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Everybody loves a “Going Out of Business Sale”

December 10, 2012

We ran a chain of retail hi-fi stores for twenty years. A few times, we were asked by the bankruptcy court or a creditor’s committee to help liquidate the inventory of a failed retailer.

“Going Out of Business Sales” always work! Customers wait in line (and will even pay admission) convincing themselves that the deals are so great they’re worth the effort. As sellers, we loved the “it’s all gotta go” ambience of stores crowded with buyers looking for below-cost merchandise that may be missing pieces or not even work!

For a retailer, it’s the most believable sale ever.

It seems the Federal Government is having their own “Going Out of Business Sale” these days and the average voter is right to love the deals. Up to 99 weeks of unemployment… much better than having to take a crummy job. Social Security Disability… far more pleasant than working two part time jobs to make ends meet. A program for every want… and someone else to pay.

The deals get better when you’re rich and powerful. The government extends copyright and patent protection seemingly forever so Disney’s descendants can live for a century off Mickey Mouse. Drug companies are paid by the government for research which fails but when new drugs result, they get the profits as well. It’s great to be a crony in a crony capitalist world!

Now the deals are so good, no one can resist. Perhaps the tipping point is Medicare. Who wouldn’t like a health insurance program if the plan pays out $340 in benefits for every $100 in premiums!  Medicare’s actual deal is 1,000 times that good.  Wouldn’t more people would drive a Ferrari if it sold for $67,500 rather than $229,825.

Of course, the reason a “Going Out of Business Sale” works is urgency; you’ve got to act fast or you’ll miss out.   Unfortunately, there’s no future in failure.  So, while it’s great to liquidate a competitor, it’s no fun when it’s your government that’s going broke and seems unable to stop itself.

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