Make Your Dollar Work Really Hard
Although politicians and media pundits tend to focus upon unemployment and the impact of technology and free trade, an unindicted economic millstone is the fabulous manner in which commercial enterprises flog products and services to end-users. Now that downsizing and globalization has boiled most of the fat out of other sectors, 'commercial communication' and 'commercial positioning' stands out as an arena of garish excess and staggering waste.
Consider the facts: As recessions and jobless recoveries force record numbers of businesses and individuals into bankruptcy, consumers — often unemployed or poorly paid — continue to be confronted by expensive marketing ploys. If consumers have less to spend, and if world-class economies value cost-effectiveness above all else, why is this not reflected in the activities of retailers?
The retail prices of goods and services reflect expenses incurred along the way: manufacturing, transportation, financing charges — and the costs of advertising and mall development.
There is another difficulty with the way we do business. Because of the deluge of promotional 'flavours of the week', consumers struggle with feelings of anxiety and insignificance reminiscent of workers before the advent of labour unionism. Millions search flyers daily for 'bargains', clip coupons and rush to 'distress sales'.
By a remarkably seamless consensus on the part of manufacturers, jobbers, wholesalers, retailers and governments ... consumers are kept in the dark about retail profit margins.
By far the most important players in this de facto conspiracy are the governments collecting value-added sales taxes. In Canada, provincial and federal governments raise enormous revenues through value-added (GST and PST) taxes. They have been complicit with retailers - making common cause where the lion's share of markup and profit occurs.
This is the reason there has not been legislation requiring retailers to disclose the overhead burden their activities represent. Price tags setting out —
UNIT COST: $10.00
STORE COST: $5.00
YOUR COST: $15.00
would allow informed judgements about the economies of big-box retailing, provide the information needed to reward efficiency and conservation, dramatize the costs of convenience, customer service and so on. Convenience, service, expertise ... are legitimate value-adding functions of the distribution network. What consumers are unable to determine is the overhead burden represented by these activities. Consumers need to know what products are worth, and what it is costing to buy them in various venues.
A thoughtful government would see to it that this information was available.
In the meantime, a grass-roots remedy is available. Since - at least for the moment - most individuals in first world nations are significant consumers, nothing prevents our organizing into bargaining groups and the negotiating with retailers and governments from positions of strength.
Any repairs to retailing efficiency, any dampening of arbitrary infrastructure development ... would translate into increased consumer demand, real value-adding employments and economic vigour.
How can we achieve these benefits? Neither complicit governments nor corporate beneficiaries of the status quo are likely to take up the task.
The failure of labour unions to seize this obvious opportunity to enlarge their mandate and relevance remains incomprehensible.
There is only one possibility: Consumers must save (on) their own bacon. Organize groups. Solicit discounts. Boycott gas companies en masse. Make representations to governments.
Why bother?
Suppose a person saved $1000.00 each year through such activism. What wage increase might this be compared with?
First of all, savings cannot be taxed. Canadians typically work 6 months each year before 'tax freedom' day is reached.
Therefore, $1000.00 saved = $2000.00 of pre-tax income.
To earn this $2000.00, employees incur work-related expenses — food, clothing, transportation, suitably proximate housing. If we (optimistically) assume that these amount to $1000.00, a further $2000.00 must be earned, again giving 1/2 over as taxes.
Therefore, $1000.00 of savings = $4000.00 of gross income, when 'money in hand' becomes the bottom line.
In short, every dollar saved through consumer activism (or any other technique) represents $4.00 individuals no longer need to earn.