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Monday, November 28, 2011

The smart, symbiotic relationship that used to be America

"For most of the last century, the basic bargain at the heart of the American economy was that employers paid their workers enough to buy what American employers were selling. That basic bargain created a virtuous cycle of higher living standards, more jobs, and better wages. Back in 1914, Henry Ford announced he was paying workers on his Model T assembly line $5 a day – three times what the typical factory employee earned at the time. The Wall Street Journal termed his action “an economic crime.” But Ford knew it was a cunning business move. The higher wage turned Ford’s auto workers into customers who could afford to buy Model T’s. In two years Ford’s profits more than doubled. That was then. Now, Ford Motor Company is paying its new hires half what it paid new employees a few years ago. The basic bargain is over – not only at Ford but all over the American economy. A basic bargain was once at the heart of the American economy. It recognized that average workers are also consumers and that their paychecks keep the economy going. We can’t have a healthy economy until that bargain is restored." --Robert Reich, Chancellor's Professor of Public Policy at the University of California at Berkeley, writer, columnist. Link: http://robertreich.org/post/13469691304

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