An Attempt to Understand the Rich and the Poor
In the recent months, there was a big fuss about minimum and maximum wages in Egypt, one team insisting on the necessity of enforcing more convergence in wages nationwide where workers would have higher wages, and high profile white collars would have reduced salaries.
On the other hand, the other team complain that increasing salaries will end up with an inflation of currency, since more people will have the capacity to pay a certain figure of Egyptian currency, which started making sense to me in a way.
That meant that the person who used to earn x Egyptian Pounds, may earn 3 times x Egyptian pounds, the other richer person who used to earn y Egyptian Pounds may now earn y divided by some factor, while a third person will have a fixed income of Egyptian pounds call it z.
Let us consider one more factor; how many of those who earn x compared to those who earn y, and those who belong to the third group.
So the price of a certain commodity C1 would be the equilibrium between the average price everyone is willing to pay and the price the supplier is willing to put for this commodity. we all know the infamous two curves of Supply and Demand, where the intersection between them is the stability point of a certain Price and a certain Quantity.
The direct result of such change, is that people from the first group may afford buying more goods and services than before, while people from second group will lose some of the existing privileges of buying excess goods and services (which is sort of more just). However, people from the third group (pension beneficiaries, small business owners, and private sector workers), who do not fall under the wages curve, will lose their ability to afford goods and services they used to have before such change.
Add to the above, that there is a spectrum of wages from those who earn x Egyptian Pounds (the extreme minimum wage) to those who earn y Egyptian Pounds (the extreme maximum wage), will we apply a function to guarantee a continuous convergence curve, or we are to apply the change only on those who fall both below and above minimum and maximum wages thresholds?
Of course the supply and demand applies only in case of a free market model, which is not 100% applied in the Egyptian market, given the regulatory interference of government to set prices and subsidize some commodities. Which means that the difference in prices will be borne by the government’s treasury.
There must be a better way, to have better wealth distribution among the entire society, including the third group. If we are to chop off the ridiculously extreme high wages, those who would buy more than they need, and shift price tags dramatically, where the rest of society would pay a portion of the goods and services ending up in the trash cans, this would be good, I guess.
Meanwhile, I believe the other important factor is to guarantee abundance in essential goods and services, where people from both first and third group would afford more without even shifting wages higher, which means lower currency inflation.
Someone might ask me, “what do you know about economy?” and my answer would be “Nothing” except that I don’t get it with such insistence on pushing for currency related reforms without focusing on what currency should be capable of doing.
This leads to the other line of thought I had; if person A is a farmer who can produce food while person B is capable of transporting people and goods. usually person A would buy services from person B, and person B would buy goods from person A (of course this is an over simplification, but just for the sake of the argument). However, during recession days, person A would lack enough liquidity to buy services from person B, hence may lose business. Meanwhile, person B, will face trouble in business because his customer (person A) is not capable of buying his services, hence, person B loses business as well, and in turn will not be capable of feeding himself!
Wait a minute! both A and B have whatever the other person is looking for, yet they both are out of business because of the lack of this medium called Egyptian Pounds, US Dollars, Euros or whatever currency? isn’t currency supposed to be some sort of evolution in economy? now it is dragging us from moving on!
In the above scenario, what would be the way out? would it be the return of bargaining? or some other economical system to guarantee streamlining business and proper distribution of goods and services among people? if person A wanted services of person B, they would say, I am willing to give you some of my goods in return of you transporting my products to the nearby market. if there is a deal, then we have business moving on without the need for currency at this stage. some other idea would be a new role of a third person C, who’s role is to evaluate both goods and services provided by both A and B, and based on that they would say B’s service is worth N units while A’s goods worth M units per Kg or so. in return of such evaluation, C would get a share of both A and B’s products, sound’s sort of similar to currency, except that it is not deducted from a balance. that means C’s role is a service instead of lending funds, and the units used in evaluating goods and services are not placed in some bank or safe, it is more of a measurement unit, like using Kg or Liters.
If we expand the above model on a macro level, where the new role of evaluators comes into the new economical model, and every person in society capable of providing goods or services will refer to person C to ask them to evaluate their product. another role to serve this new model, is a person D who monitors gaps in market needs and advices new comers about what is needed by this circle of producers and consumers.
such model can co-exist with the current currency based economical model, to allow international trade and serving visitors. Meanwhile, unemployment would dramatically decrease. what do you think of that? Hate mail is welcome as well 
