These are challenging days for customers who are paying attention. I am uncomfortable with the ubiquitous term “consumer,” as it denigrates our responsibilities as citizens and participants in the marketplace. Anyway, in April a garment factory in Bangladesh collapsed, killing more than 1,100 souls. Much of the clothes produced there were for Western retailers. Some reform efforts are being attempted, but not much is expected to change the wretched conditions in most sweat shops. It’s a vicious cycle of globalization, as we have become accustomed to cheaper clothes even as our garment jobs have disappeared. As late as the 1990s, about 50 percent of the apparel Americans bought were made domestically; now it’s about 2 percent. As with so many other sectors, “cheap” in garments has been a “tradeoff” for people losing decent jobs in sectors that went offshore.
This week, Apple was in the spotlight for its tax avoidance, although it’s hardly alone, especially among technology companies. CEO Tim Cook won over some senators, but, as Tim Fernholz writes in Quartz, the hearings showed just how pervasive the problem is in the United States as a post-industrial economy. As the biggest companies pay little in taxes, especially as opposed to the past, smaller firms pay more and the American commons — from schools to infrastructure — suffers from chronic under-investment. The tech outfits’ posture is particularly twisted considering how much they have benefited from taxpayer funded research. But citizens who patronize these firms “vote” to support their behavior with every purchase.
We’re hit with these kinds of stories nearly every day. Wal-Mart is its own category of problems for an ethical buyer; Amazon.com, like Wal-Mart, is killing local retailers. Every time we fill up the gas tank, we do our part to degrade the environment and add to the costs of the military need to keep the oil-supply lanes open. But will this knowledge really change our behavior when it comes time to buy?
Read on for the best links of the week and the haiku.
This Week’s Links:
• How a big bank failure could unfold | NYT Economix
• Is there a stock-market bubble? | The New Yorker
• Tax lost offshore could end world poverty, says Oxfam | The Guardian
• The one equation investors need to know to understand the world today |Mohamed El-Erian
• Fighting climate change while continuing to improve living standards | The Interpreter
• Michael Kinsley gets it wrong on the ‘austerians’ | Rortybomb
• Food stamp rolls are elevated for a reason | Jared Bernstein
Today’s Econ Haiku:
Three-day stock breather
Might calm the froth on Wall Street
The punch bowl’s still there