The Downward Spiral of Greed
Great civilizations, such as Rome, England and even France, have thrived throughout history, only to succumb to inevitable downfall due to any of the factors listed above. History’s demonstration that no empire is exempt from failure is a valuable lesson that Americans may be learning too late.
Perhaps the most obvious of the numerous factors contributing to the current American path is the basic human characteristic of greed. Defined as “An excessive desire to acquire or possess more than what one needs or deserves, especially with respect to material wealth,” (Dictionary.com) greed runs rampant in post-modern American culture. The most blatant example of this potently destructive phenomenon is the portent which has come to be termed “corporate greed.”
There is no question that corporations, by their very nature, exist for the sole purpose of creating profit. Through strategic positioning, however, corporations have managed to perch themselves in a position of power never before paralleled by any other entity (Dobbs).
This position of power represents a treacherous path for the American public. Long accustomed to public policy created by civically elected officials, United States citizens are now adjusting to an uncomfortable “alliance betweenâÂ?¦ corporations and government,” (Dobbs) which results in policy created by the chairman of the board and enforced through vehicles such as rising costs and plummeting job security.
By far the most detrimental of these vehicles is a youthful concept- born of pure greed- which has proliferated throughout corporate America. The recent practice of “outsourcingâÂ?¦ work to foreign (or “offshore”) companies solely to take advantage of lower labor rates in those countries [has become] known as “offshoring.”” (Dobbs)
Although this practice is touted as benevolence to less fortunate foreign countries and sold to the consumer as a modus of lower prices, it does, in fact, have a far darker and more costly reality. For each job offshored to foreign soil, thousands of dollars are poured not only into the individual who is performing the task, but to the economic development of that country as a whole.
Eagerly and gratuitously accepting work from American factories eager to outsource their production, China has reaped economic rewards of proportions previously observed only in the United States. Through the American desire to save money, the Chinese economy has ballooned from the ninth-largest to the second-largest economy in the world. (Cox et al.)
As the Chinese economy grows, the country itself is undergoing a structural metamorphosis akin to that experienced by the United States and Japan during the 20th century: a conversion from an agricultural-based to a manufacturing-based capital economy. (Cox et al.) As this transition takes place, Chinese workers who live on rural farms but work in industrial facilities are faced with the choice of either moving closer to work or purchasing a vehicle for commuting purposes.
More and more Chinese employees are, with thanks to American dollars, now able to choose the latter of those two options, and statistics show that they are doing that very thing. In 2002, Chinese demand for automobiles “soared by 56%,” an astounding number. The increase in demand in 2003 was not only astounding; it was “mesmerizing” at 75%. (Bishop)
This incredible growth is currently showing no signs of slowing. David Thomas, of Ford Motor Company, notes that China is currently the third largest car market in the world (behind the United States and Japan). Within two to three years, Thomas believes it will surpass Japan and move into the number two spot. Within a decade, he forecasts that China will overtake the United States as the largest automotive consumer in the world. (Bishop)
While all of this growth appears to please American corporations, its effects are creating a ripple in the world economy. With the unprecedented expansion of demand for vehicles, along comes a corresponding explosion in demand for fuel, a resource currently of finite capacity.�¯�¿�½
The strain of this new demand on the fixed-supply structure of gasoline (as derived from crude oil) invokes the standard economic factor of supply and demand. As the global demand for gasoline rises (a rise caused by the exploding population of new drivers) and the fuel supply remains fixed, prices climb. This phenomenon has been exemplified in the skyrocketing gas prices recently observed in the United States: between May, 2003 (when the nationwide average price for a gallon of gasoline was $1.50) and October, 2005 (when the nationwide average price for gasoline was $3.07), prices have more than doubled, an increase of more than 100 per cent. (USDoE)
This incredible, historic inflation has long-range, far-reaching impacts on the American economy. Because the American economic structure is heavily dependent upon fuel, any alteration of fuel prices can have dramatic effects on both the consumer and the economy as a whole. A doubling of gasoline prices, as has recently been observed, can have effects that can more accurately be described as catastrophic.
Electric power companies, who often burn fuel in order to meet electricity demands, are already feeling the pinch of the increased fuel prices. One of central Florida’s largest electricity suppliers, Florida Power and Light (FPL), recently announced a staggering rate increase of 19 percent. FPL’s competitor in the region, Progress Energy, is also raising their rates by a comparable 16 percent, passing along the cost of producing electricity to their power consumers. (Boyd)
From production to transportation to sales, almost every aspect of the American capitalistic economy requires some sort of fuel. The remaining factories in the United States are heated by fuel and powered by electric companies (such as FPL and Progress Energy) who burn fuel to generate electricity. The goods which are produced overseas- as so many currently are- must be transported to the country by boat or plane, either of which consumes a large quantity of fuel). Domestic goods are currently shipped by truck or train, again requiring fuel.
Distribution centers are also powered and heated by electricity generated by- among other things such as nuclear and hydro power- the consumption of fuel. Once good reach distribution centers, they are again trucked to the retailer. The retail establishment is also, of course, heated and powered by more fuel consumption.
With all of this fuel being burned at more than twice the cost of just two years ago, the price to produce goods (production cost) has escalated. Wholesale and distribution costs and also seen a corresponding increase, all of which erode the profits of the retail corporations.
As mentioned earlier, corporations exist for the sole purpose of generating profit. Any erosion of this valuable income is unquestionably passed along to the consumer, causing retail prices to climb higher. Although fuel prices have only recently started to climb, American consumers are already beginning to see these effects appear on retail shelves. Kraft Foods, for example, recently announced a price hike of approximately four percent (4%) on its retail offerings as a direct result of fuel-related production cost increases. (AP)
Sadly, American workers are not seeing an increased income in order to accommodate these increased prices. In fact, average American workers are seeing no income increase at all while some are becoming unemployed as companies fight to increase their profits. A recent study by the United States Census Bureau notes that “2004 marked the second consecutive year in which average income remained unchanged.” That same report also noted that the national poverty rate continued to climb in 2004, up to 12.7 percent of American households. (USCB) These numbers mean, as a whole, that American workers now have less money than they did just a few years ago.
An efficient summary of the current state of the American economy is that the average worker is paying more for fuel, more for electricity, more for services and more for goods but has less money to spend for any of these items. While this struggle plays out every day around the country, profit-centric corporations such as Exxon-Mobile and Shell continue to post reports of record-setting profits. (Quinn)
Perhaps the most ironic factor of this debacle is that, in the pursuit of lower prices, Americans now are paying higher prices not only for the product itself, but also for the price of acquiring it and the price of living so that they may enjoy it.
It remains to be seen for how long- or if at all- the American economy can support this type of downward spiral. As American workers continue to pay more for everything, from products to fuel to even food, with the same or lower income, a likely recession- or worse- looms in the foreseeable future. The brightest hope, perhaps the only hope now, is to reverse the trend of Offshoring.
Works Cited
Associated Press (AP). ” Higher costs spur price hikes on bologna, Milk-Bones, more.”
Orlando Sentinel 10 Nov 2005. 18 Nov 2005 http://www.orlandosentinel.com/news/local/newsletter/mu-html/chi-0511090226nov09,0,4784170.story
Bishop, Matthew. “Cars in China: Dream Machines.” Economist.com 02 2005. 16 Nov
�¯�¿�½�¯�¿�½�¯�¿�½ 2005 .
Boyd, Christoher. “Electricity rates to surge in 2006.” Orlando Sentinel 10 Nov 2005. 18
Nov 2005 http://www.orlandosentinel.com/business/orl-electric1005nov10,0,5116422.story?coll=orl-home-headlines
Cox, Michael, and Jahyeong Koo. “China: Awakening Giant.” Federal Reserve Bank of
Dallas September 2003: .
Dobbs, Lou. Exporting America: Why Corporate Greed is Shipping Jobs Overseas. New
York: Warner Business Books, 2004.
Quinn, Steve. ” Exxon Mobil, Shell Post Record Profits.” ABC News 10 2005. 27 Oct
2005
United States Census Bureau (USCB). Income Stable, Poverty Rate Increases, Percentage
of Americans Without Health Insurance Unchanged. Washington: 30 Aug 2005
http://www.census.gov/Press-
Release/www/releases/archives/income_wealth/005647.html
United States Department of Energy (USDoE). U.S. Retail Gasoline Prices. Washington:
�¯�¿�½�¯�¿�½�¯�¿�½ 14 Nov 2005
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