© Lowerkase | Dreamstime.com

MUDGE’s Musings

Went after everyone’s favorite hateful big business, Wal-Mart, a couple of posts ago, as we explored their ham-fisted attempts at influencing presidential election politics.

Slate’s Daniel Gross, whom after all gets paid to write these things, did a nice job exploring the issue (but yr [justifiably] humble svt was there with typically cogent commentary the previous evening, thank you very much; my son sent me the Journal story well after I had harvested it into WindowsLiveWriter, in preparation for the post. Just setting the record straight! ).

Lately, we’ve become intrigued as we learn that the mechanism that allows Wal-Mart to be Wal-Mart…

After all, these are the guys who have rolled back prices so relentlessly that they’ve rolled up entire industries and sent the jobs and our treasure to China, at the expense of zillions of decent paying blue collar jobs in the U.S.

… globalism, is under ferocious attack.

Shipping Costs Start to Crimp Globalization

By LARRY ROHTER | Published: August 3, 2008

…. Cheap oil, the lubricant of quick, inexpensive transportation links across the world, may not return anytime soon, upsetting the logic of diffuse global supply chains that treat geography as a footnote in the pursuit of lower wages. Rising concern about global warming, the reaction against lost jobs in rich countries, worries about food safety and security, and the collapse of world trade talks in Geneva last week also signal that political and environmental concerns may make the calculus of globalization far more complex.

“If we think about the Wal-Mart model, it is incredibly fuel-intensive at every stage, and at every one of those stages we are now seeing an inflation of the costs for boats, trucks, cars,” said Naomi Klein, the author of “The Shock Doctrine: The Rise of Disaster Capitalism.”

All of that consumer stuff that packs the shelves of Wal-Mart, and, to be fair, its competition, and all of the so-called big box stores: the toys, the apparel, the electronics and decorative accent pieces for your great room; all that stuff got to Wal-Mart in 40-foot shipping containers.

Containers loaded in a teeming factory near Shanghai (or, 100 other industrial centers in China), trucked to a gigantic container port, loaded aboard huge ships filled from hull to high on the deck with identical 40-foot boxes, and sent sailing off to Long Beach, or Tacoma, or Norfolk, or Elizabeth, NJ, where the containers were unloaded onto railcars for express shipment inland, or onto heavy trucks for local warehouses.

Very fuel-intensive. And oil doesn’t cost $10/barrel anymore, nor will it ever.

The cost of shipping a 40-foot container from Shanghai to the United States has risen to $8,000, compared with $3,000 early in the decade, according to a recent study of transportation costs. Big container ships, the pack mules of the 21st-century economy, have shaved their top speed by nearly 20 percent to save on fuel costs, substantially slowing shipping times.

The study, published in May by the Canadian investment bank CIBC World Markets, calculates that the recent surge in shipping costs is on average the equivalent of a 9 percent tariff on trade. “The cost of moving goods, not the cost of tariffs, is the largest barrier to global trade today,” the report concluded, and as a result “has effectively offset all the trade liberalization efforts of the last three decades.”

Shipping Costs Start to Crimp Globalization – NYTimes.com

Globalization won’t go aground because of fuel costs, but some of the oddities of foreign trade, like shipping timber to China to be made into furniture and promptly shipped back, are already beginning to be replaced by Chinese-owned furniture manufacturers in the U.S., a reflection of the cheap dollar, as well as the costly petroleum barrel.

Thus, world trade may be subsiding into regional trade, not necessarily a good development for the U.S., as always a strong source of commodities but whose industrial base has been eviscerated by the rapacious, red-neck buyers at Wal-Mart, and the poor product line choices made for the past 20 years by General Motors and its ilk.

This post is illustrated by a container ship, because they embody for me the modern romance of the sea. Many such ships have a global schedule: for example, dropping off and picking up containers in Long Beach, through the Panama Canal (if they fit!) to New Orleans, to Baltimore, to Rotterdam, to Barcelona, to Ashdod, through the Suez Canal (if they fit!) to Dubai, to Hong Kong, Singapore, Sydney, and back to Long Beach, to begin the cycle all over again. Only in this new world of $125/barrel petroleum, it’s going to take 20% longer.

And, perhaps that 50-inch high definition television you’ve been counting on Wal-Mart to roll back to a price you finally find approachable, perhaps it’s not going to get down to that price, as the cost of shipping it from central China climbs precipitously to reflect the climbing price of oil, and the declining value of the dollar.

Actually, courtesy of my temporarily (oh, God, we hope it’s temporary!) returned younger son, we have such a high definition television, a few years old and not ever state of the art, in our family room (only right — we paid for it!).

But, here I am in the home office, blogging and catching my White Sox on a 13-inch low def CRT television. Priorities.

And, I still won’t set foot in a Wal-Mart.

It’s it for now. Thanks,

–MUDGE

© John Leaver | Dreamstime.com

MUDGE’s Musings

Used to be, if you were annoyed by the antics of big business, you’d pick on General Motors, world’s biggest, most arrogant, automobile manufacturer.

Difficult to be anything but sorry for GM these days, as they Hummer their way into business oblivion.

No, these days if you want to vent your spleen regarding unpleasant aspects of big business, Wal-Mart is your most appropriate target.

After all, these are the guys who have rolled back prices so relentlessly that they’ve rolled up entire industries and sent the jobs and our treasure to China, at the expense of zillions of decent paying blue collar jobs in the U.S.

And, as an employer, they are infamous for poor pay, are niggardly with benefits, and have fought an equally relentless battle against unionization, lest their workers have any real means of changing their working conditions.

Those friendly greeters? Just minimum wage retirees who are really posted at the door not to smile weakly at you, but rather to make sure that shoplifters exiting the store are caught.

Just to be certain that their own underpaid and cowed staff stays that way, they have begun a campaign, documented by the Wall Street Journal, no less, to warn their managers and supervisors that a prospective Democratic presidential administration endangers Wal-Mart’s non-union status.

Wal-Mart Warns of Democratic Win

By ANN ZIMMERMAN and KRIS MAHER | August 1, 2008; Page A1

Wal-Mart Stores Inc. is mobilizing its store managers and department supervisors around the country to warn that if Democrats win power in November, they’ll likely change federal law to make it easier for workers to unionize companies — including Wal-Mart.

In recent weeks, thousands of Wal-Mart store managers and department heads have been summoned to mandatory meetings at which the retailer stresses the downside for workers if stores were to be unionized.

According to about a dozen Wal-Mart employees who attended such meetings in seven states, Wal-Mart executives claim that employees at unionized stores would have to pay hefty union dues while getting nothing in return, and may have to go on strike without compensation. Also, unionization could mean fewer jobs as labor costs rise.

Wal-Mart is far from the only employer that opposes the Employee Free Choice Act (co-sponsored, by the way, by a certain junior senator from Illinois), but as the largest private employer in the U.S. they certainly have the most to lose, and that largest body of private employees in the U.S. has the most to gain.

Wal-Mart’s worries center on a piece of legislation known as the Employee Free Choice Act, which companies say would enable unions to quickly add millions of new members. “We believe EFCA is a bad bill and we have been on record as opposing it for some time,” Mr. Tovar said. “We feel educating our associates about the bill is the right thing to do.”

By “educating” managers, who are salaried, Wal-Mart is obeying the letter of Federal election laws. When they harangue supervisors, who are hourly, they might be in violation.

Wal-Mart Warns of Democratic Win – WSJ.com

As a resident of a major metropolitan area, I was able to resist the temptation to shop the Wal-Mart experience until just a few years ago, when they completed their mission of sucking the life out of countless rural Main Streets, and had no choice but venture into the evil big city in order to maintain their growth targets.

Thus, I only have set foot in a Wal-Mart store a couple of times over the years, and in their warehouse operation, Sam’s Club, a few more (since that one opened less than a mile from home some years ago), but I find them depressing and dispirited places to do business, and I simply will no longer do business at either.

Their competition for general merchandise, Target, is by way of contrast, a far more cheerful environment, both in the look of the stores, and the demeanor of its employees.

Costco, their warehouse club competition, runs rings around them. Business Week stated years ago that this was easy to explain: Costco pays their workers more (more than double), but gets far more productivity from those well compensated and well trained employees than does Wal-Mart from their poorly paid and trained workers. [As a confirmed shopaholic, I could visit Costco almost daily. My long suffering wife sees that I don't.]

Perhaps Wal-Mart shouldn’t fight so hard against unionization; as their competition has discovered, paying well, and training thoroughly makes for a happier, more productive workplace.

Meanwhile, the government might want to check into the propriety of a corporation electioneering its hourly workers. Oh, wait, George III’s government wouldn’t dream of intervening on the side of the law, if it might be politically disadvantageous to do so.

Wal-Mart is correct: a Democratic presidency might mean some trouble for their take no prisoners human resources practices.

That couldn’t happen to a more deserving bunch of redneck creeps.

It’s it for now. Thanks,

–MUDGE

We embark this weekend on a business trip to a conference in Boston. As conferences usually take up a great deal of uptime, without the downtime associated with a normal schedule, we will probably cover many of our daily blogging deadlines with Blasts from the Past!

The conference itself, designed to illuminate the social networking phenomena in the context of business and corporate conduct, may provide the opportunity to blog, as blogging in the corporate environment is one of its key topics. So we may be able to mix business interests and responsibilities with our avocation in this space. Should be interesting!

There’s most read, and then there’s favorite. This is a post which yr (justifiably) humble svt is, regrettably, but not regretfully, not at all humble about.

Blast from the Past!

A post we really, really loved to write, and read, and re-read…

From last summer, originally posted September 10, 2007 and originally titled “China – Two interesting aspects”.

MUDGE’S Musings

China is always in the news. Two stories from the past few days illuminate why in some interesting ways.

First, from the LA Times, a look at how we have become victim’s of our unlimited appetite for everyday low prices.

Analysts expect prices in the U.S. to creep up as safety standards are reevaluated. Buyers and retailers may share the impact.

By Don Lee and Abigail Goldman
Los Angeles Times Staff Writers
September 9, 2007

SHANGHAI — Get ready for a new Chinese export: higher prices.

For years, American consumers have enjoyed falling prices for goods made in China thanks to relentless cost cutting by retailers such as Wal-Mart and Target.

But the spate of product recalls in recent months — Mattel announced another last week — has exposed deep fault lines in Chinese manufacturing. Manufacturers and analysts say some of the quality breakdowns are a result of financially strapped factories substituting materials or taking other shortcuts to cover higher operating costs.

Now, retailers that had largely dismissed Chinese suppliers’ complaints about the soaring cost of wages, energy and raw materials are preparing to pay manufacturers more to ensure better quality. By doing so, they hope to prevent recalls that hurt their bottom lines and reputations. But those added costs — on a host of items that include toys and frozen fish — mean either lower profits for retailers or higher prices for consumers.

“For American consumers, this big China sale over the last 20 years is over,” said Andy Xie, former Asia economist for Morgan Stanley, who works independently in Shanghai. “China’s cost is going up. They need to get used to it.”

The low hanging fruit of lowest prices for decent quality has run into a rising standard of living in China, and the results have been ugly.

The bulk of the world’s toys are made in southeastern China, where wages have shot up in the last couple of years amid greater competition for workers and increases in minimum wages and living costs. Booming demand has pushed up commodity prices. The appreciation of the Chinese yuan, up 9% against the dollar in the last two years, also has hurt some factories, as they are paid in dollars.

Follow the link to the rest of the story, reported from Shanghai.

[Per L-HC's reformed process, please click the link below for the complete article -- but then please come on back!]

Los Angeles Times: Fixing Chinese goods will be costly

So, what with rising wages, increases in commodity prices, the unexpected new costs of safety inspections, prices for toys, tilapia, luggage, and an entire big box store full of consumer necessities (and not so) will go up.

So, now let’s turn to the other side of the consumer equation, courtesy of the always perceptive Daniel Gross of Slate.

Pundits bemoan our trade deficit with China. But those container ships aren’t heading home empty.

By Daniel Gross
Posted Saturday, Sept. 8, 2007, at 7:59 AM ET

Economists make a big deal out of all the junk we import from China: tainted pet food, lead-laced toys, and enough cheap plastic tchotchkes to load up a landfill the size of Montana. And American industries are clearly being drenched by the rising tide of Chinese imports, which totaled $288 billion in 2006. But as imports from China loudly rise, American exports to China are quietly rising at an even more rapid pace. Would it surprise you to learn that a lot of those exports are … junk?

In an act of macroeconomic karma, materials thrown out by Americans—broken-down auto bodies, old screws and nails, paper—accounted for $6.7 billion in exports to China in 2006, second only to aerospace products. Junkyards may conjure up images of Fred Sanford’s ratty collection of castoffs. But these days, scrap dealers are part of a $65 billion industry that employs 50,000 people, who together constitute a significant arc of a virtuous circle. The demand of China’s factory bosses for junk—which they recycle to make all the junk Americans buy from China—creates jobs, tamps down the growth of the trade deficit, and might help save the planet.

Exports to China second only to aerospace products? Junk?

And this is a good story for all of you greens out there (MUDGE is always happy to assist his environmentally sensitive fellow citizens. Feel free to use yesterday’s post to wrap fish.):

The booming China trade isn’t simply good news for shareholders of Metal Management, whose stock is up 67 percent in the past year. It’s good news for tree-huggers. Every scrap of scrap put on a slow boat to China is one less scrap that winds up in a landfill or an incinerator. Asia’s insatiable demand for scrap has boosted prices, thus encouraging companies to suck more reusable junk out of garbage piles.

An interesting twist, eh? The imbalance is less so. That’s always good news.

Take a look:

[Per L-HC's reformed process, please click the link below for the complete article -- but then please come on back!]

The junk we send to China. – By Daniel Gross – Slate Magazine

A couple of things about this story are intriguing.

1) The story refers to corrugated paper, a key element of MUDGE’s once family business. $130 ton for scrap corrugated boxes (the brown shipping containers everything wears to market) is an astounding price.

2) The idea of sending scrap overseas resonates in a slightly unpleasant way with us ancient curmudgeons. MUDGE was born after WWII (believe it or not!), but the lessons of that conflict were fresh.

In the years before Pearl Harbor projected the U.S. belatedly into a conflict that had started up in Asia in the early Thirties, scrap iron and steel in massive quantities made its way across the Pacific to, wait for it, Japan.

It was a bitter realization that many of those junked Model T’s and scrapped steam heating radiators were sent back to our combatants as Japanese aircraft and ships and bombs.

Is it too paranoid to make an association with cheerfully sending our scrap to a rapidly arming and increasingly assertive about its global destiny China?

So, two interesting China stories, one from each container port.

And did you catch the punch line from the LA Times piece?

Meanwhile, Skyway is gearing up to open a factory this fall in Vietnam, where wages are lower.

“I think the consumer will not accept the full impact of price increases from China,” Wilhoit said. “We’re going to have to do things differently, like Vietnam, to get the same quality stuff on the shelf and make money.”

The mind boggles.

It’s it for now. Thanks,

–MUDGE

There’s most read, and then there’s favorite. This is a post which yr (justifiably) humble svt is, regrettably, but not regretfully, not at all humble about.

Blast from the Past!

A post we really, really loved to write, and read, and re-read…

From last summer, originally posted September 4, 2007, and originally titled “Attack of the Wal-Mart-istas”.

MUDGE’S Musings

I remain in a perpetual state of astonishment at the depth and breadth of simply fascinating commentary one finds on the web.

Here’s a wonderful entry from a newer member of the blogroll:

Maybe I stayed in the news business for too long after my radiation badge turned red. Maybe I’m suffering from Post-traumatic, Restless News Syndrome, or something. But I have this notion stuck in my head lately. It’s kind of like when I get an annoying tune stuck in my head, this notion pops up and up again, especially after I read the news.

Okay so, at the risk of exposing myself as the nut I have always secretly suspected I would someday be proven to be, here it is – my notion:

How long before before they get it? It can’t be far off. So when will day arrive when America’s once vibrant and hyper-patriotic working class wakes up and realizes they’re at the receiving end of one of the greatest screwings in human history? And then, rather than reaching for their car keys to rush off to their second low-paying job of the day, they reach instead for one of their many guns.”

Okay, this is Stephen Pizzo. He seems the real deal, an investigative journalist of the highest caliber, so to speak. We collected an earlier post of his last week, and just haven’t gotten around to working it. This one will do, however.

The man writes like I wish I could (WIWICWLT), and makes connections of disparate facts (purportedly a MUDGE specialty) that I’m frankly jealous of.

So, here’s his thesis:

US Most Armed Country With 90 Guns Per 100 People

A Sobering Census Report: Americans’ Meager Income Gains

Wealth gap widens

The U.S. today – an oligarchy with inequality growing worse

Fortress America
: Gated Communities in the United States
Brookings Institution: Americans are electing to live behind walls with active security mechanisms to prevent intrusion into their private domains

Okay, enough quoting (don’t want to violate any copyrights). Just read this, please:

[Per L-HC's reformed process, please click the link below for the complete article -- but then please come on back!]

News For Real

So, did you get to the punch-line?

Which brings me back to that first story.. the one about how many guns are out there. Who do you figure holds most of those privately owned firearms? I’d wager that 99.9% of them are owned by working stiffs. Ironic, isn’t it? For decades conservative politicians have stroked working class voters into a trance with Second Amendment chants. After all, they insinuated, when the commies came, who will fight them off? Well all those patriotic, semi-automatic toting Joe and Jane Sixpacks out there, of course.

I wonder if those right wingers might be having second thoughts about that strategy? After all, millions of those now-well armed Joe and Jane Sixpack are suddenly struggling with entirely non-commie-generated problems

Problems? A horrifyingly costly and increasingly pointless set of wars in the Middle East. Mortgage defaults. Credit cards maxxed out. Crumbling infrastructure that’s been killing people. Wal-Mart reporting to the investment analysts that “clearly our customers are running out of money…,”

And, Pizzo’s logical conclusion?

In the short term those walls and gates may keep the riffraff at a distance. But I doubt they’ll do much good when those millions of Wallmarters grab the guns they bought dirt-cheap at WallMart and turn into angry Walmartatistas.

Wow!

Pizzo’s thesis is closely reasoned. Impeccable quotations and statistics. Exaggeration? Maybe a little. But…

Is this person paranoid? Of course; but, shouldn’t we all be?

I’m simultaneously glad I found this story, and very disturbed also. Aren’t you?

It’s it for now. Thanks,

–MUDGE

Always useful, and often picking up on trends little noticed elsewhere, The Economist, best magazine on the planet, is at its typical best describing China’s massive infrastructure boom.

China’s infrastructure splurge

Rushing on by road, rail and air

Feb 14th 2008 | BEIJING | From The Economist print edition

China’s race to build roads, railways and airports speeds ahead. Democracy, says an official, would sacrifice efficiency

“IT’S like approaching the Forbidden City, it’s absolutely incredible.” The adjective is one that Mouzhan Majidi, chief executive of Foster + Partners, liberally attaches to Beijing’s new airport terminal, designed by his British firm. The world’s largest, designed in the gently sinuous form of a Chinese dragon, it was planned and built in four years by an army of 50,000 workers. “The columns on the outside are red and you see them marching for miles and miles,” says Mr Majidi.

A little hyperbole is understandable. The terminal is 3km (1.8 miles) long. The floor space is 17% bigger than all the terminals at London’s Heathrow combined (including about-to-open Terminal Five). Chinese officials like the Forbidden City analogy. Just as the towering vermilion walls and golden roofs of the imperial palace inspire visitors with awe, China wants its golden-roofed terminal to impress those arriving for the Olympic games in August. Part of a $3.8 billion expansion, which included the opening of a third runway in October, it is due to open on February 29th, weeks ahead of schedule.

The numbers are mind-bending. Beijing’s airport is now the ninth busiest in the world. The longest sea-crossing bridge: 36km (22+ miles), six-lanes, between Shanghai and Ningbo (anyone else never hear before of Ningbo, much less that it’s important enough to build the longest bridge in the world to get there?).

A bullet train line line, 1,300km long (MUDGE’s handy metrification card helps me convert that to nearly 808 miles) will halve the rail time from Beijing to Shanghai to five hours, competitive to flying.

Conventional rail lines are expanding at an enormous rate, bigger than any country’s since the nineteenth century. And they need to, as at present they carry 25% of the planet’s rail traffic on just 6% of its length.

How is this happening so quickly? The Economist discusses the fact that the government makes a decision and acts.

Land gets confiscated (the government owns it all, right?), villagers are uprooted without compensation, noise and other environmental pollution grows apace, but no one in government is letting that slow things down. That Beijing air terminal was built in the same length of time that the British took just to have hearings about one new building at Heathrow. Hearings, not construction.

Xu Li, an official at the Ministry of Communications’ transport research institute, agrees that China’s infrastructure expansion is not as restrained by rules as it is in America. Once a plan is made, it is executed. “Democracy”, she says, “sacrifices efficiency.”

[Please click the link below for the complete article -- but then please come on back!]

China’s infrastructure splurge | Rushing on by road, rail and air | Economist.com

What the story does not spend time on is where the funds for this lavish infrastructure spending spree has come from.

It’s you, Wal-Mart shopper (and let’s face it, Target shopper, Best Buy shopper, Home Depot shopper, et nauseam).

All the big box stores only can fill those big boxes with the “affordable” merchandise the U.S. consumer has convinced herself she can’t live without because they’re paying for said goods to their Chinese vendors.

So, guess the good news is that, with the highways, rail lines, bridges and new airports (10 more with 30million passenger capacity by 2020!), your retail treasures will arrive even more promptly.

It’s only right. You’re financing China’s infrastructure growth, along with the dictatorship that sponsors it.

Ain’t capitalism grand?

The Asian Century, indeed.

It’s it for now. Thanks,

–MUDGE

Share this post :

del.icio.us it!

digg it!

reddit!

technorati!

yahoo!

It’s a big target (as it were): Wal-Mart. The 800-lb. retailing gorilla that everyone (in a blue state) loves to hate.

This nanocorner of the ‘Sphere© has done its share of W-M disparagement: a tongue not-so-deep in cheek look at Wal-Mart’s function as armory to the red state militia; a look at rising prices in China, Wal-Mart’s sweatshop of choice; Wal-Mart’s key role in the rise of the compact fluorescent bulb; and most recently, a casual backhand at Wal-Mart in the context of another (supposed) 800-lb. gorilla in its business, Starbucks.

But, the NYTimes has detected a change, in a corporation previously known for its penny-pinching ways where employees and their pay and (almost non-existent) health benefits are concerned,

For decades, Wal-Mart was associated with low wages, skimpy health insurance coverage and poor treatment of workers — and not without reason. An internal memorandum in 2005 showed that though Wal-Mart earned $10 billion a year, 46 percent of its workers’ children were uninsured or on Medicaid.

…and whose growth model has been, in the ineffable prose of yr (justifiably) humble svt: “…in the manner of Wal-Mart (which has for all of its over 40 years eviscerated locally owned Main Street stores wherever they open)…”

Wal-Mart: The New Washington

By MICHAEL BARBARO | Published: February 3, 2008

OBAMA, Clinton, McCain, Romney … Wal-Mart?

The nation’s largest private employer sure sounds like it’s running for president these days.

It’s making sweeping commitments to reduce America’s energy use and improve its health care system. It’s obsessively polling voters, boasting of a higher favorability rating than Congress. It’s even touting an “economic stimulus plan for American shoppers” in the form of steep price cuts made last week. (Four 12-packs of Pepsi? $10.)

That last one may be slightly tongue in cheek — even discount retailers have a sense of humor — but the bigger message is not: after years of running afoul of the United States government on labor and environmental issues, Wal-Mart now aspires to be like the government, bursting through political logjams and offering big-picture solutions to intractable problems.

As the federal government debates how to wean the country from its addiction to oil, Wal-Mart just announced it would require suppliers to make major appliances that use 25 percent less energy within the next three years.

A stunning change. Imagine, maybe one can get better productivity from employees who can afford health insurance coverage for their children. Imagine, one can do well by doing good.

A new concept for the pirates of Bentonville, Arkansas, which looks to be finally beginning to initiate the process of starting to think seriously about pulling its weight as a corporate citizen of the nation that bore it.

[Please click the link below for the complete article -- but then please come on back!]

Wal-Mart: The New Washington – New York Times

Wal-Mart points with pride that they have a higher (by far) approval rating than our current President, and Congress.

A very low bar to scale.

They’ve a long way to go before this blue-state citizen will set foot in one of their relentlessly downscale stores again (even though there’s a Sam’s Club less than a mile away, the MUDGE household cheerfully drives a mile in the other direction to Target, or even 10 miles further to Costco; there is no comparison).

But, the effort has been noted. And with their size, and their reach, even small progress means a better deal for its employees, and its home country.

It’s it for now. Thanks,

–MUDGE

Share this post :

del.icio.us it!

digg it!

reddit!

technorati!

yahoo!

Before Starbucks, yr (justifiably) humble svt never set foot in a coffeehouse. Especially in MUDGE’s college town, coffeehouses were scruffy places filled with scruffy grad student types, and not tremendously inviting as a result.

Then along came Big Green. Absolutely not scruffy. Took a while to learn the slightly twee lingo; still not entirely comfortable ordering my “5-shot venti Americano,” but I do, pretty regularly, and I am a coffeehouse convert as a result. Although, mainly Starbucks.

It’s a phenomenon of retailing: their stores have sprouted everywhere; in many big cities it’s not inconceivable to pass several while walking from one’s parking space to one’s downtown destination. Sometimes they’re even across the street from each other.

So, I always imagined that the invasion of Starbucks into an area meant that smaller chains, like Peet’s and Caribou, and locally owned independent shops, were a rapidly disappearing endangered species.

A recent story in Slate.com set me straight:

Don’t Fear Starbucks

Why the franchise actually helps mom and pop coffeehouses.

By Taylor Clark | Posted Friday, Dec. 28, 2007, at 7:35 AM ET

The first time Herb Hyman spoke with the rep from Starbucks, in 1991, the life of his small business flashed before his eyes. For three decades, Hyman’s handful of Coffee Bean & Tea Leaf stores had been filling the caffeine needs of Los Angeles locals and the Hollywood elite: Johnny Carson had his own blend there; Jacques Cousteau arranged to have Hyman’s coffee care packages meet his ship at ports around the world; and Dirty Dozen leading man Lee Marvin often worked behind the counter with Hyman for fun. But when the word came down that the rising Seattle coffee juggernaut was plotting its raid on Los Angeles, Hyman feared his life’s work would be trampled underfoot. Starbucks even promised as much. “They just flat-out said, ‘If you don’t sell out to us, we’re going to surround your stores,’ ” Hyman recalled. “And lo and behold, that’s what happened—and it was the best thing that ever happened to us.”

Sure enough, when I began to think about it, I realized that, while Starbucks was expanding from the one store in the center of our town, to the five or six today, at least one of which has a drive-through window, there are more non-Starbucks coffeehouses in town than ever before, many of them having opened and are still open after Starbucks started to sprout like dandelions in our suburban lawns.

So what’s happened is, rather than clobber the independents and the smaller chains, in the manner of Wal-Mart (which has for all of its over 40 years eviscerated locally owned Main Street stores wherever they open) Starbucks has simply increased the market for everyone.

It’s the law of unintended consequences at its best, because they’d like nothing better than to squash their competition. Instead, Starbucks has built their own business big time, and made the world safe for coffee drinkers and smaller shops everywhere.

[Please click the link below for the complete article -- but then please come on back!]

Why Starbucks actually helps mom and pop coffeehouses. – By Taylor Clark – Slate Magazine

Some caffeinated observations:

• The most expensive short-term job I ever had was located in a downtown Chicago office building with, what else? a Starbucks in the lobby. Finished the three-month gig with seemingly less money than I started with!
• Many members of MUDGE’s immediate family do not share his preference for Starbucks; most call it too strong or bitter, preferring, interestingly enough, Dunkin’ Donuts, for example. I find that particular coffee okay but bland.
• An example of a thriving mom and pop coffeehouse is found in our son’s trendy neighborhood. It recently changed hands, and the energetic 2nd generation Americans running it are doing very good business, if one can believe anecdotal observations of the frequently crowded store. It’s just a quarter block east, and across the street, of a similarly busy Starbucks. A rising tide, indeed.
• Of course the other thing you should know about your correspondent is that, fan though he is of Starbucks, most of the time these days (yes, even in the dead of winter) he prefers his caffeine carbonated and cold: DMD (Diet Mountain Dew). But Pepsi has not built friendly shops in which to sip a Dew while reading a newspaper, or connecting to the ‘Net. Go figure.

It’s it for now. Thanks,

–MUDGE

Share this post :

del.icio.us it!

digg it!

reddit!

technorati!

yahoo!

Short attention span blogging: Item 1:

Three totally different, but intriguing takes on financial and economics news found over the past few days caught our interest.

The first from an interesting business blog long since added to our blogroll, The Cenek Report.

A Modern Parable

Tuesday, June 12, 2007 at 08:16PM
Robert Cenek

A Japanese company ( Toyota ) and an American company (General Motors) decided to have a canoe race on the Missouri River.  Both teams practiced long and hard to reach their peak performance before the race.  On the big day, the Japanese won by a mile.

The Americans, very discouraged and depressed, decided to investigate the reason for the crushing defeat.  A management team composed of senior management was formed to investigate and recommend appropriate action. Their conclusion:  The Japanese had 8 people rowing and 1 person steering, while the American team had 8 people steering and 1 person rowing.

The lesson is short, but telling, and I dare not quote more of it than I have, so please read it for yourself.

[Please click the link below for the complete article -- but then please come on back!]

The Cenek Report – Journal

MUDGE wants to support the U.S. automobile industry. Instead, for many years, his family has supported U.S. automobile workers, as well as Japanese automobile workers, as he and his loved ones haven’t found a suitable Big 3 product for more than 20 years, yet we certainly haven’t stopped buying cars. Just Big 3 cars.

The ongoing arguments in the MUDGE family aren’t Ford vs. Chevy vs. Dodge, it’s Honda vs. Toyota, and throughout the MUDGE and MUDGElet families, a pretty even split between the two maintains.

Short attention span blogging: Item 2:

From Slate, the always approachable and most readable Daniel Gross writes about an increasingly pervasive trend:

How Wal-Mart and the government are killing the incandescent light bulb.

By Daniel Gross
Posted Saturday, Oct. 6, 2007, at 6:53 AM ET

Is the incandescent light bulb on its way out?

Compact fluorescent bulbs cost more than regular incandescent bulbs. But according to the U.S. Department of Energy, they last up to 10 times longer, use about one-fourth the energy, and produce 90 percent less heat. Over its life span of four and a half years, a CFL more than repays its higher cost in energy savings: $62.95 per light bulb. Oh, and they’re good for the planet, since they produce fewer emissions. But while they’ve grown in popularity, CFLs have yet to emerge as a household staple, in part because consumers can’t see beyond the shock of the sticker price to the long-term savings. “When you buy a compact fluorescent bulb at the cash register, you experience the higher cost vividly and all at once,” says Robert Frank, a Cornell economist and author of The Economic Naturalist. “But when your electric bill goes down as a result, the savings are not as evident.” Consumers routinely make such short-term economically irrational decisions.

As it aims to vanquish Thomas Edison’s filament bulb—and save the Earth—the CFL is running into the brick wall of human nature. But the CFL is getting a lift from two of the globe’s most powerful forces: image-conscious Western governments and Wal-Mart.

MUDGE remembers the days, now long past, and in the same classification of even earlier cultural artifacts as twice daily (and once on Sunday!) home postal deliveries (it’s true, but not since the ’50s in Chicago), when light bulbs were free, provided by your friendly electric company (“Little Bill”).

You went to some unlikely place (our local bank I think I remember) and traded a copy of that month’s electric bill for 10 bulbs. One only purchased bulbs, at the ma and pa hardware store or maybe an Ace or True Value store, when something unusual was necessary, like a 4-foot long fluorescent tube for a kitchen or garage.

So the first displacement occurred when everyday bulbs needed to be purchased, as the electric monopoly’s free bulb policy went the way of 29¢/gallon ethyl.

And now, the newest displacement, when instead of the familiar globular bulbs, the odd, curly CFLs, so much more  expensive, and still not providing quite white illumination, seem to be the purchase of choice when replacing lighting.

OF course, bleeding edge as always (ha!), we’ve been replacing incandescents with CFLs here in MUDGEland for many years.

We will never go vegan (don’t get me started!); we recycle but haven’t graduated to reusable grocery bags*; and sorry, the economics of hybrid cars just don’t compute for this family. But compact fluorescent lighting — we’re there (but never, ever to be purchased at Wal-Mart!).

[Please click the link below for the complete article -- but then please come on back!]

How Wal-Mart and the government are killing the incandescent light bulb. – By Daniel Gross – Slate Magazine

And did you catch the WIWICWLT moment?

It takes more than one market force to change a light bulb.

Short attention span blogging: Item 3:

Finally this, from Paul Krugman of the NYTimes, unshackled from the newly abandoned pay per view policy, and whose blog has also recently joined the L-HC blogroll.

Here, he illuminates yet another instance of the distorting spin that the perfidious administration of George III has used when announcing economic statistics.

Pathetic — Paul Krugman — The Conscience of a Liberal

The new White House “fact sheet” on the economy declares that job growth since August 2003 is the “longest continuous months of job growth on record.”

That’s literally true – the Bureau of Labor Statistics data from the great jobs boom of the 1990s do show a couple of scattered months of job decline, although these are probably statistical blips. But by any reasonable standard, job growth in the Bush years has fallen way short of growth in the Clinton years.

All the data are available at the BLS web site.

Over the whole of the Clinton administration, the economy added 22.7 million jobs – 237,000 per month.

Over the whole of the Bush administration to date, the economy added only 5.8 million jobs – 72,000 per month.

Pathetic – Paul Krugman – Op-Ed Columnist – New York Times Blog

One no longer is surprised, or even disappointed. Just incrementally more angry.

January 20, 2009

Bush’s last day

It’s it for now. Thanks,

–MUDGE

*Non-commercial Note!: the link to greensak.com used above is for the convenience of faithful reader and represents no commercial relationship whatsoever. Left-Handed Complement should be so fortunate as to ever collect remuneration of any kind for this endeavor. I can link, so I link. It’s technology. It’s cool. Deal with it.

China is always in the news. Two stories from the past few days illuminate why in some interesting ways.

First, from the LA Times, a look at how we have become victim’s of our unlimited appetite for everyday low prices.

Analysts expect prices in the U.S. to creep up as safety standards are reevaluated. Buyers and retailers may share the impact.

By Don Lee and Abigail Goldman
Los Angeles Times Staff Writers
September 9, 2007

SHANGHAI — Get ready for a new Chinese export: higher prices.

For years, American consumers have enjoyed falling prices for goods made in China thanks to relentless cost cutting by retailers such as Wal-Mart and Target.

But the spate of product recalls in recent months — Mattel announced another last week — has exposed deep fault lines in Chinese manufacturing. Manufacturers and analysts say some of the quality breakdowns are a result of financially strapped factories substituting materials or taking other shortcuts to cover higher operating costs.

Now, retailers that had largely dismissed Chinese suppliers’ complaints about the soaring cost of wages, energy and raw materials are preparing to pay manufacturers more to ensure better quality. By doing so, they hope to prevent recalls that hurt their bottom lines and reputations. But those added costs — on a host of items that include toys and frozen fish — mean either lower profits for retailers or higher prices for consumers.

“For American consumers, this big China sale over the last 20 years is over,” said Andy Xie, former Asia economist for Morgan Stanley, who works independently in Shanghai. “China’s cost is going up. They need to get used to it.”

The low hanging fruit of lowest prices for decent quality has run into a rising standard of living in China, and the results have been ugly.

The bulk of the world’s toys are made in southeastern China, where wages have shot up in the last couple of years amid greater competition for workers and increases in minimum wages and living costs. Booming demand has pushed up commodity prices. The appreciation of the Chinese yuan, up 9% against the dollar in the last two years, also has hurt some factories, as they are paid in dollars.

Follow the link to the rest of the story, reported from Shanghai.

[Per L-HC's reformed process, please click the link below for the complete article -- but then please come on back!]

Los Angeles Times: Fixing Chinese goods will be costly

So, what with rising wages, increases in commodity prices, the unexpected new costs of safety inspections, prices for toys, tilapia, luggage, and an entire big box store full of consumer necessities (and not so) will go up.

So, now let’s turn to the other side of the consumer equation, courtesy of the always perceptive Daniel Gross of Slate.

Pundits bemoan our trade deficit with China. But those container ships aren’t heading home empty.

By Daniel Gross
Posted Saturday, Sept. 8, 2007, at 7:59 AM ET

Economists make a big deal out of all the junk we import from China: tainted pet food, lead-laced toys, and enough cheap plastic tchotchkes to load up a landfill the size of Montana. And American industries are clearly being drenched by the rising tide of Chinese imports, which totaled $288 billion in 2006. But as imports from China loudly rise, American exports to China are quietly rising at an even more rapid pace. Would it surprise you to learn that a lot of those exports are … junk?

In an act of macroeconomic karma, materials thrown out by Americans—broken-down auto bodies, old screws and nails, paper—accounted for $6.7 billion in exports to China in 2006, second only to aerospace products. Junkyards may conjure up images of Fred Sanford’s ratty collection of castoffs. But these days, scrap dealers are part of a $65 billion industry that employs 50,000 people, who together constitute a significant arc of a virtuous circle. The demand of China’s factory bosses for junk—which they recycle to make all the junk Americans buy from China—creates jobs, tamps down the growth of the trade deficit, and might help save the planet.

Exports to China second only to aerospace products? Junk?

And this is a good story for all of you greens out there (MUDGE is always happy to assist his environmentally sensitive fellow citizens. Feel free to use yesterday’s post to wrap fish.):

The booming China trade isn’t simply good news for shareholders of Metal Management, whose stock is up 67 percent in the past year. It’s good news for tree-huggers. Every scrap of scrap put on a slow boat to China is one less scrap that winds up in a landfill or an incinerator. Asia’s insatiable demand for scrap has boosted prices, thus encouraging companies to suck more reusable junk out of garbage piles.

An interesting twist, eh? The imbalance is less so. That’s always good news.

Take a look:

[Per L-HC's reformed process, please click the link below for the complete article -- but then please come on back!]

The junk we send to China. – By Daniel Gross – Slate Magazine

A couple of things about this story are intriguing.

1) The story refers to corrugated paper, a key element of MUDGE’s once family business. $130 ton for scrap corrugated boxes (the brown shipping containers everything wears to market) is an astounding price.

2) The idea of sending scrap overseas resonates in a slightly unpleasant way with us ancient curmudgeons. MUDGE was born after WWII (believe it or not!), but the lessons of that conflict were fresh.

In the years before Pearl Harbor projected the U.S. belatedly into a conflict that had started up in Asia in the early Thirties, scrap iron and steel in massive quantities made its way across the Pacific to, wait for it, Japan.

It was a bitter realization that many of those junked Model T’s and scrapped steam heating radiators were sent back to our combatants as Japanese aircraft and ships and bombs.

Is it too paranoid to make an association with cheerfully sending our scrap to a rapidly arming and increasingly assertive about its global destiny China?

So, two interesting China stories, one from each container port.

And did you catch the punch line from the LA Times piece?

Meanwhile, Skyway is gearing up to open a factory this fall in Vietnam, where wages are lower.

“I think the consumer will not accept the full impact of price increases from China,” Wilhoit said. “We’re going to have to do things differently, like Vietnam, to get the same quality stuff on the shelf and make money.”

The mind boggles.

It’s it for now. Thanks,

–MUDGE

I remain in a perpetual state of astonishment at the depth and breadth of simply fascinating commentary one finds on the web.

Here’s a wonderful entry from a newer member of the blogroll:

Maybe I stayed in the news business for too long after my radiation badge turned red. Maybe I’m suffering from Post-traumatic, Restless News Syndrome, or something. But I have this notion stuck in my head lately. It’s kind of like when I get an annoying tune stuck in my head, this notion pops up and up again, especially after I read the news.

Okay so, at the risk of exposing myself as the nut I have always secretly suspected I would someday be proven to be, here it is – my notion:

How long before before they get it? It can’t be far off. So when will day arrive when America’s once vibrant and hyper-patriotic working class wakes up and realizes they’re at the receiving end of one of the greatest screwings in human history?  And then,  rather than reaching for their car keys to rush off to their second low-paying job of the day, they reach instead for one of their many guns.”

Okay, this is Stephen Pizzo. He seems the real deal, an investigative journalist of the highest caliber, so to speak. We collected an earlier post of his last week, and just haven’t gotten around to working it. This one will do, however.

The man writes like I wish I could (WIWICWLT), and makes connections of disparate facts (purportedly a MUDGE specialty) that I’m frankly jealous of.

So, here’s his thesis:

US Most Armed Country With 90 Guns Per 100 People

A Sobering Census Report: Americans’ Meager Income Gains

Wealth gap widens

The U.S. today – an oligarchy with inequality growing worse

Fortress America
: Gated Communities in the United States
Brookings Institution: Americans are electing to live behind walls with active security mechanisms to prevent intrusion into their private domains

Okay, enough quoting (don’t want to violate any copyrights). Just read this, please:

[Per L-HC's reformed process, please click the link below for the complete article -- but then please come on back!]

News For Real

So, did you get to the punch-line?

Which brings me back to that first story.. the one about how many guns are out there. Who do you figure holds most of those privately owned firearms? I’d wager that 99.9% of them are owned by working stiffs. Ironic, isn’t it? For decades conservative politicians have stroked working class voters into a trance with Second Amendment chants. After all, they insinuated, when the commies came, who will fight them off? Well all those patriotic, semi-automatic toting Joe and Jane Sixpacks out there, of course.

I wonder if those right wingers might be having second thoughts about that strategy? After all, millions of those now-well armed Joe and Jane Sixpack are suddenly struggling with entirely non-commie-generated problems

Problems? A horrifyingly costly and increasingly pointless set of wars in the Middle East. Mortgage defaults. Credit cards maxxed out. Crumbling infrastructure that’s been killing people. Wal-Mart reporting to the investment analysts that “clearly our customers are running out of money…,”

And, Pizzo’s logical conclusion?

In the short term those walls and gates may keep the riffraff at a distance. But I doubt they’ll do much good when those millions of Wallmarters grab the guns they bought dirt-cheap at WallMart and turn into angry Walmartatistas.

Wow!

Pizzo’s thesis is closely reasoned. Impeccable quotations and statistics. Exaggeration? Maybe a little. But…

Is this person paranoid? Of course; but, shouldn’t we all be?

I’m simultaneously glad I found this story, and very disturbed also. Aren’t you?

It’s it for now. Thanks,

–MUDGE