What a great read, it's right on the money. The businesses participating in the "Locust economy" are the ones that are desperate enough to need to participate in something like this. Also, if they have gotten themselves to the position of needing this, it is safe to assume that, perhaps they do not have the best business instincts. A sustainable way to approach something like Groupon, would be to build your pricing model accordingly.

Fold the cost of coupons and special offers into your pricing model. The problem is many restaurants and retailers use price as their competitive advantage. The truth is, most consumers, while they like a coupon, care less about price then they do quality. Give someone a coupon to get them in the door and then give them a unique product, service and experience and they'll return.

I've never used a "Groupon" but I've definitely used the Pizza coupons that come in the mail. If the pizza is good, I begin ordering from them with or without a "deal."

Some businesses have a marketing "plan" that incorporates things like Groupon and others, when asked "what is your marketing plan?" Will respond, "well, we use Groupon." -these guys were doomed before they ever opened their doors.

Locust economy... I like that.