Large businesses themselves create winners and loser. Two businesses competing head to head with the same product for the same buyer, can be receiving different prices from a shared vendor. A different markup percentage is applied for preferred clients. An example of size difference is Wal-Mart. They can purchase multiple truckloads of a product and get a price that is significantly less than their competitors. The competitor is buying higher and must either sell higher or work on a smaller profit percentage than Wal-Mart.
One price is not the complete picture. The pay of the employees, the cost of benefits, tax breaks, utility costs, etc., all fall into the aggregate of expenses. Both Wal-Mart and the local store are attempting to buy-low sell-high. It is as fair a competition as David versus Goliath. Size does not necessarily win. What matters is the underlying mathematical ratio: are revenues greater than expenses? They can co-exist peacefully if consumers have enough demand, but we know that demand will fluctuate.
If the vendor sold to both companies at the same price, the local company might be able to compete more easily with Wal-Mart. Should the vendor favor one over the other? Whichever choice it makes is right or wrong, fair or unfair, to somebody. The government cannot set a logical rule. Like the trade of eggs for chickens, there is no right answer as to if volume warrants a different rate. It is a common practice, of course, but as a matter of policy, should it be encouraged or discouraged? Will the vendor lose Wal-Mart as a client if they offer them the same price as as the local company?
There are moral, ethical, and political clouds that surround every financial transaction. Everyone is equally worried about revenue and expenses and inflation. The government will be considered incompetent or adversarial, no matter what choice it makes. We should allow mathematical realities to inform our choices, not our fears and prejudices.
The free-market advocates claim that any choices the businesses make are best, and any choices the government makes are wrong. Their claims are illogical. What is important is the quality of the decision, not who makes it.
What is Fair?
It is difficult for anyone to keep revenue larger than expenses. While expenses can be controlled to some extent, there is even less control over revenue. People cannot be forced to buy something. Thoreau writes in Walden of an Indian Chief who was reduced to making baskets. When he solicits at the local lawyer's house, they refuse to purchase anything. He walks aways complaining that they are starving him to death. After thousands of generations living in balance with nature, he was among the first Native Americans to know hunger brought on by the comfort of modern commerce. The civilized man introduced a savage system when it came to the issue of distribution.
Wal-Mart is generally profitable, but other large businesses have not fared as well. Some American auto manufactures have had an overhead that greatly exceeded their revenues. Wal-Mart is a middle-man. Auto manufactures start from the ground up. First they engineer a product, then they assemble parts from a variety of sources. They sell directly to the consumer through a dealer franchise system. At Wal-Mart, employee wages are low and the products are generally inexpensive. Auto manufacturing employees are unionized and paid well. The higher cost of those wages and benefits is reflected in the price of the automobile. The union advantage for the worker becomes a disadvantage for the consumer. This is generically why America seeks to import goods made with cheaper labor, whether it is cars or the products on the Wal-Mart shelf. The fact that we cannot pay ourselves to manufacture the goods we consume is a sign that the system is in deep disarray. If we are more advanced socially and technologically, then we should be able to produce what we consume more easily. Instead, we have made it harder.
Auto manufacturers have fewer sales than Wal-Mart, but at a considerably higher price point per sale. Both make many more transactions than small businesses or an individual. Today, the majority of the population are employees. When the country was founded, the majority of people were self-employed. By the time of the Civil War, that number dropped in half. For most people, their revenue is wholly dependent on one transaction.
Wal-Mart, the auto manufacturers, and many other corporations are Goliath's. They have the capacity to lose money in the same process that allows them to make money. Because we must consume to survive, nobody has the ability to stand still for long. The game must be played. The percentages must battle against one another. This is the consequence of a money-driven economy.
Two farmers could barter eggs for milk forever. In fact, all farmers could trade food forever, regardless of how items were valued. Money changes the nature of trade. The purpose of trade is only to make sure we have what we need when we need it. The money system guarantees that trade will be difficult, when the intention was to make it easier.
The wealth divides because once one gains an advantage, it can easily compound. Similarly, once one is placed at a disadvantage, that disadvantage can compound. The Monopoly game demonstrates the consequences of inflation and compounding. Even with the same amount of turns per player, and equal rules for everyone, the wealth divides. Our reality is that some players have many more transactions than other players. It is currently impossible to formulate a level playing field between small and large businesses, or between union and non-union workers, or between American made and foreign made goods, and especially between the young and the old.
The budget formula reveals the mathematical mechanics. The rich take more than they give. The poor give more than they take. The rich are experiencing 2+2=5 in the aggregate of their transactions. The poor are experiencing 5=2+2. The former expand their consumption whereas the latter must restrict consumption and fall into debt. The harder the disadvantaged work, the more the advantaged gain. We are a commonwealth, whether we want to be or not. The choice is the degree of imbalance that we will tolerate.
Work can sustain people from day to day, but making a lot of transactions allows profit beyond subsistence needs, and that gives the person or business a powerful advantage. It is accurate to say that the rich create the poor. The usual method is to combine a positive balance and a lot of transactions. However, the Monopoly game demonstrates that you can become rich even when making the same number of transactions as everyone else.
It is mathematically impossible for everyone to become fiscally rich simultaneously. John Kennedy claimed that a rising tide would lift all boats. What is true for water is not true for finances. We can grow materially rich, however. America's primary advantage in the global economy is the long lapse since our Civil War. Our productive wealth has been allowed to compound, rather than being destroyed by bombs. However, as we migrate towards a mathematically dysfunctional police state, the sheer volume of non-productive activity, combined with intentionally manufacturing obsolescence, will have the same effect as many bombs. Areas of society are blighted by the invisible hand of fiscal habit.
Not all transactions are a brief exchange of goods for money. Many involve a long-term contract. The most important of these are loans. There is no lending in Monopoly. The game ends when everyone goes broke. In reality, we keep the game going by using credit and issuing debt. Every new government is the first party involved in long-term contracts. It accepted loans which form the basis of its currency, which made their own currency acceptable in international trade. Money stems from the intellectual agreement to accept credit. One party has nothing to trade except for a promise. The trade of promissory notes eventually became money.
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