Christmas Shopping Down Turn
Summary
Christmas shopping is down in 2004. The experts say it will pick up. Are they right?
600 words
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by Eric Armstrong
The nightly business news reported that the Thanksgiving Weekend (typically a huge shopping weekend) was a big bust for retailers in 2004. An "expert" predicted that things would pick up though. After all, he said, businesses were showing better profits, and there was still room to increase worker productivity, so he was ready to bet that there will be much more spending before the season is done.
I'll take that bet. He just doesn't get it. Most of the financial experts don't, in fact, because the numbers they've depended on for so long are now lying to them.
Sure, corporate profits are up. But they're not up because coprorations are selling more (which means that people are buying more, which means that the economy is improving). They're up because corporations are avoiding taxes, laying off employees, and sending jobs offshore. They're sending millions of dollars to offshare "owners" of their intellectual property, which can't be taxed, when in reality, the owners are themselves, in their offshore incarnation, and they orginally sold the patents and formulas that constitute the intellectual property for a buck--as in one dollar. And they're further reducing costs with layoffs and outsourcing.
The net result is improved profits. But the profits don't go into workers' hands. They don't even go into investors' hands. They go into executive perks and corporate investments. The wealth created in the process is concentrated in very few hands, and there's a limit to how much any one individual can spend.
Meanwhile, the jobs numbers have gone back up a bit. But those numbers are lying to the people that read them, as well. They don't count people who have stopped receiving unemployment, who have stopped looking for work. More importantly, they don't count the average wage, so a person working part time for $20 an hour is "employed", the same as someone working full time for $50 and hour.
In the past, when pay scales were pretty standard, a given number jobs meant that some percentage were low paying, some were high paying, and the rest were in the middle. As jobs went up or down, therefore, the money in consumers hands went up or down an equal amount. So financial analysts could simply look at jobs, and see how the economy was doing.
Not so today. Today, as jobs go over seas and the Walmarts of the world keep people on part time employment so they don't have to pay for health insurance, job numbers that go up don't mean the same thing that they once did. Instead of tracking job numbers, we should be tracking an aggegate wage index, say as the number of people employed multiplied by their average wage. That number would give us a better idea of what's truly happening to the economy.
We don't have that number, though, so financial analysts are effectively blind.
So along comes the shopping season, and guess what? Shopping is way, way down. But corporate profits are up! Big surprise for the folks reading the numbers. Unfortunately, there's a feedback effect here. Lack of spending hurts the economy by reducing sales and lowering profits. Corporations then engage in another round of tax avoidance schemes, layoffs, and offshore workers to stem their hemmoraging profits. Their numbers go up yet again, while the economy continues its trend downward in a vicious spiral.
You see it. I see it. But the finacial analysts don't see it, because the game has changed. The numbers they have depended on for so long don't tell them what they need to know, so they don't even see the problem. After all, how can you even begin to correct a problem until you're aware of it?
About Eric Armstrong
Eric Armstrong is computer systems designer, writer, and philosopher. He is currently working on a book that uses the principles of General Systems Theory to explain how America's epidemic of obesity and disease stems from profitable, but unhealthy, ingredients in the food supply; how the corporate financial system (and our own retirement plans) are complicit in the problem; how the American political system allows it to happen; and how our problems with the environment, a dwindling standard of living, and even our problems with the global economy all stem from the same constellation of systemic interactions. At www.treelight.com/health, he focuses on nutrition and fitness. At www.citizensAdvisory.org, his forming non-profit is working to get the money out of politics. At www.artima.com/weblogs, he writes about software, web technology, and development tools.
About Citizens' Advisory
Corporate money has hijacked the ballot box. The Citizens' Advisory aims to take it back. Our goal is to put people in charge of the political process. The voting-advice system recommended by the Citizens Advisory lets people choose advisors they trust. Done right, that system will enable multi-party coalitions in cyberspace. The system appeals to voters because it's convenient. It appeals to social activists and their organizations because it levels the political playing the field and empowers them with a stronger political voice.
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