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The Limited World of Direct Sales

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Offline Giff me dat fill-em!

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I am currently embroiled in what can only be described as “A Direct Salesperson” way of life, and I simply MUST share it with you gentle folk, for it is an existence that is not only potentially lucrative, but also constantly time-sapping and self defeating (if viewed in its entire business life cycle).

I have been involved in earlier plots (because that is what they were) that were coined “pyramid sales”, simply stated that if you could coerce several others to sell the product for you (and do it aggressively and consistently), you would benefit by reaping commissions and perks from their sales, and thus by adding that to your own aggressive and consistent sales effort, would quickly become a person who could earn a lavish living merely by supporting your down line sales staff and almost ignoring the “I gotta sell this shit” lifestyle that seemed so important only months/years ago.

Some examples are (maybe you remember these):
Mix-I-Go and Dies-All fuel additive that gave you enhanced mileage and motor longevity
The Cambridge Diet powder, to help you melt away those ugly pounds (this one was in the news)
(Can’t remember the name) A drink made from milk whey by-products, and I can’t even remember why it was a “hot item” that needed distributing to the buying public.

This has absolutely no reflection on the product itself, it may be the thing every household needs, and don’t get me wrong, I’ve met several people who do this constantly and live a life that nearly rivals Donald Trump’s, but I have a few problems with the “direct sales” mindset …

The emphasis on recruiting is paramount. It is driven home to EVERY person who decides to join this “great, wonderful opportunity to add extra money to their family’s income while at the same time building a secure future for them”. This is done, not just by being an excellent salesperson (which is always appreciated by the manufacturer), but by extolling its virtues and convincing others that “they can do it too”. This is the paramount reason I believe that the direct/pyramid version of sales is self-defeating, for if you manage to convince EVERYONE (and subsequently so do they) to sell the product (with promises of great down line rewards later), then there is NO ONE left to buy the stuff at “direct market” prices and no benefits to themselves except whatever quality and time saving advantages the product provides. Eventually, the pyramid will reach its base, and that, as they say, is that. It’s been my experience that whoever gets in on the “dig” early enough will reap the benefits they promise to their down line, and no one else.
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Offline Dunrobin

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Quote
This is the paramount reason I believe that the direct/pyramid version of sales is self-defeating, for if you manage to convince EVERYONE (and subsequently so do they) to sell the product (with promises of great down line rewards later), then there is NO ONE left to buy the stuff at “direct market” prices and no benefits to themselves except whatever quality and time saving advantages the product provides. Eventually, the pyramid will reach its base, and that, as they say, is that. It’s been my experience that whoever gets in on the “dig” early enough will reap the benefits they promise to their down line, and no one else.

Very insightful post, Giff, and the comments above explain why I believe that our economy is on the verge of a complete collapse.  It's just a matter of time, since it's been built on the same "principle."  The government's "Social Security" program is essentially just a giant Ponzi scheme, and it's rapidly reaching its base.  In just another decade or so there will not be enough workers paying taxes to support all of the people receiving "entitlements" from the government.


Offline Giff me dat fill-em!

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Yeah ... I can remember what Gallagher (the watermelon man - Sledge-O-Matic) said about Social Security (and this was in the 80's):

It ought to be called "So-So" Security ... maaayybbee the money will be there, maayybbee it won't.
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Offline JazzBill

Yeah ... I can remember what Gallagher (the watermelon man - Sledge-O-Matic) said about Social Security (and this was in the 80's):

It ought to be called "So-So" Security ... maaayybbee the money will be there, maayybbee it won't.
Another thing wrong with Social Security is they keep raising the age you have to be to collect full benefits. I can imagine somewhere in the future you'll have to be 75 or 80 years old to collect top dollar.  [thumbsdown]
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Offline Dunrobin

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Here's an article I just came across over on LibertyForum.org, from The Telegraph in England, that confirms what I've been saying for some time now.  Note that this comes from a leading analyst for the Federal Reserve, not just some "crackpot."

US 'could be going bankrupt'
By Edmund Conway, Economics Editor
(Filed: 14/07/2006) (That's July 14, 2006 - Europeans are weird when it comes to dates)  ;D

The United States is heading for bankruptcy, according to an extraordinary paper published by one of the key members of the country's central bank.

A ballooning budget deficit and a pensions and welfare timebomb could send the economic superpower into insolvency, according to research by Professor Laurence Kotlikoff for the Federal Reserve Bank of St Louis, a leading constituent of the US Federal Reserve.

Prof Kotlikoff said that, by some measures, the US is already bankrupt. "To paraphrase the Oxford English Dictionary, is the United States at the end of its resources, exhausted, stripped bare, destitute, bereft, wanting in property, or wrecked in consequence of failure to pay its creditors," he asked.

According to his central analysis, "the US government is, indeed, bankrupt, insofar as it will be unable to pay its creditors, who, in this context, are current and future generations to whom it has explicitly or implicitly promised future net payments of various kinds''.

The budget deficit in the US is not massive. The Bush administration this week cut its forecasts for the fiscal shortfall this year by almost a third, saying it will come in at 2.3pc of gross domestic product. This is smaller than most European countries - including the UK - which have deficits north of 3pc of GDP.

Prof Kotlikoff, who teaches at Boston University, says: "The proper way to consider a country's solvency is to examine the lifetime fiscal burdens facing current and future generations. If these burdens exceed the resources of those generations, get close to doing so, or simply get so high as to preclude their full collection, the country's policy will be unsustainable and can constitute or lead to national bankruptcy.

"Does the United States fit this bill? No one knows for sure, but there are strong reasons to believe the United States may be going broke."

Experts have calculated that the country's long-term "fiscal gap" between all future government spending and all future receipts will widen immensely as the Baby Boomer generation retires, and as the amount the state will have to spend on healthcare and pensions soars. The total fiscal gap could be an almost incomprehensible $65.9 trillion, according to a study by Professors Gokhale and Smetters.

The figure is massive because President George W Bush has made major tax cuts in recent years, and because the bill for Medicare, which provides health insurance for the elderly, and Medicaid, which does likewise for the poor, will increase greatly due to demographics.

Prof Kotlikoff said: "This figure is more than five times US GDP and almost twice the size of national wealth. One way to wrap one's head around $65.9trillion is to ask what fiscal adjustments are needed to eliminate this red hole. The answers are terrifying. One solution is an immediate and permanent doubling of personal and corporate income taxes. Another is an immediate and permanent two-thirds cut in Social Security and Medicare benefits. A third alternative, were it feasible, would be to immediately and permanently cut all federal discretionary spending by 143pc."

The scenario has serious implications for the dollar. If investors lose confidence in the US's future, and suspect the country may at some point allow inflation to erode away its debts, they may reduce their holdings of US Treasury bonds.

Prof Kotlikoff said: "The United States has experienced high rates of inflation in the past and appears to be running the same type of fiscal policies that engendered hyperinflations in 20 countries over the past century."

Paul Ashworth, of Capital Economics, was more sanguine about the coming retirement of the Baby Boomer generation. "For a start, the expected deterioration in the Federal budget owes more to rising per capita spending on health care than to changing demographics," he said.

"This can be contained if the political will is there. Similarly, the expected increase in social security spending can be controlled by reducing the growth rate of benefits. Expecting a fix now is probably asking too much of short-sighted politicians who have no incentives to do so. But a fix, or at least a succession of patches, will come when the problem becomes more pressing."

SOURCE



Offline Giff me dat fill-em!

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Looks like the US needs a "Great Glass Wonkavator" that can go upways and downways and sideways and frontways and longways and backways and squareways and any way you can think of. They'll need it to climb outa the hole they've dug.
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