A Better Way Forward

Business Insider, accessed 1/28/2018

If evidence taken from GiveDirectly's experiments in Kenya with universal basic income, or the New England Complex Systems Institute (NECSI's) paper on tax policy are accurate, it seems there is strong evidence that having more people be able to sustainably support more of their needs and wants, society as a whole is able to be better off.  I introduced a concept I call the "demand potential curve" in an earlier post, which would be a means of estimating how large an economy can grow given the resources available, the desires of people, and what's conceivable to people living in the social unit.  While I support forms of social income redistribution such as universal basic income, it still stands to reason that wealth be more equitably distributed between the "owner" of capital (whomever or whatever that may be) and those who work to produce the wealth of the capital, from the capital.  After all, without labor there would be no capital, and an individual human is only capable of producing so much from their own labor without assistance from other people.  The question that this post proposes an answer to, is how does one ensure that workers are adequately compensated for their efforts?

Current political dialogue as of January 2018 centers on the minimum wage as a means of increasing workers' pay.  The problem with the minimum wage is that it can be cost prohibitive for some businesses, especially smaller ones, to get started due to the added cost of labor.  There's also the problem that it constantly needs to be updated as productivity increases, which takes effort from the government that may or may not be inclined to grant the increase in pay. The proposed answer to the question of how to ensure workers are adequately compensated for their contribution to the economy, from my perspective, is a two-fold policy design that is as follows:

• Joint ownership of the means of production between workers and management outright, and the denial of exclusive ownership rights to an individual or group of individuals who are separate from the actual production of the compan(ies) goods and services.  This is not the same as dictating the management structure within the company (which the workers and managers could negotiate on, if they were joint owners of the company).  This is about providing accountability and inclusion in the wealth and development of companies that could, if executed well by a shrewd business leader, lead to greater overall wealth and productivity through the production of inclusive private, for-profit organizations that have real feedback and buy-in from the people who work the company.
• Proportional payroll that the companies must implement at scaling levels.  The rules would dictate that an individual cannot take more than a certain percentage of the total payroll (inclusive of all executive compensation).  If the boss or executive gets a raise, everyone gets a raise to preserve the proportion of the payroll that gets allocated to the boss or executive.  In this way, smaller companies can allocate enough of their revenue to payroll without having to break the bank, while larger companies (whose proportions would change with the size of their payroll and number of employees, individuals getting smaller percentages of the pie in such a manner that they get an absolute increase in pay as the payroll and size goes up).

The advantage of joint-ownership is that workers get a say and share in the company they're working for, thus limiting the opportunities for caprice by managers, and creating greater buy-in from the workers. Liability will have to be well-defined under law too for lost assets (I'm in favor of having managers and employees sharing the risk across the company, such that no one gets individually sunk if the company goes under, but all have a say that comes second to the investors and lenders).  In this way, companies can become more democratically managed and inclusive, while also adding more value to society and individuals in society.

Proportional payroll would be that everyone in the company can still make more from increased productivity and revenue, while ensuring that not all the wealth gets cornered by one individual or group of individuals.  It's advantage over the minimum wage is its scalability across company sizes, and its permitting new companies to start up without having increased costs.  Raises would still be possible in a company for everyone; it's just that everyone needs a raise when the highest paid employee gets a raise.  This could create a stronger team ethos in private, for-profit organizations that would benefit organizational effectiveness and function.  People would no longer be bound by a dysfunctional, one-way power relationship with their managers and executives.  By thus requiring companies adopt a different set of standards in their corporate by-laws and governance, policy can improve company effectiveness and production without sacrificing crucial efficiency for commercial success.

Thus, this simple two-fold policy change by government at a sufficiently high enough level could bring about significant, positive, and lasting changes if they are instituted and maintained by the government, if the research on it is accurate.  We have evidence that more pro-social and equitable environments are healthier and more desired by more people than anti-social and less equitable ones.  The only thing that's preventing this positive development of humanity are the irrational fears, greed, and lack of imagination from influential elements of our human society.  Bad news, they are not likely to change on their own.  Good news, we can influence and persuade them to change their ways if we have a sufficiently effective resistance to their attempts at tyranny.  Perhaps there is a better way forward.