Why the end of Twinkie means our “Mad Max” Future is Beginning

Our Future

It’s sad, but true. The end of Hostess  – and with it, the end of the nearly invulnerable Twinkie – means our Mad Max future is starting much sooner than anyone expected.

We can no longer afford to make a cheap-ass, terrible tasting cake. Something our parents could buy in huge boxes, a treat I could afford on the wages of a paper boy, we can no longer afford to make.

This is the conclusion we take from this.

Here’s Felix Salmon as he shows us how it starts:

“What we have here is a situation where a company offered a wage in the marketplace and couldn’t get any workers to accept it. Consequently, it went out of business. The word “competitive” gets thrown around a lot, often with the murkiest of meanings, but in this case there can be no doubt at all that a company, Hostess, was unable to pay acompetitive wage. Ninety-two percent of its workers voted to walk out on their jobs rather than accept its wage, and they stayed out even after they were told it was the company’s final offer.”

Hostess cannot afford to make the very cheapest, the very worst snack cakes, at a competitive wage. It’s hard to imagine a less expensive baked good product to make. These products are completely standardized, and use processes which have been known for decades and refined over all that time.

Yet the richest country in the history of the world cannot afford to pay people enough to make these products. How is this even possible?

Here’s more from Felix:

“In a piece for Salon, Jake Blumgart quoted a bakery worker who had been at the company for 14 years. “In 2005, before concessions I made $48,000, last year I made $34,000…. I would make $25,000 in five years if I took their offer. It will be hard to replace the job I had, but it will be easy to replace the job they were trying to give me.”

Yes, there are signs the snack cake company was raided by Vulture Capitalists. It had over $1bn in debt, which is completely astronomical for a company with only a few billion in sales and (probably) razor thin profit margins.  It had $450m in debt in 2004, and there isn’t much information on why it was issuing debt in those years anyway.

The point Felix makes is generalizable to other forms of manufacturing, which he does with great clarity:

“All of which means that there are two enormous problems with the story that manufacturing is returning to the US. That might be true, but (a) it’s not creating many jobs, and (b) the jobs it iscreating are not the good jobs which people want to have for many years. Instead, they pay $15ish per hour, which is what teenage babysitters make in New York.”

That’s probably a bit low for a baby-sitter in NYC. I pay $10-12-15 here in Oak Park, Il. There are much better opportunities for the same wages paid in manufacturing.

Many people believe that the first things society will not be able to afford as we descend to our Mad Max ending are the most expensive things. But this is probably not true. There has always been very nice things available to the wealthy, and the quality of many of these goods have not changed much over centuries. Custom made clothing fits very well in 1712 or in 2012, and the grand estates of yesteryear are still beautiful today. It’s more likely the case the cheapest goods will become too expensive for poor people, so we will stop making them.

Things like mass produced sponge cakes with frosting will be a luxury good, too expensive for poor people. A light sponge cake with frosting will once again become something custom made, by hand, in small batches, and far more expensive.

The first things to go will be the cheapest things, like Hostess Twinkies, at least if we continue down our current path.

Here at MR, we think there is another path. Companies hire when they are swamped with demand. Mass Production requires Mass Consumption. We can begin to sort out how to structure this beginning with the Contingent Institutional approach, and by using the fundamental identity. We should probably recognize Godley-Christ before we do anything, and accept we need and want both the private and public sectors to create money.

 

 

About

Expert in business development, product development, and direct marketing. Developed strategic sales plans, product innovations, and business plans for multiple companies. Conceived the patent pending Spot Equivalent Futures (SEF) mechanism, which allows true replication of spot and swap like products in the futures space.

View all posts by
Guest
beowulf
3 years 6 months ago

“Director George Miller has begun principal photography on the fourth Mad Max film, and here’s the official synopsis to prove it. This plot description apparently comes from the mouth of Miller himself, which explains why it’s awesome in a pleasingly psychotic sort of way:

‘Mad Max [Tom Hardy] is caught up with a group of people fleeing across the Wasteland in a War Rig driven by the Imperator Furiosa [Charlize Theron]. This movie is an account of the Road War which follows. It is based on the Word Burgers of the History Men and eyewitness accounts of those who survived.'”
http://m.io9.com/5935245/mad-max-fury-road-has-an-awesomely-insane-plot-description-and-cast-list

wpDiscuz