Why Boycotts Don’t – and Won’t Ever Work

Posted on 05. May, 2006 by in Saving & Investing

You’ve undoubtedly received at least one email forwarded from a friend telling you that if everyone boycotts gas next Tuesday that oil prices will come down and oil companies will be “forced to listen.”
The same tactic has been used over the past few weeks by immigrants who are calling on their fellow immigrants to boycott by not purchasing anything – with the hopes that people will see how crippled the economy is without the buying power of immigrants.

Both cases cause me to laugh out loud because the idea is just plain silly. Both ideas are valiant in their effort to force change but they’re grounded in principles that are just plain wrong. Unfortunately I don’t have the time to crunch the numbers to “prove” my point, but here’s a quick synopsis of why I think these types of boycotts will never work:

  1. The “Stock-up” Effect – As I watched the news the night before the great immigrant boycott I listened as the reporter spoke with people.. who were stocking up on last-minute supplies getting ready for the boycott! The economy will not feel a thing if people are just purchasing twice as much the day before the boycott (or the day after). In fact, many stores were staying open later (’till midnight in many cases) re-emphasizing my opinion that if people are anticipating a boycott they will simply stock-up the day before, or buy twice as much the next day in order to make up for the “lost day.”
  2. The Economy Always Corrects Itself – I’m going to give the immigrants the benefit of the doubt here and assume that the boycott has some sort of affect on the economy – but what would that effect be? By not purchasing any goods that day, business owners are looking at less money in their pockets. Less money in their pockets means less money in the pockets of employees, shareholders, etc. However, just as the economy always does in macroeconomics, it corrects itself. Although there might be less money in the pockets of business owners, they will be compensated by the fact that they will not have to pay wages to those employees who didn’t bother to show up for work that day.
  3. People are Selfish – I know, I’m usually not very pessimistic, but I think this is the underlying reason why these boycotts won’t ever work. In order to even start to have an effect on the economy, every single immigrant would need to boycott and that’s just never going to happen. This is evidenced by the turnout at the boycott that I saw in Vegas – a couple dozen people showed up. As I returned to my hotel room, it was being cleaned by an immigrant that didn’t show up to the boycott. Why? Because feeding her family was more important. And that’s the ultimate reason why these boycotts – whether for immigration reform or lower gas prices – will never work. People will always choose work over a boycott because they need the money to live. And a trucker will always buy gas on the boycott day because his livelihood depends on it.
  4. Large Companies Don’t Care About Customers – Ok, I should explain. Every public company has a fiduciary duty to its shareholders – by maximizing profits. Some companies do this by making the customer #1 so that the customer will return, buying more goods or services, and thus increasing profits. Many other companies use other tactics to gouge customers in order to maximize the return from every good or service sold. So if the oil companies can make an extra billion this year by increasing gas prices (yes, no matter what the oil companies say, they made a ton of money off increasing gas prices) then they will take that opportunity! And even if 500,000 people didn’t buy gas today – that amount would pale in comparison to the money that they are making the rest of the year. Just look at the billions in profits that the oil companies posted this last year – the profits didn’t come by easing the hurt at the pump…

3 Responses to “Why Boycotts Don’t – and Won’t Ever Work”

  1. Simon

    08. May, 2006

    Most people do not have even a fundamental understanding of the economy works. Until signifcant majority of any population has a basic understanding of economics and the way their actions effect (or don’t effect) the economy silly “protests” like this are going to happen.

  2. Natalie Ferguson

    09. May, 2006

    Call me an idealist, but aside from all these things you state, boycotts have and will continue to work, obviously, these ones have their weaknesses and a one day boycott will do squat, but long term, sustained boycotts (ie. the bus boycott and boycotts on Nike and various other massive companies) do actually force change.
    As for those who opt out.. they will always exist and that is fair enough, however as boycotts build mometum, their numbers diminish.
    I think the biggest problem facing any form of massive action is the lack of ppromotion about past efforts that have succeeded. We all think everything aside from violence achieves nothing, because that is the only success really advertised (ie. Our love of war), despite some wonderful and overwhelming victories by groups of people protesting in various ways over the years.

  3. James

    20. Jul, 2007

    I was driving home from school late one evening and stopped to fill up on gas. After I filled up I went to pay and that is when I realized I didn’t have any money. I told the lady behind the counter and said I would run home and get some cash and be right back. She said she would call the police if I left, so a long story short, I had to wake my father up at ten at night with a phone call and he had to come up to the gas station and pay the lady.

    My dad and I decided to boycott that particular gas station, which at least one of us had used nearly every day. We never went back and about a year later it closed down.

    Also after one tax season my whole firm got kicked out of a bar we had our after season party at. We all said we would never be back, it was closed down by the next tax season.

    I have to disagree, boycotting does work. Or at least in my experience.

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