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In 1913, Henry Ford wrote the following as the directors had been reaping the rewards of profits - "The wages we pay are too small in comparison with our profits. I think we should raise our minimum pay rate".

Thursday, November 18, 2010

Personal vs Social Responsibility

I wrote this for a reply to a forum conversation (which is irrelevant for this post, so not linking to it).

Currently (well, as of 2007), we, the bottom 80% hold about 7% of the wealth, but pay 40% of the taxes.  The top 10% pay 60% of the taxes, but control 90% of the wealth.
This is roughly the same situation as just before the Great Depression.  History repeats itself.
I am not for socialism, but there does need to be responsibility in wealth management.  Right now, the money is all going up - but very little coming back into the economy. The Rich save and invest in paper funds.  They don't spend.  Therefore, money accumulates at the top till it topples - an endless cycle of growth and crash.
We have government to try to help protect us from the Irresponsible actions of others - both the very poor on welfare and the very rich who contribute nothing to society are irresponsible.  We, the Middle, need to solve the problem and balance our society and economy.
 This got me thinking about Personal Responsibility versus Social Responsibility.  Right now, I don't think you can separate the two.  I am thinking about wealth management right now.  Lets ignore the rich who inherit and never actually made a contribution to society to begin with.  Instead, lets focus on the guy who started at the bottom.

Our guy starts with nothing.  He works long hours, hard days and starts a business.  He saves his money, invests wisely and grows his fortune.  His fiscal habits make for a sizable wealth.  At what point does he need to stop the aggressive saving and investing and start returning more of his money to the society that created the environment for him to succeed?  I do believe that it is vital to return, to give thanks and appreciation.

Its my old "Farmer tends the soil for his crops to grow" scenario.  There comes a time that all the good habits of saving and investing turns into bad habits of hording.  Is this, possibly, what we are facing now?

I know the Rich should put their savings back into the economy.  Any serious analysis of the mathematical aspects of savings vs spending practices will clearly display the unsustainable reality of our current system.  I do not believe Charity is the answer though.  We need something to help the Middle.  Those of us who are working, making ends meet, but not much else.  Society needs us, the middle 80%, to have some spare change.  We need, along with a little stimulus money, some wealth management classes.  Some counseling, education, therapy - something to get us away from the spend, spend, spend mentality and teach us to put back some savings.  We need some good "Buy U.S. Made" indoctrination.  Some "do you really need a 64 inch tv in your bathroom?" kind of therapy.  We are sick with an overabundance of consumerism and need to get it back down to a reasonable level.

Heck, we need to get EVERYTHING back down to a reasonable level - the Deficit, CEO Salaries as compared to average worker pay, consumerism, political rhetoric, entitlement programs.  Well, maybe some things need to get back up to a reasonable level - average income, savings, product quality, employment rates, ethical standards.

... enough rambling.  So, on a side note - the U.S. Health system actually, truly, honestly, SUCKS!