Vote with your feet

Need a riddle for the watercooler?

Question: What do Crocs and Republicans have in common?

Answer: They're both on the verge of extinction.

You knew the GOP was going the way of the dodo . . . but the iconic shoe company? Say it isn't so.

If you're suffering from plantar fasciitis you probably knew the answer to the riddle. Crocs are miracle shoes for people suffering from this painful heel ailment.

Unfortunately, a collapse of Crocs could be imminent. Poor business decisions resulted in a $185 million loss in 2008 and the company has big debt payments looming in September. Crocs is going the way of GM and Chrysler.

Oops, wait a second, that's only partially true. Unlike GM and Chrysler, Crocs is not getting a government bailout.

But I think we should consider bailing out Crocs.

Here's why:

If Crocs were to hire a high-powered government affairs firm, should Congress seriously consider these likely lobbying arguments?

I hope so. And I hope Congress would reject them.

Bailouts are inherently unethical; they make for bad economics and they're constitutionally specious.

Somebody has to pay for bailouts. Bailouts are conducted by government force---the force of law. Congress plunders its citizens on highly questionable constitutional grounds and transfers the largesse to favored corporate welfare recipients. By doing this, Congress perpetuates weakened businesses. Weakened businesses like Crocs need to be recapitalized by willing private investors who believe they have a profitable future. Or they need to fail so that capital and labor can be more productive in other arenas. This may sound harsh, but it's the world of business. It's the world that your local grocer, golf course owner, home builder, insurance agent, private school, and corner druggist deals with every day.

The Washington Post portrays Crocs as a victim of the economic times. This is true. But it's also true that most failing businesses are victims of economic times whether in good times or bad. Crocs made decisions to expand its manufacturing capacity and pursue new markets just as the economy was contracting (thanks due in large part to the Federal Reserve's monetary policy). The company turned a $168 million profit in 2007 into a $185 million loss in 2008. As a past business owner, I can speak from experience: Consumers are tough to please. Although Crocs has a great brand name, it's dangerous to take on debt to extend that brand to new products. It's a mistake that companies often make. Crocs, for example, tried to get into the sports-protection gear business. Consumers weren't buying.

Consumers vote with their dollars every day. They reward good decisions by purchasing products they want and need. And they punish bad decisions by not buying the products that result from those decisions. If shoppers aren't buying, companies like Crocs that take on too much debt get into trouble.

There's still some hope for Crocs. They hired a new CEO with experience at Reebok who specializes in brand renewal, and they've got a loyal customer base that purchased 100 million pairs of shoes over the past seven years. The company could emerge from its troubles leaner and more focused on the marketplace.

If you like Crocs, don't lobby for a bailout. Vote with your feet and dollars. Head out to the mall and buy a pair or two. And take a few of your watercooler friends with you!