Facebook Economics

For most people living in England – and indeed, across the rest of the world – at the moment one of the most constant high-profile news stories is the vast array of well-known high street companies which are going bust thanks, in part, to the credit crunch. I’m talking about brands like Woolworths or Wedgewood; brands that most of us thought would be around forever, even though we never actually walked into their shops. Obviously their loss is mourned slightly by the great British public at large, but I was today surprised to find that there are actually Facebook groups dedicated to “saving” these companies, although how their creators and members imagine that a Facebook group will save a bankrupt institution is difficult to comprehend. In one group, dedicated to saving Woolworths (an ubiquitous shop dispensing everything from baby clothes, cookware and DVDs through to fitness videos and fat pants), I came across a discussion of how precisely the group could put its aim into practise and save the shop. Certain Facebook members, who shall remain anonymous, were making various sensible suggestions like:

“how about 260,000,000 peeps payin pound each? i would gladly pay a pound if it would help.” [spelling and grammar as written by its anonymous author]

Interestingly, the entire population of England was only 51,092,000 as of 2007 so unless there has been a massive influx of illegal immigrants which no one knows about and which coincidentally don’t pay taxes anyway and thus presumably would not partake in this “save Woolworths” scheme, somehow I think that might not work. In any case, instead of giving my £1 to ’save’ Woolworths, I’d be happy to wager it on the theory that those people who are making these kind of economically-well-informed suggestions on Facebook are the self-same masses who wear their teeth down bitching about having to pay our country’s (comparatively) high taxes and would object if they were raised by so much as a pound for any cause other than nationalising a private company which they happen to think is a “good brand” (aside from anything else, they’re clearly wrong on that count if said company was in debt to the tune of £260,000,000, as one probably unreliable source in the Facebook group claims). And maybe they’re right! Why waste our taxes on hospitals or schools when we could leap into the sorry balance book of a poorly managed company which got itself into this mess and should have to deal with the results?

“So what you are saying is that we should no longer allow Woolworths to be privatised but made public!? You know it could work!”

Well, dear author of the above, it sure is nice to hear your fatuous opinions splashed loud and proud across the ether as if you had the faintest clue what you were talking about! Fortunately your Facebook profile reveals that you have nothing to do with setting economic policy in this country or I might actually have to catch the first plane to Canada and make good on my one time bargain with a Canadian friend that in return for a chocolate brownie she would permit me to live in a cardboard box in her garage if ever it became necessary.

Let us think what privatisation of Woolworths – or any other similar company in trouble - would mean. It would mean either:

a) putting up taxes (never exactly popular)

or

b) diverting money from the aforementioned schools and hospitals in order to bolster a company with known debts of a ridiculous amount, with a huge workforce and number of shops across the country which would undoubtedly need painful streamlining in order for it to continue as a commercial enterprise, and taking this shop and place it under government management. Because that worked so pre-Thatcher.

All it means is that the government will be obliged to keep the already failed business open for as long as it can keep staggering, because the job losses from shutting it down would be so huge that whatever government finally did close the company would undoubtedly have to face months of firey newspaper headlines from the tabloids as well as generalised bad press and low level hatred from the public. Just what every political party needs in the midst of a financial crisis.

My response in short: pouring public money into a store which sells pick and mix and baby’s clothes at a time when the government is already being forced to borrow huge amounts to support businesses which are actually crucial to the country like, oh, I don’t know, maybe the banks? Yeah. Swell idea, sweetheart. Stick to changing your Facebook status five times a day and detagging yourself in less-than-flattering photographs; or, alternatively, work towards a degree (or at least an A-level) in Economics so that next time you open your mouth your opinion will be worth more than the fillings in your teeth.

“it could work yes would be better if public rather then privatly owned it wouldnt be one person getin rich but money could go to better use for the public” [once again, spelling and grammar as originally typed]

My response: as above, apart from the extra point that the whole reason your beloved shop is shutting down is that it is has no money. So what exactly is going to ”go to better use for the public”?

“meh it was a crap store anyway”

And that’s the kind of stiff-upper-lip attitude we Brits like to encounter on Facebook.

***

Now, I personally am, on the whole, pretty liberal but there are times when where people just need to be realistic. Yes the government can, should and is there to look after its citizens and thus I say that healthcare, education, provision of crime prevention agencies and guaranteed savings in banks up to a sensible limit for each person is absolutely 100% part of the government’s job. However, private companies should remain private companies. Those that are totally in the retail sector of the market are not the government’s concern and the mind just boggles at the number of ill-informed people whose ill-informedness seems to be oozing out from every opinion page and blog in the country at the moment, people who actually think the government should privatise these things… just because they like the brand name.

I absolutely sympathise with those people who are losing their jobs while these companies are closing. It’s a harsh time for everyone in terms of money at the moment and to be made redundant right now must be incredibly difficult. But unfortunately, ultimately the situation will only right itself if we allow the economy to purge itself of the underlying reasons for these companies failing: as of yet, its not lowered rates of sales that are forcing these closures, its not just because of the banking situation. It’s because they’ve been managed poorly and their expansion has been chased so aggressively that they don’t have sufficient capital to cover their running costs when there is something of an economic downturn. And if this situation gets rid of the worst offenders and forces other companies to sit up, pay attention and look after their books more carefully -even if that means less ambitious and rapid growth in the short term - then good.