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Lawry, There is only one way to measure ‘economic
growth” – a method I imagine to measure well-being – and that
is to find whether people are getting more return for less effort. That is more
wages for less exertion and time. I should note that wages doesn’t
mean dollars but the actual physical return for what they do. But, perhaps we’ve forgotten that
the only reason for production is wages. Harry ********************************* 818 352-4141 ********************************* From:
[EMAIL PROTECTED]
[mailto:[EMAIL PROTECTED] On
Behalf Of Lawrence de Bivort Wonderful to hear this
about Henry Ford. Thanks for posting this, Arthur. The reporter, Leonhardt,
seems to written something odd: “In the last
few years, however, the economy has kept growing in large part because
high-income families -- the top 20 percent, roughly -- have done so well and
have been such devoted spenders.” The very rich aren’t
big-spenders, generally speaking. They save and grow richer. (I am
excluding the purchase of stocks and companies from the concept of
‘big-spending’.) There are different measures of
economic growth. Leonhardt seems to be focusing not on real economic growth
(measured by median income, or infrastructural investment), but by investment
indices (like stock market prices). I don’t think these investment
indices are suggestive of economic growth, but of speculative optimism.
Nor, I suppose, should the level of economic activity in wasteful enterprise,
like weapons purchases) be included in the notion of economic growth (societies
can go broke ‘buying’ such wasteful things, though a look at GDP
would have suggested otherwise). Cheers, Lawry From:
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On Behalf Of Cordell, Arthur: ECOM Business/Financial Desk; SECTC The Economics Of
Henry Ford May Be Passe By DAVID LEONHARDT 1087 words 5 April 2006 Late Edition - Final HENRY FORD was 50 years old, and not
all that different from a lot of other successful businessmen, when he summoned
the Mr. Ford announced that he was doubling the pay of
thousands of his employees, to at least $5 a day. With his company selling
Model T's as fast as it could make them, his workers deserved to share in the
profits, he said. His rivals were horrified. The Wall
Street Journal accused him of injecting ''Biblical or spiritual principles into
a field where they do not belong.'' The New York Times correspondent who traveled
to But the public loved it. The country was then
suffering a deep recession, and the Ford news seemed to offer hope. Within 24
hours, 10,000 men were lined up outside the Ford employment office in The mythology around this story holds that Mr. Ford
wanted to pay his workers enough so they could afford the products they were
making. In fact, that wasn't his original
reasoning. But others made the point, and, in time, it became part of Mr.
Ford's rationale as well. The idea became a linchpin in an industrial
philosophy known as Fordism. More production could lead to better
wages, which in turn would lead to more spending by the public, yet more
production and eventually even higher wages. ''One's own employees ought to be
one's own best customers,'' Mr. Ford said years later. ''Paying high wages,''
he concluded, ''is behind the prosperity of this country.'' This turned into a pillar of 20th-century economic
wisdom. It's time to ask, though, whether Mr. Ford's big idea is as ill suited
to this century as his car company seems to be. By any reasonable standard, the last few years have
been bad ones for most people's paychecks. The average hourly wage of
rank-and-file workers -- a group that makes up 80 percent of the work force --
is slightly lower than it was four years ago, once inflation is taken into
account. That's right: Most Americans have taken a pay cut since 2002. But you would never know it by looking at the
headline numbers on economic growth. >From the standpoint of the broad
national economy -- the value of the goods and services the country produces --
the last few years have been stellar. Despite two wars, soaring oil prices and
business scandals, the economy has been growing more than 3 percent a year. Henry Ford would have no idea what to make of this. What was so comforting about Fordism was that it
suggested that the economy operated on a virtuous, self-reinforcing cycle. Only
when the middle class did well could the country do well. And as the country
grew ever richer, so would the middle class. In the last few years, however, the economy has kept
growing in large part because high-income families -- the top 20 percent,
roughly -- have done so well and have been such devoted spenders. Globalization
and new technology have helped many white-collar workers make more money, even
as those same changes have closed factories and depressed wages for others.
Stock portfolios and houses on the coasts, meanwhile, are much more valuable
than they once were, making their owners more willing to spend. In fact, well-off families, not cash-short ones, have
been the ones increasing their borrowing and cutting their savings the most in
recent years, according to the Federal Reserve. In 1992, the top fifth of
households, as ranked by income, accounted for 42 percent of consumer spending.
By 2000, the share had grown to almost 46 percent, and it is probably not much
different today. That may sound like a small change, but it's an enormous
amount of money, a shift of $300 billion a year in spending from the poor and
middle class to the affluent. In Wages are likely to rise slightly in 2006, but
stagnation seems to be the norm over the long term. Except for a span of a few
years in the late 1990's, the hourly pay of most workers has done no better
than inflation for the last 30 years. Even some Democrats, who have long
embraced Fordism, are coming to the conclusion that Mr. Ford's reassuring cycle
is not the only thing that can keep the American economy humming. ''You don't
need an equitable distribution to have a sustainable recovery,'' said Jared
Bernstein, a liberal economist in Politically, though, I am not so sure that the
current trends are sustainable. Before the 1990's boom lifted wages, stagnating
pay had helped cause a series of upheavals: Bill Clinton's election, the Ross
Perot and Pat Buchanan phenomena, the Republican takeover of Congress. Today,
with the boom fading from memory, protectionism is on the rise, and President
Bush's approval ratings are miserable. So it seems as if now would be a good time to start
talking about what to do. There has never been a shortage of ideas: helping
more teenagers to finish college, training middle-age workers to switch
careers, embarking on public projects like better highways and high-speed
trains. Or we could pretend it's still 1914. E-mail: [EMAIL PROTECTED] |
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