Market Forces and “Going Home Happy”

Blockbuster video has ended late fees. And, if you look out the window I think you will find that the cows have returned and are wondering when’s dinner. In other words; wow. The company’s flagrantly self-aggrandizing [web-site](http://www.blockbuster.com/home.html) and commercials sing a hallelujah chorus to this startling development. This is an incredible breakthrough – as anyone who has found themselves sprinting through the woods, hurtling fences and splashing through muddy streams trying to avoid Blockbuster’s relentless creditors knows.

Years ago, I stopped renting from Blockbuster precisely for this reason. All too often I would find that an innocent forgetfulness of due dates would eventually have me looking into the current rates for organ donation. The ‚Äúfriendly‚Äù Blockbuster mailing card would ‚Äúkindly‚Äù remind me that I currently owed $567 for the copy of ‚ÄúNine Months‚Äù that I had ‚Äúaccidentally‚Äù removed from the VCR and stomped into tiny bits. And they could always find you. The late fees for the copy of “Citizen Kane” you rented in East Pakistan in 1946 would find their way to the branch in Bismark, North Dakota like pinkerton detectives following Butch and Sundance. Contrary to popular belief Butch and Sundance did fake their own deaths in Bolivia in order to escape Blockbuster’s maurading hordes.

Anyway, now that I have that off my chest…this article is not to talk about the impoverishing effect of Blockbuster‚Äôs late fees. Rather, it is to talk about the forces that went into Blockbuster‚Äôs about-face.

The reasons are quite obvious. The competitive forces brought to bear on Blockbuster’s business practice by internet-based rental services such as [Netflix](http://www.netflix.com) and the growing market for the purchase, rather than the rental, of DVDs have forced Blockbuster to adjust to new realities. They are calling it “The New Blockbuster” and are giving it a grandiose ad treatment.

And those ads have worked on me. Not having entered a Blockbuster Video in years I could have easily remained ignorant of these developments. Now, I am canceling my Netflix account and pulling out the old Blockbuster Card – the prodigal renter. Their heartless attempt to suck profits from my hard-earned money by giving me what I want has worked. Damn them.

Corporations are often portrayed as stalwart colossuses that push and pull the world however they wish. They are not the institutions that the world acts upon, but institutions that act upon the world, doing with it what they will. Consequently, they are seen as major forces, if not the primary forces, that make the modern world the way it is. Blockbuster Video, with its remarkable proliferation, is seen as one of those corporations that play with the world like a kitten with yarn.

Corporations are one of the most visible aspects of modern life. However, far from “making the world the way it is,” corporations can only thrive if they respond to the way the world is and change accordingly. Blockbuster Video is now demonstrating this type of adjustment. But, this interaction can produce a confusion of causation. This confusion perpetuates itself because the vast majority of businesses we see, particularly the highly visible corporations, only exist because they have adjusted to reality successfully. Failed companies don’t exist, at least not for a significant period of time, and therefore heavily skew the perception of business as a highly risky activity that must constantly adjust to the stark realities of the world or die trying. The incalculably more failed businesses than successful ones are difficult, if not impossible to count, much less perceive.

Unfortunately the same isn‚Äôt true for governments. Governments take way too long, far too many lives, and too much rampant impoverishment to fail – and revolutions or coup d’etats are not the healthiest way to change. It is an oft repeated truism that if anyone ran their business like the United States runs its government then they would be long bankrupt. What is startling about this fact is that, as governments go, the United States is a pretty good one. It isn‚Äôt an oligarchic kleptocracy, an enforced plutocracy or a totalitarian fascism, as the majority of governments have been. (I‚Äôm sure some of you will want to want to claim that the U.S. is, in fact, one of these nefarious systems. However, calling the U.S. one of these governments in a provocative attempt to actually say that, in some ways, the U.S. is like one of these governments only belittles the hundreds of millions who have died and the billions who have suffered under the actual versions of these governments.) Although it is profoundly removed from being my ideal government, the U.S. government deserves more praise than criticism. Be that as it may, governments are systems that respond horribly to feedback from reality.

Just play a mind game: If Blockbuster Video were a government institution how long would it have taken for them to eliminate late fees? Some of you may be thinking: “Late fees!?! Hell, we’d still be using Beta-Max.” And you’re right. And that would be funny. But when it is government’s job to feed you, or supply medical care, it becomes A LOT less funny.

What is ironic about the characterization of corporations as unmovable behemoths is that this idea is not extended to governments. Governments are seen not as stalwart colossuses but pliable entities that (hopefully) respond to the demands of the people. Yes, there are myriad criticisms of government that contradict the idea of it as pliable and responsive to the people. From calls for the abolition of the Electoral College to the increased belligerency towards the lobbying system, government, particularly America’s, sees a fair amount of criticism. However, those who criticize the government in this fashion are not prone to turn around and compliment business. Usually, they lambaste both with equal fervor. Ralph Nader seems to hate the whole lot of them, but reserves his trademark vitriol for “big business.” Either way, it is seen as a moot point that governments are categorically better than corporations.

But, corporations do fail. They lose power and money. The American economic landscape is dotted with numerous failed corporations, and even more that are shadows of their former selves. Older readers may remember A&P Grocery, once one of the largest and most powerful companies in the U.S. – now non-existent because it didn’t change with the demands and realities of the market. Likewise, Sears, Roebuck and Co. has been recently been fighting for survival after once being far and away the largest seller of dry-goods in the United States. Montgomery Ward, K-Mart, Commodore, and Atari are either gone or the faintest blips on the radar. Nintendo, Dish Network, and Albertsons may find themselves in serious trouble in the near future. Blockbuster Video may have been heading for the same fate if it hadn’t changed so radically. Unfortunately, as the Soviet Union starved millions of people to death and reduced the survivors to abject penury bankruptcy was not an option.

To criticize “big business” is to criticize all business, and the essential feedback mechanisms that allow them to thrive. Any line drawn between struggling “locally-owned” companies and large, multi-market “big business” is arbitrary and ad hoc. All business owners, even the lovable, long-haired ex-hippie down at the local, hip record store, are trying to make a profit by fulfilling customer demands. However, when that hip record store opens other successful branches throughout the city or perhaps (gasp!) other cities they cross an evanescent line and begin to trade their white hats for black ones. The lovable local gunslinger fightin’ for the common man turns into the heartless cattle-baron with a cadre of sadistic thugs. Starbucks, beloved locally owned Seattle coffee company, becomes (begin ridiculous mocking tone) Starbucks, the malevolent and greedy corporation.

Businesses need to succeed – to adjust to the demands of people and the changes of reality – to exist. Governments do not. Governments are monopolies of the worst kind – outside of bloody revolution they are practically unassailable ones. To put it another way: businesses exist and thrive because they achieve results; governments exist and thrive because of force.

This isn’t a call for anarchy or simply another railing against socialism. Anyone who falls on any side of the political spectrum needs to understand the dichotomy of incentives and feedback that inherently exists between free-market business and the state. Business and government have distinctly different, and in many ways incommensurable, ways of interacting with reality. One must respond to desires and changing conditions as soon as possible in order to survive. The other does not. One must constantly try to please the people. The other one often has the people trying to please it and need not do anything to please them, as long as it has more guns. Blockbuster Video‚Äôs about face is simply another example of one of these adjustments due to feedback and, the last time I checked, the DMV was still slow, inefficient, aggravating, and I never “go home happy.”

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2 Responses to Market Forces and “Going Home Happy”

  1. Lee E. says:

    Great article but you’ve overlooked the fine print on the commercial. The regional company owning all Blockbusters in Idaho, Wyoming, and Montana will not participate in the end of late fees.

    My protest is still active.

  2. Connor W. says:

    Trevor-

    Well positioned argument, but did you ever consider the fact that without a large, inefficient government, guys like Ralph Nader would be hobbie-less?

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