WIN(D)
Stearns, Robert
"WIN(D)" ENTREPRENEURS in the lapel-pin industry regard the 'Whip Inflation Now" campaign akin to the Second Coming. All Lapel-pin manufacturers report a marked drop in third quarter sales—a slump that...
...In a country where free competition and the laws of supply and demand are values to be cherished, such blatant government intervention, regardless of supposed good intent, appears most in-apropos...
...More than likely, scrap buyers will not consider any deals until the Supreme Court definitively adjudicates on United States v. Smith, a test case currently entangled in District litigation...
...With the fiscal repercussions thus exposed, thinking Americans might well ponder whether by participating in the WIN effort, the public is simultaneously having their pockets pin-ched...
...More than once, major producers individually and collectively applied for Congressionally sanctioned loans, only to meet with rebuff...
...Already, legal storm clouds hover over the issue of flag desecration—be it cloth or emblazoned on a pin...
...The recessionary ramifications of the WIN campaign, howftver, provide the more urgent need for scrutiny...
...Assuming that the automobile industry employs 5 percent of the American labor force, a 20 percent labor cut results in a b) 5 percent x .20 = 1 percent rise in unemployment Accordingly, the economy will experience decreased consumer spending, giving rise to decreased production, leading toeven higher unemployment, cyclically denoting even less consumer spending...
...Therumors that we were retooling to resume armband production are—and will continue to be—spurious...
...Even that prognostication may overoptimize the situation...
...but suddenly, the market is very dry...
...In any event, the economic downslide of the lapel-pin industry scarcely raises an eyebrow on "the Street...
...In fact, industry observers foresee an entire new generation of lapel-pins not far off...
...Initially interesting is the fact that the American government has granted an economic pardon to the depressed lapel-pin manufacturers...
...Eventually, we may have to take a terrible beating by letting them go for scrap...
...Production costs soared 600 percent between 1968 and 1974—in major part attributable to the added expense related to the long term debt accrued in financing the "Jumbo" Whitler Point Honer...
...The automobile industry appears the most obvious candidate to bear the brunt of the metal supply crunch...
...Now, however, Tin Pin Alley seems poised for a regrouping...
...Indicative of the optimism pricked by the WIN button was the recent announcement by Limited Lapels, long regarded as an industry leader...
...However, raising prices has long been regarded as a less than rewarding tack for corporations in pursuit of increased sales...
...Assume that to manufacture one lapel-pin, inclusive of waste, a medium-sized firm requires three ounces of either tin or iron, Further assume that in total, firms manufacture 110 million WIN buttons, 150 million LOSE buttons, 50 million TIE buttons, 25 million SUDDEN DEATH buttons, 300 million MORE buttons (this estimate may be grossly conservative, considering possible foreign demand), and 200 million buttons thus far untitled...
...The Flag pins are too small to effectively clasp diapers, and most housewives would never consider using them as hors d'oeuvre spears...
...In perhaps a year's time, the "Multiplier Inversion" (see "Doom or Boom: An Analytical Digression," Journal of World Economics, August 1972, pp...
...Table 14.1 summarizes this part of the discussion...
...Alternatively, auto producers can cut costs by consolidating factories and most crucially—cutting jobs...
...While euphoria pervades the lapel-pin industry, it might serve the American public well to take a closer look at the social and economic implications of the WIN campaign...
...Furthermore, the two most prominent domestic producers face mammoth liquidity problems...
...In the short term, world metal production remains fixed...
...Coming off a year of disappointing sales, the auto industry craves to increase revenues...
...We've got a trainload of American Flag pins ready to go...
...With such a production schedule, the manufacturing of 835 million lapel-pins consumes 2.505 billion ounces of primary metal...
...Firms are already actively testing market acceptance of TIE buttons, designed specifically for moderates...
...On the one hand, car producers can raise sticker prices—perhaps as high as 15 percent to compensate for anticipated conditions...
...and MORE buttons, conceived to express the one, universally shared desire...
...Price raising appears misguided...
...Domestic firms carved up the profitable United States market, to say nothing of the fact that foreign demand for American Flag ornamentation currently stands at a historical low...
...About 9,000,000 new cars rolled off American assembly lines during the 1974-model year—each containing an average of 2,100 pounds of metal...
...All Lapel-pin manufacturers report a marked drop in third quarter sales—a slump that gained noticeable velocity on August 9. Stephen Feldman, Chief Operating Officer of Vogue Lapels, recently lamented: "The situation looks very bad indeed...
...In this particular case, with car prices already beyond wallet range of many Americans, additional increases would substantially cut sales to the point of netting the auto companies a loss, rather than a gain, in earned revenues...
...16-38) coupled with the preceding scenario will most naturally lead to a recession...
...With the stage so set, an elementary economic analysis focuses on the dollars and cents issue at hand...
...At an outdoor press conference, senior partner Heinz Limited jubilantly proclaimed: "The lean days are over...
...Simple arithmetic reveals that, should the auto industry be deprived of 156,562,500 pounds of metal, new car production will drop by Furthermore, the price of the remaining metal available to automobile manufacturers will rise, owing to the increased demand...
...Therefore, the lapel-pin industry will necessarily siphon 156,562,500 pounds of metal away from another bulk metal user...
...Mel Coleman points out in the September issue of the industry journal, Gaberdine: "The possibilities are quite spectacular...
...Already, the demand for WIN buttons outstrips supply...
...Faced with a rise in raw material prices plus a forced decline in unit production, the Detroit triumvirate confronts two options...
...If the lapel-pin industry failed to plan for less lucrative times, then the forces of economic Darwinism should be envisaged as preserving—not destroying—the free enterprise system...
...SUDDEN DEATH buttons, aimed at decision-oriented executives...
...LOSE buttons are selling at an even greater clip...
Vol. 8 • January 1975 • No. 4
