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.