Tuesday, September 4, 2012

Is the price right?


Buoyed by the success of my economic theories, I continue my analysis of the consumer-side aspects of shopping. Unlike my other entries, this one is firmly rooted in  my own knowledge and experience. I am a professional shopper, and in my day job I shop for 40+ hours a week. To hone my professional skills I also shop a lot in my spare time, and for the benefit of my employer I often venture in new directions trying to broaden my horizons and stimulate overlooked parts of the economy.

So let me start with a complaint - shopping is not what it used to be! K-Mart, Walmart, Expedia (the list is long) have made the experience one-dimensional and not exciting. Excessive focus on price and endless bargain hunting is taking away the fun, and the economy takes a beating in the process as well. Needless to say, this is not the way to shop.

To start from the basics - an act of purchase is a complicated interaction. It is  commonly presented as an acquisition, but in reality it is so much more.
It represents a choice on part of a buyer, it rewards someone else's time and effort, it signals one's political leanings, and it can be propagated through social networks. It is the most important way of realizing one's freedom of choice and expressing one's individuality. One can exert a great deal more power through shopping than political participation. Rather then theorize let us consider two specific examples: buying eggs and buying a graduate education. I encounter both on a daily basis and over time I let the synergistic relationship develop.

Eggs

When they ask you "How do you want your eggs?"  you might say "Scrambled" or "Poached" but I want to say  "free-roaming",  "happy", "cage free" and so on.  For close to ten years I have been buying eggs that have been "certifiably humane", "antibiotic free", "from free roaming hens" which are "running on outdoor pastures", and which are  "chicken shit covered". Initially these eggs were hard to find, but after a few years a decent selection emerged and like a russian mogul I was consistently choosing the most expensive kind that met the above conditions. In hindsight, I am glad to report that I did not belong to a measure zero set. Whether it was compassion for comrade hens, longing for the organic and  natural, or simply a search for a better egg - happy eggs took over entire supermarket chains and they are here to stay. They cost as much as three times more than unhappy ones, but so what - how much cholesterol can you take anyway. Is this price right? You bet it is! Are happy eggs better than unhappy ones? Perhaps. Do you feel better eating happy eggs?  A whole lot!
So here is my "Right price" formula

               One third for the egg and two thirds to the hen.

Wow, I know, this suddenly sounds like a lot, even though now the fate of humanity might be hanging on your everyday purchases.  You need a paradigm shift and a great deal of empowerment. You can no longer think of shopping as acquiring  stuff. It is more like planting a tree; a big part of a reward is in being outlasted by the results of your actions.

Pay more to get less - it is exactly the opposite of what they tell you, but exactly what is needed. We want to pay more to get less food, pay more to get cleaner energy, pay more to get veggies grown 50 miles from where we live, and so on.  It may be a hard sell and it might take a while before these ideas take roots.
But if shopping is going to be a guide to a better world then it is bound to be costly.   To implement this plan one desperately needs good role models.


Graduate students

Big Government may be in its death throes, but there is no better shopper than government. There are many things that the government cannot afford, but bargain hunting is never a way to stretch the tax dollar. To the contrary, lavish government spending is a way to offset multitudes of Walmart shoppers who ruin the economy and shop themselves into poverty and unemployment.
More to the point, investing in the education of a graduate student is no different than buying an egg. With eggs we know that some will contribute to a delicious souffle, some will wither in the refrigerator, and some may break on the way to the kitchen. Like it or not, an analogous fate awaits the best minds of our generation. For that reason, when government sponsors a graduate student, the same "Right price" formula applies - one third for the egg and two thirds to the hen. The hen in this case is the university that is in charge of infusing our egg with knowledge.  To be exact, government funding of graduate students comes in three more or less equal pieces: stipend for a student, tuition for the university, and a generous dollop of money for the university called an overhead. The first piece represents the price of an egg, while the remaining two are contribution to the hen. A closer look will reveal that this scheme is based on the XII century crop-rotation system that was developed in Europe and abstractly it has the same nurturing ingredients.
The main point is that government will pay the price no matter what it is in spite of the fact that unlike eggs, the price of education varies a great deal more. Cost of training an ivy-leaguer who is  "free-roaming" and "cage-free" may be an order of magnitude higher than that of a poor sod coming from a cannibal hen who never saw the sun light and spent entire life on seven square inches of the cage bottom inhaling penicillin vapor.

In conclusion, I must admit that my egg buying habits were greatly inspired by  government ways of funding graduate students, and in turn, my unblinking support for the government support of higher education is a result of the transformative power of my egg buying program.

So if the government's shopping ability is greatly compromised it is up to you to pick up the slack and shop smart.  As painful as it may initially feel, let the "Right price" formula be your guide.  Whatever you buy, ask yourself  - how much did  I give to the hen?

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