Whole Foods was a standalone viable business with high-quality retail locations. Sears was neither.
But I'll certainly grant you that with the resources, a fantastic new model, and lots of luck, there were better outcomes possible. Not sure about likely.
As for the free market failure, I do think Sears was out competed, by a wide margin. By Target, Best Buy, Amazon, Home Depot, etc. New (ish), smarter, more nimble retail without the lethargy that had been inside Sears since the 1990s at least.
I agree that there's something wrong with the fact that management can do right by shareholders but simultaneously wrong by consumers. I don't know if I'd call that a free market failure though. Some kind of corporate governance discontinuity perhaps?
But the "market" as I think of it is strictly the retail consumer market, so when Sears failed the consumers, they were removing themselves from the retail gene pool. It would not be healthy for the market for them to continue operating.
> I don't know if I'd call that a free market failure though. Some kind of corporate governance discontinuity perhaps?
How could this corporate governance discontinuity be resolved?
The reason I call it a failure of the free market is because the corporate governance model is something born from free market fundamentals, not from any sort of government regulation.
IMO, the fix to such problems is government intervention. In the case of consumer retail, I think governments should be MUCH more aggressive using anti-trust to break up large companies to actually start competition.
Unbridled capitalism, especially on the scale possible today, is anti-competitive and consumer-hostile. And economically and socially destructive in the medium-to-long term.
But still, given what it was, Sears had to die. Or be reborn. Death is more common! So the death was not the market failure. That was proper and expected. The state of the world left behind might well highlight a weakness/failure of the free market model. We may be in full agreement, just semantically misaligned.
I am not confident I have a good solution. All models impose some arbitrary metrics that are probably wrong (even if they are an improvement!).
But I agree that some form of anti-trust regulation and enforcement is the only possible structure for it.
My deepest relevant experience is in broadcast media, and I strongly believe that relaxed ownership restrictions and the outright repeal of the Fairness Doctrine were economic and social mistakes that we are paying for dramatically today. The issues are complicated, but the results are bad.
When I'm saying something is a free market failure I'm talking about the model of the free market.
And I think that by free market success you are saying "this what is supposed to happen under the free market and a good thing from the view of the free market".
And I agree that the free market model does say that failure like this is a necessity and a good thing.
Whole Foods was a standalone viable business with high-quality retail locations. Sears was neither.
But I'll certainly grant you that with the resources, a fantastic new model, and lots of luck, there were better outcomes possible. Not sure about likely.
As for the free market failure, I do think Sears was out competed, by a wide margin. By Target, Best Buy, Amazon, Home Depot, etc. New (ish), smarter, more nimble retail without the lethargy that had been inside Sears since the 1990s at least.
I agree that there's something wrong with the fact that management can do right by shareholders but simultaneously wrong by consumers. I don't know if I'd call that a free market failure though. Some kind of corporate governance discontinuity perhaps?
But the "market" as I think of it is strictly the retail consumer market, so when Sears failed the consumers, they were removing themselves from the retail gene pool. It would not be healthy for the market for them to continue operating.