A strong middle class is the foundation for a strong economy. An economy is a system and, like all systems, it is one that we build and manage. An economy is not something that happens, it is something we create - daily.
For most of America's capitalist history, company profits and wages were more or less aligned. In recent history this coupling has broken. The capabilities of the corporation to generate excess revenue continues to set records. The wages of American workers has been heading in the other direction.
American corporations have moved many jobs overseas and technology has made many jobs unnecessary. While these job losses impact blue and white collar workers - they impact blue collar jobs on a much greater scale. The United States should have followed Germany's example and done more to protect our manufacturing base, the German economy fared the Great Recession much better than most.
We not only lost much of our manufacturing, we lost much of our union membership and influence. Unions have been declining in the US for several decades.
In 2010, Germany produced more than 5.5 million automobiles; the U.S. produced 2.7 million. At the same time, the average auto worker in Germany made $67.14 per hour in salary and benefits; the average one in the U.S. made $33.77 per hour. - Forbes article.Yet BMW, Mercedes, and Volkswagen generate billions of dollars in profit and compete well against their American and foreign counterparts. We have done many things right in the United States, but there is always room for improvement.
If the United States has the greatest economy in the world, shouldn't we have the best paid workers in the world as well? Otherwise, what is the economy for?
The arguments against paying these people more generally fall into two camps.
- They should get a better job, the jobs are easy - basically they deserve to be poor
- It's bad for the economy because it's bad for the corporation - yes, they're poor but it's OK because it's good for the economy
The organizational design of a corporation does not exist to create profit. It exists to create value in society - profit is the byproduct of creating this value.
Are corporations good or bad? Both.
Are unions good or bad? Both.
Strong management and strong workers benefit from one another - they are counterbalances in an ever changing system. A corporation is a machine, balance is critical to long term value creation.
What are we going to use to build a strong middle class in the United States?
Great videos on this subject from economist Andrew McAfee and Stephen Colbert.
Great videos on this subject from economist Andrew McAfee and Stephen Colbert.
Andrew's
Stephen's
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