Haggling, flash-mob style

Why can't Medicare be more like China's consumers?

Published February 28, 2006 11:48PM (EST)

Want to see the power of the market in action? Go to Shanghai and watch flash mobs of consumers negotiate price discounts by ganging up on woebegone merchants. The Wall Street Journal has an amusing article today on tough-nosed bargaining claques who gather at Internet sites and plot their attacks.

It works like this: Would-be purchasers of a new car or kitchen cabinets or anything else link up online and make plans to hit a particular retail outlet en masse. Then they present the retailer with a take-it-or-leave-it proposition: cut us a 10 percent break and we'll buy 20 sports cars. No discount, no purchase. The Journal recounts a couple of instances where the group buyers simply wear out the retailer by hanging out in the store for hours upon hours.

Using bulk buying power to negotiate price discounts is a basic market strategy -- the only new thing here is the use of the Internet to form ad hoc buyer's cooperatives. But as my Salon colleague Scott Rosenberg observed, there's a great irony to be noted. Here in the United States, where we supposedly enjoy the pleasures of a deregulated market economy, we are prohibited by our own government from leveraging our own bulk bargaining power to save money when buying life-saving drugs.

Yep, as critics of Bush's Medicare Drug Benefit plan have been pointing out for years, Medicare is expressly prohibited from negotiating price discounts from Big Pharma. The drug companies get to charge what they want, and the people just have to suck it up and take it. Maybe we should all move to China.

By Andrew Leonard

Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21.

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