Sunday, November 20, 2011

This week I received an email from my brother explaining his view of our economic situation. My brother has a good high-school education, and is a pretty smart guy. He has always worked at blue-collar-type jobs, basically as a delivery guy. He lives a modest lower-middle class life, and he is a thoughtful and intelligent person. My guess is that he listens to a lot of Fox News and/or talk radio, but I don't know that for sure, since we live a continent apart.

Here are a couple of points he makes:
I see the economy as being based on manufacturing and tangible goods. What's made here anymore other than cheesburgers? And I see labor unions having a big part of the problem. If I ran a business and had the choice of paying an employee $50 an hour or $5 an hour to do the EXACT same thing, which do you think I'd choose ? All unions do is make "demands". The company isn't supposed to make a profit. To quote (a former employer who ran a small neighborhood grocery store), "Profit is not a dirty word ." Without the union , the company would just screw everyone.....without the company......there'd be no JOB!!
Let's begin by thinking about why one person owns a company and another person works for him, and where the profits come from. So to take the case of this particular small-business owner, he took over the business from his father, who probably started it from scratch and built it up to a nice little business. (Or to take a similar but larger-scale business, take Hood Milk as an example.) The guy who starts a business saves up his own hard-earned money, and at some point invests it in starting a business, at considerable risk to himself. If the business fails, he will lose everything. He may be the main worker at the beginning, and he probably works long hard nerve-wracking days. Of course he deserves to earn a profit on his money. Otherwise, why would he take such a risk?

But as time goes on, and the business grows, he begins to hire other people to do some of the work. Those people have less risk, so all they are being paid for is their labor, not the chance to earn or lose money on their investment. So of course they make less money than the owner.

In some cases, however, it is the workers who are doing all the work, creating all the wealth (profits) and they may even be risking their lives to do so, but a very small part of that wealth accrues to them, and a vast amount goes to the owner(s). If a man owns a coal mine, how much of the profits are generated by the labor of the coalminers, and how much by the guy who owns the land that happens to have coal under it, and who invests in the machinery? Sure, the owner or the company has made a huge investment in order to get that coal out of the ground, but so have the miners, who actually produce the coal on a day to day basis. How is that profit to be divided up?

A generation ago, the top people in a company might make 20, 30, or 40 times what the average worker made. Meaning that one guy at the top was believed to be producing something of value that was equal to what 40 of his employees did. Today, in big companies, the top guys make on average 344 times what the average worker makes. One guy is worth as much as 344 "little people."

Now of course in a company like Snell's Market, or even Hood's Milk, that might not be the case. But in the Fortune 500 companies, that is the amount of wealth that the CEOs skim off, and claim as their "fair share" of the profits that are created by the company.

I think it is legitimate to ask whether the people in suits making the decisions are actually the ones who are "earning" the money, or whether something is out of whack here.

So what would be the point of a union? It's the only way that the people doing the actual work can apply any pressure and retain a fairer share of the profits that they contribute to. As you say, as an owner, sure, you'd rather keep the $50 and pay the worker just $5. Unless there is some counter-pressure, wages will go lower and lower, until we're all living like medieval peasants or sharecroppers. Why not? If the employer controls all the jobs, and can get the workers to compete against each other for the lowest possible wage, it pushes everyone lower.

Did you ever see the movie They Shoot Horses, Don't They? When people are desperate, they can be taken advantage of and made to compete against each other. And who wins? Well, for a while, the rich guys win. Until they have all the money and no customers! Then lack of demand will cut into their profits, and in the end, everyone is worse off. (for details, see The Great Depression.)

And from where does ANYONE get the brass gonads to speak about "Re-distribution of Wealth ?" I can't understand the concept. Because someone works hard & gets rich, it not only makes them an ogre, but they should be "compelled" to hand it over to No-account jerks ? Not in my book. The only reasons I can find for my OWN lack of wealth are that I ain't smart ( or lucky) [or hard-working] enough.

So the same point prevails here. Where did this wealth come from? Did the rich person earn it all by herself, with no help from society at all? And no help from her employees? Then she can keep it all. J. K. Rowling, for example, who created the Harry Potter series. She deserves to get rich, since she created something of value all by herself. But in most cases, wealth is not created single-handedly. It is created by many people, including the street-sweepers who keep the city clean enough that people will go shopping. So they also deserve a share.

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