Rule of Ten: How to rid capitalism of huge inequalties
|Rule of Ten for greater Equality|
Do you know?
That Chief Executives of many corporations make in a month what the lowest paid worker of the same organization would make in a life time (Thirty to forty years of work life)
With the legally binding rule of ten in place, it becomes in the interest of company bosses to increase minimum wages within their organizations to the extent possible, or their own wages cannot be increased, while making it impossible for them to collect huge and obscene compensations. All that is required is a simple law that prescribes the maximum permissible ratio between the highest and lowest compensation that any organization or corporation may have.
Recently there has been a hue and cry about the high salary and bonuses that some corporate executives, especially bankers are drawing. The occupy movement that has erupted in many countries around the world represents this anguish of people. New sources of communication make expressing the anguish public, yet there is a simple way to fix the problem if people can compel ruling politicians to make required changes before it becomes too late even for that. It is called the rule of ten here. If adopted such a rule will not only strengthen non-exploitative capitalism while ending the exploitative kind, it will also strengthen democracy. When capitalism is the benevolent kind, inequalities reduce, when it becomes exploitative, inequalities rise. It seems that in the largest economy of the world, USA, inequalities have been rising for more than three decades now (see this report)
Capitalism is not always exploitative as some claim because the same report shows that inequalities reduced in the period prior to 1978 and everyone got richer. However, for capitalism to continue in a benevolent manner checks have to be put on excess of greed. Unlike lust, the Lord has not put an automatic safety valve to greed that puts an end to lust at a certain peak value. Greed on the other hand, without checks, can grow infinitely, growing stronger with each level of attainment, until it sucks the life blood of society and destroys what it is feeding on, like a horde of marauding locusts that stays in a green field until every thing is wiped out, when people are told to eat cake if they cannot find bread or when a Castro or Lenin arrives to banish the czars.
Simply stated the rule of ten states that within any corporate or government organization the cumulative annual benefits (that include salary, bonuses, shares and all other benefits) of any individual within that organization shall not exceed a legally prescribed and defined ratio of the total benefits of the lowest paid individual. This will immediately put a cap to the high bonuses and perks some individuals are enjoying in various organizations while compelling them to increase wages of the lowest paid in order to maintain their own high wage. The rule has to be corporation wide not country wide in order to allow corporations to compete and also because the financial conditions of businesses vary. The rule shall be applicable to include severance and retirement benefits too.
The rule of ten is simply a way of stating and ensuring that a sense of balance and proportion is maintained when wages and compensations of employees from top to bottom are decided within an organization. This rule would not have been necessary if organizations and businesses did it on their own but very few do, rather many have begun to violate it massively especially over the last three or four decades.
|Rule of Ten|
No doubt, if instituted, corporations would devise ways to get around this rule but it shall be a beginning and in any case it will make the kind of rip offs possible now impossible.
Countries not used to this sort of rule will find it rather extreme, but they can make a beginning by a less severe ratio then 10, say 50, even 100 to prevent a few individuals from ripping off the voiceless shareholder and the shirts off the back of the poor and pushing some corporations to the point that they require a bail out from public funds. Under the present rules of the game nothing prevents corporate bosses from walking away with hugely unfair compensations and indeed some such thing is happening in many places.
|Extracted from: The Pinch of Poverty by Thomas B. Kennington|
How will such a rule strengthen democracy? If a referendum is to be called for such a law, an overwhelming majority shall support it. Any rule or law that is in accordance with the just aspirations or wishes of the people and is workable strengthens democracy. What about the argument being put by some bankers etc. that this will lead to a flight of talent. That is just nonsense but if there is capital that leads to exploitation of 99 percent of people it is best that it flees and flees fast.
Such a rule will not lead to a flight of talent or capital that benefits society as a whole although it will lead to the flight of talent and capital that destroys society out of greed gone haywire. It shall lead to a flight of greed and exploitation instead.
What will happen to the campaign contributions of political candidates if some individuals and corporations are not allowed to get disproportionately rich? No just human society needs campaign contributions that ride on the back of the homeless and the struggling while the likes of Berlusconi have perhaps taken off to their island spa for another bunga bunga party. Quite likely he has enough room for other leaders to join him as other economies around the world collapse under the burden of debt.
Unless the presently prosperous economies of the world take steps towards abolishing exploitative minimum wages and limiting high executive rip-offs both two sides of the same coin along with irrational debt, they appear headed for economic doom. Current measures as being adopted around the world only kick the can down the road, a road in which the pits get deeper as one moves further.
A year or so ago when the CEO of a Swiss drug major was walking off with a 78 million severance package, as approved by a board of directors whose compensations he had approved (it is the you scratch my back, I scratch yours story in corporations) the Swiss public woke up and forced in a new law to prevent this sort of rip offs by companies. The legislators cried foul and the companies cried foul but the public had their way because of the unique sort of democracy the Swiss have. In other countries the public does not have a similar say.
The rule of ten is far more business friendly than increasing minimum wages because a struggling business can then survive lean periods by cutting salaries across the board until it recovers which is not possible with regulated minimum wages and at times when no job is available even a low paid one is better than being kicked out to homeless street.
|Many Slaves at work make many dollars for a few rich persons|
UPDATE NOVEMBER 2013 :
This post and its reprints elsewhere on the net has resulted in the Swiss 1:12 initiative presently underway and scheduled for a vote this Sunday. The design of flag for their movement has been inspired by the logo in this post. Understandably there is much opposition to it from the same quarters that uphold the 1 per cent dominance in the world and it is possible that it may not win just right now but it is clear that the idea has arrived. Similar moves are underway in other nations too, albeit in their infancy just now. Read more about this here:
While the Rule of ten prevents a few in control of corporations from exploiting its employees and share holders, it does not prevent a corporation from exploiting the society at large. For that we have the rule of ninety described here - http://someitemshave.blogspot.in/2014/06/rule-of-ninety-step-towards-reducing.html
The rule of ninety prevents corporations automatically from becoming too big to fail unless they are working for public good, prevents excess profiteering and encourages competition.