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IMPORTANT NOTICE:
To: All Publishers, Printers, Literary Agents and Marketing Service Providers:
Please click on the following link for important information if you have interest in publishing and/or providing any service related to the marketing of Rao’s Solution. This includes anyone interested in purchasing movie, video or any other rights in the book.
https://reasonandbalance.com/to-literary-agents-market-service-providers/
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[Important Author’s Note: A common misconception about the formula Rao’s formula for fair pay is that all employees must be paid the amount calculated. This is false. Different employees at different skill and responsibility levels can be paid a different amount of compensation. In fact, after Rao was published the Author did a more detailed mathematical analysis of differing pay levels and how paying a certain number of employees more than the required Rao minimum affected the real world feasibility of employing Rao’s approach. As a result a very refined revised Rao formula was devised.
Again, Rao just sets forth the minimum that must be paid to by a company to all of its employees. Some or even most employees may be paid more than the Rao minimum. However, by requiring that all companies pay their employees at least the Rao calculated minimum it is felt that this will result in: (i) fairer pay that will allow workers a better standard of living; (ii) decrease the ever widening wealth and income gap between the wealthy (such as corporate CEOs); (iii) because of (i) and (ii) (A) decrease the chance that the U.S. will become an oligarchy run by billionaires (this is because working people will have more economic power to influence the political process); (B) allow families to better afford having much needed babies thus helping the U.S. to avoid or lessen the need for more (yes more) immigration to avoid economically harmful population decline and/or the insolvency of social security. On this last point without immigration the U.S. will suffer harmful population decline because America’s fertility rate (currently at about 1.6) is far below the required 2.1 which is necessary to maintain current population levels. Moreover, unless developments in artificial intelligence changes the situation dramatically (and it might) the U.S. simply must improve the worker to retiree ratio or future generations of workers will be taxed and worked to beyond the point of exhaustion.
Note also that Rao’s formula does not require companies to pay employees more like traditional minimum wage laws do. It is not a traditional minimum wage law. In this sense it puts far less pressure on the pocketbook of companies than periodic increases in traditional minimum wage laws. Under Rao, it is only when companies decide to increase CEO pay that Rao’s formula is triggered to test to see if all other employees have to be paid more as well. (And they almost always do.)
Note that the ratio used in the novel Rao’s Solution is one percent. Naturally any legislature can set the ratio of CEO to minimum worker pay at any level it wishes. The author in Rao’s selected one percent merely because that percentage closely approximated the actual ratio of worker to CEO pay in the 1960s when the U.S. had a bigger and financially healthier middle class.]
Dear Readers:
Rao’s Solution by David Dixon Lentz is a fictional story that blends international intrigue, romance and some extremely relevant and important economic lessons the suggest a way to lessen the wealth gap between rich and poor. And, no it’s not communism.
The author’s explanation of Rao’s Solution is at the bottom of this page. However we start with an important example of how it would operate in the context of Elon Musk’s gigantic $29 Billion bonus. This bonus was granted by Tesla’s shareholders in August of 2025 when they awarded Musk another bonus the value of which appears to range anywhere from $23 to $29 billion. This is probably in lieu of the original $50 billion bonus which has run into legal trouble in Delaware. What are the consequences of this? Will this further widen the wealth gap between rich and poor? Does this hurt or help democracy?
Here’s the 3 minute video explaining how the formula in Rao’s Solution actually operates. In other words, it actually provides Rao’s formula. It does so in the context of one of Elon Musk’s proposed Tesla bonuses in the Fall of 2025. [Please note that the 100 to 1 ratio was chosen as an example and used in Rao because that was the approximate ratio that actually existed in the 1960s.]
https://www.youtube.com/shorts/dGJGO50et-E
Capitalism and free markets are great. History has shown that they are the best way for society to generate wealth. But like nuclear power, which can unleash untold amounts of energy, capitalism and free markets can cause problems, just like an insufficiently contained nuclear power generator.. The freer the economic system is the more likely it is that wealth and thus economic and often political power will accumulate in the hands of fewer and fewer people. This is why, on the economic front, we have laws preventing/restricting monopolies. The point is that laws have to be enacted that prevent the accumulation of too much wealth, and thus economic and hence political power, into the hands of just a few people, or a dictator.
But before we talk about the novel, let’s look at one hugely important practical application of the major economic point made in Rao:
Broadly speaking, here’s Rao’s totally unique approach to compensation, which should at least start the process to decreasing the unacceptably large wealth and income gaps between CEOs and working people:
RAO’S VERY UNIQUE SOLUTION
TIE WORKER PAY TO CEO PAY
COMPANIES ONLY HAVE TO PAY
HIGHER WAGES
IF THEY PAY CEOs MORE…..THUS
- RAO’S SOLUTION
DOES NOT LEGALLY REQUIRE
COMPANIES TO PAY
HIGHER MINIMUM WAGES
- NOR DOES IT MANDATE THAT
COMPANIES INCUR GREATER
WAGE EXPENSE FOR WORKERS
( UNLESS THEY
INCREASE CEO PAY)
Here’s the original explanation of Rao’s Solution done when the novel was published.
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https://store.bookbaby.com/book/raos-solution
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