Earlier this month, I met Jack Thompson, vice president, Carriage
Trade Travel Services in Arlington, Va. During our talk, he
compared the plight of travel agents with that of hog farmers.
He noted that farmers can get the government's ear now that
drastically reduced prices they are paid for hogs do not translate
into a similar reduction in the price of pork at the grocery store.
On the other hand, he said, no one seems to care that airline
commission cuts have not reduced air ticket prices.
Coincidentally, I had seen a connection between agents and
farmers when I visited my cousin Ronnie in Iowa last month. There
are significant differences, of course: My cousin owns his
inventory, and he has to feed it -- and pigs eat a lot.
Unfettered markets tend to favor efficiency, which usually means
bigness, but some blame government policies for fostering farm
factories: Ten years ago, 7% of hogs came from the biggest farms;
today the share is 37%.
This consolidation is a huge factor in today's mess: Big
operations, unlike family farms, cannot easily switch products when
the hog market is flooded, and many are delivering to
slaughterhouses now under multiyear contracts that pay way more
than today's market prices (hence the grocery store problem).
Ronnie gets $10 a hundredweight; farmers need $39 to break even.
He said he figured it wouldn't be long before small farms are gone.
That's when I connected the dots between hog farmers and travel
I doubt any government agency aims to be rid of small farmers;
that would be a sacrilege. I doubt airlines aim to be rid of small
agencies even if they want, essentially, to buy fewer services from
them. But consolidation is occurring as a direct result of
I am guessing some government types now, and some airlines
eventually, may regret the consequences of their actions, not
because the decisions themselves were inherently bad. The issue is
that almost any major move has unintended consequences.
I have another point to make, and that relates to efficiency. I
read that walking is good for our health because it is inefficient;
that is, you have to use (hence, exercise) lots of body parts when
walking, sometimes more thoroughly than when running. This lets me
say what I believe: Efficiency (hence, cost-effectiveness) is not
everything, not even in business.
If efficiency were our god, my cousin would slaughter all his
piglets at birth (he hasn't the heart); we who have desk jobs
wouldn't ever dare look away from the computer screen, and none of
us -- after our inefficient childhoods -- could justify a walk.