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Retail and Consumerism – “On the Edge” – Part 2

Part 2 – Retail and Consumerism

I would comment that I chose America as an example of the whole Western paradigm, as it is a trend setter for the world, good or bad.

In a society which has so far been based on consumption and procurement, without dramatic intervention, the continuing severe contraction of the retail industry is a clear and present indicator of the process of the collapse of the paradigm of consumption in America.

Every civilisation in the past has failed, as will we, our choice is to make the transition from the old to the new as peaceful and uneventful as possible, I know, a hard task! However unless there is an epiphany, and both Washington and Wall Street have an awakening, and realise what is good for all Americans is good for them, then the below is the path down which we may all be led.

Poverty and Inequality is not only about money, it’s allowed to exist, it is a choice our Governments make, for inequality is also about access to education, to nutritional food which leads to the aspect that the poor are so limited by which is the opportunity to shine – inequality in an economy is a big issue, in an economy the size of the United States it is a major issue. If the playing fields was level, I don’t have any problem with the rich being rich, what I do not agree with is a policy of creating a class system whereby the poor and those who don’t have money are treated with disdain and contempt by their own government, effectively blamed for the momentary place they find themselves, policies are in place to take support from those in an country who most need it, because they are easy targets and have no paid lobbyists, nor it seems any empathy from their elected advocates – that the poor and uneducated continue to vote them in even to their own detriment is an outcome of the success of the mass control programs I touched on in my previous post, here

From Joseph E. Stiglitz, Nobel Laureate and Chief Economist and fellow of the Roosevelt Institute who offers a number of provocative insights in his 115 page report, but the key takeaway is – inequality isn’t inevitable, and it’s not just a social issue, but also an economic one, because it’s largely responsible for the fact that every economic “recovery” since the 1990s has been slower and longer than the one before. Inequality isn’t the trade-off for economic growth; rather, it’s both the cause and the symptom of slower growth – we can download the full report here

Retail

Already there is over a billion square feet of vacant retail space in the USA, and now the news that major U.S. retailers have announced the closing of more than 6,000 stores from coast to coast. The list includes only those retailers that have announced plans to close more than 10 outlets this year and next – This growing list of stores closings coincides with the ongoing decline in discretionary consumer spending – which is the consequence of the collapse of a viable living income, for those families, which are a countries financial backbone, the middle class in America.

The loss of retails outlets, will be the hardest felt in poorer and the lower middle class areas throughout America and of course overseas in countries, like Australia and perhaps Canada who tend to follow these flawed strategies.

Even at the time when productivity has increased, Corporate profits are at a all time high, disposable income for the majority of Americans has been reduced, there is just not the money available to consume anymore – credit cards are maxed out – many Americans are not earning to live, they are living to pay – this lack of money to consume in an economy based in consumption, will impact much more than retail sales, it will affect the total gambit of consumption, travel, restaurants, new vehicle purchases, service industries, manufacturing and housing, in fact any expenses which are seen as unnecessary, then later this year the holiday season, travel and Christmas selling will be a disappointment. Income for the majority, has extra pressure coming from  historically low wages – the demands of rising taxes, housing and health-insurance costs and you’ve got a formula for financial contraction across the board. All during this, the rich are being excused their equitable contribution to society itself, forcing the balance of the population to make up the difference, whilst the rich share an ever decreasing burden – that legislators don’t see the connect between income and expenses (especially when the US budget is serious deficit) is also a serious ideological deficit, but perhaps now too many legislators are no longer working for all Americans, and are perhaps working only for the rich?

The financial information is available …. below let’s look at brief statistics of the Income gains going to top 1% in various years

1954-7: 5% 1975-9: 25% 2009-12: 95% http://nyti.ms/1BhNrQq

The latest figures show that of all new money, 95% of it went to the very rich..

A further effect of the contraction is that households will tend to buy the cheapest of the known brands, further accelerating the investment in overseas manufacturing and reducing U.S. production capacity (and jobs) at home – however there will come a time, when no price will be low enough and even that strategy will fail … in the long term overseas manufacturers themselves will be vulnerable (affecting manufacturing countries such as China and many others), this will spread globally.. This is a trend that will likely affect the EU and other countries that follow the illusion of the American dream.

Needless to say Technology itself insulates us from nature … go for a walk and see people with their heads in the phones, even in public places, where they could open their eyes and see wonder in everything, from the trees, the cycle of life, the ants and insects, just wonder everywhere!

The effect of the employment in those sectors affected directly by the overall contraction will be major, it will naturally have a flow on effect on all companies involved, sales organisation and distributors, service, spare parts, any suppliers of technology, raw materials, energy, logistics, investment, construction for the entire sector as the ripple of the domino effect reaches outwards.

I would pass on the general comment that unchecked consumption is a greater threat to the planet than the growth in population itself .. also that flawed retail marketing and production strategies in food production and distribution, mean that between 40-50% of all food grown, never reaches a person.

This came from what I have been able to understand from the upcoming Pope’s statement on climate change …

To blame population growth instead of extreme and selective consumerism on the part of some, is one way of refusing to face the issues.

Outlook

A correction will be necessary, this can either being managed, or it will just happen and the ashes will lay where they fall.

By it’s very nature I feel like Alice and the looking glass, change outside of the norm will not be possible, as observations of Politicians, reveal their many flaws, which are that they are driven primarily by self interest and dogma – however let’s look at sometime in the future. Then when we look back, what will have become of the monumental edifices, the largely vacant shopping malls, these symbols of the past ‘glories’ of consumerism, consumption and distraction – what are we to do with the vast buildings and their open spaces, perhaps housing? … a productive thing we could do, it rip up the vast car parks and do something useful with the land, like grow food!

Flowing on from this retail contraction, inevitably there will be corporate failures, first in retail, then in manufacturing and service industries, the more leveraged the company is, the more likely, but around this point this will be a financial Armageddon scenario, there will be no one to buy these assets, Banks will have made loans to formerly secure and even the blue chip – stocks will plunge, companies will fail, or go into Chapter 11, bankruptcy protection,  (these assets will again be unwanted, useless, perhaps even toxic, as there will be no buyers), then the Banks (which were formerly too big to fail, and which are even now larger) will become vulnerable, cash will dry up, if this correction is wide spread, then the cycle that was started by greed, whose first chapter was the 2008, Global Meltdown will have its Finale, its curtain call for the banks will be asset rich, but cash poor, huge asset right downs, and this time, there will be no bail out, the Public cash cow won’t be there, the public won’t allow it (and the US can’t afford it) what we have is wide spread Corporate collapse – the US Budget itself will become even more vulnerable without Corporate and personal taxation income from the millions of the now unemployed, confidence will collapse, the currency will dramatically devalue, imports will cost more, what will need to happen will be severe and permanent expense cuts are applied –  I cannot see the Hawks and the GOP accepting this (especially to defense), the US. will print money, borrow more but in time, inevitably societal collapse will follow.

The Corporate spin that Trade deals are good for America is a falsehood .. they are only good for Corporations – the NAFTA was supposed to increase jobs, but it has had the opposite effect, in effect over 600,000 jobs have been lost in the USA – Corporations just took the opportunity to move manufacturing to lower paid jurisdictions such as Mexico … the TPP .. the Trans Pacific Partnership will just exacerbate the job flow out of America to the regions that endorse the Treaty, but the real basis is the Corporate grab for more Power and control, the strategy is to entrench Corporate domination, what’s at state here is individual sovereignty .. I would suggest you look to David Korten’s article that will develop this further, here. This confluence of flaws and scenarios, from the Political, Administrative, Taxation, Judicial and financial mis-management, means we enter the unknown realm, of what happens next?

There is a lesson for us all here, sadly one we won’t learn from.. as George Wilhelm Friedrich Hegel said … “history teaches us is that people and governments have never learned anything from history, or acted on principles deduced from it – Hegel”

I guess a part of what I am saying is that unrestrained consumption for its own sake could not be sustained – but from an environmental point of view, the ending of this paradigm, means that the planet will get a reprieve.

References, Comments and Influences:-

Definition of Consumerism: a social and economic order and ideology encourages the acquisition of goods and services in ever-increasing amounts. Early criticisms of consumerism occur in 1899 in the works of Thorstein Veblen.

The status-quo is always in transition, slowly … what works today may be made redundant tomorrow with a truly disruptive paradigm ( a life changing concept, not just a technical concept ) that takes hold of our imaginations – whether we have that time to wait, I don’t know – the future of the planet is in the hands of the Politicians at the moment, a more pathetic display of ignorance and uninformed power I have yet to see … the real issue is they they do not know what is the right decision, they are influenced by lobbyists by donors, and occasionally maybe a constituent, they do not know the right path, so they stay with no decision, which though they may not realise it, is still a decision which gives us more of the same, more of that which is patently not working.

During my research, I can see many people with thoughts of the future, so of us will be right, other not, me included, it really doesn’t matter. There are many people who are trying their best, actually within each person, I believe everyone is trying their best, we cannot and should not judge others, it is hubris and ego to consider that other people aren’t doing what they can, or that we are doing more.  At some point the concerns of the people will reach an inertia and change will happen – but what is without question is that we are always in transition, as nothing stays the same, the purpose of this post, indeed all of my posts is to raise awareness, to offer a perspective … not to do so would be irresponsible, my efforts and those of others may change nothing, or perhaps everything, we cannot know what the ripple we create, will touch and what may come of it.

Publications: Inequality in the long run Thomas Piketty * and Emmanuel Saez  23 May, 2014 Rewriting the rules of the American Economy – Joseph E. Stiglitz – Download here

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