The richest woman in the world warned her fellow countrymen they are becoming too expensive to employ. Mining tycoon Gina Rinehart said it is becoming too costly for multinational companies who could hire workers for two dollars a day in Africa.
So let’s do a comparison here between two cities. These comparisons always illustrate well...
City Number One
In City 1, labor is earning $70 per hour, management is earning two to three times that amount, ownership class is earning four to five times what labor is earning, and shareholders are earning about 5% per year on what they invested.
Fewer goods are produced and, of course, they are very, very expensive. Because fewer goods are produced, the market is smaller, and the focus is more on quality than quantity. People tend to have more spare time, and, subsequently, as with all societies where there is an excess of free time and money, there is a higher level of creativity.
There isn’t an intense gap between the rich and the poor. In fact, there’s quite a lot of intermingling and the society is more humane as a result. This is also because the higher wage for labor enables everybody to get a decent education so ignorance and incompetence tend to be very limited.
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Companies generally are doing well. Their executives are doing extremely well. But the people whose labor creates the products are left behind. For years, the Center on Policy Initiatives has analyzed annual income and poverty data from the Census Bureau and reported that income inequality is increasing locally.
CEO and Worker Gap in Pay Explained
City Number Two
In City 2, labor is paid $5 per hour, management is earning forty to fifty times that, ownership is earning 380 times that, and shareholding is more about gambling than actual investment in business (Only 25% of share market movement is about investment. The rest is buying and selling within micro-minutes and is done by computers.)
In this model, laborers are not able to afford nutritious food, solid education, or to live in anything other than substandard housing. As the years pass and medical expenses, schooling expenses for children, and various incidents and accidents come their way, they sink deeper and deeper into poverty. As a result of the fact that they have to work long hours (twelve to sixteen hours per day) in order to earn more money, their health becomes worse and worse. Without the funds to adequately address their medical condition, many tend to die younger than they would have had they been a member of the upper classes.
An enormous schism occurs between the very rich and the very poor. Increasingly, the management classes tend to be paid less and less as the ownership class seeks to make even more profits. The ownership class keeps complaining that profits need to be increased each quarter otherwise capitalism isn’t working. Internationally, the middle classes become fewer and fewer in number.
As the people in this model become more and more poor, they also become less educated, less informed, and more inclined to criminal activity as they see movies showing the wealth of the super rich, and they resent it. There is no chance of upward mobility as education has become very expensive and so they’re stuck. Increasingly, more and more people fall into this poverty trap as the very rich do everything possible to make more and more ‘profits.’
Eventually, all that is left is a third world model in which there are only two classes - the very rich and the very poor. In other words, a model of tyranny and extreme poverty has been reached.
A Living Wage instead of a Minimum Wage
Income for the top 20 percent has increased since the 1970s while income for the bottom 80 percent declined. In the 1970s the top 1 percent received 8 percent of total income while today they receive 18 percent. During the same period income for the bottom 20 percent had decreased 30 percent.
Chief executives at some of the nation's largest companies earned an average of $12.9 million in total pay last year -- 380 times more than a typical American worker, according to the AFL-CIO.
CEO Salaries Become Sore Issue in Labor Disputes
Is this a simplistic model?
Simplistic, yes. It’s more complex than this. However, it is the bare bones of what is happening internationally. Wealth is once more gravitating upwards - something our forebears for the last two or three hundred years fought vigorously against.
When labor is underpaid, it enables what should have been paid to them to gravitate towards the ownership class. Unless you believe that the ownership class has an ethical mandate to live at the expense of the working class and that the consequences of them doing that doesn’t matter, then it is past time, we, the people began to tell the owner classes that their excessive profits will not be permitted to continue any longer.
Economic Inequality is one of Occupy's Issues
What is the Worth of Labor?
We are going to have to rethink labor and its worth for several reasons. The first is that with the increase in machinery, the role of labor is vanishing rapidly. The second is that most people have been educated to believe that those who are 'more capable' have the moral right to make as much money as they like - even when it's harming 80% of humanity. So firmly is this belief now entrenched that they are willing to live third rate lives so that the few can live at the expense of the many. A third reason is that it is believed that the only people entitled to share in the harvest are those that have worked for it. However, as machinery takes up the jobs, this is no longer the same ethical equation as it used to be. In days of old, if some didn't work, it affected the quantity of food harvested. That is no longer so. Today the big ethical questions is this: If there isn't sufficient work for everybody, are people still entitled to live like human beings - fed and housed. And is it feasible that the system allows everybody to work for a few months per year but divides the harvest between everybody...
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