McDonald’s: An International Barometer of Capitalism
What’s the Latest Development?
Fast food giant McDonald’s is on track to sell its 300 billionth hamburger soon, but the company’s global dominance has contrasted sharply with its recent attempt to justify paying low wages. “The budgeting advice that the company management recently offered employees…reveals a management that is out of touch with the experience of its workers. It includes estimates for rent and utilities, but it does not mention food, clothing, gas, or child care. It presumes that they will hold a second job and find health insurance costing only $20 a month.”
What’s the Big Idea?
While McDonald’s founder Ray Kroc thought of his achievement as a monument to capitalism, the so-called free market is less a determiner of the company’s finances than many would think. The price of its menu items and what it pays for labor are largely determined by the countries in which the company operates. “Underlying differences in labor markets — as well as factors influencing international exchange rates — help explain why Big Macs are relatively expensive in dollar terms in high-wage countries such as Norway and Switzerland and relatively cheap in low-wage ones like India and China.”
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