an ode to coffee (why mass consumerism will ruin us all)

Starbucks has recently tested $1 coffee and free refills, in an effort to be more competitive with Dunkin Donuts and McDonalds. One dollar coffee. Does anyone else realize how absurdly cheap that is? I think, in our fast food nation, we’ve forgotten about the true cost of things.

When McDonalds turned beef into a commodity we could afford to eat every day (sometimes multiple times a day), it sent us hurtling down the road of cheap consumer goods (and global warming and obesity, but that’s a different post). Now, we’ve forgotten what quality means, and how much it really costs. I don’t eat meat, but even I can tell that the $2 Whopper at BK is nothing compared to the $35 steak at Morton’s. Comparing the two is like apples and oranges, and yet the comparison is made all the time. It is one thing not to be able to afford the pricey steak, it’s another to even think that the whopper is any sort of valid substitute. And yet, that’s what we’ve been led to believe.

And now, mass consumerism has ruined my favorite vice - coffee. Let me disclaim - I don’t drink Starbucks coffee. I find it overroasted and burnt. But I do respect them as a company because they tend to lead the socially conscious pack. I had hoped, as the economy took a downturn, that Starbucks would take a different approach - one of enhancing customer loyalty (perhaps even some in-store brewing of their fair trade blends). Instead, they’ve fallen prey to mass consumerism and cheaply produced goods.

Let me be blunt - $3 for coffee is not a lot. We just think otherwise, because we get so much crap for cheap. But good quality coffee should be expensive. It should also not be slugged down mugsful at a time (much like meat was never meant to be eaten so often). In a fairly priced market, with fair wages, coffee would possibly cost more. It should cost more.

One day, I want to see labeling detailing the true cost of goods. I want to know how many children were forced to carry 50-kilo bags of coffee cherries to make that cup of McDs brew. I want to know how many acres of rainforest were cleared for that cheap bag of beans from Dunkin. I want to know how much energy it took to produce my Starbucks latte.

The problem isn’t $3 for a cup of coffee. The problem is the ridiculous mark-up and the cheap cost of labor (and the strain on the global environment). I would like to think that Starbucks is taking a loss on that $1/cup in order to sell more, but I know that won’t be the case. Instead, they’ll undercut the Ethiopian co-ops and buy ridiculously cheap beans from subsistence farmers in Indonesia, further perpetuating the cycle of poverty and deforestation.

So I’m going to stick to my single-origin, fair-trade, organic, shade-grown beans and continue to brew my own $3 cup at home. I’m willing to pay the full price for quality and sustainability.

moves to make in the wake of a rate cut

The Fed lopped 0.75 off the fed funds rate this week, hoping to stimulate the economy. What does this mean for the average person? In general, it means there a few steps you should take to secure your finances in anticipation of a recession.

1. Lower your credit card APR. A drop in the fed funds rate is a drop in the prime rate, to which your APR is tied. If you have a good relationship with your creditors (ie, on time payments, longstanding account), now is the time to call and request they lower your rate, particularly if you carry a balance.
2. Pay off your credit card debt. That drop in the prime rate means a drop in the rate of your savings account. Consider putting a bit more towards paying off your debts at this time, but not so much to put your savings at risk. You still need a cushion, particularly if the job market tightens.
3. Refinance your mortgage. Mortgage rates will drop as well, so if you’re trapped in a variable rate, now could be a good time to negotiate a lower fixed rate. This is, of course, contingent on your having a decent credit rating. In addition, this could be a good time to buy a house as well, or apply for a HELOC.
4. Consider investing. Like weight loss programs, investments should be considered carefully, and with the assistance of an expert. A financial advisor can guide you in this area (Kiplingers is offering free advice this Friday). In general, though, as the stock market takes a downturn, index funds look appealing, particularly if you’re looking at 30 years or so of growth.
5. Buy a new car (soon). Consumer spending is down, and the rate just got cut. As new cars glut the market, dealers will be eager to sell 2007 models by mid-late 2008. You could negotiate a good 0% deal.
6. Go back to school. It doesn’t have to be a formal degree program, but if the job market tightens as well, this could be a good time to brush up on some skills, or learn some new ones.
7. Travel. Europe is out of the question as the dollar stays weak against the Euro. But several Latin American countries are tied to the dollar. In addition, the dollar still holds strong against several Asian currencies. Note: this applies only to those who are debt-free and in no need of major expenditures in the next couple of years.
8. Sit tight. If you have no need to do anything (buy a house, car, etc), then don’t do it just because the rate will be lower. Protect your assets first.