The Economic Advisor

What Happened to US?

Does anyone but me wonder what happened to US? As in U.S.? As in United states?

As an aging Flower Child, I can’t help but wonder about US. Bank bailouts? A health care INSURANCE crisis? (We need to remember that it’s NOT THE PROVIDERS of care; it’s the INSURANCE COMPANIES.) Credit card companies whose LEGAL practices surpass the mob? (At least the mob call it what it is: a shakedown.) A legal system in a featherbed WITH the insurance companies?

Late capitalism has turned US into hypnotized zombies. Not only is there a chicken in virtually every pot and a car in virtually every garage, there is a cellphone in every pocket, a computer in every Suzie’s and Junior’s bedroom, and a t.v. in every living room (and bedroom and bathroom and kitchen…).

(Please, for the sake of brevity, don’t get me started on the “disenfranchised.” I’ll apologize to them now: I’m sorry things are worse than ever for you, and I don’t know why we aren’t rioting in the streets over what’s happening to you, too.)

Look around. For the great majority of Americans, cellphones, computers and t.v.s are a given. Most of US who don’t have at least two of those things do so by choice. We have a choice. We’re lucky. We’re fat, happy and sassy.

Karl Marx had it wrong. It’s not religion that’s turned out to be the opiate of the masses: it’s having stuff. A glut of stuff keeps us peaceful and docile. Marx today would have said, “Give them enough electronics and food, and they’ll never raise a pinkie in protest.”

We don’t want to fight for the things we don’t have–like health insurance, like trustworthy banks and corporations. We’re simply too full to get up out of our recliners… even to reach for a pen to write to our congresspeople.

With comfort comes the inability to care about complete strangers and the loss of urgency to raise our voices and, if necessary, our fists. Heck, we’re ARMED in this country! In other places where the urgency is really real, where they DO have to care for one another, they’re throwing ROCKS!

You do realize I’m not advocating violence, right? It’s just a trope to get my point across. We have VOICES. We have VOTES. We have our congressperson’s address and phone number. Heck, we can even blog our frustration…

Okay, you’re right. Those seem kind of wimpy to me, too.

We Americans–US–hate taxes. We hate government. Yet we will sit by passively and wait for regulations and laws to make corporations, insurance companies, and Wall Street behave. We want–no, we EXPECT–these controls to miraculously appear like a kiss on a boo-boo. And with no effort from US.

Sure, we should be thanking our lucky stars that our worries mostly come down to money (which has lost its reality to US) rather than tribal warfare, starvation, and rampant disease. But what does that mean we DO with our good fortune?

Eat, drink and be merry. Listen to the FOX-News talking heads squawk: sound and fury signifying nothing. Declare bankruptcy with a yawn so we can start a new cycle of unrepentant consumerism.

And then what? What do we DO? I’ll eat at least three good meals today. I’ll sleep tonight in a soft bed between sheets and plenty of blankies like I have every night of my life unless I chose otherwise. I’m going to watch the ballgame on my big screen t.v. with surround sound. I’ll get fatter. I’ll insulate mind, body and soul in my castle… just like millions of other Americans.

And I’ll have the nerve to write this rant.

And I’m not going to riot in the streets.

RATS! In the end, I have just argued myself to the realization that despite the weight of our bodies and our debts, there’s no reason to riot. Pitiful…

Still, I worry about US. We have so much and are so contented that we don’t see where we’re taking ourselves. We need to be angrier about the widening gap between have and have-not because once it’s gone the only way to get it back WILL be through violence and tearing down The Great Experiment, which I really am NOT promoting in this essay. Maybe that has to be, though. I am never a fan of, “That’s the way it’s always been done.” Despite revolution after revolution proving me wrong.

Can’t we, can US, be smarter this time?

When we’re talking about money, though, one thing it never buys is smarts.

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The Future Development of Guangzhou

Due to the important geographical position and the historical reasons, Guangzhou is an important city for China from the perspective of economy. No matter in ancient times or modern times, Guangzhou played an important role for the whole economical development.

As an overseas city Guangzhou was influenced by the capitalism in an early time. It was invaded by England in the Nanjing Treaty which brought disaster to Guangzhou. However, it was also an opportunity for the economical development of Guangzhou. During the period, Guangzhou developed capitalism firstly, all kinds of light industries came out and enhanced. It was the special history that laid a solid foundation of Guangzhou as an economical center.

With the reform and opening policy, the economical status of Guangzhou was strengthened. The average GDP of Guangzhou is higher than Beijing and Shanghai in the latest years. Besides, the export volume of Guangzhou always comes first in our country. Most of the export products are from Guangzhou. In addition, the world famous Guangzhou fair can be the best evidence that Guangzhou is in an irreplaceable economical station. And the Guangzhou fair can bring a lot of commercial opportunities for itself.

To remain the important economical status, Guangzhou needs to develop in balance and stability. First, Guangzhou needs to persist in developing the traditional industries and the middle and small enterprises, making these industries as the power and supports of the economical development. Second, it is needed to pay attention to the balance of input and output. Third, it is necessary to conform to the economical disciplines. In view of this point, the local government needs to cultivate and introduce talented persons to promote its economical development.

Although the crucial economical status of Guangzhou is no doubt, there are still a lot of problems. Like most cities in China, the economical structure is not reasonable, to some degree. It is well-known that Guangzhou is famous for exporting. Most of the enterprises in Guangzhou are small private enterprises which can not resist the outside danger. Besides, these light industries without high technology just make use of the cheap labors and excessively depend on the overseas markets. The financial crisis has approved that this economical developing model is dangerous. Once the overseas market bankrupted, these small enterprises such as the clothes companies and toys suppliers will be the main victims.

Therefore, we should improve our own purchasing power especially the daily products including food, clothes, and entertainment facilities entertainment facilities such as inflatable sports and obstacles.

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What Happened to the Mid Market?

Has the market become commoditized or polarized and what’s the cause?

Since the post war boom business school professors, marketers and business leaders operated under the belief that there were three distinct consumer segments in the US market. The Luxury segment that accounted for five to ten percent of the market, the mid or mass market that accounted for sixty to seventy percent and the low end or commodity segment which accounted for twenty to thirty percent of the market. The classic bell shaped curve.

Has the classic model and curve been turned upside down, flattened or shifted to the bottom? Have marketers and business adjusted or have they been so focused on the daily grind of running a business that they have not even noticed the shift?

It is clear to me that the middle market has changed shifted over the last ten years and is certain to deteriorate further during the current economic down turn. The critical question is why did this happen and do businesses leaders recognize the changes and are they prepared to adjust?

There are at least three contributing factors that either caused the shift or are the result of the shift or maybe both.

The retailing landscape was forever changed by Wal-Mart. Is the Wal-Martization of America a reflection of a societal shift or did it cause the shift? Why did so many department stores fail? The market is littered with a long list of department stores that have failed or have been absorbed by a few remaining department stores that are struggling to survive. This phenomenon is not exclusive to the general merchandise categories but virtually every consumer goods category. Hardware and appliances are dominated by Home Depot and Lowe’s and electronics by Best Buy to mention a few. Drugs and groceries by a few chains, yes Wal-Mart is in these businesses also.

Why is the bastion of middle America the “Mall” dying? Is it Wal-Mart or is the middle/mass market that drove the success of these venues in the sixties, seventies and eighties gone? Does the death of the department store that anchors the mall make this high overhead cost venue and business model unsustainable?

What impact has the internet had on the mass market? It has evolved from an electronic library to communication tool to electronic catalogs and who knows what’s next all within the last ten years, remember Al Gore? The internet changes how businesses reach consumers with both information and the purchase process. The internet drives prices down as a result of the low overhead and cost to set up a business as compared to the investment required for a brick and mortar store or paper catalog. Marketing/advertising is a fraction of the cost because search engines, social networking sites, etc do the marketing for free or a fraction of the cost.

Where did all the once respected everyman brands go? The failure of the US auto industry has many causes but certainly has contributor to the shifting market segments in America. Not that many years ago the average American dreamed of a new Chevrolet, Buick, Oldsmobile or Dodge. They also dreamed of a new RCA or Zenith in the living room.

Didn’t every home and sports team have a closet full of Wilson and Spaulding products just a few years ago? What caused these once great middle market brands to fail? Was it Wal-Mart, is society changing or is this simply capitalism at work…the strong and smart survive?

The demise of manufacturing in America has been reported for two decades. The media and union whipping boy is China and when the capitalism Jeanie got out of the bottle there was no chance of getting it back in. China has clearly changed the world forever but the idea that it’s simply cheap labor is missing the bigger point. There is no arguing that the Chinese work for less than Americans and Europeans do but it’s no different than what our grand parents worked for in the 30′s and 40′s. Their emergence into capitalism is just sixty years behind the western world. That does however translates into a competitive advantage on a number of fronts and cheap labor is simply a small part of it. If it was only cheap labor there are lots of other places you could get that. Several points that the media never discusses are the low investment cost today because of the advances in technology.

The cellular revolution means no telephone polls in China as an example. Politics of course plays a role because China is a proud country and focuses as a culture on the big picture, the future not today or next year. Yes they manipulate their currency but they also make “investments” in infrastructure and advancing their society through subsidized raw materials, land and equipment. To them it’s an investment in the future to Westerners its unfair competition, you can be the judge but you can’t change it! The other point that I rarely hear discussed is the work ethic and the human pursuit of a better life that is very much a part of our culture and society but it often seems that the media doesn’t believe the “foreigners” are entitled. This is a large part of their success as a people much like it was for us a generation or two ago.

Did all of the above change the American consumer so quickly that we didn’t even notice? The pace of change today is so much faster than it was just a decade ago. Businesses coming and going, brands coming and going is almost invisible or entertaining to the American consumer. It’s all about new and having something first or having something someone else does not. This “I have one and you don’t” attitude used to be an affluent consumer attitude that only money could provide. Now low cost manufacturing, China, low cost distribution, Wal-Mart and the Internet have both created an environment where everything is available to everyone and someone is always willing to sell it to you for less. Brand and product managers used to discuss positioning, distribution strategy and pricing strategy. Now brand managers talk about volume and margins this month not this year. So maybe America is the mass market we all learned about in school it just isn’t middle any more…is everything a commodity except the very high end?

So it’s the proverbial chicken or the egg question? Who is to blame for the commoditization of America? The consumer, China, Wal-Mart, technology our government or is it a natural evolution? It may not matter but business leaders and marketers better pay attention because more change and turmoil is on the way.

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