The Robber Barons of Christmas

LvMIC:

At least I am surprised that wasn’t headline of this New York Times article:

Half off at the entire store at Ann Taylor. Sixty percent at Gap. Forty percent off almost everything at Abercrombie & Fitch.Aggressive last-minute deals in the days before Christmas are good for procrastinators, but they could be an alarm bell for the retail industry.

While scattered markdowns are standard every year, discounts across entire stores — which analysts say are more widespread than last year — suggest merchants are stuck with too much merchandise.

“It’s really a game of chicken,” said David Bassuk, managing director and head of the retail practice at the consultant firm AlixPartners.

Toys “R” Us announced on Thursday new deals on dozens of items for Friday and Saturday, including ‘buy one, get one half off” on popular toys like Legos. A sampling of other promotions: Up to 70 percent off toys at Amazon; up to 50 percent off gifts at Restoration Hardware; 40 percent off almost everything at American Eagle Outfitters, Talbots, Limited and Wet Seal; and 30 percent off everything at J. Crew.

“There’s been kind of a waiting game with retailers,” Gerald L. Storch, the chief executive of Toys “R” Us, told CNBC last week. “And it looks like the consumer wins.”

Reports of cutthroat competition often go hand in hand with pleas of worker/consumer protection from the state.  Since mom-and-pop (remember you are supposed to love these stores, don’t ask why) businesses have a tougher time competing with behemoths like Walmart, the media often champions the enactment of antitrust legislation to ensure a monopoly doesn’t take hold.  The same type of vitriol was thrust at industry leader Standard Oil over a century ago for its practice of aggressive cost cutting that brought cheap oil to millions.  In Power and Market, Murray Rothbard cites a passage from Isabel Paterson on this historic injustice:

Standard Oil did not restrain trade; it went out to the ends of the earth to make a market. Can the corporations be said to have “restrained trade” when the trade they cater to had no existence until they produced and sold the goods? Were the motor car manufacturers restraining trade during the period in which they made and sold fifty million cars, where there had been no cars before.… Surely … nothing more preposterous could have been imagined than to fix upon the American corporations, which have created and carried on, in ever-increasing magnitude, a volume and variety of trade so vast that it makes all previous production and exchange look like a rural roadside stand, and call this performance “restraint of trade,” further stigmatizing it as a crime!

When businesses shed costs, increase production, and lower prices, consumers always win.  The losers are those incapable of competing with newly adapted market practices.  They will find employment elsewhere satisfying man’s infinite desire.

This Christmas season, it looks like gift-seeking dawdlers are benefiting from clearing markets and stores such as Toys “R” Us, Gap, and Abercrombie & Fitch.  A happy holiday indeed.