In the 1970’s Doc Marten boots were a symbol of youth culture, inner rebellion and an essential part of the uniform. However last week the company floated on the London Stock Exchange which sort of sums up the unequal environment that we live in as it seems that everything can be repackaged, commodified and resold – e.g. US housing market and subprime mortgages.
The story of Doc Martens is the story of the financialisation of the global economy. It is a tale of credit cycles, access to capital and a winner-takes-all form of capitalism that undermines our social fabric. The story is a microcosm of much that is problematic with late-stage, 21st-century financial engineering. Some key points about the financialisation of Doc Martens:
- 1945 -Klaus Märtens a doctor in the German army injured his ankle whole skiing. Designs a better boot.
- 1947 – now with investor partner Herbert Funck they start to make good sales
- 1959 – R. Griggs group Ltd (UK shoe manufacturer) bought patent rights
- 2013 – Griggs family sell the company to private equity company Permira for £300 million
- 2021 – Permira plans to float Doc Martens at a valuation of $4 billion.
The advantage to firms like Permira is that they can borrow money at virtually 0% interest and deals like this normally involve a small amount of equity, carrying a significant amount of debt.
This means that if the debt-to-equity ratio of the original deal was 90/10, the return on committed equity could be more than 100 times the original cash investment. It is not difficult to see why, at times of very low interest rates, the return to the already wealthy and financially literate goes through the roof. Financial engineering that benefits the extremely rich, converts an everyday shoe company into a gold mine. (We are talking Doc Martens here, not a life-saving Covid vaccine.) David McWilliams
Inequality statistics from the USA:
- Top 10 per cent of wealthiest families in the US hold 76 per cent of total household wealth.
- Bottom 50 per cent held just 1 per cent of the nation’s wealth.
- Top 1 per cent of families account for 40 per cent of all wealth.
- Between 1979 & 2015, households in the top 1 per cent saw their incomes grow five times as fast as the bottom 90 per cent,
- Earnings of the top 0.1 per cent grew 15-times faster than the bottom 90 per cent.
In 1941, US supreme court justice Louis Brandeis noted: “We can have democracy in this country, or we can have great wealth concentrated in the hands of a few, but we can’t have both.”