ODE TO THE ECONOMY 3
( article 1 of 2 today )
Supermarkets sell you cheap food (
cheap as in profits, not total costs to the consumer ) because of competition. Store X gives you loss leaders every week to get your sad sack sorry
ass into the store. Almost always, you
buy something else. Even if it is just
something perishable you are almost out of and you want to save on vehicle wear
and tear. That head of lettuce might
have only netted the store ten cents, with the pound of hamburger losing them a
nickel, but the lights and power and employees were already paid. Your entry cost them nothing and yielded a
nickel.
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No, you don’t stay open making a
nickel at a time. But you do stay in
business stealing customers who buy not just sale items but everyday priced
items. The store can make zero off you one trip because the other three trips
are profitable. The stores who only get
business at a loss, the “cherry picker” customers? They price everything too high and only draw
in customers for sale items. They are
your next bankruptcy filers. Which is
about half the grocery stores in town.
Then what happens?
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A grocery store is not the same thing
as a gas station. A station is in effect
completely robotized. The tanker truck
comes and dumps the gas, a customer swipes his card to pay for it and someone
only has to be there to minimize the chances of vandalism. One gas customer an hour or thirty, the costs
barely budge. A grocery store can handle
up to X amount of business for their costs, but anything over that does drive
up their costs. Stocking the shelves is
labor intensive. Even the more efficient
ones must pay for product movement.
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Some stores are so good they just
open the case and throw it on the shelf.
The prices on so low customers come to the run down building in the
ghetto to shop. And they won’t be
increasing their hours with more business.
Remember, the ghetto. If they are
a giant warehouse in the safer industrial area, there is still going to be
increased manpower cost as more freight gets moved. My point is, getting an increase in business
as your competitors close will involve your cost and then your prices
increasing. This is what lack of
redundancy causes.
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Okay, how business USED to be done
was that you had a position that wasn’t busy all of the eight hours. You gave them Make-Work to do ( one reason
your popcorn costs $6 at the theatre is that you are paying people to stand
around waiting for the next customer to buy snacks. Multiplexes somewhat
eliminate this with less downtime than an older one or two screen ). At a grocery store, the guy bagging groceries
faced the shelves. A clerk dusted them,
and etcetera. Now? To be more “efficient”, fifty percent of
positions are eliminated.
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The remaining employees do at least
150%. Sometimes on bad days 200%. There is ZERO down time. Which means increased demand has no labor available
to fill it. Think of it like a car dealership. Five salesmen hang around picking their
ass. A customer comes in and there are
extra people to go “help” them. But that
is because they work on commission only.
If they were hourly, like other retail stores, you would have ONE salesman. If two customers came in at the same time,
they would have to wait their turn. You
don’t wait your turn at Amazon because of robots.
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A perfect grocery store would have
one brand and size per item, with limited items. Each item would be an opened case, with open
cases behind it. All meat is frozen, all
produce in bags rather than loose. One
guy supervises all the self check out scanners, and after a limited number of
hours open that one employee would close up and re-stock the cases. The problem is, all grocery stores are like
full serve gas stations that never got robots to perform all tasks. You can dump gas into a tank after hours, but
you can’t gravity dump cases from the semi to the shelves.
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And, all grocery stores are working
on a century old design when labor was considered essential rather than
optional. Even Sam’s and Costco types
have a lot of labor to pay ( not to mention far more real estate costs ). More customers, more cost. But, you ask, aren’t we paying more now just
having more stores open? Well, grocery
stores have their own version of the convenience store, the specialty
departments. The bakery and the deli’s. Offering ready to eat foods, at quite the
premium mark-up. Absent those?
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If customers stop buying luxury
foods, those lost profits need to be made up by rising costs on
commodities. So here is your grocery
store, without retail competition. It
isn’t raising costs because it can but because it must. Keep in mind no store is truly competition
free. Just like the last time foods
insanely inflated in price, you can always have a neighborhood food co-op. Any business can rent out their back room to
the group one day a month, the semi delivers and the members save on bulk buying
( obviously, this would only work with a limited amount of choices. Say, shelf stable basics like flour and sugar
and such ).
*
So the retail grocery store will
still shave costs as much as possible.
But his labor costs are higher, AND he makes far less since few
customers can afford fried chicken or birthday cakes. You the customer get to pay that extra. Like to guess about clothing next? Imports are far more expensive as fuel shortages
due to bankrupted transportation companies are widespread. And delivery costs are higher with less
trucking companies paying more to drive over roads that are not maintained
adequately anymore.
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You want to buy a gun? Well, delivery costs have increased-see
above-and so you can’t just impulse buy a gun with a $20 S&H on top of a
$20 dealer markup. There are far fewer
gun sellers, so now the mark-up is triple, as is the freight. Now it only makes sense to buy what is in
stock, and buying in stock adds in a “shelf tax”. Inventory sitting is always marked up
more. Plus, more gun makers went out of
business so wholesaler costs are higher.
Your $400 retail hunting rifle is now $600. And that is in today’s dollars.
*
Yet, as everyone is forced to raise
prices, what happens? The same pool of
wages is split far more. Everyone buys
less. If you have one dollar and a can
of peas goes from fifty cents to seventy-five, you don’t buy two cans but
one. Multiply that across ALL goods and
services. I tried explaining this to my supposed
“superior”. Look at the math. Look at the downward donation of food. Less cans per year, as costs went up. They were still donating the same dollar,
which was half the food. What did the boss
do? Hired more people to tried to give
away twice the free food.
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As people buy less because they have
no more dollars, less gets sold which means businesses go out of business. Prices go up even more as less customers have
wages to buy anything and each sold item must take on the burden of less volume
sold. If ammo is ten cents and you can
buy ten giving the seller ten cents profit, his cost is nine cents each. If his costs go to a dime, your ammo is now
$1.10. If you only have a buck, and buy
nine, his profit dropped by as much as your costs increased.
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So now he charges you 12 cents
each. So you buy eight. His profit just dipped again. See how this is going? Every buyer and seller in a self feeding
loop. Understand now how inflation and
immigration is preferable to this demand destruction? It used to be a lot easier when the economy
wasn’t consumption but destruction. Go
to the factory and build bombs and they would need more tomorrow. But as soon as they replaced bomb makers with
bomb making machines, there was no civilian economy anymore.
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We replaced that wartime economy with
a consumer economy, but we forgot the buyers of crap needed a job. You can only increase demand so much with
welfare payments ( which is really corporate welfare, as they are the ultimate
beneficiary. Who makes more on
ObammyPhones? Tyrone or Wal-Mart? ) to
illegal immigrants. Ah, self-feeding
negative cycles. Fun futures for all.
( .Y. )
( today's related link here )
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