Inflation: The Cure for a Slow Economy

The young store clerk was having a hard time of it.  He had been working at the Save-Mart for a few months, bagging groceries, stocking shelves, sweeping the aisles, and compressing and baling the cardboard boxes.  It bothered him only a little that this last duty seemed to be the most enjoyable – perhaps because it required the least interaction with people.

It wasn’t supposed to turn out this way.  He was a very bright, if not well-adjusted boy.  He always got the best grades in school, and tested out the highest on his standardized tests.  He was accepted at one of the finest universities.  Unfortunately, he majored in one of those degrees that offer little in the way of a meaningful career opportunity.

Now he was a store clerk at the Save-Mart, the local grocery store in a town best known for…well, not much of anything.  There was the paper mill, but it shut down a while back.  The semi-pro hockey team was about the best excitement around, but this would be their final season here – they were moving out of state.  Unfortunately, times were slow, and there was little reason to expect that this sad truth would change anytime soon.

Save-Mart was not immune to this malaise.  As one shop after another closed, the owner of Save-Mart saw his sales dwindle.  Sure, people always had to eat – and liquor sales had never been higher.  But people stopped buying steak – it was now ground beef.  And no one visited the “locally grown” section of the produce aisle anymore – iceberg lettuce was the vegetable of choice for many.  People still bought soda-pop and cereal, but more often than not it was now the generic variety – lower sales, and lower margins.  In every aisle, the lower priced substitute was always the most popular.  The store was barely holding on.

The young clerk knew that something had to be done; sales were slowing, and soon even this job would be at risk.  He considered the possibilities – what can be done at the Save-Mart to improve the situation?  How can we improve our sales?

Sadly, little in his formal education was helpful in his quest – he truly mastered a subject that was of little use in the real world, a condition that he shared with many of his generation.  Try as he might, he could not find an answer.  Two-hundred thousand dollars, clearly gone to waste.

He decided to go through his class notes – remember, he was always a smart student and he certainly was proud of his notes.  His notes were very thorough.  Perhaps he could find some clue.  Every evening after work, he would spend hours poring through his class notes.

Several weeks went by.  Then one day he found it – the answer to his problems, or more accurately, the problems at the Save-Mart.  He found the sure-fire way to increase sales. 

He could not sleep that night – he couldn’t wait to get to the store in the morning and tell the owner.  He was quite sure that the owner would reward this insight with a promotion and an increase in responsibility…well, as long as he could keep compressing and baling the cardboard, that would be OK.

Finally, morning arrived; the clerk ran to the store.  He rushed into the owner’s office with the news:

“I have it; I have it,” he shouted.  He couldn’t contain himself.

The owner responded: “Calm down, son.  What is it you have?”

“Well, you know how our sales have been slow, and almost every month has been worse than the last?”

“Yes, son.”

“I have been struggling every day and night with how to find a solution to this.  I would think and think, but couldn’t come up with anything.  Then it hit me: I decided to go through all of my notes from school and see if I could come up with something.”

The owner gave a little chuckle.  The clerk thought it was a laugh of excited anticipation; it was instead, of course, the best the owner could do to not burst out laughing – he knew the subjects that the clerk studied while in school, and he held no hope that from these might come a viable solution.

A moment passed, while the owner contemplated his own little inside joke.  

“Well, don’t you want to hear my solution?”

The owner did not want to discourage the young man.  “Please, tell me.”

“Raise prices.”

“Raise prices?”  The owner stopped chuckling.

“Yes, raise prices.  Don’t you see?  Our sales keep falling.  If we just raise prices, our sales will be higher.”

“Higher?  How do you figure.”

The clerk, feeling a bit smug because of his advanced degree, tried not to let his arrogance show in his response: “Well, every time someone buys something, we will get paid more for it.  Our sales go up.”

“But how can the people pay more?  Every month, a few more are out of work.  Every month, I sell more hamburger and less steak.  Every month my sales have been falling.”

“Yes, that is why you should raise prices.  People will want to buy more, because they know that they will have to spend even more next month if they put it off.”

The owner, ready to end the conversation, wanted to do so without hurting the boy’s feelings: “I will think about it.”

Later that day, the owner had an epiphany; he really had to thank the clerk – if the clerk didn’t come up with the idea of raising prices, the owner might not have thought about this.  He decided to tell the clerk about his plan.

“You know, I have been giving your suggestion some thought.”

“Great, I will get the label gun loaded with tape.  How much should we raise prices?  I’m thinking 2% per week should do it.”

“Well, load the tape…but we are not raising prices.”

“Great, I’m loading…wait, WHAT?”

“We are not raising prices.  We are going to lower prices.”

The clerk had never heard of such a thing.  Everything in his notes said that in order to increase sales, one should raise prices – lowering prices was exactly the opposite thing that should be done.  Obviously, the owner wouldn’t know this because he never went to a school with as high a reputation as the one attended by the clerk.

“You can’t do that.  Lower prices will lower sales.  Once you lower prices, no one will shop – they will wait for even lower prices the next week.”

“Well, they can’t wait forever.  In the meantime, more people will be able to buy a little more – some will be able to buy steak again instead of hamburger.  I won’t complain about that!”

The young clerk was quite frustrated – he knew for sure this idea would cost him his job, as the store couldn’t stand a few more weeks of lower sales.

So he quit, and took a job that was better suited for his education.  He spent every remaining day of his life taking actions to spite the store owner.

And the owner of Save-Mart?  He did everything he could do to keep lowering prices.  He ushered in the greatest example of a discount store chain in the western world – a boon to consumers of all types.

(This story was inspired by the bombardment of Black Friday Sale commercials – I couldn’t help but wonder why every store in the land wants to harm the economy by lowering prices.  Don’t the store managers know better?  Meanwhile, all characters appearing in this work are fictitious. Any resemblance to real persons, living or dead, is purely coincidental – pictures notwithstanding.)