THE ENTERPRISE
Who are these "analysts?"
Be careful what you predict. It may become a self-fulfilling prophecy. Each week as I edit the report from Vanguard's Economic Week in Review, I am amazed and often appalled at the often conflicting conclusions cited or reached. This one is particularly full of "missed analysts expectations" yet still strong results in nearly ever economic category.
Who in the heck are these "analysts?" They are probably economists, lurking somewhere at their computer terminals, buried in a windowless room like a bunch of weather forecasters predicting rain but not looking out the window to see that there are no clouds and the sun is shining. What's the problem with this, you might ask. Someone has to make forecasts.
The problem is that a media looking for something to headline, often seeks bad news instead of good news. (Remember the old saying from the newspaper business: "If it bleeds, it leads [the front page stories]." Economists are, in general, and unusual group. They are so prone to changing their story with the slightest provocation that our late President Harry Truman said he wanted to find some one-armed economists for his staff so they couldn't say "on the other hand" and then hedge all of their projections.
When is too big = TOO Big? NOW!
If Rush Limbaugh reads this, he'll be after me for slamming BIG SUV owners. He's a huge fan/defender of BIG SUVs. While I will relentlessly defend Americans' rights to drive whatever (legal) vehicle they want, I am always amazed to see 98 lb. soccer moms car-pooling and grocery shopping in 5000+ lb. behemoths. Every once in a while I park next to one and my normal-size car is dwarfed and my visibility is totally obstructed. They could haul enough supplies for a family farm in that giant, gas guzzling truck.
Of course normal free enterprise forces may eventually come to bear, as gas passes the $2.50/gal mark, filling up one of these huge machines quickly passes the $50 mark. The gas pump registers looks like the counters on a video game as it blinks larger and larger amounts. More concerning in the near term than the environmental impact is the safety disparity in crashes between big SUVs and autos. Given that the size and weight disparity alone makes big vehicles more crash-worthy, the difference in bumper heights, maneuverability and stopping distance only adds to their dangerous ponderousness.
Perhaps a better approach would be to increase the "luxury tax" and "gas guzzler tax" while adding extra "licensing fees" (similar to trucks, where the license cost varies with the size/weight of the vehicle.) No matter what happens, there is a coming "crunch" (pun intended) between smaller, more fuel efficient hybrid cars and these jumbo (unnecessary) car-pool vehicles.
Growth in a no growth environment--Create a disposables-driven economy?
While on the subject of how much is too much, I'd like to shift to yet another topic that has always perplexed me. The continual pressure for ever greater sales and earnings is wearing on people and companies. Aren't there situations where a company earns a handsome return for its investors/owners and doing that year after year is enough? Why does every company have to post larger sales and profits every quarter and every year? Many markets are growing very slowly, if at all. Population growth in the wealthiest countries ranges from -3 to +3% per year. This low/zero population growth combined with the increasing trend of "selling more for less" (thanks to low cost Asian production) leads to a no-growth sales scenario.
What to do? Easy--sell things that get "used up and thrown away." Unit sales can be stimulated by becoming an increasingly "disposable society"--which is especially becoming the case in the US. Making products "disposable" artificially increases the growth rate of the market for that kind of product. But it fills our landfills, fouls our environment and consumes our limited natural resources. Unfortunately only the fanatic few seem concerned about throwing away so much--containers, clothing and even appliances--that are orders of magnitude better than our parents cherished when we were growing up. Maybe the days of "deposits" added to the price on glass soda bottles (or metal cans) should be reinstated for wastefully disposable containers
These days, many so called "durable goods" are nearly disposable in a short time frame: vacuum cleaners, radios and small TV sets, VCRs and small kitchen appliances cost between $5-$50 and are used and trashed at the slightest problem. The proverbial Cool Whip® containers that stored leftovers in years past are now part of our growing solid waste problem. Drinking water doesn't come from the tap any more. It comes in disposable plastic bottles, many as well made as the one I used to carry on my bike just a few years ago. Now we pitch them in the trash and probably encase them in a sturdy, non-biodegradable plastic bag (for which we pay 10-25 cents to throw away--there is real growth for you). Did you know that a Kleenex® tissue or a Bounty® paper towel costs 1-2 cents each, to wipe a nose or clean up a spill? Check it out.
Someday, some way, someone will pay...who will it be, and when?
In Europe, particularly in Germany, many are appalled at this wasteful proliferation and lack of global environmental consciousness. But what the heck, when you have to grow at 5-10% in markets that aren't growing, what else can you do? Did I hear "innovate?" Please! Really! Just make more and more cheap stuff packaged in disposable containers and of a quality that makes them cheap as dirt and unworthy of repair and then throw it out.
Somewhere, somehow, we will all pay for this wasteful physical and intellectual laziness. Perhaps with oil heading for $60 (and then $75) per barrel, someone will start asking if we have our priorities straight. I just hope they don't ask a group of economic analysts--because they will say, "perhaps we do, and on the other hand, perhaps we don't." Won't somebody, please just take a position ...and then do some innovative thinking on better solutions?
Best, John
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