Anchorage Daily News

As government "experts" and politicians wring their hands over fiscal, monetary and intervention policy to "stabilize the economy," the American consumer is voting with his wallet.

Economists, fueling early rumors of yet another post-election rebate, say cash infusions will herd sheepish American buyers to flock to stores during the "critical holiday shopping season."

Ain't gonna happen!

Yes, some consumers do blindly spend whatever cash and credit is available. That's what corporate America would love to see now. For these folks, any improvement in liquidity increases consumption. We thank them for male enhancement products, hundreds of varieties of bottled water, extended warranties, thousands of "spice blends," endless mortgage refinances and microwavable mashed potatoes.

Despite this woolly headed majority, a growing minority is fed up with corporate shenanigans that yield substandard yet overpriced goods. Considering too many mediocre products and services, we have decided to wait and see before swiping the "plastic peso."

The gasoline market over the last year provides an object lesson. Many factors converged resulting in seemingly absurd prices. Faced with ridiculous prices, inflation of almost everything else, and static income, we reduced consumption to the minimum consistent with semi-normal modern life.

The lessons learned by big business and the consumer are diametrically opposed. The gasoline market demonstrated to business that maximum profit results from high prices that slowly retreat, only to remain at a new and higher threshold that consumers will stand. You see companies applying this lesson to their products -- prices are increasing on everything. Stagflation anyone? Ubetcha.

The astute consumer, stuck with buying at least some "inelastic commodities" like energy, housing and health care, can defer discretionary purchases if the price is unrealistic. This consumer response is bad if you bet your company's future on hybrid SUVs or yet another flavor of toothpaste. It's good if your company focuses on providing quality products at fair and reasonable prices.

The bailouts and tax rebates attempt to resurrect the status quo of a year ago: unprecedented profit growth, paper "wealth," and increasing prices that unthinking consumers will pay. Currently we have far too many businesses that exist solely for the benefit of their principals. They provide nothing more than vaporware to the consuming public. While it is painful in the near term to let those businesses suffer their fate in a free market, companies that provide value to the customer will survive and prosper. Until then, don't expect a massive spending increase by the American consumer.

As consumers, we can help the free market do its job by following a few simple rules:

Seek the best value in every purchase you make. Every buying decision should balance personal assessments of price and quality. If we always buy the cheapest alternative, the market will ultimately produce nothing but junk.

Minimize purchases of anything that you feel is overpriced. Prices won't come down until the maker and his retailers start to choke on their inventory.

Save for major purchases. If you don't use credit, the 5 or 10 or 15 percent you throw away on interest can be applied to buying better things later.

Remember that every price is merely an inducement to negotiate. Buying with cash puts you in the driver's seat. If a retailer won't negotiate on a major purchase, go elsewhere.

Don't own stock in companies that produce or sell rubbish.

Demand refunds on products that don't deliver. Don't accept a replacement that merely offers a newer piece of junk.

Cancel every long-term service agreement you can; only pay for services rendered. If the service is bad, refuse to pay and go elsewhere.

The current consumer malaise is not a bad thing. Some of us still believe that great companies are out there that make quality products sold at fair and reasonable prices.

None of us can change government economic policy, but we can all influence what happens in the economy. If we consider each expenditure and investment of our money as a vote in the marketplace, we may emerge from this recession with a better mix of goods and services than we have been lulled into accepting.

Adam Smith will be proud of you.

Dan Bonney lives in Eagle River, where he works on his 25-year-old BMW with tools inherited from his parents.

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