In 1980, there was a Ford plant in Pico Rivera, CA. `I was working for Hadley Auto Transport at the time in their rail yard, loading and unloading cars and trucks. `I bring up 1980 because two things happened that year that made a real difference. `
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One, Ford decided to build the 1980 Thunderbird - a terrible car - I mean truly a waste of the earth`s resources, but in line with the rest of their products outside some trucks. `The union was so disgusted with that car there was serious talk of a wildcat strike. `(A strike by line workers without the support of leadership.) ` No one wanted to build that car and ask people to spend hard earned money for it outside of Ford management. `So, brand loyalty when down the drain. `Before that, if you`d driven a Datsun into that parking lot there was a decent chance you`d be taking the bus home. `After that, no one was happy, even the people buying the other cars but what were we supposed to do? `Waste our money on cars we knew weren`t good? `Quality is always, always, always a management decision, Ford`s decision cost them loyalty from everyone. `
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Second, Ronald Reagan was elected and in the name of supply side economics, he got the top tax rate cut from 74% to 28%. `This gave people in that tax bracket an immense amount of extra income, which they used to build factories where they could make the highest return. `Ford came to the union and said, they`d like to modernize the plant and keep building cars in Pico Rivera, but they had workers in other places who`d work for a $1.25 an hour, so make a counter offer. `Obviously, there was no hope. `The factory and a lot of others left this country on the wave of investment money created by the Reagan tax cuts. `That`s what de-industrialized America and of course, tanked the US economy. `Now of course, Reagan did a stimulus program by way of huge defence spending - the Ford plant re-opened as a Northrup Grumman plant for awhile - but that was unsustainable and shut down a again a few years later. `Reagan tripled the national debt trying to save the economy but they way they spent the money did nothing for the country itself, didn`t better educate a work force, didn`t modernize transportation, didn`t rebuild and modernize energy production and distribution, etc. so the effect was short term and probably led to Bush Sr. being a one term President.
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The point of all this is - an economy has to have a strong middle class with money to spend - the middle class creates the jobs by creating demand for goods and services. `You can supply the best detail shop ever built, with the best machines, best trained staff, best and most efficient water and power and if there aren`t enough people with the money to use your service, you`re wasting your time. `
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Robert
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