The Art of Shifting Costs Elsewhere

When I was in architecture school in the 90’s, one of the things we studied in our design studio was how the economic landscape of small towns had changed and how those changes affected the built environment. One of the prime forces we studied was Walmart.

Walmart established itself in rural Oklahoma—among other places, but Oklahoma is the territory we studied—over the course of multiple waves. One wave was to build medium size stores at the edge of small towns where land was cheap. Their selection and low prices pulled a lot of people toward them and away from small local main street shops. After a significant amount of the local competition was shuttered, the next wave kicked in. Walmart consolidated four or five local stores into one larger store and abandoned the others in the area.

The obvious rationale is that building fewer larger stores was more efficient for Walmart to run logistically and that customers benefited by having a larger selection of even cheaper products to buy. The only catch? Most of them had to drive further since the Walmart wasn’t in their town and most of their local stores were closed down. The local stores that remained open were simply more expensive to shop in.

Now, we were studying architecture, not economics, but it was easy to hypothesize that part of the efficiency gain for Walmart is that they had successfully shifted part of the cost of transporting goods in two ways. First, government had to pay more to build the all the roads, highways, and infrastructure needed for everyone to drive to and from those Walmarts. Second, customers had to pay for the gas and maintenance on their vehicles they used to go back and forth.

To bastardize a telcom analogy, if this is true, it’s a successful shift of the last ten or twenty mile cost of selling goods. Never mind that the governmental cost for building all those roads and the individual costs of consumers buying gas and maintaining cards is probably much larger in aggregate than the savings. Walmart didn’t have to pay it, the perceived prices were lower, and it’s as easy enough to ignore the rest as it is to let spare change build up in your sock drawer.

If it was in any way intentional, it’s brilliant albeit in an evil way.

I’ve been thinking about that a lot lately. I’d love to find a good solid study on that sometime again and read up on it. The idea of shifting costs to a nebulous “elsewhere” also seems to apply pretty well to my current thoughts about the US Patent Office.

I’ve heard from multiple sources that patent examiners only really search for prior art in the existing patent library. If it never was patented, it must not exist. It’s about the only explanation for how patents like the method for swinging on a swing get through.

Now, I get that the patent office is swamped, there’s too much work for the patent examiners, and the fees for patent applications don’t cover the costs of running the office. But, taking a shortcut approach and only searching within the set of issued patents means that they’re shifting—intentionally or not—the cost of rejecting applications before issuance to the people and corporations that pay to defend themselves by challenging the issued patents. At least those that are able to pay without much consequence to their bottom line.

It’s fascinating and maddening all at once.