Monday, May 18, 2009

Bobcast: Unraveling hits home

Latest Bobcast is up. Listen here or read below.

In 2003, New York Times columnist and Nobel Prize winner Paul Krugman published a book criticizing the Bush administration called "The Great Unraveling."

Six years later and with the affects of those policies playing out in rising jobless claims, failing industries and declining home values, Americans are left wondering when the great and terrible unraveling ends.

The butterfly effect is usually summed up by saying, "A butterfly’s flapping wings in Brazil sets off a tornado in Texas." The economic butterfly effect is in play all around us.

Sunday’s Anniston Star article by Dan Whisenhunt provides a local example. As part of its restructuring General Motors and Chrysler are shuttering dealerships, here and across the country. In the abstract, it’s a perfectly sensible idea aimed at coping with new economic realities.

In its real-life application, closed dealerships can mean pain for more than the employees at a local dealership.

Many car dealers, like many other responsible local enterprises, are pillars of a local community, sponsoring youth sports teams and contributing thousands of dollars to charity.

Body blows are landing on local communities, many of which have already endured the rise of mega-marts and subsequent decline of mom-and-pop shops. From retail to banking to media, local authority if not local ownership has given way to large corporate control based in a far away headquarters.

It’s unfair to count this rise of the corporations and decline of locally owned businesses as all bad. The advantages of centralized power – big retail, if you will – can mean lower prices and greater continuity in doing business.

Yet, like that Brazilian butterfly flapping its wings and damaging Texas villages, trouble at the top of these corporations is a pain that won’t be isolated.