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Suffering financially? Blame one man

Suffering financially? Blame one man.

Don’t believe me? Read on, and bear in mind the oft used phrases ‘Market Forces’, and ‘This year America - Next year Britain’.

Between 1945 and 1973, the average wage of the American man and woman rose 94%; a figure in line with productivity. However, around 1971/72, a corporate lawyer issued a memo to the American Chamber of Commerce. The memo warned of imminent danger to the American free enterprise system. The call was for business to challenge the power and policy trends of Government.

The man responsible for the revolutionary cry was Lewis F. Powell Jr., previously an Associate Justice of the Supreme Court.

An insight to Powell’s correspondence can be ascertained through the following data. First of all, as a direct result of said memorandum, the C.E.O.s of America’s largest corporations formed the Business Roundtable, now the most powerful lobby in North America. Additionally, the National Independent Federation of Small Businesses grew from 300 members to 600,000, within a decade.

To really appreciate the possible persuasive power of these bodies, it should be noted that the number of lobbyists in America in the following decade grew from 175 to 2445. Today, business lobbyists and their advocates now outnumber members of Congress by 130 to 1.

Business and resultant necessary P.R. personnel in Washington now number 67,000 individuals, all with the sole purpose of furthering the interests of business through politicians – 24/7.

What are the tangible results of Powell’s’ memorandum?

In the thirty years prior to 2011, American productivity rose by 80%, yet worker’s hourly remuneration rose by only 10%. In the same period, C.E.O.s of companies were given stock options to align their interests with those of stockholders. So, any C.E.O with half a brain would figure that his interest lay in fattening that bottom line. If shareholders benefitted enormously, so did the C.E.O. By 1980 30% of C.E.O.s were receiving stock option grants – pay for performance.

Industry and Government were now creating big winners (industry leaders) and sorry losers (endusers/purchasers).

Whether a direct result of Lewis’s battle cry, or not, it would be a fool who denied that the last 30 years have produced an alarming change in banking, industrial, and commercial attitude to their customers. Greed and indifference are the order of the day.

The end-user has no recourse to the attitudes and actions of large companies. Example: End users switching utility companies rarely see a difference in the long run.

Now, a more graphic example. The manager of a football team I support was given shares in the club. The manager spent sparsely on new players (no one of note), and the supporters (45,000 average gate) followed a mediocre team that languished at the bottom of the Premier league. Result, the supporter base shrunk, and before long it was not a case of the manager not wanting to spend; more the board had no money to spend.

The team was relegated.

Good business is when all concerned prosper.

Word Count: 498

Revell Cornell

Sources: Hedric Smith’s ‘Timeline of America’

Wikipedia

This was posted in Bdaily's Members' News section by Revell Cornell .