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I agree with the bulk of this! But I maintain that the failure of Sears, Roebuck & Co. was the free market doing exactly what it's supposed to do. Market dist

I agree with the bulk of this! But I maintain that the failure of Sears, Roebuck & Co. was the free market doing exactly what it's supposed to do. Market distortions due to consolidation are a huge problem. But Sears was not fit for survival and there's no reason to believe that cash-for-assets could have been turned into a new viable business of any kind. There was nothing to salvage out of the business model, vendor relationships, retail locations, consumer brand equity. Nothing. They abused their brand (and their Craftsman etc house brands!) for years. Some macro events and shifts were clearly out of their control and might have been insurmountable anyway, but the brand damage was entirely self-inflicted, and ultimately the only thing that might have saved the rest. There was nothing left except lease obligations, slow-moving inventory, and nostalgia. But enough about Sears. Your point, IIMBSB, is that the free market doesn't necessarily produce the most viable ecosystem. No argument there -- the natural end state of a free market appears to be 85+% monopoly or duopoly, and this is harmful to consumers and the economy!

cogman10 2y ago
> There was nothing to salvage out of the business model, vendor relationships, retail locations, consumer brand equity. Nothing. I have to somewhat disagree here. Amazon purchased wholefoods in 2017 to bootstrap their own distribution system. One year after sears went under. My point is that sears had room and time for years to pivot their business model into something more profitable. They had the land, warehouses, and distribution system bigger than what amazon paid $13 billion to acquire. Heck, for fairly little money, sears could have entered or expanded into the shipping industry to compete with FedEx and UPS. They could have partnered with Amazon to handle their shipping. The free market failure here is that the management team did nothing wrong by shareholders which in turn killed the company. They didn't die because they were being out competed, they died because management valued the next quarters profits over the long term success of the business. The fact that the free market doesn't really care if a business does that is where it fails. The negative social impacts of large companies failing is tremendous and another problem with the free market. While business failing is value neutral for the free market, it's economically and socially a disaster.
- quesera 2y ago
  Interesting point, but I'll push back a bit. 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.
  - cogman10 2y ago
    > 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.
    - quesera 2y ago
      I'm with you 100% here. 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.

cogman10 2y ago

> There was nothing to salvage out of the business model, vendor relationships, retail locations, consumer brand equity. Nothing. I have to somewhat disagree here. Amazon purchased wholefoods in 2017 to bootstrap their own distribution system. One year after sears went under. My point is that sears had room and time for years to pivot their business model into something more profitable. They had the land, warehouses, and distribution system bigger than what amazon paid $13 billion to acquire. Heck, for fairly little money, sears could have entered or expanded into the shipping industry to compete with FedEx and UPS. They could have partnered with Amazon to handle their shipping. The free market failure here is that the management team did nothing wrong by shareholders which in turn killed the company. They didn't die because they were being out competed, they died because management valued the next quarters profits over the long term success of the business. The fact that the free market doesn't really care if a business does that is where it fails. The negative social impacts of large companies failing is tremendous and another problem with the free market. While business failing is value neutral for the free market, it's economically and socially a disaster.

quesera 2y ago
Interesting point, but I'll push back a bit. 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.
- cogman10 2y ago
  > 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.
  - quesera 2y ago
    I'm with you 100% here. 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.