A simplified model

• I'm going to assume the following simplified model that ignores risk and ignores differing skill levels -- why? -- because I think the market has a means of organizing the differential compensation for high vs low risk and for expert vs basic skills that can be reconciled fairly well with concepts of social justice (well, on second thought, maybe it doesn't work all that perfectly -- but that's another topic) -- in any case, the more fundamental question is rather: how is the compensation for risk-free capital to be balanced in a socially just way with the compensation for average (or perhaps minimum) labour skills?

The Ocandida case

• So I will assume the following simplified model:
  1. Ocandida was once a country of farmers who constantly told themselves that everything was for the best in the best of all possible worlds
  2. all farmers in Ocandida worked on their own farms (about 8 hours a day) where they earned the equivalent of 100 dolorios per year, which was just enough for them to feed and clothe their families (and care for their retired and destitute parents) and afford one modest vacation to Folderol with nothing left for savings (meaning they too would become dolorous and destitute in their old age) -- farming at the time included house building and making clothes and such stuff so that in fact each family farm was self-sufficient
  3. now, it happened that the bark of a certain tree which was plentiful throughout Ocandida could be used to create a delightful chewing gum which was much sought after by the large country of The MerryGlands bordering on Ocandida
  4. the trouble was, this chewing gum could only be made in a gum factory which would take a one-person-year of human effort (8 hours a day) to build
  5. once such a factory were built, one worker in the factory would be able to produce (from the freely available trees) enough gum to bring in 200 dolorios per year
  6. the concept of the factory was well known to everyone and needed no great flash of entrepreneurial or innovative insight to think up -- on the other hand, people found 8 hours a day to be a pretty full workload and they liked to go home at night and watch their 4 hours of DeliVision before going to sleep
  7. there was no government and no tax

Your views?

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