The January issue of Fortune has a very interesting article on The Shrinking Middle Class. While I'
m not one to endorse any sort of minimum wage for the reasons cited in the article, I do believe the corporate tax system needs to be examined.
I've worked for public companies nearly my entire adult life and have seen executives make far too many decisions simply for the benefit of Wall Street - reducing marketing, restricting training, moving production to other countries, etc. When you see a major company take a huge hit, I'm comfortable saying most times it's because they've pushed off for years activities that would offer less but more sustainable growth. Wall Street can think in 90 day increments, companies should not.
I'm not in favor of taking or restricting companies from stock buybacks and other activities, preferring instead to incentivize companies to take a certain course of action; choice over penalty. On a personal level, it's like getting a lower insurance premium because one doesn't smoke or maintains a better weight. It's not a direct penalty but instead an incentive to take a specific action. For businesses, that could mean improved deductibility for employee pay, training, retention, etc. Instead of stock buy backs, perhaps improved deductibility for lower insurance premiums or higher 401K or pension plan contributions.
Just some thoughts. It was an interesting article. I'd much rather see congress debating this sort of stuff than climate change, russia and the wall.
Replies to: The January issue of Fortune has a very interesting article on The Shrinking Middle Class. While I'
Question for the financially literate (which I obviously am not)
Would offering companies something like 2x or 3x deductions for wages paid to their American workers make any difference? Are they feasible?
No easier to charge employers 2-3 times more for E-Verify employees
And illegal employees 8-10 times more. That would solve our immigration problem. You see, US business and Chamber of Commerce support open borders.
Planning has/will not halt the technological disruptions impacting middle class workers. Working for
a public company with some vision was an advantage as we often embraced change early.
Also from the top down we were training intensive, paid people well and were family friendly.
Our size enabled the CEO to take a year long rather than quarterly view, but the performance
pressure still was there, just less frequently.
The biggest question over the next couple of decades IMO is going to be what happens as more
and more people and jobs get displaced.
The quarterly reporting requirement has amazing effects that are hidden and not well understood.
I worked for a public company as well, and it was much more important to meet next March's expected numbers than it was to invest in long term health of the company. Every frickin' quarter they came to me to ask me if I could pull revenue in to help us make our numbers. My answer was always, "Yes, but I will leave 2/3 of my revenue on the table." Shockingly, they often said, "Do it." At some point, you've left a shit-ton of money on the table, money that could be used to develop new technologies and build new manufacturing lines and hire new people...all because stock purchasers need their quarterly report which 99% of them don't read...all so the company doesn't suffer a quarterly drop in stock price.
Granted, I'm not a finance guy by training, so I will defer to others. It just seemed like we were consistently engaging in short term beneficial, long term destructive behavior. We seem to be destroying US stockholder long term value because of these requirements...granted, the stock holder can eventually sell, but that leaves the employees of the company holding the bag, or finding other jobs. Every government requirement has an unintended side effect. Measuring behavior changes behavior. At some point, will we recognize that our search for perfection is just causing all the good but non-perfect companies to suffer...and therefore their employees to suffer...and therefore the country as a whole?
I was with you until your last sentence. The debates are not mutually exclusive.
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Thanks for the thoughtful and reasoned commentary.
These are complex issues that can’t be resolved based on simple ideology. One thing I might add to what you said is it’s hard to effectively deal with the things you discussed without first fixing the institutional structures.
We’ve built a corporate model that is mandated to treat everything other than profit, as an externality. Legally, it’s baked into the system. Relative to capital, labor is highly immobile. Yet stable people in a stable society are what allow hugely successful corporations to be hugely successful. The Balkans is not the home of great innovation for a reason and the United States is for a reason. Corporations benefit greatly from the externalities known as political stability, socialized innovation and military protection yet they are required by law to ignore theses things.
The point is, if you don’t examine and fix the institutional structure, it’s virtually impossible to produce a result different from what we are dealing with now.
Species that fail to evolve in an ever changing world are doomed to extinction
The Soviet Union fell because centralized economic "planning" (sic) does not allow for creative destruction of inefficient economic processes. In a truly flexible society, individuals will migrate (physically and intellectually) to better opportunities. African Americans once fled the South for employment in the North. Today, that process is being reversed. Meanwhile, the middle class is abandoning California for states where they can earn enough to live. Human beings are they most adaptable species on the planet... unless repressed by other human beings.
true to a point but it's not always easy moving to greener pastures. Besides, it's not just about
stock buybacks. The price of education has escalated more than health care yet the benefits for many fall well short of the investment. How many people continue to graduate with no marketable skills other than they went to college? Why is there not a push for vocational training? There are a lot of cultural issues in the argument as well.
Fixing healthcare is a start, and will free up resources for additional training.
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How do you propose that we do that?
This isn't a sarcastic response, I agree that HC needs to be fixed. But the ACA was a complete failure, partially because of politics and partially because of poor design.
Enforce the mandate.
...with the death penalty.
Death panels, I knew it!
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Our corporations should engage in paid "vocational" training in their own self interest
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West and Alex sitting in a tree, K-I-S-S-I-N-G. First comes love ....
Proud of you! Evolving makes you a better American.
"Nyah....what's up, Doc?"
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