> A laborer (or an employee) exchanges their individual time and effort for a fixed wage or compensation package. When an individual opts to participate in the economy as a laborer, their only option to increase their level of compensation is to increase their job related knowledge (and hopefully their productivity) to a level that each hour they work demands a higher level of compensation. While this can be lucrative to a degree, it carries with it several significant limitations: An individual is physically limited to the number hours they can work An individual laborer’s hourly compensation can only be a relatively small percentage of what they actually produce, because most of the profit from what they produced must be channeled away from the laborer and toward the continued operation of the business and the compensation of ownership and other laborers. Trading hours for dollars ultimately favors the business and the ownership of the business over the individual laborer. Ownership of a business, conversely, allows the business owner to determine what percentage of the profit they themselves produce they will keep to compensate themselves, and it creates a vehicle for them to participate in a process called duplication. Duplication is a process unique to free market capitalism. The owner produces as much of a product or service as they themselves can individually produce. Then, when the demand for their product / service exceeds what they can produce individually, the owner can hire, train and equip another individual to produce the additional products and services to meet the additional demand, and keep a percentage of the profit produced by the person they hired. This process can be repeated without limit, until a single owner can be in receipt of a percentage of the profit created by hundreds and even thousands of employees. When properly managed, the process of duplication can be synergistic and beneficial all the way around: The owner benefits through increased income without increased personal labor The employee benefits from receiving an income without having to personally supply startup, or operating capital, or take on any personal economic liability for personal injury or property damage caused by the manufacturing or usage of the product / service The customer benefits from being supplied at a fair market rate with a needed or desired product or service Additionally, ownership of a profitable business can provide a self sustaining income source which can ultimately sustain the owner and his family for many generations, without having to rely on money invested in a potentially unstable stock market or from corrupt and mismanaged government subsidy. Ownership of a business also allows deduction of business expenses from the owner’s taxable income. These deductions are not available to laborers, and they allow businesses to reinvest more of what they produce back into their businesses and expand them, hire new employees, increasing profits and thus increasing personal incomes. Lastly, and of no small significance, a profitable business becomes a valuable commodity, which can be sold as an asset for several times the value of the gross revenue it generates annually.
Posted on: Sat, 29 Mar 2014 02:21:39 +0000
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