Thursday, September 29, 2016

The Profit Monster is kiling us...

This morning's New York Times carries a stunning story on the struggle of Fender Guitars to stay a viable business. 

What's killing Fender? The hungry PROFIT MONSTER that leaped out from under the bed when the original owner sold his company..

"Leo Fender sold his company to CBS for $13 million in 1965, but Fender struggled in the ensuing years to maintain its identity inside a big corporation. Analysts said that Fender, under pressure to meet quarterly earnings numbers, made a series of cost cuts that caused quality to suffer and sales to nosedive. "

For the sake of profit, Fender was sold as a profit-slave to CBS where it was no longer a beloved member of the family valued for its unique contributions. The only measure of its work became its QUARTERLY EARNINGS NUMBERS and it struggled. The series of cost cuts designed to make its value visible to its captor (profits) caused its true value (quality) to diminish. 

This story is played out throughout our country.  We plebians are participants when we start to believe what the huge PROFIT MONSTERS tell us - that the measure of value is completely monetary. Many of us have ten cheap shirts, and no really good ones. We buy small appliances that look great, cost little, and function just long enough to get past the possibility of return.

Are profits necessarily a bad thing? Of course not.  But profit is the side-effect of a good business. A business that provides a desireable service/product and makes enough money to pay its employees, its light bills and set some aside for future growth and capital improvements is a successful business. The trouble comes when the business needs CAPITAL. Capital is held and kept by PROFIT MONSTERS.

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