Unfortunately, this topic has now been “politicized,” which means that you can’t talk about it without being instantly cheered or jeered by fans of each respective political team. But the economy is much more important than this year’s election or either political team.
There are several factors that have come together to produce a frustratingly weak economy that has persisted in the United States for more than a decade. One of those things are “Globalization”. It opened up a vast pool of billions of workers who for way less than Americans because they’re desperate. This messes up everything, it has resulted in companies shifting formerly middle wage paying jobs overseas. Another is Technology it has continued to increase productivity, allowing companies to do more with fewer employees.
These and other factors have contributed to the most radical redistribution of wealth that the United States has ever seen. Since the late 1970s, the country’s assets and income have moved steadily from “average” Americans to the richest Americans. This has created a society with more extreme wealth inequality than we have seen at any time since the 1920s.
Fairness aside, the problem with this state of affairs is that it leaves hundreds of millions of American consumers the real engines of the economy with little money to spend. With consumers having little money to spend, businesses suffer. As businesses suffer, they look for ways to cut costs. And this, in turn, hurts employees (consumers) even more.
One thing to keep in mind as we think about how to fix this state of affairs is that this is not an era in which everyone is suffering. Everyone is not suffering. Big companies and their owners and senior managers are not suffering. They are doing great. Big companies and their owners and senior managers, in fact, are doing better that the have done at any time in history, at least judging by the amount of profit they are producing. It’s everyone else who is getting hosed.
Now, in the current political environment, you can’t make an observation like that without being pegged as an anti-business “socialist” or “communist.” So, it’s important to emphasize that there is nothing anti-business about this observation. I just don’t believe that great businesses exist solely to capture “profits” and steer cash into the pockets of their owners. When a free-market economy is functioning well, as the American economy did for most of the 1950s, 1960s, 1980s, and 1990s, the benefits of the system accrue to all participants, namely: Owners and senior managers
Society at large
When the system gets out of balance, however, the benefits begin to accrue disproportionately to one or two of of the constituencies at the expense of the others and that’s the situation we’re in now. The benefits of our free-market capitalist system which, by the way, is the best economic system on the planet, by a mile are accruing disproportionately to owners, managers, and customers, at the expense of everyone else.
If we actually want to put some effort into fixing our economy, we have to fix that. Specifically, we have to persuade companies and their owners to hire more employees and share more of their immense wealth and profits with them. Most importantly, companies don’t need to do this just for altruistic reasons (though no one would object if they did). If enough companies do this, they will not just help their employees. They will help their future sales growth. Because their employees and customers, the American consumers, will then have more money to spend.
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