Salmonella on the roof of your mouth: The cost of cheap

by Beacon Staff • February 18, 2009

It's a helicopter mom's nightmare. Instead of peanut butter giving your kid a fever and hives, this PBJ kills.

Actually, none of the tainted peanut products in December and January's salmonella outbreak went into peanut butter, so sandwiches are safe. But salmonella-tainted peanuts from the Peanut Corporation of America used in Trader Joe's pad thai, Kellogg's peanut butter crackers and some 2,220 other food products caused nine deaths and 19,000 illnesses across the United States. By Sunday, all the products had been recalled, one of the largest product recalls in U.S. history. Texas officials ordered off the shelves all products ever distributed from a Plainview, Texas plant upon discovering that its air circulation system contained "dead rodents, rodent excrement and bird feathers"-a Sinclairian scene if ever there was. Peanut Corp. entered Chapter 7 bankruptcy (liquidation) on Sunday.

Before the scandal, the company manufactured about 2.5 percent of the nation's peanuts. Good sense dictates the Kellogg Company and yuppie-friendly Trader Joe's would do business with the other 97.5 percent, the lion's share of the industry that was safe. Not, as an industry insider said before the disaster, "a time bomb waiting to go off." Peanut Corp.'s shoddy practices were common knowledge within the peanut industry.

Business, though, dictated exactly what happened. Peanut Corp. used low-grade, low-cost peanuts, making them compatible with the business model of American corporations-who aim to cut costs and ship out cheap-as-can-be product.

We want our stuff cheap, as we should. There's no reason to fritter away money on expensive products when cheaper ones do the job just fine. But the peanut case shows us that ultimately, the cheapest products can cost much more.

This can be explained by the economic concept of "externalized costs": When a product's cost is shifted from its purchase price to someone or something else. In this case, Peanut Corp.'s negligence created a massive cost outside of what they charged clients: nine deaths and the care needed to nurture twenty thousand sick back to health. Taxpayers-Who else?-will foot the bill.

With Peanut Corp., Kellogg's et al. thought they were saving money. But that bargain peanut butter was more costly than caviar. Consumers and corporations must always be on the lookout for similar schemes in bargain prices. If a price seems too good to be true, there's a good chance it is.

Besides endangered consumers, there are other victims of externalized costs across the world economy. Workers who are paid with proverbial peanuts. The environment, upon which many businesses and products inflict enormous harm. People and wildlife, who are displaced by factories or mines. Taxpayers who are forced to cover the difference when companies low ball workers on benefits. Cities and towns who lose on revenue when corporations demand property tax exemptions. These practices allow companies to sell products for less than they truly cost.

"In other words," environmental activist Annie Leonard says, "we aren't really paying for the stuff we buy." The externalities are.

These costs aren't on your receipt, but they are important. And they can make supposedly cheap products very expensive.

For example, a medium iced coffee from Dunkin' Donuts costs $2.40. This figure does not take into account the effect manufacturing, transporting and disposing the product has on the planet. It also does not account for the human cost of extracting oil (for the plastic cup) from war-torn Iraq or coffee beans from Columbia, where farmers are often unfairly compensated for their crop.

Wal-Mart charges less than $49 for an iPod shuffle. Not included in this price is the cost of employee healthcare, which is often provided by state welfare programs-instead of Wal-Mart, the world's largest, most profitable retailor. Also not included: The $1.2 billion in subsidies state and local governments have used to woo Wal-Marts into their backyards.

Not included in the $3.49 bag of Doritos, or that $1.49 Coke is the $5 billion the federal government spent on corn subsidies in 2006. (That money could have otherwise been student loans, or subtracted from the national debt.)

So in bargain-hunting, we must look beyond the sticker price, and pick products that fulfill our needs and are the best for our society, for our planet and for its people. These products are probably more expensive in the traditional sense, but ultimately, there are savings, direct (avoiding salmonella) and indirect (helping avert climate change). From peanut butter to Wal-Mart and beyond, value is not synonymous with extreme thrift.

Of course in the case of Peanut Corp., consumers did not realize they were in imminent danger. But you can bet that from this moment on, when Kellogg's buys peanut butter, they'll play it safe.

iChris Girard is a junior political communication major and is opinion editor of/i The Beacon.