My issue with Capitalism: The only way to do things right, is to do things wrong.

First off, I don’t think capitalism is bad. I think capitalism done right is how countries are made great. (The U.S. has had a LONG run of greatness due to capitalism done by giving the customer great service and products) I believe that every system has problems and that the best possible system is the one with the least amount of problems.

Secondly, this will be my ONLY post on economics (hopefully). If you have anything worthwhile to add, please feel free to comment, but if it’s critical towards ME, contains profanity or useless banter, it will NOT be accepted. That being said, I look forward to hearing other people’s opinions on the issue. So let me continue…

Being a part of a business in a cut-throat industry has opened my eyes to some dangerous truths. I imagine it’s very similar to what happened to the mom & pop’s general stores when Wal-Mart spread like an infectious bacteria, growing at an exponential rate from the small one-store operation in Bentonville, Arkansas, to a gargantuan mega-corporation with it’s stranglehold in more than 14 countries outside of the U.S.

Since I can remember, the industry I am involved in has been one of healthy competition, driven by a mix of customer service, quality of material and, least of all, price (though in Atlanta prices are lower than any other city in the Southeast).

In the past few months there has been a shift from healthy competition to outright dog-eat-dog survival, driven only by prices that are often BELOW the company’s profit margin. Take a moment and take that in. Companies are willing to LOSE money on almost every sell. The companies that are willing to leverage lost profits are, for the most part, backed by internationally traded, mega-corporations who have been willing to throw money at these companies for the past few months, with no APPARENT reason (I give my rational theory later).

What’s worse: The consumer is willing to pay the lowest price possible to save a few dollars, without even realizing the lasting effect this will have on THEIR bottom line.

Think about this: When a distributor (We’ll call it Corp A) is willing to drive it’s prices $1,000 below every other distributor (We’ll call them collectively Corps B-F) and consumers buy at the cheaper price 75% of the time, a majority of Corps B-F will go under, and leave only Corp A to reap (rearrange the letters to get what they’re really going to do to the consumers) profits at a margin far higher than Corps B-F were willing to sell at from the beginning.

So 6 months down the road you’re looking at paying HIGHER prices to Corp A than you were going to pay Corps B-F, and doing so at a loss of quality in material and customer service. 


The true crime: Consumers will complain that Corp A doesn’t do anything right and wish there was someone who could give them the quality materials they need at a price not bloated by greed, with good service, all the while being totally oblivious to the fact that it was their in the first place that those companies weren’t around anymore.

What are your thoughts? Is the only way to do things right in capitalism (to increase SOMEONE’S bottom line, other than the consumer) to do the slightly unethical thing by driving everyone else out of business by compromising your shareholders and driving margins below profitability?

Is customer service worthwhile anymore?

Tags
capitalism, customer service, industry, price, probuild, walmart

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