Innovation…

The main crux of this post is about whether a company can remain innovative as it ages. I want to use Sears and Amazon as study points. Being a U.S. history buff I can’t help but draw a parallel between Sears in the early 20th century and Amazon a hundred years later.  Here with the help of Wiki here is a little history of Sears:

2016-07-17_15-51-55.png Farmers did business in small rural towns. Before the Sears catalog, farmers typically bought supplies (often at high prices and on credit) from local general stores with narrow selections of goods.   Prices were negotiated, and depended on the storekeeper’s estimate of a customer’s creditworthiness. Sears took advantage of this by publishing catalogs offering customers a wider selection of products at clearly stated prices. The business grew quickly. The first Sears catalog was published in 1888.   By 1895, the company was producing a 532-page catalog. Sales were greater than $400,000 in 1893 and more than $750,000 two years later. …

In 1993, Sears terminated its famous general merchandise catalog because of sinking sales and profits…

Source: Sears – Wikipedia, the free encyclopedia

The parallels between Amazon and Sears startups are quite striking.  Jeff Bezos started the company in 1995 with the idea to sell books on-line. It quickly grew in both sales and product offerings so that today it is by far the number one retailer on-line.

2016-07-17_15-53-10.pngAccording to recent industry figures, Amazon is the leading e-retailer in the United States with more than 107 billion U.S. dollars in 2015 net sales. The majority of the company’s revenues are generated through the sale of electronics and other products, followed by media and other activities. As of the fourth quarter of 2015, the e-retailer reported more than 304 million active customer accounts worldwide. Due to Amazon’s global scope and reach, it is also considered one of the most valuable brands worldwide.

Source: Amazon – Statistics & Facts | Statista

One of the striking things about Amazon beside their explosive product line is the speed at which they deliver their products. For $79/year you can get unlimited 2 day delivery at no cost.  I must admit I am a major customer who places orders probably 30+ times a year for the last several years.

Because it wasn’t available on-line I recently ordered a drawer unit for my micro-RV remodel from Sears.  I was told that it would take 2 – 3 weeks for delivery. In Amazon time which is now the norm for me that is an outrageously long. Somewhere along the line Sears just lost their innovative edge. The Sears store in Bloomington just closed down so now I have to travel about 50 miles to pick up my cabinet.  It is either that or pay $70 to have it delivered!

I find it ironic that just as Sears was terminating their catalog sales a young Jeff Bezos was planning on starting one on-line.  For 2015 Sears revenue decreased by $6.1 billion to $25 billion while Amazon revenues were $107 billion.   I wonder what would have happened in 1993 if Sears had decided to aggressively take their catalog on-line instead of abandoning it?  I am personally convinced that on-line sales is the wave of the future.  Why do I need to get in the car, drive to a store, and lug my purchases home when all I have to do instead is just click a few buttons and in two days it appears on my doorstep.

The Real Republican Party..

2016-05-05_09-30-12.pngNow that Donald Trump is on the verge of being official face of the Republican party there are many saying that he does not represent the “real” party. I kind of think he does, or at least what is left of the party.  Over the years the GOP has gone about alienating one group after another in order to maintain party “purity”. During that time more and more people have been shedding themselves of the Republican label such that their is not much left.

The Evangelical vote, or maybe more appropriately the anti-abortion vote, has been splintering away for years now.  What is left are mainly those who willing to strip away the core foundations of their faith in order to concentrate on that one sub-agenda.  Even the term Evangelical is an easily attachable tag that doesn’t come with many qualifying conditions. Anyone can call themselves Evangelical and many now do.  The real Christians have quietly migrated into the Independent category of American politics.

Those of us who used to call ourselves Republicans because of our fiscally conservative views have watched the old GOP actually do worse than the Democrats when it comes to deficit spending and reducing the size of government.  We have watched one Republican president after another get us into wars and the resulting vast increase in military spending and want to make up the difference on the backs of the poor in our society. While we may be fiscally conservative we still maintain our firm belief in the necessity of a societal safety net.  So we have quietly migrated into the Independent category of American politics.

Those of us who believe in limited government who used to call ourselves Republicans have seen the GOP make every effort to strip the power of government beyond what is safe in order to maintain some form of civility and governance. We have watched the current GOP majority in congress strip away safeguards that keep the totally greedy among us from gobbling up the wealth of our country.  We have seen them viciously trying to take away affordable healthcare from millions of our citizens in the name of limited government.  We who believe in limited government know that there are many places that can be reigned in to reduce our deficits but the current crop of GOP have an agenda that is not compatible with finding these real savings.  So we have quietly migrated to the Independent category of American politics.

What is left after all these migrations are two fundamentally different groups. One are the people who have been left behind in the 21st century economy due to one reason or another.  They look back and see where opportunity was much easier to grab on to than it is today. They lament that it now takes more effort to join the middle class than they have been able, or maybe willing to give.  They have a mentality that if they are not doing good then they want to push everyone else down to their level. They want to basically destroy America of opportunity because they did not get their expected share.

The second group are those at the other end of the spectrum who seek power primarily at the expense of the rest of us. They don’t like rules that get in the way of accomplishing their personal agendas. For the most part they are self serving narcissists who don’t have any concern for others. They are concentrated total on themselves and their accumulation of wealth.

So here we are today with an extreme narcissist in control of a bitterly divided GOP. Given the past few decades it is hard to imagine it otherwise.

Shared Equity vs Pure Capitalism…

But, first, let’s look at an unusual way of running a business, by having your employees own the company. One popular craft brewery has made a name for itself in part by going that route, with strong results so far….

One of things that we think is a big societal issue is this widening gap between the haves and the have-nots. And we realized that we had an opportunity to support people owning something that was increasing in value. Shared equity has been an incredibly powerful engine for us….

The better I do, the better we do, and I personally take that to every day of my job, and it really does inspire us all to go above and beyond in a way that I haven’t experienced at other employers….

Source: Brewery workers pour their hearts into business when given a stake

Shared equity vs pure capitalism is a very thought provoking idea to me. Especially in the circumstances where we find that today’s capitalism returns are overwhelmingly skewed to the top 1% of our citizens. It is just not being shared by the people who are actually creating the wealth as it once was.  Will shared equity become the new capitalism in the future?  I can only hope so; it would indeed solve many of the social issues of our times.

In my day “the three legged stool” was the symbol for a successful enterprise. The three legs were Owner/Employees/Customers. Each had equal weight in corporate prosperity. If something is beneficial to all three then it was quickly implemented.  Over the years the Customer leg has been shortened. If something can be made for a penny less and the product will still last at least through its warranty period it is cost reduced. Product longevity and quality is missing from far to many capitalist institutions.

The Employee leg of the stool has been ruthlessly amputated. As profits rise they are never shared by those who generate them. In fact brutal downsizing has become the mantra. The median income for U.S. families has actually decreased significantly while profits sour.

The only leg getting attention now is the Owner or stockholder. He is the king of capitalism as shown by the massive increase in wealth of the ultra-rich in our society. It seems the only way to straighten out the three legs is to make the employees the owners. With shared equity another thing that diminishes is the constant need to grow profits. The new owners will usually be satisfied with a constant income and not be obsessed with more and more. It is obvious that many business fail because they tried to grow too fast.

Our industrial society started out as a cottage  industry. Small businesses were built based on local needs. Maybe it is time to start heading back in that direction. If you ask me “Too Big To Fail” is a formula for the implosion of capitalism. How to make shared equity once again happen is the question of the day.  The first answer is probably to force  politicians to join Bernie Sanders and Elizabeth Warren in realizing that shared equity appears to be our only viable future.

 

The case for more tax brackets

The “simplicity” argument for fewer brackets is flawed on its own terms. Figuring out what bracket your income falls into takes five minutes of paperwork and some high school arithmetic. The crushing complexity of the tax code comes before that step, when you have to actually define your income — that’s when the avalanche of loopholes, deductions, credits, and carve-outs piles atop you. Brackets aren’t the problem. Indeed, as Chang showed with a very slick interactive graphic, for the vast majority of the 20th century, the U.S. income tax code featured way more brackets than it does now.

Source: The case for more tax brackets

There are a lot of improvements waiting to be made in our national tax structure but as the source above says reducing tax brackets should be a very low priority in the work. The loop holes put into the structure over the years needs immediate changes.  It’s time to throw them all out and start over again and only add them back with a lot of restraint!  It is a simple as that… But, how to accomplish that is the gargantuan problem especially with a gridlocked congress and all the special interest groups tugging at them.

Obviously from the graph above the largest portion of loopholes have been carved out for the wealthiest among us. I would like to see this graph continued through 2015. I’m sure that the top 1% are now getting a much greater share than they even did in 2008.  That must be so since the middle class is getting less and less. I think I read somewhere that the 1% are not approaching 50% of the total income.

It is interesting to see that the accumulated wealth of the top 1% is now greater than it was just prior to the Great Depression of 1929. I wonder if this is a harbinger of things to come?

I know there are a variety of different approaches to simplifying our tax code. I just hope that whoever finally manages to accomplish this gargantuan feat has the wisdom to do it correctly and to not put in increased burden on those who are struggling the most.

 

Death of the American middle class??

2015-12-30_11-02-50.pngBut maybe the “death of the middle class” conclusion isn’t obvious at all. And perhaps there is more to the Donald Trump phenomenon. Yes, the modern left instinctively sees such studies as further confirmation that inequality is the nation’s premier economic challenge. Much of the media agrees. The rich are gobbling up more and more of the economy’s bounty, leaving less for everyone else. Case closed.

The Pew results are more complex and nuanced than that, however. One reason the middle class — say, three-person households making between $42,000 to $126,000 annually — share is declining is that the upper class is expanding. Back in 1971, 14 percent of households were upper class, and 61 percent were middle class. Today it’s 21 percent upper, 50 percent middle….

Now, none of this is to downplay the particular economic strain on lower-income Americans, especially those without a college degree. There is evidence that real wages for male workers without college degrees have been stagnant or falling for decades. And those are Trump’s biggest supporters. But the billionaire is competitive even among the better educated. When growth goes away or even recedes a bit, bad things happen to the American psyche.  Now combine that with fears college is becoming more necessary and more unaffordable in a time of expanding automation. The emergence of Trump or some populist like him seems inevitable.

SOURCE:  The American middle class is doing better than you think.

This is a very interesting Pew study that kind of confirms what I have thought all along. That is that there are still plenty of households who have more than enough discretionary spending to keep the economy going. If there wasn’t then who are the targets for all the extravagance shown by most cable TV shows.

If you are to believe what you see on TV then all of us should be striving or at least dreaming of backyards filled with fire pits, outside dining and living areas and covered with expensive slate. If there is no discretionary spending left then who are all these people? After all a billionaire only needs so many fire pits.

I have to admit that when I was making close to a six figure income I didn’t consider myself well off. Maybe that was because of my continuing penny pinching from my poorer years. I just couldn’t see constantly spending more and more.  When I retired in 2000 we bought a 1928 farmhouse that had gone through a couple of badly done rehabs. We spent about 70% of the original purchase price in renovations. Since that time our only expenses have been repairs. We are satisfied with the way things are and don’t have much desire for all the latest “improvement” so many say we must have.

Getting back to the original thoughts here, yes the middle class is definitely shrinking but still, as shown above, it accounts for half of all American families. Only about 20% of us really worry if we can put food on the nightly table but that is 20% too many. Then there is that 1% whose power has grown exponentially and have more money than they could ever spend but still savagely seek more and more.  And they are getting it thanks to decreases in taxes beyond sanity…

Were We Wrong??

From the title it is hard to determine where this post is going. We can be wrong about almost anything in this life and there seems to always be someone around to alert us of that fact. If we get something set in our minds that just isn’t true then we are the worst kind of wrong. But… that is not where this post is going.:)

2015-12-27_12-48-23.pngFinally, here is the full question,  were we wrong to separate from mother England, especially through  violence?

Looking back with hindsight it is always easy to judge the past by today’s criteria.  I will try not to do that but will use the wisdom of what came next to speculate how we might be different if we had not collectively made the decision we did.

It seems that the primary reason for our revolt against the mother country was money.  We simply didn’t like being taxed, especially since we had no say in where those taxes would come from. Of course the other primary reason was probably the arrogance of a king and the nobles who depended on him for their lifestyles.  They saw America as a source for income and not much else. When that income started dwindling they just raised taxes even more.

Was this reason enough to go to war over? Like most wars our revolution was an ongoing thing. One thing led to another. The Boston massacre might have started it but then a tit for tat scrimmages escalated it.  Initially there was little thought of becoming an independent nation. We simply wanted to keep more of our income to ourselves instead of shipping it off to people we knew little about.

Even when the war became official with our “Declaration of Independence” barely half of us agreed with that document. Raising an army to go against the toughest in the world was by no means a sure thing.  But soon the you kill us and we will kill you mentality took over.

In the overall scheme of the world we are still a relatively new country. Less than three hundred years of existence where many are ten times that old.  Most countries have little or no idea about how they came about because they seem to have been always there.

What would have happened if we had not rebelled? A likely scenario would be Canada. Yes, they are independent of their mother country but did so by peaceful means about a hundred years later than us.

On my visits to our northern neighbors I have realized a basic difference between us and them. They, for the most part are much less belligerent than we are. They spend on the military about the same percentage as the rest of the world whereas we spend almost a hundred times more.  Is part of this aggressiveness on our part associated with our founding? Is our obsession with guns and the NRA part of it too?

Canada, who for the most part have the same lineage as us took a very different track to world affairs. Would we be more like them if we had not rushed to war in 1776?  That is an idea certainly interesting to ponder…

 

Clinton-Bush Fatique

2015-03-10_08-45-45Have you ever felt as if a mysterious black cloud of despair was rising from the great depths of the universe? That it was cresting over the horizons of your life, blotting out all sunlight as it closes in and paralyzes you in fear? And maybe you felt that this slow-motion tsunami of dread was a deserved punishment for you personally, and humanity in general. And you realized, as I have, that this unstoppable, groaning wave was a natural outgrowth of your own moral torpor — the listlessness you had demonstrated over and over again, allowing injustices, petty cruelties, and incompetence to extend their reign over everything you loved, until finally it crashed on you, plunging you into a darkness beyond the reach of light, hope, and redemption…. The inevitable Bush-Clinton presidential campaign is gathering itself along the horizon. It will be a boring, substance-less grind that turns on just which candidate’s operation can direct slightly more of the public’s disgust over the worst parts of the last two decades at the other candidate.

SOURCE:  Why a Clinton-Bush presidential race fills me with nothing but despair.

I remember a time, way back thirty years ago before President Reagan when there was not Clinton or Bush on the national scene. But for the last almost twenty years those two families seem to have dominated the news and as a result I have severe Clinton-Bush Fatigue. I am simply totally exhausted with all the vitriol ranting that has taken place in our country since these two families have been battling for the supreme Monarchy of the USA.  About two-hundred and fifty years ago we went to war to rid ourselves of a monarch and as far as I am concerned I don’t want to return to that state.

There is so much baggage surrounding these names that if they are nominated by the parties it will surely be the most dirty mud-slinging presidential election in our history. To me it would come down to which would cause the least harm to our country and right now that is probably a close call. Our country needs to get away from all this hatred surrounding us lately and Bush and Clinton are the source for much of it.  Surely the two parties can at least give us voters an alternative to these two but given that money pretty much controls all of our political processes now who becomes the candidates will probably be a done deal before we have our say.

Sadly because we have made running for public office such a rancid experience I’m not sure that any really qualified candidate can make it anymore or even want to make it for that matter. We are just stuck with the ones we get (sigh)… I hope not…

2015-03-10_08-53-13   2015-03-10_13-12-34

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