Costco: a Model for the Economy?

For months the U.S. Congress has been sparring among itself over whether or not to raise the national debt limit.  Since both houses of Congress are no longer controlled by a single political party, the debate has raged on with no end in sight.  Unable to stand at a distance from the problem, President Obama has been reluctantly pulled into the fray.

Costco, at The Promenade, Bridgewater, NJ (Bergeron Image)

The issue is how to contain the seemingly irreversible spiral of national debt – currently in the trillions – that burdens our nation and threatens to stall the economy.

It’s not as if one could not have seen this problem building up.  The national government has been spending beyond its means for years.

Why not?  All that politicians needed to do was to keep borrowing printed money to cover their spending habits.  A war here, a war there and the economic costs begin to add up.  Afghanistan.  Iraq.  Libya.  Add to the mix all of the unfunded domestic programs and . . . . Well, I won’t keep annoying you with facts.

Which brings us to Costco.  I like its business model.  It’s not the place to go if you want to keep a tab running like the Feds do.  At the checkout, you are expected to put cash on the barrelhead (debit card’s the same thing), or you may use Costco’s own American Express vanity card. 

Costco: Cash on the Barrelhead

On Monday, when I drove to Costco at the Bridgewater Promenade to return a pair of sweats that didn’t fit, it suddenly struck me: Costco’s policy of accepting only cash on the barrelhead is a great retail model:

Who would have thought that establishing a cash-only, high volume business with an annual membership fee would succeed? But it did – wildly. On any given day, because of quality and good prices, the Bridgewater Costco has a stream of customers purchasing an assortment of food and merchandise, and happily rolling their carts up to the checkout to pay with greenbacks or debit card. (American Express is the only credit card accepted.)

It’s a sterling example of a good business enterprise, one which could be well emulated by governments and citizens across the land: Don’t spend what you don’t have. And, if you are in a position of responsibility in a government agency at any level, don’t try to fleece cash from Americans through a confiscatory tax structure.

But we all have short memories and, as the economy recovers, people and bureaucrats will return to their old habits. That is, if they even modified them to begin with.