I recently watched an excellent video by Nick Hanauer discussing potential solutions to the present economic issues facing the US and, I am sure, some other nations.
Nick’s view is that the trickle-down economic policy, which basically proposes that by making the rich richer, the rest of the country will benefit, isn’t working and that maybe we need to try something new. Given that he is one of the super-rich and is benefiting from the policy, it makes for an interesting listen.
The approach he puts forward is not a new one; it was previously shared by Henry Ford, who believed that if he paid his staff enough money, then they would become his customers too, which would ultimately benefit him.
There’s a great quote in the more detailed article I have also attached from Nick, which says, ‘We like our customers rich and our employees poor’, but when we take that approach, we stop our employees from becoming our customers.
I agree with both Nick and Henry that when companies can create more customers for themselves, that is mutually beneficial. So why not start with your own employees?
There are a lot of people who counter Nicks’s argument, and not surprisingly, many of these are in that rich bracket and don’t want to see their position changed or threatened.
They claim that his approach, which equates to increasing minimum wages and creating a wealthier middle class, won’t work. But when we look at the current situation, it’s clear that the current approach is not working either.
But as this approach makes the rich richer and the poor poorer, why would the rich want to change it?
The answer is that they wouldn’t.
One definition of madness is doing the same thing, the same way, over and over again and expecting different results, so if the approach we have tried for the last 75 years isn’t working, then surely it’s time for something new.
The argument that making employees richer is not good for the economy is often stated, but look at what’s happened to China.
We have moved significant numbers of jobs to China in search of more profits because Chinese workers are paid less than in the US, which has been a major boon for Chinese workers as it has seen their salaries increase significantly. The result is that now China has become very rich, and the Chinese are now major consumers.
Like Nick, I see pitchforks on the horizon too.
We cannot keep shifting work to India, China, and Latin America in moves that make the rich even richer, our own people poorer, and the poor in those other countries richer.
That’s not sustainable; at some point, there will be consequences. How close we are to those is difficult to say, but like Nick, I do believe they are coming unless we change course soon.
Here’s a longer article from Nick.
I’d be really interested in your thoughts and comments.
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