Here in early 2010, the country still has the economy on its mind. A little bit of history on this.
Over the years of 1995 to 2005, the American consumer collectively started to take a breather. They had tired, it seems, of the perpetual struggle for bigger newer houses, SUVs and LCD televisions. Housing sales sagged first, with a distinct shift toward older homes and a resurgence in DIY home remodeling. The housing industry was alarmed and asked the government to "do something". The sitting president began, in his speeches, to encourage the mortgage industry to make mortgages available to lower income families so that they "can participate in The American Dream, which is Home Ownership". To emphasize this point, he sternly jabbed the lectern with his right index finger while he said the last two words.
Banks and mortgage companies, worried that if they took no action, the government would somehow force them through new legislation, complied, and the sub-prime loan was born.
Other industries took a cue and qualification requirements for car loans and credit cards were softened.
The beginning of the downfall-easy credit:
Sales of consumer goods of all sorts thereby were sustained...not because the consuming public wanted more, but because the easing of credit lured lower-income consumers, who still could not afford this lifestyle, to "try it on for size" before the payments got out of their control.
And out of control it got. A flimsy house of cards on its best day, the risks taken by the banking and mortgage industries finally came home to roost. The first that the public heard about it was the stunning news that one of the oldest and most stable financial institutions in the world, Lehmann Brothers, had gone bankrupt. Kaput. Following that were a series of collapses and then the now legendary Federal Bailout. Word on the street was that people were shocked and stunned, how could this happen?
This has happened before
But surprise should not have been the emotion of the day. A confident and assured awareness that this has happened before, and it will happen again, would have been more appropriate.
An entire sector of the finance industry figuratively died, over the years 1985 through 1996. That's less than 20 years ago - most adults remember the "Savings and Loan Debacle". That, too, had been caused by making easy credit available.
The underlying cause is obvious - we just have to pay attention
There's an underlying theme - when something gets big enough, it cannot be managed. Ultimately, the financial success of any endeavor is based on a solid and sound nearly intimate linkage between the organization and its customers. This cannot be held intact when an organization gets too large. It is the reason why large organizations are difficult to deal with, bureaucratic and cumbersome. It is why, during any time of economic change, it is the larger companies that fail, and the smaller ones who survive. A statistic not often told, but always true is that after an economic upheaval, a greater percentage of the workforce finds itself employed by businesses with fewer than 50 employees. As of 2010, 92% of US citizens who are emloyed, work for such small businesses. Such small businesses are nimble, they can offer one-on-one service to every single customer, and if the market segment they serve goes soft, they can quickly transition to another market segment.
Smaller is better
Smaller is better. Across the board. While the pundits suggest that there's somehow safety in numbers or that you "want the financial resources of a large institution" to back you up, history shows that it is the smaller organizations that survive, not the larger ones.
Smaller material suppliers give better service
I'm involved in consulting on the development of a small hobby product. I'm not an engineer, but I've become decent at writing simple software and designing little electronic circuits. I'm not at all good at designing metal boxes, which this thing has to go into. So I've literally shown hand-scratched drawings of my idea for the box to various vendors. The larger companies (thousands of employees) recommended mechanical design consultants for $500 an hour to help me out. They also quoted $50 to $90 each for the housings, if I purchased 500 at a time. I didn't know what to expect, but I wasn't ready to dip this deep for something that's just a test case to see if something I designed would really hit well with customers.
I Googled for "sheet metal fabricators" in the larger cities near me and did more talking. In the end, the company I chose to go with has 18 employees and has been family-run for five generations. They work on BIG projects - they built all the railway cars, for instance, for a tourist train inside a zoo the next state over. Mine is small - a few inches - but they were happy to engage with it. They took my hand-scratches, translated them to the language their machines understood, delivered to me 5 prototype housings for just the cost of the aluminum and a quote for only $12 each in the future, with a minimum order of only 25 units. I can handle that!
Smaller is better in banks
It's across the board. Our family switched from a large bank to a smaller bank recently and wow, is the service better. When we call the bank for any reason, we can talk to the same person, and it's the woman who handles our business when we go in person. When we were with the larger bank, we got shuttled off to a call center. We even got that treatment if we went in-person to the branch! Yes, one day we went to the branch to open a different kind of account, and the branch manager sat us in a cubicle, dialed a phone number and handed us the phone...we were talking to someone in India, to set up an account at the local branch!
Big car dealerships fail to diagnose; the day is saved by the little guy
It's across the board. Our car started misbehaving. The occasional buck and wheeze and some snapping sounds from under the hood. It was old...152,000 miles, so we were prepared for some kind of nominal repair. We took it to the dealer. We should have known better. The dealer said "nothing is wrong with it, stop being a complainer". Their diagnostic procedure was straightforward: they plugged their computer into a connector under the dashboard and "read the codes". "It's not throwing any codes, so nothing is wrong with it." They charged us a $90 diagnostic fee for this service.
Since the car was still misbehaving, I decided to try a different dealership. The service department manager gave me hope. "There are certainly things that can cause that behavior that won't show up on the computer. Bring it to us and we'll do better diagnostics." Well...I did and they didn't. This dealer didn't even connect a computer. They drove the car around the parking lot and said, "Many things happen as a car ages. At this age, we recommend you do..." and there was a long list and a cost of $600.00. I said if I do all that, will these symptoms go away? They said probably...but would not guarantee it. At least this time, there was no "diagnostics fee".
I mentioned this frustration to a neighbor who said "take it to my mechanic, Jake. He'll either fix it or tell you he doesn't know how, he won't lead you on and then do nothing." On that recommendation, I took it to Jake. "Have a seat over there, let me do a little inspecting and see if anything's obvious" he said. In just ten minutes, Jake poked his head through the door into the waiting room and said, "come look at this". He showed me parts...parts that were on the car. A "cap and rotor" it was, and there was this black part in the middle, with lots of crumbs around it. "The center electrode has worn away into powder. Here's what a new one looks like" and he showed me a much newer looking version of the same part. "It's $25 plus $37.50 for my labor, and I think this will fix the car." I said that would be great. He put on the parts, I paid and drove away - and the car's been doing great ever since.
I called both dealers back to tell them what happened. Not to "expose" them for frauds, but to give them a tip they might be able to use later. The first dealer got angry and said, "We have to follow the rules. The manufacturer tells us that step one is to plug in the computer, so we do that. It's not our fault if your car develops a weird problem." The second dealer said, "Well, your car is over five years old, you can't expect us to keep on top of the technology of something that old." Evidently the current models don't have "cap and rotor" parts.
It's not just businesses
As with most Americans, we have moved a few times when employment prospects dimmed where we were, and brightened elsewhere. For a while, we strove to find larger and larger homes...it's what everbody does, right? After a while, though, it seemed we were always cleaning, dusting and otherwise maintaining them. So, on one move, we downsized. From 2400 square feet to 1800. At first it felt cramped, but we started selling furniture that we really didn't need. End tables? For what? Out they went. Our large dining room table went away and we bought one at a garage sale with "leafs" to insert to make it larger for when we have dinner guests. After a time, we felt very comfortable.
We've moved once more since then and are now in 1100 square feet. It's wonderful! We can do a complete house cleaning in just two hours...end to end, every single fixture polished, every surface dusted, even over the doorways and windows. We have more time available for friends and fun.
That car story? The car with 152,000 miles on it is a small econo sedan. When we downsized from the larger luxury car, we worried that we would not be comfortable. Ah, but we are...the seats are more firm and our family member with "the bad back" can last many more hours without having a sore back. The smaller car is most definitely saving us on gasoline. And, as of this writing, the odometer reads 217,000 miles, and that "cap and rotor" was the first non-scheduled repair in the car's entire life. And we REALLY like driving this thing, it is nimble - it's fun!
We've even downsized the dog. After our Golden Lab breathed his final breath, we were eseentially given a stray Chihuahua mix. What a difference. You have to like frenzy - he's frenzied. But he's easy to travel with. Nobody is bothered when we ask "is it OK if we bring the dog when we visit" so we never have to make him suffer in a kennel. If he escapes...hardly a problem, we can out-run him. And, on days of bad weather when he doesn't want to walk outside, he can get his daily ration of exercise by running from one end to the other of our downsized house.
Small and local is the best
We've found local farmers from whom we get our produce. It tastes the best and really isn't very expensive. My sheet metal shop is relatively local, we bank at a bank whose HQ is less than 50 miles away. We find the best restaurant food is not at national chains, but at the family-run restaurant who's part of the local sustainable food chain.
All of this is best. All of it.
I would sure love to see the government understand this principle - you cannot properly serve the varied needs of disparate individuals by passing legislation in Washington that affects the entire country. For those of us who want to live life in the most healthy and successful way, we'll just have to do our level and local best, and basically avoid needing anything doled out by the government.
I'm convinced it's still possible in the US.
Not only more frugal, money-saving, but more enjoyable and probably better for the planet, although I'll leave that argument for someone else.
No comments:
Post a Comment