Why would car manufacturers offer rebates? Incentives? Bonuses?
We’ve always assumed it was just healthy competition for our money, and who are we to knock a gift-horse in the mouth?
But it’s not competition, at least not with each other. The market just doesn’t support the prices that inflation has dictated they have to charge for their product.
Isn’t that funny? The system is actually showing a fairly blatant sign that it’s failing over the long term.
And why rebates? If they’re overpriced, why not lower the price? If the consumer’s cost has to come down in order to move the damn things off the lot why not just lower the prices? I think it’s because the dealers still have to get their percentage, and the rebates are time-limited, so the dealers are encouraged to buy a lot full without accepting any more risk. And with a full lot they’ll spend more on advertising, and so on.
But why? Why are they in this situation?
It works like this- everyone wants to get ahead, so they ask for raises. They’re entitled, under this system, to the occassional increase in pay. Aren’t you?
But this tiny improvement in your standard of living, without being passed on, would mean that over time the corporations would go broke. So they pass the increasing cost of production onward to the consumer. That would be you. A happy vicious circle. Doomed to fail.
It’s simple. Everyone wants to get ahead, and therefore very few of us ever will.
I’m not really advocating communism or anything like that. I don’t have the solution. Well, actually- I do, but no one would be interested in trying it.
See, if we did a global price & wage fix (no, it’s not that easy, but the theory holds so bear with me) then inflation would by definition no longer be an issue. We could all get down to some serious saving or investing or whatever we wanted, and we’d all, literally, get ahead. There would be more money in the system and it would be a healthy, sustainable system.
It wouldn’t do much for progress, technologically, because without that economic near-drowning we just don’t have the same drive to innovate, but we’d all, as individuals, be able to get ahead. Would that be so bad? Would you give up raises for two years if it meant the whole system got some breathing room? Probably not. See?
One interesting side affect we may see down the road is the collapse of the huge corporations, rotting from the inside. As they outgrow their ability to sustain themselves (where it’s a situation of grow or die) we’ll see more mass shut-downs and down-sizings. (As a side note- many of the huge corps blame unions for their troubles, and they’re only half wrong, but that’s another post.)
On the other hand, that grow-or-die system works just fine as long as you can sustain and manage your growth intelligently.
But I digress. The system is a mess. Too much money is being funneled to too few individuals, and the trickledown is only a trickle. Actual profit margins on large tech purchases like vehicles are pretty slim, and companies routinely report losses. We’re shocked to hear about Ford reporting a loss, because they’re unimaginably huge, yet there it is. And to protect the shareholders’ margins factories have to be shut down. Costs have to be cut. Lose the investors and you lose the farm.
It would be nice to offer a more palatable solution, or even a real solution, but as long as we all wanna get ahead (and deservedly so, yes?) we’re stuck in this loop. in this loop. i need a raise.
p.s. – this is entry #100. woowoo!
From what I can see about the way to get ahead in the world, it’s all about spending less rather than making more. In Western society, usually raises are accompanied by an increase in spending. $100k/year households drive two cars and live in huge houses. If they lived in a slightly better house than they did when they made $45k/year, they’d get wealthy very quickly.
That’s the rub. To actually ‘get ahead’ we have to semi-suffer in the short term. It’s not what you make, but rather what you save. Thingy.
COMMENT:
That’s true for individuals, but on a larger scale that’s disaster. The capitalist system depends on consumerism. If we don’t spend, the whole thing ices up and collapses. Money has to be fluid.
But to take your point on a bit of a tangent I’d be very much in favour of smarter spending. Educated spending. Responsible even.
Yeah, for sure. I’m not so much saying people shouldn’t spend at all, or even that they shouldn’t spend more if/when they make more. Heck, people could even save a lot if they delayed their increased spending by one level.
When making $10/hour, spend like it.
RAISE! (or new job)
Now making $12/hour for example, but if you keep spending like you’re making $10/hour, you’d be saving just under $4,000/year.
I don’t remember how to do the math, but if you saved that from the age of 20 in an average-return RRSP, you’d be a millionaire by the time you’re 60, I’ll bet. Or 45, or something.
Hey, maybe we could combine your point with my wage-depression-initiator-machine? *grin* Depress ’em into saving!!
I must admit this is a very theoretical topic. My long standing theory is that if everyone in the country pitched in ten bucks we wouldn’t have a deficit. Company’s would easily throw down a thousand for a tax credit. Well that or we stop giving it away to countries who have no intention of paying it back! Sorry that wasn’t very globaly responsible of me.
I agree with AA. When you are really broke a GST check for $75 bucks saves the day. But when you start making it again, you blow that at dinner. Funny, but I once heard something that people never make enough money. As soon as their income rises so does their expenses. I also link this back to my frivolous post.
Pardon me. Does anyone have some Grey Poupon?
And if everyone threw their 10$ in, how long would it take us to get that debt back I wonder.
Regarding the gst cheques… so true. There have been times where that cheque has saved my ass, and times when I haven’t even noticed that cheque go through my account.
dammit, now Im going to have a barenaked ladies song stuck in my head all day.
“not a real green dress, that’s cruel”
But Canada is the only G7 country still reducing the deficit. Our tax system is also competitive and in most cases better over-all than the US. They have to pay for health care, remember.
No, it’s not quite what I’m talking about. I want a fundamental elimination of inflation (inflation being rising prices out of proportion with actual production costs to offset wage increases).
Eliminate inflation without changing spending habits, and instantly everyone has more to play with, including the top dogs. The value of a dollar would then increase proportional to the defunct rate of inflation and before you know it we have a powerful progressive economy and everyone is benefitting.
I’m no economist, but what sense is there in a system in which everything is always increasing?
As far as I am aware, from the relatively small amount of economics that I have studied so far, inflation only becomes a problem when it spirals out of control: this becomes hyperinflation – the most famous example of which happened in Germany in 1923. Hyperinflation is a problem because it happens so quicky that money becomes totally devalued, and prices can increase several times over in a matter of hours, such that the money is no longer worth the paper it is printed on.
So when inflation is high, such that it is uncontrollable, it becomes a problem, but inflation at two or three percent is generally considered stable and does not really cause any major problems for the economy of a country. In some cases inflation may encourage growth – people think that because the number on their pay cheque is bigger, they have more money, so they may either spend more or invest more – either of which can help stimulate growth.
Unless inflation is uncontrollable, it does not cause any major problems for the economy.
Right, like if gas still cost 40 cents a liter and if a root beer still cost 20cents or a quarter. I get cha. What is the use really. The margin is still the same. I could charge you 30,000 for a sammich, but if I am paying you 60,000 an hour it doesn’t really matter.
Basically inflation works on both our cost of living and our wages. I’m not sure which one leads, but like you said. “What is the use?”
No problems except the continuing decline of the value of a dollar. You’re definitely voicing the accepted theory. But if that theory is entirely valid shouldn’t minimum wage increase every year at the same rate as inflation? See? Something in there is not working, and it’s because of the inherent greed of humanity.
A buddy of mine, Jason Chu, commented on the similarity of what I’ve been saying with what he calls “Game Theory”, where everyone accepts a little less for the sake of the common good (correct me if I’ve got this wrong, Jason). If anyone wants to get ahead they have to do so at someone else’s expense. Work together and everybody wins. Work for yourself and maybe win bigger, but that leaves less for someone else.
It is so sad, but so true. Everything that we need to survive in life keeps going up. Food, clothing, housing, but the wages never increase. I was watching a news programme awhile back stating how people are living at home longer and no one knows why. I will tell you why. Students go to school, but can not afford to go because tuition keeps going up. So the student gets the student loan, finishes school with a huge debt load. That student then finds a job at minimum wage, becaue it is so hard to find a good paying job, and can not afford to live on there own, therefore staying at home longer so that he or she can afford to survive.