Re: Doomsdayer financial analysts and coming second recession?
Min. wage...begin rant.
When I got out of college within a couple of years I started my own business. I was a business major and this was the 1980s and the very definition of business was having a business. The political rhetoric of the Reagan era economics was that you can't go anywhere unless you do it yourself and you grow a business. The concept of working for others, even as a doctor or lawyer, was largely of a bygone era when socialism and the Great Society ruled the day. But from January 1981, all bets were off and everyone seemed to be "making it" whether it was starting a microchip processing plant or a dry cleaning business in the city. You could start a business selling aluminum siding or open a dealership selling sportscars but the whole secret was being your own boss and taking advantage of the huge incentives that were coming for owning a business.
When you are still a student in the dorms and when a roommate's older sibling, not much older than you, comes driving up in a new BMW because they started a new tech business in San Jose, you get very, very hungry to try and be the next Steve Wozniak or Bill Gates. And being in California, 9 times out of 10, the rich kid who started a great high tech business is a college dropout and the average age of such a person is often 19 when they start whether it's Larry, M. Dell, Fanning, Facebook dude, Steve and Steve, or Bill and Paul. The greed sets in, unfortunately, and those days in the 80s and 90s pretty much defined, or redefined the "me" generation. While I was a typical liberal in Northern California, and still am, we were possibly more greedy than any traditional Wall Street business conservative. These were weird times and there was this almost entitlement to having invented (per se) high tech and that we were all going to make it. Even kids working at Burger King were making close to $40K just working the line. What started with a few hundred tech companies grew into more than 3,000 in San Jose alone. The money investors threw into the region pretty much fed this myth and there were skads of companies without locations and without products yet the money kept on flowing. This of course was the recipe for dot.bomb.
But I still had some of my altruistic college beliefs at the inception of my business, but within a short time in my limited experience I got employees and was like any struggling, growing business who believed in paying the least possible to get by, keep employees happy, and keep customers happy. That worked for my small, entrepreneurial world which was me, my employees, and my customers.
But as I saw a few upturns and downturns in the economy and realized that it actually began to affect "me", then I realized that there's more to being a business owner and more to the concept of social responsibility. As a college student, it's easy to sing the praises of social responsibility and helping others and the community, and your state and your nation. But when you are in your 20s and you have to pay people, and you have bills of expenses of growing a business, it's not too uncommon to have all the ideals go out the window.
As I looked at more seasoned pros/business owners in what I did, I saw that some of them gave back to the community and were more liberal than me when it came to social programs and minimum wage. Why?
But now nearly 30 years later I do understand that if you don't have a decent minimum wage, you won't have a large customer base. Though I worked mostly for rich people who were my customers, I also did have some middle class and working class customers. There's no way I could just cut out the working class customers and think I am going to make bills at the end of the month. Some of those working class customers did make minimum wage but still constituted maybe 10-15% percent of my business. What business can sluff off 10-15% percent off the top and still survive? Very, very few.
So in the a macro sense I realized that moves to help the working class, gives me a more secure customer base, and that overall richer base gives me more work, and more work translates into things like more and better Ibanezes!
You can become rich and successful and hoard all the money you made selling your wares and services, but if all the money gets into the hands of entrepreneurs like Bill Gates and Steve Jobs, and there's little left over for the middle and working classes, then you end up with nobody to sell stuff to. And when you run out of customers, you too go down and quicker than you may think. Imagine if unemployment was 12% percent and then imagine if you are Apple Inc trying to sell the next iPhone. It doesn't take that much of a downturn for "luxury" items like the iPhone 6 to take a dive. Sales of stuff like Range Rover SUVs, which are cool but terribly unreliable, go down and wifey is not as likely to buy Jimmy Choo shoes when the economy as a whole is in trouble.
To make a long story short, you can't sustain an economy where too much money is held by too few people. Most of the big wealth made their gains selling to the middle and working classes.
Wealth redistribution as forced by the government? OK with me in this context. Looking at just a few articles and reading propaganda on youtube can make one say it's a conspiracy of the rich alone that created the disparities but I think certain booms and overestimation and greed led to the real reason for income inequality.
And knowing more than a fair share of EAs, CPAs, and tax lawyers, there's still a way to run a business and make it, even in business-unfriendly California. You can pay higher taxes and still make it and if you are wealthy and blame your loss of your money due to Uncle Sam raising your taxes, it's probably a fair chance that it was you, and not Uncle Sam, who spelled your financial doom. Many successful entrepreneurs, who also shape the wealthy in their respective countries, get by quite well and pay far higher taxes than the American business owner does.
Last edited by 63Blazer; 03-06-2015 at 02:37 PM.