Cheap Read Free Page B

unfair,” she told me. Muddling things even more is that in our “bipolar” marketplace the disparity between the value of the product and the asking price is sometimes quite real. Take that Barneys handbag, a leather confection that cost the store far, far less than the selling price. (While retailers guard their markups like state secrets, luxury handbags at some stores sell for more than thirteen times their production price.) Barneys will fight hard to keep its buying price low, but Barneys’ customers have no such leverage: No ordinary customer can haggle with sales associates to get a break on that brazen markup.
    The traditional marketplace had no such limitations. Bazaar culture assumes a symbiosis between buyer and seller, because whether or not they trust each other, the buyer and seller need each other. Each is a member of the same community, and the game of offer and counteroffer is a ritual over which each exerts a high level of control. The traditional marketplace relies on both buyers and sellers benefiting from transactions for the good of the community at large. Wrote Geertz, “Whatever the relative power, wealth, knowledge, skill or status of the participants—and it can be markedly uneven—clientship is a reciprocal matter, and the butcher or wool seller is tied to his regular customers in the same terms as he to them.” Overcharge a man for your lamb, and he’s sure to overcharge you for his pots or give you a bad haircut when you patronize his barbershop. Merchants in the bazaar want the best possible price, of course, but they also rely on return customers—and those customers are their neighbors, family, and friends. As those of us who have visited bazaars well know, tourists and other outsiders not in on the game are easily and frequently fleeced.
    It is easy to conjure a scenario that mimics this dichotomy in our own everyday experience. Imagine you are looking for a used car of a particular year, make, and model. Now imagine that your good friend and neighbor is selling just such a car, as is a dealership 50 miles from your home. It is likely (though not certain) that you would prefer to buy the car from your neighbor for several reasons. Hopefully, you trust this neighbor, but even if you don’t, you know where he lives and it’s not far. Also, by buying his car you enrich him and therefore your neighborhood; perhaps your neighbor will apply the proceeds toward fixing his sagging garage or patching his roof. Purchasing your car from the dealership, by contrast, enriches only the dealer and his business while exposing you to a number of unknowns. There are pluses and minuses to each option, of course, but it boils down to this: When we buy a used car from a friend or neighbor, we feel like an insider. When we buy a used car from a dealer we don’t know, we feel like a tourist.
    In the Age of Cheap we are all tourists, blindly reliant on the seller to wring out the best price from his suppliers and to reliably pass those savings on to us. Retailers, and in particular discount retailers, reliably betray this trust. Nobel Prize winner in economics George Akerlof illustrates the problem with a thought experiment. Imagine that a quart of high-quality milk wholesales for $1.00, and a quart of watered-down milk wholesales for 60 cents. A typical buyer might willingly pay up to 80 cents for the watered-down milk and up to $1.20 for the pure milk. In either case, mutual gains would be made from the transaction: Both the buyer and the seller know what he or she is getting, and both end up with what might be considered a fair deal. But if the customer is unable to distinguish quality, both grades of milk must sell for the same price—about 90 cents a quart. Under this system, honest brokers of pure milk go bankrupt, while corrupt watered-down milk sellers flourish. So, logically enough, soon all surviving merchants are watering their milk and pocketing large profits, and consumers believe they are