How to Tell When Your Executives Aren’t Worth Their Salaries

So far, I haven’t been too impressed with these things they call “seasons” out here in the Pacific Northwest. In Florida, we all know how it’s supposed to work: we don’t have seasons, we have weather. Sometimes, that weather is hot, and other times it’s brutally hot, but at least we know what to expect. And so do building contractors, who put central A/C into every building in Florida, no matter what it might be–home, office building, store, garden shed, doghouse, whatever. If it’s got four walls and a roof, it’s got air conditioning.

Now the pacific northwest doesn’t much cotton to such fancy modern amenities as air conditioning. They claim it’s because the weather is always mild here, except when it’s not, and so they don’t need it, except when they do.

Last week was a week when they did. Here in the Portland suburb I live in, the temperature reached 110 for two days in a row, then settled down to a nice cool 107 for a few days. I’m told this is unusual, and during those same days Seattle set a new 118-year record. Whatever.

Say you live in a place where the temperature is in the triple digits during the day, and descends all the way down to 98 at night. Say you don’t have air conditioning. At this point, you face a predicament: you can buy an air conditioner and live in comfort, or you can suffer all day and wake at night every six minutes or so in a pool of your own sweat and tears.

An air conditioning unit can be had for a hundred bucks and change. Given several days in a row of back-to-back triple-digit weather, I bet you can see where this is going, right?

If you guessed “a total and complete failure of the free-market system of capitalism,” you guessed right!

The heat created a demand for air conditioning units. And if ol’ Adam Smith here is to be believed, that demand would naturally lead people who sold air conditioning units to make them available. Those folks make money; the folks who buy ’em have an improvement in their quality of life; the invisible hand makes everything win-win, right?

Well, ‘cept for the inconvenient fact that large corporations tend, by and large, to run on inertia.

You’d think that companies that sold air conditioners would respond to the demand by supplying them–and you’d think wrong. See, a big company tends to settle into a Way Of Doing Things. They develop supply lines,a nd warehouses, and inventory, and distribution channels, and shipping lines, and those things take on a sort of momentum of their own.

So when there’s a sudden spike in demand for a product, most companies don’t really rise to the occasions. Oh, sure, they’ll look in the warehouse and ship stuff out if they’ve got it, but that’s about it.

Last week, you could not find an air conditioner for sale in Portland for love or money.

Which is silly, and a failure of capitalism.

See, if I were an executive vice president at Home Depot, I’d say “We’re selling out of this product as fast as we can truck it in. Okay, screw our normal warehousing and distribution network. Underlings, do whatever it takes to load up some trucks with this product and get it into town by tomorrow.”

But, like I said, companies over a certain size operate on inertia, not on the desire to meet a demand with a product or service. What actually happens is more like the executive vice president says “I could spend my entire night here in the office instead of at home working out how to get an extra truckload or two of product to where it’s selling, but what’s the point? What will the company make…an extra four million dollars? Five million? Hell, that’s barely a rounding error. It sure as hell isn’t worth me spending all night here.”

So you get Capitalism Fail.

The notion that businesses succeed by doing their best to provide a good or service that is in demand with greater efficiency and better value than their competitors is a charming myth, much like the notion that an invisible fairy will descend on gossamer wings to give you money or, I don’t know, blow you or something when you lose a tooth. Hell, even Wal-Mart, which is nominally a capitalism success story (for some value of “success story” that involves child labor violations, anyway) fell down on the job.

We eventually got our hands on one, which has been improving the quality of our lives ever since, but damn. Not capitalism’s finest hour.