Thursday, July 28, 2011

America Fails to Succeed or Succeeds to Fail?

Succeed to Fail

Did we really fail to succeed?  Or, did we succeed to fail?

Let me give you an example of what I am talking about.  Rather than a metaphor, I will use an analogy.  

About 40 years ago, my College Professor gave me a hot tip.  It was not a stock tip.  It was not a tip on a fast horse.  I don’t gamble.  It was a tip on a great wine.

I went to the wine shop to buy the wine.  Approximately $3. a bottle,  or, $3. The Bottle if you read one of the posh glossies,  10% off on the case.  I bought a case.

I used to smoke cigars. $2.50 in the cigar store, $1.75 if I bought a box from a supplier.  Rough average, $2. a piece.

Then Ronald Reagan became President.

Now, I considered Ronald Reagan a President of Mythic Proportions.  He single-handedly tore down the Berlin Wall.  But, I digress.

One pundit wrote that Ronald Reagan created too many poor people.  That begs the question, “How many poor people did that writer consider to be enough poor people?”  I, however, think Ronald Reagan’s biggest sin was that he created too many rich people.  It did not take him long.

It wasn’t long before the Cigar Bar Craze.  It wasn’t long before the French Wine Fad.  It didn’t take long.  Soon, people were paying 22 dollars for a 2 dollar cigar and 25 dollars for a 5 dollar glass of wine.

Another observation was made in the media.  It was a lament for a time when the Bank President and the Grocery Clerk (his words, not mine) lived in the same town.  That, for me, was not a long time ago.  That was where I lived while that writer lamented a bygone era.

What does all this have to do with our Economic Failures?  What does this have to do with our Diplomatic Failures?

Simple enough to explain.

Read the newspapers.  Read where those who know (what they know, I don’t know), criticise China for their policies—foreign and domestic—political and economic. 

Read how they deride China for working for the best interests of China.

Pundits are attempting to blame our problems on China.  This reminds me of something my wife said to me during a conversation.  I can’t remember the problem, but my wife accused me of blaming her.

“I’m not blaming you, I’m blaming myself.” I said.

“No, you’re not,” my wife said.  “You’re blaming me.  You’re just taking the responsibility.”

Back to wine bars and cigars.

When a country like China invests in the U.S., they enjoy one of two benefits.

1.  They reinvest the profits in another U.S. venture.

2.  They bring their profits home and invest in China.

When we make a profit, we invest in loud noises, bright colours, and shiny things.

The newly minted rich spending 22 dollars for a 2-dollar cigar.  Spending 25 dollars for a 5-dollar glass of wine. 

Of course, they have the retort.

“Can you afford a 22 dollar cigar, Slim?”


“Can you afford a 25 dollar glass of wine, Slim?”


However, I have the proper rebuff.

“Neither can you.” 

By their economics, a 22-dollar cigar would cost about 50 dollars.  A 25-dollar glass of wine would cost about 50 dollars.

The Bank President no longer lives in the same town as the Grocery Clerk.  There are no McMansions in my town.

How did we succeed to fail? In two words?  Frusen Glädjé.

Well, actually, there were two main reasons.

1.  Conspicuous Consumption

2.  Disposable Stuff

When I was a youngster, my parents had an ice-cream scoop.  My sister has that scoop now—over 50 years later.  Good as new.

The old canard, no one is going to buy more scoops if the old scoops last 50 years, left us with disposable scoops.  You won’t miss the dollar you spend on the scoop.  When it breaks, 3 or 6 months later, you won’t care.  It’s only a dollar.

The other problem is Conspicuous Consumption.

As a nation, we think nothing of it when someone spends $300 on a pair of sneakers or $600 on a blazer.  We are not concerned that the sneakers were made in a Third World country by a child making 3 cents an hour.  Nor do we care that that blazer was made in a country by a child earning 25 cents a day.

We rationalise that the child needs that $1.75 a week so his family can buy food.

Of course, the problem isn’t a $300 pair of sneakers, if the sneakers were worth $300.  The $600 blazer wouldn’t be the problem if the blazer were worth $600.  However, we are right back to wine bars and cigars.

It was a few short decades ago that the members of the ILGWU (International Ladies Garment Worker’s Union) ran a commercial with the song: “Look for the union label, whenever you buy

The rebuff was that buying products made in America would cost more.  I am supposed to believe that the $600 blazer would cost too much for someone who buys a $600 blazer.  I don’t. 
Figures don’t lie but liars figure.  I don’t need to see figures on the cost of producing that unaffordable blazer.  Or, for that matter, how much the unaffordable sneakers would cost if they were made in America.

Figures on the Auto Industry are even more confusing.  Direct employment, lost wages, negative percents.  You Google it. 

In the past several decades, we lost many industry jobs.  We are getting many of these jobs back.  What we lost in the interim was the benefits of the multiplier effect. [Trickle down economics is a myth.  The multiplier effect is a counting of the number of dollars being spent in America.]

Here are two essentials.

The Multiplier Effect

Economic Stimulus

Each is essential to understand a healthy economy.  Why an economy is healthy.

To explain why things go wrong with the way we invest our money, I will copy-paste the monograph here rather than send you to another site.

Wolf Blitzer Buys a New Suit

For those who still have no grasp on how to fix the economy, another metaphor.

Wolf Blitzer wants to buy a new suit.  This, he figures, will attract more viewers [customers].  He borrows the money from John King—a CNN colleague.

Mr. Blitzer’s ratings [revenue] go up.  He repays Mr. King.

Mr. King, seeing Mr. Blitzer’s success, uses the profits from his lending venture to buy a new suit.  His ratings [customers] go up.

Upstairs, Mr. Turner is looking over the balance sheets.  He sees this uptick in [revenue].  He asks his accountant what happened.  His accountant tells him.  Mr. Turner gets an idea.  He issues a memo to his on air people.

CNN will make low interest loans to those who want to go out and buy a new outfit to wear on the air.

Ratings go up.  Revenue goes up.  Mr. Turner issues another memo.

Up until now, employees could buy a meal in the cafeteria [breakfast, lunch, or dinner] for $10.  Due to the increased revenue, we are going to charge you [tax you] only $5.

As a result, the employees have more money to spend.  

John King buys a new tie.  

Gloria Borger buys a new scarf.  

Candy Crowley buys a necklace. 

Don Lemon buys a new shirt.

This upgrade in the “metaphorical image” generates more viewers [customers].  Revenues go up.  Salaries are increased.  All is well in CNNtopia.
However, what if all were not so enlightened.

What if Wolf Blitzer had borrowed the money for his new suit from Bret Baier?

Well, Mr. Blitzer would still have a new suit.  However, the profits would have gone to Mr. Baier who would have used his profits to buy a new suit.  

Mr. King, not having the profits from his loan to Mr. Blitzer, would have had to go to Shepard Smith for a loan to buy his new suit.

Now, Bret Baier and Shepard Smith could use their profits to invest in a business partnership to lend money to fellow Fox News Anchors.  

They would have a spiffed up image and more viewers [customers] generating more revenue.

Back to CNN.

With Mr. Blitzer and Mr. King having to pay interest on the loans to people at Fox, they have to cut back on expenditures.  

Now, instead of buying lunch or dinner in the cafeteria, they brown-bag it.  

Revenues in the cafeteria fall.  

CNN issues a memo.  

Due to lost revenues, the cafeteria will have to raise prices [taxes] on lunches and dinners.  

This affects the other employees.  No shirts, no scarves, no ties, no necklaces, declining image, lost customers, decreased revenues—CNNistant.

What is the crucial difference between CNNtopia and CNNistan?  

That is the difference between solving the US economic crisis and not solving the US economic crisis.

Now, on to Economic Experts.

In another monograph, I referred to selling blue paint.   I chose blue because blue is my favourite colour.  However, as Freud said, “Sometimes a cigar is just a cigar.”
However, there is an opportunity to create a metaphor as well.

You watch CNN.  You watch as experts explain the economy.

One economist works for a company that makes red paint.  He says, “If you want to sell more widgets, paint the walls of your company red.”

Another economist works for a company that makes blue paint.  He says, “If you want to sell more widgets, paint the walls of your company blue.”

Well, the bias is obvious.  Less so, the supporting facts.

Red:  “We have a study that says employees in companies with red walls are more pumped up and make more widgets—increased productivity.

Blue:  We have a study that says employees in companies with blue walls are more serene and make fewer mistakes—higher quality.

What both sides don’t say:

Employees in companies with red walls make more widgets but make more mistakes resulting in many widgets rejected for poor quality.

Employees in companies with blue walls make higher quality widgets with fewer mistakes, but make fewer widgets which results in lower productivity.

You can say both the Red Economist and The Blue Economist told the truth, half the truth, or half a lie [by omission].

Both sides misled the customers of the benefits of the paint they sell.

How do you fix an economy?

Here is another easy to understand monographs on the topic. 

Will this help you fix the economy?  Well, is fixing the economy your job?  

What it will do is protect you from the politicians trying to sell you paint you don’t need to fix a problem that can’t be fixed with a can of paint.

Will $1 Billion Dollars create 7,000 jobs?  Yes and No.

The Politicians are shifting blame by accepting responsibility.  We are destroying our nation with a disposable mentality and with conspicuous consumption.  [Also, we are hurting the environment and our health.]

However, now you have a better picture of what has happened, what is happening, and what will happen.  In addition:  I don't sell paint.



PS.  I am not Paul Harvey.  However, I am open to becoming a commentator, columnist, or paid blogger.

If you’ve found anything I said to be helpful, please don’t hesitate to send me one of those tricked-out laptops and to tuck a few dollars into the envelope along with the thank you note.
Sincerest regards, 


Copyright © 2011 Slim Fairview