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Wanted: A Close Shave That Isn’t A Ripoff

Excessive greed creates opportunity.

If a collapsing economy caused mainly by unbridled greed is not enough of a wake-up call, a trip down the grocery store aisle will do the trick. It seems perverse that even as the buying power of society in general is weakened, the cost of food is soaring. But like many other bad things in this life, greed carries within itself the seeds of its own destruction. A couple of very mundane things come to mind.

I do most of the shopping. One of the things that I have consistently bought over the years is Red River Cereal, which is a mixture of wheat, rye and flax. It has not changed much over the years. It still comes in a red box with black lettering. Metric has made it into 1.35 kg, which according to my shaky metric is three pounds.

Otherwise, I think it is exactly the same cereal that my mother made on the wood-burning kitchen range so long ago. That little box of cereal now costs from $3.99 to $5. If wheat is the main component, and rye and flax make up the remainder, rye usually being a little cheaper than wheat, and flax a little more expensive, we can assume that the cost of wheat is pretty close to the mean.

A farmer with good-quality wheat will get about $7 a bushel. Since a bushel of wheat is equivalent in weight to about 20 boxes of Red River Cereal, that $7 the farmer got has now been increased in value to anywhere from $80 to $100. What value has the company added to it?

It has run the grains through a mill of some sort to crack them and then put them in the little red box, which probably didn’t cost 25 cents. All the rest is handling costs and profit. No one is producing a cheaper alternative.

I am a safety razor guy. I started shaving the down on my cheeks 65 years ago and never went back to a straight razor or forward to an electric one. Blades have increased in price over the years, but they have improved as well, so I never got too disturbed.

But the other day I went to buy my usual brand, the best known in North America, and di scovered they had competition.

My well-known brand had gone since my last purchase from $10.97 to $12.97 for 10 blades. But nestled in beside them was a brand I had never seen before – 10 plus a bonus five for $3.62.

Being at heart a reckless sort of person, always ready to take a chance, I pondered my downside for a few minutes and then thought “oh, what the heck, I’m bound to get at least 15 shaves out of them.”

So I bought them. What was my surprise when I put one in my razor and started to shave and thought, “this is better than Gil… – I mean, my old brand.”

The moral of the story is this. Somebody who knew her business saw that razor blade prices had reached the point where there was some extra candy to be had, quite a bit of extra candy in fact. And that is what causes corporations to have nightmares, and drives them to try to create virtual monopolies, to prevent the little beavers of free enterprise from getting under their voluminous skirts and gnawing those stilts that have carried them to such heights, allowing them to topple.

Excessive greed creates opportunity.

I’ll bet Red River Cereal could be produced and sold for $1.50 a box and still turn a handsome profit. And I’ll bet there are hundreds of other products out there that are equally ready to be exploited.

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