The vicious cycle.

William Pfaff has an article in the International Herald Tribune which takes a close look at how modern capitalism has changed over the last century, and the abuse of moral values. A quick look at his thesis :

A century ago, Ford’s $5 a day wage created the middle class; by paying a wage adequate to enable his workers to buy his products if they chose to do so, it triggered off a virtuous cycle of wealth generation.

In the modern day, Corporate CEOs get enormous rewards - the justification being that market forces are at play, and there’s a need to reward performance. And there’s a trickle-down effect that equalises wages.

However, the reality is that labor is the easiest cost to cut, and with the ease of global outsourcing, large sections of the population are heading downwards economically. For the overseas worker, the benefit lasts only until the next cheaper source is identified. And for the corporation, outsourcing subsidises future competition.

While controversial, and complex, there’s one core truth - there are inequalities, and far too little is being done to address those inequalities.

It’s easy to talk about income inequalities in the US - that the top 20% of the population takes almost half the income, while the bottom 40% make do with 10%. It sounds almost obscene.

So here’s another statistic. 5% of the world’s population (the US) consumes over 25% of the world’s oil. While 33% of the population(China and India) make do with 10% of the consumption.

It’s easier to compare with the guy ahead. Instead of the guys behind.

Written by 2cworth on May 30th, 2006 with no comments.
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