Share on Google Plus Share on Twitter Share on Facebook 2 Share on LinkedIn Share on PInterest Share on Fark! Share on Reddit Share on StumbleUpon Tell A Friend (2 Shares)  

Printer Friendly Page Save As Favorite View Favorites (# of views)   2 comments
OpEdNews Op Eds

Restore the Basic Bargain

By       Message Robert B. Reich     Permalink
      (Page 1 of 2 pages)
Related Topic(s): ; ; ; , Add Tags Add to My Group(s)

View Ratings | Rate It

opednews.com Headlined to H3 11/29/11

Author 47089
Become a Fan
  (118 fans)
- Advertisement -

For most of the last century, the basic bargain at the heart of the American economy was that employers paid their workers enough to buy what American employers were selling.

- Advertisement -

That basic bargain created a virtuous cycle of higher living standards, more jobs, and better wages.

Back in 1914, Henry Ford announced he was paying workers on his Model T assembly line $5 a day -- three times what the typical factory employee earned at the time. The Wall Street Journal termed his action "an economic crime."

But Ford knew it was a cunning business move. The higher wage turned Ford's auto workers into customers who could afford to buy Model T's. In two years Ford's profits more than doubled.

That was then. Now, Ford Motor Company is paying its new hires half what it paid new employees a few years ago.

- Advertisement -

The basic bargain is over -- not only at Ford but all over the American economy.

New data from the Commerce Department shows employee pay is now down to the smallest share of the economy since the government began collecting wage and salary data in 1929.

Meanwhile, corporate profits now constitute the largest share of the economy since 1929.

1929, by the way, was the year of the Great Crash that ushered in the Great Depression.

In the years leading up to the Great Crash, most employers forgot Henry Ford's example. The wages of most American workers remained stagnant. The gains of economic growth went mainly into corporate profits and into the pockets of the very rich. American families maintained their standard of living by going deeper into debt. In 1929 the debt bubble popped.

Sound familiar? It should. The same thing happened in the years leading up to the crash of 2008.

The latest data on corporate profits and wages show we haven't learned the essential lesson of the two big economic crashes of the last 75 years: When the economy becomes too lopsided -- disproportionately benefiting corporate owners and top executives rather than average workers -- it tips over.

- Advertisement -

In other words, we're in trouble because the basic bargain has been broken.

Yet incredibly, some politicians think the best way to restart the nation's job engine is to make corporations even more profitable and the rich even richer -- reducing corporate taxes; cutting back on regulations protecting public health, worker safety, the environment, and small investors; and slashing taxes on the very rich.

These same politicians think average workers should have even less money in their pockets. They don't want to extend the payroll tax cut or unemployment benefits. And they want to make it harder for workers to form unions.

Next Page  1  |  2

 

- Advertisement -

View Ratings | Rate It

http://robertreich.org/

Robert Reich, former U.S. Secretary of Labor and Professor of Public Policy at the University of California at Berkeley, has a new film, "Inequality for All," to be released September 27. He blogs at www.robertreich.org.


Share on Google Plus Submit to Twitter Add this Page to Facebook! Share on LinkedIn Pin It! Add this Page to Fark! Submit to Reddit Submit to Stumble Upon



Go To Commenting
/* The Petition Site */
The views expressed in this article are the sole responsibility of the author and do not necessarily reflect those of this website or its editors.

Writers Guidelines

Contact AuthorContact Author Contact EditorContact Editor Author PageView Authors' Articles
Related Topic(s): ; ; ; , Add Tags
- Advertisement -

Most Popular Articles by this Author:     (View All Most Popular Articles by this Author)

The Republican's Big Lies About Jobs (And Why Obama Must Repudiate Them)

Paul Ryan Still Doesn't Get It

What Mitt Romney Really Represents

What to Do About Disloyal Corporations

The Gas Wars

The Minimum Wage, Guns, Healthcare, and the Meaning of a Decent Society