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Originally Posted by John21
Ford doubled wages to reduce his extremely high employee turnover, not to give his workers the means to purchase his product. Ford's total labor costs actually decreased with the pay raise do to the significantly reduced turnover, i.e., Ford's labor share of revenue/income declined. So obviously had other businesses done the same or the government mandated a $5/day minimum wage, that wouldn't have the same effect.
Of course. But we don't have to pretend like we're creating an economic boom through all this. We're essentially consuming a portion of our working capital to keep the economy afloat; basically cutting off a toe to save the foot. So the bare minimum to keep things going is all we should be doing.
It’s no small detail that, as Henry Ford slyly observed, in the course of improving his employees’ standard of living, Ford also created a new pool of customers for his Model T. The Five-Dollar Day helped to bring members of America’s working class into its middle class. Better wages, combined with the affordable goods produced by the assembly line, are cornerstones of the prosperity that has characterized American life for so many of the past 100 years.
Matt Anderson is Curator of Transportation of The Henry Ford.
There is absolutely some correlation between wages and real economic growth. I mean....come on. Capital is only worth something because it can be used to produce something else. That something else (widget) is traded via fiat currency. That currency goes back into the system.
There's some inefficiency but it's not like capital is better than consumption. The actual driver of the economy is consumption when you think about it. If no one wanted/needed anything there would be no need to trade in the first place.
Well, we pretend pumping 3 trillion into the stock market to keep the share prices up is a boom.
In my opinion you can't run a massive trade deficit and not benefit from the supply chains and have an actual 'good' economy. But we've been doing that for decades under the guise of globalism. So it's all pretty smoke and mirrors and fragile. Best not to watch the sausage being made.