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Vouchers and “Crappification”

February 12, 2014

As readers may realize, I’m a big fan of Yves Smith who writes the Naked Capitalism blog.  And I’m usually a fan of James Surowieki who writes the economics column for the New Yorker… but Yves Smith’s recent blog post completely undresses Surowieki’s thinking about brands. In his current New Yorker column Surowieki uses “…the backlash against yoga clothes maker Lululemon” whose quality declined as evidence that informed consumers will flee a product once they realize the quality is diminished. Smith’s extended response is summarized below with my emphasis added: 

 The reason “brands have become more fragile” does not not reside in demanding, disloyal customers, but in short-sighted corporate behavior. Surowiecki does point to the early 1980s as the beginning of the sea change, but the driver was a shift away from businesses focusing primarily on good old fashioned success in the marketplace… to focusing much more on financial results as the key determinant of success. That orientation arose as raiders, later rebranded as leveraged buyout firms, and now private equity, took over companies, sold unproductive assets, piled on debt, and pushed hard to wring out costs. While many companies were so fat that a lot of overhead could be reduced without affecting production and marketing, the pressure to reduce costs soon moved into areas that involved manufacturing and product quality. Companies began subtly, and then more overtly, lowering product quality and running on brand fumes.

And even though Surowiecki talks about quality, it’s important to remember that branding is about consistency: you are providing a consistent set of product attributes at a certain price level….

What Surowiecki is talking about is that consumers are engaging in a long-overdue and largely futile backlash against the crappification of almost everything. I’m not a car buyer, but I understand some high-end brands like the Lexus and Prius have stayed true to their consumer promises. But the trend overwhelmingly is the reverse. Let’s give some examples:

Smith’s examples include white goods (ranges, washers, dryers, vacuum cleaners, etc); tools; high-end and mid-price clothing; and mattresses…. products that used be be consistently high quality but are now essentially consumables. Smith concludes with an acerbic paragraph:

But apparently Surowiecki lives only in the Lexus/iPhone market and has somehow managed to miss how the overwhelming majority of manufacturers seem perfectly willing to adulterate their good and risk consumer rejection. But since so many are willing to join them in the race to the bottom, the Lululemon-esqe rebellions are few and far between.

What does this have to do with schools? Vouchers, the chosen solution of many reformers” are a form of consumer choice and in that paradigm schools are a “product” that can be acquired the same way yoga pants or automobiles are acquired. Schools are a “product” that “private equity” looks at rapturously because schools are “…so fat that a lot of overhead could be reduced without affecting production“, especially if “production” is measured by standardized tests. The whole notion of instituting charter schools with TFA staffers is to provide a means of eliminating legacy costs like pensions, benefits, and relatively high wages paid to teachers… the whole notion of using standardized tests to measure “production” is to demonstrate to the public that the “overhead can be reduced without affecting production“… and if privatized schools provide the same level of production for a lower cost everyone wins. Taxpayers won’t see increases year-after-year and shareholders will be happy—- for a while. But… as Smith notes, “…the pressure to reduce costs (will soon move) into areas that involve manufacturing and product quality. Companies (will) began subtly, and then more overtly, lowering product quality and running on brand fumes. She defines the phenomenon of “lowering product quality and running on brand fumes” as “crappification” and she believes— as I do— that EVERYTHING except the most expensive products in our country is being “crappified”.

We could stop “crappification” if we were willing to pay a little more… if we had our clothes manufactured in factories that safety standards that our corporations disdain… if we paid more for products that were manufactured by people making a living wage and receiving decent benefits– whether those people were in Viet Nam, China, India or the US… if we allowed our government to enforce the laws on the books that are designed to keep the air and water clean… Product crappification reflects a crappification of our workplaces, compensation, and environment and it COULD be stopped if we changed our focus to long range benefits for citizens as opposed to short range profits for shareholders.

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