Sunday, September 6, 2015

Economies Of Fail: More Is Never Enough

Conventional "wisdom" is that concentration brings economies of scale and "efficiencies". Whereas, in the real world, concentration of economic activity brings stagnation, sclerosis, cronyism, corruption and collusion. 

Early stage economies start out fragmented, with small businesses flourishing. Over time, larger competitors take over and wipe out the smaller ones, until soon an oligopoly is created. A cartel. Laws and policies favouring large over small accelerate this process until soon there is no longer any all-critical "creative destruction" occurring in the economy. Zero business turnover means zero opportunity. The Oligopolists soon take over government, resulting in "Country" Incorporated. Reverse "Socialist" bailouts ensue. Voila.

The concept of craftsmanship and skill has been obliterated by mass production and commodification. Destroying the economy demanded ever-more destruction, so that jobless consumers could "afford" the prices at Walmart. It was a death spiral lower never once balanced with respect to supply and demand. 

This systematic process of ossification creates a sterile economy, a barren garden. No entrepreneurship, no employee engagement and no middle class. Revenue collapses.

The de facto misguided overriding goal of creating economic efficiencies has concentrated wealth and power and generated unprecedented poverty. The benefits of these efficiencies accrue only to the ever-dwindling and more powerful ultra-wealthy. Low-price "efficiencies" are a pathetic consolation for the jobless masses who are told they benefit from lower prices while being serially unemployed.

Something to think about for next time, which is coming far sooner than anyone apparently predicts.

If sales are tanking now, we ain't seen nothing yet.