Three Americans shared the 2007 Nobel Prize in Economics “for having laid the foundations of mechanism design theory.” They owe an intellectual debt to Friedrich Hayek. His 1945 American Economic Review article, “The Use of Knowledge in Society,” focused on the distribution of knowledge and the difficulty of coordinating behavior from a central location. While usually applied to governments’ efforts, I find it applicable to any large organization, notably, Home Depot. It explains why my friends call it Home Disappointment.

I am blessed with a few friends who are really good at building and fixing things. Their standards for products and service are extremely high. Not similarly talented, I frequently ask their advice. Here’s a piece uniformly given: “Don’t shop at Home Depot.” Why? “Try it and you’ll find out.” Alas I have—and they are right.

How can this be? Last year Home Depot’s revenue was over $90 billion and, according to the NYT, its CEO Robert L. Nardelli received $38 million in his final year and a $210 million exit package when fired. Can’t they get good management at this pay? Apparently not.

Home Depot’s slogan is fetching: "You Can Do It. We Can Help." Here’s the gist of their vision statement: "Bernie [Marcus] and I [Arthur Blank] founded (The Home Depot) with a special vision—to create a company that would keep alive the values that were important to us. Values like respect among all people, excellent customer service...."

This implies competence. However, ex-CEO Nardelli replaced many thousands of full-time store workers with flocks of part-timers. This was part of a relentless cost-cutting program designed to drive gross margins from 30% in 2000 to 33.8% in 2005. The results, in my Bozeman experience, are compellingly obvious, and predictable by the economic logic of Hayek. Here are a few personal examples.

When Home Depot opened in Bozeman, Ramona and I were working with our contractor on a minor home building project. We went to Home Depot’s design center, outlined our plans, left sketches, and were assured we’d soon be contacted with options for cabinets and plumbing. No response ever came.

Last summer I found some noxious weeds on our ranch and needed a small weed sprayer with booms to tow behind a four-wheeler. Neither Owenhouse nor Murdocks had one available so I went to Home Depot. They had one that came preassembled with a $20 setup charge. I was assured it was ready to run, so I paid, loaded it in my pickup, came home, filled the tank, and prepared to spray.

Not so fast. The hoses to the boom arms were too short for the boom arms to extend. I went back to town, bought new hoses (not from Home Depot), put them on, extended the arms, and went to the first field. Alas, the main hose from the pump flew off as soon as I turned on the pump. No clamp had been installed.

I hunted in our shop, found a clamp, put it on, refilled the tank with RoundUp, pulled onto our lawn to add water to the tank—and Ramona called me in for lunch. After a leisurely lunch I went back out only to find the tank had a hole in its bottom! Our lawn now has a bald patch that daily reminds me of Home Disappointment. Snow will soon cover it and next spring I’ll reseed, again thinking of Home Disappointment.

Ramona recently decided a bathroom in our guest apartment deserved a new basin and cabinet. She spied a Home Depot advertisement and suggested we look there. We did and the quite friendly sales person found just what she wanted, oak with simulated marble.

And what about the faucet fixture? He told us this Delta faucet would be perfect for the cabinet. A plumber came for installation, and, unfortunately, the faucet drain stop would not work with this cabinet.

This litany explains why those who know call it Home Disappointment. Home Depot’s stock price indicates my experiences are common. After languishing at around $40 for six years, it closed at about $33 on October 15. This provides a reality check hard to ignore. My friends will no doubt tell me if Home Depot gets it right.