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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".

Tuesday, August 16, 2011

Input Requested


So, Jackson Free Press put up an article about Trickle Down economics.  "turbodog" wrote a comment saying it was childish and asking "When is the last time you got a job from an unemployed person?"

I replied and started a whole chain of comments :


I have often been hired by an unemployed (or poor) person. Whether it was a sole proprietor hiring me to work for him or someone hiring me to fix their computers when I was running my own business.


Rich people do not create jobs. Government can't create private sector jobs.


You seem to have the idea that a rich person will just go out and hire someone for no reason. That is ridiculous. The only thing that creates a job is Demand. Someone has to have a need that requires someone be paid to fill that need. Many times a business - which doesn't need to have any rich people in it, nor rich people to start it up - will have to hire someone to meet extra demand for their goods or services.


The problem right now is that the top 10% have leeched ludicrous amounts of money out of the economy and into their vaults. A construction worker could support a household of 4 on his salary alone in 1970. Today, the construction worker makes pretty much the same thing he did in 1970, but the cost of everything has gone up 400%. So, the construction worker has had to get his wife to get a job and both go into debt to maintain a lesser lifestyle.


Well, we are now maxed out on the household debt, so we can't spend any more. The rich have leeched all the money and profit out of the economy. There is not much more left.


So, the only real solution is for big businesses to cut absurd CEO and Executive compensation and raise worker pay. This will put money back into the economy and create a sustainable economy instead of the boom & bust economy we have had. Read about Henry Ford and Kenneth J. Douglas.


Basically, its "the Rich" and corporations against everyone - including themselves. Capitalism requires a robust, free flow of money to sustain itself, and they have been leeching funds out of the economy, slowly killing it.


Obviously many are not going to self-regulate to maintain a healthy economy. Therefore, government has to intervene in order to "insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity."


(see http://bobbyshead.blogspot.com/2011/02/business-leaders-agree-i-am-right.html andhttp://bobbyshead.blogspot.com/2011/03/success.html for more)
posted by BobbyKearan on 08/11/11 at 09:14 AM


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Rich people do not create jobs. Government can't create private sector jobs.
***


Really? Tell that to Steve Jobs (haha) that created the iphone and the crapload of jobs and money that flowed to Apple.


Yes, he created an item, which made demand, which make jobs. But, no demand w/o the item.
posted by turbodog on 08/11/11 at 11:54 PM

***
So, the only real solution is for big businesses to cut absurd CEO and Executive compensation and raise worker pay. This will put money back into the economy and create a sustainable economy instead of the boom & bust economy we have had. Read about Henry Ford and Kenneth J. Douglas.
***

A lot of the boom and bust has been at the hands of the government. Housing boom and collapse caused 2008 problems. Was also loose credit and housing boom in the 1920's...

Government distorts markets. They underwrote these 'toxic' mortgages. You think normal investors would have given cash to finance those shady home sales? Get real.

They opened the floodgates. Banks took part, real estate agents took part, sellers took part, buyers took part.posted by turbodog on 08/12/11 at 12:00 AM



if "the rich" top 10% put money back into the economy at anywhere close to the rate they are leeching it out, then the middle class would be spending it right now and the bank accounts of those top 10% would not be as large as they are.

And you are missing a LOT. Steve Jobs was not rich when Apple was created (and his salary - income - is $1.00 per year). He was an inventor or innovator whose product created demand, which created jobs, which led to him being rich. Bill Gates was not rich when he started Microsoft. Now both are calling, along with Warren Buffet, to have their taxes raised. Why? Their own self interest, of course.

Paul Krugman puts it like this "Lack of corporate cash is not the problem facing America. Big business already has the money it needs to expand; what it lacks is a reason to expand with consumers still on the ropes and the government slashing spending."

The only way to get our economy going again is to put money into the hands of people who spend it. I don't think Government is the one that should be doing that, but the ones who should be simply are not doing so. In the end, big business will only wind up hurting itself by destroying it's consumer base.

Henry Ford and Kenneth J. Douglas, both successful and rich, said that it was 'indecent' for a CEO to make more than 40 times what an average worker was paid. They turned down raises for that reason. Because it hurt business in the long run. It hurt their bottom line in the long run.

Math, History and Economic reality are not on the side of cutting taxes more.
posted by BobbyKearan on 08/15/11 at 02:18 PM
Leeching? To steal Todd's line, "What a breathtakingly self -serving read."posted by independent on 08/15/11 at 02:43 PM


Independent - how would you describe a group that requires another group to survive but is slowly draining the other group of the very item the first requires? In this case, money is being drained at a faster rate than it is being put back into the economy.

The Rich must have the middle class in order to survive, but they are draining the very resource they require. The middle class doesn't need rich people any more than a host needs a leech. Maybe the relationship is a tad bit more symbiotic than a leech, but the end result is looking to be the same.

"The top 20 percent of American earners -- those making more than $100,000 annually - received 49.4 percent of all income generated in the country, compared with the 3.4 percent earned by those below the poverty line.

That translates to a ratio of 14.5-to-1, up from 13.6 in 2008 and almost double the low figure of 7.69 recorded in 1968."

20% of the country can not support a healthy economy. Going from 7.69 to 1 ratio of income to 14.5 to 1 is, by any definition, leeching money from the other 80%. We do not really have an infinite supply of money, so when one group's share grows, another one's must decline. "Leeching" is the only term for it, because it has become destructive to the national economy.

Its not a matter of jealousy or 'being fair' or anything like that. It is a matter of a healthy economy. The transfer of wealth from the bottom and middle to the top can't go on at this rate forever. Its going to crash and burn. The only hope is to put a stop to the greed and create a more healthy circulation. I.E. Pay workers more, CEOs less. Government cannot (should not) correct this, it has to be the market, the business leaders. We need more Henry Fords.
posted by BobbyKearan on 08/16/11 at 06:10 AM
"The new data also shows that the top 300,000 Americans collectively enjoyed almost as much income as the bottom 150 million Americans. Per person, the top group received 440 times as much as the average person in the bottom half earned, nearly doubling the gap from 1980."
- from http://www.nytimes.com/2007/03/29/business/29tax.html

The bottom 90%'s income drops by .6% (per household) while the top 1%'s income rises by 14%. That is not sustainable. Its destructive and we are seeing it now.
posted by BobbyKearan on 08/16/11 at 06:40 AM
How do you convince someone to work just as hard or harder as you take away some of their pay? Especially if they're an expert in their field and on of the tops in their industry worldwide? I'm afraid doing that would start a domino effect that would have negative consequences among high paid hard working people that your comments seem to have such disdain for, and who may actually help certain charities with large gifts because of their lofty salaries.
posted by independent on 08/16/11 at 07:35 AM
Wow. You just miss the whole point, don't you?
posted by BobbyKearan on 08/16/11 at 11:29 AM
I wish I could let that go, but ARE YOU KIDDING ME?!?!

We have millions of hard working men and women working 40, 50 hours a week, little to no vacation days, can't afford to get sick and still can't make a decent living and you are worried about a few overpaid CEOs making $8 million instead of $10 million??

You seem to have a lot of disdain for people who actually work hard for a living - construction workers, factory workers, food service industry workers, computer technicians, data entry clerks. Why do you hate us so much? It is us who does the actual work for them to get paid their salaries. We work harder and they get the credit for higher productivity. We treat customers well and they get the credit for higher customer satisfaction. We build quality into every product we forge or assemble and they get the rewards of higher sales.

You have a very different idea of 'hard working' and 'earning' your salary than I do.

"We believe in making 20,000 men prosperous and contented rather than follow the plan of making a few slave drivers in our establishment multi-millionaires," Henry Ford said, quoted in The La Crosse Tribune on January 6, 1914.
posted by BobbyKearan on 08/16/11 at 11:55 AM