Cheap goods, push for lower prices has knocked out many small businesses

Posted 2 November 2016 at 11:09 am


Last month a news commentator said that people who have lost their jobs to trade deals no longer live with good-paying, lifetime jobs. They now live in an uncertain world where they will have to find several jobs during their lifetimes as not everyone is going to find a high-tech, high-paying job in the “new” economy.

The commentator also mentioned that small business growth is going to increasingly taking up the slack.

I immediately remembered that when I grew up small businesses seemed to be even more numerous and less risky than they are today. I will always remember the day my dad took me shopping for our first color TV. It was a small shop and we had to walk through the repair area to get to the new TVs in back. The owner told us the good and bad about each model. He explained why their prices varied. Why each model has different repairs costs.

One, the Zenith, had more tubes which were cheaper to repair and its layout kept the tubes cool. It was high quality and would be cheaper to repair. Another, the Motorola, had several circuit boards which were cheaper to start with but they were placed over the tubes so they would heat up more and be more expensive to repair.

What I ALSO remember was that the price of each set – there and everywhere else – was the price. No dickering. “Manufacturer’s Retail Price!”  My dad told me that the idea was that this would help assure everyone was paid enough to keep their doors open.

Then, just a few years later, I remember the push to end price fixing at the retail level. Some warned that it might hurt small retailers but others claimed that the extra service they offered and repairs would be enough to keep them going. We were all told the important thing was “freer markets” and “price competition”.

This all seemed to be OK but I was worried about the man in that shop. As a result I noticed when his shop stopped selling new TVs and later I noticed when he stopped repairing things and had to close.

In a similar vein a few years later I remember when businesses and consumers wanted tariffs lowered and prices went lower yet. Indeed, from my vantage point as a consumer I saw the push for cheaper prices play itself with clothes, cars, computers, circuit boards, and recently appliances, just to name a few.

What I am saying is trade deals like NAFTA did not cause our problems but were symptoms of the push for  “freer markets” and “cheaper prices” which were already well underway.

Change seems to be an inherent element of capitalism and its effective allocation of resources; I will let the economists argue those issues.

But what I do know if the only truly free market is the black market. Governments, laws and regulation shape them and set limits on behavior. Therefore, when I hear someone use the term “free market” I always wait to see if the speaker can define the problem or has a plan with detailed expected consequences.

When I hear someone rail against regulation I always wait to see which one, why is was or was not unwise, and how it could have been done better. I know to that everything government does, every trend in business, every advance in science, has both intended and unintended consequences so we need to be flexible and vigilant to make changes.

I will always wonder what would have helped my TV shop owner, my suit salesman, and my appliance guy, and my neighbor who worked at Harrison. They were this country’s backbone.

They all seemed to have been swallowed up by free markets and cheap costs. For some of them I am sure no thought was given about how to soften the blow while the rest of us benefitted.

And now we are back where we started with small business expected to take up the slack. We need to know if whoever is talking has a grip or reality or is selling us a bill of goods.  Therefore I actually look to see which plan starts out being most detailed, which has the best costing, which is the most flexible, and which makes the fewest  assumptions about how good it will be.

All of “my guys” deserved it then and we need it now.

Very truly yours,

Conrad F. Cropsey