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Archive for Wednesday, November 14, 2012

Letter: Price point

November 14, 2012

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To the editor:

I recently bought an elegant pair of pants in a Lawrence shop for $39.99. I liked them so much that I put them on without looking where they were made. I checked this on returning home and found they were produced in Swaziland.

This is a small African kingdom in eastern South Africa. According to goodsearch.com, about 75 percent of the population works in subsistence agriculture for less than $1.25 per day. Some grow marijuana, which they sell in South Africa. The region has been suffering from a disastrous HIV epidemic and its people have a life expectancy of 32 years.

I wonder how much this pair of pants cost the distributor whose name appears on them as the producer? This is, in fact, a large corporation whose key executives are not accessible to the public, at least not on its home page. Is this the kind of corporation whose tax cuts the GOP wants to preserve?

Comments

Abdu Omar 1 year, 11 months ago

Yes. The Republicans are looking at changing their ways, but the protection of rich, white men will be hard to break.

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skinny 1 year, 11 months ago

"You cannot legislate the poor into freedom by legislating the wealthy out of freedom. What one person receives without working for, another person must work for without receiving. The government cannot give to anybody anything that the government does not first take from somebody else. When half of the people get the idea that they do not have to work because the other half is going to take care of them, and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for, that my dear friend, is about the end of any nation. You cannot multiply wealth by dividing it."

You know what is odd?

They do not have a WELFARE system in Japan! Becuase they all go to school and work!!

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Rich Noever 1 year, 11 months ago

Skinny, you make valid points. I think they are lost on her because her letter is about trying to rub the GOP's noses in it. It's not about economics with her. I wonder who made her keyboard?

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beatrice 1 year, 11 months ago

Yes, I know what is odd -- putting a paragraph in quotation marks without giving any indication to who actually made the statement. That is odd.

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jhawkinsf 1 year, 11 months ago

"Four score and seven years ago ... " No source, intentionally.

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Seth Peterson 1 year, 11 months ago

Ah Skinny, dishonesty at it's best. This is just simply not true.

Misinformation and ignorance! Moving on.

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Trumbull 1 year, 11 months ago

This is a tired and old statement. Adjusting the tax rate (3% increase) is not legislating anyone out of freedom.

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laurennoel 1 year, 11 months ago

Skinny, I believe you are a little out of touch with reality, and possibly the definition of freedom. Like someone else said, I'm pretty sure a 3% tax increase on the wealthy doesn't deprive them of freedom...It just increases their taxes.

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parrothead8 1 year, 11 months ago

A quote from a conservative minister isn't a really impressive source for your argument.

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FlintlockRifle 1 year, 11 months ago

Anna, did you get your full refund back when you took them back to the store????

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Leslie Swearingen 1 year, 11 months ago

This is an excellent letter and one that should sear the conscience of any decent person. Those who live in the shelter are very, very lucky compared to how some have to live. Do some serious research into countries where there are no "entitlements" and take a hard look at how those people live. Believe me I am grateful for everything I have and know that it is a blessing that there are people who are kind and will help others in need. The world is a big place and the US cannot change conditions in other countries. Is it too much to ask that Americans educate themselves and at least have some awareness of what is going on?

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beatrice 1 year, 11 months ago

Actually, it raises a resonable question, despite the build up. Is this the type of company for which the GOP wants to provide tax breaks?

People may not like the rest of the observation, but the question itself is one worth asking. Are we better off when we give big tax breaks to companies that manufacture goods outside of our country? Is it the type of thing Democrats in office also support? It doesn't have to be pointedly against the GOP.

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dinoman 1 year, 11 months ago

The real deal is this... we as a nation are a non productive nation. Now before anybody gets riled up, let me clarify that statement. In the twenties thirties and forties, we as a nation could produce almost any item, be it shoes clothes toys appliances cars, almost anything as cheep or as good as any nation or country in the world. When WW2 got finished the economy of a lot of countries suffered. We as a contry started helping out many other countries, by starting factories that could produce day to day items to help their own people. Now fifty years later we as a nation dont produce the day to day items because in our helping other countries, we ceased to help ourselves. They the other countries have prospered and although their workers are paid very little by our standards are well paid or taken care of by there standards. We as a country have nobody to blame but ourselves. They the other countries are just making a better mouse trap and given the opportunity if it was possible we as a country would do the same...And again this entire statement is based on generalities not absolutes.... there are those countries that do not follow this pattern but as a mass they do... Oh and also when you by American Made.. products just how much is actually made entirely in the good old USA and just how much is Assembled in the USA and how much is made by a US company in a foreign country.... Thats The Real Picture. thx

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deec 1 year, 11 months ago

They aren't making a better mousetrap. They are making a cheaper one. They can do this because they don't have environmental or labor laws to protect the workers and the planet.

We are all to blame, however, because for the most part we want cheaply-made goods. Rather than committing to only buying American-made goods, we go to the megastores and buy cheap goods that are subsidized by the sweat and health of foreign workers and the environment.

Mostly, the greed-driven corporations are to blame, for outsourcing jobs so they can pay executives hundreds of times what the line workers make, and so stock profits will rise every quarter

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jhawkinsf 1 year, 11 months ago

I've mentioned this before, but those big publicly traded corporations that you speak of have a fiduciary responsibility to their shareholders to maximize profits. Otherwise, the 50% of Americans invested in the stock market would see their investments vanish. And the stockholders could sue if they didn't.

What they are doing is what they are expected to do. It might be analogous to a defense attorney defending someone who is obviously guilty. He's not doing anything wrong, just working within the system we have. The same is true with the corporations who offshore jobs. If you want that behavior to stop, you need to change the system.

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jafs 1 year, 11 months ago

Well, not completely.

There could still be profit without maximizing it, right?

But, of course you're right about the rules - how would one go about changing them?

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Trumbull 1 year, 11 months ago

What you say is true. But do the rules of a Corporate charter trump our democratic society? Is something wrong with our system if this is the system we have? An increasing and good stock market is not a magic bullet that will take care of all else.

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jhawkinsf 1 year, 11 months ago

I'll try to respond to the two posts above because there is one answer that might clear things up. But want to be clear that these are my understandings and I may not be 100% correct.

Within a corporate charter, they may choose to insert language that they are not intent on maximizing profits. They could, as an example, state that they intend to give a certain percentage of profits to charities. Of course, that might portfolio managers to shy away from those companies. They could do that. However, unless they do, I think they would indeed be obligated to at least attempt to maximize profits. To not do that would open themselves to a shareholder lawsuit.

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jafs 1 year, 11 months ago

Where does the obligation arise from?

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jhawkinsf 1 year, 11 months ago

The government. As counterintuitive as it may seem to those on the left who call for businesses to be regulated, this is one type of regulation designed to protect the interests of the small investor. Conversely, while it seems this is working out great for big business, they would do away with it if they could as they would then be free to behave in any manner they choose, to the detriment of both the jobholders who will lose their jobs when moved offshore as well as to the little investor who won't have anyone there to protect their interests. Essentially, if you believe in greater regulations on businesses as a means of protecting the interests of the little guy, this is part of the solution, not part of the problem. Of course, those on the left might want to expand those regulations, but what we have now is a step towards regulating behavior, not a step away.

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jafs 1 year, 11 months ago

If it's the government that mandates it, then the government can changes the regulations, right?

And, it's obvious that businesses want to maximize their profits, regardless of government, so without that regulation, I'm pretty sure they'd continue to do so if they could.

It's not at all in the interests of the "little guy" to create incentives for businesses to offshore jobs.

And, many many little guys don't have enough money to invest in the market, so shareholder profits don't help them either.

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jhawkinsf 1 year, 11 months ago

Yes, the government can change the regulations. I suspect it will be a difficult endeavor, but there is nothing that prevents changes.

The thing is this, there is a balance. You say the little guy doesn't benefit when jobs are off shored. Right. But we all benefit from cheaper goods. So it's not all bad, it's a balance. Also, when you say the little guy isn't invested, I disagree. More than half the population is invested in the market. Pension plans, 401K, all sorts of ways. Imagine a system where regulations wouldn't be demand businesses maximize profits. All that money gets pulled out because it would be much safer to put that money under your mattress. If you think this recession is bad, wait until that one comes along.

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Trumbull 1 year, 11 months ago

The little guy is invested through these plans, but it would be hard to define them as stakeholders in the companies within their portfolios because these are indexed and change quite a bit. Meanwhile, employees also invest in the companies they work for through their labor, their livelihood, their education, they may buy a home or relocate close to where they work. All of this should be seen as an investment and as stakeholdership. It is a shame that profitable companies will still lay-off local employees who have invested there labor, for cheaper labor overseas.

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jafs 1 year, 11 months ago

Source for the claim that over 50% is invested?

Pension plans are a thing of the past, companies often don't even offer 401K, etc.

We benefit in a way from cheap goods, but if they're gained by losing jobs,...

Why wouldn't businesses operate to maximize profits even without being forced to? Don't you operate your business in that way?

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jhawkinsf 1 year, 11 months ago

Think about it this way. We all know these big box stores aren't good for local small businesses. Yet we shop there more than we support local business. We all want jobs to stay here, but we buy cheaper goods that are made overseas. We want a cleaner environment but drive cars. We want this but behave like that.

But somehow we expect multinational corporations to make sacrifices that we the public don't seem to be willing to make.

Sure, you may shop locally. I may shop locally. But go to Costco, Wal-Mart, Sam's, etc., especially during the coming holiday season. Their parking lots will be full. People are voting with their feet. Sorry, I can't expect them to behave in the best interests of the country when we're not willing to do the same.

BTW - I just looked, my K.U. hat was made in Bangladesh, my jeans in Mexico, my sweatshirt in China and my car in Japan. (At least my bicycle was made in the U.S.A.)

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jafs 1 year, 11 months ago

Well, there's a downward spiral - when people make less money, they have less money to spend. So, of course they'll tend to shop at cheaper places. Then, the places that employ Americans suffer, and go out of business.

This starts with companies paying less money than they should, in my view, and with the stagnation of average salaries, which combined with increasing costs of things like health care, etc. combine to squeeze those at the bottom and middle.

What "sacrifices"? And, a multinational corporation isn't synonymous with an individual.

Also, of course, as more companies outsource jobs, and locate manufacturing in other countries, it becomes harder and harder to find American made goods, right?

I can't blame the average citizens with stagnating salaries and fewer choices, it seems much more reasonable to me to blame the corporations that have contributed to those things. And, maximizing profits is what starts the ball rolling, with outsourcing jobs and cutting back on salaries and benefits for the Americans that are employed at all.

And, as far as solving the problem, corporations are much more able to make changes that help than those citizens. Especially ones that are making huge, sometimes record profits.

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jhawkinsf 1 year, 11 months ago

If you're going to come into the discussion with the idea that if problems exist, then it's the corporations who are at fault, you're likely going to seek answers that confirm your belief. That's what you just did.

Corporations and consumers don't make decisions in a vacuum. Markets change, times change. There was a time I might have used a rotary phone made right here in the good old U.S.A. But it's very likely that I would not be happy doing that now. So I buy a cell phone made in China. Corporations respond to my demands which drives even more jobs overseas.

What you are doing jafs, actually is answering that age old question, which came first, the chicken or the egg. You're actually giving a definitive answer.

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jafs 1 year, 11 months ago

You seem to think that I haven't thought about these issues substantially before we begin a specific discussion, which isn't at all the case.

Why couldn't you buy a cell phone made in the US?

Because they're not making them here.

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jhawkinsf 1 year, 11 months ago

Why couldn't I buy a cell phone made here? Because they're not making them here. Yet not only am I purchasing it, they produced it knowing that I would purchase it. The great unknown is that if it were produced here, would I pay 5 times the price. They suspect the answer is that I wouldn't purchase it, therefore they don't take that risk. I suspect they're correct.

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Trumbull 1 year, 11 months ago

Yes, but even maximization of profits is geared toward short-term, which porfolio managers eat up, and what the executives do to make there money and run (exercising stock options mostly).

Using short term profit maximization as a strategic plan to run a country is not good on several levels. But what you say is true. Not ideal, but true.

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Trumbull 1 year, 11 months ago

Forgot to mention, short term maximization of profits often leads formerly good companies into bankruptcy.

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jhawkinsf 1 year, 11 months ago

True. But in that manner, they are behaving in much the same ways as everyone else. We're a country awash in short term thinking. I'm not saying it's the best way, just that it's our way.

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Trumbull 1 year, 11 months ago

Yep. GM is an example I read of recently. They had an initiative several years ago to buy back its Treasury Stock, largely to boost the price of its common (or traded stock). They used this available cash to boost stock price. Not long after, they were in trouble and soon took bailout money. If I remember correctly, the bailout money was about equal to the stock buyback.

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Trumbull 1 year, 11 months ago

This is what I think but not able to spell out as well as you dinoman.

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laurennoel 1 year, 11 months ago

I'm sorry, your reply was very hard to follow but.... we have shifted from a manufacturing nation to an information/technology based nation. What we "produce" is no longer physically tangible. If the US doesn't produce it's own erasers and socks, it doesn't make us an "non-productive" (which really isn't a term btw) nation.

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Blessed4x 1 year, 11 months ago

...and yet this took place under a Democraticly held White House and Senate. I'm quite certain that once you realized all of this, you immediately returned the pants and told the store that you would not be shopping there anymore, right? Right? I'm assuming you didn't just immediately run home in your foreign made car to your house built by a crew of illegals and sit down on your Chinese made chair to fire up your Taiwan made computer to complain on the LJ World forums? RIght? Or did you just stick your new, cute pants in the closet and ponder when you'd be able to wear them on a night out with the girls.

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bearded_gnome 1 year, 11 months ago

typical vapid shallow thinking. probably voted for obama thiking he'll make the economy get better too, ROTFL!

actually in world histoy capitalism has lisfted the poor out of poverty more than any other system. not your desired socialism.

here in america, soon to be properly spelled amerika, the poor live very well precisely because of capitalism. it's capitalism that's paid the taxes that built the roads, taught the kids paid th armies, ensured the safe food, etc. etc. etc.

after a while, other people's money runs out, the system collapses. you can't keep raising taxes.

oh and, you want to change things for real Anna, you go to that southeastern african coutry and try to change things. see how far you get.

now under obama our freedoms are being eroded but we're still doing better than they are.

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jafs 1 year, 11 months ago

jhf,

Things worked quite well economically in the '50's (not socially of course, for women, black folks, etc.). Employers treated employees well, with good benefits, including defined benefit pension plans. People often stayed at a company for a long time. One income could support a family with children, including owning a house. Everybody did well, from the top to the bottom.

Why couldn't that happen now?

CEO salaries have shot from 30-50x average salaries to 300-500x those, for one thing. Employers have cut back on wages and benefits, stagnating the ones in the middle at the same time. Outsourcing has lost tons of jobs to other countries.

Think about it - now it takes two incomes, and even folks with those are struggling, lots of foreclosures, bankruptcies, etc. But, the CEO's are laughing all the way to the bank, and the companies themselves are continuing to make high profits.

Corporate bankruptcy is called "restructuring", and affects the workers, but not those at the top.

Seems pretty clear to me that greed and the maximizing of profits to the exclusion of other concerns is what's caused the decline.

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jhawkinsf 1 year, 11 months ago

You're simply ignoring the fact that we're now competing in a global marketplace. I recall when Japanese automobiles first came to the U.S. They were a novelty at first, but they eventually became a huge part of the market. Why? Because Americans bought them. Sure, Detroit had a tarnished reputation, one that they've strived very hard to overcome. But very real economic forces were at play. Maybe some American factory workers lost their jobs, others had to adapt to a new environment. But the public benefitted by having those cars here because apparently, they wanted them. The same is true with cell phones and all manner of manufacturing. We can't simply ignore the fact that we can't control the world's markets.

Alternatively, we could impose huge tariffs to discourage imports, which would negate the advantage of off-shoring manufacturing jobs. Of course, that would double and then double again the price of all those products. Cell phones might be manufactured here, but few could afford to buy them. If you think this recession has been bad, wait until that one happens.

You speak of the good old days, when one income could support a family. True. But we also had much less stuff in those days. My family had one phone in the kitchen. We now have three land line phones and three cell phones, one for each person. We used to have one TV. Now we have three, two laptops, one I-pad, two I-pods, etc. My father had one family car, my mother didn't know how to drive. Now, we have three. Our apartment was maybe 700 square feet. My house is 2700 square feet. It's filled with stuff, all sorts of stuff. That said, I live in a middle class neighborhood and don't feel as if it's overly extravagant, especially compared to neighbors who have boats, motorcycles, etc. I'm a fairly typical middle class person. Probably my largest extravagance is the private school for my child. But the point is this, we have a lot more stuff and no one's saying we should go back to those times and give up all that stuff. If we were saying that, demand would go down. But it's not. We want every new gadget and we want it now. Companies are responding to our demand.

You've essentially called for more regulations on companies, if I've read your thoughts correctly. But the American consumer has been on an unregulated spending spree for a couple of generations. Where the restraint on that?

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jafs 1 year, 11 months ago

We can't compete in a global marketplace if labor costs and costs of living are substantially lower in other countries.

That's why jobs are going elsewhere, and why we have a high unemployment/underemployment rate.

How do you expect people to support themselves if they can't find a decent job?

Your concept that we benefit from cheap goods ignores the fact that those goods also include the loss of good jobs in the country.

There needs to be some sort of parity between income and costs of living, of course, and that could happen at different price points. We could have low paying jobs, and cheap stuff, or higher paying jobs, and more expensive stuff.

But, even with a bunch of cheap stuff, a lot of people are struggling right now - costs of living have outpaced wages for many.

You're right about more stuff. I'm always amazed at what people think they need to have, including much of your itemization. If you can afford it, fine. But, many people can't afford that, especially on the wages they make. If I were counseling somebody who didn't make a lot of money, but wanted a lot of stuff, I'd suggest they re-think that, especially if they had to go into debt to get the stuff.

Personally, I'd rather have lower unemployment, American goods, and fewer extravagances - seems more sustainable and reasonable to me.

Well, that points to a funny aspect of our economy - it depends on consumer spending. So more spending is better for it than less, even if that's not the best choice for individuals. I haven't been able to sort that out yet.

Again, though, in the '50's everything worked fine. Even though people had less stuff, and probably spent less money, the economy thrived. Also, products lasted longer and you could repair them if they broke, rather than replacing them. Those factors would suggest that businesses might suffer, but in fact they did quite well. Why is that?

Whatever the factors are that made it work, I think they're worth pursuing, if we want our economy to be robust, and for Americans to have a decent standard of living.

Also, I'm not sure you're a typical middle class person, if you have all of that stuff and send your kids to private schools, but middle class is a rather large category, I suppose.

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jhawkinsf 1 year, 11 months ago

I'm quite proud of my middle class status. You're correct, middle class has a wide range. Guessing at the numbers, but I'd say I began life at about the bottom 25th. percentile and am now at the top 25th. percentile. Through hard work and determination, I've leapfrogged half the population. Not bad for a high school dropout. (Oh, O.K., I did go back, get a GED and then college).

While in college, I took an economics class when the professor gave a lesson that stuck with me all these years. Basically, he proved with mathematical equations that countries do better when they do what they do best and then trade with other countries rather than to try to provide everything that your population needs. The U.S. needs to do what it does well and then trade with China, who then does what it does well. If we can't provide cheap labor but they can, fine. But we have to continue on our own path. What is it that we do well? Have we adapted to a global marketplace. If yes, then we've adapted well. If no, then we deserve to see our standard of living decline.

Of course, that assumes everyone is playing fair. That's not happening. What we do best, innovate, intellectual properties, etc., others are cheating, stealing. We need to get tough on those who cheat. But what we don't need is to start a cell phone factory here. We need to force China to fairly value their currency, but we don't need factories that produce junk to be sold at the dollar store. Those products that we do produce here must be allowed into their markets at a fair price as we should allow their products to come here at a fair price. If they are not doing that, then tariffs or embargoes might be the answer. We need to look ourselves in the mirror and decide who and what we are. Apparently, we're consumers more and manufactures less. We can adapt, change. Or will will decline.

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jafs 1 year, 11 months ago

I'd be interested in that math.

What do we do well? And, is it enough to compensate for the loss of so many jobs to outsourcing?

I thought we couldn't control other countries - if that's the case, then your proposed solutions don't work at all.

Personally, I like the ideas, although I'm not sure they're sufficient.

Here's one problem I thought of. When we buy American made goods, 100% of that money circulates in the economy here. If they're foreign made, assume about 50% of it goes elsewhere. That means that consumers have to spend twice as much to generate the same circulation here.

That's probably one reason that the '50's worked so well economically, without people needing to spend so much.

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jhawkinsf 1 year, 11 months ago

There needs to something of a balance of trade. But it doesn't have to be one for one with every country. We could run a huge deficit with country A but have an equally huge surplus with country B. We used to talk about balance of trade more than we do now. I'm not sure why. Maybe it doesn't matter in a more global market. Maybe it's become so out of whack that we'd all be too depressed if we heard the numbers. I'm just not sure. Maybe it's because Toyotas are made here and Microsoft makes their stuff in China.

But the ultimate question is this, would the American consumer actually pay for products made here, factoring in their actual costs. I think we've spoken loud and clear. Gven the fact that the answer to that question is a pretty emphatic no, should we expect corporations to behave better than we expect consumers to behave?

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jafs 1 year, 11 months ago

I vote for "out of whack", and "depressing".

The question should include what sort of wages and compensation American workers are getting. You seem to forget that. If people are getting paid well enough to buy American goods, I suspect they will do that much more often if given the chance.

If they're available.

How corporations "behave" isn't analogous to individual behavior in my view - they're different sorts of things. And, since corporations are legal creations, we can define and dictate their behavior to a much greater extent than American citizens.

I don't "expect" them to do anything other than they're doing, unless we make them.

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jhawkinsf 1 year, 11 months ago

When you said earlier that things worked out well in the '50s, I'd just have to reiterate that the global marketplace just wasn't what it is today. We simply can't expect some company to pay an employee $25/hr. when there's someone in Bangladesh willing to do the same work for $1. No more than we can expect women to stay at home, barefoot and pregnant.

BTW - If every woman did stay home, barefoot and pregnant, there would be a surplus of jobs available. Companies would be competing for labor, forced to pay higher and higher wages. Problem solved. Right? Except we can't put that genie back in the bottle. Nor can we put the genie back that represents the changes in the global marketplace. We have to adapt to woman being in the job market and we have to adapt to lower wages being paid in third world countries. It's not a matter of what we want our reality to be. It's a matter of what reality is.

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jafs 1 year, 11 months ago

As I said, things worked well for most of us in the '50's, economically, and now they're not working well for many of us.

Of course, those at the top are doing remarkably well.

I never know what people mean by "adapting" to these sorts of changes - seems like they mean that the folks at the bottom and middle should just "grin and bear it", while those at the top make out like bandits.

Doesn't sound like the best way to proceed to me.

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