my personal rant

J.D. Sharp blows off steam on whatever the heck he feels like. And then feels the wrath of his friends' criticism as they point out the incredible shallowness of his positions. But hopefully he returns stronger than ever!

Monday, February 16, 2009

A time for collisions

This will be brief. Why is it that in the same week we have a collision between two satellites, from two different countries, and as that is going on, a bit of a fender-bender between a British and a French nuclear sub, each carrying a death-ship load of nuclear missiles? Although I am deeply reassured by the press release that states this is a "one in a million chance", that is, of a couple of nuclear-armed, nuclear-powered submarines going bump in the night, I guess that chance has now been reduced to no more than one in 999,999. However, the news that the missiles can't be launched accidentally has reduced my need to take Valium to sleep on this particular evening. The same can't be said for space SUV's ramming each other. You'd think with that giant void out there we could eliminate the possibility of smashing into each other's satellites, but, no, that is not the case. I guess there are optimum orbits for various classes of devices, and there is no orderly process for assigning orbits. As it is, we are tracking some 18,000 objects out there including debris of various sorts and sizes, but apparently we missed this one. Which undermines the entire tracking process and gives me precious little faith. Given that a surprising amount of global communication, TV distribution, phone calling, and all the rest depend on those little blobs in the sky, having a bunch of destructive detritus scattered over a few hundred vertical miles of near space could be more than a nuisance. You think it is bad when sand and pebbles hit your windshield while driving the interstate? Imagine colliding with a chunk of metal while traveling at orbital speeds. That could hurt. Or put your eye in the sky out. Of course expecting coordination between any of the agencies hurling objects into space is beyond laughable. But why can't the French and the British at least tell each other where their submersible nuclear launch pads are cruising. Oh wait. The French . . . the British . . . never mind.

And thus, never mind global communications. I didn't need that cell phone or DirectTV anyway. Never knew Comcast could be such a bargain. The last 'man' standing. At least until a satellite falls on their headquarters.

Tuesday, January 6, 2009

Still Not Getting the Picture

I have recently semi-retired from my retail business, but am still in the email loop. The music industry still insists on holding its big USA retail trade show in late January, and the email offers are building up to a crescendo that I am sure the manufacturers hope to have crash at its peak as the annual trade show opens.

If I were a musical instrument manufacturer (mercifully I am not,) the fact that Apple has deemed the timing of Macworld San Francisco to be disadvantageous to product introductions should be a clarion call.

In fact, a January product cycle times the latest and greatest to coincide with the period of maximum retail burnout; the consumer is simply overspent after the Christmas holidays. Even this year, when the consumer spent many percent less at Christmas, they still spent more than they had in previous months. So there is retail exhaustion; everybody wants to take a break, a breather, a brief lapse in consumerism. This lapse may be semi-permanent, but that's not the point. Whether a boom year or bust, mid- to late-January might just be the worst time to promulgate a new program or stimulate sales. It works against the survival of the retail dealer, who is the front line in the battle to put goods in the hands of the consumer. Why should a dealer load up on product when the consumer is napping? And if recession/depression is the talk of they day, the dealer has every reason to lighten up in this time frame.

In the past, these practices might have wreaked some collateral damage to the retailer's cash flow. This assumes that the retailer has put together a horde of cash over the holidays, and that there is some kind of kitty to be raided. While arguably true in the past, those days are over. The retailer is lucky if the rent is paid, the payroll is met, and the tax authorities are at bay. Be thankful for small favors!

In the not-so-recent past, manufacturers had a large body of independent dealers to push around. To the extent that they've cultivated large corporate clients at the expense of this base, they've become beholden to them. Simple logic dictates that to be beholden to a small group of mega-retailers may not be the best way to survive or make money. For one thing, your fate is no longer in your hands but theirs. You end up making what they want made, and figure out how to do it cheaply enough to turn a profit. Of course, giant retailers often don't pay for goods or buy anything unless its sold. The manufacturer has to guarantee a profit level and take back that which fails in the marketplace,as well as anything the retailers deems to be broken, whether broken or not. There's a name for this: consignment. That's how you get shelf space in our modern world. And you make stuff so cheap that you can afford to take half of it back as defective and still make a buck. I feel sorry for anyone who buys an instrument that has been made with this operative mindset.

This is a great exercise in money-making, and there are successful, proven models, but the whole exercise does nothing for your brands and will in fact destroy them. After all, whatever magic is emanated from your brand name is derived from the uniqueness and freshness of products that became industry standards, and that were game changers. To just turn out a bunch of product that meets price points? Consider that the beginning, if not the middle, of the end of your product line. Going, gone; sold to the highest bidder. Let's look at some marketplace failures, like Fender or Honda shoes. Turns out that the brand only stretches so far.

Apple, of course, does not have all these problems. For one thing, they have their own stores, and these are predicated on providing exactly the kind of service you'd want if you paid extra for a computer. None of that PC crudeness here; you can get everything you want (and need) at Steve Job's restaurant. So Apple has created their own bulwark against any product-image damage that any retailer could do to them. They are simply doing a better job of selling their product than any of their dealers, so none of them can come to Apple and make demands for exclusivity, higher profit, or anything else.

Thus all the more reason to respect their decision to withdraw from future Macworld Expos, which basically sounds a death knell for the show. The bad timing is one reason, and the fact that they have the equivalent of 100 Macworld Expos in their store every day is another. And even the merchants who attend the show should and must contemplate other venues and methods to promote their products. There are methods that are thousands of times more efficient to promote your product than a labor- and capital-intensive trade show.

This could foretell the end of all such trade shows, especially those scheduled after the holidays, but then again, maybe all such shows. Although they may fulfill the wishes of cash-hungry manufacturers for order input in a slow time, they are damaging to the very dealers who they need to survive and thrive. And they are woefully inefficient at reaching their targeted audience

If you have to hold a show, I would think July/August is about the right time to tap into the western retail orgy called Christmas. And better yet would be a strategy that reaches the audience with far less cost and much greater efficacy. See you online!

Friday, January 2, 2009

The Price is Wrong

Step right up folks. Buy one, get one free. 70 Percent Off! Thousands in rebates galore when you buy a new car from our stock! Discounts of 40 to 60 percent! Just $359 after rebate.

I love a bargain as much as the next person. But there comes a time when you have to ask, "Why is it that I ever paid full price for anything? Or thought that 25 percent off was a good deal?" And the question going forward, for many retailers, is, "How do we ever get people to engage in this folly of overpaying for our goods in the future?"

The fundamental problem is that once you've established a new bottom for a given commodity, or even for a luxury item, how do you now convince people that you were just kidding? It's hard. Almost impossible. I have recently retreated from the musical instrument business. The hard facts are that a basic guitar of reasonable quality has never cost less. If you look at the price tag, it is about the same numerically as guitars were in 1955, about $200 for a basic instrument, made at that time in the U. S. of A. Now a basic guitar, made in the Republic of China, could cost as little as $79 or $99, and $200 gets you a well-made, perfectly functional instrument. This may not be something you want to show off to your friends, but then again it could be, since so many of these instruments play beautifully and sound just as good. So what is it that justifies a higher price? After all, all those guitars are made out of about the same amount of chopped-up tree plus a handful of magnets, wire and a few components. Why do some cost thousands and others less than a hundred?

The answer is the elusive "value added." And this is where the damage has been extreme. Ignoring guitars for a moment, think about luxury goods like handbags and high fashion. Much like the guitar, they are all made out of a handful of raw materials, and even the fanciest of them require little more labor to produce than the simplest of designs. But design is the decisive factor when it comes to value added; what you're paying for is simply high concept, or at least higher concept than the handbag hanging next to the outrageously expensive one at one-tenth the price. And when times get tough, priorities and values suddenly get rearranged. How much more is it worth to flash some obviously-designer piece of conspicuous consumption, versus how badly do I not want to appear in public with the same handbag I last showed up with? And even further, who really cares? If you take the mania out of the fashion game, all the high-end names are left quite literally, 'holding the bag.' Which brings us back to 70 percent off. Why in God's name were prices so high to begin with if they can take 70 percent off and still afford to advertise? Is it simply a desperate strategy for survival, or has the obscene profit margin that these companies have operated with simply laid bare? Perhaps a bit of both, but the lesson to consumers is quite simply this: you've been paying far too much for everything. There's even a surplus of milk. Perhaps it's time to dicker with your grocer for a better deal. And it could be decades, if ever, that we retrace our way to that frothy economy that knew no bounds as far as luxury was concerned, damn the consequenses to our budget. For companies that have reported record profit quarter over quarter, it could be a rough road ahead. They may have beaten all the excess spending out of the consumer for quite some time to come. Thinking once more about guitars, the manufacturer Gibson likes to bring out very limited edition guitars that cost a couple thousand dollars, and often more. The very fact that they only produce 100 of a given issue is supposed to boost their value. And during the heady years they rarely stumbled. But now that even the deposed titans of Wall Street are counting their beans and global markets are under duress, the idle, monied club of guitar collectors around the world are pulling back. Suddenly even the rarest of new issues looks like little more than a chopped up tree and a handful of components.

Tuesday, December 30, 2008

Mankind: Endangered Species. So is Womankind.

Expansion of Clinics Shapes Bush Legacy

Really. I can't believe this piece of horse plop polishing in the recent New York Times. It almost seems like Prez Bush II must have had a favor or two to call in at the Times to get this published with a straight face.

Don't get me wrong. I am all for expansion of clinics and bringing health care to places it is most needed. Bravo, Mr. President!

So why is it that this wonderful news does not crowd out media reports of your attempt to gut the Endangered Species Act in a last-minute (ok, last-month) slash and burn directive from the good offices of your Presidency?

Yes, you have taken your last swipe at that darned Science, obviously the root of all evil for business development, for it is because those Scientists insist on reviewing the consequences of new construction on the biosphere. As if that should not matter.

I will not dwell on this subject, but I do want to point out to one and all why this is shortsighted. Why we should have an Endangered Species Act, and why such an act is of benefit to all of us.

The ultimate Endangered Species is humanity, mankind, whatever you choose to tag us with. How many mine canaries do we need to have fall over. stone dead and suffocated before we realize that we're working our way up to our own niche?

If there's anything that shapes your legacy in my mind, it is this rearguard abomination you've pulled. It's mostly window dressing anyway, since everything you've done is mercifully about to be reversed, starting with this miscarriage. Abort! Abort! What kind of lowlife President would want to make the destruction of critters, and by inference, the undoing of the biosphere we live in, his legacy? George II, we will remember you always!

Thank dog for friends

It would be hypocritical for me to thank God for friends, even if she were responsible, since I have spent vast expanses of my lifetime disbelieving. But friends are there to kick your perceptions back into line when they periodically drift over the line, like some long distance driver falling asleep at the wheel and traversing over the center stripe. I just re-read my rant about market capitalism, and have to admit I still feel pretty good about having identified the end of this cycle of rampant consumerism, destruction of resources and hollow lending that has done nothing but spiral the whole cycle upwards in a final surge that all but assures its destruction.

However, one must be careful when making conjectural statements, especially when dealing with friends who will actually parse them and consider each aspect of what you've laid down in print. OK, not print, virtual print. You've laid down a hieroglyphic trail of electrons that convey meaning to others. Whatever. Thinking people will react. And here's some of that reaction:

'. . .It is not necessary to have a growing population in order to have economic growth, nor is it necessary to plunder the planet's resources in some destructive fashion. And yes it is possible to keep lending to someone and expect full payment eventually, so long as that someone is making effective use of the credit to create more wealth (more additional wealth than could have been created without that credit).

Lending to an addict doesn't fall under that category. Pointing a finger at the futility of lending endlessly to an addict, and then generalizing the results of such lending to support an argument against market Capitalism is I think, one place where your logic unravels in this rant. Another is the bit about the manufacturing model being unsustainable. Efficient manufacturing is going to continue to be absolutely essential to the success of our efforts to turn around our problems.

You also lose me when you talk about money being loaned to/by China. By what mechanism has the entire planet sent its saving to China? By what mechanism has China put more money into the hands of (primarily) American consumers? The way I see it, foreign investment in Chinese manufacturing has been entirely voluntary, based completely on business decisions about cost of goods, and has resulted in substantial profits for those investors and for China. As for the Chinese loans to America (which HAS become a credit addict), who's more to blame for the consequences, the Chinese who have been buying US government issued securities, or the people squandering the borrowed money on programs that will in no way ever increase productivity here in America, thus helping to ensure that the debt will keep becoming ever more difficult to repay?

OK, I still say the current cycle is broken. Even tonight, as our pundits discuss the sinking of consumer confidence to the lowest level recorded since the beginning of the confidence survey, we are still reminded that 'consumerism makes up two-thirds of our economy.' Am I nuts in thinking this has to change? I think not. And when thinking about all the jobs in China that revolve around producing what amouts to worthless crap, I think all that has to go. I think the grand poobahs of China need to redefine the meaning of work just as badly as we need to rethink our patterns of behavior. True, it is not manufacturing per se that is obsolete; it is the creation of meaningless objects slated for planned obsolescence that is so obscene and unsustainable. Hooray to the new year. New thinking. New Plan. New President. Nu?

Monday, December 29, 2008

Low Marx for Market Capitalism

One of today's stories: that China will feel the sting of the current recession, because the bubble was built on credit that they facilitated through their manufacturing profits. With the recession and other economic displacements, they've actually made nothing; the future is bleak, and without endlessly feeding someone's consumerism with their savings, a market does not exist in sufficient size and strength to support all the factories and jobs they've created thanks to their profligate lending.

What does this really speak to? The futility, more or less, of manufacturing. It is true that we all need, or at least feel we can not live a civilized life without, the many physical items that surround us, be they toilets or iPods. Yes, we can survive despite them, but we can florish with them.

It is just that news items like the one above call into question many things. And one of those things is the very premise of our economic exchange.

Sadly, it seems that the only way our market capitalism can work is with an ever-growing population. If you (for the moment) put aside considerations like overcrowding and limited resources and global warming, why, this makes perfect sense! If you have ever-increasing demand for food, water, transport, housing, clothing and all the rest, you'll have the endless boom. And you'll justify manufacturing, for there will be an ever-expanding need for more products.

Now that we're done with this overly-rosy scenario, let's talk basics. One planet, one atmosphere, finite resources. It would seem to me that Houston, we have a problem. Several problems in fact.

The first one is that the ever-expanding model is broken. And if it was up to me, we'd keep it that way. It seems that the only way we've found to create what we call 'wealth' up to now involves massive destruction of the environment and the forced rape of Nature.

This can only go on so far. Or, in our case, a bit too far. It seems we may well have 'tipping-pointed' the environment into a warming spiral.

There is a solution that is multi-pronged. I am not holding my breath about any of the prongs, but here's the first one: go all out to stop over-population. Sure, we keep coming up with more ingenious ways to pack more people on to the planet without killing all of them, but is that really what we want, other than it pumps up the economic system? That would be a resounding, "NOT!"

Now that we've agreed to stop endlesly incrementing human density, the next problem is to re-model and re-form economic activity. The goal is to reward decisions that support a steady-state, sustainable planet, and to tax or penalize behaviors that consume resources unnecessarily and that imperil future survival.

That would mean a shift away from a manufacturing model. Right now the entire planet has sent its savings to China, which has invested on the one hand in more factories and on the other in putting more money into the hands of (primarily American) consumers, so they will buy Chinese goods and keep the good people of China employed. Nice concept, except there's a fallacy at the very heart of it; you can't keep extending credit indefinitely and still expect full payment at some time in the future. At some point you're simply lending money to a friend that you know is an addict. The hard work that created your savings will simply be snorted away. And looking back on the orgy of purchasing of 'cheap Chinese goods' that has gone on for a couple of decades, I think I hear the echo of a giant snort somewhere in the distance. Or is it in the room with me?

Here's where I get stupid, and I am hoping that one or more of the readers of this most essential rant will take it from here and provide the missing link. If, as I propose, the manufacturing model of economic activity is obsolete and out of step with Nature, how do you craft one based on sustainability and steady-state or shrinking population? Any and all proposals are welcome here. Regardless of whether we figure it out in advance, this is where we are all headed. If we can get on top of the game and channel the transition from our failed model to the next modality, we might just get there sooner. This is the dialogue I would welcome, but I have yet to hear word one of the discussion.

A Christmas To Remember? Strange Bookends


The Christmas season of 2008 opened with a rush, specifically, the stampede of manic Wal-Mart shoppers planting their hooves into one of the unfortunate employees charged with opening the front doors at five AM on one of our great commercial holidays, Black Friday. Not only was this poor man trampled to death, but a woman in the crowd with a child said she ran as best she could in the other direction as the crowd rushed the door as she realized that both her life and that of her child's were in peril. The news media also made light of the fact that shoppers continued to prowl and claw for bargains even as they stepped over the limp body of the trampling victim. This is why our enemies should fear us. If we can be this fanatic about another five percent off on a big screen TV, imagine if we ever actually had a righteous cause to fight for.

Now I am perfectly sure that this unfortunate overture to the holiday season did little to cloud the experiences of the average family. Many went about their shopping, gifting, wrapping and partying with nary a thought of the poor tramplee. I merely highlight it here to juxtapose it with the other bookend, namely the Santa Shooting and Burning Down the House with Family In It episode. Yes, Christmas Day was another media bonanza, a recently jobless man, Bruce Jeffrey Pardo, post-recent-.divorce destroys a covey of in-laws, shoots a little girl right in the face and manages not only to torch a two-story house on fire with his improvised accelerator, but also ignites his own Santa suit (psych!) and suffers third-degree burns while incinerating the structure and burning it to the ground. Can you believe this sucker thought he was going to Canada, eh? All of this fortunately led him to take his own life, sparing us the endless media circus of trials and psychological explanations over the course of many months. But of course he had to go to his brother's house first to do the self-annihilation, thus dragging in a more immediate part of the family when the brother stumbled upon the body. Left a big swath, did he.

It is true, neither of these events reduced the glow of my personal Christmas party one whit. It is only in taking the overview of our society that these things matter. But they do, and reflect rather poorly on the decisions we've chosen to make. Too much emphasis on material things. Too little control of weapons. Too much elevation and exultation of shopping as a substitute for . . . everything else. Too little psychological counseling and no attempt to weed out psychotics before they act. Too much striving for breaking into the black on Black Friday. Such deep, unfathomable blackness that black humor becomes inappropriate. The improbable becomes the norm.

So I say to you: Happy Holidays, and most of all, Happy New Year. Among the many memories I would just as soon discard after the final 24 hours of 2008, this pair of bookends will be the first in my mental trash. It's a Christmas I would just as soon forget.