April 19, 2017, - 3:13 pm
Obamacare’s skyrocketing premiums and high deductibles may be partially to blame for the recent declines of American department stores and America’s malls.
When my late father was alive, he always encouraged me to question conventional wisdom and fight against piling-on crowds of groupthink. And so it goes with the widely accepted chorus of claims that the reason major retailers in America–and the malls in which many of them are found–are dying is solely based on the rise of online shopping and Internet giants like Amazon.com and Walmart.com.
A couple of weeks ago, I picked up a fixture I bought at the Going-Out-Of-Business Sale at the last Kmart store in my area. As I was deconstructing the item with my tools in order to fit it into my car, I lamented the fact that, while there once (and not too long ago) were five Kmarts within 15-20 minutes driving time from my residence, there are now only five such stores anywhere near me, and “near” is a relative term. They are all at least 45 minutes away by car. It’s true that Edward S. Lampert, who bought Kmart and Sears and made a mess of them, helped drive both retailers into the ground, when they could have been updated and re-imagined as the next Targets. Still, Target is not doing as well as it once was. And everyone is blaming it on the Internet and online shopping. That couldn’t be the only reason, I thought to myself. Surely, the Obamaconomy didn’t operate in a vacuum. Nor did families paying thousands of dollars more a year in healthcare premiums due to the awful, statist healthcare program Obama imposed.
And my view is borne out by some of the figures. Information and statistics show that at the same time healthcare spending in America went up as a percentage of total spending, shopping at these stores went down, and Americans are buying less clothing, shoes, and accessories. This week, Justin Fox of Bloomberg News reported that the shift from retail spending on goods to spending on services, especially healthcare costs, is huge.
Health care is by far the biggest contributor to this move from goods to services — spending on health care services has gone from 3 percent of personal consumption expenditures in 1929 to 17.2 percent last year. Spending on pharmaceuticals made up another 3.8 percent of personal consumption in 2015. (Government spending data for narrower categories isn’t available for 2016 yet.) . . . Outside of health care, there are a few other services that we’re spending lots more on than we used to. . . .
Economist Angus Deaton has been making headlines lately with his argument that the U.S. economy is being distorted by health-care and financial sectors chock full of “rent-seeking” firms that enlist the help of politicians to maintain big profit margins. Maybe that helps explain why spending on those categories has gone up so much — and why retail has been struggling. . . . There’s all that money going to health care and financial services — $3.1 trillion in 2016. Surely some of that could have been spent on shopping instead.
Hmmm . . . remember when Barack Obama told us (among other “candy” that perpetually rained from his pinata of lies) that his healthcare plan would reduce spending on and costs associated with healthcare and make it more affordable? Notice how the Bloomberg reporter, Justin Fox, does every contortion in the book to avoid saying it: Obamacare. But his references to healthcare say it all, since Obamacare is the only game in town in American healthcare these days and has been for a few years already.
A family budget is generally a zero sum game. Where spending on Obamacare premiums for most middle and upper class American families went up, the difference had to be made up elsewhere in spending less on other things, such as clothes, shoes, accessories, etc. Moreover, you see more and more people who used to shop retail for those items, buying them at resale shops and places like Salvation Army, Goodwill, and Value World.
Online shopping has been growing at a steady pace since the Internet began. Given that steady rise, the retailers in trouble now might have faltered years ago. But they didn’t. The acceleration of the failure of clothing retailers, department stores, and malls which house them really picked up as Obamacare was implemented.
You could argue that stores like Kmart failed to update and keep up with the times, lifestyles, and shopping habits of American consumers. And that certainly is a factor in the closing of Kmart and chains like The Limited. Also, it would be blind not to notice that Amazon’s and Walmart’s sales each exceed three percent of total retail non-grocery non-convenience-store, non-gas-station purchases in America. But it cannot be those things alone which have led to the deaths of American retail stores and malls–whose main merchandise is clothing and accessories.
Further, in addition to the rise in costs under Obamacare, there is another reason why malls (and the stores in them) are failing, which has nothing to do with the Internet. The reason is . . . newer malls. Today’s Wall Street Journal reports that a study of dying malls found that this is a far bigger reason (than online shopping) for the decline of malls in America.
Internet retailing is eating into mall revenue, but competition from newer shopping centers was the most common cause of death for malls over the past decade, according to a study of 72 such properties.
So, let’s see, newer shopping malls and less money to spend at either because . . . your family is spending a larger chunk than every to pay for Obamacare. Yup, the same Obamacare that is, unfortunately, nearly a third of a year into the Trump administration, still the law of the land.
If you went back to your old pre-Obama healthcare plan or if we all went back to a market-based, pay-the-bill-out-of-your-pocket method of going to the doctor and the pharmacy, Americans would have more money to spend at the mall.
It’s great that Barack Obama is gone from the White House. Sadly, Obama’s policies keep on killing America, well after he’s left 1600 Pennsylvania Avenue.
And he’s at least in part–a major part–to blame for the death and destruction in American retail.
Tags: death of American malls, dying American malls, healthcare, healthcare spending, malls, obamacare