If you’re working your way through Eastern Michigan University and think your boss should raise your salary, you’re right. There are sound economic reasons why you should be earning a minimum of $22 an hour right now. Want to look closer?
One way the corporate oligarchy has destroyed their legitimacy as a ruling class is that they love gambling more than earning their wealth “the old-fashioned way.” They’ll bet the farm on a chance to win the lottery of a speculative bubble in hi-tech, housing or military contracts. But they won’t clean up coal and oil extraction.
As a species, corporate managers are also shortsighted. They’d rather take easy profits now from old-fashioned production methods, leaving tons of material and social collateral damage. It’s quite beyond them to think ahead, to develop innovative techniques that “creatively destroy” their old methods, but won’t drive us all to extinction.
To see this more clearly, let’s look at the contrast between two figures renowned for their insights: Henry Ford, entrepreneur and billionaire (but he never ran for Congress!), and Nobel Prize-winner in economics Milton Friedman.
More than a century ago, Ford, profit-oriented as any other capitalist, nevertheless kept an eye on the society around him. He saw he was paying his workers such small wages they couldn’t afford to buy even his least expensive automobiles.
Yet there were many more working class people in southeast Michigan than there were rich folks. To reach this much larger market, he decided to pay his workers the unimaginably generous sum of $5 a day. They could make ends meet, and still save up enough cash to buy one of his cars.
That decision brought thousands of eager workers to the Detroit area, enlarging his market significantly in the long run. Unfortunately, Ford neglected to say he had relatively few of such positions to offer. Many would-be workers starved or froze to death that winter while they waited in huge lines to sign up for work, thus affirming that capitalists are essentially short-sighted animals. But he had a point, and his idea worked.
Milton Friedman, on the other hand, let corporations off the hook by telling them they had no business being “good corporate citizens” of the society that charters them. For nearly half a century, boards and CEOs have had a field day lowering workers’ wages, smashing our unions and raiding our pensions.
The result is that 100 million Americans earn less than $40,000, while half of those struggle on less than half that much. Once again we’re at that point where most American employees don’t have the income to buy the stuff made or sold by the corporations they work for.
This suggests not only that Friedman was dead wrong, but that corporate policy resulting in underpaid, starving workers who are deeply in debt isn’t very smart in the long run.
As I said, the captains of business and industry don’t see very far ahead. But they’re missing a golden opportunity. Rather than putting workers’ salaries and benefits on the expense side of the corporate ledger, wouldn’t it be smarter to see employees as the huge source of revenue they can be to a company?
Why not pay employees adequately, justly, fairly, so they could afford to buy what they’re producing and selling? And not just the sales force or customer service workers, but every employee in the company.
Wouldn’t more engaged and satisfied workers attract more and happier customers? Studies show that each dollar in increased wages brings in 10 to 30 times more in profit. Just think what Wal-Mart is missing.
It’s a new concept for entrepreneurs of the Friedman school of “Shock-Doctrine” economics, but cooperation and sharing our vast national wealth will get us all a lot further than practices driven by continually extracting the last dollar from workers’ pockets.
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