Wednesday, January 21, 2015

What If Nobody Can afford Your Product?

       Did ya ever hear of  the term Inclusive Prosperity? How about Inclusive Growth? What they mean, basically, is that an economy can only go so far before it begins to deteriorate. If all the profits flow to the top, and little if any goes to the bottom, then the economy will lose it's ability to support itself. In other  words, if the people at the bottom don't participate in the wealth, then eventually they won't have the money to buy the products. And that means the people at the top will not have any wealth added to what they already have.
       The solution is for management to pay their employees more. Not the constant drive to find lower and lower labor and materials costs. Industry has used up all of the cheapest labor locations, pretty much. And as they enter cheap labor market, they boost the costs of labor in those markets. At the same time, they reduce the ability of the proven purchasing markets to continue to buy the products.
       In other words, if you continue to take money out of my pocket, eventually I won't be able to buy any new products at all. And the thing is, the wealthy are too few to buy enough product to make up the difference. That's where we find ourselves now, or pretty close to that point.
       So okay, how do we reverse this trend? At some point the government will be forced to recognize that the 'Trickle Down policy', the 'Treat The Job Creators Better Policy' just don't work . The reason they don't work is because it's all based on the premise that those who benefit the most will allow some of that wealth to filter down to the middle and lower classes. The problem is that human nature won't allow that to happen in great enough numbers to make the policies work. It's all about greed. The 'I've got mine, you need to work harder if you want a share' thinking. It might work if there was a point at which everyone agreed they had enough so they'll move over and make room for somebody else. Again, human nature won't allow that to happen.
       If or when government admits the problem and the failure of the old trickle down, then and only then will they put caps on executive pay unless increasing labor's share and other like minded actions.

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