Since 2008 the World has lived difficult times. Until now Europe has been in a recession and US has been struggling. The several US programs like QEs have resulted in mixed economic results. On one hand the stock market has been beating records much helped by the liquidity that QEs offered, but that didn’t exactly translated in improving the living of the average American.
In Europe, a socialism driven continent, the pressure for increasing the minimum wage faces the mighty force of reality, where wages increase will even make the living of the SMEs more difficult, and only accelerate the migration of the multinationals for other geographies.
Nevertheless, around 27% of global wealth is in the hands of only 404 persons. And that imbalance only tends to increase.
Make no mistake, I’m a strong defender or meritocracy and only feel that socialism ideas only make the world worst. By socialism ideas I refer to the fact that we protect the ones that don’t (like to ) work through big unemployment welfare. By socialism I also mean redistributing wealth from the wealthiest to the poorest, just because the poor is poor (without putting forward policies to identify the ones that are just lazy).
However, building huge stock piles of money in the hands of a very few doesn’t do a lot for economy. Actually it hurts economy, since a poor middle class spends less thus pressuring economy into recession.
In a era where a single company, like Apple, has enough cash to bailout Portugal, Cyprus and Ireland together the question remains. For the Americans reader we could talk about California debt.
Thus, the socialists are coming up with the idea of increasing the minimum wage in Europe, but that is a “kicking the can” alternative. That is a winning lottery ticket for the lazy workers, and an huge headache for companies that are just going by.
But it is reasonable for Apple to earn 2.3 million per employee and only paying them 100K? To those employees who actually contribute to such wealth, the vast majority of wealth is blocked.
I have a suggestion that can address an effective wealth distribution, and still manage well meritocracy:
a) Each time a company distributes dividends, a 20% amount should be distributed by the employees.
b) The amount should be distributed evenly, ie, each employee will receive the same amount.
Also noting that:
c) If an employee is lazy or incompetent, the management should have already fired that employee.
d) If a company distributes dividends it means that it can. And a company should only distribute dividends if that doesn’t hinder future growth or sustainability.
The policies in a) and b) will yield the results depicted below. Please note that results are for the medium, long term. Unfortunately our leaders aren’t able to play a multi round game. They don’t understand that increasing the tax on cars’ purchases will only reduce the number of cars bought, thus the overall tax collected cannot be extrapolated from the previous year’s cars purchases’ numbers.
The following results will yield:
1) The companies doing well will distribute 20% of dividends to the employees. That means that employees would be rewarded by their effort as a collective team, thus providing positive feedback and increasing team spirit.
2) A large amount of money would be reintroduced in the economy for each family. There is a limited amount of steaks that a person can eat per meal (in my case, one). Even billionaires will not be able to eat more than two or three steaks per meal which makes absolutely irrelevant if they have the ability to eat one thousand steaks per meal.
3) Like Larry Page states, he has a problem knowing how to invest Google huge cash ord. He wants to do it, he just doesn’t know how to do it the best way. By deploying money to the families, we are actually contributing to increase the entrepreneur’s spirit.
4) Derived from b) (each employee gets the same), we are actually actively contributing to moving people out of poverty. That means those families will be able to have more kids (reducing aging problem in some countries), have more sanitary conditions (reduce money spent in healthcare), increasing kids grades (parents can afford better study conditions), less pollution (affording houses better built) and eating better and doing more exercise.
5) Derived from a), the policy will not hurt already struggling companies, that require a lower employees’ wage to deal with fierce competition in the market place. For SMEs and large companies in stress, distributing dividends should not be an option. Thus policy a) will not have the devastating effects that increasing the minimum wage will have.
6) Finally, policies a) and b) are done at micro-economy level. The only level where you can actually control meritocracy. Because a company is small and has visible owners, the employees that get the reward are those that management deem fit to get it, otherwise they shouldn’t be working at that company.
7) Because the employee dividend is equal to everyone, management can’t manipulate numbers. And because it is a percentage of dividends, if management or shareholders try to get money out of the companies, employees will get some of it too.
In short, making every single employee a virtual and automatic shareholder will only benefit the whole economy. For sure are more middle class persons are, the more iPhones are sold.
