Philosophical musings of Chic Hollis
Time Magazine featured an article in 2008 about Creative Capitalism written by Bill Gates, one of the richest men in the world. It was not surprising that he has become an advocate for helping the poor achieve a living wage via what he calls “creative capitalism.” His inordinate financial success as a venture capitalist cannot be denied, but wealth and success came to his computer enterprise thanks to the participation of employees, suppliers, customers, and shareholders. Successful capitalists are daring gamblers, and his gamble paid off handsomely.
Now Gates wants others not nearly as wealthy as he is to help the poor, the sick, and the oppressed by donating money to help remedy the problems of poor countries so that the local inhabitants can go on reproducing themselves abundantly. The next “hi-tech” break-through like the last will benefit a few entrepreneurs, but it will not do all that much for the millions in third world countries who are trying to exist on a couple of devalued dollars per day. Men, women, and children earning that wage are dying from illness and malnutrition slowly. Still, tripling that meager amount of daily income would not be a living wage in developed countries. The majority of the abject poor throughout the world have a daily income that wouldn’t buy a $2. loaf of bread at a supermarket in California today.
Capitalism has never eliminated poverty in any country, and it never will, since poverty is a relative human concept. The overall standard of living has improved gradually in the more successful and resourceful capitalistic societies, but not everyone in those societies is living the “good life.”
Why is Bill Gates suddenly so concerned about inducing more uneducated people to gamble in the business world? How many American workers earning the minimum wage in this heavily indebted country can afford personal computers, an Internet connection, the necessary spam and virus protection, and the frequent soft and hardware upgrades?
Why has this rich entrepreneur become so involved with the health of poor folks in Africa? Why doesn’t Mr. Gates do something pro-active to stop the poor from multiplying like rabbits on that continent?
Are all the employees working directly or indirectly for Microsoft paid a living wage so that they can afford a decent home, a car, healthcare insurance, education for their children, and the basic necessities? Are the recent investors in Microsoft satisfied with the dividends being paid on common stock after the law suit penalties assessed to that company for questionable business practices?
Wasn’t Bill satisfied with being head of a technological monopoly? He earned his fame and wealth, no question about that. It came with the market’s appreciation of the value of his computer company as the computer industry grew. Now he wants to dabble in charitable projects. Has the computer revolution actually enhanced the lifestyle of the millions of poor folks in Africa? Who can judge that? The ones who benefitted somewhere or the ones who haven’t?
In America today there are a rapidly growing number of families where both adults have to work to pay the family’s bills. The combined family income of two wage earners may be above the median wage, but that amount may not be sufficient to buy a home, a car, send the kids to college without student loans, pay all the various and sundry taxes, and retire at age 66.
Who determines what an adequate living wage might be in any society? Certainly not the members of our federal government who involve themselves every once in awhile with gradually ratcheting up the minimum wage. What is considered “an adequate living wage” in America? Most employers never ask that question. Instead those companies who are hiring ask those seeking a job, “Will you work for what our company is ready to pay you for this particular job?”
Do ambitious, creative capitalists care about what it takes for a human to live? Certainly not, they only care about charging what the traffic will bear, buying at the lowest price, paying the least taxes, and earning enough profit to reward themselves and their investors. Is Bill’s contention in his article reasonable that an American company should set aside a little something to help the poor and sick in foreign countries? Who would pay for that set-aside? Employees, suppliers, customers, shareholders, and indirectly taxpayers, of course. When he was building his empire and deciding what to pay his employees and how to reward his outstanding executives, did he consider setting aside something for poor Africans?
When he advocates creative capitalism, does he acknowledge the incongruence of the physical and legal infrastructure of this country compared with that of sub-Saharan African countries? Can’t he see the difference of educational opportunities, the lack of capital, the restraints of tribal culture, religion, and expectations, and the strife among so many poor folks competing for a few low level jobs?
Why does Bill overlook the natives on reservations in this country whose tribes never received the money they were promised by our federal government under treaties that have been ignored for years? Why is he so concerned about helping poor Africans and not poor Native Americans?
Let’s move on and forget the illusory promises of Bills’ creative capitalism, and get back to discussing the subject of a living wage in the US. This term is bantered about as if everyone knew exactly what the term “a living wage” means and how hard a human was expected to work to earn that wage. The concept is so vague, yet it sounds so sweet to the ears of every wage earner who is struggling to pay his bills at the end of the month and feels he deserves a merit pay increase. Of course he’ll be lucky to get some meager form of inflation compensation when he completes his next annual anniversary, and that additional pay will be taxed accordingly.
Identifying a “living wage” is as difficult as defining the so-called “balance of nature.” The evolution of the wage structure including fringe benefits is so dynamic in a country this large and a labor market this complex that most humans hide behind that undefined term and let the media and the politicians grouse about workers’ inadequate wages.
Economists are aware that increases in labor costs strongly influence a company president’s decision to increase prices, even though the economists aver that prices in a capitalistic society are determined only by the competition in the market place.
Persistent inflation in all countries is a way of economic life that governments have accepted. Consequently, all wage earners periodically anticipate some kind of wage increase to be able to maintain their standard of living. When wages don’t keep up with inflation, the labor movement becomes more active in making demands and in organizing non-union shops. In those countries where inflation is rampant, it is difficult to sort out how much impact labor costs have on the never ending increases in prices.
Which comes first in that ugly economic situation, a price increase or a cost increase? Government leaders will blame the companies for raising their prices, while company presidents will blame labor unions for demanding “cost of living” wage increases. The ensuing vicious circle prevents wage earners from feeling secure that their current wages are adequate to pay their inflating living expenses.
Ignoring inflation, the difficulty in establishing a realistic living wage is determining what human needs are indispensable, what family costs are discretionary, and what expenses are not superfluous. What standard of living, somewhere between “three squares and a flop” and a luxurious villa in a gated community, is considered adequate? How many calories per person per day, how many changes of underwear per week, how many physical exams per year, and how many cars per licensed adult in the family? What expectations for a college education, what destinations for the family’s annual vacation, and at what age should the breadwinner retire with a paid-up pension?
There are no particular criteria for one person’s needs. Human desires differ. Personal expectations vary as do an individual’s talents, amount of ambition, and physical attributes. While millions of humans are living in squalor in Africa on a couple of bucks per day, the annoying homeless infesting San Francisco were being paid almost $400 hundred dollars per month before the city fathers decided to pay them less and offer them temporary shelter paid by the amount not handed out to them each month.
The term “a living wage” is an illusion. It varies depending on what it actually costs for each human who is expected to pay for him or herself and the family they produce. If the costs of raising a family cannot be covered by the weekly pay check, the wage earner is going to use credit until that source runs out.
All hand-out schemes such as welfare, food stamps, unemployment compensation, and charity don’t motivate the lazy and current economically disadvantaged to find permanent solutions to supporting themselves if there are any.
Launching start-up enterprises so daring capitalists can improve their standard of living and donate to charity sounds admirable, but that requires someone willing to loan them seed money and to gamble that the enterprise being formed will hire a team of industrious, knowledgeable humans with some business moxie to make their investment profitable over time.