How to End the Black Friday Madness

By ROBERT H. FRANK

Published: November 23, 2011

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ADAM SMITH’S most enthusiastic modern disciples insist that the recipe for economic progress is to push government aside and let unfettered markets work their magic. His invisible hand theory does provide a tidy account of how market incentives can generate enormous wealth. But as Charles Darwin saw so clearly, unbridled competition doesn’t always promote the common good.
It’s not how fast or how strong you are that matters, but whether you’re faster or stronger than your closest rivals. The arms races that result when rivals jockey for position — witness the huge antlers of bull elk — often spawn considerable waste. And as with the elk, so, too, in the marketplace. The start time for post-Thanksgiving sales is a vivid case in point.
In recent years, large retail chains have been competing to be the first to open their doors on Black Friday. The race is driven by the theory that stores with the earliest start time capture the most buyers and make the most sales. For many years, stores opened at a reasonable hour. Then, some started opening at 5 a.m., prompting complaints from employees about having to go to sleep early on Thanksgiving and miss out on time with their families. But retailers ignored those complaints, because their earlier start time proved so successful in luring customers away from rival outlets.
Those rivals, of course, didn’t sit idly by. Their inevitable response was to open earlier themselves, restoring competitive balance. Other retailers began opening at 4 a.m., then 3 a.m., and, eventually, at midnight. Several malls have promoted “Moonlight Madness.” Last year Toys “R” Us opened at 10 p.m. on Thanksgiving. This year, Wal-Mart will do the same. The costs to store owners and their employees and families are enormous: millions must now spend time away from home on the one occasion that all Americans, regardless of religion or cultural background, share as a family holiday.
These costs might be worth bearing if they led to even larger gains. But when all outlets open earlier, no one benefits. Few people actually want to shop in the wee hours, and the purchases that do occur then are presumably offset, dollar for dollar, by reduced sales during normal business hours. Even the shoppers who turn out for early openings seem motivated primarily by a fear that others might snap up bargains before they get there. But if all stores opened later, there would be no fewer bargains than before. In short, we have a classic collective action problem, an arms race.
Black Friday (or, more accurately, Black Thursday Night) is only hours away, so it’s too late to do anything about early openings this year. But we can start thinking about what can be done to protect our future Thanksgivings. Many societies employ “blue laws” — laws that mandate closing times, usually on Sundays. But there is a simpler, more flexible, way to approach this problem. Inspired by the 9-9-9 proposal of the Republican presidential contender Herman Cain, I call it the 6-6-6 plan — an across-the-board 6 percent national sales tax (on top of any existing state and local sales taxes) in effect from 6 p.m. on Thanksgiving to 6 a.m. on Black Friday.
This plan would leave both stores and consumers free to decide for themselves whether middle-of-the-night shopping is worth it. Even if some retailers decided to stick with the early openings and even if some shoppers showed up, the country would reap a significant benefit. As every mature adult realizes, we have to tax something, and the revenue from my 6-6-6 plan would make it possible to reduce taxes on other activities that are actually useful. Best of all, it would encourage Americans to spend Thanksgiving night where they really want to — in bed.

Robert H. Frank, a professor of economics at the Johnson School of Management at Cornell, is the author of “The Darwin Economy: Liberty, Competition and the Common Good.”

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