19 April 2008

The ten-dollar disposable toaster

An analysis in The Economist about a year ago looked at outsourcing of jobs in the last decade or so, and how purchasing power changed over that same time frame. As you can imagine, the international competition drove wages down in a variety of industries in the US as jobs were transferred overseas. But while income was decreasing, real purchasing power increased, as goods and service became cheaper as a result of global production networks which could take advantage of opportunities in any corner of the globe.

An example of these cheap goods is a recently purchased ten-dollar toaster. Rather remarkable. The unit was manufactured in China and landed on the shelves of Walgreens, next door to my work.

A couple Fridays ago (while I was gainfully employed), bagels were purchased for the office staff. Unfortunately, the individual who had promised to bring a toaster forgot to do so. Enter stage right, the ten-dollar disposable toaster. I am unsure as to what the Walgreens' markup of the toaster was, though I am guessing between 20 and 50 percent. So minus their cut, 5-8 dollars paid for everything including the mining and smelting of the aluminum, construction of the toaster from component parts, the lumber which was turned to cardboard for the toaster's box, shipment from China to the US and more. Now the skeptic is probably rolling their eyes, as this marvel of globalization isn't particularly remarkable. Skeptical or not, the point is that we have grown accustomed to such low prices. We perhaps live in a Walmart-nation of rolling back prices, in which purchasing power increases even when wages stagnate. Let's not lose focus of the greater picture as our tunnel vision stares angrily at our paycheck which seems hardly able to keep pace with inflation.


Anonymous said...

What are the advantages and disadvantages of the $10 toaster? I am predisposed to be critical of such items, but not inclined to write my thoughts down at the moment. Readers may want to contemplate this question

Yeneerg Trebor

Anonymous said...

This commentary reminds me of a section from Napoleon Hill's "Think and Grow Rich", where he comments on how an average American couple in Times Square can buy a whole breakfast made from produce from around the world for a total of only 20 cents (obviously 1930s prices, but the point was not lost).

I think the benefits of a 10 dollar toaster far outweigh the potential downside of poor design and short lifespan. I do think that globalization has many advantages. However, in areas like drug manufacturing and medicine, outsourcing poses some serious problems.

Your cousin Dan

Hwei-Ling Greeney said...

Recently a big controversy broke out in Amherst (Not a surprise, is it?). The Amherst Regional School Committee priviatized school lunch program and all the lunch ladies would be working under Whitsons Curinary Group--a firm from NY. The School Committee claimed there would be a 100K or 150K savings. Since Amherst is under such a financial stress, the SC believed this is the right thing to do. Or is it? What do you think?

Should we outsource the lunch program to some firm in NY to save money? Or should we the tax payers be also concerned about paying living wage to anyone who work for the school system? Currently, the lunch ladies are sorking for the town so their wages and benefits are better than would be under Whitsons.

Should school budget be balanced on the back of the lunch ladies?

Is globalization justified when consumbers can enjoy cheaper goods? Or should we also consider social justice for the displaced workers as a result of globalization and outsourcing?

The $10 dollar disposable toaster must be a piece of junck. Disposables do not last long. They enter the waste stream soon after their birth. Consumers should reject this kind of goods. We want something that lasts.

On the same token, we want workers who are vested in the place they work. School cafeterial is not like McDonald's. Children develop relationship with their lunchh ladies. Lunch ladies know the children they serve. So, being a mindful consumer and a taxpaer, I say we need social justice for lunch ladies. No privitization or outsourcing of Amhest school lunch program.