Not So Sweet Deals

I lay in bed this morning thinking very much like Winnie the Pooh, “I wonder what’s for breakfast.” Unlike the iconic bear though, for me it’s not a rhetorical question. I’d have to get up and make something. As a somewhat overweight middle-aged man living alone, there’s always the question of where to go on the scale of health food to comfort food.

American style breakfasts have always been an important part of my life and culture. One of the few things I continued to miss about my native land after decades in Europe was the option of going out to a diner and being able to choose between a wide variety of omelets, muffins, pancake styles, waffles and even porridges if I felt so inclined, with a genuine maple syrup dispenser on the table, a bottomless cup of weak coffee, a large orange juice and something unsubstantial to read. I have over the years found ways of making or acquiring all of these things for myself outside of the US –– and I have earned some moderate praise in serving all of these (other than the weak coffee) to family and friends in places where they are less familiar experiences –– but it’s still not the same as my young adult memories of being able to go out and have them randomly and conveniently provided by a number of competing local businesses.

One chain of “restaurants” I used to frequent in my younger days was Dunkin Donuts. This was something of a guilty pleasure even then, but back in the day they used to have some excellent soups and sandwiches besides their signature coffee and carb bombs. I was rather disappointed on my last trip to the states to discover that they had dropped their old savory lines in favor of specializing only in the sugary stuff. But I guess they know their market, and during the time I’ve been an expat that market has certainly been changing: When I moved abroad in 1986 only half of the states were keeping records of the percentage of obese people among their residents, and of those only a third were reporting obesity rates of over 10%.

By the time all states started to keep such statistics on an annual basis in 1995 they were all coming in at between 10 and 20% obese.

The first states started to cross the 20% obesity mark in 1997, and they started to crack the 30% border in 2005.

At last measure there were no states left with less than 20% obesity rates, and a quarter of them were up over the 30% mark.

So it should come as no surprise to me that Dunkin Donuts has given up on selling anything else than carb bombs and caffeine.

Now I really can’t throw stones about this. In middle age I’ve been skating pretty close to the magical BMI limit of 30 (the statistical starting point for obesity) myself. The point is that, from my perspective, if fattening people up were to become a smaller business, so much the better it would be for many of us, and for the economies of many “developed” countries besides.

Enter the one company that has a reputation for providing “food” that is closer to candy than Dunkin’s products even: Hostess. I too was raised on regular treats of Twinkies, HoHos, Ding Dongs, Devil Dogs, cream filled cup cakes, and icing dipped fruit pies from the Hostess factories. I remember sometime over 40 years ago touring a Hostess factory in the suburbs of Boston with a YMCA father-and-son group, and being fascinated by the rotating robotic fingers that injected the cream filling into so many of their products, and at how much different Wonder Bread tasted straight out of the oven, with the yeasty smell still rising off of it. Thus it’s not too hard for me to see where the American obesity epidemic is coming from.

Yet for all this decadence that Hostess is providing to the American public, they keep losing money lately. To keep addicts hooked on their particular brand of sugar highs they have to keep their prices especially low, and to do so they need to take those few employees which can’t be replaced by robots and put them on the closest thing to slave wages that they can get away with. Even that hasn’t worked, and now following President Obama’s re-election Hostess has declared that they are shutting down operations.

The bad guys, according to company spokesmen, are the unions. Just under a third of Hostess employees are part of the national union covering workers that make pastries, candies, tobacco products and flour (an ironic set of product associations in itself). They refused to take another round of wage and benefit cuts from this company that has been on the edge of bankruptcy since the early Bush (43) era. So because of the big bad unions, as the venture capitalists’ representatives explain it, an extra 18,000 manual laborers around the US will be out of work this Christmas, and many Americans will have to find new sources for their empty carb and sugar fixes.

But this ignores the broader question: Is it economically and socially healthy to keep low profit margin businesses running by squeezing more work out of employees for a lower wage than they can actually safely live on, or is it better to let these businesses go under if they can’t afford to (or otherwise refuse to) pay their workers an honest wage? Part of the essential question too is, how important is the product that these companies are making to the overall happiness and well-being of their customers, and how badly will the public suffer if particular providers of this product go out of business?

If the product in question is important enough, and difficult enough for consumers to live without, raising prices by 5-10% and passing those increased revenues on directly to the workers (rather than the “investors” and upper management) in theory should work just fine. But of course doing that would turn economic trends in the “wrong direction” from a management perspective: employees might start expecting to earn closer to a 20th rather than a 50th of what those at the top are earning. Rather than taking those sorts of risks it’s better just do drive the company into bankruptcy.

But at Hostess those sorts of strategies wouldn’t necessarily work. There really isn’t a shortage of competitors in the empty carb market, otherwise US obesity rates wouldn’t have tripled in the last generation. Perhaps, like their union brothers in the tobacco industry, Hostess workers need to recognize that their meager wages have been based on those at the top getting rich off of destroying the health of others, and people might actually be better off without what they’ve been making; even if it did provide a semi-regular income for thousands and a source of intoxicating satisfaction to millions. Yes, losing Twinkies and Ding Dongs might be as traumatic to some as losing Lucky Strikes was to others… but life goes on, perhaps better for the lack of them.

Now an entirely different “borderline profitability” business where aggressive union activity is still necessary is in South Africa’s mining sector. Mining company negotiators have been telling the unions that the world Platinum price is down from where it was five years ago, and they will have to close down if they start paying their workers more than $500 a month for the dirty work of mining the stuff.  This is crap. South Africa mines more than three quarters of the world’s platinum, which is needed not only for hit record awards but also for car’s catalytic converters (explaining why it costs so much to replace the damned things!). Thus the South African platinum industry is in a far better place to determine world prices in their commodity than the OPEC countries are to set world crude oil prices! The fact that they have not taken their workers’ basic welfare seriously enough to raise both prices and miners’ salaries reflects one of the greatest failures of the ANC government’s management of the national economy there over the past 20 years. The “wildcat” unions there aren’t the bad guys; they are the only ones who are taking the basic human dignity and welfare of the workers seriously. They are taking the action that government should have taken long ago to require a decent wage for hard working people, to build a strong, multi-ethnic middle class and to provide hope for those who have long been victims of exploitation and abuse. For police to have killed striking miners only adds injury to the insult of their government’s inaction.

American business leaders of an elitist far right persuasion apparently haven’t given up the offensive against unions’ attempts to limit the economic polarization that has been happening in the US over the past generation. The election is over for another couple years, and they’re seriously pissed about not getting their money’s worth with all of the national elected officials they tried to buy, but they still aren’t ready to call it quits. If they can find ways to further damage the US economy over the next couple years and convince people that it is all the unions’ fault, maybe they can garner more support for their minions in the next round. They can always try. I can always hope that Americans progressively become smarter than that.



Filed under Economics, Ethics, Politics, Sustainability

2 responses to “Not So Sweet Deals

  1. Read your post while eating breakfast. Trying to cut back on expenses, I set out to make my own American diner experience: 5 strips of bacon, two eggs and a stack of pancakes … I burned most of it, but at least the coffee is good.
    24 hour diners were one of my favorite things when I first came here (along the ubiquitous Dunkin’ Donuts – though Canada’s Tim Hortons is so much better), and they’re still my favorite breakfast. I also loved free-refill fountain sodas, which I heartily abused.
    Living near a 24-hour Giant grocery store, 24-hour pharmacy and a 24-hour diner, not to mention the 24-hour Walmart down the road – there is very little I can’t get my hands on at 2am on a Sunday morning, if I so desired; a far cry from the Scandinavian experience. The Subway sandwich diner will even deliver to my door, if I cannot rouse myself from my own sloth enough to make a sandwich. The epitome of this demand for convenience, though, is the drive-through beer distributor (“cold beer sold here!”).

    I have received reverse-culture-shock when visiting my old stomping grounds in Finland, where the day of the week makes a big difference on the opening hours of the stores. A mall not open on a Sunday? What!? How do people spend their time here if they can’t go shopping!? …I so hope Scandinavia stays that way.

  2. I hope they become progressively smarter as well. We can only hope!

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