I recently walked out of an instructing job because of the owner of the flight school. He was exactly the opposite of what you described. He pays his employees lower than any flight school in the area, charges more for services than any flight school in the area, and is willing to loose a customer who would spend a ton of money there long term over a few dollars in a minor dispute. Customers are fed up with this attitude as well and I'm seeing more and more of them at my new flight school. They pay better, charge less, and have been in business for more than 30 years.
Customers are fed up with cost-cutting measures such as outsourced tech help to India (I personally won't buy another Dell because of this). Some companies that have outsourced services like this are bringing them back in-house stateside because the costs they have cut are not enough to offset the loss of revenue.
Another great example, the US automakers. They blame healthcare and union labor for the increased costs. As a result they lay off millions and outsource tons of work to Mexico. Toyota on the other hand, makes many of their cars in the US, pays union employees well, and is making a profit while people are paying a premium for their product. Maybe US auto makers are ashamed of the fact that they've been making the same inefficient, poorly constructed product for years. Gas prices have nearly trippled, and they're still trying to operate like it's 1997. Sounds strikingly similiar to the industry we're in.
I'm a strong believer in the old saying that if you take care of your people they take care of you. Maybe Herb was on to something...