GuidoWorld

Capital Idea

July 22, 2007 on 6:34 pm | In General |

So far my series of posts regarding our free market economy hasn’t been highly positive or optimistic. My objections to our current system were plentiful, yet focused on two major areas. One is in how inherently wasteful an economic system based on competition is, and the second problem was in how a profit based system fosters increasing disparity and economic imbalances.

One may point out how it is easier to complain and point our faults than it is to offer viable solutions. The next obvious question would be if I have any great ideas on how to make our system any better, or  do I just feel that we should chuck the whole profit based free enterprise capitalistic system?

The answer to both questions is yes. I do feel our entire system of economics is antiquated and extremely limited. I would go even further and say that just as alchemy became an out dated mode of looking at the real world, so has economics outlived its useful purpose.  I hope some day to pose some of my ideas with what I feel will replace economics, or what will exist which will make the entire realm of economics irrelevant. Yet at this point I feel it would be good to offer an idea which could help tend to some of the flaws and problems I have discussed at length in the previous posts.

In the posts regarding waste and the recycling industry I offered the solution of using glass bottles as a way to reduce the escalating waste and toxic pollution involved in the beverage industry.  Likewise I have a similar common sense solution to the problem of increased disparity of wealth and income.

If, instead of creating laws and incentives which reward publicly traded companies who  maximize  profit margins and thereby increase the gap between the haves and have nots, what if we were to develop a system which rewarded companies for narrowing the disparity.

What if pay raises for government officials were to be based on the economic growth of the bottom 10% of the population? If politicians raises were tied into narrowing the disparity gap, don’t you think they would be motivated to make sure that the wealth and standard of living of the bottom half of society would increase? Wouldn’t they be a better watch dog of exploitative economic practices, and be less influenced by wealthy lobbyists?

Likewise if corporate CEO’s and CFO’s pay raises were dependent on the economic growth of their lowest rung workers, don’t you think they would be motivated to close the gap and raise the standard of living of all workers and citizens? What if we were to pass laws that a CEO of Walmart could only earn in salary, stock and benefits 200 times  that of an entry level employee? And lets say that every three years the gap between CEO and entry level worker had to decrease by 20%?

In such a scenario where the increased wealth and standard of living of the wealthy was dependent on the closing of the disparity between wealthy and poor, society would be viewed as a connected organism. The growth at the top would be dependent on the growth at the bottom. Instead of people competing against each other and the profiteers exploiting the consumer/worker, we would be a team a true community. We would all be working towards creating the highest quality of life and wealth for all members of society.

Is this idea perfect? No!

Does it create a utopia? No!

But I definitely feel it is a far more humane and morally defensible system then what we currently have.

Tomorrow I’ll finish this series of economic oriented posts by posing what I think our current system is headed.

Jim Guido