View Full Version : Interesting article by a billionaire - So what do I see in our future? Pitchforks.
So I saw this article on my Yahoo homepage: ‘Raising wages [doesn’t] kill jobs. It's just a thing rich people say to poor people.’
https://www.yahoo.com/news/unfiltered-raising-wages-doesnt-kill-jobs-just-thing-rich-people-say-poor-people-184825813.html
I read it and it matched my perspective regarding the shrinking middle class, the burgeoning lower-class and the transfer of America's wealth to the .01%.
I had a feeling that if I looked further that Nick Hanauer might get around to saying that we, the taxpayers in the shrinking middle class, are actually subsidizing profits for McDonald's and others by allowing their lower wages and shoring them up with govt assistance programs.
So I looked and found this TED Talk which Nick Hanauer did. It's about 20 minutes, and I think it is well worth the time spent watching it. I know many of you are staunch trickle-down believers, but I think it would be enlightening for you to listen with an open mind.
https://www.ted.com/talks/nick_hanauer_beware_fellow_plutocrats_the_pitchforks_are_coming/transcript?language=en
The link is to a video with subtitles and has the transcript below if you would rather read. Here are a couple of snippets from the first sev eral minutes, watch it I think it will be worth your time.
So what do I see in our future today, you ask? I see pitchforks, as in angry mobs with pitchforks, because while people like us plutocrats are living beyond the dreams of avarice, the other 99 percent of our fellow citizens are falling farther and farther behind:
* In 1980, the top one percent of Americans shared about eight percent of [income], while the bottom 50 percent of Americans shared 18 percent.
* Thirty years later, today, the top one percent shares over 20 percent of [income], while the bottom 50 percent of Americans share 12 or 13.
* If the trend continues, the top one percent will share over 30 percent of national [income] in another 30 years, while the bottom 50 percent of Americans will share just six.
You see, the problem isn't that we have some inequality. Some inequality is necessary for a high-functioning capitalist democracy. The problem is that inequality is at historic highs today and it's getting worse every day.
If wealth, power, and income continue to concentrate at the very tippy top, our society will change from a capitalist democracy to a neo-feudalist rentier society like 18th-century France. That was France before the revolution and the mobs with the pitchforks.
I'm not making a moral argument that economic inequality is wrong. What I am arguing is that rising economic inequality is stupid and ultimately self-defeating. Rising inequality doesn't just increase our risks from pitchforks, but it's also terrible for business too..........
.....When Ford famously introduced the $5 day, which was twice the prevailing wage at the time, he didn't just increase the productivity of his factories, he converted exploited autoworkers who were poor into a thriving middle class who could now afford to buy the products that they made.
Ford intuited what we now know is true..............Raising wages increases demand, which increases hiring, which in turn increases wages and demand and profits, and that virtuous cycle of increasing prosperity is precisely what is missing from today's economic recovery.
We plutocrats need to get this trickle-down economics thing behind us, this idea that the better we do, the better everyone else will do. It's not true. How could it be? I earn 1,000 times the median wage, but I do not buy 1,000 times as much stuff, do I? I actually bought two pairs of these pants.....I could have bought 2,000 pairs, but what would I do with them? How many haircuts can I get? How often can I go out to dinner? No matter how wealthy a few plutocrats get, we can never drive a great national economy. Only a thriving middle class can do that.
I'd love to see the numbers of those employed by publicly traded companies with highly compensated CEOs vs. public sector employees vs. small businesses. Supposedly, small businesses employ half the people in this country. I make roughly twice to three times what any of my employees do. Of course, it's all my risk and I put in way more hours than them, plus I have way more knowledge of the business than they do. Each and every one of them are fine people, but they don't have the skin in the game that I do. However, these good economic times have seen an increase in their take home pay by way of income tax cuts and pay raises from me.
If multi-millionaires and billionaires want to raise the wages at the companies they run for stock holders, go for it. Maybe just gift out bonuses every year. Just leave me out of it if they want it government mandated. If you remove my incentive to work for more, I might as well just go get an hourly job somewhere.
This guy's speech rings hollow if he's not prepared to give away that extra money he feels he doesn't need. A billion dollars sends a whole bunch of kids to trade school or college.
He mentions the French. Look where the French Revolution got them vs. where the United States is today. As many bad things that are going on in this country, I'd far prefer to live and do business here in the U.S. vs. France.
And finally, rising wages and rising demand also increase prices for goods. What good is a higher wage if everything around you goes up as well?
RetroRevolver77
06-09-18, 07:55
I can see that. A bank I used to work at back in the 90's started most people who were not in customer service around $35K. Today they still start people around the same amount. Wages overall aren't keeping pace with inflation while property values and consumer goods are growing twice that above inflation.
And finally, rising wages and rising demand also increase prices for goods. What good is a higher wage if everything around you goes up as well?
Follow the model all the way - rising demand at some point will entice more businesses to enter the market to meet the demand. Price, while elastic upward and sticky downward, will stabilize at the point that price equals demand at the new levels availability.
Follow the model to the base, raw materials upward - more demand spurred by more available income, equals more businesses entering the market, which equals more jobs, more product equals more competition..............
FromMyColdDeadHand
06-09-18, 14:22
People don't understand the Ford quote. The key fact isn't that he paid them $5/day because they were worth it. They added value. Sure, there was a bootstrap effect to it, but the key to paying people more is that they add value- as in are people willing to pay for the good they produce. That all came from the combustion engine and the assembly line. Tech and production.
Jack up McDonalds pay to $30 and add that into the price and.... everyone grills out for themselves. Everyone wants higher pay and American jobs, and then they buy all the Chinese stuff at Walmart and Bass Pros.
Sure, the FED is structurally set to squash rises in wages. Inflation in asset prices leads to comments like 'irrational exuberance' and inaction. Unemployment goes down and wages start to go up and it's like a crash dive on a WWII submarine.
Jack up McDonalds pay to $30 and add that into the price and.... everyone grills out for themselves.
I know 30 is hyperbole, and perhaps McDonald's is not the best example, but it is what I've used.
Look at McDonalds numbers for the last couple years - stock prices up and down, among other things, due to apprehension over there new 1, 2, 3 dollar menu choices which many thought would gut demand for the higher end of their menu.
In 2017 McDonald's paid dividends of 3.83 a share; so far in 2018, 1st Quarter dividends were 1.01 per share. Those 2017 numbers are in addition to a 41% gain in stock prices during 2017 - 121.00 to 172.00. McDonalds last split 2 for 1 in 1999 going from 80.00 a share to 40.00 from there rose to 171.00 at the end of 2017.
I think McDonald's, as an example could afford a little more salary expense. I'm sure CEO/corporate office pay hasn't been as slow to rise as the window guy's wages.
This is not wanting to make rich folks poorer, it is wanting to make things better for everyone.
New hires at my company make more than twice as much as I made when hired. I don't buy that new hires in the 90's is the same as today. Maybe for a no skill job, only maybe.
Income inequality is something the Democrats use to divide people and blame corporations.
If you want higher wages, you need to have a skill in demand or learn a skill in demand and continually better yourself.
Trouble is, people have an entitlement mentality and expect everything given to them without giving something in return. You want higher pay? Take the job with more responsibility, longer hours etc.....
...are actually subsidizing profits for McDonald's and others by allowing their lower wages and shoring them up with govt assistance programs.
Are you aware of how tilted the entire premise of that argument is? When they designed it, it was to skip right over any debate about everyone being "owed" some minimum lifestyle, regardless of lack of skill and/or effort.
...are actually subsidizing profits for McDonald's and others by allowing their lower wages and shoring them up with govt assistance programs.
Are you aware of how tilted the entire premise of that argument is? When they designed it, it was to skip right over any debate about everyone being "owed" some minimum lifestyle, regardless of lack of skill and/or effort.
FromMyColdDeadHand
06-09-18, 16:28
Evan Jordan Peterson acknowledges the issue with income inequality. Many people take his hierarchy comments as endorsement, but he is also concerned about the corrosive nature of them. That people would rather have less and have the higher ups have much less versus having more and much more for the higher earners is a something that AI would have a hard time understanding. I bet a monkey who climbed too high or wouldn’t come out of the trees eventually got ‘shaken down’ (literally) by his peers.
That Dems and Progressives talk about income inequality while wanting to bring in even more people with low skills and no money is a real head scratcher. That they are blind and even defend it is to be blind to simple math.
If nothing else, low-skilled immigration depresses native low-skilled/entry labor rates. Even a communist has to understand that. That you have people coming in with absolutely no capital/wealth inherently adds to the amount of inequality.
While people will tout that many lower income people would be more apt to spend income, the flip side is that 1000 workers getting a grand more a month aren’t going to invest in a $10million dollar plant to make the things to buy. Lower the income curve and you get a lot of money chasing not a lot of goods.
Obviously there is a balance. Billionaires are not a permanent class. Millionaires even less so. I’ve got tales on all sides of my family of shirtsleeves-cuff links-shirtsleeves. Fortunate sons often are idiot sons too. I happen to work for a family owned company that would make you think that dynasty and noblesse oblige was the best way to go. Four generations of linear ass kicking success.
Yes, I wish people made more money and saved some and actually had their own wealth. That isn’t how it is. People don’t go into debt because of not making enough money, it is from spending. That is a harsh truth that I know.
Are you aware of how tilted the entire premise of that argument is? When they designed it, it was to skip right over any debate about everyone being "owed" some minimum lifestyle, regardless of lack of skill and/or effort.
I'd answer you but I don't understand what you mean from that snippet quoted and your comments.
People don't understand the Ford quote. The key fact isn't that he paid them $5/day because they were worth it. They added value. Sure, there was a bootstrap effect to it, but the key to paying people more is that they add value- as in are people willing to pay for the good they produce. That all came from the combustion engine and the assembly line. Tech and production.
Here is Henry Ford's take on it, noted in a 1926 book, Today and Tomorrow. It’s as a challenging a statement today as it as 100 years ago. “The owner, the employees, and the buying public are all one and the same, and unless an industry can so manage itself as to keep wages high and prices low it destroys itself, for otherwise it limits the number of its customers. One’s own employees ought to be one’s own best customers.”
“We increased the buying power of our own people, and they increased the buying power of other people, and so on and on,” Ford wrote. “It is this thought of enlarging buying power by paying high wages and selling at low prices that is behind the prosperity of this country.”
In 1919, Ford raised his minimum wage again, this time to $6.00 a day. Again, the wage hike produced higher production numbers. Ford told Garrett, “The payment of five dollars a day for an eight-hour day was one of the finest cost-cutting moves we ever made, and the six-dollar-a-day wage is cheaper than the five. How far this will go we do not know.”
He learned how far in 1929. In the aftermath of the stock market crash, he raised wages to $7.00 a day, hoping it would spark an economic recovery. But this time, it didn’t work. Orders fell, production slowed, hours were reduced. But Ford didn’t blame the workers for the sluggish economy. The fault lay in business leaders who were “continually putting the profit motive over what he called the wage motive.” Ford told Garrett, “When business thought only of profit for the owners ‘instead of providing goods for all,’ then it frequently broke down.”
The article is interesting: http://www.saturdayeveningpost.com/2014/01/03/history/post-perspective/ford-doubles-minimum-wage.html
The Dumb Gun Collector
06-09-18, 18:39
I figure the left had to chang the argument from poverty to income inequality because almost all Americans live more comfortable lives than the Pharaohs.
FromMyColdDeadHand
06-09-18, 20:09
Ford told Garrett, “When business thought only of profit for the owners ‘instead of providing goods for all,’ then it frequently broke down.”
I don’t know what to do with people that somehow think that profits aren’t tied to business success (sales). You can’t have profit if you aren’t meeting a demand, as in sales. You can only skinny so much profit out, especially in the long term. Run your company based on short term profits and eventually you get squished.
I think the Ford quote and wages does show that the macro-economic conditions are paramount to these things working. You had the twin technological changes of assembly line and internal combustion engine at the same time. That is a pretty powerful one-two punch.
You also can look at the times when that was written, perhaps as a way to immunize Ford from being seen as other socially irresponsible big business people.
Ford sold a good that people wanted and were willing to pay for. He also decreased costs through efficiency and lowered prices and expanded sales.
Since when did working at McD have to be a career for people. It used to be a marginal job for most people, not a way to raise a family while working the counter. It used to actually teach skills to people. I know a lot of successful and intelligent business people who worked there during school and had positive experiences and good life lessons. None work there now.
Averageman
06-09-18, 21:19
If the left wants people to prosper they may want to reconsider the way they are managing the stranglehold on the Teacher's Union and how the Department of Education rules it's roost.
People with skills earn wages, people learning skills make minimum wages.
If you could graduate HS with a skill and walk in to a job as a Plumbers or HVAC Apprentice, we would all be a lot better off.
For perspective, Ford wasnt successful because he paid more, he was able to pay more because he pioneered a new manufacturing method that destroyed his competition. He was also very demanding if his employees.
The reason for income inequality IMO now is that we have coprs that are larger than ever. Look how huge GE ir microsoft are compared to businesses 50 years ago. Maybe im off, but i always thought they were much larger now. A ceo now might be in charge of a corp 5x the size of one years ago, so making 5x as much is not unfair.
Lastly wealth is not set and horded, its created.
...subsidizing profits for McDonald's and others by allowing their lower wages and shoring them up with govt assistance programs.
The "subsidizing profits" talking point, it starts the debate with an arbitrary minimum wage+welfare as if it's settled, and should in no way be contingent on skill and effort.
FromMyColdDeadHand
06-09-18, 23:59
If the left wants people to prosper they may want to reconsider the way they are managing the stranglehold on the Teacher's Union and how the Department of Education rules it's roost.
People with skills earn wages, people learning skills make minimum wages.
If you could graduate HS with a skill and walk in to a job as a Plumbers or HVAC Apprentice, we would all be a lot better off.
I've never understood how the left wants the govt to take over all kinds of things like medicine- all the while saying that they need a union to protect govt workers from the govt....
Averageman
06-10-18, 11:05
I've never understood how the left wants the govt to take over all kinds of things like medicine- all the while saying that they need a union to protect govt workers from the govt....
Imagine at a High School Graduation with corporate sponsors.
After a high caliber GPA and four years of training in High School,
BMW wants to send a Student through a work/study program for four years.
Trane Air Conditioning wants to send a Student through two years of on the job training and an apprenticeship program.
BNSF needs trained Mechanics and they could have the pick of the best and the brightest before they wasted four years in College and untold thousands of dollars studying underwater basket weaving.
We're lying to kids when we tell them there is no future in the trades, we need to quit doing that and it will fix a lot more than just economic issues.
As it is now, someone comes out of school with debt and few opportunities and yet the failed system goes on and we subsidize it.
FromMyColdDeadHand
06-10-18, 14:41
I hadn’t thought of it being direct or sponsored like that, but some kind of feedback loop on scholarship resources and economic needs really needs to be done. Tax the bejesus out of those top 20 endowment school’s endowments. That’s dead money doing nothing.
Averageman
06-10-18, 16:23
I hadn’t thought of it being direct or sponsored like that, but some kind of feedback loop on scholarship resources and economic needs really needs to be done. Tax the bejesus out of those top 20 endowment school’s endowments. That’s dead money doing nothing.
No, I'm pretty sure it comes in from the Left and goes out to further the agenda of the Left.
Ivy League Schools are factories of Socialism.
Harvard is sitting on Hundreds of Millions of Tax Free Dollars. The sum total of all of the Ivy League money squirreled away was staggering to me when I read about it.
crusader377
06-11-18, 09:22
I don’t know what to do with people that somehow think that profits aren’t tied to business success (sales). You can’t have profit if you aren’t meeting a demand, as in sales. You can only skinny so much profit out, especially in the long term. Run your company based on short term profits and eventually you get squished.
I think the Ford quote and wages does show that the macro-economic conditions are paramount to these things working. You had the twin technological changes of assembly line and internal combustion engine at the same time. That is a pretty powerful one-two punch.
You also can look at the times when that was written, perhaps as a way to immunize Ford from being seen as other socially irresponsible big business people.
Ford sold a good that people wanted and were willing to pay for. He also decreased costs through efficiency and lowered prices and expanded sales.
Since when did working at McD have to be a career for people. It used to be a marginal job for most people, not a way to raise a family while working the counter. It used to actually teach skills to people. I know a lot of successful and intelligent business people who worked there during school and had positive experiences and good life lessons. None work there now.
I think the key advantage of Ford paying his employees better than the competition is that he improved employee morale and more importantly he was able to hire the best workers available and those workers knew that working a Ford was the best job that they would have and therefore that drove improved performance and better motivation. Also, when Ford needed to expand and grow has business, because of his company's reputation of high wages, he could hire the pick of job applicants. Like everything else in life, with employee performance, skill, and motivation, you get what you pay for.
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