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A Capital Idea Part 147: Wages and the Economy
I have often wondered about jewels and precious minerals. For instance, why are there so many jewelry stores in areas where a lot of wealthy people live? Obviously, because these pretty little rocks and minerals are so expensive, that only rich people can afford to buy much of it. But why are they so expensive? I look at the size of some of these multi-thousand dollar little gems, and think it's rather pitiful. We have far larger rocks in my yard, natural ones. I keep bumping into them nearly everytime I need to dig a hole. In fact, I think the underlying granite batholith was exposed in our backyard, until the bank that owned the foreclosed home of the previous owner was ordered to dynamite it and build a retaining wall there instead. If any of you want rocks, you can come to my neighborhood. There is a granite mountain behind our house, one that won't be dynamited. It's a nature preserve -- home to Rattlesnakes, Road Runners, Coyotes, Mountain lions, Bobcats, Scorpions, Gophers, Rabbits, Kangaroo Rats and various rats and mice, and flowers such as Golden Hills and Matillaha (spelling?) Poppies, among other things. One can even find some pretty Mica ("fool's gold") and Quartz there. Also, consider how easily jewelry can be lost. My mother had a special wedding ring which had Diamonds from both of my grandmothers plus the one my father gave her. I say had, because now, she "can't find it." I wonder how valuable "can't find it" is on the market? Perhaps someday, some lucky person will find one of those golden circles that people like to put on their fingers, with 3 of those shiny little clear rocks on top of it, and say, "Whoopee! I found something pretty; maybe it's worth something." Gems are pretty, but I don't think they can beat the beauty of living flowers, and hey, you know, dried flowers can be preserved too, or one can take photos of flowers, and these flowery things don't cost thousands of dollars.
Having established that some things such as jewelry is overpriced, the next step is how wages can actually be too high as well as too low, for an optimal economy. Consider that, as we well know, certain professions seem to be grossly overpaid, especially in the United States. What effect does that have on the economy? When rich people buy stuff, they are willing to pay far more for it, generally speaking, than would a person of modest means. This causes inflation and thus continues the never-ending cycle of wage wars and "keeping up with the Joneses." Essentially, I am making another argument for greater wage parity here.
Another issue regarding wages, is the utility of a person's work. If a person is being paid to produce or sell a product that makes people sick, and ultimately kills them, that isn't of much value to society, is it? But we wouldn't be so stupid as to do that, would we? Of course we would. Cigarettes, alcohol, and various other harmful or potentially harmful drugs are a huge "market." How about people who pay themselves great amounts of money for moving other people's money around and risking it on investments, ultimately probably losing more money for their clients than they "make?" These "banskters" and financial planners, etc. are the people who have done the most, in fact, to damage the world economy. Perhaps our new slogan should be "make love, not money." And of course, the U.S. is paying huge sums of money to occupy other nations and "root out terrorists," or alternatively, just drop bombs by remote control on places where our government thinks somebody it doesn't like happens to be. Somehow, it doesn't seem to occur to people in positions of power in our government, that this is not the way to build a respectful, loving, peaceful world.
To conceptualize the possibilities for wage versus economy better, let us look at them one by one:
1. Paying everybody enormous amounts of money for doing unproductive work. One economic model -- I forget who it is by -- suggests that an economy would be just as good if we pay people for digging a hole and then refilling it, over and over, as it would if we paid people for actually doing something that helps us. While this worker would have lots of exercise at the job, I don't think it's really going to help us build a better world. What is our perpetual shoveler supposed to spend all those wages on? Perhaps paying another person to endlessly turn pegs all day, as in Leon Festinger's famous cognitive dissonance experiment? Having money is no use, if there is nothing worthwhile to spend it on;
2. The flip side of the endless shoveling model, is the Venus Project model, in which there is tremendous abundance of goods, and nobody needs any money. This could also be termed the "Star Trek" model. We may be heading there eventually, but that would require some means of creating tremendous abundance which is freely available to everybody, such as "Star Trek's" replicator machines. As it is, we need "scorecards" of some sort, and it is important to reward good, productive behavior while punishing poor (counterproductive) behavior. Sadly, our hypercompetitive system does a horrendous job of "keeping score;"
3. The hypercompetitive "free market" system which we have, which rewards people according to "the market value" of their work. Ultimately, it's something of a "winner takes all" model. The abstraction of money and thus value, which take place, serve to exacerbate differences in pay -- by allowing those who control the money to essentially use it as a weapon -- and the accumulation of wealth beyond what is needed for immediate consumption, consequently is exacerbated over time to create enormous intergenerational disparities in wealth -- in other words, the "rich class" and the "poor class" of society. The richest in most cases, continue to exploit their wealth advantage over the rest of us, even the not-quite-as-rich, ultimately rigging the legal and political system, until there is not much left but a few ultra wealthy people and a bunch of "wage slaves," and those jobless people who conservatives so love to label as "parasites," while the real parasites feast on the fruits of others' labor. We are clearly well down this path already, but calls for change are increasing as the damage intensifies and the likelihood of even greater perils become ever clearer;
4. A well-regulated system in which labor which results in some product or service of worth is valued, where wages are set to be not too low or too high, for instance (minimum wages being an example; maximum wages being a never-used possibility). This system could include government price regulation (done with the participation and consent of the public), for example, as well as prohibition of counterproductive or non-productive occupations. Our present system includes some features of regulation, but doesn't go nearly far enough. An increasingly regulated economic system is probably the next step in the cultural evolution of the economy. Also a part of a well-regulated system, are social "safety nets" such as welfare programs, social security and medicare. However, these need to be expanded ("medicare for all" for example) and government involvement to improve our economy increased (infrastructure building projects, for instance);
5. A Resource-Based Economy in which government involvement at various levels still exists, and where the fair and equitable allocation of resources is emphasized. Citizens in good standing may be guaranteed certain resources such as at least adequate and hopefully much better than adequate, housing, food and health care. Different forms of money may be used specifically for each of these different functions. Upper and lower limits on the allocation of money and resources, along with laws against resource abuse or hoarding, and the use of different forms of money for different types of resources, should prevent the excessive accumulation of wealth. Essentially, this system will actually balance wages with the economy in a real and meaningful way. To be in good standing, citizens will need to do something of value to society, for a certain amount of time per week, for example, such as 20 hours per week. This will expand the meaning of the word, "work" so that people will be freed, at least to an extent, to pursue productive activities of their choosing, thus unleashing much of humanity's creative, loving, and intellectual potential in ways never done before. This I see as the next step after a really well-regulated economic system.
The final step in the cutural evolution of economic models would probably be the "Star Trek" model, but that is far, far in our future, perhaps being carried out on some distant, idyllic planet. Even in the "Star Trek" model, I believe there will be a need for good, democratic government and a legal system to help regulate peoples' behavior in prosocial ways.