Henry Ford paid his workers shockingly high wages for the time, which enabled them to purchase the cars they built. A mass consumer economy ensued. Given the s

Henry Ford paid his workers shockingly high wages for the time, which enabled them to purchase the cars they built. A mass consumer economy ensued. Given the state of consumer indebtedness now, I think our economy is actually underperforming because there is not enough demand due to low wages. The problem with Fordism is that if you are a manager, there are strong incentives for your firm to defect from paying high wages. If you are the only firm doing this, the consumer economy still hums and you have larger margins. If all the firms do this however, consumers' spending power diminishes over time. Once the tide has turned, defection becomes a matter of survival as high wage firms become uncompetitive. Someone like Jeff Bezos has enough market power and technology to turn the tide again like Henry Ford. But he chooses not to.