Transactional economics unmasks some of the volatility of the marketplace that the Monopoly model implies. What follows are rough numbers to demonstrate the relative differences that players experience. For simplicity, transactions are counted as an aggregate. Multiple payments from or to the same source are treated as one transaction.
A wage earner has only one transaction for revenue. It is with their employer. They take a job at a set rate of pay, report to work and get paid at a fixed interval. They use their revenue to pay a multitude of expenses (rent, food, auto). Their formula could be something like R=1 E=40. One transaction of revenue, forty transactions of expense.
For the business that hires the wage earner, that salary is one of many expenses. The business derives its revenue from sales. Their formula could be R=500 (clients) E=100 (vendors and employees). E could be divided into groups like wages, supplies, fixed overhead, advertising, R&D, etc.
Businesses come in different sizes. A small business might be R500 E100, a larger business could be R50000 E1000. A business that makes a huge item (airplanes, airports, steel mills) but has few clients would have a different profile: R30, E20000. A government contractor might be R1 E150. A banking entity like Master Card could be R100,000,000 and E1000. A small child would be R0 E0. A retired pensioner could be R1 E30, living frugally on Social Security.
The number of transactions makes a difference in how people experience the economy. Imagine playing a game of Monopoly with four players, where one of the players gets to roll four times more than everyone else. At the beginning of the game, during the boom cycle, this would offer a tremendous advantage. They would be buying up all the property in advance of everyone else. Everybody that followed would be forced to pay rent. This disadvantage is what every new generation experiences when they transition away from R0 E0 and enter the workforce as R1 E+.
Having more turns also changes how one can respond to inflation. A business with a lot of expenses has a lot of areas to cut or renegotiate pricing. The individual must pay the cost of gasoline or not travel, or cut something else. The individual has less control over both revenue and expense. They can request a pay increase, but they cannot control either revenue or expense easily.
Everyone is connected. The government can raise taxes and pay public employees more, but that increase becomes a pay cut for private sector employees. Similarly, a pay increase in the private sector must increase the price of the goods being sold, and that inflation works the same as a pay cut for those outside of the company. The divide between rich and poor, advantage and disadvantage, is constantly shifting. Having more turns while losing money on each transaction is a huge disadvantage, and can bring about bankruptcy quickly. There is no safe haven when risk has become institutionalized. That is the key difference between a commonwealth and competitive capitalism.
transactional economics by steve consilvio
When voters trust a business person as a politician, and expect them to take charge of the economy, the business leader has experienced a different economy than most of the voters. For him, the solution is to maximize profits and suppress wages. The voters want good jobs, and are usually divided between the desire to earn more and for goods to cost less. Neither of these ideas are in a typical business-person's toolkit. Even if the candidate's employees were paid well, it was accomplished by charging customers more. There is no escape from this triangularization.
There are many political factions concerning economics, and they are all right and wrong in their own way. More revenue will fix any budget, but it will do so by negatively impacting someone else's budget. Unions want higher wages, but the cost is borne by the consumer or the taxpayer. More profits for businesses are borne by vendors, employees, consumers and taxpayers who are overworked, underpaid and overcharged.
Economic and political theory calls for the government to act as an impartial arbitrator, but how can people be treated equally when their roles and experiences are so radically different? Any one size fits all tax code would not fit anyone properly. A complicated tax code, which attempts to do favors for certain players, would automatically be unfair to or exclude someone else. There is a blurry line between rights and privileges. Since all numbers are connected, and every transaction imbalanced, any help for one player must put many other players at a disadvantage.
The use of fiat money and the nature of inflation ensures that the economy is not a zero sum game, but it does share one important aspect of a zero sum situation: my revenue is your expense. Obviously, consumption is good and necessary. Long term, however, the mathematical echo of every transaction is to our collective disadvantage. It is impossible for individuals or organizations to be balanced and fair in a structurally unbalanced and perpetually volatile system. Empathy cannot counterbalance the laws of mathematics that we are experiencing. We need smarter rules, not a blind faith in egalitarianism or invisible hands.
Transactional analysis explains why wealth divides in the game Monopoly and in real life. A business is profitable when it makes more profitable transactions than non-profitable transactions. The more transactions it makes, the potential exists for both great wealth and great loss. In general, it takes a huge expense to generate a huge revenue. A small business or an individual cannot make enough profitable transactions to accumulate the wealth of a large corporation. Nor do they receive enough credit to lose as much as a large corporation.
Large businesses get more turns in the game. Size becomes its own advantage. Size also makes it possible to negotiate down the cost of expenses, wages and to set the terms of the sale. This introduces more imbalance into the system.
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