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forsythI just had a very sobering realization in a conversation.
Let's start simple. The way capitalism works, most of the money a company makes comes from selling stuff to people. Stuff they make, or buy from other people. Then with the money they make from selling these things, they pay their employees. And their employees go out and take their money and buy stuff from that company and other companies, which they use to pay their employees, etc.
See, here's the thing. American average wages have been stagnant for years. Wages are more normally known as the money you get paid for work.
At the same time, companies have regularly been having record profits, and the stock market's been setting records, etc.
But if the employees are being paid the same amount, and yet the companies have been setting record profits, where's all that extra money been coming from?
Some of it comes from automation and greater efficiency, which lets the same number of employees do more work. Some of it comes forcing employees into unpaid overtime and stuff that looks like efficiency. Some of it comes from trade and specialization.
But most of it comes from debt. Americans are carrying record levels of household and individual debt. Most of it coming from real estate and mortgages. So those record corporate profits are coming from average Americans going into debt and putting their houses on the line.
We've pretty much hit the end of that, though. Real estate values across most of the country have been dropping. There's not really more places for people to get money from.
So what are the companies going to do now? There's not that much more efficiency to be gotten from most work. There's not much more people can borrow. There's not going to be an source for new record profits. Because people don't have the money to buy things, because the companies cut their pay in the name of profits.
That's a fundamental flaw of Wal-Mart thinking. If you don't pay your workers enough to live decently, you shoot yourself in the foot, long-term. Henry Ford, for all his problems, paid his employees enough to buy one of his cars. And why not? If it took five employees to build ten cars, and each of those employees bought a car, then he still had five to sell, and made a little profit on those five cars the employees bought. If he'd tried to work like Wal-Mart, then there wouldn't be enough market for those ten cars, because nobody at Ford or anywhere else would get paid enough to buy Ford's cars. They're eating their seed corn and destroying their own markets.
The other outrageous part of this? Corporate America's been driving their record profits by making people mortgage their houses and their savings, because the money's going to profits and stockholder dividends, not the employees. So the stockholders and CEOs are lining their pockets with profits which have come from the rest of us selling our houses, lives, and fortunes. There's no return on our sacred honor, or I bet they'd want that to.
Holy shit. I'd known all this, but I hadn't connected it all together. The entire edifice of modern corporate America is built on the sand of hoping people are too busy surviving to put things together. And even then, the sand's going to run out. Dude. Holy shit.
Let's start simple. The way capitalism works, most of the money a company makes comes from selling stuff to people. Stuff they make, or buy from other people. Then with the money they make from selling these things, they pay their employees. And their employees go out and take their money and buy stuff from that company and other companies, which they use to pay their employees, etc.
See, here's the thing. American average wages have been stagnant for years. Wages are more normally known as the money you get paid for work.
At the same time, companies have regularly been having record profits, and the stock market's been setting records, etc.
But if the employees are being paid the same amount, and yet the companies have been setting record profits, where's all that extra money been coming from?
Some of it comes from automation and greater efficiency, which lets the same number of employees do more work. Some of it comes forcing employees into unpaid overtime and stuff that looks like efficiency. Some of it comes from trade and specialization.
But most of it comes from debt. Americans are carrying record levels of household and individual debt. Most of it coming from real estate and mortgages. So those record corporate profits are coming from average Americans going into debt and putting their houses on the line.
We've pretty much hit the end of that, though. Real estate values across most of the country have been dropping. There's not really more places for people to get money from.
So what are the companies going to do now? There's not that much more efficiency to be gotten from most work. There's not much more people can borrow. There's not going to be an source for new record profits. Because people don't have the money to buy things, because the companies cut their pay in the name of profits.
That's a fundamental flaw of Wal-Mart thinking. If you don't pay your workers enough to live decently, you shoot yourself in the foot, long-term. Henry Ford, for all his problems, paid his employees enough to buy one of his cars. And why not? If it took five employees to build ten cars, and each of those employees bought a car, then he still had five to sell, and made a little profit on those five cars the employees bought. If he'd tried to work like Wal-Mart, then there wouldn't be enough market for those ten cars, because nobody at Ford or anywhere else would get paid enough to buy Ford's cars. They're eating their seed corn and destroying their own markets.
The other outrageous part of this? Corporate America's been driving their record profits by making people mortgage their houses and their savings, because the money's going to profits and stockholder dividends, not the employees. So the stockholders and CEOs are lining their pockets with profits which have come from the rest of us selling our houses, lives, and fortunes. There's no return on our sacred honor, or I bet they'd want that to.
Holy shit. I'd known all this, but I hadn't connected it all together. The entire edifice of modern corporate America is built on the sand of hoping people are too busy surviving to put things together. And even then, the sand's going to run out. Dude. Holy shit.
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no subject
Date: 2006-11-20 05:10 am (UTC)no subject
Date: 2006-11-20 08:27 am (UTC)See 'blindingly'.