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Archive for November, 2010

From my read, consumer power is at an all-time low.

There are still magazines like consumer reports, but although they don’t contain advertising, they resemble big brand promotional media. They review laptops, refrigerators, phone plans, etc. That is helpful information, but doesn’t represent the empowering of consumers, of citizens.

It supports retail, not cooperation.

Consumer power to be effective would include:

  1. Full product disclosure on all products, including listing of ALL components including packaging, Toxicity and recyclability, LOCUS (where a product was made), FAIR LABOR (the compensation and conditions that workers experienced at all phases of the supply chain)
  2. Assertive efforts for cooperatives
  3. Social organizing enhancing face to face community
  4. Efforts to reduce the costs of living rather than increase GDP growth as means to improve community wealth

Ralph Nader is quiet, older, somewhat discredited.

In order for capitalism to be a responsive social system rather than an imposing one, consumer disclosure and advocacy are absolutely necessary.

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The regional economy “movement” fits awkwardly in the global marketplace.

Virtually all intellectual property is now global in scope. Media products and development, software products and development, education (I taught an internet course in management accounting last winter).

Professional services are now global. Legal research, tax return preparation, engineering design.

Physical things still exist in the physical world (duh!). Personal services still exist in the face to face world.

I personally can’t tell to what extent that shift to global/anonymous is permanent. The town that I live in is very face to face.

Urban and suburban residents that work in some intellectual services, seem most comfortable with the global relationships, but that only applies to the professional classes. Rural residents seem very uncomfortable with the global relationships, even as many download software, films, music.

At the same time that media distribution has gone global, there is a growing emphasis on live performance (without the star system). I am encouraged by increases in offerings in participatory media locally. Hootenanies, jam sessions, free dance, poetry slams, shared cooking jams, yoga. In participatory media, the experience is the product, not the file, and the experience integrates into one’s community.

For physical things, there are objective reasons why economy might decentralize, particularly increases in transportation costs. The effect of transportation costs on the total cost of a product varies by bulk.

In most cases though, there is no possibility of manufacturing most physical products regionally. There is no readily available land to build plants or warehousing. There is limited management or skilled labor expertise in most industries. (The expertise has all migrated to where the plants are now: China, India, Indonesia). And, the institutions that direct capital, banks and investment paths, are highly centralized, international.

On the other hand, there is an increasing economic and community recognition that money spent locally or regionally, adds more to local employment and well-being, than money spent globally. The Keynesian multiplier effect is real. Where  there is even an incremental portion of spending locally, or savings deposited locally, more money circulates through the local/regional economy, more value addition occurs in EVERY locale that undertakes that, and income is spread more equitably.

We haven’t hit $6.00/gallon gas yet. We will in a couple years if the world economy grows at all, which it will even if only due to population increases.

We won’t want to travel far, but who knows the effects on prices of items we buy. (Food, fuel, building materials, appliances, autos, fabrics).

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When we studied geography in elementary and high school, it was presented to us mostly as the naming of physical places, natural, society.

  • What is the tallest mountain in North America?
  • What is the capital of New Hampshire?
  • What is the population of San Francisco?

For those of us that studied some geography in college, the study was more social. Relevant questions might include:

  • What proportion of the population of Holyoke, MA is speaks Spanish as its primary language?
  • What proportion of the population of Greenfield, MA makes greater than $75,000/year?

The social geographic study was relevant to many subsequent career applications, marketing, politics (a form of marketing), activism.

In my undergraduate studies and later, I sought to understand what community/s I was a part of, how, and how does that constitute a marketplace/economy, and rational scope of governance.

I live in a physical geographic cusp region, Greenfield, MA. We can’t figure out if we are urban, a city in its own right, a supply and value-adding site of international trade through Boston and New York; or, if we are rural and primarily serving a locale.

The physical geography of New England influences our (Greenfield) character significantly. Further north into Vermont and New Hampshire (and locally), the mountains are defining obstacles. There is a great amount of interchange north and south along the river valley and highway arteries, and much less interchange east and west across the Berkshires for example.

Pittsfield is 45 miles away as the crow flies, but there is far far far less interchange between Pittsfield and Greenfield than between Springfield and Greenfield. I know people that commute the 60 miles from Greenfield to Hartford area. I don’t know anyone that commutes west 60 miles to Pittsfield.

South of us, physical geography is not as much of an obstacle. From Springfield, the hills are not as isolating, and there is a great deal of east-west traffic, even between Springfield and Worcester, or Springfield and Albany.

Interstate highways make that possible, but before there were highways, there was still much more interchange east and west there than east-west from Greenfield and north.

Markets and societies now have a permanent and fundamental new feature. The internet has created links between people far and wide. Some as natural extensions of other links: common religion, common profession, common hobbies. Other linkages are more random, independant of place or interest. The linkages are so thick that they constitute really a new geography.

I attended a small conference this weekend focusing on sustainable business and “resilience” in the Pioneer Valley (Springfield, Northampton, Amherst, Greenfield, MA area). Most of the attendees were entrepreneurs and consultants serving very local geographic markets, and interests.

There was some discussion on the different scale markets that individuals and organizations served. Most served local markets, some micro-regional markets (Pioneer Valley for example), some macro-regional markets (New England for example). A few, particularly those offering intellectual services, and more particularly software and data services, served various scales of networks in the cyber geography (not well mapped).

Much of the discussion of supporting institutions and efforts had difficulty addressing the differences in scale of marketplaces existing and served.

I think it is an important discussion that gives a great deal of meaning and strategic map to improving the health of various scales and settings of community.

Rather than a difficulty in identifying a “norm” of what marketplace one should serve, identification of scale enhances clarification of one’s existing and prospective customers and other stakeholders (finance, supply chain), and definitions of success.

I think those of us that are  serial entrepreneurs (over and over again, successes and failures) need to remember that Enterprises serve needs and enjoyment. Our success depends on offering honest exchange that clearly adds value to another person or organization. The service is for others, not for us. We need to listen mostly.

Thereby creating sober livelihood and personal health, productivity, family health, tax revenues for community and state. And, creating value in customers/clients in fair exchange.

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Food prices are going up.

There are many causes.

One primary cause is that food commodities are genuinely global commodities and are affected by changes in demand and in supply anywhere on the planet.

A component  cause of very current food price swings is the relatively rapid decline in the value of the dollar. In addition to higher cost relative to the global market, there is an effect of more exports out of the country, shifting the relationship of available domestic supply to demand.

On the supply side, there is drought in many grain producing regions, Russia, China, Eastern Europe, Australia, some parts of North America. Although crop yeilds are very high relative to long term historical patterns, they are stabilizing, the low-hanging fruit and complex industrial agricultural systems are largely already employed at least in the US. The amount of available land for grain production is finite, and needs to be managed to avoid soil depletion (already a very large pestilence everywhere). It is impossible to simply plant and harvest the same plot of land year in and year out.

On the demand side, there is continually increasing population, and the great kicker for demand for corn is the consistently increased dedication of corn crop to ethanol production. According to the University of Kansas 2010 survey, between 35 and 40% of corn acreage is used for ethanol production currently. And, that is during an extended period in which the cost of oil is stable and relatively low compared what it is likely to rise to when the world economy recovers to 2007 levels.

Virtually all grain and other food commodities have risen in price over the last six months, ranging from between 10% to around 80% for corn.

In modern agriculture, fuel (in fertilizer, agricultural chemicals) and water are the largest cost components of agricultural production. Labor is relatively small per unit, as is even the amortized cost of mechanization, even seed stocks.

In three years, it is nearly a certainty that the cost of fossil fuel will increase (also causing an increase in the % of corn and other agricultural stocks used for fuel/ethanol). And, there is a continual global scarcity of water. Water is more expensive in the marketplace than oil currently, even as those of us that live in urban water districts think of water as free. Many economists describe the market price of water as underpriced, heavily subsidized, in many cases stolen.

Plan for it to continue. The price of water, fuel, food will continue to increase,  and the value of the dollar relative to world currencies will continue to decrease.

Its hard to see a creative political or even entrepreneurial response to those realities, any of the factors, given the recent “performance” of Congress and the corporate world relative to investing in value addition (industry) domestically which would strengthen the dollar, and the utter failure of policy makers and corporate world in developing energy and water conservation services.

http://www.agmanager.info/marketing/outlook/WASDE/default.asp

http://futures.tradingcharts.com/menu.html

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