Why Do Costs Rise?

We have come to expect rising costs as the reason suppliers are charging us more for just about everything we purchase.

But we should look into the reasons and not take them as gospel without analysis.

What actually causes costs to rise?

The first thing we are told is the age old ‘Supply and Demand’ mantra of all ‘for profit’ businesses.

The ‘market conditions’ reason is a valid one.  But it’s sadly one that can easily be manipulated and ultimately confuse most consumers.

In our current world the forces of ‘supply and demand’ have become less of a real reason and much more of an excuse as corporations gather more profit with less expenditure.

Increased worker productivity caused by the fear of being laid off has made corporations lean and mean and hungry for more.

And together with a historically high unemployment rate, at least in longevity has given the greedy CEO a vast worker pool from which to choose his next nervous slave.

And speaking of the money made as a result of that increased productivity just where did it go?

Certainly not into salaries or new hires as unemployment has not really seen lower numbers for a long time.

So the extra cash is being funneled back into the pockets of the job non-creators!

As for a perfect example of price increases due to greed let’s do a quick review about the price of oil and gas.

In January 2009 the average price for a gallon of regular gasoline was $1.60. Today it hovers and fluctuates in the upper $3.60 range and has been as high as $5 in some regions with oil as high as $7.50!

That would be all well and good if the industry raking in the big bucks for their environmentally polluting product was at least paying taxes on their windfall profit but they are not.

And not only do they get a pass from the IRS they receive funding from our tax dollars in the form of congressionally approved subsidies.

To do what with you might ask?

We are told they need it for research and development or R&D.

Really?

I think Rape and Destroy would fit better in that industry.

And why use tax payer dollars when you are the most profitable industry in the history of mankind?

What they are doing with our money is researching new and improved ways of blocking the implementation of clean alternative energy.  They see the alternatives as a major threat to their profit margin.

They are correct!

But as long as they continue to own Congress and fund lobbyists who wine, dine and basically bribe our so-called leaders the World will not soon get out from under the murderous thumb of big oil.

And I am not even talking about the prolific oil spill damage these uncaring corporations are wantonly causing through neglect and sweetheart lax regulations.

So the increased prices consumers must pay for fossil fuels are not caused by a struggling industry just trying to stay afloat in a sea of oil spills and red tape governmental regulations but rather the greed of a few mega-millionaires at the top who are unsatisfied with their meager take home pay.

You see after getting used to a certain level of affluence the human spirit will always want more.  It is in our nature to exceed our current standing and succeed at whatever we choose to do.

A corporation will want more profit year after year and there should be nothing wrong with that.

But the way in which they go about this search for more almighty dollars has become vulgar.

There are only a few ways to realize a higher profit margin.

A company may:

1 - Cut costs by laying off workers

2 – Or by lowering benefits (assuming there are any)

3 – Or by cheapening the product, even further than you have done already

4 – Or by increasing the selling price.

But reality soon sets in and most if not all businesses will implement all four of the above suggestions.

Success for today’s ultra conservative business people is a larger piece of every pie.  And they feel entitled to this ever since they saw the banks get bailed out for their anti-social behavior.

So in conclusion, why do costs rise?

Actually the answer is, why not?

Nyah Nyah
Keep voting Republican

Until and unless big business is forced to play by any rules there is no hope of this trend ending.

If forced to answer the question what would they admit is the reason they raise the price of everything you need?

It’s BWC baby, Because We Can and you can’t stop us!

This is greed plain and simple and the financial rape of the very people they consider to be their customers.

And the evil frustrating ever increasing wealth gap this causes is growing as we speak and threatens to take down America as we know it, or rather knew it.

UNDERSTANDING DSP

Big business has always had many tactics to increase profits.  But little by little they have found a cool way to get blood from a stone and squeeze every last bit of moisture out of a dry sponge.  They don’t want you to notice until it’s too late.  I call this tactic Divide, Separate and Profit!

DSP is a simple thing really and I am surprised it took so long for the greedy bastards to completely espouse its use!  But now that they have it it is de rigueur in the business arena.

Here’s how it works:

Say you are in the home owners’ insurance business and you have maximized your client base.

You may get a few more suckers here and there but frankly the only way to keep making more profit is to expand that which you cover or insure. (I am leaving out the obvious way of merely denying al claims since that is business as usual.)

•        Step one, have some clever attorney or accountant hide in a room and comb over policies you write, including the tiny almost invisible small print.
•        Come up with some notable omissions.
•        Turn them into codicils to be sold as if new coverage.

This was done when suddenly every insurance company started to offer the homeowner flood insurance. Since then the flood of new ways to squeeze consumers hit the market.

It was always included before just not actually written as such.

For example other types of DSP already in existence are “Renters insurance” and coverage for “Off Premises Theft (OPT.)”

OPT makes me laugh because simple analyses will show what a fraud this one is!

Say you live on Long Island and your friend lives in Brooklyn and the two of you vacation TOGETHER in Ohio or anywhere other than New York.

Sadly while you both are out visiting the Rock and Roll HOF a burglar breaks into your hotel room and steals all your stuff.  Geico (personal experience) will not cover the possessions of the Brooklyn-ite but will do so for the Long Islander.

The reasoning behind this dichotomy is that Brooklyn has more crime than does Long Island. BUT NEITHER OF YOU WERE EVEN IN NEW YORK WHEN THE EVENT TOOK PLACE! THAT’S WHY IT’S CALLED OFF-PREMISES!!!

However throwing logic out as an argument to corporations or even people and especially those in the T-Potty is a waste of time.

Airlines started using DSP a few years ago.  We all encounter this bit of covert trickery when we check our luggage!

Some airlines now charge more for seats on the aisle; next to a window or near a bulkhead.

Pennies to Pee? S/B E-Z Pass

One brazen bunch of bastards even tried to tax toilet visits by charging you money to pee.

What could possibly be next, “Oh you wish to sit during the flight???”

Luggage may be a bit heavier than it should be and for that I can see a small surcharge.  So what about the man travelling without luggage who weighs in at 400 pounds?

Just Get Me There Alive!

Remember when the ads used to say “Getting there is half the fun?”  Now all we want is to have a tiny bit of comfort and arrive alive and close to on-time!

I fear the time when every single industry has this ala carte mentality for that which used to be bundled.

“What do you mean the shirt doesn't come with buttons?”

“Sir, you only rented a car and you did sign the agreement.  If you note in the small print the steering wheel is extra!”

“Of course you voted for me but now that I am here I must keep my job.  That means kowtowing to wealthy people only. Unless, wait, is that a wad of bribe money in your pocket or are just happy to see me?”

The country has been hi-jacked by big business and being held hostage by its puppets in Congress.  They have been working toward this moment for years and the current important DSP involves removing healthcare insurance FROM YOU!

Your move America.

REMEMBER IN NOVEMBER

REMEMBER EVERY NOVEMBER!

The 49 Staples

Several years ago, 98 to be exact a great thriller was penned and turned into a 1935 movie.  72 years later it became a Broadway play.

All three were called The 39 Steps.

On the screen it was directed by the great Alfred Hitchcock and starred, at the time equally great actor Robert Donat.

On the stage the thriller became a comedic mystery and ran for 4 years. (I saw it and enjoyed.)

All the above has absolutely nothing to do with the following blog post except for the similarity in names.

But both have a touch of the slight of hand necessary in any successful story, joke or movie.

In the business world it has always been important to keep a watchful eye on the bottom line.  After all it is, well the bottom line!

If your company does not make a profit and continue to do so it will eventually fail.

As a business owner you may use the rationale of cutting corners to save your company and thereby saving the jobs of your employees but truthfully there's a bit more selfish than selfless going around in that community these days.

And why not?

After all they started the business to make money and employees are merely tools to help them do just that.

One way companies turn a profit is offering something the public wants and can afford.

Another way to have a healthy bottom line is to make sure costs are kept in line.

And still another is to get the cheapest labor available and pay them less than they deserve while charging them for any benefit still offered and pushing any healthcare costs onto their backs.  And should they complain, well as long as the unemployment numbers are favorable you can always find someone else!

The wave of the future, make that the now in the business world is to stop chipping in on any pension or 401K retirement plan.

They are also dropping any spousal or family coverage from health insurance plans.

Some companies are even watching what their employees eat and quietly demanding they make healthier choices.  They are not doing this out of any concern for the employee but rather to lower costs on insurance as required by their actuarial bean counters and pencil pushers.

And finally we get down to the minutia or mind bending mindless micro managing mania most businesses are getting into so as to maximize perceived profit.

The tools of the trade must be protected and employees must account for everything they use.

I have spoken with and listened to workers who have slowly been struck by this trend and in order to do their jobs some must:

* Bring in their own pens.

* One gentleman told me he steals pens from a bank because his company no longer supplies them and he doesn't have that many at home.

* Sign requisitions for any supplies including pens, post-its and legal writing pads.  This from a legal secretary!! 

* Bring in your own monitor and keyboard because the only one the company would supply is filthy and disgusting and in need of tossing out of a very high window. This from a new salesman in the company.

* Use the back sides of every sheet of used paper that comes out of the printer rather than a new sheet.  Of course this means you better know which side of the sheet is the important one.  You have to stop and date each side and cross out the old items after use.

What these businesses are missing is the proverbial forest in and among those trees they make believe they are trying to save.

Productivity suffers when tools of your trade are inferior or hard to use or your employees have to worry about how many pens they need per month.

So finally would you like to get back to the title of this post and its relevance with the body?

Funny you should ask!

A stapler being used to attach tickets to our product ran out and I was asked to get replacements.

Count how many & win a prize?

I visited our supply lady and her reply was:

“How many?”

“Excuse me?” I said shaking my head.  “Uh, 49!  Just give me some please.” 

She opened the box took out a strip.

I grabbed it.

I believe there are 210 staples per row and I was not going to wait around for her to count!

There is no Hitchcock-like mystery here.

What’s going on is the simple insidious re-education of Americans who ‘don’t have’ by those who do in how to help the wealthy make and keep more money!

Corporate profit above people’s lives, livelihoods, and sanity has become a staple of nearly every industry.

And it’s being done one step at a time.

Corporate Baggage

Airlines will make around $3B more this year charging for bags. This is a revenue stream that did not exist before deregulation of the industry and another example of a ‘BWC’ fee. That stands for my ‘Because We Can’ invention that covers every raise or surcharge or rate increase the public is forced to endure while the raisers of those costs reap ever increasing profits for ever decreasing services merely, well because they can.  Who's going to stop them?

Gold Mine for Airlines

I don’t have the exact figure on how much the airlines pay baggage handlers whose numbers have dwindled due to corporate cost analyses but I am willing to bet they don’t share in the windfall.
The airlines will say that the increase in fuel costs caused their increase in fees but the numbers don’t completely add up and even if they did why hide the fare increase?

Telling a traveler that he has to pay extra to carry some luggage is like selling a car and then asking the buyer if he’d like a steering wheel with his purchase.

But airlines are not the only culprit in this corporate scheme to milk humans out of every remaining penny they have.

Anyone alive on Long Island is well aware of the inept Long Island Rail Road and it's ever increasing fares to complement their ever decreasing level of service or competence.

Note that the railroad considers its trains to be on time if they are only 5.9 minutes late!
Most riders would not 5.9 minutes late as on-time but rather a miracle!

But I digress.

A quick check into the business world reveals that most corporations have amassed unprecedented and record profits; cash cushions of nearly unimaginable amounts all while claiming that the current administration in DC has left them with a terrible feeling of uncertainty that is causing them to NOT hire new workers.

Does not knowing if you will triple your profits rather than merely doubling them next year constitute an uncertainty?

This absurd rationalization pervades every corner of every industry and threatens to eradicate the middle class completely.

But while I and many others write about the path we’re on nobody seems to have a solution.

One reason is that a major political party doesn't see the above AS a problem to be fixed.

The Republicans feel that the business world and the banks in particular should not be regulated at all, or if so we should allow them to self regulate.

Millions of potholes nationwide

Sounds like Mr. Romney’s call for illegal aliens to self-deport and equally as naive.

One possible solution to the job loss in America is right under our noses or rather under our feet.

Suddenly not an uncommon thing

Our nation’s infrastructure (a word former President Bush had trouble even saying) is crumbling. A no-brainer (The fix, not him although...) would be to start hiring workers nation-wide to save our streets, and highways, and bridges, and on and on.

Disaster on the clock!

The amount of architects and planners alone would take a chunk out of the unemployment numbers and therein is the problem.

Allowing anything to help the economy while the right wing controls the purse strings of the House and President Obama is still in office is anathema.

To paraphrase Senator McJowls, aka Mitch McConnell, an elected official sworn to help America in return for a huge undeserved salary; free health care; retirement funds for himself and family and exceptional perks far beyond his worth, “We simply cannot give this pretender a win.”

So there goes infrastructure repair!

And with it any hope of fixing America.

But I am not just talking about the roads anymore.  Now I speak of the entire experiment that is America.

One political party gets their marching orders only from the wealthiest of the country. They have now brazenly taken to fixing elections so even when the masses rise up against their terroristic-like tactics it will not be enough since their votes will not be counted.

And many on the right feel that is as it should be.  "The poor made their own beds and chose to be poor so their votes should not count!"

Never happen till Congress
finds out how to give
Exxon the profits

It is the ruling class that will decide when and where workers will be hired and what those workers should do.

There are many public works programs and ideas such as alternative energy as a way to ensure that the world as we know it will still exist in 50 years that are being blocked by the ruling class and their puppets in Congress.

They will not give in unless and until we bow to their superior intellect and allow them to reap any profits from any new industry.
We are now used to paying for luggage when we fly but until we divest ourselves of the evil and brain-dead, dead weight baggage in Congress we will never get anywhere!

I hope this is not just a
Pie in the Sky.

A Modest Proposal

Peter Goldmark of Newsday is a former budget director of NYS & former publisher of the International Herald Tribune. He headed the climate program at the Environmental Defense Fund.

On August 19th and repeated in today's Sunday Newsday he wrote an OpEd putting forth a few "modest" ideas to straighten out the country.

He invited readers to send in their thoughts via email and he promised to read and respond to all.

That might be a tall order given the amount of angst in New York, let alone America.

I guess it's not a surprise that I offered my opinion, naturally, in the hopes that someone, somehow, somewhere will start to listen to those of who make less than a few million dollars a month!

Hi Peter,

Thanks for offering to listen to those who read & listen to you.

I almost do not know where to begin – Almost.

First and foremost we must restore confidence in America and self esteem in Americans. And when I say Americans I am speaking of the vast but dwindling middle class.

You are absolutely correct on all your points and I wish to add a couple of finer points to the list.

I realize there is no single project, no silver bullet to kill all that ails us as a country but one area that is definitely a win-win is infrastructure repair.

The nation’s bridges and roads are deteriorating at an embarrassing rate and putting people to work repairing them is a no-brainer. Sadly many of the politicians on one side of the aisle ARE no-brainers as they refuse to allow any movement that could be seen as a plus for the President.

If we do get to move on infrastructure I wish to add a new project to the mix:

When we built our National Highway System it became a model for the rest of the world to point to. We should use our ingenuity to now plan and build a similar system, not for vehicles but for water.

How often do we see terrible flooding in one part of the country while others are literally praying for rain? (I couldn’t resist a little dig at Mr. Rick Perry.)

This National Water Main system would funnel water away from flood ravaged areas and send it to places in dire need of the precious liquid.

The project would create jobs for tens of thousands and ongoing careers maintaining the structures for ages to come.

And it could even have the extra added benefit of producing hydro-electric energy as the water is moved around the country.

As for so-called entitlements I guess reform is absolutely necessary but certainly not as necessary as tax reform.

The wealthy who have contributed much to the problem in America and very little to the solution should look to Mr. Warren Buffet, no slouch he when it comes to money. We should agree with him as he asks why he is paying so little toward his fair share of tax revenue.

Incentives for state and local governments are nice and should always be looked into. But how do we ask the local municipalities to do that which the nation refuses to do?

But many years ago and for five consecutive years I was the President of the Home Fashion Products Assn. During one of my many speeches in the 1990s I warned that our nation was headed for terrible times as we continue to send jobs overseas.

I warned that we would become a third world nation unless DC started to place tariffs on products manufactured by cheap foreign labor.

I also admitted that we could not blame any CEO for trading highly paid and skilled workers in America for ‘who cares, they’re cheap’ labor in Asia since if they did not do so while their competitors did their businesses would fail.

My laundry list is much longer than I note here but I must stop somewhere.

But unless and until I see a willingness in Congress to tackle ANY of our problems I fear we will be airing our dirty laundry in public for many years to come.

Cordially,

I don't expect to get an actual reply from Mr. Goldmark but I wouldn't mind hearing from any of you.  Am I off the mark or am I striking Gold?

If he replies I'll post it here.