Paean to true free market holdouts

As my regular readers know (probably too well) that I object strongly to the misuse of the term “free market”.  Too often it means that corporations should be free to do what they damn well please without pesky regulations like providing buyers with full information or air and water pollution reduction.

Well, there are a few markets where there are many sellers, not enough, but they seem to be holding their own.  These are locally-owned

hardware stores,
barbers and stylists
breweries
liquor stores
coffee shops
restaurants
co-op groceries
book stores (only one locally owned new-book store left in Duluth)

We’ve been doing our best to patronize all of the above, but sometimes one has no choice but to patronize the large corporations

building supplies
computers and other electronics,
cell phone service
drug stores
automobiles (but most dealerships are locally owned)
gasoline (but a few stations are locally owned)

Hm!  I know we need a new political party that represents all the people instead of a bunch of special interests.  Maybe it should be called the True Free Market Party!

Big corporations hinder little corporations

Not quite always, some little corporations do grow into big corporations and some big corporations buy from little corporations.  But think how hard it is for people to start a company in many fields.

When I grew up in Cleveland, there were many grocery stores in walking distance of one place we lived and there were many drug stores and grocery stores in another place.  By walking distance, I mean less than ten minutes, more like five minutes.  Since we moved to Duluth fourteen years ago, a state-wide drug store has closed, a city-wide drug store has closed, and only two independent pharmacies are left.  All the others are in large chain stores and medical centers.

Now suppose you start a small company that makes a skin medication.  How are you going to get it into all those chain stores?  Will the local managers of those stores have the authority to buy local products on their own, or will they have to get corporate approval?  It depends on the company.  But if you had access to locally-owned stores, you would have a greater chance of getting in the door.

I'm only writing based on observation and not personal experience.  I know people who know people who are active in such a small company, and I have observed their marketing results.  The company is Apolonia B, a maker of a skin ointment.  When it first came out, it was available at the city-wide pharmacy, Falk's Pharmacies.  Falk's closed all of its stores rather than compete with the big chains.

As my own jar was getting low, I wondered where I would get a refill.  I checked Apolonia B's web site and found one retailer listed - Whole Foods Co-op (not to be confused with the national chain Whole Foods Market).  Bias warning: we are two of many owner-members and we shop at Whole Foods Co-op regularly.

I can only surmise that being a locally-made natural-ingredient product, Apolonia B was an easy sell to the buyers at Whole Foods Co-op and was probably too time-consuming to try to sell to the big chains.

Our choices for buying locally are dwindling.  At least we have a great choice in locally-owned restaurants and even locally-produced beer, many local hair salons, several locally-owned coffee shops, three or four locally-owned hardware stores, and one locally-owned camera shop.

Commerce without connection

"Historians will tell you that nothing changed the American retail experience in the 20th century more than the shopping mall. Once developers clustered hundreds of stores in a single place (with ample parking), the American Main Street all but disappeared. People stopped seeing each other in the center of town. They felt less connected to their community — certainly less connected to its businesses."

Mitch Albom, Duluth News Tribune 2013-04-08

This quote was in "'Just browsing' may become a memory" also published on his website on 2013-03-31.

His article is on how the shopping on the web is changing our shopping habits as much as or even more than the shopping malls changed our shopping habits.

I grew up walking or taking a street car or bus almost everywhere I went.  At one place we lived there were three locally-owned groceries on our block and two store-front chains a bit farther.  At another place we lived there were three locally-owned drug stores in walking distance.

Now almost everything is chains.  The only locally-owned stores are restaurants, bottle shops, hardware stores, and some gas stations.  I really appreciate the few of these places where I can walk in, know the names of the people behind the counter, and be known by them.

Executive pay and customer satisfaction

Yahoo had a list of 15 worst companies for customer satisfaction. http://finance.yahoo.com/news/the-15-most-disliked-companies-in-america.html  I wondered how the CEOs of these companies ranked in pay.  I found a list of the top 500 highest-paid CEOs at "Gravity Defying CEO Pay". h

Matching the two lists, I found the following selection:

Time Warner 6th worst, Jeffrey L. Bewkes, 62nd highest, 19.79 million annual pay, 10.3
Comcast, 4th worst, Brian L. Roberts, 70th highest, 18.77 million annual pay, 17.5
Century Link, 11th worst, Glen F. Post III, 121st highest, 13.74 million annual pay, 1.25
Delta Airlines, 10th worst, Richard H. Anderson, 130th highest, 13.17 million annual pay, 1.37
Aetna, 13th worst, Mark T. Bertolini, 329th highest, 4.76 million annual pay, 0.37
United Airlines, 5th worst, Jeffrey A. Smisek, 346th highest, 4.36 million annual pay, 0.87
American Airlines, 8th worst, Thomas W. Horton, 482nd highest, 1.25 million annual pay, 0.16
Bank of America, 15th worst, Brian T. Moynihan, 447th highest, 2.26 million annual pay, 0.15
Charter Communications, 3rd worst, Thomas M. Rutledge, 460th highest, 2.00 million annual pay, 0.67

The final figure in the above list is the annual pay divided by the Forbes ranking on worst customer service.  Notice how the top two highly paid CEO have the worst ranking.  To be fair, I haven't ranked those companies with good or excellent service.  But could these CEOs executive excessive salaries be partly because they aren't involved in "free market" capitalism?  How much competition do phone and cable companies have?  How much real competition do airlines have?  I am thankful that there are still local banks to provide competition for the mega-banks.

Who was at the bottom of the highest paid list?  Larry Page of Google with zero salary.  However, he does have over 16 billion dollars worth of Google shares out of nearly 192 billion of capitalization.  Many of us have a love-hate relationship with Google, how many of us can go a day without using some Google service?
Should anybody get nearly 20 million dollars for making a lot of people unhappy?  Should anybody get even 1.25 million dollars for poor service?

Where do I get good service?  From locally-owned businesses - BAM Style, Minnesota Surplus, Denny's Lawn and Garden, and many others.  Some of the owners may be millionaires, but that is their net worth, not their annual salary.  And I get to talk directly with the owners. Do you think Glen F. Post at 13.17 million per year would talk to me about Century Link's customer service?  See "Who is worth more, the CEO with rigid rules or the employee giving excellent service?"