Tuesday, March 30, 2010

How To Double salary in 10 years, country wise.

Malaysia is aiming to increase its average salary from $2,000 to $4,000 in the next 10 years. How can that be done ?

First of all, using rule of 72 you can estimate that doubling in 10 years would mean a continuous compound raise of 7% annually. Or a total of 72% increment within that 10 years. For example, it doesn't matter if the increment is from 2.72% to 11.72% adding 1% annually OR it went from 11.72% to 2.72%, either way will result a $4,000 monthly salary in 2010.

While it may sound tough to double a person's salary in 10 years but there are a number of ways this can be achieved rather easily country wide;

1. Increase Inflation

By decreasing supply on purpose, prices increase. Where does the extra money go to ? It goes to people who produce the supply. It may sound weird but when done properly, all the extra money collected from the consumers will be passed down to the workers themselves. This way, although items price increase, your salary increase as well. Nothing in life actually change, just that the numbers get bigger. This method work best with monopoly in place, as in all consumers are also the same workers for that few same companies.

How much inflation rate do we need in order to achieve this ? Properly 10% a year for the 1st 7 years (2011-2017) and then back to a very low figure in the last 3 years (2018-2020). It will take a while before the effect of inflation hike is brought over to salary increment. Furthermore, we can't have a high inflation rate approaching 2020.

Will this help us ? Well no, I have already said Nothing in life actually change, just that the numbers get bigger ... on everything.

2. Foreign Exchange

Believe it or not, it is entirely possible that by simply doing NOTHING, our country wide average salary can become double in the next 10 years. Notice that our finance minister is using USD as a benchmark for this target. Today 1 USD = 3.3 MYR. If USD continues to devalue and the exchange rate become 1:1.65 in 2010, then by having the same MYR 2,000 salary, we would have already doubled our salary from USD 606 to USD 1,212.

How possible it this ? Well, it is almost a certainty the trend IS CORRECT. The power switch from west to east has not only already occurred but it has been strengthening now. It is only a matter of how big a scale it will switch.

Will this help us ? Hell no. It would have helped if we BUY things from USA. But the fact is we BUY mostly from the EAST and we will buy MORE from within the EAST. A small currency rise on the EAST may knock us out of the game easily. We are anchoring on the wrong currency for our future planning.

3. By making a few people even RICHER

This is an average game. Simply by making today's millionaires into billionaires, it will easily pull up the average and skew the figures. How is this done ? By issuing more mega projects to turn key contractors, hiring super consultants to tell us what common senses are, setup independent groups for special projects etc.

Will this help us? Well, some of us maybe. You just need to get on the bandwagon as front seat as possible.

4. By giving FREE money to VERY POOR people

Just like above, pulling the other end of the graph can bring up the average as well. Despite qualification and ability to perform, we just simply increase basic salary for all those who are earning below $2,000 a month now. For the others who really can't fit into this category or still has very low salary, put them OFF work completely. They will receive FREE support from the government on their daily needs. By knocking out these VERY LOW SALARY figures off the chart, the average will rise too.

Will this help us ? Oh yea, quite a lot of us I guess. But if you are already one of the average guy to start with, not too poor not too rich, you are pretty much still on yourself. Lets just hope by giving out FREE money, there will be less crime !?


Now although all above may sound too extreme and may even be read as a joke, but I assure you 10 years later, we WILL achieve our 2020 goals and a combination of all 4 methods mentioned above WILL be used, partly or as a whole.

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