Communication Superhighways Can Shrink Trading Costs 50%

The difference between manufacturing cost and the consumer price measures the major cost of most products, distribution. Typically, manufacturing costs are under 20% of the final selling price.[1]

With mail-order shipping charges from 2-to-5% of retail price, no one would pay intermediaries 3-to-5 times the production cost when it is feasible, in this communication age, to study the products on an Internet database, contact the producer, buy the item, and have it shipped directly at 30-50% today’s cost.

A large share of American and European consumer products is imported. But, if full and equal rights were attained worldwide, meaning equally-productive labor will be relatively equally paid, production would be primarily regional.

Shipping half way around the world what could be produced next door is economic insanity. Once the common-sense principle of equal pay for equal work worldwide is accepted and put in place, it will be much cheaper to produce and distribute regionally and those shiploads of identical consumer products meeting and passing each other on oceans and highways—consuming enormous finance capital, industrial capital, labor, resources, and energy—will be history.

Besides doing office work at home, with that same computer one can search for, and order, one’s share of larger and more expensive consumer durables. Shopping requires information and middlemen are primarily in the information business.

On the Internet, it would be possible for producers and consumers to trade directly and cheaply again, just as face-to-face trades for thousands of years. The monopolization of distribution with its army of intermediaries would disappear.

Internet trades are surging 22% a year. As those marketing channels become operational, prices for middle-priced to expensive items will drop 50%.

Currently America has 10 square feet of retail floor space for each shopper while Britain has only two square feet. That surplus retail space will disappear as Internet shopping rapidly lowers costs to a fraction of current levels.

A great shakeout of the retail industry is inevitable. The buildings and support infrastructure for at least 30% and possibly 60% of what the developed world today considers necessary for distribution will be available for productive uses. An efficient, productive, and sustainable economy is possible.

Bill Gates, who accumulated $60 billion because he understood communications technology better than most, said, “The information highway isn’t quite right. A metaphor that comes closer to describing a lot of the activities that will take place is the ultimate market.”[2] That is the market we are describing.

Communication Superhighways Informing Both Labor and Capital

Along with databases, one or two TV channels should be reserved for direct communication between those offering investment opportunities and investors looking for them.

As everyone with savings would have access to investment information stored in those databanks, money monopolists would be bypassed. Individual investors would put their risk capital in innovations that went unrecognized by regular loan institutions.

If the investments were truly productive, investors would receive much higher than average returns. However, if their claims to insight were not valid, they would not be able to hide behind the protective shield of monopolization.

An entrepreneur who had obtained community approval and initial investment capital from the bank, they need both now, would deposit a prospectus in a databank. Investors would study the various investment plans, buy shares in the most promising, and have their accounts automatically debited, all without intermediaries.

Talented workers would look over prospectuses, which would include labor needs and incentives, and, if they saw where their talents would be used productively and profitably and assuming they had fulfilled their contract to train a replacement, they could transfer to that new job.

Labor would be mobile and free, not dispossessed as in a reserve labor force, as their right to their share of the efficiency gains of technology is assured through restructuring property rights as it applies to nature’s resources and technologies offered to all for free.

In that modern industrial society, each worker would work only two to three days per week outside the home.[3]

If a replacement were not immediately available, other workers at the factory could double their pay by working five days a week. Strict rules of later time off to compensate would have to be followed. Permitting doubling up on established jobs would appropriate the labor-rights of others and subvert the economy through again creating a class with superior rights (though in a much subdued form).

Just as today, the underemployed would be denied their share of social production while those working excessive hours would have more than their share.

For their risk, the original innovators, investors, and worker owners would receive the initial higher profits plus the increased values of a successful company.

Through sharing in the profits, workers and management who bought stock through deductions of 10-20% of their wages would be well compensated. The profit potential would increase their desire to maximize efficiency and provide incentive to look for new industries to develop.”[4]

Others would quickly analyze and duplicate the innovative production or distribution process and prices would fall to just that required to compensate the innovators, labor, and capital.

Through low priced products, equal pay for equally-productive labor, and rights to a productive job, each member of society would be receiving their proper share of wealth provided by nature and the efficiency gains of technologies which are gifts of nature nurtured by inventors’ labors and talents.

Communications Superhighways could Eliminate Monopolization

Assuming the world breaks out from under the many forms of monopolization being continually structured into unequal property rights law, specifically the current privatization of those efficient low frequency spectrums, this means a 99% reduction in cost per unit of communication capacity is possible and technology is still rapidly advancing.

When communication superhighways reach each home, it is possible to educate a population for as little as 5 to 15% of what is considered normal today.

The developing world has the opportunity to make an end run around those nations whose valuable communication spectrums are monopolized and their brick and mortar schools fully operational.

Massachusetts Institute of Technology, NASA, and Google, combining their expertise and money, designed an indestructible, WiFi and cell phone equipped, $200, laptop computers for developing-world governments to provide free to children to keep at home and take to school.

School systems within the wealthy world have taken note. As those inexpensive computers will have free linux operating systems, monopolized, expensive, operating systems will eventually be discarded to the dustbin of history.

It is possible for a nation, or the world, to establish a communications superhighway where everyone can talk to anyone in the world for the penny per minute calculated 30 years ago.

With operational costs for individual service now cheaper than accounting (Green Economics) costs on phone calls and broadband connections can be borne by society.

Already VoIP (Voice over Internet Protocol) users speak to each other across the world for free and the reception on the other side of the world is clearer than local landlines

By a community providing the worldwide communications system—just as they now provide roads, sewers, water systems, ports, and airports—those efficiencies can be attained.

TV and radio stations can stream their programs onto that information superhighway (satellite and fiberoptic landlines will cover the world) and eliminate the need for down-stream booster stations.

Consumer choices will expand exponentially as overseas TV and radio streams their programs onto that highway.

The shakeout within the developed world will be at the same pace as those information highways are installed. As their infrastructure is just being put in place, the developing world bypasses that shakeout.

To compete, the former down-stream booster stations must provide more interesting programming. Take Oprah Winfrey for example: Her Chicago station would no longer need booster stations to reach their loyal viewers. It is not likely that any of those stations can create a program to pull an audience from her or other popular programs.

Outside those loyal listeners, the market for programming without advertising will trump the advertising stations and the now-out-of-work TV and radio stations, unable to gain a broad audience, will have to produce programming for a narrow, single-interest, audience.

Major news networks will face the full brunt of competition as alternative news from around the world becomes available to all. Democracy Now, Link TV, Mosaic, BBC, Al-Jazeera, INN Report, Indymedia, documentaries, and news from all countries in all languages would present a view of the world that many citizens within the information-insulated wealthy world are totally unaware exist.

Those major news networks will have to address those various views or become irrelevant. Perception management will be severely constrained and control of the citizenry to protect the wealthy and powerful may become impossible.

As few people can handle such an overload of viewing choices, sports will gravitate to one bloc of stations, music and sitcoms will each gravitate to their blocs, and the viewers will further subdivide into regional and other subdivisions such as a bloc of channels with pay-to-play movies.

Stations forced to close will be picked up by NGOs and political groups for pennies on the dollar. Formerly forced to the margins, dedicated progressives, environmentalists, sustainable-living researchers, permaculturists, Greens, the peace movement, minority rights, labor rights, women’s rights, children’s rights, antipoverty, and a thousand more causes will be able to reach the citizenry with their views of the world over those same information highways.

Politicians must address questions brought up that were previously kept off the table. Alert viewers will have hard questions; those answers will be available, will be voiced, and will be understood. Propagandists will no longer be able to create justifications for war and full and equal rights with peace and prosperity for all will be possible.

Communication Superhighways Eliminates Intermediaries and Reduces Trading Costs

The difference between manufacturing cost and the consumer price measures the major cost of most products, distribution. Typically, manufacturing costs are under 20% of the final selling price.

With mail-order shipping charges from 2-to-4% of retail price, no one would pay intermediaries three to five-times the production cost when it is feasible, in this communication highway age, to study the products on an Internet database, contact the producer, buy the item, and have it shipped directly at 30-50% today’s cost.

A large share of American and European consumer products is imported. But, if full and equal rights were attained worldwide, meaning equally-productive labor will be relatively equally paid, production would be primarily regional.

Shipping half way around the world what could be produced next door is economic insanity. Once the common-sense principle of equal pay for equal work worldwide is accepted and put in place, it will be much cheaper to produce and distribute regionally and those shiploads of identical consumer products meeting and passing each other on oceans and highways —consuming enormous finance capital, industrial capital, labor, resources, and energy—will be history.

Besides doing office work at home, with that same computer one can search for, and order, one’s share of larger and more expensive consumer durables. Shopping requires information and middlemen are primarily in the information business.

With the Internet, it is possible for producers and consumers to trade directly and cheaply again, just as face-to-face trades for thousands of years. The monopolization of distribution with its army of intermediaries would disappear.

Trades over the Internet are surging 22% a year. As those marketing channels become operational, prices for middle-priced to expensive items will drop 50% or more. The savings in distribution alone should reach those savings which is on top of all the savings we have shown as possible in other sectors of the economy.

Currently America has 10 square feet of retail floor space for each shopper while Britain has only two square feet. That surplus retail space will disappear as Internet shopping rapidly lowers costs to a fraction of current levels.

A great shakeout of the retail in-dustry is inevitable. The buildings and support infrastructure for at least 30% and possibly 60% of what the developed world today considers necessary for distribution will be avail-able for productive uses. An efficient, productive, and sustainable economy is possible.

Bill Gates, who accumulated $60 billion because he understood communications technology better than most, said, “The information highway isn’t quite right. A metaphor that comes closer to describing a lot of the activities that will take place is the ultimate market.” That is the market we are describing.

Big-ticket, Infrequently-Purchased Items

Autos, appliances, furniture, farm equipment, industrial equipment, and major tools are all big-ticket, infrequently-purchased items whose buying requires accurate information but not the promotional-persuasive advertising hammering at us incessantly.

We trust and get information from experience and we make the most important decisions by observing products in daily use. In a communications commons, customers would make purchase decisions by dialing a database containing all manufacturers and models of a product.

That database would have information required to make an informed decision—energy efficiency, noise level, hours of useful life, price, and other features.

With tests by independent researchers, such as Consumer Reports, note the pressure this would put on manufacturers to make the most efficient products and stand out in this all-important master index. Buyers would, at their leisure, study engineering specifications, styling, and actual use of the product on their television or computer.

Once a decision was made, they would only need to punch in the code for the desired order—such as model, color, and accessories—and a databank computer would note the closest distribution point where that item was available. Or buyers could choose delivery from the factory.

The bank account number, thumbprint, eye-scan, thermogram and/or signature of an Internet shopper would be verified by a master computer and that account instantly debited.

If a credit line had been established at the local credit union or bank and recorded in an inte-grated computer, credit needs would be handled simultaneously. The process, not involving advertising, sales, or banking labor, would greatly reduce transportation, storage, and sales costs. Pressures on resources and the environment are correspondingly reduced.

Product guarantees, maintenance, and repairs would be taken care of by local private enterprise under standardized guarantees.

Direct trades between manufacturer and consumer eliminates intermediaries and guarantees high-quality products at the lowest possible price. Both seller and buyer would save time and labor as information through advertising is eliminated. The current time-consuming exchange of information would be replaced by consumers studying at their leisure.

This would conserve millions of acres of trees and eliminating impact on the environment caused by manufacturing paper, producing brochures and distributing that information, including a large percent of the retail establishments themselves makes this thesis important to the sustainable development movement.

Every qualified producer would enjoy the right to place his or her product or service in the databank and pay a very small percent of gross sales out of cash flow.

In place of millions of dollars up front to advertise through the present openly-monopolized media, there would be only a small charge for entering the product information in a database.

To eliminate clogging the databanks with useless information of producers no longer in busi-ness, regular minimum payments would be required to retain the privilege of selling through this integrated communications network.

This would break the monopolization of production and distribution by huge corporations. Starting up a truly productive industry would become quite simple. A new company’s advertising would have full billing alongside major entrenched producers.

With consumers having easy access to all choices, a few wealthy corporations would no longer decide–through promotional-persuasive, titillating, advertising–what the public wants.

In the United States, once direct contact is established between producer and consumer via product databases, it would only require roughly 100,000 railroaders, possibly one million truckers, and a system of organized freight terminals to distribute the nation’s production.

It would be a freight postal system just as with Christmas packages today and we all know those shipping costs are modest. The item would be delivered or consumers would receive notice of the arrival of their purchases and pick them up at the local freight terminal.

There are normally several trucking companies in any moderate-size city, each complete with loading docks, storage capacity, dispatching equipment, and staff. The following shipping pattern is already operational:

1) Shippers punch into a common-use database loads to be shipped;
2) truckers with computers punch in their location, freight preferences, and where he or she would like to deliver the next load;
3) the computer shows where the loads are, the type of freight, the required pickup and delivery times, the rate per mile, etc;
4) the trucker chooses a load, informs the computer, and records his or her identifica-tion number;
5) and the computer records the acceptance, removes that load from the databank, provides a contract number to the trucker, and informs the shipper.

There will be no need for duplicated dispatching services, loading docks, storage facilities, equipment, and personnel. Competitive monopolies created by the minimum capital requirements for trucking companies are eliminated, placing independent truckers on an equal footing with corporate truckers.

The nation’s freight will quickly settle into flow patterns and be moved as regularly as mail by the cheapest combination of rail, truck, ship, and plane.

Transit time between producer and consumer would be a fraction of that currently through jobbers, wholesalers and retailers.

Small item would be three days in transit and large up to 10 days but, at one-half the price plus pressure taken off of resources and the environment, they and society are well paid.

Manufacturers’ on-time delivery of parts to the factory that greatly reduces storage and finance capital costs will have been expanded to on-time shipping to consumers.

Those within the retail system who formerly bought, stored, advertised, and sold these products are available to engage in productive labor. Society will eventually attain an undreamed-of efficiency.

Well over 50% of the intermediaries between producer and consumer will eventually be eliminated and, assuming society was alert and restructured labor’s working hours and other crucial adjustments, all would be free to share the remaining productive work with employment outside the home of only two to three days per week.

Once those productive jobs are shared, the average workweek reduced, and labor fully paid, the small amount of time necessary to labor for one’s share of the nation’s wealth would be the proper measure of the price of products and services.

Our continued research concludes that an efficient economy using modern technology of production and distribution could reduce employed working hours by at least 50%.

That potential reduction in costs through elimination of unnecessary labor and productive labor being fully paid is the meaning of Adam Smith’s little-noticed insightful statement, “If produce had remained the natural wages of labor, all things would have become cheaper, though in appearance many things might have become dearer.”

Inexpensive, Small, Frequently-Traded Items

The markup on perishable groceries is about 100% while the markup on small consumer durables is several hundred percent. There is a competitive sales monopoly at work in the latter.

Taking full advantage of modern communications would remove all purchases above an intermediate price range out of the wasteful, duplicated retail outlets. Simultaneously, through access to these products in databanks, the consumers’ choices would be increased.

Groceries, household supplies, cosmetics, knickknacks and most small, inexpensive consumer items would be most efficiently distributed through the present retail outlets. The breakeven point would be in the lower range of the intermediate-priced occasionally-purchased items.

Wholesalers would keep the quality and price of all products posted in a databank. Once trust had been established, retailers would check those bulletin boards for the best buys. This would eliminate the need for many jobbers and other salespeople.

Shopping as a Social Event Entails a Cost

Shopping is recreation for many people and a status symbol for others. Those status shoppers would have no trouble finding merchants to accommodate them.

To compensate for the additional labor, showrooms, and storage, the products would cost more which is properly accounted for under socializing and recreation (Tupperware, Avon, or social status at Tiffanys).

The majority would surely choose the most direct and least labor-intensive, cheapest, method of completing a trade. The savings, which in final analysis is a savings in labor time, could be spent on family events, dinners with friends, socializing with neighbors, etc.

Reserving TV Time for New Products

While innovations on a familiar product would be readily presented to the public through a databank, totally new products would require special access to the public.

Novelty buffs comprise a large segment of the population, and there are few who do not have some interest. Complementing other methods of familiarization, demonstrations of these creations accessible in a database would be quite popular.

Once a production-distribution infrastructure is in place with society energized and accustomed to that standard of living, promotional-persuasive advertising becomes wasteful.

Rather than titillate the consumer with thousands of toys to be played with and discarded, it would be much more socially efficient to abandon promotional-persuasive, titillating advertising and permit people to advance to a higher intellectual, social, and cultural level.

The maximum average living standard within the capabilities of the earth’s resources and ecosystem can be calculated. Society could, and should, use those proven promotional-persuasive methods to educate people about the waste of the current production-distribution systems.

Just as many in the developed world have already abandoned the “conspicuous consumption” lifestyle, a rational lifestyle would be made popular.

Many items—cigarettes, alcohol, and chemical-laden processed foods—lower the quality of life, spending social funds on their promotion is economic insanity. The captive public, captivated by the power of the enormous wealth appropriated from them by the monopoly system, paying for the debasement of their lives should be eliminated.

Driving a $60,000 luxury automobile while others are driving $20,000 cars may draw admiration today, but if society were taught that this was at the expense of humankind’s survival it would incur broad disapproval.

The resources saved and pollution prevented by that refocused social mindset would be essential to the survival of thousands of species, to humankind’s quality of life, and most probably to our own.

With a communications commons functioning under the inclusive property rights of full and equal rights reducing production and distribution costs 60% and adequate compensation to the innovators being 10%, the public would, measured in hours of labor required to purchase a product, benefit by a 50% or greater reduction in the price of consumer products.

Through the reduced income of a shorter workweek matching the reduction in living costs there would be no loss in living standards. Societies which decided to forego a throwaway society and opt for a fuel cell, hybrid car, bicycle economy and other efficient transportation systems would provide a quality lifestyle with even less labor.

Global warming is fast becoming the world’s most serious problem. We sincerely believe that a sensible world society, designed to reduce pollution, reduce greenhouse gases, and still provide a quality life for all, can be designed with each employed outside the home two to three days per week.

The human animal has tremendous energies which must then be channeled into pleasurable pursuits that do not consume precious resources or pollute the environment.

The simple analysis we present now is duplicated in other articles. Each economically balanced nation or region could feed itself and avoid food purchases from other regions, and simultaneously improve soil fertility if they converted from monoculture to permuaculture farming.

Thread for cloth can be obtained from prolific plants such as hemp. So fiber for clothes is also properly obtained through soil building permaculture.

Quality homes built from locally produced rammed earth (today ceramic interiors), rock, or brick last for centuries.

So the highest quality food, fiber, and shelter are all obtainable locally and security for all demands that, witness the hundreds of millions anticipated to starve as we speak with globalized food supplies under the control of a few corporations.

The simplicity of adequate food, fiber, and shelter provided locally being primarily an exchange of local labor, exposes the true costs of modern societies, freedom to go anywhere and do anything one wants.

Most industries beyond food, fiber, and shelter are built to sustain those freedoms even though the most important needs for a fulfilling life, family and friends, are near that home.

If all are to share in freedom as understood within imperial economies, distant pleasure travels must be spaced. A culture of family, friends, and cheap transportation should be encouraged.

Three wheeled gas-electric cars are being designed which use no gas on local transits and can cross the United States on 10 gallons (Aptera Electric Typ-1 e – Video Test Drive). A thirty mile local commute would cost about 30 cents to plug in at night and charge.

With about 10% the resources and labor to build and a life-span of twice today’s cars (small fiberglass bodies are easily rebuilt), both local and regional travel could have been affordable, relatively non polluting, and, as everything in that Aptera car beyond the computer was on the shelf to use 40 years ago.

This means the only reason Americans were driving SUVs and pickups was their ego and the $8,000 profit per car automakers were making. Smaller cars earned only $1,000 profit and these fiberglass, almost pollution free, electric cars would not have earned a $500 profit.

But it goes far beyond that electric car. Study current freedoms closely. Titillating and extravagant life styles (conspicuous consumptions) are the cause of pollution, resource depletion, and, in a final analysis, even wars.

This is being carried further forward. Companies consisting of nothing but advertising, they have no factories, are all over the place whose only purpose is to sell you something at a very high price that has nothing to do with your basic living needs.

If you had never heard of them, you would never have felt a need for what they had to sell. Those products have common features, you do not need them, they titillate your interest, they feed the ego of you and your peers, and they are enormously expensive. In short, it is only the conspicuous consumption as practiced by the wealthy for centuries.

That is a huge untold story of massive waste (at least within Europe and America) that global warming, resource depletion, and war elimination activists should be studying closely. Obviously there is enough on this earth for everybody if we abandon the current monopoly structure and the wars fought defending it.

One of the purposes of this blog is to gain your perspectives and input on the massive waste only to feed egos. So please study these articles on this massive economic waste, its elimination, and how to restructure.

We now turn to how Patent Profits Collected Through the Stock Market

Those crucial 170 words describing an honest, efficient, capitalist economy. Does anyone have the ear of President Barack Obama’s Economic Recovery Team?

We are a cooperative publishing house dedicated to the elimination of poverty and war paying ourselves double the normal royalty and will pay higher yet as soon as we can.

We need more cutting edge researchers. If you can broaden our understanding and that of our readers, have a high-quality book within you that you wish to use in class, or just wish to reach the world, please Contact Us.

[1] Paul Zane Pilzer, Unlimited Wealth (New York: Crown, 1990), p. 44.

[2] Steven Levy, “Bills New Vision,” Newsweek, November 27, 1995, p. 68.

[3] Besides my work see that of Charles Fourier 180 years ago and Thorstein Veblen, Bertrand Russell, Lewis Mumford, Stuart Chase, Upton Sinclair, and Ralph Borsodi in the first half of the 20th century. Late 20th century writers describing the same phenomenon are Juliet Schor, Seymour Melman, Samuel Bowles, David Gordon, and Thomas Weiskopf, Jeremy Rifkin, Andre Gorz, Hans-Peter Martin and Harold Schumann, and numerous European authors.

[4] Ibid

Be Sociable, Share!
Be Sociable, Share!