Equal Pay for ALL Employees
How could such an economy function?
‘Income inequality’ has probably been a topic of discussion for as long as civilization has existed. For sure, it is hotly debated these days.
What about an economy with the same pay for all employees of any business or government? Could such an economy function? For that matter, how could such a thing even be accomplished?
The answer to the first question would undoubtedly have a lot to do with any answer given for the second one. So let’s look at it first.
I have developed a paradigm that would make paying all employees the same amount of money easy to do. In it money would be created as needed to fund a ‘democratically distributed income’ (DDI), i.e., an income for which any (adult) citizen could become eligible. (Any nation on the planet could adopt the paradigm.) That could be accomplished by paying the income to three groups of people: retirees, adults unable to work, and (in some form) employees of businesses and government (with government as an ‘employer of last resort’ providing jobs that paid that income, making those jobs essentially free for government to provide). It can be noted that it would also be as easy as not to pay that income to households, such as paying it to a parent (or legal guardian) in a household with at least one (legally recognized) dependent living there (the same income, regardless of the number of dependents).
The income paid to employees could be a guaranteed minimum income (GMI). In that scenario it would become the pay for people employed in ‘minimum pay positions’. Employers could designate any position to be a ‘minimum pay position’. To be clear, the pay for those employees would be the DDI. It would not come out of the revenue of the employer. Employers would, however, find themselves using benefits (and general working conditions) to compete for people to fill those positions. (Since employees would also be getting benefits, the income for retirees and adults unable to work could be higher than the GMI).
For present purposes, the important point is that such an income could as easily as not be paid to all employees of any business or government — from dishwashers and janitors to CEO’s and heads of state. All employees would have the exact same income. (Presumably, that income would be set higher in that case.)
There could still be varying, unlimited packages of benefits paid for by employers out of the revenue of businesses and government. That would preserve the traditional framework of incentives and rewards.
There could be (eventually?) no benefits. (Presumably, the DDI, which at that point would be the same for all people being paid it, would be set higher still in that case.) Personally, I have no doubt that with the same pay for all employees of any business or government, even with no benefits, non-material incentives/rewards (such as ego, power, social status, etc. — not to mention simply ability/competence) would be entirely sufficient to bring forth the traditional level of striving. So, really, there is no necessary reason to have unequal pay for employees of any business or government.
In this paradigm there would still be other ways of earning an income: any production/selling of any good/service that did not involve having even one employee or being an employee. Besides being ‘singularly self-employed’ that way (which could include being an artist such as a painter or a sculptor — or, say, a handyman working on houses), other possibilities would include, but not be limited to, being in a true partnership (with any number of partners), being in sales (with commissions for pay), or earning royalties from intellectual properties (again, singularly or in partnerships) such as copyrights for books, songs, films, etc. or patents (thus a material incentive for innovation).
As for the functioning of the economy in that scenario, this paradigm would be compatible with the existing economy of any nation on the planet. Structurally, implementing it would not require any changes to any nation’s economic system. The functioning of an economy follows from its institutional structure. That’s because part of that structure consists of the rules governing participation in it. Those rules include not only the existence/extent of private property and the profit motive, but also the participation in the economy of the national government and the banking system, with a the central bank included as part of it.
The point is that, since this paradigm would be structurally/functionally compatible with the existing economy of any nation on the planet, implementing it, even to the point of equal incomes for all employees with no benefits, would mean that the economy would continue to function the same as it does at present — only better. In addition to eliminating unemployment and poverty, environmental sustainability would at that point be systemically guaranteed, while the economy would become as stable as the surface of the moon, where mere footprints in the dust can last forever.
Did I mention that in this paradigm taxes (of all kinds) could be reduced to zero? Money would have to be withdrawn from the economy — perhaps surprisingly, not to prevent price inflation for goods/services, but to keep the prices of assets tethered to incomes and rates of profit. According to ‘Modern Monetary Theory’ (MMT), at present taxes serve that purpose. With no taxes, another mechanism is required. In the mechanism provided in the paradigm no money would be collected from any person or business before it could be used for purchases/investment. Taxes, on the other hand, are based on a ‘prior claim’; they are taken ‘off the top’, before that money can be used for any other purpose. So the mechanism in this paradigm for withdrawing money from the economy is not a tax: it is only money that is ‘left over’ (see linked article). There could be no guarantee that taxes would stay at zero — or for how long — but at least they could be reset at zero.