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Everything is rationed part 4

This is part 4 of the three-part “Everything is Rationed” series.

The primary point of this part, sub-titled “ethical dimensions of a responsible business” is that I hate bean counters.

Who (or what) are “bean counters”? These are the people who make the decisions concerning the costs of the parts used in their product. Part A1 costs the company $1.00 to purchase. Part A2 is by another manufacturer, is almost as good as Part A1, however the company can buy it for 90 cents. The “Bean Counter” will almost always go with Part A2 on the sole basis its 10 cents cheaper.

Bean Counters also like to produce products with “planned obsolescence.” This means one or more parts in a product are designed to fail after a certain period of use, usually several months past the end of the warranty. When (not if) those parts fail, a newer model is now out at the same or less price, with more features. So you have the choice to either fix the broken equipment (at a cost close to or exceeding a new unit) or discard the broken unit in favor of a new unit. This is the downside to our consumerism economy.

Thinking about this, I was reminded of a collection of Sci-Fi short stories from the 40’s that I read as a teenager called Venus Equilateral (Wikipedia, Amazon). It was about a station that relayed messages between Earth, Mars and Venus when the Sun interfered with direct communications.

In the story QRM—Interplanetary, a pointy-haired boss came on the station to “cut expenses.” He ended up spacing a room full of genetically-modified sawgrass that was used to replenish the oxygen in the station’s air. He thought “equipment” replenished the air and he saw this room was “full of weeds.” The PHB thought the plants were wasting space. This “cost-cutting” almost suffocated everyone on the station.

To cut costs for the sole reason to “maximize profits” or “boost the quarterly report” is a bad reason in the long term. Because you are probably sacrificing future profits for short-term gains today.

Case in point: the 6-pack plastic ring used to keep aluminum cans together. They are easy to make and inexpensive (at less than a penny each). The bad news is, while the rings are photo-degradable (and thus not likely to end up strangling wildlife like they used to) and while they do break down into smaller bits, they do not fully disappear. There is a long-term negative environmental impact from them and all similar plastic products.

Then we have these:

A fully biodegradable product that is compostable and edible by wildlife. The problem? A current cost of 15 cents per unit.

If companies that sold their product in cans made enough demand for this kind of holder, the economy of scale would kick in and the price per unit would drop. If Anheuser-Busch and one or two other “big name” companies decided to use these, it would not be unreasonable to expect the cost per unit to drop under a nickel.

Would you pay a nickel more a six pack if that recyclable, compostable and edible can holder held your beverages together? I don’t think you’d even notice the price difference. If you knew the better environmental impact of that holder, you might even switch brands, who knows.

I also found this article, Christian-Based Firms Find Following Principles Pays from the 12/8/1989 Wall Street Journal. Sorry, you have to pay to see it. in the article, it talks about business who adhere to Christian principles and how their growth is significantly higher than those who do not engage in these principles. You don't have to be Christian to adhere to these principles, which entail actually serving the customer to help them grow their business, treating the customer fairly and most importantly treating the employees fairly. When Hobby Lobby made negative news due to their stance on abortive birth control, the MSM never mentioned that they pay their employees $14/hour to start. The MSM never clearly said that Hobby Lobby offered sixteen barrier methods of contraception and only opposed four abortive methods.

In case you didn't know it, In-N-Out Burger puts Bible verses on their shake cups, burger bags and other packaging. They are small, so you have to hunt for them.

James Freeman Clarke is quoted as saying, “A politician thinks of the next election - a statesman, of the next generation.”

I can reframe this slightly to say, “A bottom-line businessman sees only the next quarterly numbers – an ethical businessman sees the impact of his business in a hundred years.”

If we had enough “ethical businessmen” in our companies and corporations, we would have little or no need to governmental bureaucracy to micromanage them.

How about all of us start treating our planet as something that we should leave to our children better than how our parents gave it to us?

 

Everything is rationed part 3

This is was to be the last installment in the “Everything is Rationed” series.

A woman taking care of her children while the man is out gathering food for the family is the very foundation of everything we have today. That’s because what kind of society we end up with depends on what the mother instills into her offspring long before the father gets hold of the children to show them the world.

The ground floor of society built upon that foundation and upon which everything else stands is... the private business in a free-market economy. I can hear the snorts of derision and eye-rolling from here, but hear me out.

I know the United States is founded upon the myth of the “rugged individualist,” the guy (or gal, I’m not sexist) who can survive on their own out in the wild. This is a myth because one person can’t do it all. You might think of frontiersman like Daniel Boone and his ilk. Those guys actually had a pretty extensive logistical train behind them. The rifle and ammunition they carried, the saddle and shoes on the horse, the preserved food they carried and more. All these goods were produced by someone, not to mention the reason why those men were out there in the first place was to provide a service, namely to explore the land, determine its resources and how to move people farther West.

I’m talking the “Man vs. Nature” level where you have nothing but your mind and your hands. Think of the tasks a single person has to do every day to make sure they have a good chance of survival:

  • Gather/kill food
  • Build/maintain shelter
  • Develop tools/weapons for protection
  • Gather wood to build a fire
  • Build/maintain a fire with the gathered wood for warmth and cooking food

A single person does not have enough hours in a day to do all of these things at a level where they can survive for an extended period.. You spend a day building a shelter and you go hungry because you didn’t gather food to eat. Build weapons and spend a chilly night without heat.

This is why people started communities and societies. One or two people can hunt/gather for the entire village, one can build tools and weapons for everyone and so on. This was how bartering started. Trading whatever you have developed/gathered for what another has developed/gathered. Half a pig can get you a stone axe or a spear. A couple of chickens can get you some treated animal skins for clothing and so on.

The barter system is the first stage of a free-market economy. The shortcomings of a barter system is you can have more goods and services that you need, yet the people who offer what you need aren’t interested in what you have to offer. If the Tanner already has a bunch of chickens and all you have to offer him are more chickens, he won’t trade with you. You have to trade your chickens for bread from the baker, then trade half of the bread with the butcher to get some beef, then take those items to the Tanner to get your skins. A lot of your time gets wasted in trading for other things to get what you need. This is how money got invented, but that’s another article at a later time.

A business who combines ethical practices with reasonable profits is our goal. All businesses should and need to “charge for all the market can bear,” meaning that it is a balancing act between the available supply and the overall demand of the product or service.

Using the free market to determine the price of a good or service is not perfect, however it is the best system we have. If a business charges (or is forced to charge by government) a price that is below the costs incurred, then the business must close.

Example: net cost (all expenses, no profit) for a business to produce a widget is $100. The business sells it for $110 to make some profit. If the market won’t buy it at $110, but will at $90, the business either has to find a way to product it for a net cost of $80 or close. Same thing, if the government mandates that it be sold at $90, there is no reason for the business to stay open (unless it’s at the barrel of a gun).

In times of crisis/unrest/upheaval, prices will swing drastically in response until things are normalized.

Let’s say there are 50 gas stations in a town, when the town gets hit by a hurricane. 49 of those stations have their gasoline ruined by floodwaters. For whatever reason, that last station keeps their gasoline uncontaminated. This station owner now has a choice. He can either sell his product at the pre-hurricane price, not knowing when he will get a new supply (a day, a week, a month), running out in an hour and facing thousands of angry people demanding his product,

OR

He can charge an elevated price to discourage many customers, have more money for himself and employees to live off of until the supply resumes, and he can pay the elevated price for the next tanker truck to restock his tanks. Because if the refinery is nearby, they will also likely have damage, contaminated products and the refinery faces the same dilemmas the gas station owner does.

In the overall sense, the consumer is at the end of a long train of transactions that culminate in the product or service they purchase. There are hundreds of businesses mining the raw materials, producing components, assembling the final product and the transportation for all of the bits and pieces between companies and delivered to your door.

When I grew up near Warren, Ohio, I drove by the Lordstown plant all the time. This plant made the wiring harnesses for GM vehicles. Metal and plastic went in one end and completed wiring harnesses came out the other end. They made the wire, coated it with the insulation, made many of the clips and connectors and put it all together, under one roof. This kind of manufacturing does not happen anymore.

Today a constant stream of pre-made wire, clips, connectors, and all the other parts are made by sub-contractors, which ship their product to the new plant (Lordstown closed in the 80’s) who then does the work necessary to turn the components into wiring harnesses. Then those finished products are shipped off to the various assembly plants across the country and the world, to be one of the many components that make up an automobile.

I just realized that I need to expound on the “ethical dimensions of a responsible business” to tie this whole series up and that will take up a whole article in and of itself. Research for that one is ongoing and hopefully I will have it done in time.

Look back here next week for the fourth part of this three part series.

 
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