Earthonomics is made up of the two EarthCorp programs, GESERP and the CSR ratings system. These are our literal applications described further below.
Economic theories may tell us about possible outcomes in business based on hard numbers, and history will support much of these while not supporting others. This leads to changes in theories and approaches. A “widget” may be valued at $1.00 by an economic theory and one business may sell it for $1.00 while another business sells it for $2.50. A business person may say that their sales methods are superior or their market placement, or infinite other possibilities. An economist may still say it is only worth $1.00.
Example: we have a banana. This banana costs $0.07 to produce, and the Small Food Producer that grew it was paid $0.035 for it. The owner/company buying it from the Small Producer then adds value by some means, perhaps transport and packaging. A street vendor gets these bananas for $0.25 each. The economist may say it has a Fair Market Value (FMV) of $0.50. One business person may offer it for $0.50, while another feels they can sell it for $3.00.
On the way to work one day our economist is stuck on a bridge with a major accident, no chance to get off or go anywhere. It’s very hot, and it’s been three hours and our economist did not eat breakfast, their cup of coffee and half bottle of water are long gone. The word is it’s going to be another 1.5 to 2 hours. An opportunistic street vendor comes by with a bottle of ice-cold water and…...you guessed it, a banana. Sales price: $5.00. Our economist is aghast. Rip off! Not even close to FMV! And yet, they fork over $5.00 with little hesitation. Opportunity costs. Emotional decision. Maybe even a life decision if they were diabetic.
Our economist is diligently trying to figure a way to negotiate the price down to $1.50-2.00 for another banana and water, while our business person is totally occupied thinking of ways to find or create more of these incredible opportunities.
There is a theory in chemistry called the Heisenberg uncertainty principle, which says that the position and the velocity of an object cannot both be measured exactly, at the same time, even in theory. German physicist Werner Heisenberg said that we can never truly know the location of an electron (that little tiny electrically charged particle zipping around in the orbit of all atoms) because it is moving too fast and it’s too small to see, and just the act of observing it alters its position as well. From this theory the probability of the object’s location can be found about 90% of the time. It’s an educated guess. It’s the electron cloud. An area of uncertainty, where we know something is, just not exactly where it is.
If we apply this theory to see how human emotion affects economics, and we consider that emotion is a fact yet it has no logic, then we can never say for certain what a FMV price is or what an item will sell for, or even what any of would pay for it at a given time.
The point to this is that all of our theories and ideas about economics, value, and money are only theories that are all subject to control by human emotion. Thus, the most powerful economic force we have is emotion: why we do what we do. How we can choose to spend our money.
We are not breaking all new ground here; we are building on long established concepts and processes we have used with varying results throughout history.
Now let’s go back to our banana. The actual Small Food Producer (aka Small Farmer) was paid $0.035 for growing and harvesting the banana. Then the buying company added some value and it was finally sold for $1.00. Let’s look at what we call the value chain or value added. If our banana was made into a banana split and sold for $7.00, the restaurant added value and the wholesaler made a profit, along with other parties. When we traditionally raise an agricultural product, the Small Food Producer is paid a flat fee for it, then the “owner” adds some value and typically sells it wholesale to another buyer that adds some other value, then it is at last retailed to an end consumer. From the wholesale/manufacturing side and the final retail side we have Cost of Goods Sold (COGS) which includes raw materials (the banana), and direct labor. We also have the business’s Operating Expenses (OPEX), which are most other business costs like rent, insurance, marketing, and shipping.
The typical sales margins are 25-50% mark down from Suggested Retail Price (SRP) as the profit margin for a retail seller. As we saw from our banana, this can vary widely. Here we are referring to the mainstream retail channels. The wholesaler/distributor that sells to the retailer generally has a margin of 10-20% mark up from the invoice price which is the SRP minus the retail margin. The manufacturer who sold to the distributor is generally looking to earn 30-50% above their COGS. This is more or less how we do retail business every day.
Our banana may have cost the grower/manufacturer $0.07 (remember they paid the Small Food Producer $0.035), who sold it for $0.25 to a distributor, who then sold it for $0.50 to retailer, who sold it for $1.00 to a consumer.
The big question? What happened to our Small Food Producer in this whole scenario? Nothing changes for them. The manufacturer or wholesaler or retailer may make a lesser or greater profit margin but the Small Producer is totally disconnected from all of this. Remember, these are the actual persons that worked to grow the foods we all love to eat. In many countries we have plenty of food that often wasted, while most Small Food Producers are struggling to survive.
GESERP stands for Global Economic Stimulation and Environmental Regeneration Program. This is the first stage of how we engage Earthonomics. When EarthCorp acts as the producer/manufacturer and sells a product, it sells both directly to the consumer and through these same traditional retail channels. The difference is that EarthCorp gifts 25% of the final net profit back to the Small Food Producer. EarthCorp supports them to grow pure, organic, healthy foods and pays them fair market price for the crops, then adds value and sells it. Then EarthCorp brings the Small Producer, the retailer, and the consumer together in a working relationship where everyone wins and no one needs to donate anything.
EarthCorp takes the crops through their entire value chain to finished consumer packaged goods (CPG) which we market and sell. All of the net profit goes back to the project, no salaries for executive members or expensed-out net profits. 50% goes to EarthCorp for operational costs, 25% goes to a trust fund in each country of origin to expand the program there, and 25% is given directly to the Small Food Producer. Any of the 50% that went to EarthCorp that remains unused for operational costs at the end of the year goes back to the program.
This is the GESERP model, Stage I. Everyone still makes money, we use our existing systems, and now we bring the whole process together from Small Producer right to end consumer. This is Positive Collectivism, a cornerstone of EarthCorp.
This is where the human emotion factor we defined affords us the opportunity to make a conscious, informed, decision to improve our world and the lives of all those around us. We can choose how to spend our money to be certain it has a positive impact. The Uncertainty Principle says we can never know the true value of a commodity; however we can definitely choose how the value of our money is used to best serve our society.
Earthonomics lets us choose where our money goes and how it will impact our world. No need to donate, or change any aspect of our lives or our existing systems. Just a choice to help. A vote for a better world. This is what EarthCorp programs offer.
We use a rating scale to establish the corporate social responsibility of retail sector businesses from a single owner small business up to the largest corporation. The score is based on two factors: environmental responsibility and social responsibility. This is not a new concept, rather we have evolved a new way to apply it with some additions.
Few if any retail sector businesses do any direct substantial harm to the environment. They are stores and warehouses, so their direct environmental responsibility is fairly simple to establish. The social responsibility aspect is based on how the businesses handle employees and community relationships.
The score is actually weighed about 80% towards their Business to Business (B2B) activities – who they are doing business with for products and even services.
The intent is to trace their supply chain back to the industrial sector of our society. No doubt you’re aware that few if any persons know exactly what goes on at that level. Commercial agriculture production, commercial animal farming (cafo’s), mining, heavy industrial manufacturing, fracking, and two we truly hope to see resolved: plastics and waste disposal. There are many more. These are the places we are doing the real damage to our planet. Perhaps most importantly, we are creating what we deem non-renewable waste from what is actually fully renewable resources.
When EarthCorp grows to global proportions and wins the hearts of hundreds of millions of consumers, we will have the ability to fully influence the industrial sector. When an SME will not buy from a supplier who has a poor score because it lowers the SMEs score, that will result in losses for the industrial sector and they will seek solutions. EarthCorp will give them equitable ones that increase their profits.
On the consumer side, membership is always free. We ask them to shop at the businesses that have been rated and joined the program, either the higher score or larger discount. For this they are rewarded financially and socially.
Initially, businesses that receive a 70% or greater score are invited to the EarthCorp community. We ask for a 2% or greater discount on their retail sales. When consumers make a purchase they present their membership card and they receive 50% of the discount at the point of sale. The other 50% is given to EarthCorp.
We describe this as 100% effective use of advertising dollars on a post payment term basis. The business is able to determine exactly how much they are willing to pay for a guaranteed sale, and they don’t pay for it until the sale is completed.
Discount gift cards and rebate style programs purchased in bulk from retailers are commonly sold to consumers at a discount to generate new sales for the businesses. In such cases the consumer may be buying the card as a gift, or may be buying the discount (price shopping). In either case there is no customer retention or loyalty. With the EarthCorp model the consumers are gaining economically and socially; they effectively satisfy both needs and will remain loyal to the retailers that are part of the EarthCorp program. They always get the ‘feel good’ effect without donating a penny.
Short term goals for this program include expanding participation of businesses and the public, generating revenue, and full proof concept. Extended goals are collaborative competition among businesses leading to an increase in the discounts the businesses are willing to offer, large amounts of revenue, and unification under a single cause for common good where all participants gain socially and economically.
From the consumer side, we call it Giving by Receiving. They never have to donate money, time, or effort. They shop and buy as they always have, and they help in the process. This is the interplay of social economy. Inviting everyone to help preserve and restore our environment and help others without having to take from their own pockets. The feel good effect at no cost. Social Currency.
From the business side, we create a similar social gain along with the financial. Businesses are now able to determine how much they will spend for sales and calculate more accurate expenses and profits. They gain dedicated patrons and stronger reputations. More importantly in my view, the business owners get the Social Currency income by being recognized and thus patronized by consumers that care and want to help. In our personal view, all of us care and want to help, and there may be no ceiling to the amount of this Social Currency that can be earned, and it couldn’t be devalued. We can all be part of the solution, if given the tools and guidance. Perhaps at some point it can even have a form of exchange value that is not directly financial.
On the EarthCorp side, we monitor the scores, we help them to improve. The score is dynamic. We show them how working with companies that are more responsible on the industrial side will give them a higher score. Consumers will see the higher scores and are encouraged to patronize those businesses.
A retail business that is purchasing through a supply chain supported by industrial sector businesses that are damaging the environment receive lower scores. We show them how the score evolved and how they can choose better options. The long-term goal is to bring broad attention to the industrial sector by having businesses stop buying from them. When they begin to feel this, EarthCorp engages them to support them in improving their actions.
How? When EarthCorp captures between 2% and 5% of the retail spending cycle globally it should represent a very substantial amount of money. This will be used to help industrial companies improve in many ways, as well as the retail businesses by collateral impact. Near Infinite options can be described, but the idea is to create a perpetual cycle where everyone wins and we stop pointing fingers at the “bad ones” and do something about it.
The list of so-called bad companies is pretty long, but we doubt that any of them sat down when they formed the company with the intent to devise a way to destroy our planet and our future. We think of ways to make money while often not contemplating the consequences.
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