The weather has been rainy, raw, and, some would say, dreary, all week long here in the mid-Atlantic. Still, blossoms push optimistically out of even the most unlikely patches of ground and thousands of trees have brightened into white, pinks, fuchsias and golden yellows. We are, of course, at that cusp when the cold stored over a long winter is swept back from the ocean on a swirl of Eastern breezes and time, itself, seems to stand still.
Every particular season has its own personality: in some years in early Spring there is a deep frost a night or two after the magnolias put out their silken petals and within the day they go brown and float off. To these ancient rhythms we are passing bystanders. What we do know is that the days grow longer as the sun climbs higher into the sky and that cold, or warm, they will be followed by warmer ones. These are the fundamentals. Whether it will be a warm April or a bleak, cold one, we cannot know. But we do know that before long we will be longing for a well shaded outdoor table and a chilled glass of white wine.
A couple of days ago, the employees of the two largest supermarket chains in the Washington, DC area voted overwhelmingly (95%) to allow management to lower their level of medical benefits and raise the amount of out of pocket costs they would have to bear. Against this and other losses that would cut the pay of newly hired workers, they would get an hourly pay raise of $1.25 split over 4 years. New employees would no longer get coverage for their spouses for the first six years of employment, would shoulder higher medical costs and higher out-of-pockets, and would sacrifice weekend time and a half. Giant and Safeway, the two big guys in question, argued that they needed the cost cuts to compete with our old bogeyman, Wal*Mart.
On the surface, their argument rang pretty hollow since Wal*Mart's and Costco's footprint in this prosperous area is still relatively quite small. But everyone in management and labor, took a lesson from the real tale of agony that played out in Los Angeles earlier this year and before.
As this Pyrrhic battle took place, we couldn't help thinking about some of the points made in Elizabeth Warren's and her daughter Amelia's book, "The Two-Income Trap"; i.e., that jobs that once were sufficient to support a family of four are now hardly able to do half that. Chances are that the guy in charge of the grocery counter busily sorting the collard greens at the neighborhood Safeway, like most of his neighbors, is maxed out on his credit card and, along with his mate, faces a mortgage and payments on two cars. A 60 week strike, as in LA, would have just about ruined them.
We're reminded that one of the great breakthroughs in the growth of the US economy came when workers on Ford's assembly lines were able to earn enough to buy a car, themselves. By the time World War II had faded into the Eisenhower era, America could look a lot like "The Flintstones" minus the running stone-age shtick.
Unlike the headlines today, surely, the supermarket employees were making a very clear statement on how they view the present employment situation here in the nation's capital, a place that is booming relative to the rest of the country as more and more government functions get privatized and there are no longer any constraints on how much the government spends. The horrible happenings in Fallujah during the week point to a strange aspect of this phenomenon: the second largest army in Iraq, it turns out, is made up of mercenaries paid for, not out of the military budget, but out of some other pocket. The soldiers in this army, run by subsidiaries of the usual suspects, get $1,000 a day while their uniformed brethren are earning around 10 bucks.
So much for sleight of hand. Our point is that there are fundamental trends and there are bumps up and down. It's hard not to get distracted by the day to day news cycle. The OPEC gang may or may not pump less oil in the next quarter and that will make some impact on the price of gas at the pump but it has little to do with what's really driving the price of petroleum: more consumers in China and India, bigger cars and houses in the US and longer commutes as housing prices drive ordinary working folk further out into sprawl-land, and ultimately a dwindling supply of black gold. Did anyone bat an eyelid when Shell admitted that their estimates of "proven" reserves were inflated by nearly 20%, or 5 billion barrels of oil.
Worldwide consumption of basic resources like copper, gold, petroleum, platinum will increase over time even if the US and European economies falter. World demand will continue to grow. China will be able to hold down the price of manufacturing labor for years to come but it will not be able to supply the basic elements needed for its production. Ironically, one of the US's largest exports to China these days is scrap iron. All going into the maw of this growth engine where, like the employees churning out Model T's, pre-"Flintstones", in this country, Chinese workers will be demanding washing machines, TV's and ultimately the family wheels.
Where this is all going to end, dear readers, we could hardly offer a glimmer. But be sure that, rainy or sunny, damp or balmy, the season is what it is and the next will happen because the sun is higher or lower in the sky, not because of what anyone says.
rmb
Copyright 2004 Richard Mendel-Black All Rights Reserved
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