- The feeling of American Exceptionalism became ingrained from a consistent increase in prosperity starting in Industrial Revolution through the 1970s.
- Since the 1970s workers have felt the effects of wage stagnation. This is due to globalization, increasing minority/women workforce participation, and productivity gains.
- People still wanted to increase their prosperity even if their pay checks were not getting bigger. So they borrowed and worked longer hours to maintain their standard of living. I don’t completely agree with some of his finer points, but the idea is solid.
- Banks and companies saw increasing profits from the great productivity gains of the digital revolution, which they then lent to consumers (and governments.)
- Consumers became overburden with debt…the crash happened.
While I agree with his snarky historical reasoning about what led up to the housing debacle, he should have tones down the smugness of his presentation. It made his solution seem idealist and hooky. He wants workers to own their companies rather than the capitalists or managers. This might sound like communism, but in is more nuanced than that political philosophy.
American Airlines and parts of Volkswagen Group operate this way. Instead of investors getting rich, the profits flow to the workers instead. Sounds nice, but it is hard to run a large company in this way. There are downsides to this method:
- When a downturn hits (as they always do,) will workers/owners downsize themselves? Unions often can run a struggling company into the ground, what would happen if they also control the purse strings too?
- Workers don’t have the capital to expand without borrowing from bankers, the same people who overextended our economy in the first place.
- Not every company can be run as a flat organization like Valve
Valve(New link.) Someone will still need to make strategic decisions and get paid a lot of money to do it.
Overall, there are some interesting things to be learned here, but how the content is presented makes it not worth the $20.
Update 10/19/2015: Updated link to valve handbook.