Saturday, July 19, 2008

The Free Market and The Starbucks Coffee Mocha

I don't hate the free-market.

I think a lot of things are fucked up about it, or how people view it.

Like The Starbucks Coffee Mocha.

I love the Starbucks Coffee Mocha, it is so good to me, I love it, I love it.

But why does does starbucks need to cover the world with coffee houses that have caused local coffee houses to disappear from everywhere but NYC and small artsy neighborhoods in America.

I don't mind and enjoy local restaurants. The two best or famous places to eat in the Youngstown area are the MVR, an italian restaurant where famous people go when they come to the valley, and the Yankee Kitchen where famous people also go. There are all these wonderful pictures in them of famous people standing in the restaurant smiling. There is also the Mocha House which is a coffee shop that offers the most beautiful tasting cheesecakes. We also have Quaker State and Lube, which is a world famous wing place. They are all locally owned.

The Youngstown area also has its own version of italian food, the sicilian pizza, Briar Hill pizza, spinach and white pizza. At all weddings and graduation parties rigatoni are served.

I like what a local business can do. A person or persons can start a business and supply the service they want, serve the food or things they want in they way they want to. I like that.

I think sock, t-shirt, jeans, swing sets, shoes, book companies, etc are better if there is no government influence, which means government influence. I like individuality.

But I don't think things like electricity, water, health care, oil, heating, etc should be privatized. Those products are the same for everyone. Heating, gasoline, water, etc are the same for everyone, no matter who you are. And since they everyone needs them and individuality cannot be expressed through those products then it is nonsensical for them to be part of the free market.

Now, someone could say, "But t-shirt companies are part of the free market and use slave labor in third countries to produce their shirts."

That is true. But that is a question of fairness, it doesn't make the theory of the free-market incorrect.

But having products in the free-market that cannot express individuality, does not correspond with the theory of the free-market.

What saddens me personally is this: there was once a time in history where people worked together to build houses and bridges without money. They did because it mattered, they did it because they knew it would benefit their lives.

Now people will not build, they will not work, unless someone shows up and gives them money. And nowadays people don't even want to work, they want get rich schemes, they want to get grants, go to las vegas, they buy into pyramid schemes, they buy mutual bonds without a the slightest thought they are affecting the course of history and the lives of people, never asking what exactly the stock brokers are giving their money to, convinced they will end up rich and retire in Florida, they get credit cards and take out loans they know they will never be able to pay back, etc.

Back in the day, before we were born, loans with interest attached were never given unless it was to a person very rich. If you walked up to someone in the 1200s and said and explained credit cards, they would respond, "That will lead to nothing good." But here we are running on a system of credit that history ran from until the industrial era.


jereme said...

i concur with this post. I enjoyed it thoroughly.

I only have two comments to spin:

1. I concur about utilities. My only concern is giving away this type of power over me. There would have to be many checks and balances for me to feel safe and good about it.

2. Starbucks makes some of the foulest coffee.

But people enjoy the sugar.

If people enjoyed coffee, than starbucks would be limited to about 20 stores.

Sugar is some powerful shit.

Noah Cicero said...

starbucks coffee tastes like shit. I hate all that special coffee from like brazil or made from elephant dung shit those places serve.

I can only drink the frappuccinos.

sam pink said...

i like cheap coffee with hot chocolate mix or fluff in it.

Alicia Pernell said...

noah, you found a missing button and sewed it back on your shirt and now i'm wearing this shirt.

sam, i am putting hot chocolate mix in my coffee tomorrow morning.

gena said...

i like sam pink

Anonymous said...

Nouri al-Maliki said...

"Supply Side Economic" philosophy behind Repubican rule says that if you concentrate wealth, make the rich richer, they'll spend all that money on building new factories, creating new jobs, "If you build it they will come" kind of theory of economics. This is all a complete an utter myth manufactured on the right.

We have a market based, or centerd, economy. Nobody builds anything unless there's demand for it. The problem with concentrating wealth is it shrinks demand.

Here's how/why: Imagine a small town of 50 people, they all have old cars that need to be replace. They all have $25,000, so they can all buy new cars - the near realized demand for cars is 50. But one of those residents is Donald Trump. He opens a casino in his garage. A year later, Donald has $1 million and the rest, on average, have only $5,000 - only not evenly, a few didn't gamble and a few lost everything, borrowed $5000 from Donald to buy groceries. Now the demand for cars is down to 10 - three of which are for Donald. Meanwhile the demand for helicopters went up, from zero, to one because Donald wants one. Donald has thought about expanding his casino, but realizes the market has tapped out. So he's looking for other spots in other counties to invest in.

So you see, as wealth concentrates, demand shrinks in the commercial economy, while luxury boutique items experience an increase in demand. As demand shrinks, factories close and business suffers. Because jobs are scarce, people lose bargaining power, so their wages remain stagnant and with inflation, actually go down. The rich get richer, but everyone else gets poorer. We see this too: median family income has gone down 5% since 2001 while the top .1 has gone 50% and the top .01% has gone up 500%.

Clinton manage to average creating 2.5 million jobs a year. Bush is likely to average less than one million per year. Economist estimate that the U.S. has to net creating 150,000 new jobs a month to stay even, the Bush recession of 2001 in jobs has in effect, never quite gone away. The Bush era has been a great depression in jobs.

The Bushies all knew the problems of supply-side economics, but, like the scorpion on the frogs back, they can't help themselves. They lower taxes for the wealthy and start wars increasing debt. In the long term, they are hoping to bankrupt the country so that it will have to abandon the great white whale, Social Security.

To shore up demand, they borrow massive amounts of money from China at artificially low rates. China complies because they need American demand too to help them relocate America's industrial base to China. The reduced interest rates allows Americans to refinance their homes. Their mortgage payment goes from $1550 to $850. The $700 dollars freed up from the artificially lowered interest rate goes into the economy as new demand. Suddenly mom and dad are driving a new Cadillac Escalade. Voila, you have a growing economy even though there is little new jobs and wages are declining.

When the string runs out on remortgaging, artful mortgaging takes its place: second, flexible and subprime mortgages. That string finally ran out last summer, a year earlier than it was supposed for the Bush administration.

The opposite of supply-side is demand side economics. But the effects are not completely opposite to supply-side. The idea is you increase demand by helping the poor become richer. Ideally by allowing them to capture a fair share of gains through increased productivity and/other new efficiencies in the economy. As the poor get more money, they buy new things from the companies owned by rich people, so the rich people get richer too and because their are increases in demand, rich people decide to build new factories, creating jobs, and tightening the labor market, raising wages, and increasing demand, and so you have a positive cycle.

Since 1980, our society has been dominated by supply-side theories. The GNP has more than doubled since 1980, but median family income has stayed about the same. So all that growth went to the richest among us. Clinton's mildly anti-supply policies caused a massive 50% increase in GNP, and only near the end did wages start to bump up. The Bush recession of 2001 was a deflationary one: too little money was chasing too much supply. The proper response would have been demand side economics. Instead Bush chose supply side, which could only make things worse. However, thanks to China's central banks generosity, the problem was swept under the rug of mortgage based stimulus. All the imbalances that existed in 2001 are still out there.

Meanwhile the low interest rates have caused the value of the dollar, against the Euro to collapse. That drives all commodity prices, food and gas, up. So now you have a situation where jobs and wages are declining and prices for commodities are going up. Because the value of the dollar is falling and oil is traded in dollars, massive amount of speculation is taking place in oil markets as traders try to guess supply, demand for oil AND the value of the dollar it's traded in.

In some ways, this is alot like 1929. Wealth concentrated and demand couldn't keep up with supply. Soon demand collapsed. People initially tried to borrow money to bridge the gap to sustain family life styles, but when the bridge failed to make it to the other store, the whole thing collapsed.

There is no history of supply-side (also called, trickled down or neo-liberal economics) policies ever working anywhere. There is one slight anecdotal situation that occured during the Kennedy presidency but there we are talking about extreme tax rates left over from funding WWII - 95 % at the highest bracket. Kennedy cut it down to somewhere in the 60% range. Economic growth soon followed, but that was also during a time of growing spending on Vietnam War and growing productivity from infrastructure improvements, like the interstate highway system.

There is a history of supply-side type economics causing massive failure and epic collapse across history going back to Ancient Egypt's Middle Kingdom. The pattern is wealth and power concentrate, the wealthy and powerful use their influence to avoid paying taxes, the state runs short of the funds it needs to fund the army and maitain itself.

This sort of thing caused the collapse of Egypt's Middle Kingdom, the Roman Empire where a 500 year dark age ensued (See Nobel Prize winning Economic Historian Douglas C. North's "Structure and Change in Economic History" pgs 100-115), Pre-Islamic Mecca (Islam was a reaction to it), Byzantium (circa 1071 prior to the battle of Manzikurt), Medieval Japan (200 year dark age, no invasion, just a collapse of civil institutions), Hapsburg Spain, Bourbon France, Romanov Russia, Coolidge/Hoover America (triggering the Great Depression, the rise of Hitler, WWII and the holocaust) and now our current situation.

So you see, if you have a fundamental knowledge of civics and history (and geography) you know that the Republican policies were absurd from the start.

jereme said...


once again i don't understand how you can villify the right and not the left.

the issue is the two party system, the issue is government, the issue is the media, the issue is politicians.

noah should run for local office. he seems to actually care but that is what the problem always is. the guys who want to fix shit either don't run for office or if they do they cannot compete with the two party system.

the media has already picked our candidates years before the public is introduced to them via election time.

i personally think we would be in a better situation if a government lotter occured.

that is real checks and balances.

a white house full of people with opposing views who either have to learn to compromise and fix things objectively or sit there with their dicks in their hands.

but yeah, fuck republicans!

come on. enough of the two party rhetoric from the peanut gallery.

jereme said...

i misspelled words. i should have proof read but that is not my style.


i don't need grammar and spelling to see things pragmatically though.

brian salchert said...

Mr. Cicero,

Do you know who
Nouri al-Maliki is?

It seems unlikely that the
Nouri al-Maliki who wrote the
long comment here is the same
person, but if you haven't done
a search of this name,
do one.

Anonymous said...

once again i don't understand how you can villify the right and not the left.

Because the right is who's in power now,and has been for the last 30 years, you twit.

maxed_out said...

I am wondering what the American J6Ps are going to do when they realize the rich assholes have stolen pretty much everything in the US and left only ruins everywhere.

After Weimar Germany hyperinflatory collapse both left and right extremist groups got a lot of new members and there were street gun fights between those groups (former WW1-veterans fighting..) and in the end the Nazis won and gradually got all the power in Germany.

Could something similar happen in the US also?

Anonymous said...

Your free market at work:

jereme said...

anonymous says

"Because the right is who's in power now,and has been for the last 30 years, you twit."

SIGH. yet another partisan mouthpiece.

let me break down the simple? math

last 30 years have been

12 years of democrats


18 years of republicans

where you not alive the past 30 years? or did you forget your facts?

you don't care about altruistic goals

you don't care about helping a god damn person

you care about bitching about republicans

because there is nothing better

to do in your petty little life

so you rail against something

that can never be truely fixed

under a two party system

have fun reaping that

pile of bullshit

Anonymous said...

And what about your mindless parroting of the discredited Reaganomics mantra that "the government is the problem". Is that not more of the same? And you are incorrect on conservative rule: Republicans have been in control of either Congress or the Presidency for 27 of the last 30 years.

jereme said...

the government is the fucking problem.

reagan is the problem

clinton is the problem

the two party system is the problem

you are the problem

but yeah, go republicans! i'm all for them

you know, i think you would derive slightly more satisfaction preening and squawking this rhetoric to yourself in front of a mirror

i mean who doesn't like the sound of air escaping their body
as they flap their useless gums
back and forth

somebody said...