Editors Choice
March 15, 2000The Hidden Cost of Things
There is little question that, in spite of the phenomenal economic growth of the past 50 years, the world today is not better off than it was 50 years ago. There are more people malnourished in the world than 50 years ago, environmental devastation continues unabated, civil unrest is an threatening as it ever has been and, even in wealthy countries, the gap between the rich and poor continues to grow. The question is how, given the increase in wealth in the world, can that be so?
One of the reasons, as we examined in a previous Editor's Choice (September 15, 2000: Anthropology in the Modern World: On Consumerism), is our patterns of consumption. We buy too much. But what is more important is the effects that our consumption patterns have and the hidden costs that we or others pay for what we buy. For example, Americans love to take trips, and taking an airplane is often the easiest way to get places. Yet few people think of the hidden costs of their air travel, particularly on the environment. You can get a good idea of some of those costs at Flying Off to a Warmer Climate? by calculating the green gas emmisions that your trip contributes to the environment.
Virtually all of our commodities have these hidden costs. Commodities, in fact, have, as anthropologist Igor Kopytoff points out, biographies. But like the ghost-written autobiographies of famous figures, the life story often hides more than it reveals. What are these hidden costs? To illustrate, let's take the hidden cost of just one ingredient in most of the food we eat--sugar.
Underpayment of Labor: Most obviously there is the cost that derives from the underpayment of labor. In the case of cane sugar, sugar workers are among the worst paid farm laborers in the world. In Brazil, the largest exporter of cane sugar, workers earn less than $25.00 (USD) a week. In the Dominican Republic, Haitian sugar workers earn about CAN$10 per day. However in that case the worker must also pay to have the cane picked up and weighed, and bears the loss if it is not done on time. Thus, in the end, a skilled cutter will earn less than 1000 pesos ($70 USD) a month, while 7,500 pesos ($530 USD) per month is the estimated amount needed to feed a family of four. You can get a information and a history of the exploitation of sugar workers in the article, Informal Resistance on a Dominican Sugar Plantation by Catherine C. LeGrand.
To calculate the hidden labor costs, we would also need to include the cost of the force necessary to discipline workers to accept far less then their labor warrants and the costs that accrue because of living conditions of those forced to work at less than a living wage.
We can get a good appreciation of the hidden costs of labor by the fact that economists estimate that if workers in the South were paid the same as workers in the North the cost of imported items would be ten times higher than they are.
Environment: Another obvious cost not reflected in the price of sugar is environmental damage. Environmentally, sugar is not a benign crop. Its growth (not to mention its processing into the highly-refined white, granular stuff we desire) is responsible for damage to corral reefs in Hawaii, water pollution in Buenos Aries, damage to river estuaries in Brazil, and waterways in the Philippines. Florida's sugarcane industry is situated just south of Lake Okeechobee, one of North America's largest fresh water lakes. Water that had flowed unimpeded from the lake to the Everglades now must pass through thousands of acres of sugar cane. When it reaches the Everglades it is contaminated with phosphorus-laden agricultural run-off that destroys native species and results in the growth of non-native species. As a result, almost $8 billion will be spent over the next 2 years to fix the Everglades. While some of that cost will be paid by the sugar producers, most of it will be passed on to taxpayers. Of course in countries with few or no environmental regulations, these costs will be paid largely by the poor with increased health problems and passed on to future generations.
Direct and Indirect government subsidies. Part of the hidden cost of sugar comes from the subsidies provided by nation-states, subsidies that ultimately come from taxpayers. In the United States, most direct subsidies were discontinued after 1996 (although some remain), with import quotas being used in some cases, particularly for sugar, to keep prices high. Thus the federal government sugar program costs consumers approximately $1.4 billion a year in higher prices. This is not a hidden cost of a Twinkie, since it is passed on the consumer. But these price supports do make sugar production in the U.S. more profitable and have encouraged the conversion of over 500,000 acres of Everglades wetlands to sugar cane production.
Indirect subsidies include government funding of the infrastructure for sugar production and processing. This includes, among other things, the roads, the power system, water and sanitation system, waste disposal, etc. The entire water management infrastructure that supports the Florida sugarcane industry, for example, was built with federal tax dollars. We would also need to calculate the portion of the military budget needed to maintain governments friendly to neo-liberal economic policies.
Health damage: There is little doubt that Americans consume too much sugar. A report released this month by Worldwatch Institute, on chronic hunger and obesity, outlines the effects of our diet on our health. For example, 17% of the calories consumed by North Americans are from sugar and other sweeteners. Among other things, that means that our basic nutrition must come from the other 83%. While there is no specific data on the direct contribution of sugar to excess weight and obesity (fat is obviously another major culprit), 54% of Americans are overweight. One estimate of the direct and indirect cost of obesity in the U.S. puts the cost at $118 billion annually, or 12% of the nation's health care costs. The amount spent on diet drugs and weight loss programs would add another $33 billion.
These are only some of the hidden costs of one ingredient in what we eat. To arrive at a real cost of items we would need to examine each of the other ingredients and then add the hidden costs of processing, packaging, delivery, and waste disposal. The energy and pollution costs of distribution, alone, would be considerable. In Europe and North America a typical food item travels 1,000 miles before it reaches our meal plates. The average head of lettuce from your local supermarket has traveled an average of 1,200 miles from where it was grown.
This brief overview should suffice to illustrate how the costs of our commodities, measured in monetary and non-monetary terms, are far greater than the direct price that we pay. The question is why do people seem so unaware of the real costs of commodities? We'll examine that issue in a later Editor's Choice.
I'd appreciate your comments; you can reach me at robbinrh@splava.cc.plattsburgh.edu
And please visit the Editor's Web Site, Global Problems and the Culture of Capitalism