I found this fascinating video that gets at an idea I've been trying to spread for awhile: a loss leader only works if there's a gain follower. Otherwise, it's just a loss, right? Pretty simple concept, but it's one that so many--even senior and very educated people-- just fail to grasp.
For example, my employer has a long-time customer that gets a lot of preferential treatment to the tune of many millions of dollars. Yet if you look in to the sales figures, they haven't bought much of anything from us in a long time-- moreover, they are in such financially poor condition that there's no reason to the think they'd be able to reward our kindness any time soon. So why are we giving them all this preference? This is classic loss-leader-has-no-follower thinking. It's planting a bunch of seed with no soil and no rain. The value of the seed is the fruit.
This plays out in local government all the time as well. Your local economic development authority starts throwing around property tax abatements left and right because "economic development!". Lure a business to come to your locality in the concept that all development is helpful.
Yet-- is it?
What happens when you have a lot of local economic activity, but it doesn't translate into actual higher quality of life? What happens when you have businesses attracted, but you don't get anything in the way of better schools or roads? What if your local GDP goes up higher and higher but there's no improvement in property values, no decrease in crime rates, no improvement in education?
[video=youtube_share;RWTic9btP38]https://youtu.be/RWTic9btP38[/video]
For example, my employer has a long-time customer that gets a lot of preferential treatment to the tune of many millions of dollars. Yet if you look in to the sales figures, they haven't bought much of anything from us in a long time-- moreover, they are in such financially poor condition that there's no reason to the think they'd be able to reward our kindness any time soon. So why are we giving them all this preference? This is classic loss-leader-has-no-follower thinking. It's planting a bunch of seed with no soil and no rain. The value of the seed is the fruit.
This plays out in local government all the time as well. Your local economic development authority starts throwing around property tax abatements left and right because "economic development!". Lure a business to come to your locality in the concept that all development is helpful.
Yet-- is it?
What happens when you have a lot of local economic activity, but it doesn't translate into actual higher quality of life? What happens when you have businesses attracted, but you don't get anything in the way of better schools or roads? What if your local GDP goes up higher and higher but there's no improvement in property values, no decrease in crime rates, no improvement in education?
[video=youtube_share;RWTic9btP38]https://youtu.be/RWTic9btP38[/video]