Great myths of the free market No 1: the value chain
Obviously an oyster is worth Â£1 for a single dubiously delicious slurp, right (if you love salt flavoured with salt coated in snot), while chicken liver is foul tasting and dangerously disgusting because it only costs 50p for half a kilo... unless, of course, Waitrose has added a couple of ingredients, fashioned it into a pate and given it an encouraging brand position to do with healthy living - in which case the same chicken liver is delicious and worth every penny of Â£25 a kilo.Are we really that stupid? Yes, we are. I clapped eyes on a camera that costs over Â£5000 without any lenses this weekend, almost Â£10,000 by the time it becomes usable. It takes nice enough pictures but it's an invitation to light-fingered muggers just to carry it around, specially when you are wearing a watch you can pass down to your son that costs Â£4000 and even tells you what time it is on the dark side of the moon.Ah, says the Chief Entrepreneur of the good ship Social Media Marketing, it's all about branding and commitment. Build a brand that people associate with quality and people will feel good if they can afford it. Charge people Â£500 to attended an Elite Business Breakfast Club that they organise themselves and the investment they make reflects their real commitment, meaning: you get far more "value" from the meeting than if you met the same mates down at the pub on Sunday... because you paid through the nose for it. Gives you more energy and better feelings, dunnit?Laugh? side-splittingly dopey, isn't it, yet most of us are conned by such drivel most of the time and most of the cost of what we buy is to pay for the marketing that persuades us to throw our money away. Let's take a traditional industry, diamond jewellery. The bloke who risks his life in a living hell to find the diamond gets about Â£4 a day. The mining company takes it off him and sells the same stone to a shady dealer for about Â£8,000. The dealer sells it on to a trader for a couple of crates of Kalshnikovs and some anti-personnel mines which he can sell on to some murderous maniacs to intimidate defenceless women and children with. The trader who made the arms deal takes it to Amsterdam or London with fake documents where he sells it to a wholesaler in Hatton Garden over a game of chess for about Â£20,000. The wholesaler sells it immediately to a designer who has a brand image for about Â£30,000 and the designer sets it in a gold ring for display on approval in a posh Mayfair shop. In comes a wealthy young man with more cash than brains thinking that he will get better sex if he treats his girlfriend to a fabulous designer ring which she will know cost him Â£120,000. Neither of them is really intending to marry the other but the symbolism of a proposal makes the sale of orgasm for cash seem respectable to all parties. After they break up because she has found a richer guy who buys her better presents and he has found a girl who can tolerate his erotic kinks she takes it to a classy pawnbroker who only offers her Â£10,000 for it. She accepts and the pawnbroker uses his contacts to remanufacture it as an exclusive present for someone else, to be purchased by some other idiot, probably for even more money.Meanwhile, back in the Insane Republic of Failed Optimism, the miners go on strike for pay rises to feed their starving families. Some of them are shot by the police and others get the sack. Cheaper miners are imported from a war-torn country because they desperately need money to feed their families who are being menaced by well-equipped and fanatical warlords using captured child soldiers who are often distant relatives of the people they massacre.I hope your shiny iPad wasn't assembled by anyone under such stress that they threw themselves out of the dormitary window to commit suicide... I wonder how much they were worth in the value chain, the human beings? Probably less than 3% of the price you paid to stroke the damn thing in the tube every morning, getting the sense that you are "connected" and on top of the world. Connected to what? Connected to a chain of pure evil, that's what.Better sign up for another Breakfast Brainstorming Seminar to give yourself some fresh illusions about how great you are because you won't beat the system and it won't let you in on the real deals that actually sustain it, nothing to do with enterprise, freedom, innovation and design genius. That's just a set of branding clichÃ©s, or lies as they used to be known. The reality behind it all has everything to do with a medieval level of corruption, restrictive practices, backhanders, funny handshakes and "networks" of wheelers and dealers who keep the rest of us well away from their secretive machinations at government, military and banking levels. They're all in cahoots and you are't in that network.Still it's better than communism and what would one put in its place, eh? That's such a brilliant argument that I never tire of hearing it. Come on, you optimists, say something that makes no contact whatsoever with any reality that exists, has ever existed or will ever exists. I'll make you feel better, which is just about all you actually care about.
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