Thursday, July 31, 2008

Rant: $1 = 9.16 minutes of sweeping

I just had an epiphany:

Lacking the “gold standard” – or any other official connection between the value of a dollar and a stable physical commodity – the government needs to fix the value of a dollar to something to have any sort of “value”. Thus, thru the march of greed & idiocy, the US Government has fixed the value of a dollar to the value of someone sweeping floors. This fiat value is commonly called “minimum wage”.

Every company needs someone to sweep the floors. The inherent, ethereal value of this is largely consistent across economy, geography, and time – it simply needs doing, takes about the same effort regardless of who is doing it and who it is done for, and thus is the “gold standard” for paid labor insofar as the value is universal, uniform and unavoidable. Interestingly for this discussion, it is also among the cheapest labors for which companies will hire.

Our government, in (or despite) its infinite lack of wisdom, has declared that this unavoidable – yet minimally valuable – activity shall be paid a minimum amount ($6.55 starting this Thursday). Thus, a dollar is officially worth the effort of sweeping a floor for 9 minutes 9.6 seconds.

…which explains the current price of gas. Gasoline is a universal commodity: nobody really cares where it comes from, it comes from basically anywhere and is used everywhere in roughly equal amounts, the price is universally uniform (local taxes aside), and its use/replacement cycle is fast enough that prices fluxuate (sp?) daily to reflect not so much the “price” of a gallon, but the value of a currency in terms of units of product. To wit: $4/gallon doesn’t mean so much that gasoline is worth $4 for a gallon, but that $1 is worth ¼ gallon of gas; thus, the fluxuation in price reflects not the price of gas, but the value of the currency.

A dollar, being no longer based on physical commodity (silver per the original Constitution, gold by practical value-per-density efficiency, and ultimately nothing at all under Nixon), is now fixed by fiat to the value of someone sweeping a floor for 9.16 minutes. Given the inherent ratio of the value of 1 hour of floor-sweeping naturally to an inherent value of 1 gallon of gasoline will not change, and the newly-Congressionally-mandated equation of 9.16 minutes of floor-sweeping to $1, that leaves the only unknown in this equation being the number of dollars required to buy one gallon of gasoline … which, due to the Law of Supply and Demand, will work out to something approaching $5/gallon.

I predict that if one runs historical statistics involving “minimum wage” and gas prices, you’ll find that the cost of 1 gallon of gasoline has always equated to about 40 minutes of floor-sweeping. As the government-mandated wage for floor-sweeping (aka “minimum wage”) increased, the international value of the dollar has decreased accordingly, as reflected in the price at the pump. Short of rare and extraordinary and narrow social variations, floors must be swept, and cars must be refilled with gas, and economic laws mandate the relative value of the two remain largely constant … the currency used to transfer value from one to the other, however, is subject to change depending on what silly mandates people subject the currency to.

The epiphany: $1 is worth, by law, 9.16 minutes of floor-sweeping; the price of gas reflects this.

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