
PAUL SOLMAN: Captive consumer.
ELLEN RUPPEL SHELL: Apple is a great example that I
didn't use in my book and I wish I had. I've heard from folks from Apple since
I did, they do not compete on price, that's not their selling point.
PAUL SOLMAN: Absolutely not.
ELLEN RUPPEL SHELL: Right.
PAUL SOLMAN: And in fact you notice that the ads
now, the anti-Apple ads, the Windows ads are... I guess it's Microsoft's ads, I
don't know whose ads they are but it's precisely competing on price. Look how
much more cheaply I got a... Maybe it's a Dell computer, I'm not sure what it
is, that I got instead of buying a Mac.
ELLEN RUPPEL SHELL: Absolutely. Absolutely. That's
right. And that's a full thing for them because Apple loyalists are very, very
loyal and for good reason as you pointed out, right?
PAUL SOLMAN: So let's go to the last question. This
was an exchange that I had, an e-mail exchange, with an eminent anthropologist who'd
seen the piece Monday night and was objecting to our use of evolution in the
way you did which is to... You were quickly saying: Look we have this impulse,
it's built into us, it's from our hunter-gatherer past, we can't pass up a
bargain because we know that researchers have now understand that regret is
driving force in human beings, it must have come from something like, or
presumably came from something like: Hey if you didn't get the animal you didn't
out-compete the person, the other persons, and your DNA didn't get passed along,
ELLEN RUPPEL SHELL: You're right.
PAUL SOLMAN: I'm oversimplifying but that's roughly
the thing. But anyway, she and I got into this e-mail exchange and here was her
last salvo. I have nothing against being serious about the brain or for that
matter human evolution but before we go too far back in human history or too unilaterally
into neurobiology, it would be helpful for example, as an anthropologist
remember) to have some cross-cultural work, an increasing challenge, she writes,
in this globalized world, to see whether some of the "universals"
that we find in our own society are really such. The brain giveth but the brain
also receiveth and in a much shorter time that it took us to progress from
hunting woolly mammoths to spending an afternoon at the mall.
ELLEN RUPPEL SHELL: Right. Right. Well you know, I
don't know if you would recall when you asked me that question Paul, but I did
say to you, "Oh this going to be a bit of a just so story."
PAUL SOLMAN: Yes I do remember. Quoting Rudyard
ELLEN RUPPEL SHELL: Absolutely. And I said you know...
You wanted me to extrapolate and I said, "Look here's a possible scenario," and
I'm not saying that this is... I respect your anthropologist's question very
much and I think we are way, we do this far too often, make predictions about
human behavior based on what we think we know about what happened in
prehistoric times. There are theories of why it is we react to things
impulsively. Like why do we have impulsive reactions at all? Why don't we think
things over before we act?
PAUL SOLMAN: Right. Why do we count to 10 before we
get angry, for example?
ELLEN RUPPEL SHELL: Exactly.
PAUL SOLMAN: Why don't we count to 10 every time,
why do we get angry at all in situations that could imperil us?
ELLEN RUPPEL SHELL: Exactly and that's what's known however
you want to call them, the psychologist, the psychiatrist, the, you know,
cognitive scientists call heuristic. Right. We have this mental shortcut and if
we didn't have these mental shortcuts on all sorts of functions, if we had to
think through everything we did, we'd be dead because you know the analogy here
would be the saber-tooth tiger that jumps on us and because we have to think
through: Jeez, is this a dangerous creature or not?
PAUL SOLMAN: Or when I hear the rustling in the
bush, do I have that adrenalin rush or don't I? So that at least I'm prepared
to take flight or fright, right?
ELLEN RUPPEL SHELL: Exactly. And so anticipating,
the anticipation of problems is very important. So we don't wait for the tiger
to be on top of us, we anticipate, we make that guess that we're in danger and
when I say... You know I said to you that I think and what I certainly say in "Cheap"
is that marketing preys on that anticipation and illicit the primary function
of the brain versus the secondary, that is the more impulsive or as you would
say more primitive side of the brain very effectively and negates that part of
the brain and kind of monopolizes that part of the brain to the... in pushing
aside the more rational side of the brain.
PAUL SOLMAN: Right. And in fairness, I mean I don't ...
I and probably even you or any of us knows what a bargain stands for in every
culture in the world, I mean, or many other cultures, but we certainly know that
the same mental mistakes with regard to risk taking or wanting something today -
a dollar today versus a buck and a half in a week. People consistently, the
most intelligent people you survey and I believe this is true, of people around
the world, I think I've read that, will take the dollar today more often than
not as opposed to the $1.50 a week from now, whereas if you're getting a 50
percent return in a week you're getting I don't know, 25,000 percent in a year -
somebody else can correct those numbers, but you know what I mean?
ELLEN RUPPEL SHELL: Oh yeah. We don't think nearly
as rationally about the present as we do the future. You know we can...
PAUL SOLMAN: And that's "we" meaning all
of us? That's across cultures, right?
ELLEN RUPPEL SHELL: Exactly. That's why we procrastinate,
that's why we say we're going to start exercising next week and even though
rationally look just get off your butt and get exercising as of right now. Why
not do it now? What's wrong with now?
PAUL SOLMAN: But her point is the decision, not
necessarily cross-cultural, it's not universal necessarily. I think the thing
you're talking about now more likely than not is, isn't it?
ELLEN RUPPEL SHELL: I think it's what we call human
nature and I think if you look at folk tales and mythology you'll find... I'd
be interested to hear from the anthropologist if she can give examples where it's
not the case. In which culture. I never say anything is universal, well with a
few exceptions! But so I certainly, you know, respect what this person is
suggesting but I also agree with you that as far as I can tell these are very,
very common characteristics and affect our shopping behavior very strongly.
PAUL SOLMAN: Alright. Great. Well, Ellen Ruppel
Shell, thank you very, very much. That was a lot of fun yet again and we didn't
even get to spurn $24.99 candles this time around!
ELLEN RUPPEL SHELL: That's right. Well thanks a lot
Paul, it's really fun. I hope I see you around!