The Financialization of America Continues - Dominos Pizza Insurance

To my bewilderment, it is true that Dominos now has ‘pizza insurance’. I found this out yesterday through a commercial and decided to do a little old school investigative journalism. It turns out that they indeed have ‘pizza insurance’ and, also to my surprise, it seems that they are not charging anything extra for the ‘insurance’ (YET!). As per their website:

“Domino’s Carryout Insurance program is only available to carryout customers who return their damaged order, uneaten, in its original packaging (inclusive of an order label or receipt).”

So why am I writing about this? One might ask. Well for one, to make you aware. I do not want to be the only one who has to suffer with this awful concept of ‘pizza insurance’. Secondly, to point out a trend that has been a running theme in corporate America. That trend is the financialization of everything. There is no doubt that Dominos is testing out this ‘pizza insurance’ in order to add it to the cost of your pizza as a surcharge to collect extra dollars (Would you like insurance with that?). It is a type of financial engineering that is common place in corporate America today. The business of America is not business anymore, it is finance. Every company in America acts as bank or an insurance company. Every time you go to purchase something today that is worth more than 25 cents you get offered insurance for your purchase. That insurance, if you’ve ever agreed to paying it, in most cases ends up as just a surcharge, because by the time whatever product you bought has broken, you’ve lost the original receipts and whatever else you need to file a claim for which an adjuster would just deny anyway. It is just a way to charge you extra money. It is a trend that has swept through corporate America. American companies today make 5 times the amount of money from financial activities that they did 30 years ago. These activities include trading, hedging, tax optimizing, selling financial services and insurance. Airlines in some years make more money gambling and hedging the price of oil than they do selling seats. When was the last time you went to a major retail store and they didn’t offer you a store credit card? Literally every company today acts as a bank.

Our major American companies must engage in this financial engineering, because the rules of our economy have dictated that they are entirely subservient to their shareholders and all profits belong to the shareholders. No one else matters. Not the workers at these companies, the communities which they live in or the country in which they are founded. The only thing that matters is short term profit extraction. This short term risky behavior is threatening our future. Companies no longer invest in themselves. Public companies are now spending 95% of their net earnings on dividends and buybacks rather than reinvesting those earnings to make the company more competitive for the future. In 2015, public companies spent 115% of net earnings on dividends and buybacks. If companies refuse to sacrifice their resources to enrich shareholders there are negative consequences. Those consequences are even worse if a company decides to do something unthinkable, like give pay increases to underpaid employees. In April of 2017, American Airlines CEO Doug Parker announced modest pay increases for pilots and flight attendants. As a result, American Airlines stock price tanked along with every other major airline. Citi analyst Kevin Crissy wrote “This is frustrating. Labor is being paid first again. Shareholders get leftovers.” It is important to note that American Airlines pilots and flight attendants at that time were making below the industry average. Yet according to Crissy, they were being "paid first again."

We have an economy that is diseased. The economy is growing slower than average. Inequality is as high as its ever been. We have stagnating wages and dangerous market fragility. Middle class families cannot afford the bare basics that were an after thought of the generation that came before. Basics like a simple home, retirement, education and healthcare. This is reverberating throughout our entire economy, but hey..... at least your fucking pizza is insured now. 


So on a lighter note, let’s back to this ‘pizza insurance' thing. America is always striving to be number one. So, we have to get this ‘pizza insurance’ thing right. Here is how you do it. Listen and trust me. I know about this stuff. First, you deduct the ‘pizza insurance premium’ right out of everyone’s payroll check. It’s more convenient than having to pay when you go to pick up the pizza. Also, you’ll hardly notice when the premium increases by 800% every year. Secondly, you make anyone who doesn’t get the ‘pizza insurance’ subject to a penalty. I call it the pizza mandate. This is imperative to slow the outrageous growth of the ‘pizza insurance’ premium. Think about it. Who are the people who wouldn’t get the pizza insurance? They are likely young healthy thin people who don’t eat pizza, therefore they will be paying the into the pool, but not filing many claims. (Are you still with me?).  Third, we create a new financial product that collateralizes the future premiums to be collected from these pizza premium paying customers and call them PPO’s (Pizza Premium Obligations). We get these financial products AAA rated by Moody’s. The PPO’s hit the market and triple in value over the next 12 months. It sounds a little crazy, but if no one finds out that ‘pizza insurance’ is the stupidest idea in American history, the bubble will never burst. I told you to trust me. 


The next time you get pizza
You: Hey. I got this pizza and brought it home. I opened the box and there is a turd on it.
Pimply faced stoned teenager: Well…….. did you get pizza insurance?
You: No. I would never buy something called pizza insurance.
Pimply faced stoned teenager: Sorry I can’t help you, but on a more personal serious note dude, you should learn to be a little more like…. fiscally responsible. It’s called personal responsibility.
You: Thanks pizza guy. 


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