by Jack Waymire
It used to be America had a strong middle class that powered the biggest, most robust economy in the world. But, recent studies show we are rapidly deteriorating into a second-class country with haves and have-nots. Our new role model will be one of the South American countries that still use a medieval model for the distribution of income and wealth.
A lot has been written about the greed that permeates Wall Street and the narcissists who run Wall Street companies. Investors are appalled, but they cannot do anything about it. And, Washington is not any better. Wall Street interests control the politicians who make the rules that govern the financial services industry. This is like your local police being in bed with the mafia.
Let’s face facts. Wall Street and Washington are not going to voluntarily change their ways and there is no investor or voter group that is powerful enough to create change. But, there may be a way to get our middle class back that would be acceptable to Wall Street and Washington.
Right now executives that run major companies are fixated on growing revenues, profits, and earnings per share. If they are successful, they make millions. Wall Street analysts who produce the opinions that drive share prices are fixated on earnings per share growth rates.
Company executives are faced with a monumental conflict of interest. Do they do what is best for themselves and shareholders by maximizing profits? Or, do they do what is best for the American public that they are supposed to serve? Unfortunately, companies abuse customers the same way Wall Street abuses investors. This is learned behavior and they are learning from each other.
If companies served the American people, the way JFK wanted them to, they could take on responsibility for rebuilding the middle class by importing higher paying jobs back into the U.S. Executive bonuses would be 50% based on profitability and 50% based on job creation. But, not minimum wage jobs that keep people on public assistance. These would be jobs that produce adequate income so there is no need for assistance.
Increasing the minimum wage is a laudable endeavor. But, saving the middle class is even more important. It would start in Washington, but Wall Street would have to support any initiative that impacts the price/earnings ratio of a company. There is already a good example for this paradigm. Google is extremely profitable and it creates a lot of new jobs. It should be recognized as much for creating jobs as it is for generating massive profits and creating 25 year old millionaires.
There should be a website that documents job creation by American companies. The website would also publish financial data and share prices. Companies that are growing create the most jobs. But, the jobs have to be in America. Everybody wins when we have full employment and people are paid a living wage. Adding a quarter to the cost of a hamburger is not the end of world. The end of our world occurs when we can no longer afford a burger at any price.
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