a am canadian
When I was young, the quality of Japanese merchandise was so poor that many consumers began to boycott Japanese goods. Consumer groups warned that, although these shoddy goods were cheap, they were actually poor value for money because they lasted only one-fifth as long as products costing only twice as much. Eventually the spontaneous consumer rebuff of poor quality worked: Japanese manufacturers were starved and shamed into improving the quality of their practices and components, and now have a reputation for high quality.

But how soon we forget. We are now barraged with cheaply made, poor quality products and services from both domestic and third world suppliers, and this time we appear a lot more timid about objecting to it, and about demanding better.

To understand what’s behind this (no, it’s not a conspiracy) we need to appreciate the economics that produce this declining quality in today’s global, oligopolistic marketplace:

  1. Most large corporations are public companies trading at huge, almost unprecedented price/earnings multiples.
  2. The shareholders (that’s us!) demand that management take all necessary action to keep these prices up, and take them even higher.
  3. This means profits need to continue to rise annually (and unrealistically) by double-digit amounts.
  4. Companies have done this by broadening markets and by squeezing suppliers to lower their prices. They have maxed out this mechanism of growing profits.
  5. Then they exploited record-low interest rates to ‘leverage’ profits, borrowing at record levels and using the proceeds to buy out competitors and redeem their own shares, hence artificially increasing per-share profits. They’ve also maxed this out, and are now hugely vulnerable to interest-rate spikes.
  6. Then they squeezed domestic labour, defaming and crippling unions and threatening layoffs to force longer hours and push wage rates below the current record-low inflation levels. In some case they have effectively decreased wages by laying off senior workers and hiring cheaper, younger replacements. This technique, too, has been maxed out.
  7. Then they started giving out more of their wages as share options, which, because of their fierce lobbying of the government and accounting industry, they are not legally required to treat as expenses, which further artificially inflates reported profits.
  8. More recently they’ve been buying out competitors and using their oligopoly power to raise margins, effectively gouging consumers. This has been done in various subtle and underhanded ways, such as replacing a product with an inferior product, downgrading warrantees, worsening service, and reducing the amount of product you receive in a package without notification (deceptive packaging).
  9. And of course more recently still they’ve been outsourcing and offshoring manufacturing, service and support to businesses, mostly in the third world, which have execrable social (labour) and environmental standards, and poor production quality standards.

Inevitably this has resulted in much lower product quality, poor or non-existent service, less value for money, domestic unemployment, and unwanted garbage. But it’s happened so slowly that you probably haven’t noticed that as large corporations have been lowering their standards, they’ve gradually coerced you into lowering yours as well. Anyone who blows the whistle on this fraud (that’s exactly what it is — an intentional deception of consumers) is sued by an army of corporate lawyers (as in the famous Nike case where that company sued for the right to lie to consumers about its sweatshops, and the pending Suzuki case where Consumers’ Union has been sued for reporting safety defects on Suzuki SUVs). Anyone who tries to get around this high-price, low-quality quandary by creating their own markets (knock-offs and file-swappers for example) is also sued. And all because the management of these companies are constantly forced by greedy shareholders (that’s us!) to use any method at their disposal, whatever the consequences, to increase profits by utterly-unsustainable double-digit amounts every year. Sound like a ‘bubble’ to you?

Here are just a few examples:

  • I’ve been told that the average life expectancy of Christmas lights is two years. Most people upgrade to the ‘newest thing’ every year or two and simply throw out their old lights anyway. Almost all this junk, including the big 100-200 light figurines, is made in China, and the quality is atrocious, but according to a retailer I spoke to, almost no one returns defective bulbs and strings. It all just goes into our landfill sites.
  • Reality TV shows cost less than one-tenth as much as quality dramas, but in most time slots they attract more than half the audience of a drama and therefore command close to half the advertising revenue. That’s money in the bank for networks, and debased quality for viewers. When I ask people why they don’t just turn off the TV instead of watching this crap, they tell me (a) they have it on as ‘background noise’, (b) they multi-task with their computer or a book or music, so they’re not really watching, or (c) they’re broke so it’s all they can afford to do. What’s scary is they say they wouldn’t admit to the ratings services that they had it on, which means the actual number of viewers is probably even higher. Talk about imaginative failure.
  • Most small electrical appliances have dismal repair records, and even Consumer Reports admits that it’s uneconomical to get them repaired. Phones, CD players, irons and kitchen appliances like blenders are among the worst offenders.
  • Outdoor seasonal products — shovels, sleds, sprinklers, gardening tools etc. — are “only designed to last one season”, I was told by a neighbourhood retailer. Customers “just won’t pay twice as much for a metal tool with a 10-year life as one that will probably break in a year”, he said, and “even if there’s a 1, 2 or 5 year warrantee on seasonal goods, people don’t keep their receipts, so they don’t return things”.
  • The big ticket items with the worst repair records, according to Consumer Reports, are laptop computers and lawn tractors. The magazine cites the exceptionally poor service from the tiny handful of companies that control both these consumer product industries, and their inability to get repairs right the first time. My Dell story will be coming up in a few days.
  • The latest way of discouraging customers who demand fair treatment is the ‘runaround’. This game can be played on the phone, as AT&T did with its recent phony billing scam, or in person, when each of two, three or four parties points you in a circle to the other — parts, service, the manufacturer, the installer, the outsourced delivery service, the ‘customer care’ department that is ‘not authorized’ to do anything for you or to refer you to anyone higher up etc. The objective is to wear you down by using a bunch of low-paid lackeys, and it usually works.
  • Almost all of the suppliers to the upcoming Olympic Games use sweatshops and similar irresponsible methods to cut costs (and the quality shows). Despite a fierce and coordinated program called PlayFair to get them to clean up their act, they are universally unrepentant, so you can expect to see the brand names of some of the worst social and environmental offenders on the planet flashed in your face constantly during the Olympics, and adorning the ‘honoured’ athletes’ attire.
  • Yesterday two large breweries, Molson and Adolph Coors, decided to merge to ‘increase efficiency’. They’re both profitable, but they’re in a saturated market, so to keep profits growing (and shareholders happy) they’ll need to fire lots of now-redundant workers. The irony is that when the other large Canadian brewery, Labatt, was sold two years ago to the Belgians (for the same reason as yesterday’s merger), Molson built its success on rebranding itself around the ‘I am Canadian‘ slogan (pictured above), and wrapped itself in the flag with award-winning commercials that proudly showed how Canadians were different from Americans. But, hey, what’s a slap in the face to the consumer if it keeps shareholders happy? And none of a sample of Canadian beer drinkers surveyed by the media immediately after the announcement got the irony. *sigh*

As consumers, we can either wait for the bubble to burst, and the stock market to move down to more reasonable levels (taking half of our savings with it, alas), or we can start raising our standards and refuse to put up with this crap. What are some of the things we can do (without being sued)?

  • Send or take stuff back — most people find it easier, and less intimidating, to just buy another brand instead of returning something relatively inexpensive. This lets the manufacturer of junk off the hook. And keep all your receipts in an accordion file with a brief note what each item on the invoice is and how long it’s warranteed for.
  • Write letters of complaint. It takes a bit of research to find who and where to write to, but people who do it usually get a response, and if enough people complain it might just make a difference. And when you do write, keep your cool — hystrionics, exaggeration and profanity will get you nowhere.
  • Buy less, higher quality stuff. In the long run, you save that way, and this was the method that ultimately improved the quality of Japanese products. Research the quality and repair records, and the vendors’ records of corporate responsibility, for alternative brands before you buy.
  • Ask questions. If the retailer doesn’t carry a quality brand, or doesn’t carry a domestically-made or local or organic brand that you know exists, ask them why not. Invest the time and follow the shuffle until you reach the level where someone can actually answer your question. So few people bother to do this you might be surprised: They might order the product you want in, or give you a credible reason why they can’t.
  • Communicate with other consumers. Make a list of brands and products and suppliers that have proven to be high quality, and a Boycott List of those that haven’t. Share it with friends, family, neighbours. Answer surveys about quality, especially independent ones from trustworthy independent consumer organizations — but be fair.
  • Refuse to watch cheaply-made, low-quality TV programs and movies that pander to an uncritical audience. There are much better uses for your time and money. Ultimately in the price of the advertisers’ products, you’re paying for this drivel.
  • Defer your purchases. Even at the grocery store, never buy anything on impulse, even if it’s on sale. You’ll usually regret your impulse buys, and if you don’t, the stuff will still be there next time (and probably still on sale). How many times have you bought a CD or DVD that you’ve only ever listened to/watched once?
  • Many, perhaps most of the magazines you see on the racks are paid for by advertising, and are full of it. They are essentially advertising flyers with a few, poor quality articles thrown in to make them look like legitimate reading material. Don’t pay for advertising. Buy a book instead.
  • Learn how to fix things instead of throwing them out. Or save money by buying and upgrading something used.
  • And of course, support local small companies that have to be responsive to consumers or they’ll be out of business.

Corporations won’t raise their standards until and unless we raise ours. And they won’t take responsibility if we don’t. We’re being inundated with messages to make our voice count in the ballot booth this year. We need to make it count in the corporate boardrooms and shopping malls as well. The best way to do that is to teach them what we taught the Japanese — that we won’t buy junk at any price. We have our standards. It’s time to live up to them. Just do it? Just don’t buy it.

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  1. geo says:

    David,While I agree whole-heartedly with your assessment of the current state of things and have found myself over the past few years doing some of the things you mention (admittedly more from a personal sense of standards than an overt desire to change things), I’m not sure that the comparison to the initially poor quality of Japanese is valid, nor your reason given for the improvement in their products. From other readings, in various fields, I’ve come to the understanding that American tariff policies following WWII, and into the 60’s and early 70’s, made it more economical for other countries to produce large quantities of lousy merchandise. This, and not an inability or lack of desire to produce quality, dictated the quality of the products. Likewise, when the tariff laws were changed Japan could create fewer big ticket items of good quality.Of course, both of these situations developed as they did because the Japanese companies wanted to do exactly what you discuss: maximize profit and shareholder value.

  2. Jon Husband says:

    More evidence of the “race to the bottom”, I think. Pity that someone hasn’t come up with an “Am I Canadian ?” TV (or Flash, for the Internet) rant similar to Molson’s popular advert of a couple of years ago.On a more serious note, the issues you raise are very important. I really think we are all trapped in such a complex machinery in which the markets and coporations keep pushing, pushing, pushing because *they* know we aren’t pushing back … and so you’re right IMO to flag that issue.And I suspect that the only push-back that will be effective is some form of one-by-one truning our back on all the crap and swill that is so readily offered us to pour down our throughts. As Doc Searls has said, so many of us are figuratively tied to a chair in front of TV’s and advertising, heads tilted back, swallowing all the marketing and crapping cash (or debt, I suppose). We consume, that’s what we DO.

  3. Jon: Three Dead Trolls in a Baggie, Canadian Fringe vetrans, have a good “I Am Canadian,” riff on their “Steaming Pile of Skit” album. William Shatner also does a pretty funny one, can’t remember where I heard it… “All that is required for evil to triumph is for good men to do nothing.” – Edmund Burke. We get it because we put up with it. Push back, and they listen.

  4. Dave:To me Dave you do not realize about something basic, companies are alive because people buy their products, the price is the equilibrium between what they want to get and what people (¿consumers?) are able or want to give them in money for their product or service, and here comes some very interesting points related with your post: From point 1 to 4 you are completely right, but is that bad??? NO, because that is fertile land for entrepreneurs, innovation and small business, if they raise the price fight against them with lower price and extra services in a very delimitated areas (some kind of guerrilla strategy), if they are based just in the price so innovate!!!! Once the products have very clear characteristics find what else the consumer wants, give to them and raise the price that

  5. gbreez says:

    I remember cautioning my mother about her constant efforts to buy the lowest prices…that, inevitably, she would get and evoke the lowest quality. I watched it happen. Hey! I am 61. It has been a real downer watching it all happen. From quality to quantity in a single lifetime. And, it continues, albeit Japan’s output quality has improved beyond our own (what output?). I understand that we are talking about global distribution of wealth. I am just questioning what exactly we are talking about. To me, quality is wealth, and, we have all already lost it. JMHO.

  6. gbreez says:

    BTW, I do not buy cheap stuff becuase it is cheap. Ocassionally, I buy it because I am poor.Sad sideline to the today story. :(

  7. Yule Heibel says:

    Arts & Letters Daily (http://www.aldaily.com) recently referred to an interesting review in The Guardian, “Myths and Corrections,” July 10, 2004. Here’s the link, although it might be too long for your comments window:http://books.guardian.co.uk/reviews/politicsphilosophyandsociety/0,6121,1257871,00.htmlThe author, Will Hutton, reviews two books about globalisation: one by an advocate (Martin Wolf’s Why Globalisation Works), the other by a more critical writer (David Held, Global Covenant: The Social Democratic Alternative to the Washington Consensus). I agree with Miguel Pancardo that “we have to learn how to use it [globalisation] in a better way to get wealth, safety and justice [for] ALL no matter if you are in a first world economy or in a third world economy,” and I agree with the rest of his comment as well. Globalisation is not going to go away. David Held’s take, that we have to find ways of managing it from, more or less, a socially democratic perspective so as to avert disaster, seems critical and realistic. It’s not just a “race to the bottom,” but it will be if the pigs have the last word.

  8. Dave Pollard says:

    Thanks, everyone, this is a useful comment thread. There’s a great article this week in The New Yorker about globalization. The gist of the article is that in theory it’s a win-win situation, but for a whole host of reasons (oligopolies, hidden subsidies, political corruption etc. etc.) we do not live in a perfect world of free markets and equal playing fields so it turns out to be, at best, a win-lose, and often a lose-lose (unemployment in the first world, slavery in the third). Globalization, like Marxism, is a *wonderful* idea in theory, but the more you study about how both work in practice, the more you realize they make the real world situation worse, not better. I used to be a fan of both globalization and Marxism; now I believe in neither. What is needed is a more pragmatic and balanced solution.GB: What you’re describing is what I’ve called The Wal-Mart Dilemma, and it’s the most insidious and dehumanizing thing about globalization.

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