This week there were three
separate memes in the newsmedia about corporations blaming citizens and
consumers for their woes. Put them together and it's not a pretty
picture:
The Customer Isn't Buying It...
 The NYT reports
that, despite companies' attempts to get greater and greater bargains
for their customers, the customers aren't buying it -- the American
Customer Satisfaction Index remains below its levels of a decade ago.
And although Seth Godin
attributes this to the FedEx phenomenon (get used to an innovation, and
eventually you expect it and raise the bar, so it takes more to satisfy
you), I'm not so sure. I think the Wisdom of Crowds
is at work here. People know that you get what you pay for (if you're
lucky). They're paying less mainly because they're making less, thanks
to the Wal-Mart Dilemma.
The company selling you stuff, meanwhile, is making more profits,
despite the fact they're bringing the stuff in from China now instead
of Ohio. So you know full well that what you're getting for that lower
price is lower quality, and that the quality is dropping faster than
the price. That quality decline manifests itself in a variety of ways:
Flimsier design, less durable materials, less competent assembly,
poorer choice, poorer service, less bundling of 'extras' (sometimes it
seems a modest warranty costs as much as the product these days). Consumer Reports confirms that, with few exceptions, consumers are noticing this, and aren't happy.
Maybe in the ivory towers of the NYT
they can afford to only buy top quality, and so they're not feeling the
quality pinch. But no, gentlemen, consumers aren't raising their
expectations. All they want is a product that works well for a
reasonable period of time, a reasonable choice, and efficient service
when problems arise. That's not asking too much. But they aren't getting it.
And thanks to a chronically weak employment economy, union-busting,
outsourcing and offshoring, consumers' pocketbooks are squeezed and
their credit cards are maxed out, so they can't afford to pay very much
either. Corporatists have only themselves to blame for both customer
dissatisfaction and falling consumer buying power. It's time they
stopped blaming consumers for the problems they themselves have created.
...But Blame Consumers Often Enough And Maybe They'll Start Believing It...
 I
don't watch much TV, but do try to catch some of the economic analyses
from time to time, especially on networks with less corporate bias like
PBS and CBC. Three times in the last month I've heard corporate leaders
recite almost the identical riff to explain why, despite Bush's lavish
tax giveaway to his wealthiest donors, and near-bankrupting of the US
treasury, the economy remains stalled, in a multi-year recession with
no end in sight by every standard except the increasingly meaningless
GDP numbers.
The outrageous riff says that the problem with the economy is frivolous customer litigation against corporations,
and calls on Bush to immediately provide 'protection' to corporations
against such litigation, in order to improve the economy. The wording
of the three corporatist speeches was uncannily similar, and I think
it's improbable that this was just coincidence. Watch out.
I think the Bushies have sent the scripts out to selected ideological
friends in big corporations, to soften up the public for new, planned
legislation. This will be, I predict, the next wave of 'favours' for
corporatist supporters -- having deregulated the corporations from laws that make them act responsibly to citizens, now it's time to regulate
citizens to block them from fighting back. The problem is that the
legal profession has opened the door for this, by launching absurd
self-serving class actions against corporations (like the famous
McDonald's hot coffee spill) that get all the press, so that the many,
many legitimate consumer actions against egregious corporate misconduct
are ignored (and if Bush and the corporatists get their way, will no
longer be possible). What will the world be like when corporations are
truly 'above the law'? When Adam Smith said over two centuries ago "the
real purpose of
government is to protect those who run the economy from the outrage of
injured citizens", he was hyperbolizing. If he were living today, he'd
just be telling the truth.
...And If That Doesn't Work, Take The Corporations Out of Public Scrutiny.
 This week the NYT also reports
the growing trend of public companies to go private (buy back all their
shares and de-list from the stock market). The always-fair Andrew Ross
Sorkin resists the temptation to portray this as an attempt to hide
unscrupulous behaviour from the public, and instead cites the
insatiable demands of public shareholders for perpetual double-digit
profit growth in a stagnant and finite economy. Take the company
private, the argument goes, and you can start making intelligent
long-term decisions and strategies, instead of obsessing over the next
quarterly results. You can actually invest in infrastructure and
innovation. You can take sensible risks, some of which will pay off
big-time.
But think about it. With no other place to put their money,
investors have bid the prices of public stocks up to bubble levels --
price/earnings ratios almost unprecedented in history. That means if
you buy back your shares now you're paying those investors much more
than the shares are really worth. Why would any company do that? It
would make far more sense financially for these far-sighted people to
start up a new, private company, quietly selling off the inflated
public company's shares to finance it. Eventually the management will
have moved all its cash to the new private company, which they'll own
100%, and the old public company will be the new shareholder-owners'
headache when the stock market bubble bursts.
The only reason I can
think of for not following this 'take the money and run' strategy is
reputation: The old owners will still be blamed for having 'bailed out'
before the crash, and there will even be questions of impropriety and
suggestions they knew the stock was overpriced and deliberately sold it
off to unsuspecting suckers (you and me) who were left holding the
(empty) bag. That's what the stock market is all about, of course, but
maybe they don't want too many people to realize that too quickly, and
crash the whole economy before the new private business can find its
feet. Safer to take your lumps now, pay the inflated price, and start
running the private company sensibly. It also solves the stock option expensing problem, which is about to blow up in all our faces. For most, the reduced public scrutiny would be just the icing on the cake.
The third cartoon is
from the Sorkin article in the NYT, and is by Stuart Goldberg -- I
can't find anything more about him, or anything else he's done, but
this little picture really is worth a thousand words.
|
MADE IN CANADA
trust your
instincts 
