The AUSTERITY CODE & POWER

In hard times, it's suddenly not so hard to think of ourselves shampooing the dogs, or washing and waxing our own car(s), or steam cleaning our own carpets, or doing some home wiring/plumbing, or even packing lunch to work and eschewing the Big Mac, or whatever. Perhaps instead of tossing out that pant, a little unobtrusive patchwork might not be amiss? In hard times, DIY becomes the order of the day. Outsourcing is just out, even when that means that we are going to lose some comforts and lose some of our now not so precious time.

All of this, and more, could be thought of as cost cutting. Budgeting, and budgeting, and stretching that cash to make ends somehow meet, and staying off those deadly little credit cards...

The other side of the coin is that all of a sudden, the few rupees or dollars in one's pocket take on a new power. Our economies survive, as they are, only because we earn and then we spend. When the spending drops, businesses have to figure out ways to again separate us from that cash.

Influencing what you will choose to do becomes the most important question that other businesses must find an answer to in order to crack the AUSTERITY CODE. If you still have a job, or a viable business, you have in your hands power, real power. What you are still willing to spend money on will do well, and whatever you avoid has to die.

Of course, this has in fact always been true. The thing is that in easier times we just don't notice. Keeping up with the Krishnans is so much easier when we are not feeling the pinch.

Subliminally, but effectively, advertisers are able to convince us that we just can't live without X or Y or Z, the cost really doesn't matter, but to make us feel a real sense of achievement, the bargain of the century is always there to be had, just don't miss THIS chance, AND with an unbelievably low EMI to boot!

The real power of the consumer - that's you - is that the economy cannot do without you. But, that doesn't mean that you are obligated to spend in any way except how you decide is best.

You may get to vote once in a couple of years but you do get to exercise a much more powerful economic (and hence even political) power with every single note that you pull out of your pocket.

Think about it. Think about it a lot, and start exercising your power, Now, and Forever.

On how to be a Better Lemming

'Tis the season to be jolly... would be quite frivolous if it were not at the same time also so profoundly real.The Christmas season in the West is a time especially set aside for spending, purchasing, buying, gifting, and generally being very, very, jolly.
In the U.S. the spending season kicks off with a bang at Thanksgiving, but all over the world, common sense will lead us to suspect that the jolliest of traditional seasons will begin soon after the annual harvest. Give a couple weeks or a month for all that excess to start getting distributed, and then them holidays, and that spending will ensue - it makes good sense.
In India we have that grand 'festival of lights', Diwali, that is strategically placed after the first harvest in October or November and then, in the South of India, there is a second celebration (Pongal) that comes right after the second monsoon season in mid-January and that forms the very exciting and satisfying climax to our times of splurging.
Economies and spending cycles that keep them vibrant have to be based on the presence of excess, and most times that excess is only available for a short while right after the harvest. Holidays are also timed to help to distribute all that 'excess' and just as efficiently as possible! Any great delay between when the excess arrives and the application of peak marketing pressure to get people to spend may result in that excess getting channeled into savings accounts - economists don't like that at all. When we have plenty, and so much that we can even think in terms of excess, the purse strings will be at their loosest. Marketing has to strike while the iron is hottest but that is not the end of the story. We too help out by apparently just temporarily choosing to collectively forget that the upcoming year may hard and long.
Marketing the world over, is geared to maximise its hype just at these times. Spend - buy - purchase - CHARGE IT - or the ubiquitous EMI with 0% interest!
This year, the absolutely essential gadget is...
Everybody simply HAS to have this!
The teaser SAAALE! drags you out, 'pushes' you over that last little hump of caution, and then...
Insidiously, we also might not notice that we will really have to shell-out just a bit more this year than we did last year to get that 'absolutely essential' something. Economic cycles rely on the feeding frenzy to slip into the inflation mode too, for this is the one time of year that folks will be blithely unaware that the essentials just got a bit dearer. The small incremental adjustments will slip quietly into place in the corners of our subconscious even before we have time to register them, for there is so much else of an exciting nature to capture and hold our collective consciousness in thrall.
Value addition is one culprit, but the yen for bigger profits is certainly another. For the corporates, turnover should increase, and so too should the return on investment, the profit margin. Balance sheets will be anxiously prepared as the financial year draws to a close. At stake is the size of the share price pie for that depends on 'the figures'.
To the economist, inflation is a godsend. Deflation, when prices actually drop, (do you see red in the diagram above?) is an absolute disaster and must come straight out of hell. Modern economies rely on inflation to create the space in which value addition creates levels of work both in manufacturing/marketing and in services/marketing. More jobs, more earning, more spending, more money - MORE
Those little entries on corporate balance sheets called profit (net after taxes) quietly also rely on inflation. The trend is paradoxically opposed by innovation and new technologies! The whole complex process works together to keep standards of living on a slow rise that is slightly worse than what the actual inflation level would lead us to expect.
At some point people do question whether this all adds up. Of course it doesn't, not nearly, but it sure looks good while it's flowing along. Pension plans will be the most obvious harbingers of the bad news that eventually inflation catches up with you. Other painful reminders include the cost of health-care, health insurance, and medicines. Long term savings plans and incremental investments will yield something but much less than they should when compared to the damage that inflation has quietly been inflicting.
Money and easy credit are the end of a very long road that has separated our spending from the realities of our actual contributions to life. Think about it, as it is you're just the last stop between the ATM and the corporation that owns the store that you're heading to with the plastique in hand!
What would happen if inflation were to stop? What would happen if our governments printed just enough notes to maintain a fixed amount of money in circulation? What would happen if value addition were to be replaced by true value? What would happen if the purchasing power of a dollar or of a rupee were to become rock steady?
Have you thought about it this year-before you start (or at least finish) spending that bonus?
What will this Christmas/Pongal bring I wonder? Is it perhaps even possible to have fun and fellowship with friends and without money? Will anyone believe that you love them anyway even though you didn't push your plastic a few thousand more over its already strained limit?
GOLD > Coins > Bills of exchange > CREDIT Þ Transactions

Originally published by Sam at http://bartramia.wordpress.com