- When so much income goes to the very top, the middle class and the poor don't have enough purchasing power to buy what the economy is producing. - Robert Reich, Former US Labor Secretary
- Once upon a Model T...
- The U.S. Is Even More Unequal Than You Realized
William Annett, Beating the Street, Evergreene Digest
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June 29, 2014 | Henry Ford was a smart fellow. As a matter of fact, he was much smarter than the current ruling junta of the much-envied and much-maligned 1%, because they still haven't yet figured out what Henry realized in the early Twenties. In addition to inventing the assembly line, he shrewdly calculated the ratio of the worker-wage-purchaser cycle, such that he determined precisely the minimum hourly wage he could pay his workers, compatible with the maximum price tag he could put on his Model T, in order for his workers to be able to buy their own product, i.e. his cars.
Take a simple graph - with the vertical axis representing the range of hourly wage rates for a typical auto worker, while the horizontal axis represents ascending possible retail prices for the basic black Model T Ford. (We're talking maybe 1926, so forget the likes of Rockefeller and Al Capone, who are driving Hupmobiles. We're dealing with the huddled masses here.) Now, draw a tangent from lower left to upper right. Somewhere about where 50 cents an hour on the vertical axis intersects the tangent, corresponding with $250 on the horizontal price continuum, (suggested manufacturer's retail price, SMRP, as the dealer johnnies say nowadays), you reach equilibrium. That is, Henry does, or did, perhaps with killer entrepreneurial instinct. It was the magic intercept or inflection point which, circa 1926, might be called the Henry Ford Matrix, which he must have sat up nights figuring out. But it's simple: You pay the guy with a lug wrench on the assembly line like five bucks for a ten-hour day to tighten the same nut 500 times, and he can afford to buy one of your Tin Lizzies.
William Annett has written six books, including a page-turner on mutual funds, a send-up on the securities industry, three corporate histories and a novel, the latter no doubt inspired by his current occupation in Daytona Beach as a law-abiding beach comber.
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The U.S. Is Even More Unequal Than You Realized, Maxwell Strachan, Huffington Post
- When it comes to income inequality, no other developed economy does it quite like the U.S.A. If you need some proof, here it is.
- America’s rotting empire
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