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My recollection is that the great industrialist Henry Ford aspired to build the Model T so that his own employees could afford one. He hypothesized, rightly I think, that consumption by the middle class is the foundation for all material wealth in an economy. I think this mentality has been lost in recent decades. You can have corporate profits through the roof and the stock market soaring, but when the middle class incomes are eroded and they cannot consume, the whole thing comes crashing down.
The trend for at least three decades has been to move wealth from the middle class to the wealthiest classes. It has undermined our economy. Tax cuts for billionaires make perfect sense if the billionaire are buying influence in our political system. It makes no sense if we want to rebuild our economy.
But both parties push consumption as the key to a healthy economy. The only alternative is saving. Our savings dropped like a rock since Greenspan.
You bring up a very good point. Overconsumption is very bad. Neither Bush nor Greenspan recognized the signs of debt-fueled consumption, which was a ticking time bomb. I don't blame Bush for that-he had other things to think about. I do blame Greenspan.
My recollection is that the great industrialist Henry Ford aspired to build the Model T so that his own employees could afford one. He hypothesized, rightly I think, that consumption by the middle class is the foundation for all material wealth in an economy. I think this mentality has been lost in recent decades. You can have corporate profits through the roof and the stock market soaring, but when the middle class incomes are eroded and they cannot consume, the whole thing comes crashing down.
The trend for at least three decades has been to move wealth from the middle class to the wealthiest classes. It has undermined our economy. Tax cuts for billionaires make perfect sense if the billionaire are buying influence in our political system. It makes no sense if we want to rebuild our economy.
Your recollection would be wrong, as usual.
Henry Ford aspired to build model T's so he could become wealthy, he paid his employees more than the prevailing wage at the time because his average employee lasted 3 months and he was paying a fortune in retraining costs. By increasing wages, he cut his own costs and made himself richer..
If you think creating a business and paying their employees 2-3 times the prevailing wage, please start a business and let me know how that works out for you..
He also understood something that it seems most left wing kooks on this site doesnt understand, which is one can not get wealthy without employees. I have yet to ever hear of a billionaire that didnt have tens of thousands, if not hundreds of thousands of employees working for them.
Henry Ford aspired to build model T's so he could become wealthy, he paid his employees more than the prevailing wage at the time because his average employee lasted 3 months and he was paying a fortune in retraining costs. By increasing wages, he cut his own costs and made himself richer..
If you think creating a business and paying their employees 2-3 times the prevailing wage, please start a business and let me know how that works out for you..
Nope, you are wrong:
"In the rancorous debate over how to get the sluggish economy moving, we have forgotten the wisdom of Henry Ford. In 1914, not long after the Ford Motor Company came out with the Model T, Ford made the startling announcement that he would pay his workers the unheard-of wage of $5 a day.
Not only was it a matter of social justice, Ford wrote, but paying high wages was also smart business. When wages are low, uncertainty dogs the marketplace and growth is weak. But when pay is high and steady, Ford asserted, business is more secure because workers earn enough to become good customers. They can afford to buy Model Ts."
"In the rancorous debate over how to get the sluggish economy moving, we have forgotten the wisdom of Henry Ford. In 1914, not long after the Ford Motor Company came out with the Model T, Ford made the startling announcement that he would pay his workers the unheard-of wage of $5 a day.
While Henry's primary objective was to reduce worker attrition—labor turnover from monotonous assembly line work was high—newspapers from all over the world reported the story as an extraordinary gesture of goodwill.
Quote:
Originally Posted by helenejen
Not only was it a matter of social justice, Ford wrote, but paying high wages was also smart business. When wages are low, uncertainty dogs the marketplace and growth is weak. But when pay is high and steady, Ford asserted, business is more secure because workers earn enough to become good customers. They can afford to buy Model Ts."
Wrong again, newspapers reported that it was a matter of social justice, but to Ford, it was smart business because TURNOVER COSTS exceeded the cost to pay his employees more because one of the qualifications was that the employee had to stay 6 months, which was twice the attrition rate he had prior to the new wage. By time they qualified for $5 a day, Ford had already pocketed $2600 in savings. He didnt state that it was to assure his employees could become customers until many many years later.
He also understood something that it seems most left wing kooks on this site doesnt understand, which is one can not get wealthy without employees. I have yet to ever hear of a billionaire that didnt have tens of thousands, if not hundreds of thousands of employees working for them.
Ever heard of Warren Buffett?
Oh, and thanks for clarifying the wage issue. I spaced that. I am not saying Ford's model would work today, but the notion that the worker needs a certain wage level to be able to support consumption is just a recognition of the fact that the health of the many supports the wealth of the few over the long haul. And when the few move from being faciliators of broad-based wealth creation to parisitizing their own citizenry, collapse is not far away. Our corporate class has become a bunch of pirates, not the masterminds of a macroeconomic system.
While Henry's primary objective was to reduce worker attrition—labor turnover from monotonous assembly line work was high—newspapers from all over the world reported the story as an extraordinary gesture of goodwill.
Wrong again, newspapers reported that it was a matter of social justice, and to Ford, it was smart business because TURNOVER COSTS exceeded the cost to pay his employees more. He didnt state that it was to assure his employees could become customers until much, much later..
Really?
"We believe," said Mr. Ford, "in making 20,000 men prosperous and contented rather than follow the plan of making a few slave-drivers in our establishment of multi-millionaires.
Mr. Ford refused to be further interviewed by press reporters on the subject, contenting himself with the above statement and a wave of his hand and saying, "We believe social justice begins at home."
"If we are obliged," said Mr. Ford, "to lay men off for want of sufficient work at any season, we propose so to plan our year's work that the lay-off shall be in the harvest time, July, August, and September, not in the winter . . . No man will be discharged if we can help it, except for unfaithfulness or inefficiency. No foreman in the Ford Company has the power to discharge a man. He may send him out of his department if he does not make good. The man is then sent to our 'clearing house,' covering all the departments, and is repeatedly tried in other work until we find the job he is suited for, provided he is honestly trying to render good service."
Last edited by helenejen; 09-07-2012 at 09:32 PM..
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