Post: #1

In 1908, Henry Ford produced the Model T, but a greater contribution was the pricing of the vehicles. He was determined that the average family, like those who worked in his factory, should be able to afford them.

In an effort to overcome worker's dislike for repetitive tasks, Ford introduced the $5 8-hour work day, basically doubling salaries and cutting hours. Labor flocked to his factories to man the assembly lines. This move helped spawn the consumer society in America.

The problem today is that corporations have been so focused on profits that they forgot what Ford realized early on -- you need customers who can afford to buy your products. Not only do you need to price your product in reach of the average buyer, but you also have to pay your workers a good wage as well.

So while these global giants have been reporting record breaking profits, they have also cut salaries. Jobs have been outsourced and wages have remained stagnant for some 30 years while the cost of living has steadily climbed.

This approach to maximizing profits replicated like a virus, while smaller companies were consumed by larger conglomerates. Salaries and labor were approached as merely an entry under expenses, something which negatively impacted the bottom line. Business was reduced to a formula where revenues were increased and expenses minimized by any means possible to the benefit of the shareholders and executives. This was was repeated over and over across the board.

Business did not feel obligated to pay their employees well, especially with a huge pool of candidates willing to do more for less. There was no moral imperative to pay people a decent wage, and this philosophy is the driving force behind the collapsing economy.

Instead of rewarding people who created the goods and provided the services, corporations rewarded those who were able to maximize profits or provide capital and "screw everyone else." While this may not have been a significant problem even if say 75% of the companies hold this view, when you begin concentrating the economy into the hands of fewer and fewer powerful organizations, this becomes the norm -- lower wages, unemployment, predatory business practices.

Corporations cannibalized their consumers. There simply aren't enough customers who can afford to buy. This is what has escaped the banks leadership -- people with bad credit can't buy homes, people who are upside down in their mortgage are not going to keep paying their note, holding onto inventory waiting for a solution is not going to help.

In the end, the banks are going to have hundreds of thousands of decaying properties while millions of Americans can't qualify to buy one. This, in turn, has destroyed so many other jobs that those who do have the credit to buy probably can't afford the payment.

The end result is that the wealth has been concentrated in the top 1% of the population by people who end up hoarding the money. We have reached a tipping point where the system is no longer sustainable because business simply doesn't have enough customers. Whether it's cars, homes or tax preparation, you must have a large population of people who can afford to buy your product or service. In order for people to do that, they must have jobs that pay a decent wage to be able to afford something more than the bare necessities.

Instead of giving the money to the people who would have spent it and got the economy moving, the government did exactly the wrong thing by bailing out the banks -- they gave even more money and further concentrated the wealth and power. There was no incentive for them to help out the homeowners because the goal is always to maximize profits by any means necessary -- EVEN IF THEY KILL OFF ALL THEIR CUSTOMERS. They zealously hold on to this notion that they must always maximize profits without any regard for the fallout.

This is because capitalism has shifted from the small business owner model to one of a corporation where naked greed drives the process. When corporations take over, the quality of the product suffers as they look for the least costly method of production, wages fall and the economy gets a little bit worse. When a family owns a business, they count their reputation as one of their assets and will often sacrifice profits to maintain their good name, or pay good employees more to keep them on staff.

And this is what has happened to America. We have moved from a representative government where the people were the beneficiaries to one a corporatacracy where business was all that mattered. The problem has been that everyone in the board rooms and in Washington seems to have forgotten that it is people -- the consumers -- who keep this economy moving. Not hedge fund managers. Not CEOs. Not the shareholders.

It is the factory worker working eight hour days.

It doesn't matter what policy you institute, or how many bailouts you give the banks, if the average worker doesn't have money to spend, the economy is going to stay in the shitter.

Henry Ford instinctively understood that his employees were also his customers and that if he paid them a good wage, they could afford to buy a car from him.

-- Kill The Matrix

Post: #2

barack obama that's why

Post: #3

LoP Guest  Wrote:

barack obama that's why

I am shocked I tell you -- SHOCKED -- to see a bullshit post by a guest with a one star rating.

Post: #4

One small fly in the ointment: THEY have a global customer base now. Their profits will continue without us. It's only OUR economy that will stay in the shitter.

Good article though.

Post: #5

Good post, OP.

I remember a time when Consumers were referred to as Citizens.

Post: #6

While they may have a global marketplace most emerging economies can't afford their goods or don't see a need for them. Cars are a good example of this. Only a small percentage of people living in India are going to buy a Hummer.

Maybe the best thing is off-shoring and removing these parasitic corporations.

Post: #7

Post: #8

1. NAFTA

2. Outsourcing

3. Illegal immigration

These have destroyed the wages, industry and housing & banking sectors in the entire western world, especially USA.

Post: #9

Excellent post KTM.

Sarah's point is a part of it too.

Seems every week, we hear the Corporate heads saying the US Labor Market needs to be more competitive. What they don't say, is that they want us to be competitive with Laos and Haiti-- and that doesn't involve raising Standards of Living for Laos and Haiti.

Post: #10

Ikaika  Wrote:

Good post, OP.

I remember a time when Consumers were referred to as Citizens.

EXCELLENT point. I'm so old that I remember that, too!

Post: #11

Quote:1. NAFTA

2. Outsourcing

3. Illegal immigration

These have destroyed the wages, industry and housing & banking sectors in the entire western world, especially USA.

Post: #12

Good article man.. something I've thought a lot about as well