Experiment with a Simple Business
This spreadsheet can be downloaded and used on your own computer. It is
designed so that you can change the values written in red. There is a
version for Excel and
also one for Macintosh Numbers.
In a world where water can be exported from Fiji and sold for a higher
price than some wines it is clear that what something is worth depends
on what people are willing to pay for it. That being the case, it is
difficult to create a simple case in which there is a naturally
occuring minimum wage. However, in this scenario there exists a
community on the edge of a forest preserved in wilderness condition and
open to nut collectors who pay a small license fee. They are permitted
to collect nuts from a kind of tree that produces a vegetable food even
more nearly perfect than sesame seeds for human nutrition. Accept for
the monotony, a human can survive on about six nuts per day. This
scenario assumes that any nut collector can collect, on average, eight
nuts per day. So to work for hire an individual would not be wise to
accept less than an eight nut per day salary. Since other parts of the
domain in which the forest is found do not produce these nuts, they are
more valuable in trade than they are in local consumption. A trading
post manages the packing and the hand-off of surplus nuts to traders.
amd they receive fish hooks, ax heads, and various other things that
they cannot get locally. The individual who manages the trading post
hires nut collectors and pays them in nuts, which are a de facto unit
of currency. The workers in turn can buy trade goods from their
employer at cost. People in other occupations, e.g., fishermen, sell
their products for nuts, which can be used to pay for fish hooks, for
labor used to repair their boats, etc.
The trading post owners determine how many of the villagers will be
given work as nut collectors and other workes in the post. If they hire
too many they may get so many nuts that they cannot trade them all
before they lose their value as food. The workers can collect more of
fewer nuts per day depending on how well the nut trees are producing
and how well the collectors are working. Packing and related costs are
constant since nut husk fibers are used to weave simple containers for
transportation. The owners keep back a certain amount of their gross
income since the trading post needs a new thatched roof every few
years, and there are some other small upkeep expenses. They have to pay
a forest management fee that undergoes inflation at such a small rate
that it is barely noticed from year to year. Small expenditures are
also needed for communications, coffee and snacks for visiting traders,
etc. These expenses are pretty constant from year to year. The
government can tax them at any rate that it wants.
I have set the initial conditions, exhibited above, to indicate trading
post owners who imprudently keep their workers at a bare subsistence
level. As a result, next year they will have three fewer workers.
Everybody in the community will know why they quit, got sick and
infirm, or died. Next year it may be difficult to find three more
people willing to work for the trading post.
The attrition rate I've set, the minimum standard of living, the amount
the government takes in taxes, the amount the owners hold back for
their own use and spend and/or save, the number of nuts that workers
can collect each day, and perhaps other factors (e.g., a fire in the
trading post that destroys half of a year's crop) can all change for
reasons that onlookers might never expect. No attempt has been made to
include war, theft, the trading post owners taking up gambling, etc.
Nevertheless, those interested in experimenting can try things like
computing the number of workers lost to attrition, and plugging the
number of workers remaining to see what might happen the next year if
other conditions were not to change. What would happen in a
worker-owned trading post wherein the management is paid exactly the
same as the janitor?
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