Sunday, July 22, 2007

Wage reform: Part 2 – "Basically" you and Bill Gates are the same

There will defiantly be a part 3. Feel free to ask questions or post comments, but there will certainly be issues left unresolved.

Every single human being needs three things to survive. We were all taught in school that the basic needs were "food, shelter, and clothing". Close. We need food and clean drinkable water. We need a way to stay at an acceptable body temperature. The use of clothing, shelter, or a combination of both can do this. God knows I have spent many of weekends without clothing and I survived. Shelter has its own set of basic necessities. We need protection from the elements. Weather those elements be human or natural threats in nature. These are the things we need to ensure we will see the sun rise tomorrow.

In the United States, we have "extended basic necessities." (I hope I am making up this term.) These are need required because we live in an industrialized, free market, urbanized, well populated society. These are needs that if you live on a sail boat wondering the ocean you do not require. If you live on a couple acre plot of land in Croatia with your own garden and your own livestock, your own wood lands, you don’t need "extended basic needs". However, If you live in the United States on a small couple acre plot of land, with all the same fixin’s, you still need to pay property tax. That requires money. So you will have to produce more then you need to survive. Most of us are born into more settled and even more urban areas. We don’t have that plot of land to begin with, in order to get it we need to get money. So much for "Freedom".

The basic necessities plus those extended basic necessities equal the minimum life requirements of a citizen. Theses are the least you could get by with weather you are Bill Gates, or Bill "The Janitor". Both Bills need about 1500 calories to sustain life. I think that is a Big Mac. (Oops, did I say "Bill Gates" and "Mac" in the same paragraph?) so that is about $2 a day in most places. Of course somebody is going to have to bring it to you because getting it would throw the whole figure off. They both could live under a bridge with a pair of old cloths they got from the trash. They will have to get a stick to defend themselves from any other Bills that might want to bring them harm.

That would be the unrealistic "basic necessities". In this country you need a form of transportation. That also mean you are paying for energy costs. You need a house, a way to regulate the heat in it. Communication is as much a part of allowing upward mobility promised by The Constitution as freedom of speech is. In other words, you are going to need a phone in this society. Television is also another part of that communication requirement. Doesn’t have to be cable, but if your government is trying to tell you that you need to leave your shelter because an F5 hurricane is coming your way, you need to have one. Transportation, Communication, and energy are really the three major categories required in this society. Like Basic needs, there is a measurable bottom minimal level. Like with nutritional requirements that you must have all of these things. They require money to pay for them.

The best way to tell if a attribute is one of these extended necessities is if it fits this simple formula. It requires money to get it, and it is required to get money. You need to be able to call and/ or get called by an employer in order to get a job and make money. You need to make money in order to buy a phone and pay for phone service to make a call. You need a form of transportation to get to work. You need work in order to get money to pay for transportation.

So back to the "Bills". There is a certain amount of money that each requires for a minimal standard of living. Many economist and politicians refer to this as a "living wage". It is the same amount for both "Bill's" as it is for everybody that is a member of this society. When you start adding family members they fall into one of two categories. They are either liabilities, or they are assets to the family’s minimal standard of living. Bill "The Janitor" makes only a few dollars more, or in the advent of credit, even less then the required amount of money to sustain his family’s life. Bill Gates makes many times more then his families standard. He has the option of buying many thing that are not necessities. But they are both alike in the fact that they need to cover the basics first.

Now that we have established Bill and Bill need to buy many of the same things, lets go back to our example of H. Lee Scott and his cashier, lets call her Jane. She deserves a name. (I know this should have been part of the differences post, but it just fit better here.) If Jane buys a gallon of gas, it cost her $3.20. If Mr. Scott buys a gallon of gas it costs him (Provided he isn’t using a company gas card or just pulling up to one of his stations.) $3.20. The same right? No not really. As stated in Part 1 Scott makes $1057 an hour compared to Jane’s $8.05. It cost Scott 1.25 seconds to Jane’s about 1/3rd of an hour. That is if you don’t take her taxes away. Life is another measurable and guaranteed quality. Time spent going to work to make money to meet basic needs, is time not spent being "free". It is also time not spent educating, creating, or promoting a citizen to a higher class.

There are other things that have the same price no matter how rich you are. A 40 oz of malt liqueur, a membership to a fitness club, a gallon of milk, a DUI, a VIP dance at the million dollar strip club, a dinner at Friday’s with your wife, a loaf of bread, a car, a bus ticket, a lottery ticket, a pack of Newport’s, a medical bill to have your liver replaced, a 5th of John Daniels, or a credit hour to Yale. (Now a passing grade might cost different people different money at different colleges. You will have to ask George Jr. about that though.) Especially the VIP dances, that pack of Newport’s, and the milk are necessary. They all have the same price, but the "cost" to each buyer is different. It still will be under a minimum percentage economy, but not that much different.

In a free market economy governed by a democracy, the goal is to let aspire to whatever heights of financial success as their hard work, intelligence, creativity, and luck will let them. The citizens are empowered to control their own destiny. There is no single source of financial strength that could be corrupted. In contrast a "controlled" or "Command" market economy governed by a dictator or a monarchy the people's wealth and opportunity is repressed by the limits of a narrow power basin. It is easily corrupted. A problem in the US is that less the 2% of the citizens control 80% of the wealth, and for all the reason I explained why money is required for freedom, an understanding that the 2% are controlling the freedom on the other 98%, the US has become a command economy. That is the first cousin to dictatorship. The difference between the two situation is that there may be no malice intent by those who have rose into the elite. It is just the way things are.

Understand, I am not talking about making it even. I think that 3% would be a nice goal in the future. That kind of change could not be imposed without adverse effect over night. Maybe at first we start out with an .08% requirement. We might even have to put a minimum or living wage bottom in effect until the system "settles down". At 3% that would mean a CEO making $1 million, would be paying its employees $30,000 a year. Jane is not going to be sitting on the USS H. Lee Yacht sipping martini’s with him. It will mean that Jane will be able to put her son through community college and still keep her sanity as she juggles the other bills. There are so many other benefits to the economy it could and probably will be another post all together.

A minimum percentage will be an avenue that brings top and the bottom income earners together. It will do it however without destroying the virtues that have made America great. Hard work and perseverance will still yield a way happier life style then those who just choose to be normal. Excellence will still be rewarded. As a matter of fact it will bring back some of the lost innocence that was once the driving force behind that greatness. It will make America more American. It will free some of those innovative free thinkers from the chains of just trying to sustain life. It will give them time to build greatness again. The result will allow the legislative branch to put reins on the economy. They will be able to really stimulate growth by adjusting the percentage of disparity. It will also strengthen the US dollar so much that we will truly be a super power once again.

Please Post any questions or comments Here

"Society comprises two classes: those who have more food than appetite, and those who have more appetite than food." ~Sébastien-Roch Nicholas de Chamfort, Maximes

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