A business owner in Seattle has decided to pay his employees according to their needs. Leftists are celebrating. From NBC News:
A Seattle entrepreneur on Monday delivered a startling message to his employees — he is raising the minimum pay for all of his employees to $70,000, while reducing his own pay to the same amount from about $1 million.
Dan Price, the founder of Gravity Payments, said he increased the minimum pay to $70,000 because of concerns about income inequality — and also because he wants his workers to not have to worry about basic needs.
While not exactly the communist manifesto, Price’ decision; which was welcomed by standing ovation from his employees, will kill personal ambition within the company.
Let’s be fair, it is his decision because the business belongs to him. He started it, he built it (yes he did Mr. Obama) and continues to manage it. So how he chooses to determine salary is entirely up to him. That is except where government has mandated one thing or another.
Some lower level employees who did not go to college, did not work hard to move up and did not sacrifice nights and weekends becoming better at their jobs or more productive will see their salaries double. It shouldn’t take much to figure out what is going to happen at that company.
Sometime during the next four years production will drop, quality will drop and personalities will clash. The best employees who actually earned the higher salary will leave and the less valuable employees who didn’t will be all that is left. The company will crumble and everyone will lose.
How do I know that? And what does this have to do with Puerto Rico?
I know it because I have both seen it in real life and have read it in the headlines and it is also a part of Ayn Rand’s opus ‘Atlas Shrugged.’ While the story of Gravity Payments is different to some degree to that of the 21st Century Motor Company in Rand’s book, the similarities are striking.
But they are also striking when compared to Puerto Rico. For the last 50+ years The commonwealth has been receiving money from the federal government based on federal law and based on the needs of the island. Part of that money was for free housing, free food (food stamps) free schools, free health care and on and on and on.
Puerto Ricans living on the island pay no federal income taxes. The only true federal ‘tax’ is Social Security (with associated programs) and not everyone pays into that either. Yet in 2010 the island received more than 20 billion dollars from the U.S. treasury most of that in payments or benefits to individuals.
Like the 21st Century Motor Company, Puerto Rico (and soon Gravity Payments) lost all concept of self determination, sacrifice, hard work and ingenuity. Half of the population learned to live by being permanently in poverty and permanently in need. The other half continued to work hard and try to get ahead.
In this kind of system, the bureaucrat is celebrated and the entrepreneur reviled. All the free money has created a class of professionally poor, perpetually needy and angry people. It has also come with the moral decay that always accompanies idleness. It has also come with the loss of hundreds of thousands of jobs and the flight of those people to other places where they will be rewarded for their hard work.
The government, never too concerned about money since an endless flow would come from Uncle Sam began to spend like tomorrow did not exist. Labor Unions demanded a big share of that money and got their way via typical big labor extortion tactics. The result is the Puerto Rico you see today.
The entire island lost touch with the concept of cause and effect. Math no longer mattered. The one thing that did mater were impossible to keep promises; paid for with other peoples’ money, to keep an ever demanding public happy in order to win the next elections. Now suddenly the truth has come home and it isn’t pretty.
73+ billion dollars in ‘official’ debt with some estimates going as high as 150 billion or more. That amounts to the largest per-capita debt burden in any U.S. jurisdiction. The island is once again turning to Uncle Sam for a bailout, but it won’t matter because even if the island does get a bailout it won’t fix the fundamental problems that face the island: free money, for no effort. Free money, to reward victim-hood.
Gravity Payments will learn this lesson the hard way over the next few years and will either go bankrupt or go back to a regular salary scale. Its profits will disappear as fast as its customers as they grow tired of the lower level of service that free money naturally creates.
Puerto Rico has seen the results of socialism and the welfare state, yet few are courageous enough to talk about the problem and fewer still are willing to take actions needed to fix it.
*Please, take a few minutes to watch parts I, II and III (below) of this reading of the story of 21st Motor Company from Atlas Shrugged. As you read it you will be stunned to learn how what happened in the fictional company is happening today in Puerto Rico, the United States and throughout all of Latin America.
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