In from the Snake Oil for What Ails You Desk: I’m a registered Dem and retraining is the swill the Party’s neoliberal leaders have peddled for the last 20 or so years. Back to school with you.
It’s the only answer the Democratic Party has had for people shed by de-industrialization and the conversion of the economy to financialization. It’s a theme that is one of the central planks in Thomas Frank’s book, Listen, Liberal, on how the Democrats abandoned populism and the working class for wealth and “meritocracy,” a buzzword better described by phrases like winner take all, root hog or die and fuck you if you didn’t go to the right school or have money.
“Job retraining has proven to be a failure over the last two decades …The record is pretty clear … We’re creating a lot of [false] hope where hope doesn’t exist.???
Peter Navarro, an economics and public policy professor at the University of California, Irvine, called job-retraining programs a “cruel joke” on American workers.
“The problem we have is there’s a fundamental mismatch of skills Americans have [and] opportunities,” he said. “You can retrain these people all you want. But if there are no jobs for them, what’s the point?”
[Retraining] reforms may quickly clear the way for the jobless to enroll in community college, making courses available to train them for a multiplicity of jobs.
Such jobs will include but not be limited to: test-tube cleaning, shelving and getting reagents, learning to use a Metler balance, mucous, surgical drain and breathing pipe maintenance, teeth scraping, gram-staining, changing oxygen tanks for those with chronic obstructive pulmonary disease, blood pressure-taking, temperature taking, enema giving, supervision of administration of Fleet’s Phospho-Soda, cleaning up messes in hospitals and clinics, airport security, turnstyle security, public transit security, frisking, pat downs and strip searching, simple detentions, immigration status checking, herding, temporary staffing, manning the metal detectors at court houses, X-ray smock fitting, checking dosimeters, wheelchair-bound patient moving, massage, bed pan emptying, restraining and strapping the old and mentally ill into chairs in various warehousing environments, bed sore monitoring, security work in privately administered prisons, embalming, corpse dressing, using word processor and accounting software, installing anti-virus software, transcribing, bank tellering, cafeteria work, how to wear a sterile smock, simple sterile procedures, transfers and transport of pees and poos in the clinical lab setting, refrigerated organ transport, transport of organs reclaimed from cadavers, preparing cadavers for organ reclamation, selling door to door, telemarketing, on-line promotion and astro-turfing, using Blogger, search engine optimization, building a network with Twitter, repeat calling debt collection, data entry and processing tax returns, using Adobe Acrobat or Photoshop and using Microsoft Powerpoint.
Robert Titman, an expert on the economic impact of continuing education at the City College of Gobble-Wallah in Birmingham, Alabama, predicted that in the next two years the US would see a big economic boom from the new highly educated and skilled workforce. The country would leap to the forefront in retraining the unemployed, providing a leading example for the rest of the world, he said.
Economic recoveries and good outcomes always promised by retraining initiatives haven’t panned out, so to speak.
“Job retraining tends to be popular with politicians … it often amounts to little more than a public relations sop,” it reads.
Again, this is about contempt. Contempt for Americans seen in the implication that people aren’t fit to work and cannot read or do arithmetic.
The problem is not, as it appears when shopping Baja Ranch, that people don’t know how to read and do arithmetic. They do! They do fine with cash registers, counting out money, reading stocking lists, preparing foods behind the counter, reading labels, using scales and so on. The problem is being paid too little for a fair day’s work.
In fact, there was no shortage of Americans who tried to get jobs in the 2010 census. Almost all of them, as far as I could tell, had a basic grasp of reading and math.
However, there’s always room for another scam at the bottom. Now that Americans can afford even less, they can have a certification dangled in front them, one that promises a future job, if and when they take some courses and pay to take a test that proves they have reading comprehension and the basic ability to add, subtract, multiply and divide.
An organization called “Skills for America’s Future, a business and community-college partnership based at the Aspen Institute in Washington and Colorado,??? it is said is working to retrain and place Americans.
“Companies it already works with to link students with 21st-century job skills range from Accenture to UPS to Gap Inc,??? it continues. (Boldface mine.)
Twenty-first century job skills? To drive UPS delivery?! To be an “outsourcing service??? consultant for Accenture? Working in retail [at] young people’s denim mall stores is a 21st century skill for which people need training?
Training on not to steal from the cash register and how to resort all the clothes properly and put them back where they belong after a day of customers rummaging through them?
This is repellent rubbish. It is the stench of rot, of cynically coming to the conclusion that there’s nothing to be done but sell people on the idea that they’re inferior and need even more vocational training for the low wage jobs of the future. Another way of putting it is to piss in a jar and tell people to drink up because it’s lemonade.
In Michigan domestic manufacturing, except for cars and tanks, has disappeared. Electrolux, in Greenville, closed its plant, destroying employment in the town. All the jobs went overseas.
So to re-training camp, Montcalm Community College, to get people ready for the jobs of the future! In this case, solar panel manufacturing.
Problem, the jobs of the future are too few. And American companies still ship the jobs out.
Reports the LA Times:
“Solar panel technology was invented in the United States. So was the key technology for advanced batteries for electric vehicles, for which Michigan is also developing a number of factories.
“But in each case, sales and production are tiny compared with European countries.
“Even if clean technologies were to bloom, it’s not clear that they would produce large numbers of new jobs.”
“[The] U.S. usually has left matters to the private sector, and its multinational companies have moved tens of thousands of jobs overseas,??? it reads.
It’s not the training. That is a rationalization.
In fact, a company could train people to do its work as easily, or even more quickly, than a community college. The US guitar and amplifier manufacturing industry didn’t send all its jobs to China because that country has community college training its workers to make rock and roll consumer electronics.
It’s all bullshit. The Los Angeles Times doesn’t state this. However, the story makes clear that re-training camp has a pretty good failure rate.
In 2016 it has become part of the explosive political environment. That it has failed so utterly is also one of the driving forces that has led to the rise of Donald Trump.
A lot of people just don’t believe anything establishment politicians say about the economy, jobs and the future. Furthermore, rage results when you hear still more of it.
“U.S. corporations have by now stashed over $2.1 trillion in profits overseas (including Apple’s $181 billion), thereby starving the U.S. of revenue we could use to repair our collapsing infrastructure. What they want is for Americans to get so desperate that Congress is willing to deeply slash the corporate tax rate for “repatriated??? money.
“This will deliver a one-time jolt of tax revenue, at the cost of sending the message that everyone who possibly can should use tax avoidance schemes like Apple’s in the future…Hillary Clinton has hinted that she’ll push for exactly this in her first 100 days in office, while Donald Trump has said explicitly that he wants to make it happen. Moreover, in the interview Cook also notes he’s gotten advice on how to handle this issue from both Goldman Sachs CEO Lloyd Blankfein and Bill Clinton.
“So get ready for a tsunami of fairness, headed your way next year.”
Apple feels the current corporate tax rate to be “unfair.” “It doesn’t go that the more you pay, the more patriotic you are,” said Apple’s Tim Cook to the WaPo (here by way of The Intercept).
“The problem with all of this is that the Democrats went so far in the direction of advocacy for the global religion that they made something as idiotic as the rise of unabashed nativist Donald Trump possible … And maybe the next strongman those voters pick to lead them out of the wilderness won’t be quite as huge an idiot, or as suicidal a campaigner, as Trump…”
There are a lot of lacerating bits in Taibbi’s piece.
“We never really had a referendum on globalization in America,” he writes. “It just sort of happened. People had jobs one day, then the next morning they were fired, replaced by 14-year-olds in Indonesia …”
Economist N. Greg Mankiw of Harvard in the NYT this week on the unfortunate turn of events in which voters now don’t believe it when experts say trade is good:
“You see it in Donald Trump’s railing against immigrants and trade agreements. It may well be part of Hillary Clinton’s shift, under pressure from Bernie Sanders, against the Trans-Pacific Partnership, which she once embraced as ‘the gold standard in trade agreements to open free, transparent, fair trade.’
“You certainly see it in the British decision to exit the European Union, which has become known as Brexit. That vote flummoxed most political forecasters, and it makes one wonder whether Americans might also produce a surprise in November …”
The answer, according to Mankiw, is simple: more education. Although not stated baldly, those now opposed to “corporate America-style” (my words) global trade are the stupid — the less educated.
Mankiw: “In the long run … there is reason for optimism. As society slowly becomes more educated from generation to generation, the general public’s attitudes toward globalization should move toward the experts.’” Who are all for it.
N. Greg Mankiw was economic advisor to Mitt Romney. He is also opposed to raising the minimum wage. I would normally post the link to the NYT but globalism and all that hasn’t been good for me. I’m sore about it, even though I’m educated.
Also from the “Oh, That’s Rich!” channel, an explanation, now among the thousands, as to Why “The Tom Friedman Blues” needs to be on your gadget and reviewing stand.
“Thomas Friedman moves beyond his Flat World to divide the world into ‘Web People,’ who he likes, and ‘Wall People’ who he holds in contempt. Donald Trump is naturally the lodestar of the Wall People …
“Okay, so let’s work through some logic here. If you want to see a freer flow of ideas and technology, by replacing patent and copyright monopolies with more modern ways of promoting innovation and creative work, then you are a Wall Person. After all, Friedman’s Web People wouldn’t know how to get by in the world without these relics from the feudal guild system.
“If this means that life-saving drugs, which would be cheap in a free market, are priced beyond the reach of the people who need them, well get used to Thomas Friedman’s world. If it means that we have to turn the whole world into copyright cops to ensure that Disney can collect its royalties on Mickey Mouse, that’s a small price to pay to keep the Web People wealthy…”
I’d like to add that Hollywood got the FBI to confiscate the kickass torrents website and arrest its owner last week so that the Motion Picture Association of American and Marvel Studios would not be deprived of any of their due profits on Captain America: Civil War by the grasping BitTorrent clients of the leeching poors. And, of course, they have momentarily stymied me in my downloading of pirated eBooks on the inequalities and failures of the US system.
Of course, I will inform you as soon as an adequate replacement is put in place. Currently, the Pirate Bay and EasyTorrents don’t cut the mustard.
The major problem with it is the piddly findings. Trump is a builder and and a tycoon whose fortune comes from high-end services to the wealthy, not manufacturing. Perhaps he pays poorly but he’s not an outsourcer on the scale of a General Electric or Apple. (Or Tesla. Special case, follow link at end.)
The Times dings Trump for his line of “suits, ties and cuff links.”
“Mr. Trump also invested in a line of crystal bearing his name to go with his Trump Home line,” continues the Times. “The collection was produced in Slovenia, the home of his wife, Melania.”
Here. “The items in this collection are no longer available,” it reads. Well, maybe they’re somewhere else.
The Times shows its strongest evidence in his hiring of groups of laborers from eastern European nations for construction and service, a practice that is now common in American business and which is generally, as shown by the San Jose Mercury News, in direct violation of US labor law. (See this series concerning Tesla and Elon Musk.)
Perhaps Donald Trump has already lost the election. But if he has not, this magnitude of sin, when stacked against the general anger and grievance aimed at US trade policy and corporations, just doesn’t matter.
I recommend to you Yanis Varoufakis’ “The Global Minotaur: America, The True Origins of the Financial Crisis and The Future of the World Economy.” Not because I think you’ll rush out and buy it. It’s not an obvious “must have.” But if you’re clever, you might have the know-how to steal an ebook copy.
Varoufakis is a Greek economist, Syriza’s former Minister of Finance, who quit in protest of the austerity imposed on his country, an austerity that has blighted his nation. For that, he deserves a salute.
But his book is often also hysterically funny, mordantly, about American-style predatory business.
On Walmart, of which he has much to say, most notably the tale of the gigantic jar of pickles:
“Take for example, Vlasic pickles, a well-known everyday brand. Walmart’s ‘innovation’ was to sell these pickles in one gallon jars for $2.97. Was this a shrewd retailer’s response to market demand? Few family refrigerators had room for such an item.
“So what was the selling point?
“It was the idea of a huge quantity at ultra-low price. Walmart’s customers, in this sense, were not buying pickles as such. They were buying into the symbolic value of cheapness; into the notion of having appropriated so many pickles for so little money. Indeed, it made them feel as if they were Walmart accomplices — in association with an icon of American corporate might, they had forced producers to make so much available for so little!
“The gigantic jar of pickles thus ended up denoting a small victory at a time of wholesale defeat. Whose defeat? That of the American worker, whose wages had never really recovered since 1973. Moreover their working conditions deteriorated as employers everywhere faithfully copied the Walmart model…
“The situation in the workshops and the fields of the Third World, where goods are grown or made on behalf of Walmart, is, as one might imagine, bordering on the criminal.”
If you ever run across Yanis Varoufakis and what he has to say or write, I guarantee you’ll be purged of whatever holy crap you’ve been pumped full of on the American economy.
They don’t make ’em like this anymore. That’s a Washburn A-20v BBR, for black-black-red, ca. 1984-85. I have one, made at the Matsumoko company in Japan (since out of business) for Washburn USA (which isn’t).
The shape and color scheme enjoyed a very brief moment in the sun, one coinciding with Quiet Riot’s Metal Health LP, the first heavy metal record to hit number one in the US charts in 1983, going on to sell 6 million copies.
Although I wasn’t much of a fan, Metal Health was a catchy record. Guitarist Carlos Cavazo and bassist Rudy Sarzo played Washburn A-20s, featured in videos on MTV and guitar magazine advertising.
That’s not why I bought mine. I’d wanted a Gibson Explorer but couldn’t afford it. And I’d played one of the BBRs at a Washburn stand at a guitar show. So I had one special ordered and still have it.
I play it regularly now. It’s a shape and color that went horribly out of style. And it fits me, also horribly out of style at almost 59, perfectly.
Even Carlos Cavazo won’t play his Washburn A-20s in public anymore. He joined Ratt and switched to Gibsons. His friends, he said, talked him out of playing those old things. It’s not hard to guess why.
Still, it sounds and plays great, a poor man’s Gibson with a great jet-black hard finish.
It has “Power Sustain” pick-ups, say the old brochures!
And that’s my intro to today’s post on the American guitar business. In the mid-Eighties, electric guitars were still solidly of the middle class business. Leo Fender made it that way.
It doesn’t take a lot of brains to figure out what happened.
The recession, the evisceration of buying power, and the great thinning of the middle class made the guitar-making industry polar.
One end is cheap guitars made in China or similar Asian labor markets. And the other end is expensive custom-shop artisan instruments for classic rock musicians who can still get paid, but mostly for the upper class and very top people who want them as nice things to have. Investments that impress stupid people.
And there’s little in the middle.
The stagnant economy isn’t the only reason guitars have had a hard time. Classic rock is music for an older generation. Like polka was for me in southeastern PA when I was in school.
It’s not entirely dead, of course. Taylor Swift, the biggest seller in pop rock, is firmly from classic rock roots. All her sidemen play vintage model guitars, the best. But young people, as they should, have different choices. They don’t need electric guitars in any big way.
And the industry bet wrong on that.
Before the collapse, the idea, and it was a clear one if you shopped at Guitar Center or BestBuy or Target, was that electric guitars could be put in every household, like microwave ovens. And so the production of 70 percent of all electric guitars was moved to China, the instruments made cheaply, and sold in cardboard boxes as start-up kits.
And then the bottom fell out of the economy and ruined it. Even $120 guitars-made-in-China weren’t quite cheap enough a lot of the time.
Plus a lot of young people would have rather spent up for a more universal symbol of cool, an iPod or iPhone.
However, you can’t have a guitar business like you did in the Seventies, Eighties and Nineties. Guitars are not thrown away. They don’t end up in landfills. You can find them everywhere in pawn shops and used sales. And the very wealthy, who buy the American-made custom shop hot rods? There just aren’t enough of them.
They lack the numbers and the same prole desires of the old middle class.
I see this on-line everyday. Facebook shoves posts from guitar publications and companies into my feed and they’re all about only two things.
First, pictures of expensive hot rod guitars, most of which the middle class, or even people who work in music stores, can’t really afford anymore. And the guitar accessory business, which exploded.
The accessory business, which means guitar effects and foot pedals, can just barely keep prices down on American-made stuff because there’s not much to it in the way of materials.
Fuzz-tones, of which there are at least eighty different brands/makes now, are priced only slightly higher than a rock bottom guitar made in China or Indonesia. And at that price point, a lot of poverty-stricken musicians, which is to say quite a few of them, can still afford the stuff.
And so the American makers of guitar pedals have gone through a boom. Culturally and socially they resemble the demographic of Silicon Valley programmer/brogrammer. Only not paid nearly as well.
They’re all tinkerers. With analog electronics rather than code. They play guitar, naturally, and they’re all white guys who pretty much look and sound the same.
It’s a busy industry that’s forced adaptations on the old industry. Big manufacturers, who have been around for decades, have seen the offerings and co-opted, leased or bought out some of the best of the little guys. Or the luckiest. It’s often hard to tell which.
Dunlop, for example, makes about a score of guitar fuzz/distortion effects under three different sub-company names, MXR, Way Huge and its own. They all feature some overlap, many in details that are of little or no distinction to the millions of people who still listen to classic rock recordings.
But it’s a fit for the hollowed out economy. Small stuff, made-in-America, that young men can still afford to buy a bit of. Gadgets easy to market and advertise, not requiring a lot of development time or much of an investment as the designs have already been made over and over and over again. And lots of choices, like hot sauces or ketchups and mustards at slightly snob up-market grocery stores.
This has established glut as what looks like a permanent feature of the market. There are more things to buy, and more coming all the time, than there is demand.
But despite the inexorably shrinking market for this, YouTube bristles with unpaid advertising for the new state-of-the-art electric guitar and accessory market.
New local bands nationwide can record and make as many videos of their music as they want, never make any headway, never get any numbers without a couple lucky breaks.
But un-boxing and demonstration videos of new fuzz-tones and guitar overdrives often guarantees some kind of audience.
Since American guitar manufacturers moved their production to China they surely cannot be surprised at some of the more interesting ramifications.
Three years ago I did a number of posts on Chinese-made counterfeit Gibson guitars after the Washington Post and other major newspapers actually began running on-line ads pointing to sites that sold them.
The ads were eventually taken down but the business became more vigorous. And why would it not?
Why pay for an expensive American-made Gibson guitar when you can’t afford it? But you can have a nice-looking forgery for hundreds of dollars, with a little luck when it comes to shipping.
There are many people who think this way. Can you blame them? They know that if they try to hock a forgery it will be discovered. They know that in many areas in won’t be up to the standard imposed at the Gibson factory.
But the Chinese are always getting better at the job and, in terms of for personal pleasure and looks, often the difference in quality matters less and less every day.
How good is that Chibson? How do you tell if you’ve been sold a Chibson? Let me show you the unboxing of my new Chibson! How do you get a Chibson and what can you do to upgrade it?
Two years ago Fender Musical Instruments tried to go public.
Initially, it seemed a natural, even proper, thing. The company of Leo Fender, although he’s long dead, is the tap root of the tree of American electric guitar. It’s a big part of the history of pop rock all around the world.
“Jeffrey Bronchick, the chief investment officer at investment advisory firm Cove Street Capital, says the stock was overvalued,” read a story from Fortune.
“It is a much more difficult business than what it was being sold as,??? says Bronchick (who also plays guitar, on a Fender),” told the magazine. “It was highly levered, there was a big question mark on growth and it was priced too high …???
For the New York Times, there was the same financial adviser, telling the newspaper he had four Fender guitars, but: “What possible niche is left unexploited by Fender?”
Fender’s margins were under pressure, said the newspaper. “Many of the guitars that are selling these days are cheap ones made in places like China — ones that cost a small fraction of, say, a $1,599 Fender Artist Eric Clapton Strat …”
And “Poof!” went the i.p.o.
Done in by the merciless judgments of those in the financial industry who make nothing but who buy tricked-out American custom-shop goods as investments and baubles. They weren’t believers in the company’s future. What they believed was how nice it is to show off a couple expensively furnished Eric Clapton Stratocasters to wealthy acquaintances at dinner parties, acquisition of luxury goods as a means of keeping score.
Today Fender is owner by a private equity firm. It’s interim CEO is known for being an executive at Under Armour and J. Crew, the latter an upscale women’s wear company.
In 2011, the Fender Museum closed due to lack of interest. A week or so ago there was a garage sale for what was left of its memorabilia.
And in a not very surprising development, Fender announced it would be selling direct from its website, royally pissing off its 70-year old network of bricks-and-mortar guitar store dealers.
Why not? Perhaps it would increase the profit margin, if only by increments. And to the new generation who use smartphone apps of convenience, shopping in a physical store lacks the zing of custom-picking the colors and hardware of a Stratocaster on-line.
Picking up a guitar in a store is old and fuddy-duddy, obsolete. You have to drive to it. You might have to plug it into an amp to see how it sounds and plays. With new computerized machinery to set-up a guitar before it leaves the factory and the service of UPS or FedEx, things are generally OK when they arrive at your doorstep.
And there is the upside: Direct sales taps Fender directly into the mania of unboxing video.
Playing the guitar is entirely secondary to the loving way in which the cardboard shipping box is displayed. Then the slow prying open and gentle removal of packing materials, all captured with full HD digital camera work.
Finally, the climax: The camera shows the un-boxer panning over and turning the as yet untarnished instrument itself. Exquisite!
Perhaps a second video can be made in which the unboxer briefly plays the instrument.
But, really, this is relatively unimportant in the grand scheme because there are always new instruments and accessories to be unboxed. It is the movie-like documentation of the acquisition that is the be all and the end all.
There’s no more rock n roll in the lot of them than there are in boxes of mashed potato mix. But that’s where the money is and you cannot fault Fender for trying to shake hands with the future.
What about Washburn? It has its custom shop in America, for the high-priced models. For the rest of us, there are those made in Indonesia.
Here’s a Stars and Stripes shocker: Prior to Friday, flags bought by the Department of Defense weren’t necessarily 100% American-made.
But going forward, flags purchased by the military must be wholly sourced from the U.S. — and not have any elements from overseas, according to a Department of Defense purchasing rules amendment that went into effect Friday.
While the Department of Defense’s major flag vendors are American companies, the flag material — such as ink and fabric — could have come from foreign markets prior to the change.
“Our men (and) women in uniform should serve under American-made flags,” Rep. Mike Thompson, D-Calif., said on his Facebook page last week. He proposed the legislation requiring the flags to be 100% American-made.
“After Thompson posted news of the regulation on his Facebook page, it spurred much debate among users on that site … Some applauded the rule … Others said flag production should be done by the most cost-effective source, even if that meant going outside of the U.S.,” it continues.
“I would like for someone to offer one economically sound reason we should show preference to the more expensive American made American Flags, rather the affordable flags made in other countries,” reads one such comment. “I cannot support this crony capitalism.”
Markets must not be constrained by government order! Liberty! Atlas will shrug!
Whenever you see the slogans and beliefs now it’s always the property of the WhiteManistan boys club, people who deserve a kick in the butt and superciliousness.
China makes American flags more cheaply, the article notes.
In 2003 I sent off a parcel of cheer-you-up-type stuff to an US Air Force friend who was serving in Iraq. In return he sent back an American flag in a box that contained an official notice that said flag had been flown in a combat mission in an A-10.
I was informed the flags were bought and sent out on sorties for just such purposes. The flag, which was made a nylon fabric or something similar, had a made in China identification.
I no longer have it.
I don’t care whether stuff is made in China. It’s all I or lots of Americans can afford.
The piece of minor legislation by a Democrat is very small beer. It makes no difference at all to our collective fortunes. If an American corporation must now have the flags it supplies to the US Dept. of Defense made in America, it will either find a way to still use Chinese-made flags and have them fall under the made-in-America stipulation by having US workers add one little thing before they’re put in boxes or pass the slightly higher price on to the taxpayer.
It’s part and product of an economy where American corporations have been allowed to prey on the civilian population for decades, pushing pay for work down until all that could be done to keep a semblance of middle class life going was to buy goods made by ever cheaper labor. Nationally, paying people fairly became equated with the source of all evil, government.
Of course, you can have an economy in which people are paid more and the corporations are allowed to do many things, just not cannibalize and liquidate the lives of their domestic workers.
We don’t have it. Some European nations and other more progressive economies, places that aren’t slumped like the US, do.
A telecaster guitar has a simple specification. It can be made anywhere.
A Chinese factory can make them as effectively as the Fender Custom Shop and its alleged Master Builders.
The only reason the “Master Builder” employee description took hold in this country is its convenience as a marketing tool for the artisan work “crafted” for the snob buyer market. In this market the guitar is an investment, to grow in value as it ages.
But electric guitars are by no means scarce goods. They are not precious jem stones, old classic muscle cars, gold, the first Amazing Spider Man comic book or even BitCoin.
Leo Fender would have snorted at the warping in today’s American guitar markets.
“China Toilet Blues” is, amazingly, four years old. Which is when I started doing my “protest” music set to video. It was the first.
At 21 seconds, the commonly seen American flag lapel pin on insincere patriots and politicians. There’s Hugo Chavez, now dead. And who’s the crazy mullah? I don’t remember.
The market for weekend retreats in which corporate middle-managers have their leadership and creative skills strengthened by learning to play blues harmonica never blossomed as planned.
The image of a roomful of managers from Kraft Foods or directors from the American Society of Forensic Laboratories learning to “blow their blues away” on Chinese harmonicas during a compulsory leadership get-together is a shattering one. You would be hard-pressed to think up a situation containing less “mojo,” creativity and fun although you might be able to imagine it as a potential TV movie in which special punishments in Hell are meted out to the deserving. — 2008
Of course, you can still buy many harmonicas from China. My favorite package, from a couple years ago, was the Piedmont Blues pack.
The only harmonica made in the U.S. was manufactured right here in Rockford. It was a business so unique, many thought it would take-off and create a hundred jobs. Instead, Harrison Harmonicas abruptly closed about a year ago, leaving no employment future and customers without their pre-paid orders or a refund.
Bum-bum-ba-bum-bump!
A blast from the past, February 2010:
Fender Musical Instruments is another example of ‘artisan’ business.
The book on its musical amplifiers entitled The Soul of Tone is an unintentional profile of a company that went from being a middle class employer in California, one making things for the middle class, to a company that sent all its manufacturing overseas, reserving its domestic manufacturing — greatly decreased — to stars and big deal corporate lawyers.
In the context of the book, it’s written of as straightforward smart business. When it was published, three years ago, it seemed that way.
Now it reads poorly. The first part of the book is filled with great amplifiers made in America by guys and gals in Hawaiian shirts.
The end of the book is quite different. It’s filled with oral history from its current designer/artisans explaining how they ship their everyman stuff manufacturing to whatever overseas place is the cheapest.
Coincidentally, all the guys pictured in the front of the book are dead.
This transformation is encapsulated in a quote about one premium domestically made guitar amplifier, the Vibro-King, a $2500 item used by Eric Clapton and Pete Townshend.
“If you’re a rock star or a lawyer who wants a Vibro-King, you’re gonna get one, but the Cyber-Champ (a low end Chinese-made Fender-branded amp) is an example of the relentless march to Asia for manufacturing,??? states Shane Nicholas of Fender.
Coincidentally, all economic reports indicate that class hit hardest by the Great Recession has been the low wage earners, those customers targeted by Fender’s cheap goods made in China.
And, of course, the update, a Captain Beefheart-themed version starring Tom Friedman, quoting from one of his columns:
Well, folks, Sputnik just went up again: China is going clean-tech!
Now for plutocrats and their not-yet-obsolete shoe-shiners.” width=”365″ height=”210″ />
Now for plutocrats and their not-yet-obsolete shoe-shiners.
From the middle class to the upper class in a little over half a century. The de-evolution of the domestically-made electric guitar from a working class instrument to a snob buy primarily for the plutocrats, their immediate servant class and rock stars mirrors much in the calamity that is American inequality. Fender Musical Instruments didn’t cause it but the state of the company and its legendary products does show the systemic problem caused by the Great Recession and the crushing of the middle class.
The buying power of the American middle class took a big hit in 2007 and has never really recovered. Electric guitars and amplifiers are not an essential good. While American companies like Fender now employ the same manufacturing model as the iPhone — design in the United States and outsourcing of production to China or any other comparable low wage or slave labor country — guitars are not smartphones. They are not nearly as essential to young people, not even remotely as “must have.”
Leo Fender’s company was dependent on a healthy middle class as well as a lower class that could aspire to greater things in an economy where the majority could have employment at decent pay. That economy no longer exists.
Like everyone else, Fender followed the track of corporate American manufacturing. And it would be a little unfair, but only a little, to whack it for not realizing where that story could wind up.
Today Fender’s Mexico plant in Ensenada employs around 1,000. It’s Corona plant, here in southern California, approximately 600, according to various reports. Of these, fifty are employed in its Custom Shop, making ridiculously-priced snob pieces for famous musicians and the wealthy.
China now makes 70 percent of the world’s electric guitars, an American innovation. And Fender, like Apple, uses the model of employing an outside contractor in Asia to supervise and implement manufacturing of its low cost Squier line of relatively inexpensive lesser parts and cheap-manufacturing copies. It’s a business in which the guitar-making has disappeared into a warren of low cost Chinese or Indonesian industrial plants, manufacturing operations that house cheap production of multiple brands of electric guitars all under one roof, for whatever is needed.
However, even these instruments are not cheap enough anymore for the working class. And when your business was built upon the buying power of a healthy middle class, that means you have a long term, perhaps permanent, problem.
In 2012, Fender Musical Instruments attempted to go public. It then withdrew the plans for its IPO when the tea leaves were read and it was determined the capitalist market deemed the company over-valued under much of the same ratonale discussed on this blog.
“Though Fender remains the largest guitar-maker in the world and an iconic brand name, the market for guitars hasn’t been great,” reads a piece from Fortune. “The recent recession forced many people to reconsider purchasing luxury items such as electric guitars.”
Unintentional hilarity is provided by the assessment of a financial instruments man as at a wealth investment firm (pay attention because this guy’s going to show up again):
Jeffrey Bronchick, the chief investment officer at investment advisory firm Cove Street Capital, says the stock was overvalued. “It is a much more difficult business than what it was being sold as,” says Bronchick (who also plays guitar, on a Fender). “It was highly levered, there was a big question mark on growth and it was priced too high, which makes for a fairly toxic combination.”
The 1-percenters weren’t the market for the electric guitar in the United States and the west. Now, one can certainly make a product to sell to them, but they’re not enough to sustain the traditional business that one, historically, enjoyed.
Another way of putting it is to state that Fender, domestically anyway, has changed from the equivalent of making Ford Mustangs, a “sports car” just about anyone could hope to own in the Seventies, to Teslas, cars that are only for the top end. With the exception that there have really been no design changes worth noting in 60 years.
In 2009, Michael Hiltzik, a Los Angeles Times reporter did a puff piece on his tour of the Fender Corona plant.
So it’s no accident that Fender’s $1,590 American Standard Stratocaster, the heart of the catalog, is made in Corona. And that’s not to speak of the models produced by Fender’s eight master builders, elite craftsmen who can spend anywhere from several days to several months building a guitar in the Custom Shop …
John Cruz showed me the replica he fashioned from Swedish guitar-virtuoso Yngwie Malmsteen’s 1971 Stratocaster. It’s a heroic reproduction, down to the original’s cigarette burns and tooth marks, not to mention its strip of tape with the words “Play Loud??? and electronics that achieve what Cruz called a “1-to-1 match??? sonically.
Fender then turned out 100 replicas, sold for a list price of $12,500, to Malmsteen devotees — plainly a group that puts the “fan??? into “fanatic??? …
Many guitar experts believe Fender is today experiencing its golden age, but that doesn’t mean the firm is immune from economic woes. It cut back to one shift from two about a year ago, when the recession made $1,000-plus guitars look like dispensable luxuries. Executives say dealers have finally begun to report hazy indications of resurgent demand.
But it never really did turn around and in 2012 Fender could not go public.
It is not Apple, or Facebook, or SnapChat. And while I still think stratocaster and telecaster electric guitars are cool, the choices in “cool” things to have are now consumer electronics of the smaller, globally-networked kind.
Fender, as everyone else in the same business, could also do with average Americans having more money. But that’s not coming back soon. Instead, the current trend is much more worrying for American labor and its compensation.
A more recent story in the Sacramento Bee, another enthusiastic report on a factory tour, gets to another central point: Old guys who can still spend part of their pile, reliving their glory days.
“Being here today is like a dream come true,??? said Francisco Felix, 60, of Philadelphia. “It took me 50 years to get here. I’m serious. I’m originally from Puerto Rico, and I’ve been in places where guitars are made. But it was like, wow, wouldn’t it be great to go to Fender guitars someday????
“It’s a pilgrimage,??? Fahey added. When his questioner looked at him quizzically, he elaborated: “Why am I here? Fender is huge. It’s the guitar maker. I’ve got a lot of people back home upset with me that I’m here and they’re not. It’s about coming home, seeing where the electric guitar pretty much started.???
Except it’s not. And Leo Fender, unfortunately, is long dead.
The American economic tragedy is also Fender’s. It’s everybody’s.
Any post about Fender Musical Instruments should include something about Guitar Center. These days, they share some corporate DNA.
But this heart of rock isn’t beating quite the way it once did. Like many other American manufacturers, Fender is struggling to hold on to what it’s got in a tight economy. Sales and profits are down this year. A Strat, after all, is what economists call a consumer discretionary item — a nonessential.
More than macroeconomics, however, is at work here. Fender, based in Scottsdale, Ariz., is also being buffeted by powerful forces on Wall Street.
A private investment firm, Weston Presidio, controls nearly half of the company and has been looking for an exit. It pushed to take Fender public in March, to howls in the guitar-o-sphere that Fender was selling out. But, to Fender’s embarrassment, investors balked …
[The dilemma posed by making guitars for the plutocrat once again turns up like a bad penny in the guise of the familiar financial analyst. The rich man who has money to buy your firm’s guitars is of the class that kicked you to the curb on the IPO, ain’t it a bitch? And they don’t give a shit about inequality and what it means to companies like Fender and Guitar Center.]
“What possible niche is left unexploited by Fender???? asks Jeffrey Bronchick, founder of Cove Street Capital, an investment advisory firm in El Segundo, Calif., and the owner of some 40 guitars, including four Fenders.
Another big player on the American music scene, Guitar Center, has already had financial strains. Like Fender, Guitar Center, the world’s largest chain of instrument retailers, is also involved with private equity. It’s controlled by Bain Capital, Mitt Romney’s old firm.
Analysts say Guitar Center is crucial to Fender, accounting for roughly a sixth of Fender’s sales — and the ties between the two run deep. Fender’s chief executive, Larry Thomas, used to be the chief of Guitar Center. He sold the company to Bain at the top of the market in 2007 for $2.1 billion, including debt.
Guitar Center has been losing money since.
I shop at Guitar Center. I bought picks and strings there just before Christmas, woo-woo! I like the employees and the company gets a rum deal from many, as a big box store, for perhaps not being the more personal artisan business they would like.
Those objections are rubbish, something from libertarian annoyances, people who believes all the crap they read in a Tom Friedman column about how everyone and everything average is now over, obsolete, suitable only for the trash heap unless it can be remade as globe-spanning suppliers of custom services and goods made only for the most discerning and worthy of customers.
The Great Recession hurt Guitar Center’s business. More importantly, like Fender, the great hollowing out of the middle class has meant bad things for both. Neither company can furnish an answer alone. It’s beyond their power. They are at the mercy of the American economic system.
Corporate America, the banks and Wall Street are doing fine. But can you run big businesses that depend on mass demand and the ability to pay from a middle class that’s being whittled away more and more every year?
Americans have to have jobs and those jobs have to pay more. A lot more, not part-time limping-along work, not minimum wage work, not jobs in which everyone qualifies for Medicaid health insurance, food stamps or the earned income tax credit.
Guitar Center didn’t make that world but they’re certainly part of it. A lot of their employees could use more spending money.
No one expects most musicians to make much. But not being greatly alarmed by the national way of making penury more universal because corporate America believes labor costs have always nowhere to go but down is a long-term still slowly unfolding disaster for many companies just like Fender and Guitar Center.
Here is a site devoted to employees who tried to unionize some Guitar Center stores.
Excerpt:
“We work at Guitar Center stores throughout New York City, and we love music and our jobs. But since Bain Capital bought the company, our commissions have been cut, and many of us barely make more than minimum wage or receive paid sick days or vacations.”
“But the Great Recession played havoc with the business model.” — USA Today, in a piece on Guitar Center, the day after Christmas.
Move over, Goldman Sachs. At the rate things are going, and assuming there’s a lot more extreme weather this winter, we may soon be able to add the ride-sharing firm Uber to the list of institutions loathed by nearly everyone, with the exception of those so rich as to pay no attention to what they’re being charged for things …
The more drivers who leave Yellow, say, for Uber, the nearer we get to a world in which only the rich can get around. Which, of course, may not be a bad idea, the rich invariably being nobler, harder-working, nicer-smelling, and generally more virtuous than lazy, malodorous good-for-nothings who can’t afford Samsung Galaxies or iPhones.
From my point of view, I can’t see Uber making much of a dent in southern California. Too many poor people and it’s not semi-pro want-to-be an unregulated cab driver nation waiting to happen.
It may take a couple years for it to sink in that you can’t rule the world from your smartphone everywhere, though.
Uber as a way to redeem your economic viability in West Virginia or Mississippi? Give me a break.
It is pleasurable to see bitcoin have its ass kicked by the world’s second largest economy, China. What countries will follow?
After crashing twice in the past few weeks, both due to China’s moves preparing for the elimination of the digital currency’s use, it’s still easy to imagine that bitcoin hoarders will work hard to push the value of it up again.
Which will only underscore its volatility, demonstrating that bitcoins are only for those who already have real money liquidity and the ability to purchase and sell large amounts of them quickly for speculative purpose. It’s a money for digital goldbugs who increase their worth by gaming it.
Bitcoins and bitcoin wallets are of no use to the hoi polloi who must use money to buy prosaic shit like food.
“A few drug users aside, no one appears to be buying [bitcoins] as a way to buy things,” reads the Economist, today.
Remember — these is much that can be delved in the blog archives using the search bar. It is great for finding stuff on the sharing economy, the new tech system of systems for reducing everyone to penury, for instance.
Now for plutocrats and their not-yet-obsolete shoe-shiners.” width=”365″ height=”210″ />