On Thursday, Toys “R” Us announced that, after 70 years as the major toy chain, it was going defunct. Immediately there was a nostalgic backlash of adults humming the theme song, “I don’t wanna grow up, I’m a Toys ‘R’ Us kid…” to coincide with news reports of their closing.
Still, let’s be honest: This wasn’t Mom ‘n Pops book store being put under by Barnes & Noble, this was savvy, online retailers outdoing a smaller, specialized chain — peak free-market capitalism. The fact that it went under isn’t necessarily a cause for celebration, but nor is it an invitation to whine or feel sad. Would you rather live with Toys “R” Us and without Amazon?
Competition is ground zero for the marketplace. Those who stay in the ring, compete, and improve, go on to fight another match. Those who fail to observe their opponent, improve, and implement that knowledge will experience net loss and eventually shutdown. Chief Executive David Brandon blamed Target, Walmart, and Amazon for the store’s death. The New York Post reported: “the first self-inflicted wound came in 2000, when Toys ‘R’ Us, struggling without a viable e-commerce platform, inked a 10-year deal to become the exclusive toy seller on Amazon. At the time, shoppers going to toysrus.com would end up on Amazon.” To add insult to injury, Toys “R” Us could not seem to grasp the new era of online shopping and failed to lower the prices of its products to compete with other outlets. “For example, a Nerf Blaster by Hasbro that sold for $49.99 at Toys ‘R’ Us late last year sold for $39.97 at Walmart, $44.99 at Target and $34.26 at Amazon over the same period, according to BMO research.”
It’s not that Toys “R” Us deserved to close, or that there’s no empathy for employees who lost their jobs, but the beauty of the free market is that the market dictates what remains at play and whom–Theranos, I’m looking at you–gets eliminated. Even those who now must search for another job can take solace: BLS data show employment at a record high.
I’m no economist, but it works like this (I’m simplifying the process significantly in the interest of space): When Walmart sells a Nerf Blaster about $10 cheaper than Toys “R” Us does, the customer who purchased that gun now has, theoretically, $10 extra to save or spend. He can invest, purchase a coffee at Starbucks for himself and a friend, or he can be charitable with the funds. Either way, the “extra” allows him to funnel more into the marketplace, which requires someone else to do another job, be it brew coffee, or whatever. Lower, competitive prices actually improve the job market, not the other way around.
Because Toys “R” Us never got in the game with online retailers or became more competitive as the market went that direction, they suffered the consequences as buyers preferred other outlets. Adults (or kids) shouldn’t feel nostalgic that they can no longer be a “Toys ‘R’ Us kid,” they can just be happy they got their Nerf gun $10 cheaper at Walmart. As Milton Friedman said, “Underlying most arguments against the free market, is a lack of belief in freedom itself.”
Nicole Russell is a contributor to the Washington Examiner’s Beltway Confidential blog. She is a journalist in Washington, D.C., who previously worked in Republican politics in Minnesota. She was the 2010 recipient of the American Spectator’s Young Journalist Award.
