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View Diary: The Bush Boom continues: 229K Private Payroll jobs in Feb (118 comments)

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  •  handouts vs. ownership (none)
    Traditionally, rich capitalist societies have avoided this through social programs that give everyone a share of the country's wealth.

    This is one way of addressing the problem, but it is qualitatively different than Kelso's. He acknowledges the necessity of these social programs given the inequality of the present system, but views them as detrimental to market efficiencies that increase the overall level of wealth. Let me attempt an example:

    Current system - A guy works at McDonalds. His wage is artificially inflated due to minimum wage laws. He gets an earned income tax credit from the government. He gets food stamps to help buy food for his family. When he retires he will get a monthly SS check.

    Kelsonian system - A guy works at McDonalds. As an employee, he is a co-owner of the McDonald's corporation. No minimum wage is necessary because any increased profits due to reduced labor costs (lower wages) are shared by all the worker/co-owners. He makes enough money from some combination of wages and profits so that he doesn't need food stamps, etc. When he retires, he will own his house and his kids will be grown and he can stop working and live from the continuing profits from his partial ownership of McDonald's.

    Before you scoff, Kelso has devised numerous very detailed and specific legal and tax code mechanisms that encourage capital to flow downward from the ultra-rich to the average Joe. Kelso would argue that his model is real true capitalism based on a real free market and economic democracy.

    One interesting predicted side effect of his proposals is that the market value of certain unpleasant menial labor will increase dramatically. If most people are making plenty of money from their co-ownership of productive assets, nobody is going to want to clean other people's toilet bowls, so such crappy jobs will command much higher wages in a truly free market.

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