Saving the Middle Class: Josh Brown on Corporate Stupidity

As anyone who reads this blog or follows me on Twitter knows, I'm beyond being a fan of Josh Brown and his blog, The Reformed Broker.

I think he's a hero - particularly because the truths he's telling are about his own industry: Financial Services. Most important of all, he gives those of us not in the industry the information we need to make smart decisions, see charlatans for what they are and the knowledge of when to run like the wind.

Well, he did it again over the weekend with his piece: "Forget Fairness, Let's Talk About Stupidity."

Only this time, he takes on what the multi-year corporate decision to hold down wages really means. Not just the dismantling of the middle class - although that's definitely happening. It's that the companies are giving themselves a slow death by not ensuring that employees have enough money to buy the products and services the companies, themselves, are providing.

Short-sighted idiots.

Here's a taste:
The corporations are every bit as vulnerable to the disappearance of the middle class as the middle class is itself. 
They've managed around this issue thus far with an increasing emphasis on exports (now responsible for half of the S&P 500's sales and profits) as well as systemic and legally-sanctioned overseas tax evasion. Consider that Exxon Mobil made $19 billion in profits in 2009 and paid zero Federal income tax (you want to laugh, they actually got a rebate of $256 million). GE earned $14 billion in 2010 and also paid zero in Federal income tax. Microsoft and Hewlett-Packard have each set up offshore subsidiaries which they use as payment conduits so as to keep their profits shielded from the IRS. 
But offshoring of profits and the export of goods and services won't sustain these corporations forever. At a certain point, native companies within the developing world will nudge our adventuring multinationals aside (China's already building its own version of Wall Street).  And when that happens, Corporate America is going to turn around and be horrified by the devastation in its own backyard. 
"Where did all our customers go?" 
Well, you enormous fucking idiots, you fired all your customers. You've spent the last decade or so suppressing wage growth in the name of "creating shareholder value" and now even your shareholder base is disappearing. 
You allowed wages to stagnate for a decade and made every decision you could in the service of nudging the quarterly profit higher, thinking less of the yearly profit and virtually nothing of the long-term viability of your business.
Read the full post here. It's more than worth it.

Thanks, Josh.