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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: combjelly who wrote (325722)	2/12/2007 8:35:22 PM
From: TimF	Read Replies (1) \| Respond to of 1576323

Significantly growing your total volume just from increasing sales to your own employees, and doing so by increasing their wages is a rather neat, and rather rare, perhaps non-existent trick. Generally your increasing your costs (and if you don't increase the price your at least forgoing a possible decrease in price). Your only adding to the buying power of a fraction of your market (usually a small fraction), and that additional buying power will not normally be mostly used to buy your products. You might do better with discounts for your employees, than at least the effect additional buying power will only be for your product. Or better yet just lower prices for everyone, so that the effective additional buying power for everyone will be for your products. Its not totally clear that Fords personnel costs went up, but its likely that they did. He may have had other advantages from the more skilled employees, for example more total production without more fixed investment, or higher quality which can increase demand and reduce waste. Of course he saved on training costs, and higher productivity may have allowed for fewer employees, so its possible that his labor costs wouldn't have gone up, but even if they didn't the whole "Ford grew his company by paying his employee's enough to buy Fords" idea is pretty silly for the other reasons I mentioned. I'm not saying that paying his employees more didn't help him grow the company, only that the supposed mechanism is really bogus.