The discomfort has a lot to do with Washington, in good ways and bad. The industries that think the future’s rosy all have lobbyists with bottomless pockets of cash. The less optimistic point to tariffs that they (not the Chinese) have to pay and the lack of consistent direction from the capital. If you side with the United States Chamber of Commerce, you probably want even more D.C. decisions that will make the rich richer. If you lean to the middle and a bit to the left, you probably believe the fix is in against the average American citizen.
Yet to lean toward what’s good for executives who earn the kind of salaries that Midas would envy is to ignore a basic fact: the prosperity of employees is what makes the economy hum. Pay them less, and they have less to spend. Cut back on healthcare, and the savings will vanish through sick days and lost productivity. Eliminate training, and the workforce will lose out to Asia. Again.
The great giveaway
After all, China didn’t steal U.S. jobs. American companies gave them away. Repeatedly. Along with intellectual property and a lack of access to domestic Chinese markets. If we hadn’t accepted those terms then, we might be in a different situation now — a situation that has more trading power and leverage.
Yet U.S. business leaders are myopic in the most convenient ways. They see as far as the next quarterly report, the impact on the price of shares, and the margin of profit. If they see further forward, it’s only toward their bonus at the end of the year and how they compare with the rest of the plutocrats controlling the levers of Wall Street prosperity. And it is Wall Street prosperity, not the nation’s.
The means affect the averages
According to a Gallup Poll, only 55% of Americans own stock, and that includes passive investments through 401(k) plans and IRAs and mutual funds. But the richest 1% holds one half of all stock.
When the stock market rises and falls, the wealthiest will feel the dollar value effects most of all, of course, but not in ways the middle class — the buying class — does. When billionaires experience declines like the one that occurred in 2008, they go from a billion to merely 700 million. When that happens to a person in the middle class, it can mean that they won’t have the assets to qualify to get a loan to buy a car or mortgage a house.
When companies claim that a rise in the minimum wage will adversely affect their viability (while maintaining a CEO’s salary, stock options, and bonuses), the implication is that they don’t want employees as customers. That contradicts the basics of supply and demand. When demand declines (because people can’t afford to buy products), supply has to shrink to sustain profit margins.
But reductions in production lead to layoffs, and layoffs completely eliminate the wages that workers rely on to buy things. Like cars. And all of the businesses down the line in the supply chain lay off people, as well. So there’s even less cash in the marketplace.
How giving and getting work best
Henry Ford understood that, by paying his workers enough to buy the Fords they produced, it was a win for both the firm and its workforce. CEOs nowadays seem to overlook that concept. So does half the Senate.
So go ahead and raise the banner high for lower taxes that provide the greatest benefits for companies and wealthy individuals. Don’t make it clear that all those tariffs are, ultimately, paid by Americans when they show up in the higher cost of goods. And do more than declare that a company’s stakeholders’ needs are important while the majority in Washington works hard to undermine those stakeholders’ best interests.
In 2020, inaction, like silence, is sure to lead to unintended consequences.