The real solution is to just do a UBI. If this is not an obvious call sign of how the efficiencies of recent decades are obsoleting human labor in general I don't know what is. Redistribute that money so consumers have spending power again.
Already in service industries, it seems like current companies that focus on employees more have higher reputations overall, and often have higher growth despite higher expenses on employees. Costco and Trader Joe's vs. Wal-Mart is the frequently cited example of this sort of case scenario, but there are plenty of others.
Unfortunately, I'm not sure that a large portion of the investor class is really great for evaluating long-term value, and too focused on the quarter end. (Quite a number of the better service oriented companies are not public owned.)
For the same reason, I'll be honest, while UBI is another way around increasing automation, I just can't see the same short-term oriented investor class fully getting behind this concept, at this time.
The last time we had a similar scenario (the Gilded Age), it took a lot of unrest for things to get better for the manufacturing worker class. Unfortunately I wonder if a similar future will happen for the service worker class if something doesn't change...
If I'm at a self-service gas station using the self-service pump and paying at the self-service machine, I really don't care if there's good service from the person behind the counter inside. I certainly wouldn't want to pay more for better service from a person I don't ever interact with.
A sentiment I agree with, but if the recent Yelp call center fiasco is any evidence, I don't find it terribly likely.
Let's say it: it took the Russian Revolution to get the Western owning classes sufficiently scared that they decided to buy wholesale into Bismarckism and social-democracy.
In the short-run, yes. In the long run, perhaps not. From retention to training to quality issues, it can make sense to pay more.
Universal basic income is a bandaid on the fact that the short-term, market-driven focus of capitalism under-values people and seems to be creating a winner take all game that will eventually end the game itself, if balance isn't restored.
I'm not opposed to UBI – it may well be the best option at this point, but I'd also like to figure out how to incentivize the system to look at long-term consequences as well. (Though, I recognize I'm far from the first down this line of thought).
A recent experience when trying to get a personal mortgage as a company director underscored this:
"Your profits are down! Your business must be failing!!"
"No, we opted to re-invest some of the substantial amount of cash we're sitting on, and therefore took a hit to profitability this year so as to be more profitable in the future."
"So your business is failing?"
Consider this at a grand scale and you understand the incentives within which corporations operate. Everything is about the quarterly earnings report.
Look at a typical main street business: retailer, car dealership, restaurant, etc. There is no "R&D". Profits scale linearly with revenue; it's not so crazy to jump from "profit is down" to "business is failing".
In fact, the very definition of a "high-technology company" is one that reinvests a large amount of revenue into development. The exact threshold varies, but 20-30% and most people agree you're into "high tech" land. For comparison, consumer product goods companies like P&G spend some 10% of their revenue on marketing/advertising. http://adage.com/article/special-report-pg-at-175/procter-ga...
The real issue is that "Business" doesn't yet understand the economics of software companies. They have no tangible assets, their cash cycles are vastly different from most other companies, and they grow in discontinuous, sharp, nonlinear ways. You'll see this bias all over the economy if you look.
"Silicon Valley companies are overhyped, THEY HAVE NO PROFITS"
"That company is failing, it's going under"
Amazon is the grand counterexample, look at how much of a head-scratcher that company is to Wall Street to get an idea of how puzzling this is to Joe Business Guy.
No, but people do tend to be. We seem to be wired to value near-term gains much more strongly than long-term gains -- http://www.behavioraleconomics.com/mini-encyclopedia-of-be/t...
This then drives us to create the systems that focus on near-term rewards – like the quarterly reporting and equities that can be traded at a moment's notice, etc. etc.
If you let the masses take charge, you're going to a get a more wild, dynamic, unpredictable outcome. In the stock market this new "democracy" manifests as extremely short hold times, in the political arena, as fringe candidates that party elites would never have let win the primaries, had they been in charge.
I, for one, hold stocks for a long time, and hope companies do optimize for the long term, but I realize I may be in the minority.
We talk about how the tech industry has a problem with employer / employee loyalty where you should expect to work for a half dozen companies by 35, but even moreso investors have zero loyalty whatsoever, and will jump at the first sign of declining growth.
So entrepreneurship is only half the battle - we also need to incentivize more Dells that either revert from public to private or just get more new business startups that aren't looking to just cash out and sink the business.
This implies retention. It also implies a certain level of quality or the agreement fails. So your long run argument falls flat.
Yes, you can pay more to get more quality. This is not at odds with wanting you to work for as little as you will agree to.
Depends on how consolidated the industry has been, and whether the firms that are left can collude or silently set norms to put ceilings on pay and quality.
I'm actually not sure this is true. From a short term perspective, perhaps. But longer term it is more beneficial for everyone if there is more money to be spent.
Most of the companies I've worked for I would never buy their product: either because I didn't need it, or because I knew its true quality, or both.
I think it could be a terrible PR move. If you effectively pay your employees less and justify by giving them discounts. A program that begins with good intentions could end badly. Especially if the program is conceived in an era of high profits. In low profits, management makes different decisions. Also, you often get new management.
I meant you run into problems when you end up effectively paying them less and justifying via a larger discount.
Management could end up doing this gradually as times get tough. For example, a company announces lay offs and pay cuts, but softens the blow with a larger discount.
I guess I'm recommending caution. I would avoid making a discount a major part of employee compensation. A worker deciding to apply for jobs at Walmart and Costco could end up weighing a better health plan against a higher discount on basic goods. That seems problematic to me.
Henry Ford realized just how wrong this is almost a hundred years ago. He realized that if you don't pay your workers enough they you won't have demand, and growth is driven by demand. It's a feedback loop. This is why having so much wealth concentrated at the top is so bad, it stifles growth. You end up with a stagnant middle ages type economy.