Saturday, March 05, 2005

The Scotty's Donuts thesis

Several years ago I was discussing current trends toward conglomeration with someone who is no longer a friend, while driving past a shop called Scotty's Donuts. He declared that to be name of the eventual, inevitable arch-corporation, the one that will buy out every business and buy up every available piece of real estate, take over every bank and take out every competitor. When this ultimate corporation of all corporations is formed, all of us will work for it, all of us will owe it money, all of us will follow its instructions. (Actually it's far more likely to be Wal-Mart. By the way, Wal-Mart employees, because they lack benefits and because they are not well paid, extract $2.5 billion in public assistance payments from states.)

We see evidence of the formation of Scotty's Donuts all over. In the 1980s, AT&T (aka Ma Bell) was declared an illegal monopoly and broken up into so-called Baby Bells with regional local telephone service areas, and competition was opened for long-distance and local telephone service. In addition, the phone companies were now free to get into other kinds of business - selling computer equipment, cable or satellite TV service, home loans, you name it. 20 years later, there are two mega-telecom corporations left: SBC and Verizon. Retracing the long family history of these two companies would reveal them both to be Baby Bells (and SBC has just made an offer to buy AT&T, the original parent company).

This is just one case in point, in one industry. Consolidation is attractive to big biz because it is imagined to yield efficiency, by which they mean to say that they can lay people off after merging. But this is a consumer economy, not a producer economy, and our roles in the system are to make enough money to keep us in DVD players and fridges, to keep the factories in China going, to keep the credit system floating, etc. etc.

The details of all this aren't very important, and I probably have them wrong anyway. The significant thing isn't how or whether the system works. The significant thing is to get to the point that Scotty's Donuts runs the show. There's a ton of money to be made in the process.

I mention it today because I've just read this story about two firms buying the entire National Hockey League to operate it under one ownership. It strikes me as surreal. Imagine the Stanley Cup Finals between the Scotty's Donuts Flyers and the Scotty's Donuts Canucks.

1 comment:

Anonymous said...

mmmmmmmmmmmm donut hockey