But is it Fair?

A blogger I have been discussing fair taxation with, appears to have a position that the Capitalistic system is unfair. Since True Capitalism is based upon the oldest form of enterprise known to man, called the “Barter System”, I thought it worthwhile to discuss it in a post.

When you go to the store and buy a can of beans for $2.10, is the price that you paid “fair?” Yes, it must be, because you paid it.

Lets examine the transaction. You voted with your dollars that you would rather have the can of beans than the $2.10. That is what establishes the value of the can of beans. If enough people don’t buy the can of beans, the price will be lowered until enough people vote for that price.

When you show up to ask for a job, you listen to the work required and then usually you are told that the job either pays “x” amount or you are told it is based upon experience.

Now, you can either just accept their offer, if one is made, or you can ask for more. The trick is to know how to ask for more without it sounding like a demand. Usually I say something like this, “I was hoping for a little more…say “x” amount?” It never hurts to ask, but most people feel too intimidated. Only ask if the job is offered, but don’t hesitate to ask. The two most advantageous times a person is in a good barter position for their wages is “going in, and going out.”

There are two components of a “free market” society. Capital, (money), and Labor, (Workers.) One of these two components is more valuable than the other, and the one that is more valuable is Capital. So, why is Capital more valuable than Labor?

Let’s suppose you want to go into business for your self. You usually need a few things to get started. First, you need something to sell, as every business sells something, be it service or a product.

The next thing you need is usually “seed” money. This is money to invest in your “sunk costs” or “float costs.” Sunk Costs are those that you have to make in order to have a business. They are things such as Office Furniture, phones, etc.

Float Costs are the amount of money you need to have as a “cushion” or “emergency” funds, such as when you don’t have enough sales yet to pay all of your bills, because the “fixed costs”, things like house payment, car payment, etc. that are always there, need to be paid even when you are loosing money. And most new businesses fail, so the owner gets to loose all or most of his investment. That fact also makes the Capital side more valuable.

So, now how do you get this initial money to start your business? You save up, borrow, or seek additional investors.

If you saved up so that you can have 100% of the business, then you have deprived yourself of current gratification for future gratification. Since this is a difficult task for most people, it is the main reason that people get ahead in life. They learn the value of saving and the multitudes of benefits it brings.

In any case, funding is the difficult part. There are always people who will volunteer to work for you at whatever they feel is a fair wage. Will a President of a Company work for $10.00 per hour? No. Will a Finance Officer work for $10.00 per hour? No. Each position has an established “market value” based upon the single most important item in a Laborers toolbox, and it is called his “skill set.”

This is the most important part of this post for all to understand, and that is this, “The only Job Security anyone has that works for others, is his “skill set.”

A person should be trying to figure out what he or she can learn or what inherent skill he or she has that will always be valuable to an employer. Also becoming more versatile also makes you more valuable.

What makes a persons “wage” fair is the amount of effort that the person applying for the job has spent in improving his or her skill set. That perceived skill set is what the business is bartering for. The more effort put into your skill set, the more you can ask for during the bartering session.

Back in the 1980’s I was offered a Job as a “C” Programmer for $25,000.00 and I said that I was hoping for $40,000.00 and they said, “O.K.” In my mind I said to myself, wow, I should have said $50,000.00, but needless to say, I was very, very, happy.

My goal was to eventually make a six-figure income. I asked around how could I do that and was told in my profession, A Software Engineer, I needed to go into consulting. It would need to be as an owner or work for a consulting company.

I eventually felt I was skilled enough that I applied to many consulting firms and eventually was offered a job. I told my boss that I didn’t want to work there unless I was guaranteed the ability to earn six-figures was available. He said that he had two other Software Engineers working there with that income. I asked him for the criteria, and he told me. Initially I turned down the job because it was only $35.00 per hour, and he kept upping the offer $5.00 per hour at a time, until I could no longer refuse. This was in the early 1990’s.

So, there you have it. A socialist will say that the Capitalist is living off the fruits of others, but in reality, a business is made up of a team and each has something to offer to reach the goal of the team. Some contributors offer more to the enterprise and therefore they rightfully get more in return. The ones that have more invested also have more to loose.

Is the Capitalist society a zero sum principal? No. If people produce goods with their labor, then sell it; they have increased the wealth of the nation. That is why the GNP goes up most years. In a zero sum society, a person only gets richer by making someone else poorer and the GNP will always be the same. It is easy to prove that it doesn’t happen in a Capitalist Society, but I will leave that to another post.

My philosophy is to have a really great profit sharing plan so that the employees can do well when the company does well, and when the company doesn’t do well, then it doesn’t pay any bonuses. This gets the employees to do their best to help contribute to the bottom line as it directly benefits them.

So, what is a “fair” wage? It is whatever two consenting adults decide is fair, which is usually somewhere around market value for the given skill set.

Want more money? Make your skill set more valuable to your employer. Simple.

Is Capitalism fair? You bet it is. See Matt 20: 1-13 as an example of Christ saying essentially this very fact! When the laborers found out that some were paid more for less work, he basically says, "Your deal is your deal, and someone else’s deal is their deal. You were happy when you made the deal, or else you would not have made it, so be happy now."