Desperate situations, the optimistic philosophy goes, are supposed to be blessings in disguise, that jar people into innovative practices that aren’t merely solutions to the crisis at hand, but are broader shifts that improve life in general. I’m trying to find the blessing here. newyorker/talk/financial/2013/08/12/130812ta_talk_surowiecki In this week’s New Yorker, economics writer James Surowiecki has a column about the intractable problem at the center of the U.S. economy. If you want to increase wages at the country’s largest employers, retail and fast-food chains, he writes: “You have to get consumers to accept significantly higher, and steadily rising prices. After decades in which we’ve grown used to cheap stuff, that won’t be easy.” Surowiecki explains the context: 50 years ago, the country’s biggest employers, manufacturers such as GM, Ford, and Bethlehem Steel, paid good wages. Today, he points out, the country’s biggest employers—retailers and fast-food chains—pay the least. The result is a low-wage nation. The other difference between today’s big employers and those from the past: 50 years ago, the top employers had healthy profit margins. Today’s biggest employers do not; in addition to low wages, the chief aspect of the fast-food business model is low-prices and slim margins. They make their money off sales volume—plus the low pay and skimpy benefits. In order to rebuild the middle class, the country’s biggest employers, such as Walmart, Target, and McDonald’s, would have to increase workers’ salaries dramatically. But this would capsize the dominant American business model. In other words, they’d have to start increasing their profit margins too by raising their prices. I think we’re starting to get to the blessing in disguise part. The way the Walmarts and Targets and Mickey Ds of the world can raise their prices is buy increasing the actual value of what they sell. Selling higher quality products will reverberate through the economy, changing the efficiency MO at the backend from something that now means cutting corners into something that means enhancing the production process. Increasing the value of what we make, sell, and buy will ultimately increase the value of how we live—spreading wealth rather than siphoning it. Quality is the common denominator between consumers and workers: quality goods = quality wages. Bonus: Well-made products are built to share, which will get people thinking about collective consumption for big cost drivers such as transportation. Acknowledging that we want higher quality all around will force consumers to come up with smarter ways to pay for it.
Posted on: Thu, 15 Aug 2013 01:12:15 +0000