How the Consumer Became King

Stores don't open on Thanksgiving because they want to; they open because shoppers reward those that do.

Some 200 retailers nationally opened their doors on Thanksgiving Day, and a lot of others did so at midnight. Shoes, jewelry, sporting goods, flat-screen TVs, fancy chocolate—if you wanted it, you could buy it before the football games were finished.

This development provokes all sorts of laments. Family togetherness is getting short shrift. Commercialism has become an epidemic. The urge to buy has trampled more wholesome traditions.

The critics may be right. But what is most obvious in the expanding store hours is an item of good news: In America, the consumer is king.

This has not always been true. Producers once reigned supreme. When I took economics in college in the 1970s, my instructors continually highlighted the danger of large firms that could restrict production to keep prices unreasonably high. This was often taken as proof of the need for strict government regulation.

Monopolies and oligopolies were seen as a constant threat, and with some reason. In one major industry after another—cars, steel, oil, telecommunications, computers—there were only a few relevant firms, and they divided up growing markets without much fear of competition.

Fifty years ago, when you needed a car, you could choose from General Motors, Ford, Chrysler and American Motors, and that was about it. Steel? A handful of producers, almost all of them American.

For most goods, consumers had only a few options—and limited information about those. If they bought a radio or a pair of pants that proved unsatisfactory, they were often stuck. Sellers had the upper hand.

But no more. Consumers can choose from a dizzying array of options and prices.

"If you want to see product differentiation in action, go to PetSmart," advises George Mason University economist Thomas Hazlett. When he goes to get treats demanded by Girlfriend, his German shepherd, he sees food "for puppies, for old dogs, big dogs, small dogs, healthy treats, diet treats, multiple flavors of everything." When he and I were young, dog food was dog food.

Corporations are ever more eager to please their clientele. Money-back guarantees, no questions asked, used to be the exception; now they're practically mandatory. Auto warranties run as long as 100,000 miles, and Chevrolet has even offered buyers 60 days to drive new cars—and return them if they aren't happy.

A number of changes have transformed the economic landscape. Among them:

*International trade. The biggest spur to higher quality and lower prices has been the proliferation of competitors from abroad. In 1965, U.S. automakers had 90 percent of domestic sales. Today, the figure is less than half.

Toyota and Honda made huge inroads by offering better cars or lower prices, or both. Foreign makers of other goods have done likewise.

*Easier access to goods. In the old days, stores were few in number, and you had to physically enter them to make purchases. Today, there are towns that seem to consist of nothing but shopping centers jammed with retail outlets—which have to entice shoppers who can go online to get products delivered to their doors. Shipping is often free.

*More information. Want to know what people think of their smartphones? Hotel accommodations? Winter parkas? The problem today is not finding information but sorting through it all. Our parents and grandparents, by contrast, were largely dependent on what they heard from friends and relatives.

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  • InlineSkate||

    Sort of a shame that so many people want to go back to good ole days of protectionism. Where if it isn't American you can't have it. The same protectionist mentality that allows monopolies to form in the first place.

  • The Late P Brooks||

    Stave Chapman is an idjit.

  • EDG reppin' LBC||

    Care to elaborate?

  • robc||

    His body of work has proven it consistently.

  • robc||

    This article seems fine however, but the overall point from the departed/tardy is still accurate.

  • EDG reppin' LBC||

    I figured Mr. Brooks had some former beef with Chapman. But this article is good. I would save the insults until Chapman shits it up again.

  • Ptah-Hotep||

    His body of work has proven it consistently.

    This must be an outlier then.

  • Hyperion||

    We are quickly returning to that model, and beyond. Cronyism, if left unchecked will insure that there is virtually no competition in the future. There will only be a handful of megacorps who will be in a joint collusion with the federal government. Everyone will work for them and innovation and progress will die a slow and painful death. Welcome to the USSA.

  • T||

    Nope. 49 employees or less, or megacorps. That's what we're looking at in the future.

  • Hyperion||

    Those with 49 or less employees will be drivem out by more and more regulation, or just gobbled up by the monster gubmint/corp hybrids.

  • sarcasmic||

    Big Brother and the Holding Company.

  • Almanian.||

    Fifty years ago...for most goods, consumers had only a few options—and limited information about those. If they ...[were] unsatisfactory, they were often stuck. Sellers had the upper hand.

    Um, Ok, maybe in some cases "fewer" absolute choices, but for the rest of it...[citation needed]. What planet are you reporting from Chapman? Jesus you bring the stoopid hard.

    Ima leave it there - this is just nonsense.

  • Hyperion||

    In my view, more choice can only come about from free markets. But there also have to be available a means of economically viable production, a profit motive, and enough competition to bring about those choices.

    So at the time that all of those things started to come together, from the industrial revolution forward until now, the consumer did start to become King.

    Sadly, our betters have decided that they need to bring about the death of that state through regulation and cronyism. I am afraid that the King will soon be dead.

  • Almanian.||

    I just believe the consumer's always been king in the US (granting certain limited periods of teh evul monopolies in some areas).

    Chapman also ignores other factors that I think were BETTER in the 60's/70's in terms of consumer choice that have been extinguished.

    So I just don't buy that consumers weren't "king" before and now they are - they've always been king or Studebaker, Packard and Kaiser would still be making cars/trucks (among many examples of businesses killed by consumer choice).

  • Almanian.||

    Please feel free to remove any extraneous apostrophes as you see fit.

  • Hyperion||

    Having been around for more than half a century now, I can completely agree with what you are saying. I never remember a time when a product came out, there was typically at least one competitor if not several, and as new models came out, the one before became a bargain and new technologies always became a better bargain with time.

    Unfortunately, the proglodytes hate this. They want a single choice, because it insures fairness. And they also want control, at any cost. And they are going to get it. I for one am feeling that we cannot suffer these insufferable assholes much longer. I don't want to live in a little gray 200 sq. foot unit exactly like everyone elses and drive the same car, work for the same employer, eat the same food, etc., etc., as everyone else. But the luddites are in control and this is the future unless we break free from them.

  • anon||

    Chapman is right about limited information; being able to price shop from your phone while in a store contemplating a purchase, and also read consumer reviews/etc, has empowered consumers at the expense of distributors/retailers.

    Information always benefits the buyer, usually at the cost of the seller, by either price or sales.

  • Rasilio||

    "Fifty years ago, when you needed a car, you could choose from General Motors, Ford, Chrysler and American Motors, and that was about it."

    50 years ago was 1962 and off the top of my head the following were all also available in the US market...

    Studabaker
    Hudson
    Volkswagon
    Toyota
    Datsun (Nissan)
    Honda
    Renault
    Fiat
    Jaguar

    There are probably a handful of others I am missing off the top of my head.

    Now it is true that all of these combined probably only equaled the sales of AMC, the weakest of the big US manufacturers, but the point is that consumers had at least as many options of manufacturers then as they do now. In the cases where they did not it is typically either because you were either dealing with new technology and therefore a not fully developed market (televisions, transistor radios, etc.) or a market whose global infrastructure was shattered by world war 2 a mere 15 years earlier (eg Steel).

    Another factor you miss is that at that point in time technology was still evolving to allow more products to be mass produced. For example, in the 1920's there were few ready made clothing manufacturers because the technology did not exist to make large quantities of clothes in consistant sizings nor was there any consensus on how clothes should be sized. As a result most clothing was either made in the home or custom made by hand by a Tailor.

  • Rasilio||

    The simple fact is that in the US the Customer has ALWAYS been king and there has never been a monopoly or oligopoly who was able to artificially restrict production to spike prices (or for any other purpose), at least not for more than very brief periods. What there has been is a constant give and take between a small number of mass producers and a large number of custom producers as changes in technology and consumer preference shift. The 1960's was a period of consolidation and mass production as technology allowed relatively high quality cheap manufacture, the 1990's and 2000's it has been the reverse as technology has allowed smaller manufacurers to capitalize on the benefits of lower cost manufacturing and distribution while being more responsive to market niches.

  • Almanian.||

    Tis is what I was too lazy to spell out - well stated, Rasilio!

    I don't see "consumer is king" as new at all - just that there are more choices in some (many, many) things, and more limited choice in others (think of all the regs and laws since 1960 that limit/prohibit things you could buy back then....WHERE ARE MY JARTS???!!)

  • Hyperion||

    All of that choice leads to inequality and that is bad. But if I can make just one proglodyte hurl themself off a bridge because my cell phone is better than theirs, then I am all for these choices.

  • Almanian.||

    I hope they land on a trash pile of Jarts.

  • Hyperion||

    And if they survive, then we can hunt them down with our plastic boomerangs, lawn darts, and Official Red Ryder Carbine-Action Two-Hundred-Shot Range Model Air Rifle. Point not to terminate them, just torment them for as long as possible.

  • anon||

    Commercialism has become an epidemic.

    And that is a Good Thing(tm).

  • Brandybuck||

    I think his characterization of 1970s consumer landscape misses a major point: the "King Producer" monopolies and oligopolies were largely the result of government policy. You had only three television stations because that's all the government would license. You had only three auto manufacturers as an unintended consequence of the dealership system, which was driven by state laws. Only three major beer producers because of the distribution monopolies. Etc, etc.

  • OldManJoe||

    On one hand, yes, the consumer has more choices, and that is good.

    However, the Thanksgiving thing is not about consumers. If those same consumers could get the same deals offered a week later or earlier, they would shop at that time.

    Historically people shopped on "Black Friday" since it was the start of the "Holiday" season. Then the stores started giving bigger deals earlier in order to grab those sales, and the consumer responded to the deals, not to the times the stores opened.

  • joey89924||

    There will only be a handful of megacorps who will be in a joint collusion with the federal government. 93C46

  • Rick Santorum||

    This development provokes all sorts of laments. Family togetherness is getting short shrift. Commercialism has become an epidemic. The urge to buy has trampled more wholesome traditions.

    The critics may be right. But what is most obvious in the expanding store hours is an item of good news: In America, the consumer is king.

    I'm glad that our nation's traditions are quickly being erased in favor of CHEAP STUFF.

  • Xerographica||

    There are 64 google search results for "the taxpayer is king". Is that a problem?

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