Cash Mobs Aren’t Helpful

I saw this CNN feature on the Cleveland Scene webpage about Cashmobs. Cleveland Lawyer Andrew Samtoy apparently created this idea, which is similar to the “Flash Mob” we’ve seen here in D.C., but minus the whole stealing part.

While I respect his goals in trying to help local businesses, this will not improve the community.

A few reasons:

1.) Buy Local is a silly theory to follow. Ultimately businesses will close anyway, and those who tried spending their hard earned dollars there solely because it’s local end up poorer, because smaller stores have a hard time competing on price. In the long run, for food at least, it is often worse for the environment, especially when it comes to food and “food miles.” The bottom line for a sustainable local economy is this: make the decisions based on your own needs for price and quality, not whether the store is local, national, or multi-national. Doing anything other than this, like spending more money at a locally owned store that charges more, just because it is local, just makes you poorer. We know most people aren’t participating in cash mobs, so it’s safe to assume that your altruism isn’t going to change the grand scheme of things. Why make yourself poorer in a futile effort?

Put simply: If Wal-Mart sells something that Ace Hardware in Cleveland Heights sells at half of the price, why would you buy it from Ace? Either way, you’re buying it from a place that employs people from Cleveland Heights. Is that not buy local? If Amazon.com charges half of what Wal-Mart is selling it for, and that includes shipping, if you don’t need it right away, why not buy it from Amazon? Sure, it’s not buying locally, but it saves you money. Remember, intentionally paying more is intentionally choosing to make yourself poorer. Even worse, not shopping around for the lowest price not only makes you poorer, it makes you stupid. Following a guy in a crazy hat, well, I don’t know what that makes you.

If you are “Buying Local” to feel good about yourself, without looking to compare quality or price, why not just round up to the nearest $5 mark next time you’re at a “cash mob” and tell them to keep the change? This is what you’re doing: just giving them more of your money than you ideally would to acquire the good or service you desire. You’ve already chosen not to get the lowest price, though sometimes you may, you’ve chosen to buy local. Why not just give them even more of your money for no additional gain for yourself? It helps the community, doesn’t it? Why not just give them money and not buy anything? That helps the community too! But people don’t do that, even though it is kind of what they are doing already.

2.) 40 people “mobbing” a store will not do much to help that store. Sure, one night that store will make money, no doubt, but that will not help out an ailing business stay in business. The video of “Big Fun” doesn’t help their case because it is a store that nearly everyone in Cleveland knows about. The best way to keep a vibrant, sustainable economy in your locality is to be a price hawk and only shop where you benefit the most. This will hasten the demise of inefficient economic actors, and allow that space to be used for a presumably more economically beneficial purpose. Keeping inefficient actors in business might employ people, for sure, but it also collectively makes the community poorer if that business cannot efficiently operate. Why prolong this?

3.) If cash mobs truly help these places stay in business via the one-time cash-mob, then they would have to continue the cash-mobs to help these places stay open. What’s this you say, going back to a place because they offer a good or service at a price I like? This sounds a lot like, you know, being a happy customer that chooses a business because it offers goods at prices people can afford. Cash-mobs don’t contribute to long-run success of these businesses. No business owner gets 40 customers one night from a guy in a funny hat and goes: “40 customers buying trinkets (or books), hallelujah, my money troubles are over.” And odds are that if that business was in monetary trouble, those 40 new customers could help, but that alone would not keep that business open. To really make a difference, they’d have to keep having “cash-mobs” there night after night, and I think people would stop coming after maybe the second cash-mob.

Cash-mobs may be cute and kitschy, but they are Keynesian “stimulus” economics at a micro level, and they don’t make a difference. They are not sustainable ways to improve things, just as the stimulus proved not to be sustainable when the money ran out. Cash-mobs do not do anything other than prolong the lives of businesses doomed to fail anyway, or help businesses that didn’t need it in the first place. That is in nobody’s interest.

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3 Thoughts on “Cash Mobs Aren’t Helpful

  1. Pingback: JimSwift.net » Blog Archive » Cash Mobs Aren’t Fight Club

  2. 1) Suggesting that buying from Walmart or Amazon.com precludes the idea that a locally owned store offers something unique that is not available from those retailers.

    There are no working condition issues such as there are at Amazon warehouses or the buying practices of Walmart, etc. etc.

    Many local retailers source locally. That is a by product benefit you do not consider.

    Cash Mobs can also be about discovering your community and the unique stores and services that are available, but are overshadowed by the 500,000 sq ft behemouth.

    2) I question whether you have owned a local retail establishment. Correct me if you have or do.

    A $2,000 injection of cash can be enormously helpful. It would pay for the owner’s health insurance for 2 or three months, it would buy added inventory, it could pay a debt and wipe the slate clean with a creditor, it would pay wages (obviously)…what could YOU do with an extra $2,000?

    Your premise of the “only the strongest should survive” presumes that the playing field is even and that the “big boxes” are playing by the rules. Walmart is as concerned about local competition as they are about their big box competitors. To put forth a premise that a local small business does not survive because thay are not competitive is naive and assumes the best and most honest of actions from all actors.

    3) Of 40 or 100 people who may participate in a Cash Mob may never have previously stepped into said store or stores. You completely overlook or chose to ignore the idea of generating a new or new repeat customers.

    I for one know many big store employees who commute 50 miles to go to work. Obviously, those are not local employees.

  3. Dan,

    Thanks for your comment. I agree that big box retailers often pursue policies that inhibit the competition. I wrote about it a little bit here: http://bmbl.us/wjC3oi

    One such example is Wal-Mart pushing for a higher minimum wage hurts local competitors more than it hurts Wal-Mart.

    I personally oppose the minimum wage, FWIW.

    Whether or not things will be “fair” of course depends on one’s definition of fair. Some even think a (truly) free market is not fair. I think it is safe to say that nothing will ever be considered fair by all or most people.

    In the interim, though, I am going to continue to shop based on prices and not other factors like who owns the store. I’ll do what I can at the ballot box to push for elected officials that don’t pursue bad or market distorting policies (meaning virtually all Democrats and many Republicans won’t get my vote.)

    That I think is a better solution to make markets more fair.

    And while I have worked in many retail jobs over my life, and run many marketing campaigns for small, locally-owned businesses, I have never owned anything but a lemonade stand. I do co-own an LLC of a regional entertainment website that produces original content and reviews local restaurants.

    Thanks for your comment.

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