The gigantic monopolies and oligopolies of yesteryear are gone. When you think of oligopolies from a by-gone era, consider the example of the control NBC, ABC and CBS had over the airwaves, and compare their influence of their industry today. There are still large corporations, to be sure, but their control of market share is not as large as it once was. In the past, giant car manufacturers, tv makers, airline industries, soda suppliers, and other sectors had gigantic labor forces. They controlled their markets. They controlled their prices. Companies dealt with labor and came to labor agreements with their employees satisfying both sides and avoiding work stoppages. Big companies do not control prices any longer. Technology and innovation have made it far easier for small startups to compete. The modernization of infrastructure and telecommunication has made it much easier to compete globally. There are freights of goods going to and fro over the oceans everyday. Adjusted for inflation, the cost of products has dropped substantially over the last 30 - 40 years. You've been forced to. If you can't sell your product at this price, someone else, be it a long term competitor, a new foreign rival, or a small upstart... will. American consumers have never had it so good.
But at what cost? How do we get prices so low? For most American businesses, roughly 70% of your costs are wages and benefits. You lay off workers. You cut back hours. You reduce wages. You prevent raises. You decrease health benefits. You increase premiums. You may drop health coverage altogether. There was little competition in the 60's and even less in the late 40's and early 50's... but global competitors are here. Work forces in most nations are not getting paid as well as American labor, and American companies are trying to find a way to level the playing field. And with giant companies like Wal-Mart, they no longer monopolize the market and try to keep prices high, they use their buying power to push their costs from wholesalers down lower... and lower... and lower. Wal-Mart keeps their employees wages low... to the benefit of their customers. And the businesses that deal with Wal-Mart must either do likewise, or consider moving jobs overseas to meet the demands of what Wal-Mart will pay for goods. Could it be, that prices are already too low? Does it benefit America to lower the price of the average good by another $1.59, if it means that small businesses near Wal-Mart will fall... that Wal-Mart's employees will not be given a fair wage... that the medium size businesses that sell plastics and other goods to Wal-Mart must now ship jobs overseas, because their largest customer is telling them they must lower their prices... again?
Where does that leave the modern American employee? As consumers and as stock holders, we want low prices and high quarterly earnings reports from the stocks we hold... but as citizens, as neighbors... as friends and family... as society as a whole... is this good for America? Pundits who talk about the housing bubble on television never mention the economic circumstances that put so many Americans in a position, where so many people were unable to buy a home like their grandparents did 50 years prior. People choose to not see the rising cost of living and decreasing standard of living. I was shocked to see Airline pilots in Michael Moore's film admitting that they and many of their coworkers make no attempt to hide the fact that after all the airline industry restructuring... many of them try to work a second job to survive. What has happened to America? While the Wall St. has been given triage by the government, regular people continue to suffer. Including foreclosed homeowners, who live in homes owned by banks that were bailed out!!!
We are a nation of 300,000,000 people. Manufacturing continues to go overseas (where its cheaper) and more and more people have (low wage) service jobs that can't be outsourced. But even still... we haven't had a month of positive job growth in America since December 2007. January 2008, the Labor deparment reported a net loss of 72,000 American jobs.. Feb 08 = 144,000 lost. Mar 08 = 122,000 lost. Apr 08 = 160,000 lost. May 08 = 137,000 lost. Jun 08 = 161,000 lost. Jul 08 = 128,000 lost. Aug 08 = 175,000 lost. Sep 08 = 321,000 lost. Oct 08 = 380,000 lost. Nov 08 = 597,000 lost. Dec 08 = 681,000 lost. Jan 09 = 741,000 lost. Feb 09 = 681,000 lost. Mar 09 = 652,000 lost. Apr 09 = 519,000 lost. May 09 = 303,000 lost. Jun 09 = 463,000 lost. Jul 09 = 304,000 lost. Aug 09 = 154,000 lost. Sept 09 = 219,000 lost. Oct 09 = 190,000 lost. Nov 09 = 11,000 lost. [Approximately 7.3 million job losses]
The highest unemployment rate in 26 years. It has doubled (4.9 to 10%) in only a couple years. Which "good" jobs are coming back? Is the economy more important than the society? Is the consumer more important than the citizen? It seems clear to me now that we can't go backwards, but how exactly do we move forward? The status quo will only lead us closer and closer to a society of aristocrats and peasants, like 18th century Europe... with an ever declining small and invisible middle class. (Let them eat cake?) I dont know the answer... and I'm even less optimistic that there is a GOOD answer to that question. One that doesn't involve the inevitable further squeezing of an already declining middle class. As soon as I find a good answer, I'll be sure to let you know.
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