The Cost of "Saving" (Part 1)

Note: this is the first of 2 articles that I wrote for the Casey County News here in Kentucky. Although it - and the 2nd article which will be posted in a few days - were written specifically with the City of Liberty & Casey County in mind, the core concepts can just as easily be applied (with a little tweaking) to any community anywhere in the U.S., and probably to many in other countries as well.

For the past several decades, small businesses in America have been holding the short straw during a trend which has seen consumers consistently bypass their hometown stores to opt instead for shopping centers, outlet malls, and big-box retailers. The conventional wisdom has always been that this is perfectly acceptable, and is, in fact, the very allure that makes doing business in a free-market society so appealing in the first place.

Run your business well. Crush your competition. Get rich.

What’s not to like? Especially when we - as consumers - are the ones who benefit from the whole process by being able to save money and live better. It’s a valid argument; but is it true? Are we really saving money, or for that matter, living better?

To decide, it’s important to first understand the motivation of the large, publicly traded corporations that run the majority (if not all) of these big box retailers and savings superstores. Publicly owned corporations are, by design, intended to do one thing and one thing only: make money.

That’s it.

They are not designed to save people money, create good jobs, provide quality products, or save the environment; those things – if they happen at all – are merely side effects that were necessary in order to achieve the main goal. If they could do without them, they would.

Publicly traded corporations make money. That’s just what they do. And not only do they have to make money, but they have to make ever increasing amounts of it to satisfy Wall Street and the shareholders who own their stock. For smaller corporations, this isn’t at first very difficult to accomplish, but as they grow in size, the business model of perpetually increasing profits becomes harder and harder to achieve.

In order to maintain that momentum, something eventually has to “give”, and it does. That’s why we see things like massive layoffs, mergers, restructuring, jobs moving overseas, and lower quality of products due to cheaper & flimsier materials that require the same item to be purchased over and over again. (I can personally share many horror stories regarding vacuum cleaners, doorknobs, coffee makers, and can openers.)

In our lust for those “low, low prices”, we have essentially created a world where almost everything we buy is junk, while in the process we’ve given ourselves less money to spend and fewer options of where to spend it. I’ll ask again: Are we really saving any money or living any better? Is the short term fix we get from “saving” a few dollars upfront worth the long term economic damage that occurs both to our communities and ourselves?

Whether we intend it or not, every dollar that we spend outside of Casey County is gone forever. It will never be recycled within our community. It will never be spent at a local business, or contribute to a local charity, or be added to someone’s paycheck, or result in a new job. Most likely, it will wind up in the pocket of a nameless shareholder who has done nothing to earn it and couldn’t care less about the people living here.

That said, no one should hold any malice to large corporations in general. They are simply doing what they are supposed to do, and doing it well. And, without a doubt, there are some things that simply would not be available to us at all if they didn’t exist. The question arises, however, about how much of our money should be spent to make their world better as opposed to making ours better right here at home?

Click here for The Cost of "Saving" (Part 2)