Repubs and Dems, Is our current economic system sustainable?

This is not a rant, but is actually a factual explanation of our system. I am not judging whether it is good or bad, that is for you to decide. Please take the time to read and understand.

The Stage:

Every year, the American workers generates trillions of dollars in wealth for the corporations of this country. This wealth is called profits by our corporations. These profits are generally not shared with the people who work to create it, but are given in the form of dividends to people who own stock in the corporations. While many Americans own stock, it is only the truly wealthy who can afford to live off the dividends alone. These people, the richest 1% of the American people, who live off capital gains (dividends) do not work for the wealth that they receive, but simply receive it because they own large amounts of stock in various corporations around the world. Most of these people were inherently rich and descend from families with lots of money, or families that owned large amounts of stock in companies. Either way, most of these families children have never worked, or at least not in the sense that you and I call “work”. Meanwhile the top CEO’s make 475 times the average worker.

The Problem:

There is a culture in America to continually produce higher and higher dividends. Corporations and wall street are under enormous pressure to generate higher and higher profits so that their investors, (namely the board of directors which represents the largest shareholders) can increase their dividends and hence, their wealth. This pressure for higher and higher profits forces corporations to raise prices and slash costs. Corporations eliminate jobs, reduce benefits, freeze wages, outsource jobs and materials. Hence, consumer goods have diminished in quality, workers wages have been stagnant, and the overall quality of life for Americans has diminished greatly. Conversely, the CEO’s and the Board of Directors have used the increase in profits to increase their own dividends and overall wealth. The CEO is hired and compensated by the Board of Directors. Thus the CEO does not do what is in the best interests of the corporation or its workers, but instead does what is in the best interests of the Board of Directors (the majority stockholders) so that he/she may keep their job. We see examples of this every day. One example is American Airlines. They will lay off thousands of workers to reduce costs, and the CEO and other top executives get paid enormous bonuses, not to mention and increased dividend from better than expected profits. So, we have the pressure of corporations to increase profits, which means slashing labor costs, so that the rich can get even richer. While many of us have investments in the market via the 401K or mutual fund, the amount we receive is miniscule compared to the wealth we generate as an American worker.

The Solution:

Currently, workers do not get a portion of the profits. They get a “wage”. A wage is considered a “cost” and thus is not changed by the profits of a corporation. This wage is determined by market forces and is always the lowest possible amount that a company can pay someone to perform a given task. My solution is to restructure the corporation to let the American worker share in the profits that they create, and only what they create. For example, Comcast made 2.5 billion dollars in profit last year. This profit was divided up among its shares of outstanding Class A, Class A Preferred, and Common Stock. The majority of those 2.5 billion dollars went to the largest shareholders, which is the board of directors, most of which do not even work for Comcast. Comcast employs 80,000 people. Thus 80,000 american workers made 2.5 billion dollars in new wealth (profit) and that profit was mostly distributed to a very few lucky people who own the majority of stock. I propose that no less than half of all corporate profits go towards the workers that generated that profit. So the investors can still get their dividend, but the workers also get a fair share of the profits that they worked so hard to maintain. In my example, the average worker at Comcast would have gotten no less than 15,625 dollars as a profit sharing check at the end of the year. This would do wonders for the economy and raise the lifestyle of every American. People who work would actually benefit from their work once again.

I know that the individual investor should get a dividend from their investment in a company, but I think that the American people would be better served and have a better life if they got a share of the profits that they make. So, for starters, I would divide the profits in half. Half for the investors, and half for the workers. That would be an enormous amount of money that would go into the average American's pocket, increasing tax revenue, consumer confidence, and overall American lifestyle.

So, the question is; Is the current system sustainable?