Why Wages Are Low Part 1

Introduction

As HR Practitioner, other than attracting and hiring the required number of right talents, it is part of our role to find ways to retain them. People work at jobs for a livelihood; hence compensation is an important tool.

However, I also realized that a lot people are living on a standard close to the poverty line. In this article, I want to investigate to find out the possible reason why wage levels are suppressed.

Nature Gives Us Abundance. We Can Get By With Little

“Therefore, I tell you, don’t be anxious for your life: what you will eat, or what you will drink; nor yet for your body, what you will wear. Isn’t life more than food, and the body more than clothing?” Bible verse Mathew 6:25

At the lowest level of Abraham Maslow’s hierarchy of needs are the physiological needs: the physical requirements for survival. This includes water, food, clothing, shelter and healthcare.

Nature has provided for mankind. However industrialization, consumerism and materialism had driven people away from self-sufficiency and community based living towards city living and relying on money.

Most people falsely associate success with excess. Even the rich (such as Donald Trump and Robert Kiyosaki), and interestingly the “mystics” (such as OSHO) tell us that they can get by with little. Some are well known to be frugal (such as Warren Buffett).

Jon Jandai: Life Is Easy. Why Do We Make It So Hard?

Jon Jandai in his TED Talk “Life is easy. Why do we make it so hard?” had gone from his hometown in Thailand to Bangkok, to study at the university and work at a job. He found that he had to work 8 hours a day for very little wage; do not have enough to eat and university courses was teaching destructive ways of agriculture, civil construction and so on.

Then he recalled from his childhood memories that back in his hometown, people worked only 2 months in a year. He returned to his hometown; planted rice; reared fishes; have a vegetable garden and these gave him enough for his family to live on and he sold whatever is left for an income.

Not only has he learned how to heal himself when he is sick, he has also learned to build his houses by himself, by spending 2 hours a day to do so, and completed each in 3 months. Comparing, his former classmate had to take out a 30 year loan to buy his home in the city and have to work a lifetime to repay that loan.

He highlighted 2 flaws about what most people are taught:
• We are taught to make life hard and complicated all the time.
• We are taught to disconnect ourselves from other people, and rely on our money (wage).

He felt that society has become more uncivilized because human beings had made the 4 necessities (food, house, clothes, medicine) hard to afford or obtain.

Cradles of Human Civilization

I want to talk about land because it is something under everyone’s feet. In the history of human civilization, many cities had been built on river delta because of the fertile land and the closeness to fresh water.

Land came into the hands of the powerful because of barbaric conquests. Historically this is the case worldwide, including Greece, India, China, Japan. You can google the question “Why did Japan enter world war two?” At its peak, the British Empire was the largest formal empire that the world had ever known. For example, when Singapore was under colonial rule; before it became a republic, its citizens were subjects to the Queen.

Kevin Cahill’s book Who Owns the World mentioned that Queen Elizabeth II, head of state of the United Kingdom and of 31 other states and territories, is the legal owner of about 6,600 million acres of land, one sixth of the earth’s non ocean surface.
She is the only person on earth who owns whole countries, and who owns countries that are not her own domestic territory.

This land ownership is separate from her role as head of state and is different from other monarchies where no such claim is made – Norway, Belgium, Denmark etc. The value of her land holding is approximately £17,600,000,000,000.

Land: 10 Characteristics of Land Economics

One of the 10 characteristics of land economics is that it is a free gift from nature. In cities, the government, royalties, aristocrats or ideologist owns the land (When Stalin came into power in the former Soviet Union, the government took away land from rich farmers and created state-owned farms. However, the farms did not produce enough food for the people and many starved.)

Cities exist within physical boundaries (city limits). Land is permanent, immovable and fixed (limited) in quantity.

Working Life in the Cities

Myrl Shireman wrote that “Most countries have other major cities besides the capital city. These cities have become important because of the functions they serve. Many have become major cities because they are transportation centers; others are financial centers for the country. Many capita cities have other important functions, besides being the location of government offices.”

What this means is that in the modern cities, a lot of businesses have either their physical operating bases or manufacturing plants in the cities. These activities give rise to a need for public services, such as schools, building of roads, providing fire-fighting and medical services, banking services.

Thus the value the land in the cities increases first because of the economic activities generated by businesses and second because of the availability of public services to enable those economic activities to be carried out efficiently.

This value increases over time because of competition and speculation. In modern times, unethical practices in the real estate industry also complicated the situation.

In this system, businesses and workers have to work for income. Land owners or landlords (lessors) are the only ones that do not need to work to collect rent. Even when the economy is not doing well, the lease agreement forces the tenant (lessee) to continue to pay rent. This is the concept expounded in Henry George’s book.

Henry George’s Book “Progress and Poverty”

Henry George’s book, written in 1879, titled “Progress and Poverty: An Inquiry into the Cause of Industrial Depressions and of Increase of Want with Increase of Wealth: The Remedy” seeks to explain why poverty exists despite of widespread advances in technology and even where there is a concentration of great wealth such as in cities.

Wendell Fitzgerald, President of the Board of the San Francisco Henry George School talks about the concept in Henry George’s book. For your interests, I have indicated a long list of youtube videos in the references at the end of this article.

As written in Wikipedia article “Progress and Poverty,” the technological and social advances (including education and public services) in cities increased the value of land (natural resources, urban locations, etc.) and, thus, the amount of wealth (rent) that can be demanded by the owners of land from those who need the use of land. In other words: the better the public services, the higher the rent is, as more people value that land. In addition, property speculation also led to increase in the price of land faster than wealth (profits generated from businesses) can be produced to pay. This has the result of lowering the amount of wealth left over for labor to claim in wages.

To be continued in Part 2

 

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