ANALYSIS and OPINION:
Company CEO’s and Oligarchs want to maximize profits for themselves and for stockholders. They keep wages as low as possible. The consequence of this over the last 70 years has been the rich have gotten richer and the wages of workers have stayed relatively low. This contributed greatly to the fact that (i) Americans, for quite some time, have not been having enough babies; and (ii) the fact that most Americans cannot save enough for retirement. This in turn has contributed to the looming 2034 insolvency of social security. Fixing social security’s financial mess looks only possible through either cutting retirement benefits or imposing higher social security taxes. Over the next several decades Social Security will require an additional $25 trillion dollars. Cuttng benefits for those who rely on social security for most of their financial needs would seem almost cruel. Thus it seems that the U.S. must, whether it likes it or not, allow more immigration, not less if it wants enough workers to keep social security and the economy generally healthy. Moreover, the widening wealth gap that has occurred over the last few decades has contributed greatly to the rise of oligarchy. Simply put the rich have too much political power and our Constittuional democracy is suffering because of it.
In the next vide we explain that Rao’s Solution may show us the way to start resolving many of these problems all at once. But fixing things will take time.
About Rao’s Solution:
How does Rao’s Solution fight the rise of Oligopoly?
Rao is nothing like a typical minimum wage law. Workers are really not guaranteed anything unless the company decides to pay its CEO and/or upper echelon employees a large amount. Rao essentially says that Company has to look at its payroll as one pile of money and that it must be divided in a way that does not violate Rao’s minimum requirements. A company can pay its CEO and its employees anything it wants but if the CEO gets a certain amount (let’s call it $X) then all other employees must get at least another amount ($Y). Different employees can get different paychecks but they all must get at least the $Y amount. (Note: Any amount received by any employee above $Y is deducted from the CEO’s pay ($X).)
Importantly, minumum worker pay ($Y) is always set as a percentage of CEO pay ($X). In short, CEO pay is always limited and/or reduced by moneys that are required under Rao to go to the workers in order to satisfy Rao’s formula. Thus the income gap between rich and poor is lessened. Workers get paid more than they do now. CEO’s, while still getting paid more than the workers, get paid less than they do now.