There appears to be some sorrow among the laid off Sears employees who “feel” betrayed by a company in trouble. I have news for all employees. You have a “job” and you serve at the pleasure of your employer. By pure definition, if you decide to take a “job” you are giving up some of your autonomy. If you should so choose to have a portion of your pay handled by a private pension plan, what gives you the right to think that there is no “risk” in having a third party manage those funds or to think that the company will be financially fit to make ongoing company contributions on your behalf? In socialized Canada we are fed this line that you are marginalized if “self employed”. I have news for those who believe that your company will be there for you. You are one bad relationship or two bad performance reviews from the exit sign and if you think you have “job security” think again in the context of a financial system teetering on the brink. If you worked at Sears and have witnessed a steady decline in retail traffic over a period of years, you should have taken a look at the competition or at the least upgraded in the evening with some career changing course work. Now is not the time to be looking to a bankruptcy trustee for answers or the CBC for sympathy. There is nothing more defeatist and sad than the state of a workplace in decline with hangers on sinking with the ship believing that the company will throw a life vest last minute in the form of a “severance”.
Category Archives: Economics
Comments On Sears Decline
This is a company that never revitalized in the face of competition. Clerks were indifferent, the computerized check out system was antiquated, and the “Arnold Palmer” brand was mediocre. The company did nothing special to make customers feel welcome. It’s becoming a real blight on the urban landscape with all these empty big box spaces. Bezos over at Amazon has been a big winner and I commend him for creating a web portal that is easy and convenient with an excellent “search bar”. Over at Amazon, you can travel the shopping neighborhood with a click of a mouse and let someone else take care of the logistics otherwise associated with parking, ambivalent pedestrians in mall parking lots, and service levels deserving of the pay grade. How many clerks have given you the blank stare once questioned about pitiful inventories in the most popular of sizes? These mall lease rates are going to start looking pretty hefty once ecommerce and competitive on line pricing increases market presence even more. Last question – how many folks have you witnessed at your local mall hands free of merchandise filling the food court rather than the tills of starving merchants?
Three Prominent Doomsayers
As part of my financial education, I took a course called “macroeconomics”. The discipline was certainly more interesting than its cousin “microeconomics” because macroeconomics dealt with topics such as the money supply in association with fractional reserve banking, central banks, interest rate policy, inflation, gross domestic product, international trade, and government fiscal policy. To this day I recall one moment sitting in class when my professor referenced the financial transaction evident when a new dollar bill is created. The banking elite make reference to “open market operations”. In Canada, if the “Bank of Canada” feels compelled to stimulate the economy, it does so by purchasing government denominated securities (treasury bills, bonds) in the open market. Consequently, the seller deposits its cheque thereby increasing the capacity for the seller’s bank to lend against the increase in its “reserves”. Money becomes available to a qualified debtor. The scariest part of this transaction is skimmed over by academics. Where did the Bank of Canada get the money to purchase these securities on the open market? You guessed it – the Bank of Canada pulled it from its printing press. What compliance formula did the Bank of Canada need to adhere prior to firing up the press? Well, none. That’s right, none. It used to be the case prior to 1928 in Canada that new money could only be created with a proportionate increase in gold reserves (gold standard). In 1991, the Canadian government enacted legislation abolishing any responsibility of Chartered Banks to hold cash reserves. Hence; in the event of a sudden loss of confidence in the Canadian dollar, a wide swing in inflation / deflation, a material reduction in a debtor’s ability to repay loans, those first patrons to the ATM win.
Modern economic theory has aligned to the sentiment of D.H. Robertson from Cambridge University who in 1948 stated, “The value of a yellow metal, originally chosen as money because it tickled the fancy of savages, is clearly a chancy and irrelevant thing on which to base the value of our money and the stability of our industrial system.” Today, three particular economic doomsayers, namely Jim Rickards, Peter Schiff, and Martin Armstrong have gone on record to refute the sentiment of Mr. Robertson in lieu of our current monetary system’s weakness.
Canadian Bail Out of Softwood Lumber
When you first embarked upon your career, you may have stumbled, adjusted, retooled, and re-evaluated. Then you found your path. If you are a highly capitalized business in Canada burdened with plant and equipment and a claim that jobs will be lost in the face of market forces, you get teary eyed and whine to governments for bail outs. This is becoming endemic to the Canadian corporate psyche. If you have business operations in Quebec – then governments not only wipe your tears with oodles of cash but roll out the red carpet in a direct line to the treasury.
Your governments get themselves into trouble because they cannot balance a cheque book. Then they think in order to keep the funds flowing, they’ll need to “invest” in the plumbing that keeps the cash flowing. They’ve got it wrong. Capitalism is the driver of economic success. Taxpayers expect services related to the common good and not targeted bail outs for losers irrespective of international trade agreements and barriers.
In a capitalist environment while facing international trade pressure, manufacturers curtail production until the environment once again turns friendly. Those involved in the industry have every opportunity during a down turn in a land fostering freedom to redirect their energies just like every other Canadian is expected to do during times of career / job pressure.
I expect more of my governments handling my tax money and I bet you do too.
Ryerson Reports Modern Day Slavery
The Star this morning has reported on the plight of immigrants working through temp agencies. It should be no surprise that take home pay for such workers are a pittance when factoring in day care costs, taxes and the “pimp”. I have a client who introduced me to this label which I actually find quite fitting. Ryerson University will be reporting on these “middle men” in an upcoming report. When I lived in Vancouver for a time, I was registered with about five agencies. I’d get on the phone in the morning to see what was happening and mostly get the cold shoulder. One particular agency was responsible for the majority of my hours. One occasion led to a respectable full time job where I was able to make an impact. In fact, this position launched my “reworked career”. This should be what “temping” is all about. A worker should be in transition while pursuing a focused primary career goal. It should not be a way of life.
In Canada, we pay too much income tax. Employers are also burdened by payroll taxes which tempt them to temp out situations which arise in their business as opposed to binding themselves to legacy like costs. It makes business sense. It also reduces the burden placed on an “HR department”. Unfortunately, socialist government models impede the capitalist instinct. Workers are less inclined to promote themselves directly to employers and employers are less inclined to make commitments to workers. Ryerson will be releasing a “study” but I can espouse with confidence that one doesn’t need a PHD in economics to deduct the street level ramifications of the market condition for temps. When business can’t compete with public sector salaries and pension plans, it will look to the market for ways and means to obtain non-payroll help. Alternatively, it will close up shop or find a more business friendly jurisdiction.