Why are we such suckers? Why do we consumers allow ourselves to be gouged?
We too often pay ridiculous prices because we crave convenience or can’t resist an impulse. Most companies are happy to exploit our weaknesses and charge far more than necessary.
One of the most impressive recent examples of gouging is the $3.50 Coca-Cola at Turner Field, Atlanta’s new upscale baseball stadium. You’d think the concessionaires would be sheepish about such blatant abuse of a captive audience, but the only sheeplike activity can be found at the food counters, where customers meekly await the financial slaughter.
Interestingly, the loudest complainer about Turner Field’s preposterous prices is Ted Turner. When told the price of a beverage at his stadium, Turner’s eyes popped. “Are you serious? I won’t buy one! That’s outrageous,” he said during a news conference. He also noted that the fans “don’t have to buy it and I won’t, and they shouldn’t either. I’m going to drink water.”
His statements tell us a lot about why Turner is a billionaire while most Americans are struggling. Turner is a smart businessman who knows how to say “no” when prices get too high. That’s exactly what successful corporations are doing all over the world: resisting price increases by shopping around and rejecting bad deals.
As a result, wholesale prices show no trace of inflation. Profit-starved steel manufacturers, for example, find it virtually impossible to raise prices because customers will search the globe for cheaper suppliers. Small-business owners switch long-distance carriers to get better deals, and corporations don’t hesitate to replace long-time employees with outside contractors to hold down costs. To workers, such cost-cutting moves may seem motivated by pure greed, but companies say they must be ruthless to survive in a competitive marketplace.
This past week, a survey by the National Association of Purchasing Management turned up more evidence of this intense pricing competition. The organization’s measure of manufacturing activity rose to its highest level in more than two years. But despite surging demand, the prices paid to suppliers for materials actually fell.
In other words, the purchasing managers are very good at driving the toughest bargains possible. And that helps the economy by spurring efficiency and containing inflation.
But meanwhile, back at the ballpark, spineless consumers are slurping down $3.50 Cokes. They may feel they have no choice because security guards won’t allow them to bring in their own food or beverages.
Still, the ban on outside refreshments is no excuse for paying obscene prices. Customers can eat before the game. They can do what Ted does and drink water. If for even a single game day, fans refused to spend a penny on refreshments, concessionaires would get the message and lower prices.
Bank customers, too, could boycott the ATM machines that charge absurdly high fees. A survey released last week by the U.S. Public Interest Research Group found that fees at the cash-dispensing machines shot up from an average of 97 cents last year to $1.15 this year. The survey showed that Georgia had the second-highest percentage of ATMs charging extra fees among the 27 states examined.
Why are fees increasing so quickly? Because banks know that customers have become suckers for convenience. Rather than stop at their own bank for cash, more consumers now wait until they get to the airport, ballpark, or wherever, to get cash from an ATM. Then they get hit with fees.
Consumers complain about rising inflation but you don’t hear the same whining from purchasing managers. That’s because businesses have learned to shop wisely, squeeze costs and say no to gouging.
The rest of us sit around crying in our $4.50 ballpark beers, complaining about higher prices. Instead of fussing about rip-offs, we could take control of our spending. Before heading to the stadium, we could eat dinner at home, stop at the bank for cash and take a big swig of water before sitting down for the game.
If we all did that, we’d lose weight, save money and teach bankers and concessionaires a lesson. All it takes is a little restraint.
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