Jan
23

Pyramid of Income Equanimity

I had an idea recently. I feel that an idea of this sort is necessary and appropriate at this time, since much of my posts have been opinions, questions, and analysis. No, the idea has nothing to do with traveling in tubes…not that traveling in tubes is a bad idea. And no, it’s probably not ‘the greatest and best idea in the world.’ As basic and semi-unoriginal as it may sound, I believe the idea is definitely maybe at least worth noting. My idea is called the PYRAMID of INCOME EQUANIMITY, or P.I.E. for short. I know the acronym ‘pie’ has been used before, but no matter. I think the name suits the idea well, in that its fundamental notion is to divide income amongst individuals in a more balanced way, so that people get a more suitable piece of the wealth pie.

I’m going to break down this post into three categories in an attempt to make it easier, quicker, and more coherent to read:

1. I will explain what P.I.E. is and how it functions.
2. I will cover the pros of P.I.E. and why I think it could help society.
3. I will discuss some cons to P.I.E. that I’ve come up with and that I’ve heard from the few people I’ve told this idea to; in turn, I will try to give my responses to those points.

Before I break it down, I would like to give a brief intro as to how I came up with the P.I.E. idea. The subject of economics and prosperity has come up in many conversations I’ve had throughout the years. I’ve tended to side with the common man, trying to figure out how to change things for the better for the average person. My friend Dan, who happened to be an economics major, helped me to understand economic theory somewhat, giving me insight into arguments dealing with the subject matter (I’m by no means an expert). Along with discussions with others, I came to see that a claim that seemed to threaten the capitalistic system was met with certain resistant arguments. I think there is a feeling amongst people who promote capitalism that any attack on that system would destroy production and advancement. People also seem to want to achieve the American dream, which says if they work hard enough, they can be elevated past fellow human beings to a God-like status. They (not everyone obviously) want to see a person make billions of dollars while others starve because they want to think that they will be that mega-rich person someday. They think that the disparity between the super-rich and the dirt-poor is a sign of freedom and of a system functioning efficiently. Any idea that makes the system even a little more fair for the human population is seen as a Communist plot to destroy our way of life, which just happens to suck for many people. Okay, I may seem to be stretching the extent of what people actually think, but hopefully you get my point (I’m just trying to sound more mysterious and dramatic). Fast forward to recently…I was listening to Al Franken on the radio, and he brought up a good point that I hadn’t really thought out to that extent before, or at least he said it in a way that clicked in my head. He was talking about taxes and how the top 1% of the population receive more opportunities for tax breaks than low-income individuals. He said something to the effect that a person like Bill Gates owes something to the community because his empire was built upon the ideas and efforts of those who came before him and upon those who work under him today (I may’ve added the latter part of that sentence). In other words, Bill Gates would’ve never found riches without the technological discoveries of others. Al said something like…this country was founded on people who stood on the shoulders of people who stood on the shoulders of people who stood on the shoulders of people who stood on the necks of Indians (Native Americans). It was a very green-meme comment that I found entertaining. The point I’m trying to make here is that it’s not warranted for someone to be elevated to an epic financial status because people depend on other people…we’re in this thing together. I’m not completely tearing apart free-enterprise; there should be a difference between someone who runs a multi-national business and someone who sits at home, watching soaps and eating Cheetos…it’s natural for output to be rewarded from effort…it’s an energy thing. I could just start going off at this time and getting off-task, but instead I will jump into the P.I.E. idea with the hope that this intro served its purpose of wetting your pallet and getting you acquainted with the subject matter at hand.

1.
Think about a large corporation. Picture the way it is structured. You have the CEO on the top calling all the shots. Below the CEO you have a handful of other people who tell a group of other people what to do. Below them are other administrators and below them are supervisors to the call center. Dig what I’m saying? Each successive layer below the CEO has more and more people involved. Therefore, the structure ends up looking somewhat like a pyramid. I know each company will have variations and the structure won’t be exactly the same, but roughly it will look like a pyramid. Rarely do you see a company structured in a committee style say, where there is no higher management like a CEO. With the pyramid structure in your mind, the first step in developing the P.I.E. strategy is to do an analysis of many large companies’ income distribution amongst employees. I’m not versed in statistical analysis, so someone else would have to take up this endeavor. The idea of this analysis, though, would be to calculate an average of all the companies involved to see how income is distributed throughout the levels of the pyramid. An equation could be generated, describing what percentage of total income is given to each member on each level. Follow me so far? The point I’m getting at is that most likely (without having first looked at examples…hence the statistical analysis) large companies give wages disproportionately to the various levels. For instance, a CEO may make $3 million a year while someone in the call center only makes $9 an hour. This is where you should pay attention, so it is clear what I’m getting at. I’m not saying that the call center worker and the CEO should make the same amount of money. The CEO has more invested in the company and has more responsibility. The higher up you go in a company, the more money you should be paid, or at least that is how it’s structured in this country. White collar is paid more than blue collar. We value leadership and managerial positions more highly than physical labor positions for the most part. If we valued it differently, we could, for instance, argue that a person cleaning an office building uses more energy than an exec sitting behind a desk and sipping lattes spiked with bourbon. Although the exec may be more stressed out, the energy used is quite lower than the janitor. Can you see how our values influence the situation here? I know I could explain that point better, but I just want to sit with that a little bit.

I’m not attempting to destroy our value structure when it comes to employment, but I want to say that taken to the extreme, these warped values diminish the worth of those who work less glamorous positions. This is the key to the P.I.E. idea. To make this easier, think of the pyramid in a two dimensional form. The CEO is at the top with an inflated income, while the lower workers are far below. The triangle ends up looking isoceles (remember Geometry?) with a steep peak. The strategy of P.I.E. is to change the isoceles shape into a more equilateral triangle. Flatten it out a bit. When this happens the percentage of income throughout the levels becomes more symmetrical and thus more even. The CEO would then only make $1 million a year and the call center guy would get a raise to $15 an hour. An equation could be figured out for this equalateral triangle as well, so that there is at least a starting point for how a company can decide to distribute wages. This equation wouldn’t necessarily have to be adhered to in an overly strict fashion (life doesn’t need to become a numbers game), but it would be something to strive for. I’m simply saying here that there would need to be flexibility in this strategy, since the real world has many variables. It’s my opinion that being too rigid and trying to fit into some formula never really works…the formula would only be used as a guideline. Keep in mind flexibility doesn’t mean manipulation.

So who’s going to adhere to such a formula for employee income? Should it be something the government steps in on? I would advocate that pioneering companies take on the new equalateral system as opposed to having it be a governmental policy (reason being that the fat cats in the government would tell a bill of this sort to go f’ itself). These progressive companies would set the example for others to follow suit. Of course, the way for other companies to want to model after the P.I.E. strategy would be for P.I.E. to show tangible success, i.e. profit. When the company does well, the employees benefit proportionately. Oftentimes, as seem in Congress and large corporations, senators and CEOs get a hefty bonus or salary increase when business is good (or also when the budget sucks or the company is in the toilet). Bonuses would be sufficiently rewarded to all when there is an increase in profit. This form of positive reinforcement would boost work ethic and in turn promote company growth. With more growth, more companies would consider the P.I.E. strategy as I stated before. Over time, the big picture idea would be for us to live in an economic landscape where division is the opposite of multiplication, not how people relate to one another.

2.
– One big positive that I see when I look at this P.I.E. idea is how it blends the best of both capitalistic and communistic worlds. It promotes hard work and achievement of capitalism, so that apathy doesn’t set in, which would likely happen if everyone made the same amount of money. Also, the genuine worth of every human being is considered, not leaving the have-nots to starve to the extent they do today. Wealth is more systematically controlled, although not to the point of totalitarianism. P.I.E. basically says, yeah, you can be rich (capitalism)…but you didn’t get there alone and you should give back to the society that got you there (communism). Note: I realize that I’m probably not using the terms capitalism and communism 100% correctly or at least I’m utilizing them in a narrow context…I’m not trying to have a discussion on these terms, though, keep in mind.

– P.I.E. levels power structures. Money, in a sense, is power. Money itself is just a concept, but one that can get you things in this world. When power is more evenly distributed, since people would share a more similar monetary status, ‘democracy’ would have a renewed sense of meaning.

– Society would be more productive overall. The general population would have more wealth and would feel more powerful. People would feel more loyal to companies, morale would improve, and the general work ethic would increase. Better compensation for work would likely make people feel that they don’t have to justify working at a crappy job as much. A janitor would get a sense of contributing to the good of the company as opposed to just being that guy who dropped out of high school and is treated like a lesser citizen by some (not picking on janitor, just pointing out that some jobs have certain stigmas). More production would mean improved living conditions for all, unless we use the surplus to drop bombs and build missiles.

– I don’t know much of anything about business, economics, politics, statistics, finance, etc…This can be a pro in a way because being versed in certain fields of study could have a negative effect. Let’s take business for example. I go to school and learn how to do business. I get so enmeshed in the views and ideologies that I can’t think outside the box that I’ve been put in. I may be able to think of ways to alter the business structure, but to make any radical inquiry would be difficult. What I’m getting at: brainwashing…be careful!

– The last pro I’m going to mention, I haven’t worked out in my head completely yet…so if you have any ideas on this, let me know. One thing I don’t like about companies such as Ford Motor is the constant stream of layoffs. If the company struggles, what do you do? Cut the jobs of the working class! Perfect! No, you fascist pig, maybe this job insecurity is unnecessary and unfair. Good or bad, if everyone’s income is affected on a proportionate basis, then there would be less need for layoffs. Need to squeeze the budget on money spent on employees? How about this: if business is bad, instead of cutting tons of jobs, how about decreasing a percentage of pay from everyone? Say two percent. The call center worker who was making decent money would get say 10 cents less per hour. This would be feasible because the CEO would get a more sizeable pay cut at two percent, say $30 thousand a year. I don’t know the math, but do you see my point? There wouldn’t have to be as many layoffs. I’m not sure this idea is workable, and I don’t like the idea of taking money from those that don’t make much in the company, but it’s something to consider. I suppose the way around this would be to make wages less bound to the status of the company…share holders take the brunt. This ‘pro’ turned out to be more of a side note, but I digress…

3.
– The cons are much more exciting and thought-provoking, I promise. I’ll start out with the big banger…the biggest hindrance to the P.I.E. strategy. What do (wo)men in power want most?…more power. People in the top spots of companies need to increase their level of consciousness and moral standing to a level beyond the self. This is difficult because they don’t want to lose their money or their power position. It’s what they wanted to achieve in the first place, probably. If this P.I.E. strategy is too much for a CEO to chew, though, there is possibly a rhetorical way to influence their decisions. One would have to make the case that it does benefit them on a personal level, although the immediate effects won’t seem that way necessarily. The other way to get around a CEO’s status-clutching is to regulate from the outside and not give them a choice, which would probably be an even greater challenge. Okay, so the power issue is a tough one. It’s an obvious problem if you look at the world today and how it is structured. I guess you just have to believe…

– I don’t know much of anything about business, economics, politics, statistics, finance, etc…This is an obvious method of attacking the P.I.E. idea.

– Along with my lack of knowledge of the economy comes the argument that if you pay people more money, then the price of consumer products and services will also rise. More money, more inflation. My rebuttal is that the amount of money given to employees can be viewed as irrelevant. It doesn’t matter if the American dollar is worth 10 cents, 100 dollars, or 100 billion trillion dollars…money is just a bunch of numbers on a computer or pieces of paper. P.I.E. is more than just giving money to people who don’t have much money. Throwing more made up cash into the economy wouldn’t really change anything. The bigger benefit of P.I.E. would be to level out the financial status of people in our society. The percentage of wealth would change. It’s not giving people money and raising costs of living; it’s smoothing out the stark differences in our class structure. There are potential problems with this point though. If P.I.E. isn’t adopted by the country overall, it could have certain ramifications, although possibly only short term. The janitor at company ‘A’ that has implemented P.I.E. could make $13 per hour, while the janitor at company ‘B’ without P.I.E. may only make $6 per hour. I don’t know what effect that would have, though it would likely suck for the company ‘B’ janitor. Any even bigger issue, which is too big to pick apart right now, is how the world economy would be affected. Would third world countries drop down a few worlds? Fifth worlds?

– Are hierarchies bad? David Icke would likely think so. Ken Wilber may say something different. For those of you who don’t know who David and Ken are, don’t worry about it. I’m just asking a more philosophical question about P.I.E. This strategy seems to maintain the system. It’s my opinion that they way our economy is structured currently, it is destined for a collapse, due to its imbalance. Whether or not it is doomed to crumble is another debate. By correcting the system and making it more secure continue the pyramid of power over people and thus keeping people enslaved? Maybe an economic crash would be better than an improvement. I do think, though, that I’d rather live in a world with a pyramid structure that’s healthy than the one we live in today. It’s more practical to improve the system than to radically change it because people are scared of change. The only way to scrap it is if it falls. Should we take measures such as P.I.E., which would possibly be a feasible form of action? To put this issue in another cinematic context: Is the Matrix good or bad…is it necessary to destroy the Matrix? I suppose there are other options than the pyramid structure of economy, even though a departure of this level would be quite difficult, but that’s a topic for another time.

– This next ‘con’ after some more thinking turned out to be a ‘pro.’ I thought that people could fear that more employees would be laid off in the P.I.E. strategy since they made more money and were therefore more financially burdening to the company. With tight budgets, companies try to get by with as few employees as possible even in today’s system. If you consider that the total wages given out would be the same and just distributed differently, though, this fear isn’t warranted. Actually, there would be less people losing their jobs with P.I.E. Just think about it…cutting 200 employees making $6 per hour would be the same as cutting 100 employees at $12 per hour.

– People are lazy is a big problem in our society and a main reason why we have poverty. There will always be those who work hard and make a life for themselves and those who don’t do anything productive. Well, that’s how this particular argument goes for the most part. Fingers are always being pointed when this claim is brought up. In varying degress it goes from blaming the poor and blaming the system that created the poverty. Simply placing blame does nothing to change the situation. It’s used to make excuses and create a superficial story of why things are the way they are. This idea as to why P.I.E. wouldn’t work could be summarized by the phrase: Nothing ever changes, so why bother? All I say to someone who thinks this way is to look at your reasonings for this belief and what effects this thinking has on your life and others around you. Maybe you yourself are lazy in being able to see other people’s perspectives. Maybe you yourself have benefitted from the system and therefore selfishly put up an apathetic guard as to protect all that you have received. In defense of P.I.E., I’ll just say that if you pay these poor people more money, they’ll likely feel more empowered and perhaps just a little less ‘lazy.’ They may still continue working in a factory for 50 hours a week though.

– I guess you could argue that more people would want to become a janitor than a CEO, since they make more money in this profession. I say, well good for them. I’ll add that mopping floors isn’t for everyone…there’s is something to picking an occupation aside from how much money one makes.

– P.I.E. only works for certain types of companies based on how they are structured. I know there are a lot of different types of businesses out there. I’m more focused, though, on those companies who do fit the pyramid structure. On the other hand, the basic principle of P.I.E. can be used in any company, which is: give people honest pay for the work they do.

In conclusion, I hope you don’t feel that you are somehow dumber after reading this post. The basic idea of P.I.E. may seem simple, but its ramifications and implementation would be very complex. I’m sure I didn’t make a complete argument; remember that this isn’t a scholarly paper. It’s an idea that at least gets you to think…I welcome any comments or questions on it if you feel inclined.

4 Comments


  1. Hey Russ-
    I like the article it is a very thought provoking idea. Sounds like a very good concept and I would be very interested to see it implemented in the real world. The only thing in my opinion that needs to be tweeked is the issue of poor company performance. By constantly giving raises and then taking those back makes it hard for a family to live on a budget. Most families know how much money they will be receiving every month and this could make it more difficult for them. It almost seems like wages are equated to investments in a sense like when a company has a good quarter stock holders are rewarded and same for a bad quarter and seeing potential profits fall. I would like to hear more about this though.

    - Andrew (Jan 23, 2006)


  2. hey russ, if you have time to post messages that long, you have time to dust off and play your guitar

    - macgyver (Jan 30, 2006)


  3. a blog? you trendy bitch.

    - surf savage (Jan 30, 2006)


  4. Did you get that article I forwarded to you off the Internet
    regarding this very subject?

    - ginger (Feb 11, 2006)

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