The Real Cost of Cheap Goods
How is it possible that a toaster at Walmart sells for $4.99? When one adds up the cost of materials, labor and impacts to the environment, the $4.99, toaster just doesn’t add up. The components of the toaster, tin, steel, copper wiring, rubber and paint or lacquer, must be mined, refined, smelted, manufactured and transported. Once each of the raw materials has been produced at locations throughout the world, they are then sent to a factory, probably in China, to be assembled into the completed toaster by human hands. The person in the factory may have a family at home to support with the meager wage he or she earns. Once assembled, the toaster is then shipped across the world again to end up on the shelf of a big box store. In the not to distant future, as should be expected, the $4.99 toaster breaks and is disposed of in a landfill.
Throughout the life history of the $4.99 toaster, innumerable costs are incurring that do not appear on the price tag. The metallic components of the toaster begin their lives as ore in the ground. Most ores contain 2% or less of the desired metal, so extraordinary amounts of ore must be mined to produce small amounts of metal. In most cases, the ore is strip mined. First the land is cleared of all vegetation, then fossil fuel guzzling heavy machinery literally rips the bedrock into pieces of ore. Many strip mines cover many square miles. Once the strip mining process is finished, the land areas are rarely, if ever reclaimed and become vacant wastelands devoid of life.
The metallurgical process also involves several, environmentally devastating stages. First, the ore is crushed to powder. In the case of copper (used for wiring), the powdered ore is then mixed with sulfuric acid and/or other chemicals to liberate the metallic components from the rock. The crushed ore is heaped into a pile and saturated with the chemical solvent. The leftover tailings are left in heaps at the production site and contain extremely high levels of toxic chemicals and heavy metals sitting in an acidic brew. Then, the treated ore is smelted in a furnace mixed with limestone and silica. Finally the brew is reduced to the finished copper metal by exposing it to extremely high temperatures to burn off any oxides that may remain.
The above process is a basic standard for the extraction of most metals; however, many require more extensive treatment with subsequent greater environmental impacts. The environmental effects of mining and processing metal include habitat destruction, landscape degradation, toxic contamination of groundwater, air and land, excessive fossil fuel consumption and greenhouse gas production, and the list goes on. Once a mine is exhausted, cleanup, restoration and mitigation expenses can run into the millions of dollars, but the corporate benefactors of the mineral extraction rarely pay the costs.
Until recently in the United States, mining operations were simply abandoned and local residents were left to suffer with the consequences. In response to several large scale environmental disasters, in 1980 the US government passed the Comprehensive Environmental Response, Compensation and Liability Act (a.k.a. “Superfund”) to hold corporations accountable for cleaning up their industrial messes. Unfortunately, on most Superfund sites that were contaminated prior to the passing of the legislation, the taxpayer has picked up the tab. As for the corporations, they have largely moved their mining operations overseas to developing countries that have no such legislation for environmental liability. Once can almost certainly assume that the environmental costs of production are not included in the $4.99 sticker price of our toaster, and we have not even discussed the manufacture of paint and transportation considerations.
A human cost is also not calculated into the toaster’s sticker price. Once upon a time in America, a vast middle class enjoyed good paying factory jobs with benefits. Most of the consumer goods sold in America were also made in America. The globalization of the marketplace has basically eradicated those jobs taking the American middle class with them. In the new world of free trade, it is much cheaper to hire a factory worker in China, Bangladesh or the Philippines than it is to hire one in the United States. Developing countries do not require minimum wages, healthcare or retirement packages. Labor that once cost dollars per hour can now be obtained for pennies. Needless to say at those prices, factory workers in the developing world for the most part work in unsafe, intolerable conditions. Working environments that were long ago deemed inhumane and illegal in the United States are now the standard in manufacturing across the globe.
Artificially cheap goods and services that do not reflect the true cost of their consumption also act as a monopolistic domination of sorts in the market. As overall prices plummet, conscientious manufacturers who pay their workers a fair wage and clean up their environmental messes cannot compete. The lower price for the consumer also prohibits the development of newer, cleaner technologies, as these technologies would incur costs that would inhibit competition with the artificially low price tag associated with conventional manufacturing.
Sadly, as good blue collar jobs have gone the way of the dodo bird in the United States, a declining middle class is forced into employment at the same big box stores that sell $4.99 toasters. Struggling to make ends meet on less than subsistence wages with no benefits, the consumer can no longer even afford to buy goods at their real cost, thus perpetuating the vicious downward cycle. Conscientiously manufactured “green” and fair trade goods are available only to the lucky few that can afford them.
Every trinket, toy, appliance and gadget in our homes is complicit in the environmental and human degradation above. Shop wisely.