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.
