Thursday, November 1, 2012

Capitalism: The Party Goes On

By Tom Kando

Today, my wife and I  went shopping for a new refrigerator. We got a miraculous twenty-four  years out of our existing refrigerator, but it’s dying. So we drove to the usual places - stores such as Sears, Lowe’s, Home Depot, RC Willey. These are all massive, nationwide chain stores that sell furniture, appliances and other things. When you enter Lowe’s, the building is so gigantic that you can’t see where it ends. The floor is larger than a football field. Same with RC Willey.What I want to tell you about today is how things looked, while we were out shopping.

We first drove to  the  Galleria shopping mall.  To most of the two and a half  million people of  the  Sacramento metropolitan area, the Galleria is probably the finest local  mall. I has about 220 upscale stores and it was built about a decade ago.

But the Galleria is  just the beginning.  The growth beyond it is flabbergasting! It  is now  a small fraction of the hundreds upon hundreds of additional new businesses that stretch out to the horizon  in all directions.  As we drove in search of RC Willey, we passed acre upon acre of  new business and residential growth.  We drove through gigantic shopping areas  too fancy to be called strip malls, much more resembling veritable shopping malls..

There were of course all the familiar  fast food chains, but also excellent restaurants such as Pasta Pomodoro, Chipotle and many others. There were  the giant outlets I already mentioned,  plus countless other ones - Target, Costco, Kohl’s, Best Buy, specialty stores such as Sports Authority, Petsmart, Petco, Barnes & Noble,  Gap, Lord & Taylor, BevMo, upscale giant grocery stores like Whole Foods, Winco and  Trader Joe’s. A dozen Starbucks of course. Also innumerable hotels - Marriott, Courtyard, Hampton Inn, Holiday Inn, you name it, suggesting that the area may be a shopping  destination like Minneapolis’ Mall of America.

And then, there are the vast new residential developments - places with  names like  Stanford Ranch and Sun City. The houses look luxurious. Their sizes  probably range upward from   2700 square feet The three-car garage is becoming the norm.
This is just one of many such areas around Sacramento. There is also Palladio, and Town Center and Serrano, and Rancho Murieta and other ones, many of them  with 16 to 20-theater  multiplexes, some  with their own golf courses, all built in that festive, attractive golden Tuscan architectural style they use these days.  In the Sacramento suburbs of Rocklin, Folsom,  Roseville, Lincoln, El Dorado Hills, Elk Grove  and elsewhere, these vast shopping,  residential and recreational  areas sprung  up like  mushrooms after rain - at least  until the great recession hit. And frankly, it doesn’t look like it’s slowed down since!

I don’t get it. How is this economically viable? My wife and I often go to  a movie on Friday night at one of  these  suburban multiplexes. It is not unusual for us to be the only  2 people in the theater, or two out of  half a dozen spectators. So I ask myself, how does this work - these thousands of shops and enormous stores like RC Willey? How can they be profitable? Are there  enough customers with enough money?
It is clear that we, Americans, are expected to continue to consume at an insane pace.  But who are the investors? Where does the money come from for this continuing suburban explosion? Who owns these millions of stores, shopping malls, golf courses, upscale tract houses?
Foreign investors? I suppose that’s part of the story. According to the Wall Street Journal (June 20, 2011),  foreign investment increased  from $153 billion in 2009  to $228 billion in 2010 - an increase of $75 billion, or  49%.  7-Eleven is Japanese-owned,  Trader Joe’s is German, Budweiser is now  Belgian, Shell has always been  Dutch, etc.  According to the US Department of Commerce, in 2010, the five largest foreign investors in US companies were  Switzerland, the United Kingdom, Japan, France and Germany (in that order). Surprisingly, China wasn’t even in the top 10, nor were any of the filthy rich Middle-Eastern oil states.  Also, the true  investment - be it by foreign or American investors -  is primarily  in the real estate, which is then leased by the stores.

One thing is for sure: without us little people  spending money there, the lavish  malls become ghost malls.  There has got to be trickle-up, not trickle-down. 
The global  economic system OVER-produces. Production is not guided by  need. It is the opposite: consumption is promoted to match  production.

So, is everything okay this way? Probably not. There is obviously plenty to worry about - environmentally, economically, politically, morally. But the masses  who live, shop, eat out and enjoy themselves in these endless Disneyland-like suburbs are not millionaires. At the most, they are upper middle class. And the restaurants are fine, the houses are beautiful, the hotels are comfortable, and the merchandise is inexpensive.  As they say, you “get value for your money.”

So the party goes on. leave comment here