Economic Survival--Long-Term

When I wrote that China elevated (at various points)

300 Million

500 Million

700 Million

people from poverty to the middle class, I pointed out China created a

Middle Class

Consumer Class

Investor Class

I also pointed out that China created cohesion among the Chinese people.  China created a buy-in.  A vested interest in the success of the Chinese economy.

This brings us to Henry Ford.

Ford doubled his employees' salaries and cut the work week to 40 hours.  He, essentially, created the Middle Class.

Ford workers could now, and subsequently buy

A Ford

A Washing Machine

A Refrigerator (Ice Box)

A Radio & Eventually

A Sears Roebuck House  (Some assembly required.)


By creating a Middle Class, he created a Consumer Class and an Investor Class.  He gave the American worker a vested interest in the success of he American Economy.

Don't get me wrong; the labour movement was ugly, violent, fraught with private armies, sabotage, strikes, lockouts, scabs, strike-breakers, and the like.  Nonetheless, the strong Middle Class meant a Strong Economy.  A strong Economy meant a Strong America.

The Middle Class is the Economy.


Now, The American Widget Company is not going to hire one additional widget maker, until there is an order for one widget more than the company can make when operating a maximum capacity and optimal efficiency.

They also know:

If you grow faster than your market, you tie up capital.
If your market grows faster than you do, you lose market share.  Therefore, company growth is predicated on a rising demand curve.  And when more people buy stuff, they make more widgets, increase their revenue, invest their returns, and also benefit from revenue enhancement.

China: Rising middle class, rising economy.

India:  Rising middle class, rising economy.

Russia: Stagnant middle class, stagnant economy.

America:  Declining middle class, follow the path of the trajectory.

One reason I wrote, 

Tax policy to increase wages $5 an hour. Now! was to show the benefit to increasing wages with a tax policy that incentivises, business increasing wages with serious tax benefits for doing so, and subsequent economic benefits as the programme proceeds. 

If you want to close the gap, you redistribute the money.

Henry Ford did not redistribute the wealth.  He redistributed the money.

Wealth is what you have.

Money is what you make.

If you own a $100 Million Factory, but can't run a business, you make earn $50.000 a year.

If you own a $500 laptop and pay $100 for an internet connexion, (A service, not an asset) might earn $1Million a year.

The first example, you have wealth but little money.

In the second example, you have little wealth but make a lot of money.

If you are responsible, you save half your income, and in 20 years you have $10 Million.

If you spend it on loud noises, bright colours, and shiny things, you end up with nothing.

In the first example, you may end up liquefying assets and come out with, say, $50 Million.  Wealth is what you have. Money is what you make.  If we want to close the gap, we redistribute--Read: Reinvest--the money, create a Solid Middle Class, and let the economy help people create wealth.

Further reading:


Tax Policy to Increase Wages $5 an hour. Now!

If You Really Want to Close the Gap

Powell's Testimony House Financial Services Committee

If you're really interested and energetic & ambitious:

Hillary Redux

Sincerest regards,


Slim.

If you find anything here to be helpful, please don't hesitate to send me a really tricked-out Mac Book and to tuck a few dollars into the envelope along with the thank you car.
Slim.

Robert Asken
Box 33 
Pen Argyl, PA 18072

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All rights reserved.