Job #2:
A Fair Wage and Real Money

 

Linking Wages, Prices and Money
We've been doing it sporadically for 70 years.
We should do it more seriously.

Why, in a supposedly mature, developed economy, do we have to live with an economic cycle of boom-and-bust?

Why can't we just expand slowly and steadily, increasing productivity, producing more and better goods with less work, seeing prices slowly fall and our savings gradually increasing in real value? The simple answer is that there is no fair and just relationship between work and reward. So when the economy expands, workers push up wages, producers push up prices, and inflation halts expansion. Is there a way out? Yes there is.

The concept of Job/Remuneration Evaluation already exists, as it has done for 70 years. It remains in widespread current use, and though there are differing approaches, they are all basically dedicated to measuring the work involved in a job, so to determine the appropriate remuneration. The establishment of a national standard, applicable at all levels and incorporating a maximum remuneration differential between top and bottom earners would create a climate of economic stability, and the industrial peace of social justice.

But pay has value only in terms of its purchasing power, what you can buy with what you earn. If Remuneration Evaluation is to yield its full potential benefits of economic stability and maximum growth without inflation, the public must be able to see an advantage from innovation and productivity-increases. Specifically, increases in individual industrial, and overall national productive efficiency must be reflected, not in ever-greater profits, but in lower prices and the corollary of increased purchasing power and standard of living. If it costs less to make, it should cost less to buy.

Government policy on company taxation can impose, for example, an overall profit ceiling requiring a subsequent monitored and verified reduction in price, returning purchasing power to the consumer. This will in fact benefit companies, by increasing demand, thus reducing the company's unit production costs yet further. And once a climate of industrial peace and stability can be created together with productivity-related price reductions, business and consumers will feel the benefits of stable, sustainable growth.

The longterm effect of productivity maximization reflected in declining prices is negative inflation. Your money buys more each year, not less. This would in fact become a completely normal, natural process. As productivity increases, the work-content decreases, and it becomes possible for goods and services to be produced and offered at lower prices, thus progressively lowering the cost of living.

Evidence can already be seen in the field of computers and other electronics. Buy a computer today, and it is almost guaranteed that in three months' time the price will be lower for a faster machine with more storage space on its hard drive.

This in turn means that as we get older we can look forward to increased purchasing power for our savings. A wild dream? No. This is as it should be, the normal course of events. We should be increasing productivity, producing more and better at less cost. And increased productivity involving less labour should be reflected in lower prices.

Ultimately the idea of living in a society where the cost of living goes down slowly, year by year instead of up, where your savings are not only safe but increase in value, where your domestically produced goods get progressively better and cheaper, where a fair day's pay for a fair day's work in decent conditions is an accepted norm rather than an on-going battle... it may all seem utopian.

But it's possible. And we can begin right now.


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