4th Installment on Supercapitalism

The transformation from the Industrial Era to the Information Era changes everything. It doesn’t eliminate everything, but it transforms everything. Because technology permeates every aspect of a society. Technology touches all.

Starting in earnest in the 1980s the technology driven changes hit sector by sector of the economy. Increases in productivity – and the tax cuts (not the tax increases as Reich says in Supercapitalism) created new capital. So much that in the late 90s the Clinton administration crowed that the old business cycle of standard economics – expansion and contraction – was over. Then, came the dot com bubble burst. And 9-11. And first two U.S.-initiated campaigns in a long, long World War.

In previous installments we’ve discussed the impact in the changed job and income market for America and Virginia and some structural answers. At least two issues remain: How to deal with the fundamental changes in businesses or “What to do about Walmart?” and what about the concentration of wealth in businesses and persons in a representative democracy? Consider Robert Reich’s findings.

Big box businesses have wiped out main street small businesses. Family run stores have been eliminated by Walmart. Communities are lost when the Mom and Pop stores go away. Walmart doesn’t provide health benefits and pushes wages to the lowest levels possible. And, across the board there is no economic security in a lifelong job – outside the U.S. Congress. Moving jobs overseas also leads to environmental degradation and violations of human rights.

  • Big boxes aren’t the problem. I’ve read the analysis, but didn’t keep the numbers, on small towns and Walmart. The number of people who lost income vs the number of people who have more money because they could buy cheaper products was astounding. It would make the utilitarian David Hume proud. The greater capital that stayed in the local economy creates jobs. It proliferates the big boxes from Walmart to the Lowes or HD, Bed Bath and Beyond (female equivalent of a hardware store), box book store, chain restaurants, etc. etc. The big boxes create jobs.

One may not like the homogenized look of the nation – and I see it as I travel on business. The boxes aren’t evil economic death stars. They will come and go and evolve. Like Target, etc..

The Waltons of Arkansas and Bill Gates make good boogey-men, but they aren’t the problem. If We, The People, do more to create and recycle capital in Virginia then we all will benefit. Capital, even capital kept in local economies by big boxes produces Mom and Pop businesses to provide services cut trees, do yards, clean houses, care for kids or pets, detail cars, build pools, clean pools, change gutters, etc.

  • Production matters. Virginia’s proximity to DC and a natural port provide the Federal funds that won’t stop until the U.S. surrenders as a Super Power or our economy collapses after a comet strike. The Feds will dump capital because for the time foreseeable DC is New Rome. Agribusiness, The Bay, forestry, and mining remain vital to our economy. Virginia needs to make sure we don’t kill those golden geese.

Cutting corporate taxes to zero (with the possible exception for corporate bad behavior as defined in earlier posts) and reducing personal taxes will help small businesses and large corporations make stuff in Virginia.

Before we go to the last installment on what the transformation means politically, let’s consider a basic paradigm of government and business in a mixed economy.

Our governments have checks and balances at every level. They work imperfectly, but they are a constraint against the corruption that power brings. Our government is organized for imperfect humans.

Business doesn’t have a check or balance other than the market – and when government intervenes. Business is organized for efficiency. There is no brake on the abuse that power brings.

Except unions and shareholders can provide a brake. It’s most effective to use market forces to change business behaviors.

Next: Transformed and transformed politics in the new economy.

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  1. Larry Gross Avatar
    Larry Gross

    well.. certainly all this talk about the GA staying out of NoVa and HR/TW “business” .. when their “business” is the Fed Government rather than “real” business.. sorta has a hypocritical tinge to it….

    Of course the Feds are never going to go away but the way that NoVa nose points to the sky when talking about it’s “contribution” to RoVa has a haughty sense to it… no like somehow NoVa has more going for it than mere geography…


  2. Anonymous Avatar

    Mr. Bowen,

    Whom do you favor for the Republican nomination for U.S.Senate?

    Is there anyone in the Senate or House of Delegates who favors zero corporate inc. taxes? Could help us; I think Arizona has zero or close to it.
    – March Hare

  3. Darrell -- Chesapeake Avatar
    Darrell — Chesapeake

    Back in the 70’s I used to work on mainframe computers. We used to have a saying. “The number of reports demanded by management is directly proportional to the amount of memory a computer has.” As we evolved to larger systems, more processing time was devoted to generation of reports. Managers wanted the same information but in different formats, which kept the applications programmers employed.

    Now here we are, light years ahead of what was available back then, and nothing has really changed. Customer Service Reps are hired and fired based upon the number of minutes per call, all displayed in high definition colored graphs on a big screen TV in the manager’s office. The last time you used your VIP card at Food Lion is in someones Excel spreadsheet.

    And the IT folks? Well nothing has changed there either. Except now we spend close to 90 percent of our time maintaining endless security patches and other crap to keep people’s access to all the terabytes of information at the lowest possible level. All this data, and it has zero impact on most worker’s daily chores. It has gotten to the point where the amount of bandwidth expended on network security exceeds the level of productive work.

    The only product manufactured by the Information Era is more useless meetings to discuss the latest information.

  4. Jim Bacon Avatar
    Jim Bacon

    On Wal*Mart, I haven’t read Reich’s book yet, so I cannot respond to his critique of Wal*Mart. I have read Ed Risse’s critique (in one of his “The Problem with Cars” series) and agree with Ed that Wal*Mart has helped create, and prospers from, our auto-centric society. Some of the “savings” the retailer provides consumers is illusory, in that the money “saved” doesn’t account for the consumer’s time and expense driving to distant Wal*Mart locations, nor does it account for taxpayer expenditures to provide automobility access for Wal*Mart stores.

    That said, I don’t see how anyone can deny that Wal*Mart has revolutionized, and brought tremendous efficiencies to, supply chain management. Through the use of information technology, Wal*Mart has extended the concept of just-in-time inventory from the manufacturing sector into the retail store. As other companies have imitated Wal*Mart, the result has been a massive, economy-wide reduction in the amount of consumer-goods inventory stuck in warehouses, shipping containers, loading docks and retail storerooms.

    Smaller inventories increase the efficiency of corporate capital deployed, and it moderates business cycles, which in the past had been driven to a significant degree by inventory build-ups and liquidations.

    Fi0nally, regarding the loss of the mom-and-pop stores… Should we really lament their departure? What did the mom-and-pops pay in wages? How many of them paid health care benefits? Are retail employees really worse off working for Wal*Mart? Maybe they are. I don’t know — I’m asking the question. But I haven’t seen evidence that answers these questions definitively.

  5. James Atticus Bowden Avatar
    James Atticus Bowden

    Jim Bacon: The Moms and Pops lost their incomes in small towns. But others gained more in capital. In a utilitarian sense it was a plus.

    March Hare: Not a subject for this thread on my preferences – read about them on my blog Deo Vindice.

    I don’t know of anyone in the GA who wants to cut corporate taxes to zilch – I haven’t asked.

  6. Anonymous Avatar

    J.A. Bowden,

    (1) Yes, Wal-Marts are the problem. Besides ripping up land wantonly, forcing more dependence upon cars and flooding our environment with runoff from acres of concrete and ugly light, they encourage mass imports of cheap goods from places like China and Latin America that use cheap labor with few safety or environment controls and no unions to replace production that used to be done in the U.S. All that does is contribute to our balance of trade problems and overspending, not to mention help encourage U.S. production capacity to move to places like China where they enjoy anything but a level playing field in currency valuations, tariffs, etc.
    When the wasteful big boxes that consume massive amounts of energy suddenly are no longer needed due to some local market shift, they are often abandoned and left blank for months or years as Wal-Mart or other Big Box moves across the street. Wal-Mart suppresses the rights of Americans to belong to labor unions, offers cheesy benefits and throttles efforts of small communities to control their land use. The Wal-Mart business model is being rejected in places such as Germany and Montgomery County, Md. It is a model that evoled in the 1970s and 1980s and is fast becoming out-moded. The thinking and justification you are offering for Big Box development is just as outmoded. In other words, Mr. Bowden, you are serving up a diet of rather stale, moldy bread.
    As far as your part on not killing the golden goose in Virginia, all I can say is “Like, Duh!.” Aren’t you simply stating the obvious? And then you come up with a rather lame argument for no corporate taxes. Have you considered that the big residential developments that supverisors have approved throughout the state (many of them GOP) do not pay for services they use. Big companies do help pay for services. Are you saying this shouldn’t happen. How, then, would you proposed paying for services? You make the same error many Republicans make when they want great services but don’t want to pay for them. And you can’t answer where the money should come from?

    Peter Galuszka

  7. Larry Gross Avatar
    Larry Gross

    re: Walmart

    still more confusion between evolution of supply chains and efficiencies.

    Walmart is but ONE example of hundreds/thousands of business models that are evolving in the same exact way.

    Go to your “local” tire retailer…or your local Starbucks or your local Batteries Plus or your local Bob Evans or Cracker Barrel.

    The anti-Wal-Mart folks are living in a dream world.

    They don’t like the way we’ve evolved and they need a focus for their ire.. but their view is myopic… because they just totally ignore the massive changes that have occurred in virtually the same way to other products.

    That tire store.. is operating virtually the same as WalMart in terms of a supply chain.

    The tire .. “not in stock”.. will be “in stock” at the next day’s delivery from the warehouse as soon as the clerk clicks “send two of these on his computer screen”.

    Subways do not make local dough. They make the bread from dough that is made at a central site and delivered to them every 3 days or whatever.

    The dough… like some of the tires are NOT MADE overseas… but they ARE cheaper than if Mom and Pop were selling them.

    The anti-Wal-Marters need to tune in to the real world..

    That contact lens that you get from Wal-Mart is the same one you get from Lens-Crafters and they’re both made in Ohio and not China and they both come in one or two day deliveries via UPS or Fed Ex.

    Claiming that WalMart and it’s policies have “ruined” small town America is .. so far off the mark – in my view that I seriously question just how “in touch” folks are who take that view…and especially so if those same folks are also offering opinions about what is wrong with our current settlement patterns.

    Mom and Pop likely did not have health insurance themselves much less provide an admittedly minimal “benefit” to their employees.

    Likewise.. Mom & Pop did not provide retirement benefits.

    Mom & Pop also did not care if slaves made their tea bags or mercury was used in tanning the hides of their cowboy boots made in Mexico.

    Why do we not see this?

  8. James Atticus Bowden Avatar
    James Atticus Bowden

    PG: We can agree to disagree about Walmart. It will change as the marketplace evolves.

    Yes, I may be stating an aphorism about the golden geese. I am Captain, Master, Mister Flash of the Obvious – or so says my family.

    The argument about lowering corporate taxes is about attracting jobs and returning more cash to the workers and consumers.

    If you want residential developpers to pay the cost of the roads, police, medical and school services that new residents need, then that cost can be incorporated in the bill for development. But, don’t imagine that the developpers will actually pay it. The cost will go on to the new residents. I don’t have a problem with that if the numbers are real.

    I can’t think of a state or local government service – that is needed – that is unconnected from an appropriate source. Transportation may be improperly funded, but we’ve discussed that in detail on other threads.

    LG: Good points about business reality.

  9. Anonymous Avatar

    “Captain of the Obvious?”

    Yeah, I take a lot of crap from my family, too.


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