[ IMAGE ] Trickle-Down Economics Illustrated.
by Kasia Babis
(Published in The Nib, 2020-09-24)
This image illustrates how a "Trickle-Down" economy really works. Sure, the workers get their pittance, but the bulk of the profits goes to everyone else -- those who rarely (if ever) set foot inside the workers' facilities.
If this was a worker-owned corporation instead, the flow of money would stop at the workers and be re-invested in the company.
Instead, the workers are treated like prostitutes with dozens of pimps waiting for their share of the earnings.
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But what about the money that went in a loop into the factory and machines the workers are using? That image seems take no account as to where the buildings and machines came from and they just materialise. Factories and kitting one out with machines is VERY expensive and someone or some people risked a lot of money to do it. They often have to share the burden and hence the name "shares"
Guess who benefits?
Hint: Not the former employees who have been replaced by robots...
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But you just assumed again that the money to buy a factory and all the machines just appears out of nowhere.
We have a good website in the UK called "companies house". It lists all the financials of all registered companies in the UK. If you look at a lot of medium to large companies, you'll notice that they spend the majority of their turnover on staff pay. The company I work for spends about 85% on staff pay. It still leaves the company directors being paid hundreds of thousands a year but if you were to completely get rid of the bosses and take ALL of their income and spend it on the staff, staff members who were once on £10 an hour now get paid a whopping..........£11.50. It's not really a life changing amount.
A lot of the leftover is reinvested into the company too. If a company has replaced it's workforce then the chances are the job was unstable and low paid anyway. Replacing a workforce with automated machines means that those jobs much have been VERY basic. It's similar to how hundreds of coal stokers were replaced with a fuel pump in ships.
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Last edited by aghogday on 24 Sep 2020, 12:18 pm, edited 1 time in total.
Now, what if that extra £3,120 per year per worker was put back into the system as scholarships, grants, and ordinary skills training, instead of into a single payment on the CEO's new Rolls?
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Now, what if that extra £3,120 per year per worker was put back into the system as scholarships, grants, and ordinary skills training, instead of into a single payment on the CEO's new Rolls?
If my boss didn't have his high end Range Rover I'm pretty sure I wouldn't even get the £10 an hour anymore yet alone part of his pay. I would be getting nothing because he decided not to start the business in the first place if he gets less than 15%. You'll need to be stark raving bonkers to start off a company and get a poultry return. If you are aware of the original source of the money needed to start off a business then why do you have an issue with the directors getting a half decent return?
Would you part with 100k of your own money to start of a company and be OK with all the profits not even going to you?
(I know... "Dream on, Fnord"...)
However, if I wanted to own $100k worth of shares in the company, I should also expect the company to buy back those shares once it was able to. This is not much different from a direct loan, but it allows me to take part in the actual business decisions.
Capitalists rely on the interest they charge in their investments/loans, which is a form of usury, and to which I object.
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Companies that require manpower need to employ people. Such companies are not able to operate without the manpower. Regardless as to who injected the capital to start up the company.
Personally, If i were able to, I would introduce a new law that forced all companies to share x amount of all profit made to all employee's equally.
This i feel is fairer as well as good for economy and government.
This strategy is good for the economy as it increases the amount of disposable income for the lower earners, who are most likely to spend their extra disposable income, compared to the scenario where super high earners earning all the extra profit, in such cases, an extra million may make very little difference to such a person.
Increasing disposable income for low earners who spend their extra income helps keep currency in circulation which is essential to keep the economy buoyant and preventing the economy from shrinking and stagnating, which causes economic crisis and recessions.
This strategy may slow down progress for big companies, as they will have less profit to use for expansion etc.
But that perhaps also is a good thing, as it stops big corporates from taking over the world and setting up monopolies and oligopolies.
The increased disposable income for lower earners also has a positive knock on effect for governments as the increase when made across the board, inevitably increases the revenue that is paid in income tax.
This is a significant observation, as lower earners, when given an increase in income inevitably will then pay an increase
in tax, which will likely add to a great dealer amount on revenue from tax for the government, that if the profit is taken by the super high earners and used for other purposes that tax is not paid on, such as re-investment in the company through assets (i.e. new cars, new property etc.), which is accounted for in the companies non-taxable aspects of their accounts, especially if such big companies do their banking in big off shore tax havens (such as Jersey, the island that i live on).
A small increase in tax revenue across the board for most of the population is sure to generate pleasing results for the governments, which can then be used to pay for the great services that we get provided for us as citizens of such governments. Perhaps even an increase of such tax based revenue may even allow the governments to restructure their tax infrastructure to allow for even a reduction in tax rates (due to the extra capital that is generated by this increase).
However, like i said earlier the most important aspect of the profit sharing law strategy is to prevent economic crisis and recessions, as i think everyone can agree, no one enjoys a economic crisis or a recession.
The Profit Share Law can also be used as a safe guard no matter what type of government is in power.
I.e. You don't have to be a socialist democrat or communist to enjoy economic stability.
Profit share law also gives the incentive for workers to work hard, as the more profit a company makes, the more they get rewarded in profit.
If such a profit share scheme was put into place with Amazon.com, all the minimum wage earners would have been rewarded for their hard labour, which would have been far more fair than Jeff Bezo's getting all the money and setting up his global monopoly.
Some of the workers that work for amazon may have then been able to use their profit share income to start up their own business, or pay for college etc. Which would have also benefited them as individuals as well as the economy.
Jeff Bezo's still wins, but make x % less. The impact of Mr Bezo making x % less, would unlikely change his life that much, although he may not have made the worlds richest man place, he would also then be more respected by his employees and the world instead of being thought of the modern day equal to a slave master douche bag.
Long life Profit Sharing Law! Which, due to the stupidity and greed of businessmen and politicians, is unlikely to happen.
Instead we will enjoy economic crisis after economic crisis, recession after recession and multi millions if not billions will face injustice on a daily basis.
This is the way of this world at present. Who knows what will happen when automated systems and robots take over from employed manpower, i can see a global elite committing genocide over the masses of population who would be made redundant and surplus to requirements.
Such things exist, they have not been banned in the U.S. A better question might be how they are faring vs the "traditional" corporate structure and why aren't they more popular.
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Behold! we are not bound for ever to the circles of the world, and beyond them is more than memory, Farewell!
Such things exist, they have not been banned in the U.S. A better question might be how they are faring vs the "traditional" corporate structure and why aren't they more popular.
Capitalism allows for such a company to exists and joint ownership is encouraged. The problem with these types of companies is how do they even start when nobody is willing to put their head above the parapets to begin? Lets start with a modestly small company that costs 1 million for the factory and machines and employs 10 people. Can you imagine 10 people getting together and each spending 100k of their own money to start it? I can't. I can only imagine the chaos that will ensue with so many conflicts of interest. Lets be very unrealistic and assume this small building can somehow fit 100 people in it and give them all full time jobs, can you imagine each of those people parting with a mere 10k each? Again I can't.
There is also the issue of making important decisions for the company, who is liable if anything goes wrong, how are large miltimillion engineering projects managed and the complete legal chaos having a company owned equally by each worker will cause. Imagine just trying to take out a bank loan or insurance for the company or where they will even begin to manufacture a ship superstructure. Unless they make REALLY simple and small products they seem destined to fail.
(I know... "Dream on, Fnord"...)
However, if I wanted to own $100k worth of shares in the company, I should also expect the company to buy back those shares once it was able to. This is not much different from a direct loan, but it allows me to take part in the actual business decisions.
Capitalists rely on the interest they charge in their investments/loans, which is a form of usury, and to which I object.
I meant paltry haha. You mean make it mandatory for company directors to sell their shares once they pay off all their loans for setting up a business?
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