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Show Love to the Merchant Class

Mises Daily: Monday, July 04, 2011 by

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People can be downright nasty to store clerks and stores. It's their right: a feature of the market is that you don't have to trade with anyone in particular. And yet, it still troubles me when people are so dismissive of attempts at entrepreneurship. Why not refrain from buying and walk away? Why hurl invective or behave in a rude way?

In the sports store the other day, I heard customers muttering that this glove is too expensive, this tennis racket is too tightly strung, this shoe is too gaudy, this exercise equipment is not all it says, and that the store should carry this brand of ball, not that one. Most people are happy, else the place could not be in business, but other people (again, rightly) just assume that it is their right to dislike, refuse, cut down, put down, and generally dismiss any merchant with a wave of their hand.

Compare to the scene at airport security. This same class of citizen marches in lockstep, permits himself or herself to be subjected to invasive searches, holds the tongue even when subjected to barking orders from the TSA, and even allows property to be confiscated from personal bags. No one dares utter a word of protest or even complaint for fear of landing in the slammer. The goal is just to get to the other side of the government barrier, where the mini utopia of airport commerce awaits to serve us in a real way — and that hamburger and beer had better be served up immediately, else we will demand our rights!

We are masters of the universe as customers and as compliant as lambs when acting as citizens. And perhaps that's easy to understand. The government has a gun pointing at our heads. The merchant is trying to persuade us to part with our money in exchange for goods and services. One won't take no for an answer; the other sees no as just part of daily life.

Still, we should be more conscious of the difference, and appreciate what it means. The class of people who have chosen the path of persuasion over coercion are deserving of our gratitude even when we don't buy from them. The merchant class is that which makes everything possible in our lives: our homes, our food, our medical care, our clothing, our air conditioning, our computers, our music listening — absolutely everything that makes daily life tolerable and joyful.

We are too often tempted to think that the gas station, the drug store, the restaurant, the fast-food franchise, and the mommy-owned cupcake bakery are just a given part of the structure of our world. They are not. The decision to open a business is absolutely wrenching because the risk of failure is so high. The future is unknown in either a macroeconomic sense (will the economy collapse with falling incomes?) or a microeconomic sense (maybe no one really wants to buy my stuff). Often it involves cashing out retirement savings or being in hock to the banks. No matter what the business plan, it is scary.

And it's not only about money. You end up buying lots of capital equipment that is not easily converted to other uses or sold at anywhere near the price you bought it at. Custom chairs, tables, signs, and other decorations are all a pure waste if the business doesn't work. Then there is the issue of people. You have to hire employees and they must get paid long before the point of profitability arrives — if it ever does. You are suddenly responsible for them.

You call yourself "boss," but you know the truth. You are responsible but not really the boss. The bosses are the consumers whose fickle ways can make or break your new livelihood. You are completely at their mercy.

"A bad day of sales could mean nothing or it could mean everything. It could be a bump on the road to glory or the foreshadowing of disaster."

Then there is the issue of marketing. You believe in your product, but you can't do it all yourself. You have to hire others to push, market, and sell. It is necessarily true that these people you hire are not as strong in their belief in your good or service as you are. They must be a "salesperson" of fame — someone hired to be excited and interested in the craft but who is most often more interested in other things.

Never underestimate the problem of inventory, which requires daily entrepreneurial judgments. If you are selling plywood, for example, and your first month's sales are far beyond your expectations, your battles have just begun. You must make a judgment about next month's inventory. Buy too much and you squander all your profits. Buy too little and you lose customers who never come back. Your guesses must be close to correct all the time. But you have no crystal ball. And this problem never goes away: whether you succeed or fail, you never know whether more success or failure is around the corner.

Then there's the competition. Anyone is free to copy and replicate your successes. The more you succeed, the more you inspire imitators who are pleased to do exactly what you do but somehow manage to do it at a lower price. This means that you must constantly stay on your toes and innovate. At the same time, you have to constantly watch your back. A bad day of sales could mean nothing or it could mean everything. It could be a bump on the road to glory or the foreshadowing of disaster. There's no way to know for sure.

The forces of competition in a dynamic market are constantly working to take away your future successes. For the currently successful business, the market system amounts to a giant conspiracy to reduce your profits to zero. The only way to fight back is to serve others with ever more attention to excellence.

And yet, no matter how much your plans work out, there is nothing you can really count on for the future. Any day, any hour, it could all dry up. The consumers could go away. The fashions could change. The tastes of the spending class could shift. You are utterly and completely dependent on the subjective whims of everyone else. No matter how much determination you have, in the end you just can't control what others think or do. This is as true of the lemonade stand as it is of Amazon.com. No matter how big you get, no amount of money can buy a reliable fortune-teller.

Why does anyone do it? Why does anyone become a merchant and an entrepreneur? The usual rap is that people are in it for the money. But there is no bucket of money to grab. The money may or may not be there. And when it is there, it usually ends up being poured back into the business itself in order to stay on top. So why do people do it? It has to do with the dream of success, the hope of making a difference, the living out of a vocation, the fulfillment of an ambition to serve and make a difference. This is what drives the entrepreneur.

"The class of people who have chosen the path of persuasion over coercion are deserving of our gratitude even when we don't buy from them."

And how do we repay them? We snarl and sneer, refuse to buy, criticize at the slightest misstep, and otherwise refuse to give them credit for anything at all. We call them greedy and dismiss their pleas to buy as craven marketing. The state hectors these people with regulations, taxes, mandates, and impositions far greater than the rest of us experience, and yet people call for ever more.

Clearly, the merchant class is treated now as it was in the ancient world: as lowly and unfit. And yet here's the truth: the merchant class is the class that brings us all the things we love the most. We depend on them, and they depend on us.

People living in the age of the Leviathan state often feel powerless to do anything about the state of the world. I would suggest that one way to fight against the takeover of society by the state and its minions is to show a greater appreciation of their opposite. We should show love to the merchant class. We should begin by intellectually appreciating what they do for us. We should go further to actually say to the merchants how highly we regard their vocation.

Managing our affections is one way to fight back. Show love to the things and the people who are doing what is best for society and are providing a model for others to follow. The model and ideal of the kind of peaceful and prosperous society we want to live in might be as close as the convenience store right down the street.