If you are in the habit of bargain hunting or trying to get free stuff, think again – especially if you are fortunate enough to be in a secure well-paid job. Look for quality, not price, and expect to pay for quality goods and services. In addition, be generous because it is generosity, not miserliness, that creates prosperity. [Let me explain.]
This is an edited & abbreviated excerpt from an article (see original article* HERE) by Frances Coppola (coppolacomment.com).
The madness of crowds – when everyone is cutting costs, hunting for bargains and trying to get something for nothing, no-one can make any money and this bears down on incomes.
- If businesses are forced to cut prices,
- they won’t increase wages,
- they may lay off staff,
- they may cut working hours.
- When the employed find their incomes squeezed,
- they stop using the services of small businesses and the self-employed.
- When small businesses and the self-employed can’t find work,
- their incomes crash and many go out of business.
Miserliness doesn’t lead to prosperity, and deflation is not benign. It causes depression and poverty, particularly among those who lead precarious lives… pushing down prices…has unfortunate consequences, not just for those working in that sector but for society as a whole.
If everyone expects to pay rock-bottom prices, or preferably nothing at all, price is no longer an indicator of quality and Gresham’s Law prevails. Why put in the time and effort to produce good writing or deliver good care? You won’t be paid for it. There is no point in being more than perfunctory. If you love your work, and feel that you can make a difference by doing a good job, you will simply be exploited. Might as well sell lemons.
- The tendency for poor work to drive out good work when prices are very low degrades service industries.
- [For example,] we decry the declining quality of online articles and long for something better written and researched, not seeing that this is the inevitable consequence of avoiding paying for good writing (I confess, I avoid paywalls too).
- In the care sector, reluctance to pay for quality is disastrous.
- When good quality care is driven out by bad, the result is abused children, neglected elders and suffering among the sick and disabled.
- When benefits are cut because well-off people with good jobs object to those less fortunate than themselves apparently getting something for nothing, suffering is amplified.
- Miserliness creates misery.
Scrimping and saving in the private sector can be offset by generosity in the public sector.
- When people and businesses won’t spend, government must but we have now convinced ourselves that government has run out of money too, and so must scrimp and save like us.
- When government becomes as miserly as the private sector, the only source of income becomes external trade. This can work well if other countries are enjoying the good life, as Germany discovered in the mid-2000s but,
- when the whole world decides that there is no money left and everyone – government, business, households – must scrimp and save, the result is global misery.
- When every country in the world is pursuing an export-led growth strategy, export-led growth becomes impossible. We simply end up with competitive monetary easing as countries try to steal demand from each other, falling global trade and declining global growth. That is where we are now.
- Historically, such a position has been followed by growing use of tariffs and barriers to trade and restrictions on the movement of goods and people and, since everyone likes to find someone else to blame for their own problems – and governments are particularly keen on this – global miserliness tends to lead to social and political unrest, cross-border skirmishes, local conflicts and outright war.
We desperately need a change of attitude…to change our behaviour…
- If you are in the habit of bargain hunting and trying to get something for nothing, think again – especially if you are fortunate enough to be in a secure well-paid job. Look for quality, not price, and expect to pay for quality goods and services.
- Be generous. It is generosity, not miserliness, that creates prosperity.
*http://www.coppolacomment.com/2015/10/the-something-for-nothing-society.html (Image (unsurprisingly) from http://www.letssavemoney.com/news/article/1225/free-stuff-get-something-for-nothing/. Since they are advising people on how to get something for nothing, I didn’t pay for my use of the image. I’m sure they won’t mind, will they? )
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