Quote:
Originally Posted by skeeter31
I have another question...if 100% of the income of a company is being paid to the workers, how would said company afford up keep of their buildings and facilities, or afford to purchase new inventory to see or make? How would they pay their taxes, fees, lawyers, permits, etc?
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Buying inventory is paying income to workers since that money is being used to pay workers to produce that inventory. That is not what is meant by paying 100% of our income to workers.
We pay two types of income in our economy. Roughly half goes to people for working and producing every single good and service in our economy. That is called earned income because they got that income by working.
The other half of our income is paid to people who do not work and do not contribute to producing anything in our economy. This is called unearned income because they got that income without working.
An example of unearned income is interest. If you had $10 million, you can deposit that money in a bank and collect $300,000 per year in interest income without working at all. You can sit home all day watching tv, and you will get paid all that money every year.
Since these people do not work, they are contributing absolutely nothing to the economy. So it is a complete waste to pay them. And since this is $300k less that we can now pay to workers, the people doing the actual work, it is not fair to workers. That $300k should be getting paid to workers.
Half our income is paid out as unearned income. So workers are only getting paid half the income they produce.
Of course, we need money to invest and lend. However, what this post explains is that we don't need to borrow some person's savings in order to lend and invest in our economy.
Paying people unearned income like interest or profit in order to make investment money available is just as useful and necessary to a market economy as needing to pay people to print their own money in order to make money available.
A central bank can provide investment money to the market more efficiently than private investors can just like it can deliver enough money to the market more efficiently than private individuals printing their own money can.
The central bank will just provide investment banks with enough investment funds, taken from whatever the natural savings rate is, to meet whatever their demand for investment funds is.
The central bank's mandate will be to provide enough investment money to launch or expand enough businesses to fully employ everyone who wants to work. If the natural savings rate is not enough, they would levy a tax on gross sales in order to make up the difference.
This is a trivially simple task to accomplish for a central bank, especially in today's digital banking system. Just like the central bank can manage the money supply, they can manage the investment supply.
Keep in mind that this does not mean government does the investing, or runs the banks, or runs the businesses. This is still a free market economic system. Investing will still be done by individually run banks, the people at those banks in charge of investing will still be paid based on how well their investments perform, those investors will still invest in entrepreneurs who launch individually run companies, and those entrepreneurs will still be paid based on how well the companies they launch perform.
It just means the funds they use will be public funds. And requiring companies to use public investment funds is no different than requiring everyone today to use public money.
But most importantly, using public funds will enable us to stop paying unearned income. It will enable us to pay workers twice the amount of income they are getting paid today. And it will enable us to always maintain full employment. You wouldn't ever have today's situation where 18% of workers cannot get a full-time job while tens of trillions of dollars sit idle.
For a little more information on investing,
read this.