February 10, 2004

Stalling Your Way to Economic Wisdom

The great Wal-Mart profit demolition machine is running out of steam. It's aggressive price cutting tactics have lately been hurting its own bottom line so much that its stock is lagging and it is embarking on a new policy of raising prices to increase margins and profitability. This will also allow more of its competitors to survive in the face of competition with the retail behemoth without resorting to legal maneuvering to "save our local stores" via zoning and other restrictive practices that have been popular with stunned competitors who did not see a way to fairly beat the giant in the marketplace.

This is just one example of wider phenomenon, the use of panic to provoke government intervention in the marketplace. In combination with the tendency of government to be a one way ratchet, it's what's fueled the explosion of government intervention all across the West.

A popular tactic is just to stall, delay, study, and hope you can keep it up long enough for the panic to subside and solutions to be worked out in the private sector. Once that happens, government solutions are no longer necessary and you can deal with the next panic.

Posted by TMLutas at February 10, 2004 01:46 PM