Economics is Everywhere

Economics is Everywhere. No. I didn’t invent the phrase. Daniel Hamermesh, a labor economist who I wish I had had as a colleague instead of the one I suffered with, is responsible for the useful observation (and accompanying textbook, which I assume, in a fifth edition, is doing very well). Actually, for years now, this has been my problem. I learned just enough mainstream econ to see the world as the econ do–the real econ, not the dogmatic, the minimum wage must be abolished because demand curves slope down types (again, a colleague I wish I had never laid eyes on). But that ain’t what this post is about.

On the road to Damascus, once more, I had a revelation. This came at the HEB. In Texas, pretty much, there is no other grocery store, although some other chains have been foolish enough to contest its dominance. HEB in Texas is like Yahweh. There is no other, so get over it. But if, God forbid, the Cowboys are America’s Team (check), HEB is America’s grocer. Even the closet socialists at Consumer Reports bestow their blessing on the HEB. All bow at the HEB’s corporate feet H-E-B took the top spot in Dunnhumby’s Retailer Preference Index for 2024 for the third year in a row, continuing the Texas retailer’s dominance of the annual predictive rankings of grocery chains based on their financial performance and shopper perceptions (this is from a grocery industry site, btw). So, you know you are at the Alamo of Grocery Stores. Gentlemen, remove yore hats.

Well, some other time we can talk about the HEB, but what we have here is merely an insight provided by economics at the expense of HEB. It is not, I confess, entirely original.

Years ago, when I lived in Philadelphia enjoying the charms of graduate school and trying to figure out my dissertation (I still am), my best friend was the radio, cause it never went to sleep either. There was–and is–an all-news station called KYW. It was dull then and awful now, but it did help pass the time. One of its features was a guy called “The Greengrocer: Joe Carcione.” (cue ethnic stereotypes). Joe passed on in 1988, but back in the late 1970s, he was a big deal, syndicated on over 80 television stations nationwide, and who knows how many radio stations. I loved Joe. He could tell you how to cook spaghetti squash, and how to properly ripen even mediocre tomatoes. And, having spent his life in the produce business, he knew what he was talking about. He took great pride in his work and in his industry. So, naturally, I was intrigued one day he hosted a call-in in which listeners could ask deep questions about grapes and stuff.

Joe was genial as Hell, right. He knew how to keep customers happy. So it was really cool to hear him lose his temper on the air when some insolent caller chose to teach him some supermarket econ. I think this guy was some kind of libertarian or neocon avant la lettre. Either that or an economist. Anyway, Joe had been explaining why presentation mattered so much, and that he was sometimes disappointed by what he was seeing at then contemporary grocery stores, especially where fruits and vegetables were concerned. You know, wilted lettuce, bruised pears, anemic endive–stuff like that. That, Joe said, should never be allowed to happen. Well, because it shouldn’t, and not just because it pissed customers off. You know, have some pride, right? I dug the ethic because that was how any good Italian boy was raised.

Well, what happened next was memorable. Some guy, very self-assured and patronizing, told Joe, basically, “It costs too much to assign a babysitter to keep the fruitsies and veggies happy all day, so that’s why it doesn’t happen. And it costs too much because of nasty things like the Retail Clerks Union.” Heh, heh. Optimizing economist, meet The Greengrocer. An epic exchange ensued. Joe, avuncular, paternal even, lost his cool. He didn’t swear or anything, but he raised his voice considerably and basically started shouting at this Neanderthal. Said caller just kept insisting this was all costs and benefits, you know? It cost too much to keep the stuff looking fresh all day. What you would lose in sales, goodwill and the rest hardly justified the attention, especially when the nasty unions were rent-seeking (he didn’t say that, but he was thinking it). Well, I distinctly recall a sudden station break and an announcer straight-voicedly intoning “We’ll get back to Greengrocer Joe in the next hour. So be sure to stay tuned.” I wish I had an aircheck. I think Joe had a stroke.

But even as I was laughing at this novel intrusion of market fundamentalism into the world of Joe Carcione, I was thinking “Dude–econ wannabe–has a point you know. There must be an optimal amount of funky veggies which, as we say, is determined at the relevant margin. I mean, this guy is a bit much, but I don’t think he’s completely wrong. Just a bit…..narrow minded.” Ho, boy. After spending 30 years around the Econ South of the Mason-Dixon line, I had no idea how much homo economicus I was going to contend with. Every. Damn. Day. Normally I tried to be a honest broker, but, you know, doing “on the one hand…..on the other” with some of these narrow-minded Philistines is an errand into the wilderness. Had I known that this was what was in store for America 35 years ago from the Econ 101 crowd maybe I would have gone somewhere else. Like anywhere. And that coming from a guy who thinks the Congestion Charge in London, UK, must be suboptimal because it took an Uber an hour to go 8 miles from Central London to Kew Gardens. So it’s not as if I’m not sympathetic to the idea that the price mechanism has some role to play in the efficient allocation of resources.

Well, ok. How does the prove that economics are (is) everywhere, especially in Texas at the HEB. You got a minute?

Today Linda and I made one of our frequent journeys to the HEB to stock up on crudites and comestibles, as Dr Oz says. It was, 40 degrees aside, like any other dreary trip to the HEB. Not fun. So while we’re there, wouldn’t you know Linda buys….blueberries, which are a part of her breakfast routine (mine is coffee and whatever is leftover from desert). Ok, big deal. So why is this earth-shaking? Well, we get to one of the check-out stations (one as yet staffed by a human being rather than some damn do-it-yourself scanner) and start the ritual of getting our stuff on the conveyor to get scanned out. All proceeds smoothly until Linda picks up the plastic carton of blueberries. Then disaster strikes. The carton really wasn’t secured properly shut. And you know what happens. Like a cartoon, right? With blueberries cascading all over the counter, the floor, to the next aisle, oh boy, don’t we look like the idiotic elderly couple exclaiming like Custer at Little Big Horn. Where did all those blueberries come from?

Not to worry! Da-da-da-dah!!! Front end manager-dude gets on the horn. As quickly as you can say “freakin’ blueberries” (that would be me), an employee appears in full HEB kit. He is armed with a broom, a kind of bin with a handle, and some other stuff to mop up the berries that have already gotten underfoot. It literally takes less than a minute. No fuss, no bother. And no charge either, as someone else is dispatched to get more blueberries–which we don’t get to spill. We apologize profusely, but you think HEB were at fault. Grin. Whaddya know? “Y’all have a blessed day!” I grin. “Damn right!” Manager-guy frowns at oath. This is a Christian store. Texas.

Since you must be running out of patience, you are wondering what the Hell this has to do with Economics, Joe Carcione, optimizing, anything? Well, I gotta tell you, I would guess a great deal. You want to know? Ready or not, Dr Science has an explanation: Economics is everywhere. Especially in Texas.

Since 1947, Texas has been a right-to-work state. I am not a lawyer, let alone a labor lawyer, so exactly how right-to-work laws work here is a bit above my pat grade. I can tell you that unions aren’t exactly welcome down here. I can tell you that the HEB is not unionized–as far as I know. Nor have I ever heard any suggestion that anyone wants to organize it (which would be amusing, if possible). But I can tell you one thing. Labor here (Bexar County) is cheaper on average than it is in the United States overall. See here. Now this is a complicated question for sure, but I’d guess that supermarket employees are not exactly minimum wage ($7.25/ hour), but, whatever Gov. Greg Abbott says (he is a congenital liar), it surely is no $29.00/ hour which Abbott trots out every time someone says how cheap labor is in Texas, especially the less skilled variety. You think baby-sitting asparagus takes much skill?

Ok. So what does this have to do with our blueberries on the floor? Linda observed on the way out that the HEB has a nasty habit of not securing their plastic containers, even with a bit of tape. We’ve spilled salads, olives and other stuff, so it isn’t just blueberries. Their shopping bags (paper) are cheap and spill all over the place too. Hmmm……Why not just get better bags, or just get someone to secure the plastic cartons more carefully? Tell you what? Even with relatively cheap labor, having someone working to seal up all those fresh-to-you containers for everything from blueberries to cherry tomatoes would be a shagload of work. And, it would have to be supervised, right? Isn’t it possible–even likely–that it’s easier to say “To Hell with it. Not worth it.” So what if you lose a few loads of blueberies a week? So what if the asparagus sits in a tub of ice water instead of ice? You can clean up something for a marginal cost of basically zero–the guy is already hanging around. And if customers don’t like soggy asparagus, well, tough. Where else you gonna go? HEB is, for all intents and purposes, a monopolist in a cheap labor state. The blueberries can spill and the asparagus can wilt. And Joe Carcione can spin in his leafy grave. You lose less by not providing the fancy package when the clean-up service that you do provide costs next to nothing. You know. Like the Italians say (in a very different context): Why buy the grapes when the wine is free? And believe me, nothing happens at the HEB by accident. The electronic surveillance in that particular store is Orwellian.

I ain’t saying this is some airtight explanation, but watching those blueberries hit the deck reminded me of Joe Carcione and his optimizing interlocutor from so many years ago. Actually, you might expect even better care of the veggies and fruits given labor costs here, but, ironically, it appears that cheap clean up is even more attractive. One thing I do know. Texas never ceases to amaze me. And, believe me, at bottom, economics is everywhere. Y’all don’t like it? Stay home. Like in California, if it’s still there.