Imagine you’re big in economics, inventing new ways of covertly ripping-off the public. You’re the guru of the party. You are the Chief Economist. You’re afforded many petty and serious financial perks. You need have the job boiled-down to a simple message: “Serve your shareholders well”!
What can go wrong there? Eventually, in a half-demented bid to maintain your absurd margins, you pit the public against the shareholders. Either the service to the public declines or perhaps, you may maintain your margins. That is what the insane scramble for ‘productivity’ has been about. It’s not really measured in productivity, it’s in profits.
By all means, there is a rate of productivity below which we should not go. It’s got to do with an honest day’s pay for an honest day’s work. You’ll more or less know it when you’ve done it. But the updated ‘Fordism’ in many factories was a return to try extracting maximum profits.
Wages were kept low – especially in the sweat-shops – and items that were manufactured for $3 or $5 could be sold for $75 or $100 or above. Consider all those Foot Locker outlets (owned by Woolworth’s) charging absurd money for their ‘creations’. Think of what you’re being sold instead.
You’re being sold a pair of shoes . . . not shoes, exactly but footwear. They might even be good for your feet but even the all-black variety can’t be worn with a suit. In fact, the things might be designed to take you on a 120-miles (196 kilometres) marathon running course. It’s no bother to splash out more than $100 for them.
What is their worth? Are they to yield about 20 times their cost as profits? Yet that’s precisely how have they have been marketed. Each pair of shoes is accorded the status of a ‘piece’ and we Westerners need to cop on. You don’t sell many ‘pieces’ of clothing to Indians, enough of whom remain on top to qualify as world’s-best dressed race.
But the issue here is how we were persuaded the ‘shoes’ were a ‘piece’. Most of us knew the nonsense for what it was but we were spread along a continuum. We lined to buy $100 or footwear knowing what was paid in the sweat-shops. It’s largely true that if you ignore your own environment, you will irritate many people. However, it may well be a price worth paying.
Look at the way the ‘piece’ was presented. After an 18-hour day in a ‘sweat-shop’, during which you’ve have a quota, you’d be well-paid to make $1. The differentials were excessive, too much. It was quite obvious. One part of the world doesn’t have to have the same standard of living as another. But 100 doesn’t work. It just doesn’t.
You make $1. The item is sold however, for a price in excess of $100. The difference between paying the person who made it and the person to whom it was sold is too great. You can do much with marketing but extending it to a level where it is 99 per cent of an item’s value is obscene.
With that, we’ve got to go for a new, gentler capitalism. I don’t know what figure it will stabilise around – 2, 6, 12? – but my options would be to place it as low as possible. Inevitably, anyway it will eventually – if we want to have a future – crystallise to as near for 1:1 as possible. We have some way to go though.
Now, fundamentally, we must question degrees is economics. For instance, how many degrees in economics are as absurd as the system which spawned them? They called it a ‘science’ but it was not. There were too many variables. Eventually, all the humanities probably have to come down somewhere.
So, economics has been burst. It’s probably no harm. There were too many of them qualifying as “economists” for decency purposes. They rather lost the run of themselves. Their models work in a pre-programmed world but this not the REAL world as they are fond of demonstrating themselves.
Their world was a fiction, an outrageous fiction in which multiples of 100 were perfectly acceptable. This is the world President Obama, Prime Minister Gordon Browne, President Nicholas Sarkozy, Chancellor Angela Merkel, China’s Hú Jintao and the others have pledged to fix. We wish them well but how are they to do it?
Too many ‘red-braced, collar not same colour as shirt, chalk-stripe wearing men’ had it too easy for too long. They even came to believe their dope! That, yet again, has proved ‘fatal’. Hubris undoes us again!