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Too Big to Fail
Further to MD's post on America Viewed as a Corporation, here is a thoughtful view of the North American economy that parallels Wal Mart's challenges with those facing North American society as a whole. The author's view is that the underlying cause is a belief in today's society that we can get something for nothing. An excerpt:
Quote:
Everything comes at a cost. In this case, the brief moments of hyper-prosperity we experienced over the past two to three decades (and more generally, since WW II) were gained in exchange for a more fragile, less-resilient America. We now have a supply chain that extends across the globe, but it is susceptible to swings in energy prices, which we don't control. We have little domestic capacity to fall back on.
We all have a chance to live like European royalty on our suburban estates, but again, we are dependent on cheap energy, a massively complex and fragile supply chain, and an easy, stable money supply. We have no energy program. Period. No backup plan. We've spent ourselves in the public sector, but especially in the private sector, so far into debt that we have no reasonable chance of paying it back. We've not borrowed primarily to create things of value, just to consume. Again, no Plan B.
We can build millions and millions of dollars worth of infrastructure for the near-term growth it provides, finance it with cheap borrowing or subsidies from higher levels of government, but now we have to maintain it all with returns well short of what is needed. Didn't anyone ponder this as we went?
The odd thing about Wal-Mart is that, for many places — especially small towns and suburban areas — it is too-big-to-fail. Literally, without Wal-Mart, what would people in some places eat? There are no local bakeries anymore — they've all been put out of business. Same with the butcher, traditional clothiers, shoe salesman, repair shops, printers, etc ... They are all gone, replaced by the magic prosperity-boxes.
Here's a little insight about Wal-Mart that is important to grasp as well: Their business model, like everything else American, relies on ever-increasing rates of growth. Is seven consecutive quarters of declining sales a momentary blip on the radar or a harbinger of the failure of a complex and fragile model?
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Full article here: Wal-Mart. Too big to fail. | New Urban Network
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