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June 30, 2012 12:32 PM Age: 7 yrs

Win-Win Versus Winner-Take-All

Category: Larry Checco
Source:  Larry Checco

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The Great Recession—including the housing and stock market collapses of the past decade—wiped out nearly 30 years of net worth gains for the typical middle-class household, according to a recent article in Time magazine.

When adjusted for inflation, the average American household is bringing in less now than it was under Bill Clinton’s presidency.

The Federal Reserve recently told us that median family net worth dropped nearly 40 percent between 2007 and 2010, alone.

Ouch!  Yet the goring may very well continue.

Because it’s also been confirmed that, should anything similar to Republican representative Paul Ryan’s tax reform plan be enacted, more will be asked of those who have the least to give.

Mr. Ryan’s plan—which presidential hopeful Mitt Romney described as “marvelous”—would sharply cut taxes even further for the wealthy and most likely raise taxes on middle-class households, according to the Tax Policy Center.

Which begs the question:  If Mr. Romney is elected in November, when will all this redistribution of wealth to the top—through our tax system—stop?

Texas Hold ‘Em

It appears that the American economy has evolved into a game of Texas Hold ‘Em, a version of poker where the game ends when one player wins all the other players’ money.

That kind of winner-take-all gamesmanship may work for a friendly evening of poker, but as we’re becoming more painfully aware of all the time, it doesn’t work for an economy.

A healthy economy is dynamic and fluid with money constantly moving from hand to hand, company to company, sector to sector—and consumer purchasing power has always been the dynamo of our economy.  Far less now than in the past, however, which is the problem. 

According to the latest Conference Board report, U.S. consumer confidence declined in May for a fourth month, with consumers holding even gloomier views for the future.

Henry Ford had the Answer

This isn’t rocket science folks.

The majority of Americans—that former middle-class stronghold—just don’t have the financial resources, or confidence in the future, to keep up with their spending side of the bargain to keep the economy going while those holding the lion’s share of the nation’s wealth—the Texas Hold ‘Em winners—have no need to expend much because they already own most everything in the way of material goods that they could possibly need.  Besides, they represent a much, much smaller percentage of the population; one out of every 100 of us.

At the same time, corporations are sitting on piles of cash, not wanting to invest or expand their businesses out of concern that there is not enough demand for their products and services.  When they’re not outsourcing jobs overseas, they’re cutting the wages and benefits of their employees here, at home.   As if that’s going to help their situation.

Duh!

Henry Ford had this problem figured out a hundred years ago.  He paid his factory workers $5.00 a day minimum wage—a sum unheard of in his time—so that they could turn around and buy the automobiles he was manufacturing.  It’s such a simple solution when not conflated with all the greed, shortsightedness and politics of our day—and it certainly didn’t hurt Mr. Ford’s bottom line.

Spread the wealth around instead of concentrating it in the hands of people who truly don’t need it.  How?

Well, we could start by insisting that corporations that can afford to pay their execs 200 to 500 times more than their average worker reverse course and raise wages, provide decent benefits and work to restore confidence in the American middle class.

While we’re at it we might insist that millionaire and billionaire hedge fund managers ante up a similar percentage of their earnings in taxes, comparable to the average middle class family, if for no other reason than to humor the rest of us into thinking that we’re all playing on a level field.

In short, we need to revert back to Henry Ford’s win-win approach, instead of the winner-take-all mentality that’s killing our economy—as well as our future, and the future our children are facing.

# # #

Larry Checco is president of Checco Communications. His latest book is entitled Aha! Moments in Brand Management: Commonsense Insights to a Stronger, Healthier Brand. Checco Communications is a consulting firm that specializes in branding. It helps organizations clearly define who they are, what they do, how they do it and, most importantly, why anyone should care enough to support them.. Click here for full bio.

Contents © 2012 by Larry Checco - All Rights Reserved

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