Smart Capitalism

Dr. Errington Thompson

by Errington C. Thompson, MD

The 111th Congress wrapped up its lame-duck session just before Christmas. Progressives were all smiles as several important pieces of legislation were passed before the House and Senate adjourned. Don’t Ask, Don’t Tell was an awful piece of legislation that was passed in the Clinton administration: after two years of haggling, this legislated discrimination was repealed.

The New START treaty (which reduces nuclear arms and allows for bilateral inspections) was held hostage by Senate Republicans who are upset about the repeal of Don’t Ask, Don’t Tell. In spite of their temper tantrum, the treaty was ratified – with four votes more than the 67 needed. New food safety legislation was also passed. So, progressives were smiling –but I’m still not happy.

I’m not a curmudgeon by trade. I am a happy person. I have a great wife
and fabulous family. I live in a nice house which is not underwater (I
do not owe more than the house is worth). I live in one of the most
beautiful cities in the world. Yet, I’m still not happy. I’m not sure
that I’m going to be happy until Congress addresses one of the
fundamental problems facing all Americans – joblessness. I see this
almost every day.

I’m not talking about patients who can’t afford their medicines,
although I do see that on occasion, I’m talking about patients that I
see every day. As part of their history, I will ask, what do you do for
living? When patients tell me they’ve been out of work for six months or
12 months or even 18 months, that stops the conversation dead. There
really is nothing you can say that’s going to make that patient feel
better. I offer my condolences, but that isn’t the same as actually
offering them a job.

I’ve been trying to figure out what our problem is in this country. Why
is it okay to have millions of Americans out of work? These Americans
are out of work by no fault of their own. They were laid off. Factories
have been moved overseas or upgraded so they need fewer workers.

Retraining is a myth. Most workers who retrain obtain new jobs at 60-70
percent of their previous wage.

I went rummaging around on the U.S. Census website (www.census.gov). I
came up with the chart shown above, which reveals an ugly truth: wages
have not kept up with other living expenses. The rule of thumb back then
was that you could afford a house that cost four times your annual
earnings: clearly Middle America could afford a median house in 1975
($39,300 is LESS than four times $11,800).

Since then, median income has grown by 300 percent, but median housing
prices have increased by more than 500 percent! So how can the average
Joe afford a house in 2005? Only by taking on massive debt with
low-interest or interest-only, no-money-down mortgages. And we know what
that has led to.

Jobs and wages have me depressed. I am tired of hearing both sides in
Congress giving lip service to jobs and wages. We need more. We need to
give tax breaks to businesses that pay a living wage. We need to end tax
breaks for businesses that ship jobs overseas, and offer them to those
that invest in jobs here at home.

We need to impose tariffs on products that U.S. manufacturers ship
overseas to be assembled in China or Malaysia and reimport to sell here
in the U.S. We need to reward good, pro-American behavior, and penalize
actions and behaviors that hurt American workers.

Demanding good jobs and good wages is not anti-capitalist: it IS
capitalism. Henry Ford was a capitalist, and a very smart one. He
recognized, in 1914, that if he paid his workers $5 a day (substantially
more than the going rate), they could afford to buy his cars. By paying
his employees well, he created a market for his Model T, and his
profits went from $25 million to $57 million just one year later.

It’s time for the CEOs of Dell, Microsoft, Google, Wal-Mart, Sears,
Verizon, and many other corporate giants to become smart capitalists –
to learn from the master. Once any one of these major companies gives
its workers (not their already over-compensated executives) a
significant raise, watch their stock price soar. And watch those workers
spend their money in their communities, generating more jobs and
economic growth – they might even be able to afford their employers’
products. Then, I can put down the Prozac and start smiling again.