What is your money?

This seems like a basic question, but in economic systems there is an attachment to work effort and compensation that is loose and not all together correlated to productive value.  Most humanity’s greatest difficulties occur in the dysfunctional attachment of over or under reward for productive value to work effort.  The massive aggregation of wealth in the hands of the upper one tenth of one percent and the massive percent of the poor holding zero to less than one percent of the world’s capital wealth is the result.

The oligarchic form of capitalism utilized by modern global economic markets associates reported financial statement net income as earned.  In the American iterations of reporting either a 10K for a public company or an audited private financial statement flowing into a K1 for a partner in an S corporation or a W2 for a salaried professional, the output of take home pay is considered sanctified by the system.  What was actually earned per the productive value provided and to what backdrop is that productive value measured? 

The payment stream is determined by a negotiation between the firm and the payee.  The power of the payee to determine that payment stream descends from owner to minimum wage laborer.  Economies function with both a private and a public sector.  These two components are interdependent.  In today’s global economy the operational domain of private firms has crossed public sectors seeking a lowest denominator for labor costs and taxation rates.

Without assurances for floors on the bottom end for labor or taxation rates on the top end to correct or guard, we risk public economies becoming unsustainable to sustain the private economies that operate inside it.  Both the public and private economies fail.  That is what the Great Depression was.  The 2008 market crash was a precursor to where the global economy is probably heading nearing 2022.  There must be balance.

Owners of private firms determine how much profit to extract from the companies they own.  Traditionally the profit formula is to keep employees desperate in order to accept the lowest wages possible, to put as many personal expenses through the company to reduce income taxation as possible to serve as tax free compensation, and to pay yourself while you can.  For publically traded companies, management does the same, but diffuses the personal nature of perks as systemic normality.  Executives prioritize short term profits rather than long term corporate sustainability because they are highly influenced by stock based compensation.  If capital gains become personal in the next quarter or year rather than what is good for the private firm and to a degree the public economy over the course of the long term, both sides of the economy fail.

So what is your money?  What if you are over or under paid?  What if a firm pays you as little as possible not because your productive value is not greater to the profitability of the entity but that the system has disempowered an entire labor class and externalized the full employment cost of health, retirement, and child care of being a member of public society to be borne by the public economy?  The costs of being a human must be paid by the summation of the private and public economies.  To claim an imaginary mezzanine where a human is expected to labor but not eat or be housed or find healthcare, to die as a disposable worker ant reduces the investment in the average laborer to that lowest denominator.  Furthermore that denominator is false.  Unless we are in some Atlas Shrugged fantasy world, where humans are left to die in the street, starving, and sick by the millions due to the negligent extortion of the job creator class, the public economy subsidizes this denominator.  Is this what we want as a species?  

The recourse is to first change the false capitalist perspective that the number a person is paid in a W2 or a K1 is representative of their productive value added to society.  These decisions are made on biases which are both ego driven and systematic based on the power provided to those who have accumulated wealth.  Much of that wealth is generational and falsely connoting power to those who never did anything but win the genetic lottery and extend a lead in a biological relay race.  To a degree the repression of this reality is a primary factor in the existence of systematic racism. 

Once this perspective is changed, the global society of governments representing the public economies that global firms in the private sector operate must work to implement global based taxes on capital to the stockholders based on proportional tax rates based on the citizenship of employees based on reported compensation.  What this would mean is that a global tax on capital held on the balance sheet of the firm would occur and be allocated based on the reported earnings by individual to a single country based on that individual’s primary chosen citizenship.  In the event of dual citizenship there would have to be one elected for everyone under a certain earnings number and an audited one for those over a certain earnings level.  The capital tax rates would be set by individual countries.  The tax would then go back to the applicable countries.

The same could be done on a citizen level based on reported citizenship for investments and total wealth owned.  If the world does not start taxing capital more, taxes on income alone even if adapted for those dodging countries will never catch up in time to avoid the impending depression and risk of inflation. 

The average person knows there is something wrong.  Trump and Sanders are evidence.   When the owner or upper management of a company is dining out at $200 lunches and a daily worker is packing a bologna sandwich that is one level of disparity.  When the owner is given every advantage to lower taxable income and externalize the living wage of a laborer to the public sector that is also underfunded because of those tax advantages that is another.  Today we have both.