Myer, DJ’s and The Federal Election
Last week the Spring fashion shows were held on two consecutive nights. DJ’s was first starring Megan Gale and forty other models from around the globe. Fashion writers were flown in from every state. 530 guests boasted they were the triple A list. Millions of dollars was spent by the store on the décor (a French Rivera theme) with café style refreshments, topiary and a fountain in Randwick. They claim to have shown Australia’s top summer fashion. The next night was Myer’s turn. They had flown in some of the top fashion writers in the world, had spent millions on a tribe of what they claimed were the world’s top models led by Jennifer Hawkins, displayed similar fashions from another lot of Australia’s top designers, to a crowd that described themselves as “triple A” list. They also had lavish décor and hundreds who were wined and dined. The event was in Redfern just down the road from the DJ’s location.
Why so much money on providing the same? In fact, why do they have their city stores located next to each other with an over-road walkway between them? Would it not make sense to put their energies into different fashion shows, at different times of the year in different locations? Perhaps to a male like me fashion designs and those who sell them seem to be like Tweedledee and Tweedledum. That sent me back to my wife’s “Alice in Wonderland” that she has kept since early childhood. It is beautifully illustrated by Sir John Tenniel.
Lewis Carrol, the pen-name of Charles Dodgson, a professor of mathematics in real life at Oxford University, wrote the delightful books, “Alice’s Adventures in Wonderland” and “Through the Looking Glass and Alice’s Adventures There” almost 150 years ago.
There you meet the opinionated Queen of Hearts, the Mad Hatter, the March Hare, the Mock Turtle, The Cheshire Cat that smiled but was always vanishing (like Morris Iemma). The White Rabbit, huffing and puffing and always late seemed to me to have the characteristics of the Australian Democrats. The Mad Hatter was dressed all in green (enough said!) and the coy little dormouse that kept popping up out of the tea pot seemed to be a very Christian dormouse. But there was no doubting the likeness of Tweedledee and Tweedledum.
Both Kevin Rudd (“Me Too”) and John Howard seem to be agreeing on so much. Both support action against terrorism and Dr Haneef, intervention in the Aboriginal camps against child abusers and so on. Indeed, Mr. Rudd describes himself as an “economic conservative” a description usually reserved for Mr. Howard.
Mr. Rudd believes Mr. Howard is better at the economy so he agrees with holding to the main principles of holding down inflation and taxation. Mr. Howard believes Labor’s credentials on the environment led by the silent and currently invisible Peter Garret are better, so he announced a $10 billion Murray Darling water scheme unable to be matched by Labor. One announces work-choices and the other a scheme slightly diluted. One announces a housing affordability summit, and the other will shortly announce a new scheme for home buyers.
Why this double act? How you see it depends upon where you were born, what kind of a job your father had and your predisposition to the roles that Liberal and Labor play. Labor voters tend to want those policies that care for the poor, the aged and the unemployed, industrial relations, the blue collar worker, the chardonnay intellectuals, and more money for education, healthcare and the environment. The Liberal voters want policies that will provide for a sound economy, business growth, low unemployment, low inflation, lower taxes, strict border and immigration control, defence and national security.
The problem is that many of us want all of these things at the same time! The rise of the middle class, the aspirations of a group of new homeowners situated in outer suburbs and the people of a dozen electorates known as “swinging voters” want it all, now! They have short memories, high aspirations as measured by what their neighbours have, and no sense of gratitude.
So why the Myer and DJ’s look-alike competition? Because of Harold Hotelling’s law. Economist Harold Hotelling (1895-1973) in an article ‘Stability in Competition’ in Economic Journal in 1929 argued against the prevailing opinion of product differentiation, that is, people buy products because of those qualities that mark them as different from each other. Hotelling observed that in many markets it is rational for producers to make their products as similar as possible. This is also referred to as the principle of minimum differentiation.
Suppose that there are two competing shops located along the length of a street running north and south. Each shop owner wants to locate his shop to maximize his own market share by drawing the largest number of customers. Customers are spread equally along the street. Each customer will always choose the nearest shop. For a single shop, the optimal location is precisely halfway along the length of the street. Customers travel the shortest distance if the shop is in the middle.
Hotelling’s law predicts that a street with two shops will also find both shops right next to each other at the same halfway point. Each shop will serve half the market; one will draw customers from the north, the other all customers from the south.
Obviously, it would be more socially beneficial if the shops separated themselves and moved to one quarter of the way along the street from each end – each would still draw half of the customers (the northern or southern half) and the customers would enjoy a shorter travel distance. However, neither shop would be willing to do this independently, as it would then allow the other shop to relocate and capture more than half the market. (Thanks to Ross Gittens for reminding me of what I learnt in management education at Mt Eliza School of Graduate Management. SMH 6.8.2007). That is why Jetstar and Virgin fly the same routes with similar prices, and why fast food chains produce identical hamburgers.
In politics, the leaders are elected by their supporters because of their differences, but in an election the undecided electorate resides in the middle of the political spectrum, and there is a tendency for the candidates to “rush for the middle” in order to appeal to this crucial bloc.
Bob Hawke was unashamedly a union man, but when it came to the election that would make him Prime Minister, he gave away drinking alcohol, never swore and tried to hide his larrikin ways. He became respectable and trust-worthy. Paul Keating was a Labor “true believer” but he wore Italian suits and collected French antique clocks. It worked. The conservatives supported him. Mark Latham, when he almost became Prime Minister, built his shop down the left hand end of the street and waited for customers. But they did not come. They went to the Howard Emporium in the centre of High Street.
Hence we have Tweedledee and Tweedledum. But only until the Election Day. After that they will revert to type.
