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View Diary: Median U.S. household income fell 5% between 1999 and 2009. Globalization remains the core problem (201 comments)

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  •  indeed, that is a fatal flaw (1+ / 0-)
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    Roger Fox

    One that a market - economy based on wage labor can never solve. On the one hand, every business owner needs his workers to be paid as little as possible to make the most profit.  On the other hand, every business owner needs everyone ELSE'S workers to be paid as much as possible so they can all buy his products.  It's an unsolvable inherent conflict.  

    The problem was best illustrated by a story told about UAW Prez Walter Reuther.  Reuther and Henry Ford, the story goes, were touring a new prototype factory that was completely automated, and replaced all the workers with computerized robots.  As they walked among the whirring robotic arms, Ford turned to Reuther and asked triumphantly, "Well, Walter, how do you plan on getting these robots to go out on strike?"  And Reuther shot back, "Well, Henry, how do YOU plan on getting these robots to buy cars?"

    When I read about the new automated Volt factory, this story was the first thing I thought of.

    The business owners can only make money by reducing wages--but they can only sell products by raising wages. Currently, we are trying to do both at the same time, by having our products manufactured in low-wage havens like China or Cambodia, and SELLING them in high-wage areas like Europe and America.  Alas, as we are now finding, that is an inherently unstable situation--inevitably the wages equalize.

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