Confronting our Agoraphobia, Part I: Carefully Taught

Fear of the marketplace

"Let us never negotiate out of fear. But let us never fear to negotiate."

-- John F Kennedy


"In North America and Europe bargaining is restricted to expensive or one-of-a-kind items (automobiles, jewellery, art, real estate, trade sales of businesses) and informal sales settings such as flea markets and garage sales. In other regions of the world bargaining may be the norm even for small commercial transactions. In Indonesia and elsewhere in Asia where locals haggle for goods and services everywhere from street markets to hotels, haggling is a strong cultural tradition that even children learn from a young age."

-- Wikipedia, "Bargaining"

There are some places in the world where to get a bargain means that you've used your market savvy to nick some of the vendors' profit back for yourself. It's a win in the game. In America, getting a bargain generally means the vendor had decided to lower her list price on a certain item for a short period of time. There is a "win" involved, but it's more like winning at slots than winning at chess. You'd not believe it from looking at the crazed shoppers waiting out front of Wal-Mart on Christmas Eve, but American-style bargain hunting is a far more passive experience than it is elsewhere.

I have a hypothesis that Americans are afraid of haggling. It's a carefully taught agoraphobia - in the true translation of the term, "fear of the marketplace." It has a twofold basis. On one side, the dogma that only the most clever can successfully negotiate a deal. On the other, the forced separation between buyers and sellers. Transactions are automated and anonymized. The pace is quickened to limit a consumer's ability to research actual value.

This is a pretty major topic, so I'll be doing this as a multiple article series over the next couple of weeks. To give you an idea of where we're headed, I've provided this handy timeline.

Spiffy, no?

A Nation of Cowards

"Yes, there are people who haggle just for fun. Me, not so much. The mere thought of asking for someone to knock a buck or two off the price of a damaged item causes my stomach to push against my throat, my vision to narrow, my breathing to grow shallow."

--Amy Reiter,, "How I learned to haggle," April 2009.

It's been a long time since America has had to collectively fight in a real war. It's been even longer - nearly 150 years - since there was sustained combat on American soil. In the interim we've become oversensitive to conflict. Our only exposure has been filmed or televised, hyped up to sell ads and hamburgers, glossed over by comic book artists. Only the most doughty of our citizens have volunteered to fight in our more recent foreign conflicts. The generations under age 40 have only known minor skirmishes like Desert Storm and the war in Afghanistan. These were certainly substantial but when compared against conflicts like WWI, WWII, Korea, they're pitiful. Our concepts of confrontation have become distorted and exaggerated.

Commercial interests encouraged us to confuse negotiation with confrontation. The basic conversation required between buyer and seller got decorated with the trappings of battle. Our fear of the latter became fear of the former. Now we buy at prices set by the vendors, our only available protest being to stay home if the price is to great to bear. There is no doubt that footage of 9-11 have been recycled far past the point of healing to keep the population slightly on edge, slightly leery of getting aggro on anyone, be it on the road, in the office or in the mall.

Ms. Reiter's reaction to haggling described in the leader quote is the fight-or-flight reflex. She finds the situation threatening. Judging by the abbreviated, timid bargaining efforts I've seen from the rental and home buying population over the past several years, I'd reckon many of you reading this find negotiation to be pretty scary too.

I'm of a mind that this lack of negotiation is hurting our economy, especially for those of us at the lower end of the payscale. A return to bargaining actively could be the impetus needed to exit the era of super-powerful corporations lording it over the 99%. However, to get there we need a plan to push back against centuries of carefully taught fear.

Fixed Price: Created in Switzerland, Made in America

"At that time, in most stores, prices were set by haggling. The result was a frustrating dance between customer and salesperson, who parried back and forth until they managed to arrive at (in the words of one retail historian) 'a price which neither party to the transaction considered robbery.'"

--James Surowiecki, Wired Magazine, "Going, Going, Gone: Who Killed the Internet Auction?", May 2011 Print edition.

Negotiation was the norm even here in the US at the beginning. Buyer spoke with clerk, they discussed the comparative value of different items. It was the clerk's job to know the stock in the shop, and the buyer's job to know what was carried elsewhere for less. It wasn't until the mid 19th century that fixed prices and price tags on items in the stores saw widespread use, and they didn't begin here in the states. They started in Switzerland at a department store called Jelmoli in Zurich.

They were obviously popular from the start. They didn't require shopping multiple stores before buying an item. They didn't put the buyer at risk of getting taken for a ride by an unscrupulous salesperson. Once the buyer wasn't trying to cut into the seller's profits and vice versa, both parties could skip the posturing and get to the building of a relationship based on mutual advocacy. I would go so far as to say that modern concepts of real estate agency & negotiation by proxy can trace their lineage back to Jelmoli.

The pricetag thing didn't make it over to the States until over 10 years later, when an Irish immigrant by the name of Andrew Stewart opened the first department store in New York City, the Marble Dry-Goods Palace. Fixed prices were just as popular here. Even though Mr. Stewart eventually lost ground to his later competitors like Macy's and Lord &Taylor, at the beginning it was his innovation in outlawing haggling that pressed them to follow suit.

While we probably saved a lot of time by no longer needing to dicker over oatmeal, there was now less of a reason for us to talk to each other. A hurdle now stood in front of the buyer if they wanted to bargain. Everyone loved the new fixed prices so much, they saved so much time, why bother worrying about the few cents markup that ensued? Supermarkets and mail order would soon arise to separate the two sides of commerce even more. It has culminated in the web economy, where transactions with invisible vendors are handled via mouse using fake currency like Facebook coins. The problem is, a few cents markup here and there and suddenly a shop owner is seeing some mighty nice profit margins.

We'll visit more with the slow downward spiral of the buyer-seller relationship later this week. Suffice to say, the spark is gone. When two halves of a couple stop speaking, progress is impossible.

Death by 1,000 Paper Cuts

The ebbing of the buyer's power was slow and almost unnoticeable. Until we reached the 1980's it masqueraded very well as technological progress. But then the pace sped up and the mood shifted from "let's learn everything possible" to "let's acquire everything possible." Without the need to research our purchases, without having to wait for mail order or worse, for the raw materials to build an item that we wanted, our negotiation skills weakened and our need for instant gratification increased. "Why haggle," we wondered, "when we can get what we want without it, and we'd probably do it wrong anyhow?"

Any of the following could be blamed on our lack of bargaining practice:

  • Poor impulse control leading to reliance on credit.
  • Reluctance to adapt products to suit our needs.
  • Downturn in home skills like tailoring & carpentry.
  • Downturn in home "tinkering" & curiosity that led to the creation of the web as we know it today.
  • Increased use of disposable items, increased environmental waste.
  • Inability in younger consumers to invest in long term contracts and items that would require work or upkeep, e.g., a house instead of an apartment.
  • Weakened research, planning and comparative value skills.
  • Increased demand on petroleum-based plastics for quick-manufacture.
  • Consumers without bargaining skills become small business owners, who in turn are preyed upon by B2B companies like Groupon who rely on such owners with poor awareness of their profit margins.

Personally I would ascribe much of the current economic sluggishness with the one-sided nature of modern American commerce. And I think the trend can be reversed, but it will take effort on the part of the consumers to stop just buying mindlessly. There must be a return of negotiation.

Wednesday we'll continue on this journey, talking about how modern commerce has systematically removed nearly every piece of the buyer's formerly robust arsenal of negotiation strategies.