The Gift Exchange

Regardless of your religious beliefs, most people will have participated in a gift exchange within the last few days. The gift was purchased, and so the giver had to give something up, (money) to the store and in exchange they received the gift because the seller gave up inventory. The giver didn’t hold onto the gift but instead chose to give it to someone else — the receiver. The receiver is the only party who is not giving anything up — the only act they need to do, is to receive the gift.

This concept got me thinking about the workplace. An employee gives up a portion of time and in return they receive payment. The employer gives up cash because they’ve received someone’s labor to create products or services they’re selling to their customer. The customer gives up cash in exchange for receiving the product or service. 

I also found it interesting recently to study the history of the word “pay”. We talk about a “paycheck” or “being paid” but where does the word “pay” come from? It means: “to appease, pacify or satisfy,” from the Old French word “paier” — it literally means to “make peaceful”. So when an employer pays an employee or a vendor, they’re in effect, “making peace” with the employee or vendor in exchange for the labor, goods or service the employer received. 

We often hear people complain about minimum wage — my innate response is always to ask why people don’t put in maximum effort so they can move beyond minimum wage? Employers will only pay a wage based on what they believe a unit of time is worth to them — a basic skill will only earn a basic wage while enhanced skills will earn a higher reward. I’m no great economist but it seems to me the macro picture is, that in a free market, consumers will only pay so much for a certain product or service. The employer then has to back into the calculation by using processes and labor as efficiently as possible, to still generate a profit for the shareholder.

The company then pays taxes on their profits and the shareholders also pay taxes on any dividends they earn and any capital gain they make when they sell a share of their stock. The taxes go to the government who hopefully spend the tax revenues as wisely as possible. According to the 2018 Pew Research report, taxes are spent as follows: defense (15%), health care (13%), interest payments (6%), income security (13%), benefits for veterans (5%), education (3%), social security (24%), Medicare (15%), foreign aid (1%) and other (5%) which includes crop subsidies, space travel, highway repairs and national parks etc. according to the report. It seems to me, this is a lot of giving and receiving to make the world go round.  

As an employee, we receive what we give — we earn exactly how much the employer is willing to pay for the time and effort we give. If we think we’re worth more, we may choose to leave their employment to “make peace” at a higher level with a different employer. Likewise, an employer gives what they receive — the employer will pay what they believe a unit of time is worth for the task and the level of discretionary effort someone puts in. The employee, employer and shareholder then “appease” the government authorities by paying taxes — the IRS can get annoyed if we don’t make peace with them!

Coming back to the receiver of the gift on Christmas Day. If we look at this exchange in a business context, that person didn’t do anything to receive the gift… or did they? We give gifts to the people we love and care for — it’s their love for the giver that moved the giver to give the gift. In the spirit of Christmas Day, I’m aghast by the fact that I’ve received the Ultimate Gift, and all I’ve done in return is love the Giver, but the mind-blowing concept to me is that the Giver loved me first! Can you get your head around this type of gift exchange, which makes peace between the two parties?

I wish all of the readers of this column a Merry Christmas and a Happy New Year. I so much enjoy writing and appreciate the gift of encouragement many of you give to me — it’s gratefully received.