Thursday, December 28, 2017

Some thoughts on toys

If the producers of CNN's documentary series are moderately educated baby boomers, then the producers of Netflix's new series The Toys that Made Us are moderately educated Gen-Xers and older Millennials.  Are are predominantly male and without children.
The series focuses on eight toy lines ranging from the enduring (Barbie, Lego, G.I. Joe, Transformers) to the flash in the pan toy lines that are only relevant to hard-core collectors (Masters of the Universe).  Most of the brands were popular during the 1970s and 1980s (Star Wars, Hello Kitty, and the aforementioned Masters of the Universe.)  An OK start, but not enough.  To my mind, a series like this needs to focus on toys with staying power.  Toys that our children will be playing with, or are playing with.  Here are a few suggestions:
  • Teddy bears.  What could be more quintessentially American than a toy named for a U.S. president?  In production since 1903, teddy bears are everywhere, and in all forms.
  • Slinky.  A spring, a spring, a marvelous thing!  Everyone knows it's Slinky.  Whether in metal or plastic, most of us have owned at least one at some point in our lives.
  • Play-Doh.  This staple of preschools has been going strong since the 1950s, and has been produced in a wide range of colors, with all sorts of extruders and molds to fit your imagination.
  • My Little Pony.  These colored plastic horses with butt tats (or "cutie marks") have been a staple of little girls' play since 1982.  The animated series My Little Pony: Friendship is Magic not only kept interest in the toys alive to this day and introduced the Generation 4 design, but expanded the fanbase to include men (bronies.)
  • Silly Putty.  Tan putty in a red egg, it wasn't as versatile as Play-doh, but how many of us picked up transfers from the newspaper with it?
  • Mr. Potato Head.  Another staple of preschooler play, the original iteration made you supply an actual potato.
  • Fisher-Price preschool toys.  From the telephone on a string (the one with the eyes and the mouth) to the colored stacking rings, these are the toys are babies will be gumming on for the next century or so.
  • American Girl.  I hesitate to include this, as it only really caught fire during the mid-1990s.  Originally conceived as the anti-Barbie, the sale of the brand to Mattel meant the Barbification of the brand, with the childlike dolls receiving colored hair extensions and cars in place of the historically accurate schoolbooks and china tea sets.  However, it has all the imaginative potential of Barbie and none of the body image controversy, as the dolls represent children with stocky bodies, and come in a range of facial molds, hair colors and styles (or not) and skin types.  However, while the dolls cause little controversy, the price point certainly has (remember "homeless" Gwen, retailing for $115?)
  • Etch-A-Sketch.  How many of us fiddled with the knobs, trying to get the line where we wanted it to go?

Sunday, December 24, 2017

Reverse Robin-Hooding

As we see the Senate and the House pass a tax bill that every economic analyst agrees is horrible, most of us concede that the American Dream is officially dead.  Businesses that were once staples of our middle class (Sears, Toys R Us) are declaring bankruptcy and shuttering their stores.  Alabama is being investigated by the U.N. for levels of bone-crushing poverty not seen outside most third-world nations.  And about 80% of our nation is struggling to afford just to live.
But not all the news is bad.  After all, the Dow Jones Industrial Average keeps going up, right?  It's got to be better than it was in 2007?
Yeah, not really.  We've had all kinds of explanations for stock increases during flat economic times.  From "stagflation" in the 1970s to our most recent "jobless recovery," we're increasingly measuring economic success by one rubric, and it's the wrong one.  The stock market is not an accurate reflection of our economy's health.
Let's look at what the stock market is.  Businesses need money to operate.  Some of that money comes from revenue.  Most of it, however, comes from loans and equity financing.  Loans are easy enough to understand.  Most of us have borrowed money at some point in our lives.  For equity financing, the company sells off little pieces of its ownership.  Those pieces are called "stock."  Currently, stocks are traded in two markets--The New York Stock Exchange, founded in 1817, and NASDAQ, founded in 1971.  (Fun fact: One of the founders of NASDAQ was Bernie Madoff.  Yes, that Bernie Madoff.)  The owners of stock certificates are owners of the company.  They share in decision making (like voting in a board of directors) and they share in the profits.  These profits, called dividends, are paid out quarterly per share.
So much for Economics 101.  How does this play out in practice?  Let's look at an American corporation.  United Health Care is a company that sells health insurance.  In 2016, according to their annual report, the company earned about $184 million in revenue.  That sounds like a lot, except that their stock sales for that same year were over $132 billion!  Now, if you were United Health Care, who would be your top priority?  Your clients, or your shareholders?
We saw this play out to an even greater extreme in the 1990s and early 2000s, with the "tech bubble."  Companies like Yahoo were selling stocks at high prices without having any saleable product at all.  Stock prices do not necessarily reflect revenue.   They reflect how well a particular stock is selling at a given time. 
Most of the people buying stock are in the "investor class"--their sole interest is in getting the most out of their stocks as possible.  Whether that comes from dividends or from the "buy-low, sell-high" ethos of the market, they want to make money.  And, as companies see a significant portion of their equity tied to stock prices, pleasing shareholders becomes more important than product quality.  So, the only thing that matters is the bottom line.  Whether it's moving plants to countries with lower wages and no regulations, cutting staff, or trimming benefits, companies want to increase revenue to please shareholders.  And, if their employees can no longer afford their products, oh well!  They still have their stocks to bring in money.  Who cares about sales revenue when stock equity makes up a great percentage of overall equity?
But it doesn't last.  As history has shown, we've had depressions, stagflations, recessions, and periods of high unemployment.  Currently, we see the Dow rise while more and more Americans face economic instability.  We cannot keep this up.  Eventually, we will crash again.