An idea I heard once just cross my mind as being a possible solution to American woe’s. It’s a little socialist, but at the same time… it has it’s merits.
Assume for the moment that everyone has “some” value. Let’s pretend for the moment that this value ranges on a scale from 1 to 10. Where 1 is your highschool dropout working at McDonalds, and 10 is your Super Smart CEO that’s running a Fortune 500 company. Now lets assume for the moment, that this is roughly how American paychecks look:
1 – 20,000 (this is high)
2 – 30,000
3 – 40,000
4 – 50,000
5 – 65,000
6 – 90,000
7 – 120,000
8 – 250,000
9 – 500,000
10 – 1,000,000
Thanks to the way capitalism works, the more specialized you are, and the more in demand you are, the more (in theory) you can get paid. From that perspective its great. However, over time (given the other axiom that money breeds money), the system tends to get top heavy. So the people on top tend to stay the people on top, and the people on the bottom tend to stay on the bottom. The people in the middle however, are the ones always in danger of falling off or moving up. This is the wonderful “Middle Class” that Obama issued exectutive orders to try to help today.
I’m not sure though that the middle class needs protection, so much as it simply needs more members.
I heard a story once from Ben and Jerry’s about how they had some sort of policy in place about the owners only being able to be paid 3 or 8 times (I can’t remember) the amount the lowest paid position was paid per year. I just looked up their annual report, and it looks like that policy may be long gone (they show a 16 to 1 ratio now)… But the concept seems like a rather good one to me to establish the middle class again… Imagine this:
Our government (or President) gets a law in place that says something like “The top paid employee at a company can never make more than 10 times that of the least paid employee per year”. Using the model above, that would mean the millionaire CEO’s out there would suddenly not be getting the full extent of their check. It would also mean they would have to do something with that money… and so in theory, to get paid more, they would have to pay the little people more… If they add 1 dollar per hour to their little people’s checks, they can add 10 dollars per hours to theirs… Seems like a pretty decent tradeoff to me…
So what would this do:
- Shrink both the upper and lower class
- Encourage more jobs (think about it… if your have all this extra money from not paying inflated benefits and salaries… you would also have the option to pay MORE people)
- In theory, increase people’s investments (because investments would be the only way to make money independent of a normal job)
- Prevent to many people from getting “set for life”
If you aren’t happy with 10 (or don’t think 10 is fair… perhaps try 15 or 20… anything is better than the scale we operate on now.)…
That said, I’m not a fan of government stepping in and doing anything… But if the middle class is a win for everyone overall, then I think it’s something that should be considered as opposed to your simple “create more government jobs” and “lower the tax burden.”
— end rant of ideas for the moment —