Thursday, December 18, 2014

Is it really just greed? Part 2



Remember, the Apostle Paul told Timothy, and us, "For the love of money is a root of all kinds of evil, and by craving it, some have wandered away from the faith and pierced themselves with many pains." 1 Timothy 6:10. This was a warning about greed. It affects and distorts everything it touches. The minimum wage issue, which I discussed last January, is also impacted by the affects by greed. It distorts the perception of the very proponents of an increased minimum wage so much that they sincerely believe raising the minimum wage will help everyone. Am I calling proponents of raising the minimum wage greedy? Well....yes, but let me explain.

Real unemployment is about 12.1% according to the "U-6" rate that measures total unemployment, more reliable and accurate than the main "adjusted" figure of 6.1%. Both come from the Bureau of Labor Statistics. If one considers the unemployment rate, and viewing labor as a commodity, why would raising the cost of a commodity against what the law of supply and demand dictate be a good thing? When there is an excess of something, you don't get rid of it by raising the price, you lower the price. For example, if I have 1000 1963 Split Window Corvettes for sale, and I am having trouble selling them at their current value of $55,000.00, I am not going to raise the price and think I can sell them for $100,000 each. That would not make sense. Similarly, if I have 12.1% unemployment, why would I think increasing the cost of labor would reduce the number of unemployed? In all probability, raising the price of labor will increase the number of unemployed. 

Further, consider how greed affects the perceptions of some groups on others. Most people want more money, but they don't always want to do more for it. Some work longer hours, but most would rather not. Some people want raises, but as Robert Kiyosaki pointed out in his Rich Dad, Poor Dad books, employers usually want to know what they get for the pay raise, and employees usually say "why nothing, I've just been here a long time." Other assets depreciate over time, so why should an employee asset be the opposite? Or perhaps this is just the employer being greedy and not wanting to spend more money. Except, the employee is exactly like the employer; the employee doesn't want to spend more money on things either, so why is the employer greedy and the employee not? This the the distortion effect of greed in action. The employee wants more, and calls the employer greedy out of envy, not because the employer is actually greedy at all. Envy is closely related to greed, and has a distorting effect on perception as well.

This is not to say there are not some employers out there who are just as motivated by greed and are in fact greedy. They usually run their businesses poorly, and do not often survive in the economy, especially today's economy with all the social media and information available. Even in the past, however, businesses that didn't treat their assets well, including their employees, often failed. Sometimes it took a while, particularly if there was limited competition. Competition, however, and the desire to do better, would help balance the scales. Understanding this is the key to getting past the effects of greed and correcting perceptions. The reason for business, at its heart, is not really about making money; it is about helping each other, and serving needs. It is the "how" and "why" one goes into business that truly matters, not seeking the "what" of money. Money is simply the measure by which we can judge how well we are helping and serving. Businesses seeking simply the "what" that is money, as I explained, do not last long because they have the wrong motivations and as a result mistreat their assets.

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