Question: Can You Tell Me More About That Free
Stuff?
Response: Who pays for all the "free stuff"? Even slackers in addition to
the Payers and everyone else in the non-POM economy do not need to spend any
money at all in order to get the goods and services not designated as "luxuries." Only
luxuries must be paid for. But somebody has to produce all those capital goods
and services in addition to the necessities. They are being paid for doing
so. So where does that money "come from"?
The obvious and trivial answer
is that the money doesn't come
from anywhere, it simply appears
in one's account when one or
more Payers pay for the net
benefits you produced. But
that answer bypasses the real
underlying question.
So let's drop back and consider
a POM economy businessman.
He produces some goods and
services and he sells them.
If he makes a profit then he
may continue in business. If
he consistently loses money
he goes out of business. He
can lose money because his
business will have expenses
such as overhead, payroll,
taxes, cost of materials, interest
on any loans and so forth.
It is the difference between
the total of those expenses
and the gross income that constitutes
the businessman's profit. This
profit may be a small percentage
or a large one depending on
circumstances. I will allow
you to imagine what that typical
profit percentage might be.
Now let us compare that to
the non-POM economy. All payments
to everyone who is paid represent
luxury goods and services.
The supply of those luxuries
determines the amount of money
that will be paid (after they
are provided). Therefore, all
payments come from the luxuries
produced by a portion of the
workers. To simplify matters,
let's say that one third of
all the workers produce the
luxuries, one third produce
the necessities, and one third
produce the capital goods and
services. Thus, all the production
that makes possible payments
is provided by one third of
the labor force. We will also
assume that each third gets
one third of the money paid
during any one time period.
So if a luxury sells for $90.00
(that's easy to divide by 3)
those who contributed to its
production most likely will
be paid $30.00 upon its sale.
So a businessman in the non-POM
economy who produces luxuries
would be paid no more than
$30.00 for a luxury he produced.
If he does not work alone and
if he uses a building or other
capital equipment, then he
would be sharing that $30.00
with a lot of people. So let's
say he owns the store and when
the item is sold, he is later
paid $3.00. That isn't much.
It's only 3.33%. So is this
non-POM businessman getting
cheated? Is his just reward
being taken from him unfairly?
Well, how much did the store
owner pay to get the luxury
item to sell? Nothing. How
much does he have to pay his
staff? Nothing. He also has
no taxes. He has no overhead
expenses. He has no government
rules and regulations to follow.
He pays nothing for the necessities
he consumes himself. He paid
nothing for the education he
got to become a better businessman.
He pays nothing for the advertising
his store gets. He pays nothing
for insurance. In fact, that
$3.00 is pure profit. And not
only is it profit, it is profit
which does not have to be spent
on his family. Every bit of
that money can be spent on
luxuries for himself or anyone
else of his choice.
So what about that POM business
man with, say, a 10% profit
on that $90.00 item. He has
$9.00 as profit but he has
to pay taxes on that. So let's
say he has $6.00 left after
taxes. He has to pay rent and
for insurance to protect his
family. He has to buy food
for himself and his family.
How much of that $6.00 will
be left for just plain old
luxuries? Probably not much.
And if he uses a credit card
and pays interest on that "loan" there's
a good chance it will almost
all be gone. He also has no
idea whether he will make a
profit next month. He has competitors
and some of them "play
dirty." He could be required
to pay organized crime extortion
money. He might have high medical
bills for himself or his family.
His workers may strike or become
lazy or steal his stock.
Back to the non-POM businessman.
What does he have to lose?
Can he lose the store? Can
he lose any money if he is
unlucky or makes an error in
running the store? No. The
store is his property and no
one can take it from him without
his voluntary consent. He has
no taxes to pay. His family
is secure whether he earns
any money or not. If his wife
divorces him, he will not be
required to pay alimony or
child support. In other words,
he has no downside risk. The
worst he can do is not get
paid. Also, everyone will be
trying to help his business
succeed. There is no organized
crime and others who sell similar
luxuries are not rivals. He
has no labor problems. His
employees would be idiots to
steal any of the luxuries.
So it seems that the non-POM
producers of luxuries do not
lose by not receiving "full
price" for the things
they produce. They make out
far better than the POM businessman
producing the same items.
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