What is Good for Business is Bad for Business.

A Unregulated, unlimited, untaxed profit, freemarket, consumer economy is unsustainable.

How about that for a sweeping generalization...

I like it though, it does in a nutshell describe what the American (and global) economy is now realizing.

Our governments encouraged profit making and profit taking. Corporate strategy is rife with words like "exploiting", "penetrating", and "dominating" markets.

Competitive profiteering at a global level resulted in companies being caught in a negative feedback loop. They expanded into markets and commanded total market share, dictating that anything less was failure. They eliminated competition through questionable tactics, then fell into the trap of cost cutting once profit growth stagnated. The golden umbrella got bigger and bigger and retirement or success was no longer required for today's corporate executives to reap huge monetary rewards.

The decline was a result of archiving a "profit plateau" which was deemed unacceptable to modern corporate ethics layered on top of greed. To not grow profit each quarter was seen as failure. Competition was to be destroyed. Rather than sustaining healthy competition companies aggressively destroyed competition until real innovation was no longer required.

To maintain profit projections the cost of production had to go down and innovation and engineering were tossed out the door as was risk taking. For American business when the going gets smooth, the smooth cut costs and hunker down with profitable products.

Corporations lied to themselves in believing that changes in manufacturing and engineering to reduces costs resulted in better products. The end result is manufacturing moves across the border and over the sea, to go on the cheap while new methods of extracting profit were sought after. These methods included sub-prime mortgage and derivatives trading, abstract intangible assets that really only existed in computer programs.

The House of Cards was built and when it all fell down, we were left with a resounding pool of junk products that people simply don't want to buy anymore and even those are disappearing. Money is too scarce and purchasing goods engineered to ultimately reside in a landfill are no longer worthy. "Do I really need that? I'll wait." That pretty much sums up today's consumer attitude. So no wonder the big-box retailers are collapsing.

Robert Riech's recent conclusion that a new economy is on the horizon is spot on for most economists. They simply can't see the forest through the trees and can't imagine a economy based on anything other than ever increasing profit.

So yes this essay points out many observations already echoed by many. So here is what I think the "New" economy will look like when the dust of infinite profit capitalism has settled.


The New Economy

1. Smaller scales of economy, smaller inventories, higher margins, higher quality.

Goods and services will grow and develop in a grass roots manner. People will realize that they won't get what they NEED from big-box retail and shopping malls. Large retailers that do not shift to smaller inventories and higher margins will fail. Locally made consumer products will find there way into large chain stores. Those stores must adapt or fail. Locally made goods exist in smaller inventories but have higher margins now and many stores are handling locally produced products.

As mass produced products disappear off the shelves they will be replaced by at first, more expensive higher quality hand crafted products...but the price will drop. Distribution models will shrink and become regionally cellular and highly localized.

2. Rejuvenation of light industry

As a result of smaller scales consumer economies anchored by locally made consumer goods, local industries will spring up utilizing the steel and raw materials harvested from the glut of abandoned rotting buildings the ring the belts of our cities. This ultimate form of recycling will see our cities stripped of strip malls and light industrial "parks". Higher quality fabricated products will see a return. Tools, agricultural equipment for small scale operations, food packing, distribution equipment, green industry technology will survive and prosper from the new found sources of parts and tools. This won't be done by any government bailout or program, it will be good old fashioned ingenuity and pioneering spirit.

3. Large Cities De-Centralize services.

As the economy shrinks to fit and becomes cellular so to will our cities. City services will divide into smaller more manageable units and entire sections of some cities will be raised and recycled. The Giant factories will never return. They will be cut up and recycled.

4. Financial Services will be smaller, simple and highly regulated.

What money is there for borrowing will be invested in the community and cellular economic units. Gone will be the days of money extracted from a city by giant corporations that ends up invested in a specter of a residual default credit swap will be gone. Money will stay and circulate locally for the most part.

5. Personal Customer Service

Nested IVR menus will relegate themselves to government and healthcare smaller business cannot afford to ignore the customer, because in all likelihood they live down the street.

6. Quality and Service Competition is a good thing.

Pricing reforms at the wholesale level will result in smaller operations to purchase from suppliers on a equal footing. Without this large suppliers with cash can wipe out local competition and start us down that path again. Pricing competition will be limited such that companies will have to attract customers with some besides price. Not price controls but scaled sales taxes at the wholesale level to prevent giant "Marts" from flooding the market with the same goods cheaper. If you could buy the same product from a corner store vs. a giant retail box 5 miles down the road...which would you choose?


In the end it won't be the government that lifts us up from the dregs of this failed economy. It will be the everyday people trying to provide a good home for themselves and their families. The spirit of commerce and innovation is not lost on all Americans and it is not solely the intellectual property owned by corporations.

It is the spirit that built the small towns and villages across this nation that still existed as they were built not more much than 30 years ago.