It might seem counterintuitive but Macy's announcement to close 100 stores sent their stock soaring by 17%. It was a great day on Wall Street. How can this be? Isn't the closing of stores a bad thing?
For the real economy it certainly is, but for the world of finance, such a move can be considered a success. Why? Because the message sent to investors is that the executives within Macy's are addressing the problem and taking radical steps to ensure profitability. They're not trying to simply make adjustments, or re-tool existing strategies. They're cutting out the waste by means of a deep and invasive surgery.
How is this a long-term strategy? It probably isn't, but the investment community doesn't care. They'll ride the wave for a year or two and make a lot of money as the company streamlines. For Wall Street, a company like Macy's that's willing to do 'what needs to be done' is a sign of opportunity.
This is where finance and the real economy diverge. In terms of the real economy thousands of jobs will be lost. They haven't released numbers but based on previous store closings I would say this one will result in the termination of at least 7,500 jobs.
But the effect on the wider economy is greater still. It made me think of a nearby town of about 6,000 people. If everyone in the town lost their job and had no income, it's safe to say that many of the businesses would also be adversely affected. I realise the people in the town work at the businesses but let's pretend for argument's sake the businesses are all run by outsiders. It's a fairly small town and yet there are two grocery stores, a hardware, several gas stations, numerous restaurants and bars, a handful of still open 'Mom and Pop' shops etc...
The repercussions would be enormous and the economic effect would be far greater than the base cut of 7,500 jobs.
Then there's the real estate. Now in some cases Macy's will reap great benefit from a store closure. Some of the locations (like in Manhattan) are prime and will quickly sell. But in general shopping malls are suffering. Their heyday was the 1980s and they've been in decline ever since. In economically struggling areas (like the Rust Belt) a closure of an anchor store can be devastating and it may take a great deal of time to fill the vacancy... if they ever do at all. We've watched quite a few malls die over the past decade. I can also think of one mall in a nearby city that lost an anchor store. The mall owners were pro-active and quickly divided the space rather than try to keep a massive 'anchor' zone. In their case it worked but the anchor spot is now permanently gone.
Empty spaces are something of a curse. For some malls it starts the road to decline. I can also think of a Kmart along the highway that shut down about 15 years ago. The building is all but crumbling, the 'For Sale' sign covered in dust and cobwebs. It will eventually be torn down probably at tax payer expense. That's but one of many such facilities that litter the region.
And then of course there are the more important factors like families. Job losses in this economy are devastating. In the low-wage world of retail there are very few full time jobs. People are having to take second and third jobs to make ends meet. They're working longer and more erratic hours for lower wages. The management is wielding greater control and dominating, even exploiting people essentially getting them to work mini-shifts (and off the clock time) that make it impossible to live or plan anything. Some of these jobs offer benefits but often at cost-prohibitive rates. Families are being pushed to the breaking point over money, child-care and the resulting chaos of kids growing up without stability.
In many cases this devastation is brought about by already profitable companies that simply want more. A 2% profit isn't enough when the competitors have figured out how to make 5%.
The Wal-Mart effect relying on low margins but huge profits based on scale has changed the nature of the retail game and the repercussions are felt throughout the industrial and service sectors. Finance drives an endless quest for hyper-efficiency even to the point of being destructive. There's no sense of obligation to the workers or communities. Ignore the silly little pictures in the paper of company representatives handing checks to local charities. This is just public relations and a tax write-off. It's little more than crumbs.
In many cases these companies have received massive tax breaks, even overt subsidies in many cases. They provide 'jobs' but all too often they suck the community dry, destroying local business in terms of retail and then when it's no longer 'profitable' they simply walk away. They leave social devastation and in many cases unviable real estate.
Corrupt officials and deregulation let them come in because it meant 'jobs' but few considered what type of jobs and what it meant for the community. The truth is that economics is more than numbers and percentages. Local people realise that, finance capital doesn't care. Big retailers gain an advantage in tax and infrastructure breaks and admittedly there are some Libertarians who would criticise this. But the reality is, that no CEO or even city official is going to put doctrine over practical realities. There are stockholders and voters to answer to. In this case everyone's self interest, their careers and their survival mean that doctrinal orthodoxy (in terms of the Free Market) goes out the window.
Criticisms of capitalism can be misleading. Many opponents are not critical of local entrepreneurial enterprise, family business and incentive. Finance is a different monster. Credit and investment open a world of great risk and reward but for the social layers beneath the financiers and investors it has generated instability and destruction.
From a Christian standpoint this mode of income is immoral. Despite the twisting of the famous Talents parable of Matthew 25, such a viewpoint is incompatible with looking out for others, treating them as yourself, working quietly with your hands and minding your own business. It is dishonest and manipulative gain made at the expense of other people. This is covetousness and avarice but even those English words fail to grasp the connotation of the related Greek words referring to 'much-having', the desire to accumulate. At its heart this is what Christ is talking about with regard to Mammon worship. Its service, veneration or worship is related to a desire for security, power and status, all absolutely antithetical to the values expressed in the Sermon on the Mount. Mark 4 and Matthew 13 warn of the deceitfulness of riches, the cares of this world, and desire for other things.
In addition it must be asked, did Macy's value really increase 17% in just a day? No, that's money generated out of optimism and perception. It's fictitious capital that can be translated into cash by those savvy enough to play the game. Was that money honestly earned? Do those investors really deserve to make that money simply due to their 'risk'? How is this working with your own hands? How is this work with integrity? How is this not making money on the basis of exploitation?
Even if I were to accept the Capitalist hermeneutic regarding the Parable of the Talents and the Workers in the Vineyard (Matthew 20), which I don't, variable wages and interest based on loans in not the same thing as inflated value and speculation. Value is itself a tricky concept and yet caveat emptor is not a Christian position (see Phil 2.1-4).
Fictitious capital, speculation and value based on perception belie the claims of those who cling so tenaciously to concepts like the gold standard for currency. So many advocates of that position fail to grasp its limiting nature which investors don't want and as has been proven by history it doesn't really provide stability. Because as long as stocks and real estate values can be inflated through a massive infusion of investor cash and the spirit of restlessness... you will still get inflation and the value of the currency will still be subject to volatility. The current inflation of gold is indicative of this reality. In this volatile economy investors are looking for something stable and are turning to gold. Its value is increasing and will of course ultimately tip and fall. And yet the many speculators who bought low and sold high will generate massive profits that are based on what? Nothing. The gains are based on their ability to exploit feelings, fears and avarice... their own and others. This happens even when there is a gold standard. The same is true for real estate and many other commodities. Supply and demand can be manipulated and often the demand is not rooted in anything ethical.
It's the world system. So be it. But don't pretend it's Christian or that this all represents some kind of natural law rooted in Holy Creation. This is man's activity in light of the Fall. Banking and Finance are not holy vocations and contrary to the claims of some (like Tim Keller) we will not have banking in the New Heavens and New Earth.
The apostate Church in its rejection of antithesis and embrace of worldliness as piety has quite literally inverted key components of Christian doctrine and ethics. This is why I consistently hear very bad sermons on not only the Sermon on the Mount but much of the narrative in the Gospels with regard to money and the poor. Dominion Theology which is considered the orthodox position in the Evangelical world cannot reckon with New Testament teaching.
This is at the heart of the Constantinian Shift which was in no way remedied by the Magisterial Reformation. In fact Protestant reformulations of the doctrine led to its enhancement and have exacerbated the problem. Today, wealth-building and prosperity are the equivalent of Christian ministry and Kingdom building. This narrative is ubiquitous and represents the very spirit of false godliness and spiritual adultery we are repeatedly warned against in the New Testament.