August 17, 2007

Playing the Toy Blame Game

I was going to tee off on the Buffalo News editorial this morning that people shouldn't blame the Chinese for the toy recall being conducted by Mattel over lead paint. But the more I thought about it, the more I'm agreeing with them. Here was my train of thought.

1) Toy manufacturers like Mattel, along with a host of other companies, have gone overseas as a way to lower their costs and make more money. They're greedy and they should be blamed.

2) The Wal-Mart effect. Wal-Mart long ago abandoned any notion of Buy American and is all about forcing companies like Mattel to produce super cheap goods. The only way Mattel can do that is go overseas, so it's Wal-Mart's fault.

3) With Wal-Mart putting price pressures on manufacturers, they must find cheaper ways to lower their prices. The unionized American worker demands too much, especially in benefits and legacy costs and won't recognize the realities of the global economy. So manufacturers like Mattel must look for cheap labor elsewhere like China. It's the union's fault.

4) As more Americans lose their jobs or are underemployed, they are shopping at places not based on quality or, they are most concerned about price. So whoever can sell Barbie accessories at the best price makes the sale. Mom and Pop toy stores can't compete with Wal-Mart's prices and are forced out of business. Since we are rewarding the Wal-Mart business model, we the consumers are to blame.

Hmmm, this is too hard. I think I'll just stick to blaming the Chinese.


Turk 182 said...

Can't wait until with get that Super Wal-Mart and all that imported Chinese Food. Who wants to eat lead of a Dora the Explore Doll when you can ingest directly in your cereal?

Larry S said...

I think everyone you mentioned plays a role in this. Corporate greed, American's insatiable appetite, union greed all have driven companies overseas.

This has lead to inferior products and putting the consumer (and pets)at risk. Do we care, or is this just another 2 day story?

Pirate's Code said...

Ah, yes, corporate greed. The single focal point of all that is wrong in our lives. Except, maybe, the corporations that are adding any value at all to our 401-k holdings. And certainly not the corporations that employ me, or my family, or my frieds. Or the corporations that buy goods and services from my business. But, yes, corporate greed is the source of all our problems.

Somebody modestly famous once said, "All business begins with public permission and exists by public approval."

We live in a relatively free market society. You/we remain free to buy products and services from whomever we chose. It is you/we that demand lower price. It is you/we that decide what level of quality we will accept for that price.

Corporations -- successful ones, anyway -- act and react to our decisions. Are there corporate excesses? Absolutely. But larry s is correct, everyone plays a role in this. Blaming Wal-Mart, or Mattel, for your lot in life ignores the fact that Wal-Mart became successful by giving people exactly what they asked for.

Want something different from Wal-Mart? Or Mattel? Or General Motors? Or any other corporation? Then demand it. And be prepared to pay for it.

Big Daddy said...

We won't if people care until the holidays when we see if the consumers still buy all that Chinese-made garbage or send a message to retailers that they're willing to pay a slightly more for better stuff to guarantee Little Johnny isn't eating lead.

Clark Griswold said...

Stuff like this just makes me feel better and better about a Wal-Mart coming to my home town of NT....

Scott Leffler said...

Good analysis SailAway.

One thing that strikes me is the constant need to INCREASE profit. The record profit from last year isn't good enough. We seem to believe that unless we're getting better, we must be getting worse. Lack of growth is a sign of weakness.

Pirate's Code said...

Exactly, big daddy. Wal-Mart didn't get to be, well, Wal-Mart by being stupid.

If their store shelves are still full after Christmas because people made a conscious decision to buy something else elswhere, Wal-Mart will react. Or die.

The automobile industry still goes through that ebb and flow. Remember when Japanese-made cars first started appearing here in large numbers? Many were largely junk, but sold because they were cheap. American automakers, to compete, started producing junk, as well, to be price competitive. The Japanese reacted by building better cars, and starting leaving GM, Ford and the rest in the dust despite the fact that Japanese cars were no longer less expensive. American car makers had to react and things like the much-lamented K-car, Pintos, Gremlins and so on died a deserving death.

Why? Because we -- as buyers -- demanded better quality and are willing to pay for it.

Pirate's Code said...

Scott --

How much profit is enough? Or too much? How fast will your 401-k or IRA grow if you invest in companies that don't grow?

Increase profits -- earned legally and ethically -- lead to increased investment, and increased wealth for whomever did the investing. In today's America, that's you and me.

Said in the negative, profit is always earned at someone's expense. What makes it fair is the return or value you get for contributing to someone's profit.

If you don't believe that the product is worth the asking price, don't buy it. That will limit the profit a company earns.

We are not helpless in this.

Mr. Pink said...

This has turned into an interesting debate on the free market. I want my 401K to grow, but I'm also concerned about the continued separation of the classes in America.

I don't think it's a stretch to say that the seeds of revolution began to get planted in the haves/have nots ecomomy we are turning into.

However, if you aren't growing, you are dying, there is no middle ground. And in a global economy, you need to be able to compete on quality and cost.

Sail Away's analysis is right on the money, we are all to blame...if there is blame to go around...or perhaps better said...this is the downside of capitalism, but would you ever want to exist in a different system?

For me, it comes down not to the corprate model which demands profits, but by the corporate leadership that lavishes huges bonuses on executive while cutting workers and gives golden parachutes to CEO's who failed.

In other words, I never hated Adelphia, but the Rigases got what they deserved.

Boy, I'm all over the place. Better eject now.

Pirate's Code said...

Pink --

Pointing at corporate execs as the problem or issue is no different than those who want to blame Wal-Mart for everything but post-nasal drip.

The Rigases got what they deserved, yes, but they did so because the ran a publicly traded company with stockholders like you and I and regulators that require quarterly financial statements. But I believe they are the exception, not the rule.

That issue is smaller than the media makes it out to be. It makes great copy or great TV to highlight the rogue exec who buys a $1 million birthday party with company funds. It's becoming much like the Hollywood tabloid shows. How many stories do you hear about entertainers that go home at night to their families? Zip. No, we hear about Lindsey Lohan. Does she represent the majority? Probably not, just like the Rigases probably don't represent the majority of corporate execs.

Executive compensation is not the reason for our struggling economy.
Nor will lowering "corporate execs" pay or bonuses make a business more successful.

The gap between rich and poor is growing, no question. But so is the gap between the number of rich and the number of poor. There is more wealth, spread among more people, than at any time in our history. That so many are unable to grab for some of it is troubling and a problem worth addressing.

But it is part of the ebb and flow of our economic system.

Scott Leffler said...


I don't have a problem with profit. It's obviously healthy. Good sound economic policies REQUIRE it. But some companies choose to stay in America and make X every year when they know they could go somewhere else and make 2X. And then 3X. But X is enough. For some companies X is never enough. And we're canabilizing the free market with that thought.

Pirate's Code said...

Scott -- "For some companies X is never enough. And we're canabilizing the free market with that thought."

How, exactly, is the free market being cannibalized by companies seeking to increase profits? What economic theory supports that contention?

Even in the best (or worst, depending on your point of view) companies, cutting cost to increase profit can only go so far. To sustain increased profits in most industries, companies must look for new markets and look for business growth. That some do it better than others -- or at the expense of others -- is not cannibalization, it's called competition.