Monday, August 19, 2019

Economics - ownership vs labor

Consider this scenario: a bicycle courier risks their life and works their ass off for close to minimum wage.  The owners of the internet-based courier company get rich. The venture capital company that takes the company public makes a handsome profit.  Shareholders  get a decent return (at least for awhile?).  What's wrong with the picture?  Who's taking the most risk?  Who's getting the most reward?

Unfortunately, I have no formal training in economics, but as a citizen I've been thinking about some of the various theories; from simple - raising minimum wage, to Universal Basic Income, to Modern Monetary Theory.  

To be honest, based on my experiences in Australia, I'm not a fan of raising minimum wage.  I've worked plenty of minimum wage jobs in the US - sometimes it was ok, sometimes it was just treading water and getting more into debt.  And though Universal Basic Income has some appeal, I think it would be far more beneficial to change the nature of the corporation and shareholding.  Why should a person who invests only money get a far greater return on their investment than a person who risks their entire life in a dangerous occupation?  

That said, I am not in favor of uneducated employees making decisions that well-educated business managers need to make.  So the answer isn't necessarily full-on worker-ownership and worker-management, but the answer is definitely more in the direction of shared investment return, when the investment on the part of some is their life, while the investment of others is merely financial.  I'm not even advocating for equal investment return. What I'm advocating for is that as long as there are dividends and ownership of any given enterprise, those who have poured their blood into that endeavor - including the workers - should be a part of the revenue sharing.   Of course many corporations fall by the wayside, but some may have made a handsome salary and even tidy profit before the downfall, while the only thing others received were wages and unemployment.  I'm not advocating for more equal wages, though the salary differentials have become absurd - I'm just saying that rather than all of that money going to financiers and managers, a portion of that needs to be shifted downward; not even necessarily into pay, but into long-term equity.

In some ways, these notions reduce the role of government in redistributing wealth.  Rather than arbitrary increases in minimum wage, or taxing to redistribute to the poor, this is a restructuring of the framework of a corporation, so that all inputs are given value that is appropriate.  Of course, while we're at it we might consider the environmental costs of obtaining raw materials, or industries that do not contain and recycle harmful byproducts.  But for now, the discussion is about ownership and labor, and the value of human life. 

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