Profiteering, and, the 66%
Raéd Alexander Ayyad
"The most serious mistakes are not being made as a result of wrong answers; the true dangerous thing is asking the wrong question." —Peter Drucker
Profiteering refers to taking advantage of unusual or exceptional circumstances to make excessive profits. It is the generation of disproportionate or unfair profit through manipulation of prices, abuse of dominant position, or by exploiting a bad or unusual situation such as temporary scarcity. It's an extreme example of bullying at its worst.
Unfortunately, usually, there is no governmental control over profiteering unless it involves any [obviously] illegal means and someone reporting it. Sale of scarce goods at inflated price during war is an example for profiteering. It is also the worst kind of capitalism, and the most destructive to societies.
When I used to think of profiteering, I used to automatically think of people like Martin Shkreli... not any more... now, to me, they come in all classes, colors, cultures, ages, races and sexes.
By the by, Shkreli is not the worst of them, by far. As a smug individual, he just got-under-the-skin of, and pissed-off, enough people to get called-out. If he was a small business or a faceless mega organization, I bet that he would have gotten away with his avarice... well, technically, from a relative wealth perspective, he did!
Such behavior is not just the domain of large businesses and "evil corporations;" we must understand that to remediate such a destructive human mentality, we must look at the level of the individual too, and they too must be held accountable... remember that "today's Jr. prick, tomorrow's Sr. partner."—Working girl.
The means are many, but the face is the same...
Over the past couple of years, I have come to interact with a class of people that I never thought I would, or—in my na?veté—even existed in real life. A class of exploiting scum no different than pimps or drug dealers. Now, please do understand that I am not claiming to be a moral compass for anyone, I am not some enlightened person, or of the sort, but I think that there is a universal definition for basic decency that we can come to agree to, and that is the level I am operating at.
In the case of this article, I will focus on one aspect alone, one that is well expressed in a graphic slang Arabic proverb I learned while in the the Mid-east... said in Arabic: " ??????? ????? ?????? ", interpreted to English: "a soon-to-be dead person f*cking a person who is already dead." All the experiences are based on first hand interactions.
Last year, at my suggestion, with a friend who's into real-estate, we drove around visiting houses that are for sale or rent at relatively low rates. I was curious and needed to establish a baseline to work from when it came to understanding the price tiers and their offerings. My business focus was to see what role technology plays in this industry, and how it is being used, and how can it be optimized. Where was a good place to start? Well, of course, my own home town, which is rated as one of the best places to live in Texas.
Arlington has always had a fairly diverse population, in contrast to other cities in the North Texas area; the credit to this quality goes to the existence of a major university that has become its nucleus, the University of Texas at Arlington. Large-scale industrialization in Arlington began in 1954, with the arrival of a General Motors assembly plant. Automotive and aerospace development certainly gave the city one of the nation's greatest population growth rates between 1950 and 1990. Afterwards, Dallas-Fort Worth International Airport added to that drive, as a major transportation hub.
I think that this diversity is what helped the city to grow rapidly from being a cotton-ginning and farming center, on the way between Dallas and Fort Worth [as my family has described it from the past], to a thriving major modern city with a population nearing half a million inhabitants, and a population density of 3,810/sq?mi (1,472/sq km).
Moreover, from more recent times, it seems that the wars our nation has got into has also added to the immigration trends to the city. For example, I have noticed that there was a very notable increase in people from Iraq (Arabs and Kurds alike), Syria, Ethiopia, Somalia, and also, there is a remarkable increase in the population of people from Nigeria (many who seem to have been recruited to serve in the armed forces—the men often boast about being in the military or working for the State Department), and then those from Afghanistan, who are easily distinguished by their national garbs. Prior to this, the most notable immigrant population were those immigrants of [east] Indian heritage.
As it usually happens, opportunity and prosperity brings out the unscrupulous and the scum too. There are two notable kinds of the latter... ones described as your typical "WASPs" moving from the countryside and other towns to the city, and the other is the "new migrant and immigrant," which includes those who moved from other states to Texas, and the newcomers to the Good ol' USA; of the caliber being alluded to, both types mentioned are as bad, the differences are practically nonexistent, and the major commonality is strong, which is a lack of universal morality (non-adherents to the essence of the Golden Rule).
All this reminded me of my history studies of the Gilded Age in The United States, and also made me recollect some of the less than positive qualities of the Carpetbaggers of the 1800s!
The economic crash of 2008 onward, and the [false] real-estate "boom"... really, a "bubble" that will bust
The economic crash of 2008, that was triggered by the avarice and corruption at the high levels of major corporations, investing entities, and banks, and the lack of oversight from the entrusted governmental entities that were supposed to govern, lead to what can be seen as the practical demise of the American Middle Class.
I qualify it by saying American because by economic definition, the "American Middle Class" is really mostly a 'Working Class.' Nonetheless, this ("White Collar Labor class") was the thin strata, dividing the so-called "Upper Class" and the "Lower Class"—(and "Blue Collar labor").
"Middle-class" refers to the bourgeoisie. Historically, the medieval French word bourgeois denoted the inhabitants of the bourgs (walled market-towns), the business owner craftsmen, artisans, merchants, and others, who constituted "the bourgeoisie", they were the socio-economic class between the peasants and the landlords, between the workers and the owners of the means of production.
Millions lost their homes, I think the number is around 7-million Americans, and were relegated to the only option of renting. In turn, with a demand created, rise in renting rates and restrictive conditions defined the times. Moreover, now, with this once middle-class rated as not credit worthy, that left the blue-collar of the past as candidates, and then the migrants moving from other states in the nation to Texas, for jobs, due to the relatively strong economy and quicker recovery raised the prices of homes significantly.
Americans moving from the East and West Coasts particularly made this problem a compounded one. In their states, they were used to [relatively] expensive real-estate... think New York and California... When these people moved to Texas, where real-estate and taxes are notably less, they started throwing around their monies... a home that was being sold at $150,000 was being resold by "flippers" at $250,000+... that is around the 200% profit!
Fools and their money departed
Were these homes worth the increase—from the intrinsic value sense? No. What modifications were added before resale? In most cases, a coat of paint, and an exchange of "contractor grade" appliances and perhaps hardware; if construction work or repairs were necessary, in most cases an unqualified person rigged the work... no inspections, no licenses, no safety or electrical and fire code regulations observed... 200% for applying a coat of paint on the walls! Not too shabby (from the sellers perspective)!
The only reason that this was possible, is because of desperate, emotionally reactive, great fools who chose not to use critical-thinking to their advantage, or anyone else's... this "bubble" was created by the irrational beliefs and expectations of ignorant market participants, and the national economy WILL pay for this imbalance. A dramatic and historical example is the Tulip Mania of the 1600's.
Low-end homes...
Many of the low-end homes I've seen are tied together with spit and bailing-wire; some are pest infested deathtraps. The most common comment I heard from sellers (or renters) during my research: "I don't care, I'm not living there, I'm flipping it; I have a buyer. I just want it to look good-enough until I sell it, after that it's their problem."
I would say that over 90% of the people I met selling, or renting, domiciles made this statement. On a side note, what is truly fascinating to me is that this attitude (in the U.S.) is—sadly—usually described by ones who were sporting all kinds of "Christian" regalia and insignia, ranging from jewelry in the shape of crosses, to T-shirts with verses of the Bible scripted on them, and presumptuous phrases like "Jesus Loves Me"! Just: Wow.
I have become very weary of people who always wear their religious beliefs on their sleeves (extremest). I have observed that they tend to be some of the most insecure and hypocritical people on Earth. “It is well established that religiosity correlates inversely with intelligence” —Richard Daws and Adam Hampshire, at Imperial College London
I have no intentions of making this an article about the science of economics, and certainly not about religion, but note the following: According to the economist Charles P. Kindleberger, the basic structure of a speculative bubble can be divided into 5 phases:
Can you see how the path we are on, at this time of U.S. history, will lead most of us to a path of suffering, if no meaningful correction is enacted?
Caveat emptor.
My personal professional wild ride
My interactions through the retail world: For those who have been reading my recent articles, they'd know that what brought me into this environment was my desire to conduct firsthand business<>IT alignment research in the retail world, but I ended up bargaining for more than I expected, and learning more than I thought I would have ever learned; I will continue to share what I can with you as I transition through this experience. Back to the latest wild rides! ...
Electrical nightmares... a typical dialog:
"Chlorinating the gene pool" —Darwin Awards
"I don't care, I'm not living there, I'm flipping it; I have a buyer. I just want it to look good-enough until I sell it, after that it's their problem."
Watch the following video while understanding that the phrase "faulty extension cord" is misleading, it was—and I will bet—improper use of an extension cord that was the culprit!
Another A/C situation...
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Flipping infested homes... a typical dialog...
From roaches to rats, people selling lower-end homes would ask:
Furnishing appliances... some typical dialogs...
Another fantastic one...
Ooh, a doozy! ...
[A—standing tall—man from the Indian Subcontinent, donning a cross, and clothing as if second-hand, and cheap but well-polished long nose slip-ons (cockroach killers)]
This latter person—seemingly—is a poster man for the type of exploitation and profiteering I detest the most. In my book, the worst type of profiteering is that done on the backs of the poor, and socioeconomically marginalized, or crushed, human-beings (such as the Dalit in India). Such profiteers—with their [falsely] perceived ideological superiority—are lowest of the lowest social parasites.
On the same token, on this latter subject matter... social parasites...
Last year, I walked into a house that was "for rent or sale." The owner had an open house. I would practically swear to whatever deity you believe in that the place was held-together with the thick layers of [what seemed like] oil-based paint it was haphazardly painted with over the many decades. The floors were patches of plywood and deteriorating Linoleum flooring, the toilet was filthy and not even tightly fastened to the uneven flooring underneath it. The back yard was a dense concoction of tall weeds and thorny plants. I saw a rat scurry under a debilitated shed in the back, with a collapsed floor.
Coming into the structure, I saw the owner, a casual shabbily dressed man, in jeans, with long blondish hair and beard, in his fifties—I think. I acted without surprise to the state of the place, and with indifference and casual acceptance I struck a dialog with the owner. He said that he preferred to rent; he has been renting the house for near a decade to low-income people and immigrants... "they're not picky... they have no choice. They can't even speak the language... they are desperate, so, it is a good business."
I asked him about how much he invests in keeping the place standing, to which he replied: "every-time a tenant leaves, I may put a coat of paint on the inside." The walls were a checkerboard of different colors and types of paint [probably, he bought anything on sale at his neighborhood DIY store]; some parts were not painted and just had large Sheetrock or plywood patches... others had mold all over the their tops. Most of the people checking the house out were females from Latino, Asian, and African heritage, with what seemed like small entourages of relatives, friends, or children in tow. From the design of the original crystal-like door knobs on some doors, I think the construction was originally from the 1950's or 1960's.
The house was a three bedroom peer-and-beam (the third room was originally the garage, which you step down to with a plywood ramp, to the concrete flooring, and has no windows that I noticed), the plywood floor was a roller-coaster of hills and valleys, kitchen walls had holes to the outside, no appliances, a couple of small window A/C units [from the ducting, I can tell that it once had a central A/C system], and the plumbing was obviously sub-code... and I started wondering: where are Code-Compliance and the city inspectors? Obviously they have never set a foot into this place, or even anywhere near it.
This is one example that demonstrates the importance of proper regulation, for many businesses can not be trusted to always do the right thing, including maintaining the image of our fair city.
By far, this situation is not unique...
Every tenant I met, who lived in such conditions, without exception, was afraid to report landlord abuses fearing to loose their shelter and "ending up in the street." Most had young children; they were afraid of the landlord's retaliation.
Verbatim, I was told this by an Iraqi immigrant family, whose rented house that was so debilitated that the wife asked me for "best solutions to combat rats," or "if owning cats can help," because they [the couple] often woke-up in the early hours of the morning with rats jumping on their bed (in the master bedroom)!
The wife said that she opened her eyes one night, with her head still on the pillow, to find herself face-to-face with a rat staring at her! She said that the family reported the problems to the landlord, but he never replied. A son of theirs said that they tried to block and patch holes in the walls, and under the cabinets where the plumbing comes out, to no avail.
I advised her that she needs to report this to the City, and I looked-up the contact information for Code Enforcement. She thanked me profusely, but said that she is afraid that they will be kicked-out and will not have an affordable place to live. I advised the mother, an older lady, that I wished that I could help them further. I encouraged her to report the problem, and offered my multilingual interpretation skills to be put at their service as a neighbor... she grabbed my hand—I thought to shake it, but it was—to kiss it in gratitude!
I pulled back and I apologized in embarrassment, and told her: "mother, no need, please not at all; it'll be my privilege to help if I can... y'all just let me know;" and I bid them adieu (Salam Alaikum)... haven't seen, or heard, from them since. This incident broke my heart. Per their story, her husband, an employed man, prior to coming to The States was an interpreter for the U.S. Military during the Iraq War.
Truly, disasters make for great headlines. They help publishers sell more newspapers and TV networks sell more ads. They generate public sympathy for charities, and enable politicians to appear benevolent. But, in the quiet aftermath, after the attention fades, they are simply the precursors to bigger, slower-moving disasters.
This problem of profiteering is impacting practically every race and people; it's a meat grinder that does not discriminate against the type or color of the meat going into, or through, it. We need to shine a much needed spotlight on one of the most pressing issues affecting America today (as it was in the past). The presence of a marginalized, preyed upon, and ultimately explosive underclass, "the 66%," percolating restlessly beneath the surface of these Unites States. The majority of the wealthy will eventually pay as dearly, too, because we are all traveling on the same ship... when it goes down, we all will (especially in a connected global economy)... a balanced solution is still needed to be enacted, and the real solution is not just throwing more money at the problem.
A community service note: "Contractor grade"
Lastly, as a typical consumer, I must—even if in passing—address this grade of products and services... just as a community service!
For the longest time, I thought that "contractor grade" meant practical, resilient, and tough (the old image of a 'contractor'—in my mind)... I was wrong... very wrong. If you did not know, contractor grade actually means the cheapest crap that they can buy (in-bulk when needed).
Contractor grade means the cheapest and least quality you can get on the market to get the job done—from the outside appearance perspective, and sometimes barely passing by established quality and safety codes... the bare minimum. It's type riddled with Engineered/Planned Obsolescence (you know those expensive color printer cartridges that stop working and say that they are empty, while in actuality they still have ink in them, to force you to buy new ones? Or the Whirlpool appliances that use proprietary microchips that you can't buy on the market to repair surge-fried control panels? Yeah, that's what we are talking about when we say Engineered Obsolescence).
To date, France is the only country in the world that has legislation on planned obsolescence. The 2015 Law on energy transition introduced a definition of planned obsolescence into French consumer legislation[1] and made it a criminal offense: Planned obsolescence is punishable by two year’s imprisonment with a fine of up to EUR 300,000 (or up to 5 percent of the company’s average early turnover).[2]
Bonus: Straddlers, and "double consciousness"...
"The most serious mistakes are not being made as a result of wrong answers; the true dangerous thing is asking the wrong question." —Peter Drucker
5 年PS: I am not affiliated in anyway, outside of being a customer, with Tony Lama Boots... I just appreciate their products and service.