Vote For Barack Obama Or Fred Smith - Road to the Middle Class

IF YOU VOTE for Sen. Barack Obama (D-IL) maybe he’ll spread the wealth around. He’ll take money from the rich earning more than $250,000 a year and give it to 95 percent of the American people. Obama is a student of Saul Alinsky, who wrote Rules for Radicals. Alinsky’s idea was that you organize poor people to demand justice and their share of the economic pie. You can read all about Obama and community organizing from Stanley Kurtz.

Or you could vote for Fred Smith. Fred Smith is the guy who wrote a paper in business school on the idea of an overnight package business. Today FedEx Corporation owns 300 planes and employs 290,000 people. But back in the day his business school prof didn’t think the idea would work.

Fred Smith is frustrated. He’s built his company on blue collar and community college types, according to an interview with Stephen Moore at the Wall Street Journal. The high flyers won’t go to work at ordinary industrial companies. They want to earn the big bucks in the finance industry. Or they did.

He says that most of FedEx’s first line managers come not from the top flight universities, but out of community colleges and the military. "The top talent has wanted to go to Wall Street."

But if you want to spread the wealth, according to Fred, you want to forget about Obamanomics.

"The politicians deplore the fact that we have a disparity of income," he says, but "the only way to make a blue-collar person earn more is to invest in capital, training and infrastructure. So the more you tax capital, the more you hurt workers." He estimates that about 70% of the return from FedEx capital expenditures is captured by workers in the form of higher wages as their productivity rises.

You mean that the way to help ordinary Americans is not by government spread-the-wealth but by corporate invest-in-capital-training-and-infrastructure? My, that’s radical!

Notice that Fred doesn’t mention education. The way to make a blue-collar person earn more is to invest in capital, training and infrastructure, he says.

Fred Smith deplores the high leverage in the financial industry.

"Rather than in our business where you have to have a dollar of equity for, 10 cents or 15 cents of debt," he explains, "it’s exactly the opposite in the financial sector where you have one dollar of equity for 10, 25, 50 times risk."

The thing about having 1 to 10 debt to equity rather than 10 to 1 like the finance industry is that, when things go south, you get to survive. In today’s economy that has to mean something.

Fred argues that the way to encourage corporations to reduce debt load and increase equity is to tax equity less, starting with lowering the corporate income tax rate from 38 percent down to 25 percent.

Now that would be something.

Sphere: Related Content |

Christopher Chantrill blogs at www.roadtothemiddleclass.com. His Road to the Middle Class is forthcoming.

TAGS

Faith & Purpose

“When we began first to preach these things, the people appeared as awakened from the sleep of ages—they seemed to see for the first time that they were responsible beings...”
Finke, Stark, The Churching of America, 1776-1990

Mutual Aid

In 1911... at least nine million of the 12 million covered by national insurance were already members of voluntary sick pay schemes. A similar proportion were also eligible for medical care.
Green, Reinventing Civil Society

Education

“We have met with families in which for weeks together, not an article of sustenance but potatoes had been used; yet for every child the hard-earned sum was provided to send them to school.”
E. G. West, Education and the State

Living Under Law

Law being too tenuous to rely upon in [Ulster and the Scottish borderlands], people developed patterns of settling differences by personal fighting and family feuds.
Thomas Sowell, Conquests and Cultures

German Philosophy

The primary thing to keep in mind about German and Russian thought since 1800 is that it takes for granted that the Cartesian, Lockean or Humean scientific and philosophical conception of man and nature... has been shown by indisputable evidence to be inadequate.
F.S.C. Northrop, The Meeting of East and West

Knowledge

Inquiry does not start unless there is a problem... It is the problem and its characteristics revealed by analysis which guides one first to the relevant facts and then, once the relevant facts are known, to the relevant hypotheses.
F.S.C. Northrop, The Logic of the Sciences and the Humanities

Chappies

“But I saw a man yesterday who knows a fellow who had it from a chappie that said that Urquhart had been dipping himself a bit recklessly off the deep end.” —Freddy Arbuthnot
Dorothy L. Sayers, Strong Poison

Democratic Capitalism

I mean three systems in one: a predominantly market economy; a polity respectful of the rights of the individual to life, liberty, and the pursuit of happiness; and a system of cultural institutions moved by ideals of liberty and justice for all. In short, three dynamic and converging systems functioning as one: a democratic polity, an economy based on markets and incentives, and a moral-cultural system which is plural and, in the largest sense, liberal.
Michael Novak, The Spirit of Democratic Capitalism

Action

The incentive that impels a man to act is always some uneasiness... But to make a man act [he must have] the expectation that purposeful behavior has the power to remove or at least to alleviate the felt uneasiness.
Ludwig von Mises, Human Action

Churches

[In the] higher Christian churches� they saunter through the liturgy like Mohawks along a string of scaffolding who have long since forgotten their danger. If God were to blast such a service to bits, the congregation would be, I believe, genuinely shocked. But in the low churches you expect it every minute.
Annie Dillard, Holy the Firm

Conversion

“When we received Christ,” Phil added, “all of a sudden we now had a rule book to go by, and when we had problems the preacher was right there to give us the answers.”
James M. Ault, Jr., Spirit and Flesh

Living Law

The recognition and integration of extralegal property rights [in the Homestead Act] was a key element in the United States becoming the most important market economy and producer of capital in the world.
Hernando de Soto, The Mystery of Capital

mysql close 0