Monday, 2 December 2013

How scroogenomics is destroying capitalism.

The modern Scrooge character is very different to the Scrooge of Dickens' A Christmas Carol. Not only is the 21st century Scrooge a grudging employer paying only what is required by law (if that), but also holds clients and customers in smug contempt for not realizing he's conning them he may well also be a clinical psychopath or sociopath.

His definition of a successful economy is fairly narrow by many standards, to him it is one that makes him even more obscenely wealthy than he already is. When asked about others his response is "I want my fair share, and that's all of it."

We should all be familiar with how Dickens' Scrooge was a grudging employer to Bob Cratchet. Today we have the Wall Mart Heirs, who instead of spending US$7billion dollars to raise their workforce out of poverty bought stocks in their own company to boost the share price. They didn't even use revenues to do it. the made US$17b in revenues last year, and could easily have raised all associates wages by over US$5/hr. Saving the US tax payer US$1.2b in public assistance.  Walmart did arrange a sort of swap meet, so that associates who were struggling for thanksgiving could get a little extra. Which might sound good to some, but letting other people be generous on your behalf is no more than an abdication of your own responsibility to act as a decent human being or ethical employer. If corporations are people according to the Supreme Court judgement, then some corporations can be cheapskate assholes of dubious lineage and infect with the pox. As I write SCOTUS is considering whether corporations can have a religion. If so, does this mean pagan corporations get to sacrifice virgins to their volcano Gods?

The race the to bottom for wages and prices is a loosing game for everyone. Like a room full of people where everyone has a gun and an unlimited supply of ammunition. Any can shoot in any direction if you get shot, you must shoot twice, since every one is blind folded, the game only ends when the last person standing has no one to play with.

As wages are driven down, for example by big box retailers, they starve competition and other community enterprises of custom and of business. But they also starve manufacturers of demand because of the suppress wages in the retail sector and fewer retail workers can to buy manufactured goods as often. Primary producers are also affected as wage become so low worker struggle to put food on the table. Manufacturers and producers are forced to raise price or reduce their employment costs either by paying less or laying off staff, sometimes they sell of plant and equipment, and in some cases shut down all together. This can become a positive feed back loop. Fewer goods at lower prices in a market with reduced liquidity, further reduces liquidity as manufacturing and production workers join the ranks of the un(der)employed, further reducing liquidity, and suppressing retail activity until the bankster has no one to play with. To how these low wage employers hurt non-competition. A big box hardware will hurt cinema business, because none of it's staff can afford a night at the movies or a restaurant meal if disposable income is $2.74/week. Smaller competitor retailers are forced to lower prices, and pay for that in reduction of and or wages. Or they close up shop and get work out of town or in a big box retailer.

The economics of big box retailers, are sensitive to factors that are different to small retailer models, because the operate on smaller margins, market shifts make them more fragile. As consumers we can take advantage of that, and push them to do the right thing, and we may even get a better bargin in the process. Costco for example pays a living wage, and offers most of its workers a quality health plan, while many of the remainder get a $500 cheque for buying their own health plan. Support these guys and other ethical employeers sends a message, that the market will not accept starvation offered by a greedy few. CostCo is also cheaper than Walmart. You may find bulk purchasing difficult, so get together with friends or form a community to shop and swap. Shop at the big box, and divide and swap portions purchase among yourselves, you may be to on sell some items on ebay.

Another Black Friday has just rolled by leaving 4 dead and 67 injuries. perhaps this indicates a desperation born of thirty of race-to-bottom corporate strategy, or hyper consumerism. Either way there has to be a better way than for corporations to act like douces and blame the victims when it all goes belly up.

It was once a requirement that corporate charters included the responsibility to offer a public good. Bring back that requirement would almost see and end to corporate psychopathy(see The Corporation - a documentary that uses the DSM IV to diagnose corporate behaviour). That required was removed in the first half of the the 20th century. Since then corporate ethics in the US have been on a downward slide, which lately appears to be very well greased with a mixture of crude oil from the Gulf of Mexico and "produced" water from the Pennsylvanian Fracking fields. But that is a another story

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