Half a croissant, on a plate, with a sign in front of it saying '50c'
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Pay for everything at once

(with various options)
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A service business which enables you to buy everything you need at a reduced rate because you pay for a huge quantity of it at a time. It offers you various options in terms of the scope of what you want and the period of time for which you want it. On one side there are food, clothes, rent, utilities and transport, on the other options for a year, ten years or life. The business will then undertake to guarantee to deliver whatever you opted for for free for that period of time. Since it's able to take advantage of bulk prices, it can charge things at bargain prices, and it's inflation-proof because although the customer is buying the service at the time, it's actually financed by the people who will be buying into it later on. Moreover, it's owned by the customers themselves and they derive a profit from the organisation. Once the period has elapsed, a customer can pay again if they wish.

The advantages are threefold: there is a dividend for the customer; assuming the business doesn't go bust, the customer has complete security for a long period and their entire income can become disposable while a minimum standard of living is guaranteed; the customer gets to buy the goods and services at a discount at prices protected from inflation.

nineteenthly, Mar 11 2009

Fuel Bank http://www.fuelbank.com/
Buy and pay for a quantity of gasoline and lock in todays price. [Noexit, Mar 13 2009]

[link]






       Well, you could sell it on i suppose, or buy the right to a certain value of food rather than the actual items themselves. Alternatively, you could have a low-controversy option, including foods which are rarely associated with intolerance or hypersensitivity states or ethical or political issues. Which would amount to just pears basically, wouldn't it? Oh sod it - fructose intolerance and diabetes. Right, the first one then - opt for a value rather than specific food.
nineteenthly, Mar 11 2009
  

       I do not think it is still bulk if it is spread out over time. The advantage to the service would be that they have use of the money during the time between payment and eventual delivery of goods.
bungston, Mar 11 2009
  

       They might still be able to pay bulk prices nevertheless because of the number of customers involved, and they would indeed have the use of the money. Your first customer comes to you and pays for a year's worth of groceries, which is a few thousand pounds. You then buy a few thousand pounds worth of groceries at trade prices and wait for another customer. That type of plan would depend on rapid growth. What you could do, however, would be to offer a small selection of non-perishable goods or services at the beginning such as utilities or clothing and expand into groceries, again beginning with non-perishable items like, say, toiletries or certain condiments.
nineteenthly, Mar 11 2009
  

       Or, the upfront payment can be used for infrastructure investment in the services or goods required - e.g. covering the cost of getting the pear orchards organic, for the organic fruit option.   

       The hard part might be convincing people a priori about the quality they're going to get over the next ten years. Maybe for things like toilet rolls it's not such a big deal.
VaquitaTim, Mar 11 2009
  

       [Bigsleep], a couple of things about that. The people who are selling the stuff also own the company. Co-ops tend to do better in recessions, by which i mean boring, big co-ops like the Cooperative Wholesale and Retail Societies, not like us (although i think maybe we are). The managers are answerable to the people with the dividends, i.e. the customers, to a greater extent in the situation i describe. There is a tendency to ethical entropy though, i would agree with that and you see it everywhere, and there is a problem with hedging, though less so than with a conventionally organised company. The customers are the "shareholders", and it isn't a PLC. That makes maintaining high quality more convincing, and whereas there's a captive market, the customers have a substantial amount of control over it.   

       [VaquitaTim], yes, there would be opportunities to improve the quality of the produce. I'm not so sure about toilet rolls not being a big deal though, since my brother used to work for a toilet paper company and the quality of their stuff was not impressive.
nineteenthly, Mar 11 2009
  

       Private enterprise socialism of sorts, I like it.
tatterdemalion, Mar 11 2009
  

       I read the idea as being a bit like buying/creating a futures contract (like in the stock market) but with groceries.   

       Am I mistaken? Or would that be a different idea?
goldbb, Mar 11 2009
  

       It has some problems. I'll try and keep it simple:   

       The company would have to protect itself against food price fluctuations. They would do this the same way airlines hedge against fuel price increases. If an airline thinks that the price of fuel is going to increase, it contracts for the future delivery of fuel at a lower price than what they think it will be in the future. In other words, it makes a bet: If fuel prices go up past what they paid, they save money. If prices drop, well, they're stuck overpaying for fuel (this happened to most U.S. airlines when oil prices went down). When airlines make a mistake like that, they can increase ticket prices.   

       However, if you're buying 5 years of food, and the price of food shoots up drastically in years 2 and 3 (and I'm not even bothering about inflation), the company can't raise prices the same way airlines raise ticket prices. You already bought everything! The company would be forced to increase the prices of new 5-year contracts to compensate for its losses on old 5-year contracts. However, this will probably make its deals less of a bargain (and consequently, the company would probably go out of business).   

       So, what the company has to do is hedge itself against food price increases. Now, let's say the company hedges itself against price increases...and food prices decrease instead (like what happened to the airlines). Oops. Now it has a lot of pissed off customers who overpaid for food. Even worse, since the company itself is overpaying for food since its hedge failed, it won't be able to decrease the cost of new 5-year contracts (and if it can, it won't be able to decrease contract costs enough to compete with regular grocery stores and wholesalers).   

       Now, what if the company's makes the right bets? Well...let's say it hedges against food price increases, and, sure enough, food prices go up. Great. Now its 5-year contracts are a bargain compared to regular grocery stores! However, let's say that a few years later the company loses money on a bet. Now it has a lot of people who got 5-year contracts cheaply, but it's also short on cash because of its bad bet. What should it do?   

       However, let's say that it had saved the money it "won" on its earlier bet--in effect, it bet that it would make a betting error in the future. If it does that, then it can't offer the cheap 5-year contracts mentioned earlier. And it would stop being so affordable. So even though it has plenty of cash, it doesn't have enough customers (and it goes bankrupt).   

       Basically,   

       1) The company would fail very quickly if it made the wrong bets because it can't increase prices to compensate for bad bets without losing market share.   

       2) The only way it can protect itself against bad bets is by keeping the money it makes off good bets, which prevents it from offering competitive prices, and would thus cause it to lose market share.   

       All the company really does is pass food price risk onto its consumers. There could be wholesale-like benefits, but these savings won't be large enough to compensate for the inevitable mistakes the company will make on bets.   

       It couldn't survive without bets either, because if it tried to raise prices on new 5-year contracts to compensate for losses on old 5-year contracts, people would just stop buying contracts.
plasticspoon, Mar 11 2009
  

       I think this can work for a while, and it can improve efficiency and lower costs over few-year spans, if it's done on a large enough scale. I don't think it can work over a many-year time span.
colorclocks, Mar 11 2009
  

       The company would work fantastically if food prices didn't fluctuate.   

       Contracts would have to be much shorter (maybe 1-3 months) for the idea to work, but that also means that the contracts won't be a very attractive alternative to regular stores.
plasticspoon, Mar 11 2009
  

       How do you determine how much stuff you are getting? How can you know how much milk or toilet paper you are going to need over five years? How do you allow for shorts and overs on these estimates?
tatterdemalion, Mar 12 2009
  

       [Bigsleep], that would involve trusting the government. That might sound like paranoia, but it would make it a nationalised industry, and if a government changes, its policies, whatever they might be, could have an inordinate influence on what the undertaking does. Clearly that influence is there anyway, but maybe not so much if the government doesn't actually fund it directly. There's also a pattern of government offering funding for a project which then leads to dependence on that money and reluctance to do something the government wouldn't want the project to do for fear of losing funding. The same applies to bank loans or shareholders, hence the co-op model.
[Goldbb], sort of, but it's not just about groceries but other things too, such as electricity, fuel, clothing, rent, whatever. Also, there's nothing stopping the company from running its own farms, which is what the CRS does here in England.
[Plasticspoon], yes, there is a risk involved and for the customer it's quite a scary one because if the company goes under all their money goes with it and they have to survive anyway. However, they will have had a chance to save during the time the company was operating. Concerning the risks of fluctuating food prices, if the company owns the means of production that risk becomes something else, concerned with the likes of weather conditions and soil erosion.
Concerning bad debts, i think the risk of these can be reduced by slowing growth. Certain things are beyond the control of the company, but the more the company does for itself, the less risk there is. It needs to start, probably, with lower risks, be very cautious and grow slowly. It also needs to be as self-reliant as possible.
nineteenthly, Mar 12 2009
  

       If I wanted to buy 5 yearsworth of groceries, how much would I expect to pay? Assuming a weekly grocery bill of what, £40 - that's £2080 a year, so roughly £10,000 for 5 years. But I don't have £10,000 lying about the place and if I wanted to buy into this scheme, I'd probably have to borrow the money - at which point, I'd expect to offset any bulk-buying savings with the extra cost of interest payments. Then, if I'm making regular loan repayments, my cashflow is going to be equivalent to me paying at the checkout every week/month anyway.   

       Then there's the trust element - loads of people pay into pension plans with the expectation that after they've saved up a big enough pot (which can take years) they will be guaranteed an income for life (so for one-off big payment when the annuity is purchased, the customer is buying a guaranteed income for the future) and this idea is kind of like that - a sort of mixed commodity pension. BUT! Robert Maxwell and other pension scandals show us that big pots of money can attract the kinds of people who like big, expensive yachts and are partial to creative forms of accountancy. I can't be sure, but the pay-up-front thing feels like putting too many of my eggs into someone else's basket.
zen_tom, Mar 12 2009
  

       I understand there is an issue of trust and most people don't have large amounts of cash hanging around to pay for things that far in advance. This is one reason i want it to be a co-op. That means you are partly trusting yourself or possibly the management of the co-op, but a management which you've had some say in choosing, though that's a right you may have chosen to waive. When people pay for things in installments, which often includes their own homes, they trust that that isn't going to go wrong in some way when it surely could. However, houses have been perceived as a safe investment, so there isn't the kind of risk people often run. If this company starts off with food, it's a safe investment in the sense that people are not going to decide not to eat, and there are various other products they are unlikely to opt out of buying, for instance toilet paper and underwear. Those areas are safe investments.   

       One thing i think is a flaw in this idea is that it's not so likely to be available to the people who would be most concerned about the benefits, i.e. young adults, since they have less income to play around with. However, at the other end of adulthood, it makes sense because at that point there are likely to be savings available to invest in a secure grocery, clothing and utility supply for retirement, leaving them with more money from the pension.   

       Also, there's the possibility of "parasitism", though i don't think this is morally defensible. Someone not entitled to benefits because of savings could buy a certain period's worth of food which would reduce their assets to the point where they become eligible for welfare. I don't particularly like that idea, but to be fair, it might provide them with a sum to invest elsewhere, i.e. in training or starting up their own business.
nineteenthly, Mar 12 2009
  

       Yeah I like this.   

       Just this week I was working out a similar idea. Might post if it ever gets to that point.
zeno, Mar 12 2009
  

       Just had another thought. Whereas the option of exploitation by people who want to claim welfare but whose savings are too high would exist, so would the situation where people become unemployed and don't claim benefits, but choose to coast on what they're already getting, saving on tax and paperwork, so i think that balances out.
nineteenthly, Mar 12 2009
  

       The popularity of this idea demonstrates why centralized economic planning doesn't work. It's a cute idea, but it can't work. I pointed out a few reasons earlier, and [zen-tom] brought up another. It's madness! Madness, I say!
plasticspoon, Mar 12 2009
  

       can i get it on the installment plan?
k_sra, Mar 13 2009
  

       [Plasticspoon], are you saying that fluctuations are inevitable regardless of other control? I can see that they exist in practice because of the likes of different approaches in different providers of products and changing political circumstances, but are you saying that these fluctuations can't be eliminated because they are in a sense a law of nature? There are limits to what a company can control, but if it also owns the farms and generates its own electricity and has fixed its own prices not just by subsidy but by increasing control, can it not predict more reliably?
nineteenthly, Mar 13 2009
  

       How about the counter/complimentary idea: Get PAID for everything at once? In this scheme, upon employment, for a guaranteed period of service, your employers will dish out a one-off, lump-sum payment. Those earning £35k a year (I think that's the current average UK wage) if employed for 5 years would expect to receive the tidy sum of £175,000 - enough to put a pretty severe dent in the mortgage!
zen_tom, Mar 13 2009
  

       That's on here somewhere, i think. Germaine Greer also proposed something similar once. But what would happen if you lost your job? I like it, and it would provide a way of paying for the original.
nineteenthly, Mar 13 2009
  

       Baked, at least for gasoline. See link or further Google 'gasoline banks'. Haven't ever seen it applied to anything else though. [+]
Noexit, Mar 13 2009
  

       My local cash & carry does this - you buy a whole load of something (e.g. one lorry full) - they store it and you can get it in consignments against a tab. They sell from your stack of goods in the meantime, but what they sell they replace with new stock.   

       //All run by the government// I would LOVE for all everyday food products to be sold by the government at a very low fixed national price (or even better, given as a ration without money being paid). This money=entitlement thing shouldn't be nearly as powerful as it is today.   

       //PAID AT ONCE// Fine, but people would end up in serious debt because they would use all their money before the end of the period. End of February this year, the supermarkets here were virtually empty. Why? Most employers paid their workers early (approx 15th) in January so they could enjoy the Chinese New Year holiday (26th Jan). By the end of February people had already used up their salary and had nothing to spend in the supermarket. Now scale this up to five years... most people will not be able to ration themselves sufficiently and will have one year of splurge, one year of moderate overspend, two years spending about right, and then a year of poverty and panic, probably punctuated only by expensively borrowing money against their expected pay cheque at the end of the fifth year.
vincevincevince, Mar 13 2009
  

       I can see paying a person for years of service up front. The person would need to keep his practice up to current standards (new tools, techniques).   

       Food seems easy enough if it were agreed to have regular price adjustment as per fair market value.   

       Material goods is a problem. In 1979 you pre-paid for 30 years of eight track tapes (or records), bell bottom pants etc. You may or may not be the coolest guy on the block in 2009.
knowtion, Mar 13 2009
  

       known to exist in some industries: quite a few people/industries already do this and the ones that don't you're asking to take on responsibilities they may not be prepared to do.   

       The local transit operates in reverse: they'll sell you batches of tickets but when they change the ticket designs and prices you're screwed (after a grace period) despite the fact that you've pre-invested a certain amount.
FlyingToaster, Mar 13 2009
  

       OK, no problem with the MFD, i'll delete this myself in a few hours, but in the meantime, how can there be arguments on this page which say it's not feasible if it's actually happening? I find that quite worrying because if the arguments people have made against this working presumably mean that either people are making off with large sums of money in the knowledge that their schemes will collapse, or that they are doing it innocently and are going to go bust with the same effect. It's not exactly reassuring, unless, naturally, the arguments are either wrong or only work in particular areas.
nineteenthly, Mar 13 2009
  

       a "service contract" for computer systems is such a plan: customer pays x/year for support; warranty or guarantee work; insurance; cell-phone contracts where you get a free phone in return for signing up for a few years; most companies small enough to have a personal level of services, yet large enough to be able to afford this will do it (I've negotiated housing rent in yearly chunks at a discount)..... though you're asking for off-site warehousing and on-demand or timed delivery which is a bit different.... very co-op'ish.   

       Be interesting though... "subscription service" for bluejeans or something... [mfd] withdrawn.
FlyingToaster, Mar 13 2009
  

       You can call it speculating, buying forward, buying long, hedging, arbitrage. Whatever ever you call it, over time it corrects. It is cyclic but has a rather undetermined period. There are only two types of buyers in this set up. The guys that rely on technical analysis, and those that rely on fundamentals. This is where the battle always lies.   

       "Between the conception
And the creation
Between the emotion
And the response
Falls the Shadow" ~ Hollow Men TS Elliot
4whom, Mar 13 2009
  

       OK, thanks [FlyingToaster]. So, you're saying it works for services but not goods? In that case, when is something not a service? Growing cotton and woad (or new-fangled artificial dye manufacture) and making and distributing pairs of jeans is a service. The laws of thermodynamics give you the matter and energy, so they aren't perishable. Clearly that's rather a silly way to look at it, but services are perceived as less perishable. I wouldn't get very far offering someone a year's supply of sylphium, owing to it being extinct. Long term VHF TV service wouldn't be worth a lot either.   

       [vvv], i fell into a similar trap once. I paid six months' rent in advance at one point but found that someone else got used to spending rather more money than was strictly sensible. It wasn't me though, so it's evitable.   

       [Bigsleep], so, maybe it could happen with a consortium of businesses or with an intermediary? That would introduce more uncertainty.   

       [4whom], you've lost me there because there are things i just do not get and one of them, sadly, is poetry, but i will make the effort to get what you mean once my daughter stops strumming her guitar very loudly next to me.
nineteenthly, Mar 13 2009
  
      
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