You've felt it your entire life, that there's something wrong with the world.  You don't know what it is, but it's there, like a splinter in your mind, driving you mad.

Friday, July 12, 2013

Wealth reform


It isn’t laziness that has caused worldwide poverty, it is the disenfranchisement of millions through the perpetuation of corporate greed.  Even the mega-corporation of Ben & Jerry’s, makers of the popular ice cream, once had a 5 to 1 board member ruling that the CEO would be limited to a 5 to 1 ratio of earnings over his lowest paid worker, but the company ditched this practice when they couldn’t find anyone to replace Ben Cohen, the CEO that worked for just $81,000 a year. -- source


Idiots!  Any excellent idea, poorly executed, will fail.  That doesn't mean the idea is a failure.

The flaw in this idea is the 5 to 1 ratio.  What ratios will make this idea succeed, and what ratio is optimal for all involved?

If Ben worked for $81K per year, then the lowest paid worker was getting $16.2K per year, or about minimum wage ($8.10/hour).

What if the ratio had been set to 50 to 1?  Then Ben would make $405/hour, or $810K per year.  Can't find a CEO that will work for that?  BS, you can find lots of them.  Even I would do it.  I've run my own company for 27 years, every one of them in the black.

Maybe the CEO you want requires a million dollars a year.  Set the starting salary for the lowest paid employees at $10/hour, and you've got your million dollar CEO, along with some happier employees.

50 to 1 is probably not the optimal ratio, but it clearly works better than 5 to 1.  A much higher ratio is probably as poor a choice as the 5 to 1 ratio.  Google's CEO takes home an obscene $101 million every year.  That's a ratio of 6234 to 1.

So what is the optimal ratio that will satisfy all employees and still allow a business to thrive?  And if humans are so smart, why haven't we solved this very simple economics problem?  And don't give me any of that "free market" BS.  There are no free markets wherever sociopaths are running the show, and that's exactly what we've got.  At the very least, we need to place limits on the people at the top of the hierarchy.  A 100 to 1 ratio seems like a good place to start.  And if those at the top want more money?  They will have to create the rising tide that lifts all boats.  Isn't that really what they are paid to do anyway?

What if the whole world were modeled in the same way, and the richest among us could not be more than 100 times richer than the poorest among us?  Can you imagine the improvements that would bring?


No comments:

Post a Comment


About Me