Thursday, May 29, 2014

Inequality Has to Stopped

How income inequality could be stopped. On January 5, 1914, Henry Ford announced he was paying workers on his famously productive Model T assembly line in Highland Park, Michigan $5 per eight hour day. That amount was almost three times the amount typical factory employees earned at the time. In light of the audacious move, some lauded Ford as a friend of the workers, others called him a madman or a socialist or both. It’s not difficult to imagine which group said favorable things about Ford and which didn’t. The Wall Street Journal called his action an economic crime. Ford thought it a cunning business move, and history proved him right. The higher wage turned Ford’s auto workers into customers who could afford to pay $575 for a Model T. Ford was neither a madman nor a socialist, but a very smart capitalist who profits more than doubled from $25 million in 1914 to $57 million in just two years. Now just think if the Walmart Waltons would raise the wages three times higher like Ford did. The workers could buy what they sell, Walmart wouldn’t be whining about their sluggish sales in the U.S., and more workers would be needed to make the products being sold. The old Wobblies had it right, to prevent inequality the income had to be fairly distributed. The wealthy still got rich, but the disparity between the two groups was less damaging to the economy. The capitalist system of today and how it's been rigged against the workers has been exposed much to the chagrin of the wealthy in Thomas Piketty's book, "Capital in the Twenty-first Century." Most every smart business and financial person knows that income inequality is the most dangerous or destabilizing factor in our economy and must be addressed. The low wage-have nothings are trying to bring about change by going on strike for better-fairer wages, but the politicians are still gun shy and afraid of upsetting their money masters. California just failed to pass Senate Bill 1372, which would have helped stop the economic inequality. Inequality is a huge threat to economic growth and stability in California, as well as the rest of the world. The capitalist system is built for the top to win and the bottom to lose, until people understand this, nothing will change. The costs of gas and food are on the rise, and everything else will follow so how are workers going to afford the poor man’s luxuries or durable goods like televisions, cellphones, and the latest fashions? Wages must go up because time is running out for peaceful resolutions.