Wal-Mart figured out sometime ago that the findings by the Chicago School of Economics in the early eighties could be applied to a successful business model. The idea that consumers are driven by price and it is price that determines satisfaction, the only thing left was to develop a way to drive those costs down. The problem was the Robinson-Patman Act of 1936 which prevented the elimination of competition through price discounts. But Wal-Mart understood that if they could keep prices down even after the competition went out of business without raising them once they were the lone player, it would have successfully skirted the anti-chain store act.

Wal-Mart economics, as I have used it here is a process of eliminating all other possibilities in favor of the lowest price. If the cost of cheap beef means less testing and regulation, the price will outweigh the dangers that is perceived by the public. If the mutual fund scandal is any indication, the only thing being discussed are the related costs of the funds (fees) with the real underlying reasons being ignored by the general public.

When price is your only concern, you are applying Wal-Mart economics.

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