We all know that we need to have competitive pricing. Manufacturers missed an important change in their own markets a while back–-say, a couple of decades ago. The companies that make things started giving their best prices to their worst customers.
I learned early in my working life that if you want to make money--You just have to be willing to take the money from someone. Who? Your choices are limited to who you exchange money with: customers, suppliers or employees. Really big companies also take from the government sometimes, but us plain folks don’t get that option. The sales prices in small business are not as competitive as they could be because of some outdated thinking in the manufacturing world. Big retail in particular has decided to take the money from their suppliers.
In the business to business world, like between you and your suppliers, the worst customers now get the best price. Long ago, small businesses really were the worst customers because the paperwork made it cost more to sell in small amounts. But with computerization and supply chain management, there’s little cost difference per unit in shipping 10 or 1000 of the same item and almost unlimited locations. The advantage that manufacturers thought they were getting from discount pricing are gone.
Where is the business advantage in granting big discounts for large purchasers if there is no cost difference? In short, there isn't one. No benefit.
Small Business buyers should ask their suppliers why they have to pay a higher price. Those suppliers are actually undermining their own pricing (and profits) by granting discounts to discounters. And they are almost certainly guaranteeing that their future profits will continue to decline because as the discounters grow, they become more bold in taking the manufacturer’s money.
Flat Pricing for Everyone.
If you subtract out the taxes that are levied on fuels like gasoline, the price of fuel around the world is actually pretty flat. Most countries pay about the same price. One big exception is China, where the government subsidizes the price of fuel. It’s very low compared to everywhere else.
The thing that I am wondering about is this: how much less is the fuel cost to move a tanker from China to the U.S. than the other way ’round?
I don’t know what to do about it, but it seems an unfair advantage both for producing goods and transporting them.
UPDATE. 6-19-2008. Well, it’s 5 days since I wrote those words. And the Chinese government just raised the price of gas. Is this one of those chaos theory butterfly effect dealies? Either that or I am completely creeped out by Chinese data mining techniques. Oh. Could just be coincidence.
Universal and Free College Educations. An educated population is more likely to seek better employment and better opportunities. There are more quality entrepreneurs, smarter voters, and a great recovery on our investment. Here are some of the obvious ways that we recover our investment:
- Income. Education equals income and income equals new business for YOU. Plain enough?
- Taxes. The fact (it’s not a theory) of greater income also means more tax revenue.
- More Hope and Less Failure. Education reduces a host of costly ills: teen pregnancy, drug abuse, avoidable health problems like alcoholism and tobacco use… an education prepares people for a brighter future. It’s an investment in optimism.
Education is also an export product in the United States. A significant benefit to us all is the increased education infrastructure. America is still the place where the world would like to educate their children. We are the world’s supplier of choice. The more capacity we have to educate, the more we can sell that capacity on the world market. Again, like health care, how can this result in people wanting to bomb us?
Doesn’t an investment in optimism sounds like us?
The Opposite Of A Bullet
Having health insurance in the US is a lot like eating a gourmet meal while sitting next to a starving person. They could die while you are eating.
Universal Health Care. Here is a different title for that idea: Universal Health Care EQUALS Competitive Advantage (for American Business... for the American People). I am tired of waiting. I am tired of hearing talk about incremental steps. It is time to simply make the case to the people, tell them what they get and ask them to support health care for everyone. Yes, I am completely advocating that every American resident be added to the Medicare rolls. Its a proven system, cost effective and they don't even have a way to tell your doctor how to treat you.
Most economists could probably agree on at least one result of granting universal access to health care: we would have to build more health care infrastructure. What can you do with infrastructure? Sell the extra capacity on the world market. Health Care is one of the rare markets where high value American know-how is still worth the money on the world market. I think that we should immediately implement universal coverage because our people are sick and our businesses need profits.
How do we pay for it? Any way we can, though a good candidate is to make cuts in military spending. Other than our citizens existing in harm's way, military spending is largely hardware products whose use includes bad consequences for someone in another country. Why are we surprised that selling bullets sometimes results in guns being pointed back in our direction? Health care is a knowledge and services product with great export possibilities and few negatives for the recipient who can also be in another country. When you have a paying customer in another country, it's absolutely correct to label the product an export. In terms of simple human affect, health care is pretty close to the opposite of a bullet. Doesn't healing sound much more like the American people than killing?
At home in the US, providing health care to our citizens benefits our own economy tremendously. Healthy people are more productive workers, sick people can't work and sick people without treatment might never work because of this fact: 18,000 to 22,000 die each year because they are uninsured. Meanwhile, as if dying weren't a high enough price, we squander talent by not creating high skill jobs that would mean employing more people at wages that have disposable income. That larger disposable income means a larger consumer economy. Universal health also removes a big cost burden for business. It leverages all of our businesses' efforts to compete globally. Even very large corporations like GM and Wal-Mart are now asking to be relieved of the cost of health care--even if it means they must pay new taxes.
Will people lose what they have now? Yes, definitely, and it's time to get over it because switching from HMOs isn't really going to be very painful. The system that we have now leaves millions with excruciating choices and we can choose to end that pain. There are 47 million without insurance in the US--living with health insurance in the US is a lot like eating a gourmet meal while sitting next to a starving person. They could die while you are eating. Everyone loses what they have now--and they gain new access to a stable existing system, in the Medicare case: coverage that includes independent doctors making the health decisions in a system of industry accepted cost controls. Medicare has exactly ZERO management of doctors, but they do effectively control costs.
Insurance companies are still likely to still see a lot of profits because they would decrease their loss exposure. And since universal coverage would have gaps, that would create new opportunities for them. They have the tools and skills to be large providers of services in the claims processing area but also in the higher profit area of supplemental insurance. Also, many insurers have adopted HMO practices, which means that they own hospitals and clinics. 47 million new customers for those hospitals and clinics seems likely to grow their business. For non-insurance businesses, employer paid health insurance (in the form of supplemental coverage) can once again be a benefit offered by businesses to compete for talent. This contrasts starkly with health care costs being a reason to go out of business or ship jobs overseas.
In a global economy, one of our nation's better choices for ''export products'' is health care. In treating the world's health problems, our own health industry's skills, technologies and business practices get better. The US health industry would become better at keeping us at home healthy. And as a business case, health care is a long term prospect--''doctoring'' as an industry is growing worldwide and people aren't going to stop getting sick any time soon. In addition to health services, who's going to train all the doctors? How many jobs does a Medical University create? And how much good will?
When you consider our current foreign policy, which is ''executed'' largely through military means (and therefore through military spending), it is a net economic loss for the country--very little profit returns to the US for each bomb or bullet that we send abroad. If we are looking for return on investment, Health Care is, again: the opposite of a bullet. Real profits would come to the US from health care. And a likely affect in the "global market" is that few people in foreign lands are ever going to want to bomb us after "we" take out his auntie's appendix. There are two big issues that nay-sayers bring up around universal health care plans: bureaucracy and patient choice. Here's an old salesman's answer to that objection: "When was the last time your HMO's bureaucracy gave you a real choice?"
I think that our brand needs some work. And even though I make advertising, I don't mean communications work. I mean big changes in systems and infrastructure work. "America" as an idea is probably the strongest brand that has ever existed, but no one knows what that brand really means. Any marketing guy will tell you that a brand means what you make it mean. Our people and our country used to be clearly understood as good and freedom loving. Now, not so much. We need to change what we are selling. Lately, we've been selling bullets. At gunpoint.
Here's the short proposition: Let's invest in our Education and Health Care by supplying to everyone. We can pay for it by allowing more people to become taxpayers through immigration and also by reductions in military spending. The United States is strongly positioned to continue long term MARKET Leadership in Education and Health Care. We are the supplier of choice for most of the world in both of these fields. People want to come here and spend their money on health care and education. While they are here, they get to experience our way of life: tolerant, open and generous. They leave here as our friends.
Contrast this with how we are promoting our way of life recently. We are more and more being defined as the brand Militarism. Terrorism is a crime. Terrorists are criminals. We could probably use more investigations, and fewer invasions. When we respond to terrorism with our military, we elevate criminals to the status of freedom fighters. Certainly not in my eyes--but in the eyes of many.
Remember the old bumper sticker: "It will be a great day when our schools get all the money they need and the Air Force has to hold a bake sale to buy a bomber." As it turns out, this may be a very profitable position for American business. In the 21st century, education and health care are looking like great export products. Exporting our military has proven to be a terrible way for us to get paid. "Less Government" politicians never seem to actually make the government smaller, so how about we just give up on the decades old 'small government' experiment and focus instead on making government more effective.
Ronald Reagan was famous for effectively cutting programs that he didn't like by choking the money supply to those programs. His big idea was to spend so much on 'critical' military items that there was no money left for other things. I'd like to see a similar strategy - in reverse- that reduces our militarism. If we fully fund education and health care for every American, we just plain won't have the money to maintain troops overseas for decades.
Teddy Roosevelt established the "American Century" by investing in our military. He forcefully established our country as an economic and military power by vying for the world resources at that time. The times have changed. The needs have changed. Our policies haven't changed. I think it's worth pointing out that Teddy was also the first U.S. President to propose universal health care. Brand America. Let's invest our tax money here at home. Maybe, if we really are good people, we actually can export the love of freedom and good intentions.
A Generously Reduced Military
I believe that countries export what they manufacture. We are a great people: diverse, generous and kind. How does sending guns anywhere under any conditions represent who we are as Americans? And since this activity is paid for by the government with our tax dollars, this should be a matter where the people have a great deal of influence, not only corporations. No one really responds to taking care of their own needs if someone else is doing it. We should not be providing military security to any borders but our own. If we leave Europe, leave the Middle East, leave the Pacific, leave Asia then the interested parties will take care of their own interests.
Did we not hear Eisenhower's farewell address 46 years ago? We have now spent half a century eroding our economy through taxation supporting military activity that gets us almost nothing. And we have spent that money while millions have had no health care and while our roads and bridges crumble beneath us. Why is it political poison to discuss that 60 years later we no longer need the equivalent of the vast army needed to defeat the Axis Powers in World War II. The American people proved ready and able to mobilize as needed. "As Needed" is, I think, the key phrase. When did we become convinced that Americans don't know how to win a fight?
Perhaps George W. Bush's strategy of asking the Iraqis to "stand up" as we "stand down" could be applied to the United Nations and NATO instead. Let's put OUR money into fixing some of our problems at home by putting military spending back on the table at budget time--and cutting it. It's time to talk about constitutionally mandating that our home needs come first--a military budget in peacetime should come LAST. Why propose that? Because the militarists are trying to encourage a permanent war footing by adopting a constitutionally mandated percentage of spending for military use. Why? The people of the United States have proven themselves more than ready to take up that task when it is required. In addition to that generosity, we know how to win a fight.
I live in one of the most ethnically diverse places on the planet. The area surrounding San Francisco has been a destination for immigrants for 150 years. And Immigration works. The mixing of cultures here breathes in ideas and creativity and then exhales art and business. The economy is vibrant and exceptional.
Mexico, Mexico, Mexico. The immigration debate in our country is all about Mexico, so let's just talk only about Mexico. There used to be a knee-jerk response that immigrants were stealing jobs. Yet almost everyone acknowledges that many immigrants are willing to do work for which there is no domestic labor supply. If no one here is willing to have these jobs, and the jobs need to be done... well, shouldn't we be willing to allow immigrants to generate that economic activity? Someone making money is better than no one making money.
Stealing Jobs? It's not intuitive that a competitive environment creates opportunity. Members of groups that perceive themselves to be advantaged over competitors seek to protect their advantage. But it doesn't actually work-- economists show us over and over that free markets generate more opportunity than closed markets. Restricting access to competitors actually reduces your opportunities.
The Economies of Immigration. Another big factor is the funding of public works. We have been hearing about the coming Social Security crisis for many years. And that problem is directly stated as too many beneficiaries and too few contributors. Why is no one talking about promoting immigration from the most obvious source of new contributors, new taxpayers-- Mexico?
Free Market Types need to start walking the walk of truly free markets--which includes open immigration.
Here under the "World Knocking" category are a few of articles that I wrote way back in 2007 asking Small Business people to start thinking a little differently about *GASP* their politics. Why on earth would I do that? Because I am trying out an explosively direct bleeding-edge advertising technique: the truth. There is a human at the other end of these words and if I tell you about me then it can help you to decide if you're willing to do business with someone like me.
As a demonstration of advertising techniques, this is "Informational Advertising" that segues into "Relational Marketing." You might think I'm nuts or just plain wrong, but it's much more likely that you already understand that I am a person who is willing to talk with you as a person. If your advertising doesn't do genuine human stuff like that, get in touch: NeighborWave will fix your advertising.
Since I help people fit advertising into a their business plans, these topics really do come up in my work conversations. To my surprise, when I speak the truth to people, many agree that WE ALL are facing some serious problems and those problems are affecting business by eroding sales and lowering profits. Many of the advantages that we have all supported over the years have turned into big disadvantages--not for our government--not for other people--but FOR US. Big disadvantages for the owners of Small Business. I want you to consider the idea that many so called "progressive" ideas are not progressive at all: they are actually investing ideas.
What kind of return on investment do you want? Have you struggled in your business with health care costs, employee turnover, profitability under intense competition? It's not just you--it's everyone. There has been a steady erosion of the underpinnings of our economy and the erosion happened largely as a result of public policy. Publik Pawlicy (like education). You know, that politics stuff. My question for you as I attempt to inform: Does saving money on your tax bill help your business when it is starved for customers? Or... put another way: Where are your customers going to come from when everyone except you is poor, stupid and sick?
Hey! Handy Links!
New Investment Strategy for Our Country. (because I love a big idea and secretly want to be president.)
How To Fix Health Care for Small Business. (hint: fix it for everyone.)
How did we get so Dumb? (we convinced people that education was for someone else.)
Where did all these people come from? (immigration is your friend.)
Guns and Ammo for The World. (i'll buy my own powder, thanks.)