[ by Larry Goldfarb ]

A Macabre Notion

I woke up this morning to the news that Wall Street was expecting a bad week.  The commentator noted that financial sector earnings were expected to be below expectations as investors were anticipating more hiring – and higher costs  – to meet demand.  After the melt down, banks were able to respond without hiring.  Huh?  Was he saying hiring was hurting our country’s economy?  I thought to myself, what a macabre notion.

Background

After the NASDAQ meltdown in 2000, I adopted what I’ll call the "we are all in this together" mentality.  It goes like this: it’s hard to enjoy your life when you know there are people suffering for things that they themselves did not cause.  There began to be a spate of corporate shutdowns and publicized hardships that resonated with me.  9/11 added to the misery and it seemed like past certainty had given way to present and future misery.  Friends and I used to speak about the economy built on the back of the home equity loan.  At the same time, the rich got a lot richer.  For instance, it used to be that a couple hundred million dollars got you on the pages of the Forbes 100 richest Americans.  Now it’s well over a billion.  The trickle-down effect espoused by conservatives was clearly not trickling down to the poor and middle class..

Well, in 2008, all the accumulated greed and misery came together, and the bubble burst.  Debris spread far and wide, and we are still trying to pick it up.  While the world changed, the paradigm remains.  The rich are rich and everybody else is poor.  The middle class has seemed to disappear.  The world has become a more difficult place to live.  Prices keep going up, but salaries are going down.  Solution to problems, particularly in Washington, typically takes the form of blaming someone as opposed to taking responsibility and fixing it.  

The Reality of the Situation

I believed the commentator was espousing a traditional view that companies are producers and consumers are on their own.  Their well-being is related to factors beyond "our control" like trade deficits and interest rates;  that might have been the case 20 years ago, but today, not only are countries globally interconnected, but so are companies and consumers.  Who are getting mortgages and investing?  The same workers who are getting pay decreases or getting laid off.  It’s a paradigm that has not received much air time but one that I think can save the American worker and in effect change the workplace dynamic.  The richer the American worker, the more goods he buys.  When GE builds a plant in South America, it may produce lower cost goods but who buys most of their consumer goods?  Americans.  Moreover, when GE sells a jet engine to an airline, it will only buy it if people are filling their seats.  The US is the biggest market in the world, by far.  In short, a company hiring a worker is not only potentially improving their product, but adding a customer.  Perhaps that's why Starbucks is so popular.  A lot of their employees, who have good benefits and appear to make a living wage, buy their coffee.  Using this logic, when hiring costs go up, Wall Street should in fact rejoice.  It may mean the economy is about to grow rapidly.