A proposal for a New Politico -Economic System
I must essentially bore you with my thought process, in order for you to understand how I have reached my conclusions and why these ideas can work. My test case will be the United Kingdom where I live and I shall give you practical illustrations on how concrete and feasible my proposed solutions are. However, please remember that this idea also applies to every other country in the world.
The starting salary of a London policeman today is 384 times MORE than the same policeman a hundred years ago and specifically in 1914. Is the purchasing power of a policeman of today 384 times more than his counterpart of 1914? Of course it is not. What will be the salary of a London policeman be in 2112?
Inflation is eroding our purchasing power on a monthly basis and the results can been seen in every country for the same reasons:
· Inflation creates wage rises.
· Higher wages mean fewer profits for those who control our lives, whom I call “The Controllers” and their minions.
· The latter take their manufacturing concerns to countries with cheap labour, like China and India
· This creates unemployment at home, but relative wealth in these other countries….,
· Which allows these countries to buy the products of the manufacturers…,
· Thereby increasing the sales of manufacturers in China and India.
· Manufacturers open more and more manufacturing concerns in countries with large populations like China and India, in order to take advantage of the low wages to produce goods with a lower cost to sell to the local market as well as to export back home.
· Inevitably, unemployment at home reaches such high levels that it becomes a cancer and even sales of food begin to drop.
· When people cannot afford food, the result will be revolution.
The Need for Survival
We are all ruled by three basic primal survival instincts which will not be denied and for which we would be ready to kill. They are our need for:
Once we ensure the above three, we begin thinking of medication to cure our ills and pains and subsequently of ways and means to create comforts for ourselves.
Since we no longer live in caves and we do not source our own food from the wild, we need to have a job which will provide the financial ability we need to satisfy our basic needs. However, the ideal would be to work for ourselves.
Taxes are NOT the personal property of politicians, as the politicians appear to think, but the property of the people and taxes are supposed to be used for the promotion of the peoples’ interest, for the common good, NOT for the interest of the conglomerates and their profits which are partly derived through their desertion to countries with cheap labour cost.
For example, when the UK government refers to the necessity of Britain to annually spend billions on its military, they claim to be protecting “Our strategic interests”. Since you should never believe what politicians are saying, let us consider this claim. The possibility that a north European island state, the UK, will be invaded by a foreign power is less than feasible. So what are the island’s “strategic interests” in, say, Indonesia? Very simply, it is the interest of BP and similar conglomerates. So the taxpayer is essentially paying to ensure that BP remains a global energy power ensuring the profits of the shareholders of BP. But at the same time, the government leaves sufficient windows in its tax laws that allow such shareholders to pay only 1% in taxes. Such a window was in the news lately and the Prime Minister himself is on record as saying that it is impossible to close such windows. He is not telling the truth. It is possible to close all such windows.
MY PROPOSAL – (The Economic Part)
So we come to the gist of the matter at last and I thank you for your patience. What I propose is, in fact, the reverse of the current international religion of GLOBALIZATION , into LOCALIZATION but without changing international agreements now in place.
I propose that the government uses tax-payers money to invest in needed productive enterprises which will employ large numbers of people and after these enterprises are up and running, to sell them back to the tax-payers, starting with the employees of the enterprises themselves. So LOCALIZATION - but with a twist, so please see the examples below:
· I am the UK Government
· I have 2,500,000 unemployed
· I wish to create productive businesses to employ at least half of them
· Each business will have a budget of £5 million (or increments of £5 million)
· £4 million will be in a main productive industry and £1 million in a secondary productive unit
· Each £5 million investment will employ a total of 1,000 people covering a three eight-hour shift format
· Each investment will require two years to show its respective profit from start to first profit.
· Agricultural land in the UK is very cheap, about £4,000 per acre.
· For every industrial facility created for the main £4 million investment, another £1 million will be invested in agricultural land for the purpose of producing food. This food production facility will belong to the employees of the industrial facility and they will be given the option of purchasing this unit through salary deductions. They will be asked to look after their investment by offering their labour to the unit for free in the operation and harvesting of the produce. Their free labour will be given during their free time and they may take their families to help them, if they so wish.
· The worldwide pharmaceutical market is valued at $600 billion
· Dozens of pharmaceuticals lose their patents annually and can be copied freely by anyone
· Coronary heart disease is the most common cause of death (including premature death) in the UK and 1 in 5 men and 1 in 7 women die from this problem.
· Simvastatin (statins in general) with Aspirin (Acetylsalicylic Acid) are the pharmaceuticals used to preventively counter this problem
· An FDA approved pharmaceuticals factory able to manufacture Simvastatin and Aspirin, along with other medication whose patents have expired, can be built for just £4 million. This factory can produce £1 billion’s worth of products per year using a 24 hour three shift format.
In the UK, an NHS patient with a prescription for Simvastatin from his doctor contributes £7.50 towards the purchase of medication. If the patient is over 60 the medication is shouldered exclusively by the tax payer.
To purchase a month’s supply of 20mg Simvastatin outside the NHS with a private doctor’s prescription, the selling price by the retail drug stores is £5. Even assuming an unlikely mark up of 100% by the retailer, the factory sale price of the product in the UK will be £2.50.
What is the manufacturing cost of a month’s supply of Simvastatin 20mg tablets? Hold on to something solid, as I am about to shock you. It is only £0.44. This is not a typing error. The manufacturing cost is just £0.44.
The manufacturing cost of a month’s supply of Aspirin (Enteric-Coated) 75mg is £0.116 and retails for over £1.00
THEREFORE, I (the UK government) use tax payers’ money to invest £4 million in the construction of a pharmaceuticals factory whose main products will be Simvastatin, Aspirin and miscellaneous analgesics.
Covering the local market and with exports, the newly formed company can expect to sell £1 Billion’s worth of products per year. It’s estimated net profit will be in the region of £500 million per year. (In addition, the government will save billions over the long run on current annual expenditure for the same products).
Out of this £500 million profit
1. 10% (£50 million) will be held in reserve to be used for future expansion AND for the creation of an ETON STANDARD school for the children of the employees and the neighbouring residents. The school will operate on a twelve hour basis, covering homework and sports besides normal teaching, creating relevant employment for teachers.
2. 2% (£10 million) will be given to the employees as a bonus (£10,000 per year each) with the right to invest this money in shares in the company at the company’s market value on the day of purchase.
3. 80% (£440 million) will be re-invested in new manufacturing/productive ventures with the same original £5 million budget (examples will be provided later on)
Let me now refer to the £1,000,000 to be invested in a secondary productive unit for food production. Each factory will buy at least 100 acres of agricultural land to produce food for sale, either to the employees themselves or to supermarkets. Let me give you an example of how this may be done.
On my daily walk I pass by a house with a huge fruit tree in its garden and the branches overhang onto the pavement. Every year it produces at least 200 kilos of a type of miniature plum which is one of the most delicious fruits I have ever tasted. I do not know what it is called, but I steal a couple of fruits every time I pass by. Unfortunately I do not find this fruit in the supermarket. Instead I find a lot of imported fruit which have consumed a lot of fossil fuel energy just to get to the UK.
I would plant the 100 acres of the first £1,000,000 to be invested in a secondary productive unit with such local fruit trees, meaning 5,000 trees.
In addition, I would fence off the area and have at least one million chickens graze freely on the land. Free range chickens sell here for about £2 per kilo, so we are talking of a selling price of about £3,000,000.
The sale of fruit will pay for the chicken feed and since the pharmaceutical factory workers will be taking care of them without additional labour costs - considering that the chickens will belong to them - we are talking of at least £2,000,000 net profit for the factory workers. Out of this they will pay off the government for the initial investment in land/trees/chickens and after that they will each have at least £2,000 extra annual income on top of their salaries.
Each employee will naturally pay relevant taxes and social insurance contributions, thereby alleviating the financial burden they placed on the state as they were previously unemployed.
The factory will contribute to the common good by creating a very high quality school on the basis of Eton. The children of its ‘Plebs’ will join the ranks of the 7% currently enjoying the luxury lifestyle that goes with an Eton education. Since the school will be local, the children can sleep at home, but the most important part will be that teachers will sit with them and help them with the homework that possibly uneducated parents might be unable to do, preparing them for university. In addition, sports will ensure a healthy lifestyle for them and the habit of exercise for as long as they live THEREBY SERIOUSLY REDUCING FUTURE HEALTH COSTS TO THE NHS.
It is important to note here that the other manufacturing/productive units referred to here will also send their children to this new Eton, if they are in the same area.
The currently unemployed will not only be given work, but a real opportunity to own their place of work, becoming self-employed IF THEY SO WISH. The annual bonus of £10,000 described above will make this a real option for them, should they wish to exercise this option.
The Secondary Productive Unit
The UK has an incredible amount of delicious native berries that few people get to enjoy. By owning a food producing unit as described, multiplied many times over, and by planting local native fruit on an industrial scale, the cost of fruit imports into the country will be reduced. Combine each 100 acre site with the raising of chickens or sheep and the benefits are obvious.
The owners of the Secondary Productive Units can have access to both inexpensive fruit and meat products which they can either consume or sell, thereby increasing their income. Furthermore, the employees – who now co-own their place of work - will create a family business atmosphere with their co-workers and their families during harvest as well as through taking care of their unit throughout the year.
Re-Investment of Profits
As described above, the £440 million to be re-invested will start up 88 new ventures with 1000 employees each, thereby creating that number of new jobs, meaning 88,000 jobs in all.
OTHER POTENTIAL LARGE PROFIT MAKING VENTURES and EXPERIMENTS
The politicians will tell you that pharmaceuticals are the exception and that you cannot solve a country’s problems in this way. They would be lying as usual. Help me work the following idea out:
The sports shoe maker NIKE has annual sales of $24 billion. It claims to spend $1.7 billion in research and development, which I do not believe for a minute. They probably spend these amounts on fees to professional sportsmen not already under contract to one of its competitors, to “research” their products.
We pay $200 - $200 on a pair of NIKE shoes for our kids; some of which are designed by youngsters who are employed right out of design school. Material costs are the same wherever the shoes are made, but NIKE chooses to make them in countries like China, where the labour cost per shoe is less than $1.
What if we spend one set of our £4 + £1 million in creating a mini competitor to NIKE, employing a professional who is qualified in this field to run it? Buy shoes from all the competitors, cut them up to see what the supposed “research and development” is all about and get young shoe designers to come up with alternatives?
The worldwide free publicity such a project will generate will be worth the NIKE’s annual budget for the UK.
It costs them less than $1 in labour cost to make. So it will cost us $10 in labour cost to make because we will be making these shoes in the UK, France, Canada, the USA and elsewhere where people are paid decent salaries, but the materials will cost the same. Imagine the advertising effect this will have on consumers who will know that the company that makes these shoes will belong to its employees at some stage and that the employees are working hard to ensure a perfect product which will ensure their own very existence. We would be able to sell a wonderful product at much less than NIKE provided the idea is marketed as described.
We will not need $24 billion sales. Just being there and offering an option, taking advantage of our free advertising and pushing the envelope. But most importantly we will be creating independent business owners from the people who make the products; free from the slavery of those who now rule us.
Smaller, Less Profitable Units
Let us assume that the smaller resulting units will produce only £100 million of profit. Out of this £100 million profit
· 10% (£10 million) will be held in reserve (each group of ten factories will combine their income to do exactly as the more profitable pharmaceutical factory has done in the first example above).
· 10% will be given to the employees as bonus (£10,000 per year each) with the right to invest this money in shares in the company at the company’s market value on the day of purchase.
· 80% (£80 million) will be re-invested in new manufacturing/productive ventures with the same original £5 million budget (examples will be provided later on).
· This means that each of the resulting 88 ventures from the pharmaceutical venture will now be instrumental in creating 16 new ventures worth £5 million each, creating 16,000 new jobs.
· Those 16 new ventures will each use their profits to create new ventures with budgets of £5 million each, with job opportunities for 1000 new employees for each new venture, and so on.
In this instance, TEN factories will pull their resources together in order to create their own New Eton for the total of their employees’ children. For the nit-picking bureaucrats, the numbers can be adjusted to accommodate needs that are considered to be crucial.
· Maths: 1 original venture x 88 new ventures x 16 new ventures = 1,408 ventures x 1000 employees each = 1,408,000 new jobs.
(Remember that this idea applies to the US, Canada and other countries, not only to the UK as referred to here)
Hundreds of factories have been transferred out of the UK to countries with low wages, for the simple and ‘logical’ reason that their owners wanted to make more profits.
I remember a time when London was bulging at the seams with factories of all sizes, manufacturing clothing and employing tens of thousands of people. Tourists used to fly to the UK to buy clothes. Those factories of old not only covered the local market, including the tourists, but also exported clothes the world over. Now the factories themselves have all been exported to countries with very low wages.
Imagine a cooperative specifically created to organize either large or small clothing factories around the country which will provide work for both women and men in the industry.
Because of foreign competition, such factories will work on a non-profit making principle, removing the profit margin from the equation, thereby making the products competitive with foreign imports.
With an investment of tax payers’ money worth just over £6 billion, the Government can turn the UK into a self-sufficient country within two years, which is the time required to put up the various businesses and for those business to start making a profit.
Another Means of Reducing Unemployment
Instead of paying the unemployed to stay at home drinking beer and watching TV, the Government can also offer the following additional solution to the unemployment problem:
At the moment companies are reducing staff to the bone in order simply to survive. Many companies know that they could be more efficient and more productive if they could afford to employ more people, but we are going through such a serious crisis that for many reducing staff is the only viable means to survival.
What if the government made the following proposal to employers?
Up to 50% of the taxes of every registered company in the UK will be discounted to cover the cost of employing additional employees to improve their productivity. For example, if you are a large conglomerate paying (say) £50 million in taxes, you will be given 50% free allowance if you employ 2,000 extra people at an average of £24,000 per year AT NO EXTRA COST TO YOURSELF!
If you are a small company paying £30,000 per year, you can have £15,000 discount to help you towards employing an additional employee for the same £24,000 salary, or you might employ a much needed cleaner for the amount the government has discounted.
This way everyone wins:
· The employer gets additional help to improve his performance and profits
· The employee gets out of the misery of government hand-outs and earns enough to support his family with dignity
· The government wins twice: First they do not pay unemployment benefit to the person employed and second it collects taxes and social insurance contributions to cover the payments to those who are unable to find work.
A company which is created with an investment of £5 million and ends up making a profit of £500 million in two or three years can be sold at least £50 million on the stock exchange. With these kind of margins a number of wealthy businessmen will be tempted to copy this system, selling the shares to those employees interested and the rest on the stock exchange.
This will create more employment and more wealth for the working class.
THE POLITICAL PART OF THE PROPOSAL
· All 1400 productive units created in this fashion will be joined in a cooperative agreement.
· Each 1000 member unit to elect a leader through a democratic vote, but with a difference.
· Instead of one vote, each person will be entitled to cast two votes for two different names.
· Everyone will automatically be a candidate
· Names will be written down by the voter personally in full. One vote could be for a person the voter admires and one could be for the voter himself. If the voter does not wish to vote for himself, he can choose a second name from the group, or simply vote for just one person.
· 1400 representatives will result.
· The elected representatives will rotate from factory to factory in groups of 100, so that they will all become known to the electorate, giving the electorate the opportunity to get to know them in actual working conditions.
· A year after the first election, another election will be held, again with the same system of voting for two persons.
· Those who will end up with the most votes will be put forward by the cooperative as candidates for Parliament.
· The prospective parliamentarians will elect a leader with the same two vote method, who will lead what will now be a new, true DEMOCRACY.
· Those elected, individually or collectively, will undertake to resign if 75% of their cooperative vote for them to do so.
Employees of large corporations will be invited to participate in this method of choosing a leadership. So will any citizens who live close to factories created through my proposal.
Once the wellbeing of all concerned is ensured and the education of children is on the right path, the cooperative group will vote on whether all ventures will operate on a Cost+10% basis.
This will mean that everything produced and sold internally will be sold with only a 10% profit margin only. This will reduce the cost of living for everyone and will control inflation.