The First Leg of the plan is to tempt financially sound companies to voluntarily participate in making their pay graphs reflect greater point-of-pay equity by making those payroll graphs less concave. In doing so, they would gain calibrated access to very cheap capital, depending on how well they scored in that regard, as measured under the program's formulas. The hope here is that, in time, as thousands of companies continued to participate, the sum of all the gross profits of their collective enterprise would become more evenly distributed over a broader swath of earning levels all across the nation, giving Main Street more access to that money before it floats off to Wall Street and other destinations in the financial sector via the bank accounts of the rich. The secondary effect of this gradual strengthening of the middle class would be an incremental escape from the surcharge in interest attached to things purchased, allowing more take-home pay to be spent on other forms of retail activity, along with gradual growth in the demand side of the economy.
The nut of this approach boils down to making that access to cheap capital dependent upon a mathematical measure of how well each company performs in the distribution of its gross payroll set-aside. This we can do quite simply by comparing the area under the actual pay graph of each quarter to the area under an imaginary straight-line graph of ideal distribution drawn from the lowest paid to the highest paid.
If pay were perfectly distributed, this imaginary line would be the payroll graph of the company and the area under the graph, in terms of the units used in the vertical and horizontal axes, would equal the company gross payroll. The more the actual gross payroll falls short of the imaginary payroll, the smaller the ratio of the actual sub-graph area to the imaginary and the lower the resulting social equity score; the rationale being that, in making top end pay higher (and the graph swoop upward), money (area) had been moved out of the middle ranks to pad the upper ranks, most notably the few highest paid - precisely what we don't need if we are to rebuild America's economic core and the root cause, in my opinion, for the recent past's explosion in credit assistance sought by middle class earners.
In this manner, as the quarters rolled by and social equity performance points were earned, the company would gradually increase the limit it could borrow at rock-bottom rates (pending a verifiable good cause to lend on the part of the fund's loan management staff).
If the company redeemed points earned, and took out the money represented by those points, the company's Social Equity Credit Access (SECA) account would be drawn down by the number of points extracted.
Irrespective of points gained, companies would still have to demonstrate good repayment capability, on a case-by-case basis, for such loans. The points accrued would simply establish how much cheap credit the company in question was qualified to borrow, relative to how much pay it had disbursed among employees in earning those points.
As long as participating firms continued to exist, unredeemed credit access points would not be lost if the option to use them were not exercised. They could be cashed in at some rational fraction of the unused (or unusable) credit access earned over time under POPE requirements (or, perhaps, sold to another company desirous of points, subject to regulatory requirements similar to those behind carbon credits).
In the First Leg of the POPE system, the figures that are needed to rate the equity performance of any given payroll are the highest pay, the lowest pay, the total payroll of the company and the number of employees (including officers). That's it.
The gradient of the pay graph, relative to the number of employees involved, would not affect how much capital could be borrowed, though it would have relevance in determining how much of their pay the top three earners in the company could actually take home - a concern dealt with in the supplementary Second Leg. That is because, for the account to be truly effective in promoting social equity, we have to prevent company executives from trying to meet the goals of the First Leg by reducing pay at the bottom to make the pay graph straight. The Second Leg's corrective action is exerted by customizing a membership fee top earners must pay in order for their company to be in "The POPE Club", so to speak. In deriving a socially equitable custom membership rate for each of the three top earners, the calculations of the Second Leg take into account job context factors that are relevant. Those factors are the following: 1.) what the best-paid receives, 2.) what the least-paid receives, and 3.) how many other people have to be considered in the payroll.
The math here is pretty basic. For the sake of preserving such readability as this rather dry topic may have, I've relegated the actual formulas to a separate addendum, which genuinely interested parties may get on request.
Again, it cannot be overstated that such loans would still have to be justified against projected repayment capability after the loaned money had been deployed in whatever manner the company intended. From society's point of view, this program would not be an extension of charity; it would be the collective interest at work in the form of a mutually-beneficial partnership.
Very simple and doable, in principle, and, I'm prepared to bet, potentially very useful to meeting the employment challenges of the foreseeable future through stimulation of the demand side of the economy.
With the appropriate organization and outreach in place, the First Leg, alone, would be a very significant step towards narrowing the gap between the rich and the middle earners of the country. It would be useful in reversing our recent slide, in the eyes of the world, with respect to quality-of-life issues and our ability to govern for our own social benefit.
The People, through their government representatives on the management team of the fund, would need to see sustained progress before rendering any assistance extended under this program. When I say, "the People," I don't mean some select group within the government; I mean the whole 300 million person taxpaying, news-reading society from which such cheap credit had been solicited - the People of these United States.
Failing some better reciprocal of an alternative nature (I can't imagine what that might be), it is only right that the price for being given access to cheap credit should be a company's willingness to participate in a productive way in both the First and Second Legs of the POPE system for a full financial year, minimum.
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