EQUITABLE COMPENSATION:

So, I have identified one major reason for an imminent, steady decline in the quality of life in the U.S. “The Bell Curve of Finance”. And while the absence between writing that and this is lengthy I apologize, both were written at the same time.

The other major factor that contributes, if not equally then substantially, is the disparity of wealth and income. At a time when $10 to $15 an hour minimum wage is resisted and outright fought, we have CEO’s making $200 million dollars per year. We are talking about someone making $31,000 a year at a minimum wage of $15 per hr. We all know that this amount of income is unlivable as a single income to sustain any sort of family. Thus, the two income households but even then, with daycare expenses it’s difficult in light of today’s spiraling medical and household expenses. We need to solve this and NO SOCIALISM IS NOT THE ANSWER, but a radical approach is. We need to break the cycle of the rich getting richer at a pace that not only eclipses the middle and lower classes but dwarfs it. I won’t go into how in 1950 the average wage at a company was X and the top management at the company made X times 7 and how now the average has gone up to X times 50 or 150. We have read this for years and some European Countries have even talked about instituting limitations. In the U.S. we clamor about it periodically but never act or even try to act.

The necessary approach would be to cap the maximum a person could earn, say at $2 or 3 million dollars a year. Any amount above that would be taxed at 100%. The exception to that would be any income received from investments and / or the sale of assets which would be taxed at normal capital gains rates. Any income from the job like stock options, housing, travel etc would be counted as income under this plan.

The thought would be that companies would reinvest these savings in higher salaries for all employees, reinvest in the company to expand and innovate or higher profits which would be taxed and put back into the economy because we know if the government has a dollar, they try to spend two. It would be the “Executive Stimulus”. Our politicians cut taxes or rebate $’s to stimulate the economy well this would have similar results on a micro level. Companies have said that they need mega dollars to attract talent and talent would leave. Well all U.S. companies would be on the same level so I guess if someone wanted to move to a different country they could. But how much would such a cap interfere with lifestyle and this would not blunt an aggressive or smart investor who could still accumulate great wealth while running a company. It would maybe allow CEO’s to look longer term for their companies since they wouldn’t be looking for the next step up the mega food chain. This would allow them to make good decision not just opportune decisions. Hopefully shareholders would want to keep good leaders and not push simply for profit return but trust that long term successes had value.

This is not socialism, it doesn’t cap or dictate a certain lifestyle, and people would be just as competitive to have more than their neighbor. Individual success and accumulation would be alive and well. This concept only spreads the wealth in a wider trajectory and 2 or 3 million dollars a year is not a trifle amount. Just as the out of proportion “Bell Curve of Finance” is distorting and reducing prosperity and thus “happiness” so is the disproportion of wealth that is encouraged with mega income to some individuals. Since we do not want to eliminate aging and welcome medical advancement that foster longevity, we need to attack the crisis where we can. Just as we looked to flatten the curve of covid-19 we need to flatten the wealth pyramid. We do not want to eliminate it like socialism but flatten it to allow a large middle class and a reduced lower class. You cannot ever eliminate the poor, make everyone financially secure and happy but maybe we should take small steps and try.

The Bell Curve of Finance

I have a cynical theory that in society prosperity is tied to the ability of the populous to add value. By this I mean what and how much an individual creates in dollars and cents with their efforts and actions. Thus an infant creates none and basically takes as obviously been the case forever. "Old People", also once retired or disabled with limited activity add much less than their earlier version. So on either end of the spectrum "a bell" you have for lack of a better word "takers" with the middle populated with "givers". Now let me say neither are good or bad, just simply what they are in this exercise. No one would look at a sweet infant as bad or not consider its future additions to society or your elderly grandmother as bad. Nor Jared Kushner as especially good as he occupies a spot in the middle of the bell. Everyone has or will make contributions to society. But over the last several decades we have reached a tipping point. The advent of medical advancements to longevity has distorted the bell curve of prosperity and advancement. (Now this is important: this is only one reason that monetary advance will slow greatly). My hypothesis is that the "golden years" will kill the "golden age". This phenomenon will only grow and accelerate as the distortion of the bell curve increases, which as of now it will most certainly. Let me say this is not some fatalistic theory that promotes euthanasia or any other sinister underlying agenda only an observation. I think the crisis was really hurtled forward a couple of decades ago when we were told and convinced that one should retire as soon as possible. People saw 55 as a goal to start living the "good life". One could say the doom of Y2K was not a computer crisis but a subtle entrenchment that we need to plan our exit from adding value as soon as possible. I will follow over the next weeks with my thoughts on solutions: simple, complicated, radical and old fashion to address this issue.