Tuesday, January 23, 2018
No Man Is An Island
No Man Is An Island
by Allen Laudenslager
An emotionally satisfying poem, but what the heck does it mean to business? It means that your business, in too many ways to list, depends on the businesses around it and on your suppliers and customers.
A climate of success helps you to succeed while a climate of collapse makes it much more likely that you will fail. We have uncountable examples of towns that relied on a single economy. The farm and market towns of the midwest that were supported by the small family farms died with the advent of industrial farming.
Those large farms were operated by so few workers that all those support businesses that made the town exist weren’t needed.
We know of cases where small stores closed thru the loss of business diverted to big box stores. Part of the problem is that the profits from a local store tend to stay in the community while the profits from big box stores tend to be aggregated in the financial centers of big cities.
This phenomenon constitutes a cash drain that eventually strips that small town of its cash and unless there is a constant influx of fresh cash then the community goes broke and the residents leave for richer ground.
If the cash is in the financial centers then that is where the cash gets spent and that’s where the jobs are. As the people collect where the money is those small towns slowly die out. Just like the gold rush ghost towns when the gold ran out.
We are witnessing the same thing on a national scale. As more and more products are made in far-flung places the cash is being transferred from the developed nations to the developing.
The key here is that people who don’t have jobs can’t buy your product no matter how cheaply you can make it.
I can buy a life jacket for around 12 bucks but what is its value? If I don’t go out on the water I wouldn’t buy it at any price. When the boat sinks I might pay $100 for that same life jacket. If I don’t have even a single dollar, then I CAN’T buy that life jacket even if the boat is sinking under me.
The point to all this is that if you minimize your worker's profits to maximize your own, then they have less to spend with you. While it’s true your workers can’t buy enough of your product to keep you in business that money does circulate.
If your workers can’t buy from the local burger stand, the people who work in the burger joint can’t buy your washing machine or dish soap.
Every job you and your industry transfer to some far-away factory is one less local customer for your product. And when that transfer is to chase that last fraction of a percent of profit but is making your potential customer base smaller, are you really coming out ahead?
Once again, you are absolutely correct when you say that your business can’t make that big a difference and by yourself you are right. Add your choices to all the others making the same kind of decision and we have the current lingering recession.
Living proof that recessions are a self-generated self-fulfilling phenomenon. If business cut employees and/or salary/benefit packages than employees spend less and there are fewer sales.
Reminds me of an old Kingston Trio song, Desert Pete:
“You’ve got to prime the pump, you’ve got to have faith and believe
You’ve got to give of yourself before you’re ready to receive.
Drink all the water you can hold, wash your face, cool your feet,
Leave the bottle full for others, Thank you kindly, Desert Pete”
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