Profits in Collapse: the Detmer Curve
It’s been an observable phenomenon dating back to the middle 80s: the less money you receive in salary while all other prices go up around you, the less money you have to spend as a consumer -- duh. Thus, the Detmer Curve, identified here for the first time, figuratively tracks a now flat-lined consumer spending curve leading to a long-overdue demise of capitalist grandiosity … and more likely, much, much worse.
by Donald Croft Brickner
For the longest time, sub-middle class Americans -- a gigantic chunk of the
I know. For 25 years now, I’ve lived it. And like my hourly-wage peers, I adapted.
The slide of the middle class into this ever-evolving new sub-middle class is a phenomenon that’s not going away (a major understatement) -- and it must be cause for concern for economists. Yet, incredibly, it isn’t -- despite the hard fact that more than two-thirds of the economy is dependent upon consumer spending to keep it afloat.
About 70 percent, actually -- a statistic that should be embraced with due pause.
Most weekday mornings I awaken to my favorite newscasters anywhere on TV, on CNBC (at least six of whom I really enjoy watching). But some of the notions offered as good investment strategies by the “experts” interviewed -- embracing such strutting bouffants as, “entrepreneurs drive the economy” -- are logically ill-considered and, in so many other respects, flat-out mistaken.
You just want to jump up from your seat and yelp, “It’s the consumer.”
So many Wall Streeters keep falling back on two decades-plus-worth of bullish spin control, indifferent to the crises about to engulf the lot of them (along with most of the rest of us). Many economists presently suggest the economy will turn back around to Happy Days Are Here Again around, oh, the turn of 2009.
Only it won’t. It can’t. Rapidly increasing costs in gasoline have pushed prices up across-the-boards in almost every other arena of product movement and sales -- inducing a dominoes-falling effect for profits (already fully locked-in), and hurting those who’ll absorb those increases -- the consumer. It’s like, whenever in doubt, dump everything on them. The consumers will absorb our costs, all of them -- they always have, and always will, Big Business shrugs.
Only this time around, consumers won’t. There’s not enough extra money above the (spiraling out of control) cost of survival for them to spend this time around.
Put another way: the giant sub-middle class of today’s America has become so squeezed, so abruptly, that it can’t adapt this time around -- and therefore won’t.
Consumers can no longer adapt -- even though, yes, they’re sure to give it a try.
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Enter the Detmer Curve, a figurative measurement I first applied to a future world gone destitute in an unproduced three-act play I wrote back in 1995, Revelations at Mount Rushmore. The play mostly failed -- but its economic warnings remain apt to this day … now, apparently the “future” I was striving to warn people about.
So much for prophetic aims to afflict the comfortable. Going didactic never works.
Only hitting bottom does, apparently. And hitting bottom, we will -- still maybe a year or more away. The large dominoes have to fall first, followed by everything else after that.
It’s going to appear as if money is under attack from every conceivable direction.
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The first of the dominoes to fall, and it’s happening now, are the mostly silent, invisible increases in costs to run businesses -- and that leg of the consumer dump-off phenomenon is heartily underway, with a lot more of it to follow.
With mid-year 2007 now here, profits-making still appears realistic down the road to most, according to cable news (and, alas, CNBC). This society, dependent on money spending, still appears to be alive and functioning.
Unfortunately, it isn’t. Our vital, viable economy has become a fast-fading illusion.
Global stock markets will be the first to recognize bullish diagnostic fluff as faulty.
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The Detmer Curve:
Directions: slightly in front of you, raise your arms over your head and form an arc, connected by your pointed index fingers. Visualize that where your index fingers meet, then, there exists a vertical line falling between those fingertips, from the ceiling to the floor. Unseen points along this invisible vertical line represent
The floor of the profit margin line represents The Great Depression. The ceiling of the margin line is by its nature conceptually unattainable. It suggests a childish quest to secure huge profits reminiscent of that sought by Star Trek’s Ferengi.
Rising from the shoulder of your left arm to your left index finger, then, represents the consumer’s on-the-rise capacity to spend big and often, before it gradually flattens out -- which herein is an inevitability when greed fuels economic activity.
The downward arc falling from your right index finger toward your right shoulder thereafter represents a gradual (but ultimately heated and exponential) collapse in big-and-often consumer spending, via a businesses failing dominoes effect.
The Detmer Curve doesn’t exist when profits are naturally inhibited, as they were in the 1950s and 1960s -- a far slower-moving but arguably happier period in our economic past that featured buying widgets on lay-away, and it pre-dated I-want-it-all-now credit cards.
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Critical to understanding the co-dependent relationship between sellers and buyers is the notion that contemporary consumers are now commonly every bit as compulsive about buying widgets as our (compulsive money-making) widget makers are to sell them. Further, a gigantic number of widgets today are either silly or irrelevant, or both -- which underscores the feverish relationship between buyer and seller as, at best, dysfunctional.
Keep an eye both on consumer spending and stocks-buying numbers over the next several months. There may be indications that nothing is really wrong. Yet all that these potential forthcoming faux positive numbers may imply is that buying has long since become a compulsive behavior, in and of itself.
Compare it to the stricken soccer family who must -- must -- go shopping at the local mall: mom, dad and the kids. The latter blankly hammer out text messages throughout the entire zombie-like procedure.
Buy. Buy, buy, buy.
It’s all so Invasion of the Body Snatchers.
In this compulsively-driven, co-dependent relationship between sellers and buyers, then, the comparison with active addicts holds: both sides are in severe denial -- and, in fact, there really isn’t a perceived problem with any of this until those so afflicted hit a personal or en masse bottom -- and finally admit there is.
Both sides in this equation might well benefit from meaningful psychotherapy. But how could any psychotherapists anywhere deal with problems of this magnitude?
If you haven’t already connected the dots: something tumultuous this way comes.
* * * * *
The foundational premise behind the Detmer Curve suggests that any endless pursuit of big profit margins is impossible to sustain -- and sometime during such an obsession, the one-note intention of making free money necessarily collapses like a house of cards. What are engorged profits, in the end, if not free money?
Oh, what -- you “worked hard” by stepping on competitors’ faces and downsizing your workforce, and so the enormous profits were hard-earned? That’s a slippery slope (never mind a prototypical characteristic of an addiction): the same callous, self-serving thought and effort probably goes into robbing large banks.
No amount of jumping up and down and crying, stop, stop, stop, is going to wrest this process away from our bull-in-a-china-shop compulsive moneymakers … nor their E! TV-oriented offspring. So it’s really clear: none of these folks are victims. They embraced a multi-obstructed blindness as they brought this on themselves.
The big discovery here is that greed, always selfish and cynical in its world view, doesn’t work. What a terrible lesson to have thrust upon this once great society.
The Great Leveling, written about previously and still in its very early stages, is already upon us. And there’s no going back.
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Ben & Jerry mostly got it right when they created a formula for profits-making that included limits for those at the top, while it generously intended to avoid forsaking those lowest-paid in their company -- to whatever degree that has worked. They viewed the foundational health of their company -- heavily weighted, then, toward its participants, not its widgets (ice cream) -- as their driving focus and concern.
Oversized profits aren’t just laughably obscene, they’re self-destructive -- surely that had to be a foundational issue at Ben & Jerry’s -- and so these oversized fever-pitched profits are what truly drive the Detmer Curve to flatten, and fall.
The problem has nothing to do with the efficacy of capitalism as an economic system (which is all capitalism is), by the way, but rather how the practice of capitalism is applied. The core question simply is: do people matter? In
There’s a sustainable capitalism that supports its society -- or there’s profiteering capitalism that knows few ethics, and no national boundaries. The latter variation is what’s practiced globally at this time in human history -- we all know that -- and what corporate greed has in store for consumers and small businesses alike is sure to be more painful in its destructiveness than yet can be foreseen.
Contempt for the consumer is what the Detmer Curve represents, regardless -- as is the doomed materialistic destiny it invites.
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“Multi-national,” in corporate terms, simply means that companies run by born Americans will pull up their stakes and move out of the country once their mining for profits here in the
Talk about betrayal: these American-founded companies will simply close up shop, release all of their American employees, and move on to a new “home” and perceived greener pastures elsewhere, far outside of our country and its territories.
What’s left in their wake will be comparable to what Wal-Mart (or, at least, the Wal-Mart of yore) left when it entered small American cities and towns, put existing local mom-‘n-pops out of business, and then closed their doors and moved on, leaving destitute and depleted towns behind them -- most of this taking place a decade or so ago. The company fell under such feral widespread attack, it simply had no choice but to substantially upgrade its image.
What Wal-Mart appears to represent now is a company that shifted its corporate philosophies from widgets (which it still sells) to its individual stores’ neighbors, and the American people it’s long insisted it favors. Maybe this proclamation of a perceived major revision of corporate behavior is naïve – but, tell you what: if you need a place to stay overnight in your vehicle, that’s quiet and safe and patrolled by security vehicles paid for by the company, then go find yourself a Wal-Mart. Just drive into their parking lot at night, turn off your engine and catch some zzz’s
Three cheers for them. Someone simply had to embrace decency nowadays.
The brunt of the rest of
When that occurs, such corporate leaders should be tried as traitors – or, at the very least, barred from ever returning again to
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How this is all probably plays out in the days and years to come remains unclear -- there is no historical precedent, apart from a bite-sized symptoms.
At the core of this global “leveling” will be a ton of much-needed cultural changes and dramatically-altered human motivations. There’s still every indication that what will appear nationally and globally once the smoke clears could be beautiful -- and maybe even inspirational. Who couldn’t use a little of both in these times?
Right now, enormous enterprises like our stock markets are focused on minutia, with little consideration for the big picture -- and, in fact, that determination might be applied to any institution, almost anywhere. There’s a big difference between being stupid Americans and, say, ignorant and misguided Americans. This isn’t about synapses misfiring. It’s all about our growing up emotionally, and striving to gain a far broader view of each of the fundamental elements at play in this crisis, how they predictably interact, and who we decide we really are as a collective.
The sad truth is, most of us knew better than to march down this shallow path.
The collapse of compulsive money making (with fearsome climate change in tow) appears as if it will assure our first smoking ruins by way of greed. It will also mark the initial torpedoing of what’s likely to be a slowly sinking Good Ship
Can this, or other bleak futures here, be changed? Theoretically, yes. But compulsive behaviors characterized by really nutty, half-baked and impotent belief systems, combined with unexamined self-destructive emotions -- such as today’s
Very few are going to begin to seek changes to anything until they’re forced to.
And, so: where are we now, along the Detmer Curve?: Past the last joint of the left index finger … or, perhaps even sliding across the fingernail of the right index finger. None of this is good, in any event. All systems are Go for tragedy.
At the moment, one thing is for sure: as long as greed wins, we’ll continue to live in a society that embarrasses us, individually and collectively.
That it mortally abuses us, as well, ought to be of far more immediate concern.
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Tags: Economics , Greed , Wall Street , Philosophy , Predictions , United States , Psychology , Money , Ethics , Recession
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