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Civil Service Pensions – A Marker for What We’ve Lost

by Brian T. Lynch, MSW

In New Jersey, as in many other states with conservative Republican Governors, the state civil service pension systems are under attack. A friend of mine, who has followed Governor Chris Christie’s rhetoric in the newspapers, commented about how reasonable this sounded since the system seems to be going broke. But the story of the pension system in New Jersey is more complicated that the current political sound bites. Let me tell you a true story about how civil service pensions came to be a target for public ridicule.

When I first went into civil service it was a calling to serve, not a career choice for the prospect of making lots of money. I was following the inspired words of John F. Kennedy and asking what I could do for my country. I was, and am still, an idealist. Money didn’t matter as much to me. I wanted to help people. I still feel that way now, which is why I blog.Back when I started with the state, everyone in the private sector had better health care and benefits, better defined pension benefits and they made a lot more money per hour or had higher salaries. Even the state cars we drove back then had no radios or air conditioning as that was considered too extravagant for state employees. That is the way it was, so working for the State came with low earnings expectations.

But things were changing in 1979 when I began my civil service career, even though I didn’t know it at the time. Big business had begun organizing politically and started spending big bucks on lobbying government for laws and regulations more favorable to business. Industry organizations were created to raise money and coordinate anti-union marketing campaigns. Ronald Reagan came into power in 1980 and set the tone for union bashing by crushing the air traffic controllers union. Private sector wages, which up to that time always rose in to proportion to increases in hourly GDP, were frozen and have remained frozen ever since. A fear campaign and actual business tactics based on globalization made jobs less secure. Private company pension systems were intentionally dismantled by big corporations to quarterly boost profits. Profit sharing arrangements took their place initially so workers had to invest in their company for their hope of retirement income. Then Wall Street saw all this money and wanted some action. They got congress to pass the IRA laws and all that pension money went to them.

Instead of real raises, businesses only offered cost of living adjustments, which keeps up with inflation but doesn’t share the extra wealth that the growing hourly GDP created for their employers. That extra wealth went to CEO’s and wealthy stockholders, beginning the cycle of great income disparity we have today. At the same time, Reagan cut the top marginal tax rate from 70% to 28%, a windfall for the rich and a huge loss of tax revenue that the rest of us had to bear.

So while the raises, salaries and benefits I received were always sub-par compared with the private sector during the first half of my career, declining private sector wages and benefits, rather than civil service raises or improved benefits, is the reason civil service looks so good today. In fact, civil service benefits have been steadily eroding for the last 15 years but this decline is slower than the collapse of private sector benefits. Civil service salaries also have barely budged in years and actually declined when you factor in inflation. But the assault on private sector salaries and benefits makes civil service look great by comparison only.

Know this, if corporate business interests had not conspired to suppress wages in America over the last 40 years the median income for a family of four today would be over $100,000/year. Instead it is shrinking and down to $51,000/year.

My point is that people in this country who work in the private sector have to fight back to regain a fair bite of the wealth they create for their employers. Workers need to re-organize and demand their fair share of our GDP. Rather than tearing away at civil servant pensions, people should be working to recreate what has been taken from them and use civil service as the framework and model to rebuild private sector retirement security.

There are particulars about why the pension system in New Jersey is in so much financial trouble.  It isn’t because it is too generous. It is in trouble because when New Jersey was flush with money during Governor Christie Whitman’s (R) term she stopped making payments. She said she did this because the stock market was booming at that time. She said the pension system was way over-funded and didn’t need more cash. By the time she finished bankrupting the state with massive tax cuts and increased credit spending, Governor James Florio (D) didn’t have the revenue to pay into the state pension system during his entire term in office. This default model became a habit with subsequent Governors. Nothing, or only fractional amounts, were paid into the retirement system for the last 20 years. Governor Chris Christie (R) refused to put money into the system a few year back, when he had the money to pay, saying he didn’t want to put money into a broken system. This is crazy talk since it was the Executive branch that broke the system in the first place by doing exactly what he was doing.

The New Jersey State Pension system is, to a lesser extent, also in trouble because it has been abused for years by politicians bumping up the salaries of their political cronies just before retirement so they get huge pensions that they didn’t deserve or contribute towards. Politician’s take advantage of the way pensions are calculated to reward their buddies.

In New Jersey, civil service pensions are based on the average salary for the last three years. Recently the Star Ledger newspaper criticized the Governor for bumping up the salary of a political friend such that his retirement income was around $120,000 per year when his base salary had been closer to $30,000 for most of his career. Politician’s have treated the state’s pension system like it was there private cookie jar.

So when the state’s pension system, or any states fixed pension system becomes a target for political destruction, let it be a reminder instead of just how much ground private sector workers have lost. Let state pension systems be the model on which the rest of the work force rebuilds what they once had.
Photo Credit: http://ivn.us/2012/07/11/california-ignores-growing-public-pension-crisis/

Coal Ash Disaster Turns Capitalists into Socialists (Again)

by Brian T. Lynch, MSW

Commentary:

Coal ash is what’s left after coal is burned. It’s a toxic stew containing heavy metals including arsenic, lead and mercury.  For many years Duke Energy has mixed coal ash with water and pumped this cocktail from coal fired power plants into huge open pits. In February, one of the sludge pits located in North Carolina began releasing millions of gallons of toxic coal ash into the Dan River, a source of public drinking water for thousands of people.

coal-ash-spill.jpeg3-1280x960

 Photo and article: http://www.salon.com/2014/02/26/north_carolina_might_finally_crack_down_on_duke_energy_after_disastrous_coal_ash_spill/

Duke Energy spent millions over the years to keep government from properly regulating their waste products.  For all those decades the stockholders and upper management of Duke energy have profited from this arrangement. Now that the inevitable has occurred, clean up effort will take years and cost a billion dollars. Millions more will have to be spent to correct the improper disposal problems that Duke Energy has practiced for decades.

Lynn Good CEO

Safely storing coal ash should have been a cost of doing business for Duke Energy all along, but they have deferred that cost to boost their profits. Now Duke Energy’s president and CEO, Lynn Good, thinks taxpayers should bear the cleanup costs. She said, “Ash pond closure has been a plan for very long time. And because that ash was created over decades for the generation of electricity, we do believe that ash pond disposal costs are ultimately a part of our cost structure.” She believes the burden of this clean up should be shared by everyone equally.  (Corporate socialism? Again?)

Corporation are legally obligated to maximize profits for their shareholders. This would be fine if they were also legally obligated to paid the full cost of doing business without cutting corners. Cleaning up toxic spills is far more expensive than preventing themand regulations to enforce safe disposal are less expensive in the long run. But asking the victims of their environmental crimes to pay for cleaning up their mess and fixing their problem should not be an option.

(See also: http://www.politicususa.com/2014/03/14/republican-hypocrites-force-nc-taxpayers-pay-duke-energys-toxic-coal-ash-dumping.html )

Graphic Truths about Debt and Deficits

NATIONAL DEBT?

Republican’s increase our public debt by lowering taxes on the wealthy, raising corporate welfare and starting wars. If you are surprised by this bar graph then you then you need to shop around for a more reliable news source.

Republican's increase our public debt by lowering taxes on the wealthy, raising corporate welfare and starting wars. If you are surprised by this bar graph then you then you need to shop around for a more reliable news source.

WAR SPENDING?

chart 1

CORPORATE WELFARE?

Corporate Welfare Grows to $154 Billion even in Midst of Major Government Cuts

 

The Embodiment of Corporate Welfare Himself - Mr. Moneybags

Editor’s Note: Even as the federal government executes major cutbacks, it’s giving huge subsidies in the form of tax breaks to industry, a fact legislators rarely acknowledge. The Boston Globe recently published a thorough and eye-popping report detailing the nature and extent of these breaks. We think it’s a must-read. 

By Pete Marovich

First published in the Boston Globe

WASHINGTON — Lobbying for special tax treatment produced a spectacular return for Whirlpool Corp., courtesy of Congress and those who pay the bills, the American taxpayers.

By investing just $1.8 million over two years in payments for Washington lobbyists, Whirlpool secured the renewal of lucrative energy tax credits for making high-efficiency appliances that it estimates will be worth a combined $120 million for 2012 and 2013. Such breaks have helped the company keep its total tax expenses below zero in recent years.

The return on that lobbying investment: about 6,700 percent.

These are the sort of returns that have attracted growing swarms of corporate tax lobbyists to the Capitol over the last decade — the sorts of payoffs typically reserved for gamblers and gold miners. Even as Congress says it is digging for every penny of savings, lobbyists are anything but sequestered; they are ratcheting up their efforts to protect and even increase their clients’ tax breaks. [snip] http://reclaimdemocracy.org/corporate-welfare-tax-breaks-subsidies/

__________________________________________________

Here is how the rise of corporate welfare looks in my state of New Jersey, and note in particular how it has grown under Gov. Chris Christie:

Time for Workers to Re-Organize!

ORGANIZED LABOR? 

Regardless of what you have been lead to believe about the evils of unions, there is no question that organized labor is responsible for creatiing the middle class and the good life as we know it today. But all that is in decline as anti-union sentiment grew in response to organized business interests in the 1070’s. I say this because I don’t see anyone else point out these facts. Here is another graphic view of how middle class income has declined in lock step with union membership over the years. Also, you will see that the savings in employee wages have gone directlty to the top 1% creating the huge income and wealth disparity we have today. Check it out:

It is clear to me, at least, that the heart of our economic woes is due to 40 years of wage suppression. This results in a declining middle class, a growing number of people falling into poverty, a decline in federal income tax revenue and an added burden on government to support a growing number of poor, working poor and unemployed Americans. You can’t separate chronically lower wages from our declining consumer spending. Regardless of what the economists say, if people don’t have money to spend the economy slows down and jobs disappear. Stocks are doing so well because so much of our financial sector is based on even more depressed foreign labor, yes, but also on depressed wages here at home.

If corporations what to stimulate consumer spending here, and make America attractive to foreign investors, they need to raise wages. They won’t do that because they personally benefit, financially, by keeping labor costs down. Their corporations benefit from the artificially cheap US labor pool created by government aid to the working poor for housing assistance, WIC, food stamps, daycare, etc. And then these bastards making all the money have the nerve to pit us against each other by promoting the lie that the working poor are somehow less worthy, or that they are stealing from us. If corporate leaders don’t see the light then the only alternative is for the work force to re-organize itself and demand higher wages.

 

Victims of the Third Column of American Politics

BLOGGER’S COMMENTARY

oligarchy2

He has been a friend of mine for years. We worked well together on school projects when both are children attended the same high school and our families socialized together. Outside of politics we have a lot in common, yet in the past five or six years we have become estranged. It isn’t our fault. We are victims of the rising tide of political partisanship.

It’s a damn shame that the billionaire puppet masters pumping money into politics to create divided, dysfunctional government have also driven a political wedge between him and me. I suspect there are many other friendships that have fallen victim to divisive politics. I tried to repair our friendship by explaining that the politics dividing us is actually a result of a third party attack on democracy, a third column, as I see it. But my friend is too firmly embedded in conservative doctrine to trust my arguments.

The larger truth is that there is a third column in American politics. It is the hidden hand of unprecedented wealth and corporate ownership. The only force in the world big enough to control corporate power  is civil governments. The power elites don’t what to be told what they can and can’t do, especially by one person, one vote majority rule. They are accustomed to corporate governance which boils down to one dollar, one vote. Their intent is to cripple civil control over our democracy and make government do its bidding. They have already overwhelmed most states and many countries around the world. Whether you are conservative or liberal, Democrat or Republican, it is the ultra privileged elite that is controlling the media and writing the scripts. THIS really is the big picture. What was once the conservatives/ liberal continuum was ruptured and is now this great divide. We were never so different before, my conservative friend and I. This is all a grand scheme and we are all caught up in it.

The wealthy oligarchs donate to the Republican Party in a ratio of at least 2 to 1 over Democrats. Moreover, their strategy with the two parties is very different. On the Democrats side they only support targeted seats and spend money on targeted issues. They buy specific votes when they need to kill or pass legislation important to them (making Democrats look sleazy in the process). This appears like the traditional way we think about lobbying and government, and both sides to it. This targeted strategy also happens leaves room for Democrats to champion other popular causes that don’t harm the oligarchs interests. This helps to preserve the facade of a democratic republic.

On the Republican side the Oligarch’s mostly own the whole party. They have put together an unlikely coalition of fundamentalist Christians, libertarians, small and large business owners, conservative special interest groups, neo-confederate separatists and anyone else who harbors antipathy towards the federal government. In fact, antipathy towards the federal government is the common thread that hold this coalition together.

To gain support of the fundamentalist Christians, who oppose secular government, the elite ruling class spends lots of money ginning up social conservative causes, like abortion or same sex marriage. To libertarians they serve up small government rhetoric, incite Second Amendment fears and promote “big brother” narratives. To businessmen they rant about government regulations and pro-labor policies. To white cultural warriors they attack immigration, welfare queens and exploit racial animus. To neo-confederates they clamor for stricter interpretations of the constitution and direct verbal animosity towards the federal system. To hold on to bread and butter Republicans they demonize liberals and the Democrats to raise fears about voting for them. To all of these groups they rail about taxes, but the whole time their real goal is to control the levers of power for their own gain. There is no longer any room left in the Republican Party for politicians who loves government and wants it to succeed in improving the lives of ordinary Americans (i.e.: moderates).

In the end, the wealthy power elite are neither Democrats nor Republicans, neither conservatives nor liberals. They are out for themselves and their own financial interests. This is the third column of American politics and the hidden hand behind the growing dissatisfaction with our system of government.

Four Graphs on What Hurts the Working Class

We never hear any reference to the working class these days. The media and our politicians only speak of the “middle class” as if that covers everyone who isn’t either poor or wealth. Even references to the poor are scarce. The working class exists. They are sandwiched between the poor and the middle class and they are being squeezed into poverty. It is cruel to ignore them and the terrible pain they are suffering. What has happened to them, aside from being ignored can only be touched on by the four graphs that follow. These were presented in a conversation I had with conservative friend of mine who has forgotten the working class exists. There are many factors hurting the working class. This conversation was only about four factors, wage suppression, the upward redistribution of wealth, working class decent into poverty and declining upward mobility. Post this is my way of addressing what I believe is the most hurtful factor of  them all… public silence.

Q:  I always thought of the owners as the producers of the jobs that the workers have. You say that it is the workers who are the producers. Have you ever been employed by someone on welfare?

A:  Owners coordinate the workforce, but it the employees who do the work that makes the products or services. So in a real sense, the workers ARE the producers. And this has nothing to do with welfare at all.  Jobs are not a product. Stuff is a product. Things to sell or trade is a product. Workers are key to making stuff or offering stuff yet when they want a fair share of the value they create they are treated like thieves. Read this and you will know what I am talking about even if you don’t agree:

http://aseyeseesit.blogspot.com/…/fair-wage-for-days…

hourly GDP vs Wage graph

I also just ran across this table (below) that shows were all the Hourly GDP wealth has gone since the mid-’70’s.

CEO Compensation

Source:  https://scontent-a-lga.xx.fbcdn.net/hphotos-prn2/1480602_10200873563747333_1576469932_n.jpg

Q:  Why should it matter how much a C.E.O. makes if their workers remain on the job? It’s one of the great things about this country. You can work where ever and for whom ever you want.  Someone please explain to me why it is greed for C.E.O.’s to make deals to be paid as much as the market will bear but it is ok for workers to make deals to make as much as the market will bear.

 A:  It may not matter to you at all, but anyone who wonder why they can’t have collective barganing while the CEO is making 400 times their salary might have questions, especially since this is strictly a feature of the US economy and others around the world are paid better than we are relative to their economies.

Don’t forget, almost  40% of people who work full time are poor. I’m not sure what percentage of the poor they account for, but it is clear when we speak of the poor we are not speaking only of people who are disabled, elderly, retired or unemployed.

Working and Non working Poor bar graph

http://upload.wikimedia.org/wi…/en/7/74/Pov_crossnatl.jpeg

Note here that in the US, the number of working poor (blue bar in right hand column) is twice the number of non-working poor. So when you and I talk about the poor, you are defining it as welfare recipients while I broadly define it as everyone living below the poverty line, the majority of whom work full time. That’s partly why we have a disconnect on this topic. In my understanding, most poor people work.

Q:  I wonder how many of the poor who are now C.E.O.’s would agree with you? Or would they say : “Work hard towards your goal, as I did, and you can achieve anything.”.  Isn’t this what made our economy great?  Not people who wanted a wage so they could be comfortable in the position they have today?  Flipping burgers at McDonalds is not supposed to be a permanent career goal. Even the management at McDonalds wants people to move up. Or am I wrong about incentive and ambition?

A:   There are 17,000 companies with 500 employees or more. There are 43 million poor. If 20% of CEO’s started out as poor children that would mean there are only about 4,200 CEO openings for 43 million potential applicants. It’s a safe bet that far fewer than 20% of CEO’s come from poverty. In fact, less than 20% of children born to poorest families will make it into the middle class in their lifetime. Less than 8% will make over $140k/year, which is approximately the income line where the richest fifth starts. Of those at the top, only the smallest fraction will become a CEO. I believe that if you really understood the economic situation in America you, of all the folks I know, would be a big supporter of the working class.

Upward Mobility bar graph

source: http://www.pewtrusts.org/…/Eco…/PEW_Upward%20EM%2014.pdf

As for incentive and ambition, a good paying job that makes one economically self-sufficient is the highest motivator.  But a self-sufficient wage for a single earners is over  $30,000/year whereas the median wage for a single earners is less than $26,000/year. In other words, the incentives are less than optimal in today’s economy, and no amount of hard work or individual effort will make a difference for most people until even low wage workers receive a fair wage for a days work.

Austerity for Dummies, Like Us

Imagine owning a small manufacturing business with 25 happy employees.  After paying overhead , suppliers, employees, benefits and your Potter’s Bank business loan you have just enough to get by.

One day your suppliers find they can’t get raw materials because of artifical shortages and price spikes caused by futures speculators that work at bank. The suppliers they need to borrow money to pay for higher priced raw materials, at least until they can adjust with worker layoff and cutbacks. Potter’s Bank charges them higher interest rates because now they’re “risky” borrowers.

Your suppliers must pass along their higher costs to you, so now its your turn to cut wages, benefits and hours. Your employees grumble and can’t keep up with the workload. Production stalls, but also sales start to drop because all the affected workers are also your customers.

One day you discover you can’t pay the bank loan, so you go to Potter’s Bank to renegotiate terms.  Potter tells you what he has been telling everyone:

“You’re a credit risk! Your workers make too much and the cost of their benefits is rising. Cut benefits, cut wages, layoff some of those lazy workers and you will be more efficient. Only then will I loan you the money you need.  Do as I ask or Ill  raise your interest rates further or foreclose on your business.”

This is the austerity trap. Bankers use their leverage to play both ends against the middle forcing both businesses and governments to be more labor efficient. It squeezes more production out of fewer workers for lower wages and benefits. It also suppresses consumption because fewer consumers are employed and those who work have less income or job security. It doesn’t matter if austerity is imposed on businesses or the public sector, the effects are the same.

Imposing austerity is like digging a hole in the economy, the more you dig the deeper the hole. It is good for bankers but bad for workers. It increases corporate profits but reduces personal incomes (except for the very rich). It shrinks the size of government but reduces support to the poor and unemployed people it creates.  What ever hurts workers hurts consumers which suppresses consumption and depresses the economy, which then hurts more workers in a literally vicious cycle.

Making debt reduction a priority during a recession, rather than creating jobs and putting money back into the hands of consumers, is austerity. As the article below points out with a graph, shutting down the government and causing the government sequester to lower government spending at this time has hurt recovery. It is the wrong prescription.

In a World Without Austerity…

By Adam Hersh | October 4, 2013

http://www.americanprogress.org/issues/economy/news/2013/10/04/76305/in-a-world-without-austerity/

Thanks to the federal government shutdown, there is an absence of new U.S. job market data for September 2013. Let’s take a moment to imagine the kind of economy we might see in the United States today had we not just lived through three years of fiercely divisive politicking for fiscal austerity—sharp cuts to public services and investments, as well as cuts to taxes on America’s wealthiest people.

If federal and state governments had not adopted policies of fiscal austerity, today’s jobs report from the Department of Labor would likely be telling us, as shown in Figure 1:

  • U.S. employers added more than 260,000 jobs in September.
  • The unemployment rate for September fell below 6 percent.
  • Since December 2010, the U.S. economy has added more than 8.2 million new jobs—or 2.4 million more than have actually been added.

employment without fiscal austerity

Immigration Myths Hide the Benefits Says US Chamber of Commerce

From the US Chamber of Commerce: This ultra-conservative organization finally comes clean with a DATA DRIVEN VIEWPOINT support their position on immigration and how it benefits the US economically.  http://www.scribd.com/doc/179652570/Immigration-Myths-and-Facts

 Immigration Myths and Facts

Despite the numerous studies and carefully detailed economic reports outlining the positive effects of immigration, there is a great deal of misinformation about the impact of immigration.  It is critical that policymakers and the public are educated about the facts behind these fallacies. [Says the US Chamber of Commerce]  

Below I present the major points of their arguments. Please go to their website to read a detailed explanation for each of these points. 

JOBS  MYTH: Every job filled by an immigrant is a job that could be filled by an unemployed American.

FACT: Immigrants typically do not compete for jobs with native-born workers and immigrants create jobs as entrepreneurs, consumers, and taxpayers
WAGES MYTH: Immigrants drive downthe wages of American workers.
FACT: Immigrants give a slight boost to the average wages of Americans by increasing their productivity and stimulating investment
ECONOMY MYTH: The sluggish U.S. economy doesn’t need more immigrant workers.
FACT: Immigrants will replenish the U.S. labor force as millions of Baby Boomers retire.
UNEMPOLOMENT MYTH: At a time oF high unemployment, the U.S. economy does not need temporary foreign workers.
FACT: Temporary workers from abroad fill specialized needs in specifc sectors of the U.S. economy.
HIGH-TECH WORKERS MYTH: There is no shortfall of native-born Americans for open positions in the natural sciences, engineering, and computer science and thus no need for foreign-born high-tech workers.
FACTS: Job openings are expanding at educational levels where demographic data show too few native-born students, so we can expect these shortfalls to persist in the future. Moreover, relative to other economic indicators, wages are increasing in STEM jobs requiring higher education.
COMMUNITY IMPACT MYTH: Immigrants hurt communities that are struggling economically.
FACT: Immigrants have economically revitalized many communities throughout the country.
TAXES MYTH: Undocumented immigrants do not pay taxes.
FACT: Undocumented immigrants pay billions of dollars in taxes each year.
WELFARE MYTH: Immigrants come to theUnited States for welfare benefts.
FACT: Undocumented immigrants arenot eligible for federal public beneftprograms, and even legal immigrants face stringent eligibility restrictions.
INTEGRATION MYTH: Today’s immigrants are not assimilating into U.S. society.
FACT: Today’s immigrants are buying homes, becoming U.S. citizens, and learning English.
CRIME MYTH: Immigrants are more likely to commit crimes than native-born Americans.
FACT: Immigration does not cause crime rates to rise, and immigrants are actually less likely to commit crimes or be behind bars than native-born Americans.
BORDER SECURITY MYTH: Reforming the legal immigration system will not help secure the border.
FACT: Immigration reform is an integral part of any effective border security strategy.

Razor Blade Prices Growing Faster Than Whiskers

What is up with the price of razor blades? 

There are few cheap plastic items as horribly expensive as razor blades.

It’s insane! Gentleman, where is your outrage? If these prices keep rising the length of women’s skirts and dresses will have to fall. It’s time for consumers to ask some pointed questions of companies like Gillette and Schick?

By some estimates the simple act of shaving our face can cost as much as a dollar per shave. I have been shopping for Gillette Mach 3 blades but can’t bring myself to cough up $24 bucks for eight cartridges. I went shopping again today and was shocked when I saw the unit price for them is $291 per hundred. The 4 blade Fusion cartridges are $180 more per hundred, or $469.75/ hundred.

I started looking around on the internet and discovered that the prices of these stupid plastic razors has been soaring everywhere, even in the United Kingdom. By one account on a British Website the cost of razor blades has climbed by 99% three years to as much as £3.49 (or $5.59 US) per cartridge. According to that article in costs Gillette less than 10p (about 16 cents) to make. (see below)

If you listen to business analysts or industry spokes persons it is either brand loyalty or the high cost of shaving research and marketing expences that is driving up the cost. I don’t believe it. I suspect something akin to price fixing is behind it all. I think it is time for someone to investigate the shaving industry to see why the costs are skyrocketing.

The great razor rip off: Prices of blades soar by up to 99% in just three years

By SEAN POULTER

PUBLISHED: 18:26 EST, 27 April 2012

Read more: http://www.dailymail.co.uk/news/article-2136440/The-great-razor-rip-Prices-blades-soar-99-just-years.html#ixzz2kJ3Yy3wM
Follow us: @MailOnline on Twitter | DailyMail on Facebook

The price of razor blade cartridges has surged by as much as 99 per cent in just three years – driving many men to adopt designer stubble. The cartridges cost less than 10p to make, but shoppers are being charged as much as £3.49 each. The biggest player, Gillette, has imposed a stealth price rise by cutting the number of replacement cartridges in its Mach3 Turbo packs from five to four. [snip]

 

Allure Man Asks: Why Are Razor Blades So Damn Expensive?

If you, like me, can remember a time before razor blades were kept behind the drugstore counter along with the cigarettes and other controlled substances, then you probably also share my amazement at just how much they cost. A four-pack of Gillette Fusion Power razor cartridges retails for $19.49 at Walgreens. That’s, what, $4.87 for a week’s worth of shaves? Outrageous!

I put this question to Jeff Raider, a cofounder of Harry’s, a new online retailer that offers shaving supplies similar in quality to the major brands but at half the price: How did razor blades become fetish objects? All of the good ones, he says, are made from similar high-grade steel, which is then precision-milled to produce a blade that’s thick at the bottom, where it’s anchored to the plastic cartridge that clips onto your razor, yet thin as a single hair at the top, where it mows down morning stubble. “The steel is a very expensive product, but the real magic of a fine razor blade is how it’s ground,” says Raider.[snip]

Good Question: Why Are Razor Blades So Expensive?

October 21, 2013
http://minnesota.cbslocal.com/2013/10/21/good-question-why-are-razor-blades-so-expensive-2/

MINNEAPOLIS (WCCO) — It can cost us anywhere between $20 and $30 dollars just to shave the hair from our faces or legs. Sometimes, the price of the razor blades is more expensive than the razors themselves.

So, why are razor blades so expensive? Good Question. [snip] Erin Lash is a senior equity analyst at Morningstar, anindependent investment research firm. She covers Gillette (owned by Proctor & Gamble), one of the the two dominant players in the razor market.  Schick (owned by Energizer Holdings, Inc.) is the other company.

Lash says part of the reason razor blades are so expensive is because consumers are loyal to the brand.

“Once you buy a particular razor, there’s no substitution for the razor blade,” she said. “Companies have a great ability to charge up for the blade once you’re locked into the actual product,” she said.[snip

Why Are Razors So Darn Expensive?

Because shaving is a science.

By  | Hub Health | August 9, 2013
[snip] “The complexity, length of time, and the cost of the [research and development] process is what factors into cost,” Vanoosthuyze says. “It looks so simple and so intuitive, yet it is so complex in its design and development process. The small details and dimensions go far beyond what the naked eye can see. For the ProGlide, to give you an idea of the scale of consumer testing that we do, 30,000 guys were involved in testing the innovation process,” she says.

So let’s do the math. In the photo above, a women’s package of razors costs $18.79 for five cartridges. If each cartridge lasts about a week, that comes out to about 54 cents a shave. Seems pricey, but what exactly goes into making a razor? Those stainless steel blades that you see are only a small part of the final product. [snip]

Carbon, Climate and a Mirror to Our Future

by Brian T. Lynch, MSW

If you asked most forward thinking Americans to name a disruptive challenge we face today, global warming would be high on the list. Climate changing levels of carbon dioxide have been released into the air and the impacts on weather, on raising ocean levels and melting glacier are underway. The most socially responsible among us are already reducing their carbon footprint by recycling, buying more efficient cars, better insulating their homes, buying Energy Star appliances, using florescent or LED lighting.  More and more people are also taking advantage of incentive programs to install rooftop solar or wind power generation systems.

The impact from these early pioneers of change is still quite small relative to the problem, but it is significant.  So significant, in fact, that the industries which release carbon dioxide to produce the energy we buy are feeling threatened.  After all, every time you replace an incandescent light bulb with an LED bulb you reduce their revenue.

Our power generation and distribution companies can adapt by getting into the LED lighting business for example, or they can maladapt by killing government regulations and initiatives to reduce carbon emissions.  It appears they have chosen to do both.  Some energy companies are investing in wind, solar or other renewable energy technologies while others are busy hatching plans to manipulate the democratic process in order to scuttle government incentives and regulations that threaten their bottom line.

When the power generation utilities think about the disruptive challenges we face as a nation they quite literally see a mirror image of what the rest of us see. The threats they see include “demand side management” (DSM) which refers to consumer energy conservation measures, and “distributed energy resources” (DER) meaning residential power generation such as rooftop solar systems.  This is explained in an national industry report released this past January by the Edison Electric Institute.  Entitled, “Disruptive Challenges, Financial Implications and Strategic Responses to a Changing Retail Electric Business,” the report describes how disruptive consumer conservation and residential energy generation can be to their business. To help electric utility executives better understand the disruptive forces of socially responsible citizens it offers this useful flow chart: [http://tinyurl.com/m5py4rg]

Vicious Cycle from Disruptive Forces Graph (2)

Edison Electric Institute, Washington, D.C. – www.eei.org

Another study conducted for PacifCorp was released in March of 2013 by The Cadmus Group, Inc., another D.C. based firm. This industry study looks at the potential impact of consumer conservation on corporate energy sales over the next 20 years in states served by the Pacific Power and Rocky Mountain Power Companies.  The Cadmus Group defined DSM this way:

Demand-side management involves reducing electricity use through activities or programs that promote electric energy efficiency or conservation, or more efficient management of electric energy loads. These efforts may:

  • Promote high efficiency building practices
  • Promote the purchase of energy-efficient ENERGY STAR® products
  • Encourage the transition from incandescent lighting to more efficient compact fluorescent lighting
  • Encourage customers to shift non-critical usage of electricity from high-use periods to after 7 p.m. or before 11 a.m.
  • Consist of programs providing limited utility control of customer equipment such as air conditioners
  • Promote energy awareness and education

http://www.pacificorp.com/env/dsm.html

This report suggests that energy conservation efforts and residential power generation over the next twenty years will reduce these energy company sales by up to 15%. About 76% of this reduction will come from residential customers, mostly from conservation measures.  Numbers like these are causing energy companies everywhere to start defending their business model. The Arizona Public Service Company,  for example, recently  funded non-profit agencies to start what looks like a grass roots attempt to turn public opinion against both rooftop solar and the states’ publically elected Arizona Corporation Commission, which has final authority over utility rates.  Rooftop solar initiatives are a prime target for utility companies both because of its rapid growth and the direct way these installations impact utility company profits.  The reason why conservation efforts and residential power generation may be scary to utility companies from a business perspective becomes clear when you look at the bigger picture.

The history of U.S. energy use is one of annually increasing demand. Population growth and consumer  purchases of more energy reliant products guarantee increased electric demand well into the future. It remains a growing market, but the rate of growth is slowing. This has been true since the 1950’s. According to the U.S. Energy Information Administration, “The growth of electricity demand (including retail sales and direct use) has slowed in each decade since the 1950s, from a 9.8-percent annual rate of growth from 1949 to 1959 to only 0.7 percent per year in the first decade of the 21st century.”  The following chart shows how the increase in electric demand is declining in this country.

US ElectDemand Declining

US. Energy Information Agency http://tinyurl.com/nnz9rgg

Meanwhile coal continues to be the biggest fuel source for power plants. The use of coal accounts for about 42% of the electricity we generate.  Coal is expected to remain predominate though 2040, although its share of the energy generation mix will fall to around 35% of the total as natural gas and renewable energy soruces grow. This means that for the foreseeable future carbon emissions and growing electricity demand will still be with us if nothing changes. Of course nothing ever stays the same. The real question is whether the energy utilities, reacting to market forces, will dominate the direction we take in producing carbon based energy or whether pressure to save the planet will rise to a point where we can achieve meaningful reductions in green house gas emissions.