by James S. Albus
The best way to raise the minimum wage is not by legislation, but by reducing the labor pool voluntarily. How could that be accomplished? The answer is amazingly simple.
Public Dividends
Give everyone income from public dividends paid by a National Mutual Fund, and many in the currently employed labor force would be happy to leave. Many parents with small children in two income families would be happy to be able to afford to take time off. Many people with ambition could afford to return to school, or try to start their own businesses, and many would love to retire early. All of this would reduce the labor pool, while public dividends would simultaneously create greater consumer spending power. There would therefore be a reduced supply of labor accompanied by an increase in demand. Wages must rise. Everyone benefits. No one looses.
From Where?
But, you might ask, where would the public dividends come from? From profits earned on investments by the National Mutual Fund, of course. Financed by what? By the U.S. Treasury, or by the Federal Reserve Bank, and by mandatory savings withheld from individual and corporate incomes. (Mandatory savings would not only finance investment, but would prevent inflation due to newly created money being invested by the National Mutual Fund.)
Public dividends would be a big improvement over raising the minimum wage. Public dividends would supplement the incomes of everyone, not just low paid workers. Public dividends would be paid to every adult citizen -- to the elderly, to the poor, to the unemployed, to those desiring to leave the work force to focus on family, or education, or starting a business, or other creative endeavors.
Is this Possible?
Yes. The secret is increased investment. Investment is the source of productivity growth. Productivity growth is the source of economic growth without inflation or environmental pollution. Mandatory savings would provide some of the funding and provide a mechanism for keeping inflation in check. Private investment and loans from the Federal Reserve System would provide the rest. A National Mutual Fund would provide the mechanisms to invest in the private economy while providing guarantees against fraud or unwise investments. The numbers add up. The benefits are real and achievable. What remains is to enact the program.
The Plan
The plan, first published in 1976 in a remarkable book entitled Peoples' Capitalism: The Economics of the Robot Revolution , has been largely ignored for the past 19 years by the economics establishment. A recent update of the economic details can be found in A Plan to End Poverty The author, James S. Albus is one of the world's best known researchers in robotics and intelligent machines, and heads the Intelligent Systems Division in one of the nationÕs top research laboratories. He is widely published and often cited in the scientific literature. He is well known around the world for his pioneering research in brain modeling, neural networks, and intelligent control system design.
Like a good scientist, Albus cares about the social and economic implications of his research. When he began his research into intelligent machines and advanced manufacturing systems, he was worried by Frankenstein scenarios of automation run amuck. He therefore took the time to devise an economic system that could not only prevent mass unemployment from advanced automation, but could lead eventually to an Everypersons Aristocracy where poverty would no longer exist.
The Benefits
Under Peoples' Capitalism, everyone would own a share of the nations means of production. Everyone would receive dividends from their ownership of stock in an amount sufficient to support a modest lifestyle. Increased investment would produce rapid growth in economic wealth in an amount sufficient to support environmental restoration and preservation. Work would be plentiful and enjoyable. Wages would be high, and opportunities for entrepreneurship would be unlimited. There would be no need for welfare or economic assistance, because there would be no need.
What can be done?
You would think that such an attractive idea would be very popular. Unfortunately, it has been very hard to get these ideas published in the economic journals, or injected into the political debate? Why? I do not know. It just is. That is why it appears here, on the Internet. Hopefully, Peoples' Capitalism will be understood and appreciated by interested parties like yourself, and the word will be passed on by you the reader through the World Wide Web.
The bottom line is that there are answers. Prosperity for all is possible. Raising the minimum wage is like putting a Band-aid on a cancer. Giving everyone a piece of the action is the real and permanent solution. Making everyone economically secure through ownership of the means of production should be the ultimate goal of political and economic systems everywhere.