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People sometimes overly generalize about the economy and how people spend their money.
A case in point is a column in the New York Times by Robert Reich, who was Secretary of Labor in the Clinton administration. But before I get to that, I first have to point out that my wife and I don't throw our money around. We are approaching the point in our lives where we will have to live on the proverbial and dreaded fixed income. So we are frugal people.
That much said, we'll get back to Mr. Reich. He asserts that today's economy offers Americans a Faustian bargain. We are lured by low prices at Wal-Mart and other Big-Box retailers, says Mr. Reich, but at the same time, these stores mercilessly hammer suppliers to cut prices. If they don't, the business goes to China or another Asian nation. In the process, the working conditions and wages of Americans deteriorate. Consumers perpetuate this downward spiral by continuing to shop relentlessly where we find the lowest prices.
Mr. Reich then cites other examples where prices dominate. He says that although he regrets what is happening to people in the airline industry, he still gets on the Internet to shop for the lowest airfares he can find. Likewise, he mourns the closing of a bookstore in his community, yet he helped shut it down by buying books from Amazon.com. He then poses a rhetorical question: "I look on the Internet to find the lowest prices I can and buy airline tickets, books, and merchandise from just about anywhere with a click of a mouse. Don't you?"
"Don't you?" Those words get my dander up. No, Mr. Reich, my wife and I don't constantly do bottom fishing. We prefer something other than carp. We watch our pennies, but we haven't sunk so low that scrounging has become the guiding principle of our existence.
We almost never go into a Wal-Mart. We find their range of merchandise narrower than it is in stores that spend money on a decent inventory. We recently shopped for a television set at Wal-Mart and found the selection much more limited than it was in conventional appliance stores. Even when shopping for a particular type of light bulb, I couldn't find what I needed. On top of it all, we find the ambiance in Wal-Mart downright unpleasant.
My wife is the primary shopper, and her first choice always is to patronize the oldline department stores. (These are the ones supposedly on their way to extinction.) Next, she goes to J. C. Penney or Sears, two more chains put on the ropes by Big-Box retailers. She even tries to avoid Target if she can.
When we buy an airline ticket, we want a direct flight and broad choice of departures. The only way we get them is to fly Continental, which uses our hometown as a hub. We do no comparison shopping whatsoever. And we pay for the tickets with a Continental credit card, for which we pay an annual fee and get mileage credits, something the experts tell us is foolish.
When we want to buy a book, we go to our local Barnes and Noble, not Amazon.com. We brew Starbucks coffee in the morning because it tastes good even though it is pricey.
Again, none of this means we throw money around. We rarely eat out, even at fastfood restaurants. We keep our vehicles for a minimum of 10 years. We don't go to Cancun, don't take the grandchildren to Disneyland, and vacations are spent visiting family members. But scrounging for the lowest price is something we don't do.
Wal-Mart became successful by picking off small-town merchants one by one. They also plopped stores down in the middle of nowhere, drawing in rural customers with no competition for a radius of 50 miles. All of this flew in the face of conventional wisdom, so experts began groping for a reason the strategy worked. They said the stores were successful because of rock-bottom prices. I'm hoping that really isn't the reason. If our future really is going to be driven by the lowest price of everything, what an impoverished existence we face.