Inequality and Growth

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A society constitutes of variety of people with variety of skills, knowledge and attitude. This is what brings variation in the achievements and living of individuals, some achieve more some achieve less, some grow rich some remain poor. Its the natural phenomena. To try to make the rich ones achieve less and the poor ones achieve more is in fact to try to disturb the natural growth cycle. Making one achieve more than what s/he deserve may be kindness but doing so by compelling the captives one to give away the benefits obtained by their toil is not a fare practice. A voluntary service can be considered to be ethical to help the less deserver, rather then making the real deserver to contribute with coercion.

We have different philosophies and organizations (political and non-political) trying hard to reduce the natural human in-equality towards equality. I really question myself “Is this natural brone in-equality really evil and needs to be reduced?” And “Should we worry more about the in-equality than growth?”

Is the economic inequality really a problem? Are the less fortunate suffering because someone are succeeding? If so how many people are suffering because of the Billionaire of Nepal, Mr. Binod Chaudhary? Wait a sec, had there not been Chaudhary group, how many people would suffer? Lets just consider, Chaudhary Group closes from a day x. Then, how many people in Nepal are going to be jobless? How much people had to depend on imported goods? How much costly the product would have been? Chaudhary Group was a start from a zero and regular addition of the building block in seek of betterment. It did not earn by slaving people. It earned by giving job and providing living of numerous families. He grew more, other grew less. And he deserved to be so. To forget the growth of living standard of numerous families and to accuse the inequality is just to be jealous of the success of people. I just say “Why to worry about someone making his fortune, by using his physical and/or mental abilities?” But what if he had not initiated the company? Would anyone work if he will not achieve more then other? And would anyone work more and more if he would not achieve more and more? Getting more is the inspiration that promotes one to work harder. As a summary, its the inequality that motivates people for the growth. Nobody will work harder to just be equal or almost equal with others. In my view, Nepal needs to forget the chapter of economic equality, at least for decades, if it really wants to grow.

Explaining Taxes to a 5-Year-Old

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Its not only in America, its elsewhere. Nobody wants to give up the hard earned money to invest in facilitating people who do not work. The higher tax not only discourages the 5 year old child, its equally evident in the youngster and adults. One would rather be happy to invest even more for the purpose s/he would like to serve voluntarily.

Free Your Family

After finishing 2 jobs where he earned a total of 30 cents, we talked of economics…

Me (Mom): If I hired you to do a job and I told you that I would pay you $2 for the job, but you thought it was too much work for not enough money, would you do the job?
Young Inventor (Son, 5): No (smiling)
Me: What if you asked for more money?
YI: Yeah like 100 dollars!
Me: (laughing) Okay and if I said that was not fair either but then offered you $5 and you agreed, how much would I have to pay you?
YI: $5
Me: When would you get your money?
YI: When I finish the job.
Me: Good. If you finished the job but wanted more money, because it was harder than you thought, should you demand more than the $5 we agreed on.
YI: No
Me: Should I…

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Talks on Minimum Wage

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People tend to believe that government must fix the minimum wage level for any task, and they should increase the amount timely. We used to have various discussions when I was in college. We do study for years with a large amount of economic investment? And what we get? A job of 12 thousands salary per month? (around 15 thousands in discussion nowadays). It will take 3-4 yrs only to earn the spent money and do not know when to save the amount that was invested. Then whats the use of studying years spending hundred thousands of sum? Therefore the government must make the minimum wage/salary laws: this was what used to be the conclusions of most of the discussions.

But after my college, there have been more discussions about the minimum wage laws and increasing the amount. Unions organize various strikes for the issue, political parties supported the strike. Surya Nepal Private Limited had  to shut down the company permanently because of the strike organized by the unions. There are many other examples shut down of industries because of the disharmony between the employee and employer in Nepal.

I was just going through an article: Minimum Wage Laws: Sabotaging the Ladder of Economic Opportunity . I thought this is just the issue we go through many of the times, motivating me to write this content.

Anybody establishes a firm with the purpose of making profit and runs the firm to make better profit. The firm may be different, service may be different, strategy may be different, but the final motive is always making better and better profit may be in terms of money, share, goodwill or any other they believe to be profit. Every will be doing it, including me. And this particularly in not an offense. Every body have the right to make his living without coercing the right of other.

How does an employer hire employee? How does he pays?

The factor that matters to any businessman is profit. He does not bother to hire more and more workers until and unless he thinks he can make better profit from the hiring. Better profit may include the better working efficiency or the better efficiency to salary ratio. I believe nobody bothers to pay more if he can make more from him. The employer never hires men for $10 to have the output of $9.99 (just for an example), he would rather not perform the task. But I believe he would be pleased to pay $15 for the output of lets say $16, that makes him profit.

What’s bad in Minimum Wage and what’s good?

What’s good? Employee gets better salary for their job.

What’s bad? Employers get less attracted in hiring the manpower. Cut offs of job. Increase in work pressure. Unemployment increase. Unexperienced get lesser chances to get the first job. Production cost increase. Cost of the product increase.

What in my view :

Many high school students come to me and ask a question: Which subject has a better scope? Which subject shall I study and/or try to study? I generally answer: “There’s no relation in the subject you study and the altitude you reach after the study. The same study has made people earn 4 digit salary and the same study has made people earn 6 digit earning and this occurs regardless of the subject you study. What height you receive in your career depends on our own ability regardless of the study or profession you choose. Therefore, its better you choose your field of interest”. This however is not the answer I made myself. I know this because I had once the same question and had got similar answer.

Regarding the minimum wage: Its only the job of union leaders, so that they get an issue to get support of the existing labors and bargain management. Political parties favor them to get the votes. Of course increment of earning of workers in itself is good but what comes up along with it should never be blinded. While completing a cycle, I see no profit to the low income people themselves. Its just the numeric value increase not the living standard while completing a cycle. (Cycle: Minimum wage increase — cost of production increase —- cost of product increase — consume the product in increase price). Only the thing that happens in between is the Government collects higher tax and this is fruitful only for a corrupt leaders and government. I would better prefer in increasing the skills of an individual so as to be able to increase the earning.

Critical Question of a Child?

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I faced a critical question. Is Child Labor a Crime ? I was confused.

I met a child labor, to be more specific “an orphan child labor” . I had an informal chat with the child and found a self-respect in him. According to him, he used to be beg when he was a child then started to thieve until he was caught when he tried to pick pocket his current master. He showed his gratitude to his master and said : ” I still would have been a thief, if I was not caught by him that day “. On further chat with him about clarifying about the child labor and explaining it as a crime, he questioned ” Doesn’t a Child like me have the right to eat food by own labor ? , or Should I continue thieving until I grow up as a thief? “.

It is estimated that more than 700 children labor only in Nepalgunj. Everyone have a different story ” Why they have to work?” . And most of them would say : “Abandoning child from work is injustice, unless the government itself take the responsibility of them and assure there is no need of labor to them.” And this would refer to poverty as well, as far I understood them.

I would say: What are the factors causing Child Labor? Why do children go to labor? How are child laboring? Are they receiving their payments? What would be the best alternative of Child Labor? What are their challenges and risks? are some vulnerable questions we need to sort out. In one hand we are searching the right to choice on the next hand many children are seeking their rights to cloths, food, shelter and life.

However the question : “Doesn’t a child have the right to support himself when there is nobody to support him?” ” Is child labor a crime or the factors that lead to child labor are the real culprit?” has strike me. I believe “Generalization is various aspects of an Individual is a Crime?”. Nobody wants to labor, not only the children, even grown ups would dream to live a life without labor, but needs make them do so. If you can, solve their problem, if not, do not make their problem more complex.