Archive:Andrew Hester/On "Spreading the Wealth"

By Andrew Hester , Head of the Treasury , Sophomore Executive

October 21st, 2012

On October 19th, 2012 I talked about the role government should take in the economy and taxes, now I'd like to go into more economics that I feel the Triumvirate government, and all governments and people should take for that matter, this perticular matter being the idea of *Spreading the Wealth* or what's crudely called *"Socialism"*.

The idea of spreading the wealth, although it has great thoughts behind it, is possibly the worst thing that can be done to an economy. An example of spreading the wealth would be this; Rather than money we'll use grades in a classroom as an example then go into money: Now, say your teacher in your history class was to announce that everyone would be getting the same grade, or the average grade of all the scores divided by the number of students, the first test all the students get a B, while the students who didn't study much or at all are happy with their grade the students who did study, some of them really hard, are mad that they didn't get the grade they studied for. The second test all the students study less than the first test and the class average was a D, finally the third test comes around and everyone studied even less and the class average was an F. The reason for everyone getting a B in the first test was due to those students who studied hard.

Now in economics the practice is the same, but with money; You have a CEO of a company and his/her 100 employees, the CEO makes $10,000,000 year the average employee wage is $25,000 a year. Now it may not seem fair to people that one person makes $10 million a year while the rest make only $25,000 but when you factor that the CEO's job is to manage the 100 employees, make sure the business is being profitable and cutting cuts when needed while all the employees do is probably manual labor in a factory or such I'd say the CEO is doing alright. Now say everyone's wages were averaged out and given to everyone evenly (($10,000,000 + $25,000 \* 100)/101 employees = $123,762.376 a year for everyone. Now the CEO is doing all the critical thinking work managing the business while the employees are doing manual labor. So as a result the CEO works less, and because the workers are already getting paid a six figure salary and they're doing the same amount of work they work less as well. Over time no one's really working and the business goes bankrupt.

Now, take a construction worker making $13.66 an hour, working 40 hours a week every week in a year (52 weeks in a year) their making $28,412.8 a year before taxes . Now take a Surgeon, making $80 an hour working 40 hours a week every week in a year they're making $166,400 a year before taxes . Now if we paid them both the same wage, what's the Surgeon's motivation to continue as a doctor? Practicably, it's the money in alot of cases, plus enjoyment could be argued but consider a doctor spent 3-8 years of education become a doctor  while the construction worker, typically, has little to no education . The fact of the matter is that people should be paid based on their experience, education level and possibly position. Another possible outcome would be that quality of goods and services would go down, continuing the Doctor-Construction worker example. The doctor has to be extremely careful when operating, an outcome if they're not would be their patent dies, another reason they're paid more than most people. While the construction worker is manual labor to build a house, while the effects of shoty construction could be the house or building collapses worst case.

Therefor I believe that if you all want to be a high earner, you have to work for it, have entrepreneurial spirit and be ambitious, and then you may make the money you seek.

Thank you once again for your time.

## Sources

1. ↑ United States Department of Labor on Construction workers
2. ↑ United States Department of Labor on Surgeons
3. ↑ United States Department of Labor on how to become a Doctor
4. ↑ United States Department of Labor on how to become a Construction worker