Monday, February 17, 2014

American Consumer Choices

I brought up one of my favorite theories in some MinnPost comments. "How are we going to fix this if American Consumers are determined to spend any additional income they make on high "foreign content" goods and services"? 

As you know, I believe that American consumers are freely making the choice, and our dropping wages are a natural consequence.  The MinnPost  article was regarding an interview with Marty Seifert where he said Government Costs Too Much.

Well Matt has a different theory regarding why we Americans insist on bargain hunting. 
"You've trotted this out in several threads now, how's about a little context. Yes, American consumers have bought into the "cheap is best" disposable consumerist culture. However, this hasn't happened in a vacuum, it was deliberate policy pushed by both corporate America and its minions in government. 

Its not as if one day the average consumer woke up and said "Gee, these American made products are garbage, but you know this Chinese plastic crap is GREAT!" Decades of carefully crafted marketing, the explosion of discount retail outlets (whose rise has coincidentally aligned with the middle class decline), and the systematic demonization and subsequent destruction of the labor union have put consumers in the position we are in. 

The battle has already been lost, people like me, who value quality over price, are in the minority. You certainly cannot blame consumers for doing exactly what they have been directed and encouraged to do, in some cases now, for the entire lives. You blame the people in who's interest it is that it remain so." Matt

So what do you think, was this a business and government conspiracy? Or do you think Americans are just dedicated Capitalists looking for the best value for the least cost?

See the MinnPost comments for more detail. 

32 comments:

jerrye92002 said...

Oh, yes, those corporations FORCED you to buy the least expensive product you could find that met your needs. :-^ I'm wondering how they did that? Oh, I can see how American corporations, responding to high union labor costs, huge government regulatory burdens and taxes, could have "priced themselves out of the market," so in that sense I suppose they "forced" us to choose foreign goods. But I don't think they engaged in a conspiracy to put themselves out of business.

John said...

To some extent I don't disagree with Matt regarding the clothing departure from the USA. Companies like Levis, Nike, etc are US brands that likely did move operations overseas to maximize profits.

I mean if your customers do not care where the item is designed, tested, manufactured, etc and you can produce it cheaper elsewhere, why would any responsible company keep producing in a high cost country? I mean the shareholders may get very disgruntled if they learned you were not maximizing the return on their investment.

Besides shipping costs were negligible on these light compact products.

jerrye92002 said...

OK, so why would anyone spend money on goods that can be purchased at lower price, and are the same or better? What is the advantage to my personal budget by spending more than I must to get the things I need? Should I quit clipping coupons, too?

And if companies wish to maintain market share and be cost competitive, aren't they going to move to where they can do so? What possible incentive could government offer companies to stay here and go out of business?

John said...

To me and you this is apparently common sense. Yet to the Liberals this is apparently a conspiracy between the businesses and government to outsource jobs over seas, lower the incomes of American households, etc... The consumers were somehow coerced to seek out the best deals.

And I mostly pick on the Liberals because they preach wealth sharing, minimum wages, unions,evil businesses, etc on the blogs while spending their money over seas. They preach more socialistic concepts while personally behaving like hard core capitalists.

John said...

"So why would anyone spend money on goods that can be purchased at lower price, and are the same or better?"

Now that is the big question of this post.

I'll bring this back to my local Canby, MN "Runnings" store. I could buy everything for the farm and lake at Walmart, Target, etc. I drive by several of them on my way out West. I would likely save money. However if everyone does this and my local store closes, where am I going to go when I need something quick.

So instead I factor more into my purchase decision than just cost and quality. Which leads me to buy $500+ worth of stuff from the local retailers each year.

John said...

With this in mind, what other factors should American consumers consider when deciding to buy the "low" or "high" domestic content products and services?

Here are some to start us off with:

If you believe American Unions are good and should be supported. Does the purchase go to a location and company that benefits a strong American union?

If you believe wages should be higher in America, does the purchase support the employment of Americans? (ie workers, spvr, technical, mgmt, logistics, purchasing, acctg, IT, etc --- not just assemblers) Better yet is it a company like Costco who pays relatively well and controls mgmt compensation?

If you want to maximize US tax revenues to help maintain government programs, does the purchase maximize the US content and taxes collected in the USA?

Sean said...

I don't think it's an either-or question. Matt is right that business interests have lobbied government for provisions that make it easier for them to offshore jobs and to weaken the power of labor unions. You are right that Americans are looking out for their bottom line by choosing the lowest priced products.

What the question really becomes is how do we respond to these forces? What is the best path to prosperity for out nation given this?

John said...

Tell me more about the "easier to off shore jobs" and "weaken unions".

I know companies can deduct moving / shutdown expenses. But they can do that if they change states or countries. It is just a business cost.

Regarding Unions are you talking about Right to Work laws or something else? CNN Union Analysis

Sean said...

Well, sure, it's a business cost. But there's no reason we should allow it to be deducted if you're moving production offshore.

RTW is the highest-visibility one. The chronic understaffing of the National Labor Relations Board is another. The whole "card check" issue is an example of how the process has been perverted. Today, you can decertify a union using the equivalent of card check, but you can't certify a union that way. I don't have strong feelings either way on whether card check should be allowed, but the standards for certification should be the same as decertification.

John said...

I agree as usual that it is not an either or. G2A Contribution The challenge I have with most Liberal commenters is that they are adamant that it is the fault of greedy owners and businessmen, and that they can some way legislate the problem away.

Mandate people to pay Union dues.
Mandate people to pay higher wages.
Mandate more regulatory costs.
Mandate more "free rider" costs.
Mandate USA companies stay here.

All of which ironically make our domestic products and services more expensive, and less competitive. Which leads the current "typical American consumer" to shop elsewhere... It is a nasty self feeding cycle.

Not sure how we break out of it.

John said...

Sorry we overlapped.

So we should punish a US company for making a change that is likely to help keep them in business against foreign competitors who do not have that restriction?

I'll have to research the Union issues further. What is allowing the Public Unions to prosper as the Private Unions shrink then? I assume many of the laws affect both. Thoughts?

Sean said...

Government does not exist to serve corporations, it exists to serve citizens. Corporations exist because we have determined it is in the public interest to allow individuals to pool their capital. If corporations choose to act in a way that doesn't serve the public interest, we are under no obligation to subsidize that activity.

John said...

Subsidize by "letting them" deduct a normal cost of doing business?

Now which is in the "public interest"? Keeping some jobs here or keeping the business here, alive and thriving. Not mention preventing all of us citizen owners/investors from losing our holdings when the company fails.

John said...

Maybe Apple is a good case in point since many of our pensions, IRAs, 401Ks, etc own some of it

John said...

An interesting link...
Apple Jobs

And another one...
ABC Apple

Sean said...

Determining what the public interest represents is the difficult part. But let's be clear -- corporations are supposed to serve the public interest, not the other way around.

John said...

I am fine with that, though I think it will be hard to differentiate a "corporation" from its shareholders, employees, stakeholders, and those of all the "corporations" they do business with. It is like a huge matrix overlaid across our society.

I thank heavens for the USA's Fortune 500 on a regular basis. I am pretty sure America would not be as formidable and living large without them.

Now how do we keep them a global force while helping Americans earn more. That is the challenge we face. My advice is simple, start buying products and services with high domestic content. Reduce the costs of doing business in America where ever it is practical. (ie don't reduce compensation, do eliminate wastes) Wiki Muda

Better ideas welcome...

jerrye92002 said...

Here's a better idea. Get government to reduce the cost of doing business in the US, letting quality increase and prices drop, and everybody-- here and elsewhere-- will start buying from the US! Government thinks it can command the free market, but they're just outrageously and dangerously wrong. (How's that "you must buy more expensive and lower quality health insurance" thing working?) People will buy what suits them best, largely on the basis of price, period. And if the government makes it impossible for US companies to offer it to us, we'll buy it from SE Asia.

John said...

I agree and stated that costs need to be reduced when practical. Unfortunately I am thinking only the far right folks are willing to trust businesses to "do the right thing".

Many of our regulations are there because businesses just watched their cost/quality and didn't behave like a responsible neighbor and business. I don't think any of us want the lifestyle, business methods and environment of China.

John said...

So does a smart Conservative Capitalist truly believe that buying with only price, quality, features, performance, trends, etc makes sense?

Therefore no consideration to be given to company, employees, economics, consequences, etc. I agree that short term view describes true Capaitalism at its best/worst. But is it best for the long run success of that consumer and the country they live in?

jerrye92002 said...

The free market dictates that consumers will buy whatever suits them best, with all things considered. If enough people find value in paying lots more for poorer quality Detroit autos, GM stays in business and continues to pay too much for those UAW jobs. If not, Obama gives GM to the UAW.

at some point, you have to accept that people make their economic decisions logically, and that governments distort that free marketplace based on political ideology that bears no relationship to logic.

John said...

So instead of willingly supporting our friends, neighbors and countrymen, you would choose to pay them via welfare, tax credits, medicare, prisons, etc. That non-domestic car is looking more expensive by the minute. Kogod Index

I am pretty sure we are not comparing apples and apples here. That is unless you have some secret desire to move to a third world country that has a lower cost of government. Don't forget to pack your mask, water purifier, etc.

jerrye92002 said...

First you talk about welfare, etc., and then suggest that there is nothing that could be done to bring down "the cost of government." Government does not COST anything (relative to what is now being spent), but the ridiculous spending and senseless regulation drives up the real cost of everything else, thus putting people OUT of work, rather than working. It's a vicious circle.

And I am exercising the only choice left to me. I have not been able to stop the crushing burdens of the welfare state, but I can see to it that I acquire those goods and services I need from the lowest cost competitor. I may consider that these goods are made in "sweat shops in the third world," but in my experience that is very seldom the reality. I am happy to give these third-worlders the opportunities that our government denies our own citizens.

Unions have put themselves out of work. I'm sorry, but that is the reality, and it does not have to be that way. Unwarranted raises and benefits, plus stodgy work rules that prevent productivity improvements, allowed foreign competitors to sneak past US companies and the jobs "went overseas." Yet, where such union-inspired nonsense is NOT active, US workers compete well with anybody, anywhere. Government meddling, the other shoe, is endemic to our economic system and our "doctors" are unwilling to give us the cure.

John said...

So should we also gut the US Dafense budget? It looks like it is a huge burden on our competitiveness compared to other countries.

And you truly think the USA would be better off and a great place live without an EPA, Bank Regulators, SEC, OSHA, etc. Are you really serious? You are okay with our water and air looking like that in China?

Being concerned that your savings may disappear? We may all have to start putting our money in the mattresses like in the 1930's...

jerrye92002 said...

OK, if you like how the EPA has reduced pollution from coal-fired power plants, you must be thrilled that they are now going to put those plants out of business with CO2 regulations. After all, you cannot burn coal without creating CO2-- it's fundamental and unalterable chemistry.

And if you think FDIC has done a good job of preventing the bank runs of the 30s from recurring, you must be thrilled with Sarbanes-Oxley and Dodd-Frank, driving up the cost of banking and business while doing nothing to prevent another bubble, or another Enron, for that matter.

Tell you what, I will agree to spend money on every cost-effective regulation and regulating agency you think we need. I will even agree to reduce defense spending, done sensibly, even though it is an ever declining part of the budget already, and offers us some great technology offshoots that keep us competitive in other areas.

Turn the question around. Do you really think the US is competitive burdened by ancient union rules, high taxes on capital and profits, crazy regulations and government picking winners and losers in the marketplace? Do you honestly believe that government can make us MORE competitive with further intrusion into the free market?

John said...

Please be more specific, which:
- ancient union rules?
- high taxes on capital and profit? (ie dividends and long term gains are taxed at low rates)
- crazy regs?

I didn't say I want "more" intrusion... I challenged that you want significantly less.

Remember that SOX and Frank Dodd are only in force because some small percent of the investors and managers seemed to have no problem bending/breaking the previous rules. And a lot of private investors and mortgage holders lost A WHOLATTA money...

John said...

Regarding EPA and COAL... Here is an MPP gift to wind you up...

jerrye92002 said...

--ancient union rules:
Requiring that a union worker do one and only one job on the assembly line, when modern lines have workers move with the product, doing multiple tasks. Or when one worker is missing, moving another into that spot. Requiring that the six employees the job used to take stay on even though the new machine only requires one. That sort of thing.

- high taxes on capital and profit
How about the double taxing of corporate dividends? How about one of the highest corporate tax rates in the world, when as we all know corporations pay no taxes-- they simply pass through their costs.

- crazy regs
EIS
Endangered Species
War on Coal
Heavy metal mining regulations
Mine reclamation laws
And that's just the EPA. Notice that what many of these have in common is good intentions and miserable results, the simple problem of too much power given to do-gooders.

SOX is a prime example. How many "Enrons" have been prevented in exchange for federal intrusion into absolutely every business process and decision? But even if there was nothing bad prevented, was there any good created? Certainly on balance there was not.

jerrye92002 said...

That didn't wind me up. It simply proves conclusively that CAGW (now hastily renamed to Climate Change) is a religion and a religious pursuit, not a scientific one. Truth certainly has nothing to do with it, since calling something "Climate Change" when every bit of evidence you have points to WARMING, not "change." It's not even a theory, scientifically speaking, because it can only be considered a theory when the data matches the prediction, 100 years from now. Of course, short-term predictions, like Al Gore's that the North Pole will be ice-free next year, are probably going to go badly for the cause.

Fundamentally, these folks continue to deny the science by denying proper language. They insist that "global warming is undeniable" when, of course, the facts say otherwise, but more fundamentally because most "denialists" do not deny the actual temperature record. They use the accurate term for the theory and the problem by referring to MANMADE (or Anthropogic) global warming), usually prefacing that with "Catastrophic" for the completely correct acronym CAGW. After all, if it's warming naturally, and not catastrophically, who cares and there's nothing we can do about it anyway.

I have to respect Paul Douglas for his religious concern, properly placed. But unless he first states the problem correctly, he can't have a solution. To the topic, this environmental nonsense is one of the things needlessly costing American jobs .

John said...

The union example has nothing to do with government, and everything to do with the foolishness of union rules.

The others I will need to do some looking into.

Regarding climate change... For your amusement.
Comic 1
Comic 2
Comic 3
Comic 4
Comic 5
Image 1

jerrye92002 said...

You asked for examples of "ancient [i.e. antiquated and undesirable] union rules" I gave you a few. And of course unions would not have the power they do except for government.

jerrye92002 said...

Oh, and we are not amused (well, OK, a little) because these Klimate Kooks are in deadly earnest, and have absolutely no sense of humor (or irony).