Income --- 1% earn more in 2006 than 60%
(see inequality.org/bythenumbers)
Wealth --- 1% own more than 91%
(see Currents and Undercurrents, the Federal Reserve study of 2006 called the Survey of Consumer Finances, by A. Kennickell)
Poverty --- 28% of the workforce are either a) working for below poverty wages (16.4%) or b) unemployed (5.7%) or c) working part-time involuntarily or dropped out of looking (6.1%). 28% of the workforce equals 43 million U.S. adults, 2 out of 7 in the workforce.
(see njfac.org/unemployment)
Our economic problem is badly distributed profits leading to weak consumer purchasing power and recession. It is happening worldwide, it will last. See Nouriel Roubini RGE Monitor.com, his article of August 6, 2008, Navigating Towards a Global Recession?
I quote FDR's Chairman of the Federal Reserve to show what is coming our way soon.
This essay simplifies the previous one about Economic Rights.
Dear Liam, my friend in Myrtle Beach, (and Dear Reader), July 31, 2008
It’s 4 in the morning, I should be sleeping. But you got me thinking. I should be able to explain my thesis in simple words. And I’m going to try, right now.
The Nation magazine had an issue on “The New Inequality,” dated June 30, 2008, and in the several articles comprising the issue was a contest to name the era we’ve just gone through. One economist, Paul Krugman, has called “our past three decades of growing inequality The Great Divergence. Berkeley economist Harley Shaiken speaks about the Great Disconnect, his tag for years of stagnant and declining wages amid a growing economy.” My first impression was too call it The Ken and Barbie Doll Went Shopping Era. But that’s inadequate. I finished with this tag: The Buying with Debt while Profits go to the Wealthy Era. It’s unwieldy but that is what happened. People bought with debt, the profits of enterprise went to the wealthy.
I’ll explain.
In 1911 America passed a tipping point when more than half of the population had moved from farms to cities. Self-sufficient farmers continued to live in idyllic freedom, an American ideal, but most people became dependent on a corporate paycheck, or were dependent on their neighbors’ corporate paycheck. We made things collectively. Corporate enterprise, industrial factories and the age of mass production took hold. Production efficiency and living standards rose. Consumption rose. Profits grew. But the rewards of work were not shared equally.
Capital is the essence of profit, and it can be either distributed to employees in wages, salary and compensation, or it can be routed into corporate expansion, they way Ford built up his factories, or it can be distributed through dividends into the private accounts of stock holders and owners. In the last thirty years, 1975 to 2007, profits have been routed to the owners, or invested overseas, or lastly distributed as wages and income. But mostly wealth has gone to the wealthy; the stock market tripled in value between 1994 and 2001, for instance. The average worker did not see any increase in his income. Like I tried to show, in a household where the wife did not enter the workforce, over the past 35 years, that household showed less than 1% increase in income. More women entered the workforce, so median household income rose by 20%, but individual incomes did not rise much. Couples became dependent on two incomes in order to buy a house and live at a level they had lived during the 1950s and 60s. Workers went into debt, while owners invested internationally and created paper assets. Paper assets are inherently unproductive, they are, after all, simply paper. John Edwards in 2004 gave a speech about the Two Americas, the common family and the wealthy royalists who owned a lot of paper assets. So wealth became concentrated; Microsoft owners and Wal-Mart owners became the wealthiest people on the planet. Most of their wealth is stock. Stock value is based on future earnings, not present sales price of tangible assets.
This also happened in the 1920s. I’m going to attach an essay by the head of the Federal Reserve, Marriner Eccles, during the F.D.R. years. I’ll attach a section of his memoir called Beckoning Frontiers. He explains the problem of the Great Depression of the 1930s. I tried in my essay to show that the only means of exiting the Depression and returning to a healthy economy was to redistribute wealth. (In fact, I advocate a wealth tax today.) Consumer power was destroyed in the Depression, and Roosevelt tried many ways to revive it. I tried to show that the WWII war expenditures, financed through war bonds, created full employment of the 1940s, and that made possible the restoration of consumer power, which economists call aggregate demand. The national debt increased by 16 times, 16 fold, between 1932 and 1945. This was in essence a transfer of wealth. Eventually the nation paid off the loan to the wealthy bond holders. The 1950s did not resemble the 1930s precisely because there was widespread consumer demand. All the boats rose in a rising tide, or everyone helped everyone. Capitalism resembled a cooperative enterprise. We have lost the cooperative side; we have lost sight of the importance of equitable distribution of profits of corporate production. It’s a democratic thing. People have to understand why the system works when it works, and if they don’t they will lose their prosperity, which is what is happening in 2008.
Franklin Roosevelt had to contend with this dynamic of capitalism. I quote him in the essay at length. He never got his “economic rights,” a “Second Bill of Rights” put into our Constitution. (See Cass Sunstein’s book.) Those rights to a good job, to health care, and to education are not legalized, not yet. Eleanor Roosevelt saw that they were proclaimed in a U.N. document called The Declaration of Human Rights. But no one can sue anyone in court or take the government to court if they can’t get health care. It’s not a legal right, but Roosevelt wanted to make it legally binding.
Those rights are expensive; they cut into corporate profits. The owners believe in cowboy independence. They say that each one of us can make a fortune, we can all become multi-millionaires, we don’t need fishy “economic rights.” It sounds like a communist idea. Joe McCarthy probably thought FDR was a commie. The tendency of owners to sequester the profits of mass production, to hoard the gold and cash, and to cut wages plagues capitalism. It’s a world-wide problem. The working masses can be exploited and impoverished. Elections are bought by the wealthy. Democracy goes down the tube. The working multitudes must seek access to credit and debt. Eventually the system can’t sustain itself, the paper asset castle crashes. Unemployment reached 25% in the 30s, producing massive poverty.
I’m going to attach this quotation from Marriner Eccles to help you understand. As director of the Federal Reserve during the FDR years he advocated high incomes taxes that eventually reached 94% for the highest earners in 1942. You should remember that from 1942 to 1963 the highest incomes, incomes over today’s $5 million, were taxed at about 91%. These years were capitalism’s most successful years. The wealthy still found loopholes and the effective tax rate was closer to 51%. But today a hedge fund billionaire pays about 15% of his billions in taxes. The guy that delivers his pizza would have to work 10,000 years to earn what that guy made in one year. Also by the 1950s a third of all workers were represented by feisty labor unions. But now only 7.8% of the private sector are unionized, and the fruits of labor have been sequestered by the wealthy.
All the same, you shouldn’t lose the bigger picture. It’s a collective enterprise, we’re all working together. The glass of water you drink came to you via the labor of some peon digging a ditch. Sixteen percent of the workers receive pay that is less than the poverty level. But if excess capital is not distributed fairly to the workers, the system buckles and fails. In the mid 1970s we began to lose this fair payment for work. I quote an article from the New York Times (July 20, 2008, The American Way of Debt) that shows that between 1920 and 2007, an 87 year period, in only 4 years did national household savings exceed household debt. Those years were 1942, 1943, 1944, and 1945. Young men were in the military fighting, everyone else was working, few people were buying houses and going into debt. In the 1950s the ratio of savings to debt grew from 1 to 4 in 1950 to 1 to 7 in 1960, and that ratio just kept growing. Mushrooming is the best way to see it. Today that ratio has mushroomed to 1 dollar saved to 271 dollars committed to debt. Is that sustainable? Whose to blame? We just don’t cooperate well. That’s all. At least we are not shooting and bombing, but cooperation is missing and most fall victim to economic warfare!
You have to ask, why so much debt? Our economy is shuddering. Two of seven are either working in poverty, unemployed, working part-time involuntarily or dropped out of looking for work. The median annual wage for adults is $32,140, while our economy generates about $87,000 per worker. The top one percent earn more annually than the bottom 60% and own more than the bottom 91%. Yet Ken and Barbie went shopping. In China we are duplicating the process by paying $5 a day wages. Soon all this will come to a crashing halt. The dollar will collapse in the Dollar Crisis (read the book of that title by Richard Duncan, a former World Bank officer). This is an extension of the same story, the exploitation of labor for the cause of high profits. Will we ever learn? People may scoff in 2008, but in 2011 they will not scoff. We are about to see another era of extremely slow growth and widespread poverty.
Got it?
It’s a shame. I should be sleeping. Now I’m going to find that Marriner Eccles quote. Imagine naming your child Marriner! They lived in Utah, he was a Utah banker before he went to Washington, D.C. What were his parents thinking?
http://en.wikipedia.org/wiki/Great_Depression
Inequality of wealth and income
Marriner S. Eccles, who served as Franklin D. Roosevelt's Chairman of the Federal Reserve from November 1934 to February 1948, detailed what he believed caused the Depression in his memoirs, Beckoning Frontiers (New York, Alfred A. Knopf, 1951)[22]:
As mass production has to be accompanied by mass consumption, mass consumption, in turn, implies a distribution of wealth -- not of existing wealth, but of wealth as it is currently produced -- to provide men with buying power equal to the amount of goods and services offered by the nation's economic machinery. [Emphasis in original.]
Instead of achieving that kind of distribution, a giant suction pump had by 1929-30 drawn into a few hands an increasing portion of currently produced wealth. This served them as capital accumulations.
But by taking purchasing power out of the hands of mass consumers, the savers denied to themselves the kind of effective demand for their products that would justify a reinvestment of their capital accumulations in new plants.
In consequence, as in a poker game where the chips were concentrated in fewer and fewer hands, the other fellows could stay in the game only by borrowing. When their credit ran out, the game stopped.
That is what happened to us in the twenties. We sustained high levels of employment in that period with the aid of an exceptional expansion of debt outside of the banking system. This debt was provided by the large growth of business savings as well as savings by individuals, particularly in the upper-income groups where taxes were relatively low.
Private debt outside of the banking system increased about fifty per cent. This debt, which was at high interest rates, largely took the form of mortgage debt on housing, office, and hotel structures, consumer installment debt, brokers' loans, and foreign debt. The stimulation to spending by debt-creation of this sort was short-lived and could not be counted on to sustain high levels of employment for long periods of time.
Had there been a better distribution of the current income from the national product -- in other words, had there been less savings by business and the higher-income groups and more income in the lower groups -- we should have had far greater stability in our economy.
Had the six billion dollars, for instance, that were loaned by corporations and wealthy individuals for stock-market speculation been distributed to the public as lower prices or higher wages and with less profits to the corporations and the well-to-do, it would have prevented or greatly moderated the economic collapse that began at the end of 1929.
The time came when there were no more poker chips to be loaned on credit. Debtors thereupon were forced to curtail their consumption in an effort to create a margin that could be applied to the reduction of outstanding debts. This naturally reduced the demand for goods of all kinds and brought on what seemed to be overproduction, but was in reality underconsumption when judged in terms of the real world instead of the money world.
This, in turn, brought about a fall in prices and employment.
Unemployment further decreased the consumption of goods, which further increased unemployment, thus closing the circle in a continuing decline of prices. Earnings began to disappear, requiring economies of all kinds in the wages, salaries, and time of those employed.
And thus again the vicious circle of deflation was closed until one third of the entire working population was unemployed, with our national income reduced by fifty per cent, and with the aggregate debt burden greater than ever before, not in dollars, but measured by current values and income that represented the ability to pay.
Fixed charges, such as taxes, railroad and other utility rates, insurance and interest charges, clung close to the 1929 level and required such a portion of the national income to meet them that the amount left for consumption of goods was not sufficient to support the population.
This then, was my reading of what brought on the depression.
Marriner S. Eccles
This Eccles piece from wikipedia/Great Depression was posted on Robert Reich’s blogspot on Saturday, 26 July, 2008.
Thursday, July 31, 2008
Monday, July 21, 2008
Contents of this Blog
Dear Reader,
Contents of this web site:
I write essays on economics. This listing of the Contents is in reverse numbered order, the most recent at the top.
All these essays are mind-wrenching. I recently saw Mohammed Ali shout, "I am the greatest," and the prettiest. It's great to be great, and mind-wrenching. I hope someday to communicate as well as he. Enjoy.
The Dalai Lama says that he is a Marxist Buddhist. He takes an ethical position. There is more fairness in a social and humanitarian perspective of economics. “From each according his ability, to each according to his needs,” is a higher ethical standard than the capitalist ethos of Adam Smith’s invisible hand of the market, each economic actor pursuing his own self-interest and all benefitting thereby. Also, the spiritual teacher Meher Baba commented about the two ethical standards, stating that the Marxist ideal was a higher ethos. A higher ethos is driving world history and personal destiny.
19. To Buy or to Bail, that is the Question
Should the public buy bad assets from moribund banks or buy bad banks? Do you allow the nuts who brought you the crisis to continue, or do you show them the door? This analysis is supported by many economists, Nouriel Roubini who first predicted the meltdown, and by Paul Krugman of the N.Y. Times. September, 2008
18. Understanding the Crisis
How distribution of income and wealth have shaped the basics of the financial meltdown that engulfs AIG, Merrell Lynch, Countrywide, Fannie Mae, and so on.
The head of economics at Howard University, William Spriggs, had the same basic understanding. September, 2008
17. The Justice Revolution
This deals with the fairness of distribution of profits. I am happy with it. Both domestic and international solutions are presented. It is a complex stew of numbers, but the broad outlines are accessible and I hope prescient। I present the systemic solution to the systemic problems of badly distributed profits। August 31, 2008
16. The Bottom Half Own 2.5%, Earn 15% Annually, Wealth and Income Distribution in the U.S.A.
Stark inequality. August, 2008
15. Infectious Greed Overwhelms the U.S. Economy August, 2008
A simpler essay, full Marriner Eccles quotation।
14. Celebrate $100,000 Average Annual Income Nationwide.
August, 2008
Yet the median income still is below $33,000 a year. Top Heavy?
13. Economic Rights for the Two Out of Seven Who Are Not Making It
Inequality, weak purchasing power, Roosevelt’s State of the Union, ‘44,
and much more. Not too pessimistic. About 3,000 words.
Really interesting says the author. July 22, 2008
12. What the Government Can Do
May 1, 2008
A two page reduction of the essay There Are Solutions. A quick read on
ways to increase employment and incomes without stalling the economy.
Maybe my ‘Best.’ Short, to the point.
11. Three Short Pieces June, 2008
June 15, 2008. To the KPFA Morning Show, The Next Wave of Political Reform, and another review of Robin Hahnel’s book Economic Justice and Democracy.
10. My Second Letter to Pete Stark, Congressman
A little note about shrinking aggregate demand, how to grow an economy,
and why worldwide depression is possible। May, 2008
9. There Are Solutions April, 2008
This 4,000 word essay details and reviews three plans for revitalizing the American economy.
First, I take a look at Frank Stricker’s book Why America Lost the War on Poverty --- and How to Win It, and his 17 point plan called What Needs to Be Done.
Second I look at the Center for American Progress’ plan “From Poverty to
Prosperity.”
Finally, I review “Decent Work and Public Investment,” a plan authored by members of the National Jobs for All Coalition, Helen Lachs Ginsburg and Gertrude Shaffner Goldberg.
The economist Doug Dowd gave me a compliment on this essay. Doug lives in Bologna, Italy, now enjoying his 89th year and still writing. He will call his next book Rampant Inequality.
8. White Birds --- a poem not about economics। About love। April, 2008
7. A Wealth Tax to Eliminate Poverty
This may be my best effort। It is a reduction of my original essay A Modest Proposal to Tax Wealth Annually in the U.S.A. April, 2008
6. The Art of Living Together
A short vagrancy, a fissure, an errant meander, a lunacy। Something burst।
March, '08
5. A Letter to My Congressman, Pete Stark. February 5, 2008
He should read it। But I doubt he or any one will। March, 2008
4. A book review of Robin Hahnel’s Economic Justice and Democracy
This essay was published in the Alameda County Green Party News in
October, 2007. March, 2008
3. Odd, Very Odd. March, 2008. A recapitulation of old ideas. Nothing special.
March, 2008
2. Is There a Middle Class?
The 40 to 1 ratio between two halves of the U।S। population impressed me। I was listening to Michael Krasny on KQED FM radio talk about the middle class। He did not take my e-mail, so I wrote this essay and sent it to him। February, 2008
1. Progressive Economic Reform, 2008
January, 2008
This essay was posted at Econo-atrocity, the commentary site at Center for
Popular Economics. No one left a comment. I think that means no one read
through to the end. It is good. It contains evidence marshalled and supported for the argument that the economy serves only a minority.
It’s my third favorite after What Government Can Do, and
A Wealth Tax to Eliminate Poverty, second best.
Contents of this web site:
I write essays on economics. This listing of the Contents is in reverse numbered order, the most recent at the top.
All these essays are mind-wrenching. I recently saw Mohammed Ali shout, "I am the greatest," and the prettiest. It's great to be great, and mind-wrenching. I hope someday to communicate as well as he. Enjoy.
The Dalai Lama says that he is a Marxist Buddhist. He takes an ethical position. There is more fairness in a social and humanitarian perspective of economics. “From each according his ability, to each according to his needs,” is a higher ethical standard than the capitalist ethos of Adam Smith’s invisible hand of the market, each economic actor pursuing his own self-interest and all benefitting thereby. Also, the spiritual teacher Meher Baba commented about the two ethical standards, stating that the Marxist ideal was a higher ethos. A higher ethos is driving world history and personal destiny.
19. To Buy or to Bail, that is the Question
Should the public buy bad assets from moribund banks or buy bad banks? Do you allow the nuts who brought you the crisis to continue, or do you show them the door? This analysis is supported by many economists, Nouriel Roubini who first predicted the meltdown, and by Paul Krugman of the N.Y. Times. September, 2008
18. Understanding the Crisis
How distribution of income and wealth have shaped the basics of the financial meltdown that engulfs AIG, Merrell Lynch, Countrywide, Fannie Mae, and so on.
The head of economics at Howard University, William Spriggs, had the same basic understanding. September, 2008
17. The Justice Revolution
This deals with the fairness of distribution of profits. I am happy with it. Both domestic and international solutions are presented. It is a complex stew of numbers, but the broad outlines are accessible and I hope prescient। I present the systemic solution to the systemic problems of badly distributed profits। August 31, 2008
16. The Bottom Half Own 2.5%, Earn 15% Annually, Wealth and Income Distribution in the U.S.A.
Stark inequality. August, 2008
15. Infectious Greed Overwhelms the U.S. Economy August, 2008
A simpler essay, full Marriner Eccles quotation।
14. Celebrate $100,000 Average Annual Income Nationwide.
August, 2008
Yet the median income still is below $33,000 a year. Top Heavy?
13. Economic Rights for the Two Out of Seven Who Are Not Making It
Inequality, weak purchasing power, Roosevelt’s State of the Union, ‘44,
and much more. Not too pessimistic. About 3,000 words.
Really interesting says the author. July 22, 2008
12. What the Government Can Do
May 1, 2008
A two page reduction of the essay There Are Solutions. A quick read on
ways to increase employment and incomes without stalling the economy.
Maybe my ‘Best.’ Short, to the point.
11. Three Short Pieces June, 2008
June 15, 2008. To the KPFA Morning Show, The Next Wave of Political Reform, and another review of Robin Hahnel’s book Economic Justice and Democracy.
10. My Second Letter to Pete Stark, Congressman
A little note about shrinking aggregate demand, how to grow an economy,
and why worldwide depression is possible। May, 2008
9. There Are Solutions April, 2008
This 4,000 word essay details and reviews three plans for revitalizing the American economy.
First, I take a look at Frank Stricker’s book Why America Lost the War on Poverty --- and How to Win It, and his 17 point plan called What Needs to Be Done.
Second I look at the Center for American Progress’ plan “From Poverty to
Prosperity.”
Finally, I review “Decent Work and Public Investment,” a plan authored by members of the National Jobs for All Coalition, Helen Lachs Ginsburg and Gertrude Shaffner Goldberg.
The economist Doug Dowd gave me a compliment on this essay. Doug lives in Bologna, Italy, now enjoying his 89th year and still writing. He will call his next book Rampant Inequality.
8. White Birds --- a poem not about economics। About love। April, 2008
7. A Wealth Tax to Eliminate Poverty
This may be my best effort। It is a reduction of my original essay A Modest Proposal to Tax Wealth Annually in the U.S.A. April, 2008
6. The Art of Living Together
A short vagrancy, a fissure, an errant meander, a lunacy। Something burst।
March, '08
5. A Letter to My Congressman, Pete Stark. February 5, 2008
He should read it। But I doubt he or any one will। March, 2008
4. A book review of Robin Hahnel’s Economic Justice and Democracy
This essay was published in the Alameda County Green Party News in
October, 2007. March, 2008
3. Odd, Very Odd. March, 2008. A recapitulation of old ideas. Nothing special.
March, 2008
2. Is There a Middle Class?
The 40 to 1 ratio between two halves of the U।S। population impressed me। I was listening to Michael Krasny on KQED FM radio talk about the middle class। He did not take my e-mail, so I wrote this essay and sent it to him। February, 2008
1. Progressive Economic Reform, 2008
January, 2008
This essay was posted at Econo-atrocity, the commentary site at Center for
Popular Economics. No one left a comment. I think that means no one read
through to the end. It is good. It contains evidence marshalled and supported for the argument that the economy serves only a minority.
It’s my third favorite after What Government Can Do, and
A Wealth Tax to Eliminate Poverty, second best.
Are Economic Rights Human Rights?
Economic Rights for Two out of Seven
Who Are Not Making It
Two out of seven American workers (28.0%) are not making it --- are working full-time for poverty wages (16.4%) or are unemployed (5.5%) or are part-time workers who want full-time work or have dropped out of looking for work (6.1%). (See njfac.org/inequality). Should they have economic rights? Franklin D. Roosevelt had to think this through during the 1930s. I will show his conclusions. When our economy generates about $87,000 per worker and $40,000 per person, should we tolerate a large core of poor workers. Isn't there something missing in our values? As half the adults over 25 earn less than $32,140 in 2007 (the median income), and to reach a middle class life-style requires about $40,000 income per family of four, the conclusion is that the "system" is broken for two out of seven. Naturally, global corporate business will always try to lower expenses, including wages. But at some point this wage pressure destroys instead of constructs. It destroys wealth at the lowest and least empowered level. Are there economic rights for working people that society should create? The answer is "yes, definitely."
This longish essay deals with these ideas.
The middle class has been shrinking. On page 76 of The State of Working America, 2006/2007 a table “Distribution of families and persons by income level, 1969 - 2004” tells a very interesting story. The middle class is smaller. In 1969 71.2% of families lived in the range of 50% to 200% of the median income. In 2002 only 60.7% fit in this range, roughly between $27,00 and $104,000. Of the 10.5% to leave this range, 6.0% went higher and 4.5% went lower. And the median family income itself grew by 21.8% from $44,381 to $54,061 (between 1973 to 2004 according to the U.S. Census Bureau). This is overall good news.
Another table, 1.8, in this chapter shows a different story. The median family income rose 21.8%, as noted, but for couples with “Wife not in paid labor force” the median income went from $42,049 in 1973 to $42,221 in 2004, an increase of 0.4%, less than one percent. In 1973 the “labor force participation rate” for women was 44.7%, and in 2004 it was 59.3%, a gain of almost 15%, while for men it had dropped from 78.8% to 73.3%, and the overall participation rate increased from 60.8% to 66.0%.
In Jared Bernstein’s book All Together Now he claims that women are working 3 months more each year than they were 30 years ago. That is the key to rising median family incomes. Also, the wage rate for the single male non-supervisorial worker has inched down in these years. Also average annual work hours are up by three weeks since 1969, but statutary minimum vacation time is 0.0 weeks, and actual holiday and vacation time stands at 3.9 weeks compared with Germany’s 5.0 and 7.0, and Japan’s 5.0 and 7.8 weeks off.
In Tijuana, Mexico, just across from San Diego where houses sell routinely for $600,000, you can find people living in cardboard hovels and cement block structures, and they earn less than $10 a day. What Tijuanans produce San Diegans buy. Northern Mexico produces cars, trucks, copper, and electronic assembled goods. Will our neighborhoods start to resemble those of Tijuana, Mexico? Not soon, but the trend is in that direction.
In 2006 the U.S. official poverty rate was 12.6%, one in eight, or 36.9 million people in a population just under 300 million. The unemployment rate is 5.5% in May, 2008. But 11.6% is more accurate, as it the combines workers who are unemployed (5.5%) with involuntary part-time workers and with discouraged workers (6.1%), a total of 18.5 million workers in a workforce of 153 million.
Add to this 11.6% the full-time workers who earn less than poverty rate incomes, 16.4% of the workforce, and the grand total is 28% of the workforce either unemployed, working part-time, discouraged from looking for work, or working for poverty wage rates. (This data comes from The National Jobs for All Coalition (njfac.org)and State of Working America, 2006/2007, and the Bureau of Labor Statistics, May, 2008.)
Another way to tell the story is to say that the rate of full-time workers working below a poverty level wage is 16.4%, almost one in six, or 25 million workers. Add part-time low-paid workers (8.1%) for a total of 24.5% who earn below poverty wages. Just how it is possible for one in six full-time workers to earn poverty wages while only one in eight households live in poverty is not explained. Maybe very long work hours, double income families, and earned income tax credits which reaches 23 million taxpayers explains it. But wages fall below poverty in one in six full-time jobs (16.4%), and full-time jobs are not to be found for one in nine workers (11.6%). Combine these two very distinct groups, and 28% of the workers (42.8 million adults of 153 million, or 2 out of 7) are either unemployed, working part-time involuntarily, discouraged from looking for work, or working for less than poverty wages. This figure is important; we have the world’s largest national economy but a significant minority are not surviving well.
In a report Movin' On Up by the Center for Economic and Policy Research (February, 2008), they conclude that "almost one out of every five Americans in working families, or 41 million people, is 'missing the middle' --- that is, is living below the minimum middle-class living standard for the area in which they live." Typically these families living below the middle "would need to see their income --- from all sources, including the value of work supports --- increase by almost $10,000 to secure a toehold in the middle class." The report factors in the value of government support --- TANF, food stamps, EITC, housing assistance, child care assistance, and Medicaid/SCHIP. Still some 20% fall short of the middle-class bottom rung.
Only 23% of U.S. jobs pay above $17 an hour and provide both health insurance and pension plans. By their calculation 29% are "bad jobs" paying less than $17 an hour with no benefits.
The percentage of those families earning less than 50% of the median family income increased from 18% to 22.5% from 1969 to 2002. And many experts claim the official poverty rate is an unrealistically low assessment of real poverty. In 1999 Clinton’s Secretary of Labor tried to raise it by 6% points, but Congress rejected the proposal.
For every five job seekers there was one job opening in May, 2008, according to the Bureau of Labor Statistics (3.7 million job openings, 18.5 non-full-time workers willing to work) (see njfac.org for details). Full employment without government assistance will be difficult to achieve.
The book Hardships in America states that 28.9% of families with children under 12 cannot afford all four essentials of food, shelter, medical care and child care. This book surveyed 600 localities and compared 4 different family sizes for 2,400 variables.
Our economy produces over $40,000 per citizen, which is also over $87,000 for every worker, yet the median income for workers over 25 is $32.140. To state another version, the average income for workers is almost three times the median income. Distribution of the economy’s income is amazingly tilted towards the top. The top one percent earn more than the bottom 50%. The top one percent receive 18.4% of the national income while the bottom 60% receive 20.3% (see inequality.org or State of Working America, 2006/2007 page 79).
In wealth, the top one percent own more than the bottom 91%, 33.4% vs. 30.4%. Comparing the top one percent to the bottom 50 percent (who own 2.5% of the national wealth), the average net worth is nearly 700 times greater ($16,675,000 average wealth vs. $25,000, see U.S. Federal Reserve, Report of Consumer Finances, Currents and Undercurrents, 2006, page 11).
Roosevelt and Economic Rights
In San Francisco on September 23, 1932 at the Commonwealth Club Roosevelt, not yet president, gave a speech calling first and foremost for a ---
“redefinition of rights in terms of a changing and growing social order.” He proposed “the development of an economic declaration of rights, an economic constitutional order” that would recognize that “every man has a right to live,” which also entailed “a right to make a comfortable living.” A person “may by sloth or crime decline to exercise that right; but it may not be denied to him.” Roosevelt complained that under modern conditions, equality of opportunity had become a myth. He argued that the economic declaration of rights was necessary to ensure a system that would be “more permanently safe” and contended that a new conception of government was necessary to promote the values of American individualism, properly understood. (quote from C. Sunstein, page 68)
In January, 1944, Roosevelt gave his State of the Union message to Congress in which he laid out a set of economic rights:
>The right to a useful and remunerative job in the industries or shops or farms or mines of the Nation;
>The right to earn enough to provide adequate food and clothing and recreation;
>The right of every farmer to raise and sell his products at a return which will give him and his family a decent living;
>The right of every businessman, large and small, to trade in an atmosphere of freedom from unfair competition and domination by monopolies at home or abroad;
>The right of every family to a decent home;
>The right to adequate medical care and the opportunity to achieve and enjoy good health;
>The right to adequate protection from the economic fears of old age, sickness, accident, and unemployment;
>The right to a good education.
All these rights spell security. And after this war is won we must be prepared to move forward, in the implementation of these rights, to new goals of human happiness and well-being.
The “right to a useful and remunerative job” is the foundation for full employment and security. But how will this work? How does free enterprise guarantee full employment? Private employers cannot be forced to hire unwanted employees. And, as in the Tijuana example, “free enterprise” in the U.S.A. is being undermined by virtual slavery conditions or “too free enterprise” in other poorer nations. Wage rates in central Mexico are 12% of U.S. rates, in the maquiladoras they are 6%, and in China they are 3%. Under modern conditions the “equality of opportunity has become a myth” and free enterprise never has and probably never can provide full employment. Government must intervene to secure economic rights. Government will be the “employer of last resort,” argues L. Randall Wray in his book Understanding Modern Money. The market will be altered by a socially determined exogenous force called national will to achieve a non-market goal, full employment and security for all from hardship. Will that destroy the market? Or will it achieve both security for all citizens from hardship and preserve the incentive for individuals to excel and gain wealth? Will the trade-off between freedom and security destroy freedom? Do we settle for security for most but not all?
What is an economy for? Why do we need Roosevelt’s economic rights? How do we achieve a moral standard of security without destroying market freedom? If people work in slave-like conditions do we want their products on our shelves? Are we inconsistent to allow two labor standards to compete together? Don’t we undermine and eventually destroy our higher standards? For what purpose? So that everyone can labor under the lower standards and achieve the same level of penury and insecurity? Of the world’s 6 billion inhabitants, our workers compete now with many who earn less than $5 a day.
In her book The Forgotten Man Amity Shlaes argues that Roosevelt’s New Deal programs got in the way, impeded recovery. Business executives and the wealthy class refused to invest because Roosevelt made them insecure, she claims. I came across a statement that sounded familiar. During the Depression almost everyone had a theory of what to do to end it: the grocer, the barber, the bus driver, your waitress, your neighbor. For more than a decade unemployment was very high. The book ably points out it was at 3.3% in 1927, --- at 5% in 1929, --- at 17.4% in 1931, --- at 23.2% in 1933, --- 21.3% in 1935, --- 13.5% in 1937, --- but up again to 17.4% in January, 1938, --- 14.6% two years later, 1940. There were 9.5 million unemployed in 1940, and in 1943 there were 500,000 unemployed. Eleven bad years of 13% to 23% unemployment.
What ended the Depression? If you say, “The war,” you are only partly correct. Say anything but that. It’s an important question. The answer is the government intervened. People agreed to sacrifice their freedom for security, wealth for survival, lives for preservation. All out war calls for all out sacrifice. But having made the immediate war sacrifice they also destroyed the persistent economic hard times. The 1950s did not resemble the 1930s. By redistributing money to working people during a period of full-employment caused by the war effort, aggregate demand or consumer purchasing power was restored. The New York Times’s economic web section (The American Way of Debt, July 20, 2008) shows a graphic of U.S. household’s average savings compared to indebtedness (basically savings vs. mortgages). Data comes from the Federal Reserve. From 1920 to 2008, in only four years did the savings rate exceed the indebtedness rate. Those years? 1942, 1943, 1944, 1945. In the 50s the savings-to-debt ratio was between 1 to 4 and 1 to 7. In 2007 the ratio was 1 to 271. The question hangs for us now, if we slip into a prolonged, very slow or negative economic growth period, how will we restore employment and economic health short of taxing wealth and redistributing it?
To call Roosevelt’s subsequent increase in federal spending an “intervention” is not accurate. More accurate would be to call it a mobilization or transformation. To quote from John Garraty’s book, The Great Depression,
“The United States responded more slowly to the threat of war, but by 1938 national security expenditures were twice what they had been in 1934. Total federal spending rose from $6.8 billion in 1938 to $8.9 billion in 1939. (The big proportional increase came in 1941, when federal spending rose from $13 to $34 billion.)
These huge expenditures necessitated heavy borrowing and stimulated economic activity. Whether one argues that government spending per se ended the depression or whether the war is given the credit depends on how far back in the causal chain one wishes to go. Keynes’s theory ‘explained’ why spending was necessary in the 1930s.
If these details are correct, total public spending increased from 5 to 10 times between 1932 and 1941.
From 1938 to 1941 federal spending increased five fold, from $6.8 billion to $34 billion. According to The United States Public Debt, 1861 to 1975, an article by Franklin Noll, PhD. (EconomicHistory.org) the national debt increased in the years from 1932 to 1945 from $17 billion to $270 billion, a sum 16 times greater. What actually happened? Capital resources were transferred out of banks into savings and war bonds by both wealthy and non-wealthy citizens . This is what society does to thrive and maintain progress. It shares resources. This transfer of capital resources ended the depression. This applies to the entire world and all humanity. This brings up the question I mentioned about taxing and redistributing wealth. How else do you get a market economy going when the winner of the poker game has all the chips? As Marriner Eccles, the head of the Federal Reserve under F. D. Roosevelt once said, the winner of the poker game has to give back some of his chips to the losers for the game (capitalism) to go on.
There are many ways today beside taxing wealth. But equitable distribution is needed for a vibrant economy. This is the theme of Jeff Madrick’s book Why Economies Grow. The Individual Development Account, the Earned Income Tax Credit, raising and indexing the minimum wage, and subsidizing government work projects --- aside from the military budget --- are some policy choices. Taxes under Eisenhower were kept at the top rate of 91% for his term in office. Today's top income tax rate is 35%, and effectively it is 25%. Toomuch.org reports that the effective tax rate for incomes over $5 million was around 51% compared to today’s 25%. The rich might reject the sacrifice of their “property” but they may be out-voted by a majority who see the light of a more just economy and the cause of greater widespread prosperity. The interests of economic royalists and plutocrats may not accord with the general interest. Democracy implies an economic dimension to it.
I don’t believe I’ve made an iron-clad case for this plan, but the general outlines are there. Such government intervention may be a blessing towards security and happiness that includes 7 out of 7, not just 5 out of 7.
This essay takes its inspiration from these books:
1. The Second Bill of Rights, FDR’s Unfinished Revolution and Why We Need It More Than Ever by Cass Sunstein
2. The Ownership Solution, Toward a Shared Capitalism for the 21st Century by Jeff Gates
3. Understanding Modern Money by L. Randall Wray
4. Why Economies Grow by Jeff Madrick
5. The Squandering of America by Robert Kuttner
6. The End of Economic Warfare, a book I don’t plan to write.
Those books are magnificent books. They probably point to the way to spread and maintain prosperity. I wish I had time to read them and report on them. I don’t have time. Madrick’s book points to the benefits of broadly dispersed purchasing power. Wray’s book proposes that the government become the “employer of last resort,” thereby providing full employment and, for a real bonus, maintaining a permanent check on inflation. Gates’ book wants to reengineer capitalism so that more people are intimately connected to economic decisions of corporations. Sunstein’s book, as already noted, provides a basis for insuring economic rights as a corollary to the original human rights of the Bill of Rights. And Kuttner’s book shows how the three decade-long experimentation with neutered, deregulated, laissez-faire economics has destroyed or “squandered” our common wealth. And the book I won’t write would have portrayed a profound social morality that would abolish poverty and economic warfare.
This blog will have to wait. I hope you’ll comment on this essay.
Any of my essays are available on pdf. Send me a note, benleet@earthlink.net
Who Are Not Making It
Two out of seven American workers (28.0%) are not making it --- are working full-time for poverty wages (16.4%) or are unemployed (5.5%) or are part-time workers who want full-time work or have dropped out of looking for work (6.1%). (See njfac.org/inequality). Should they have economic rights? Franklin D. Roosevelt had to think this through during the 1930s. I will show his conclusions. When our economy generates about $87,000 per worker and $40,000 per person, should we tolerate a large core of poor workers. Isn't there something missing in our values? As half the adults over 25 earn less than $32,140 in 2007 (the median income), and to reach a middle class life-style requires about $40,000 income per family of four, the conclusion is that the "system" is broken for two out of seven. Naturally, global corporate business will always try to lower expenses, including wages. But at some point this wage pressure destroys instead of constructs. It destroys wealth at the lowest and least empowered level. Are there economic rights for working people that society should create? The answer is "yes, definitely."
This longish essay deals with these ideas.
The middle class has been shrinking. On page 76 of The State of Working America, 2006/2007 a table “Distribution of families and persons by income level, 1969 - 2004” tells a very interesting story. The middle class is smaller. In 1969 71.2% of families lived in the range of 50% to 200% of the median income. In 2002 only 60.7% fit in this range, roughly between $27,00 and $104,000. Of the 10.5% to leave this range, 6.0% went higher and 4.5% went lower. And the median family income itself grew by 21.8% from $44,381 to $54,061 (between 1973 to 2004 according to the U.S. Census Bureau). This is overall good news.
Another table, 1.8, in this chapter shows a different story. The median family income rose 21.8%, as noted, but for couples with “Wife not in paid labor force” the median income went from $42,049 in 1973 to $42,221 in 2004, an increase of 0.4%, less than one percent. In 1973 the “labor force participation rate” for women was 44.7%, and in 2004 it was 59.3%, a gain of almost 15%, while for men it had dropped from 78.8% to 73.3%, and the overall participation rate increased from 60.8% to 66.0%.
In Jared Bernstein’s book All Together Now he claims that women are working 3 months more each year than they were 30 years ago. That is the key to rising median family incomes. Also, the wage rate for the single male non-supervisorial worker has inched down in these years. Also average annual work hours are up by three weeks since 1969, but statutary minimum vacation time is 0.0 weeks, and actual holiday and vacation time stands at 3.9 weeks compared with Germany’s 5.0 and 7.0, and Japan’s 5.0 and 7.8 weeks off.
In Tijuana, Mexico, just across from San Diego where houses sell routinely for $600,000, you can find people living in cardboard hovels and cement block structures, and they earn less than $10 a day. What Tijuanans produce San Diegans buy. Northern Mexico produces cars, trucks, copper, and electronic assembled goods. Will our neighborhoods start to resemble those of Tijuana, Mexico? Not soon, but the trend is in that direction.
In 2006 the U.S. official poverty rate was 12.6%, one in eight, or 36.9 million people in a population just under 300 million. The unemployment rate is 5.5% in May, 2008. But 11.6% is more accurate, as it the combines workers who are unemployed (5.5%) with involuntary part-time workers and with discouraged workers (6.1%), a total of 18.5 million workers in a workforce of 153 million.
Add to this 11.6% the full-time workers who earn less than poverty rate incomes, 16.4% of the workforce, and the grand total is 28% of the workforce either unemployed, working part-time, discouraged from looking for work, or working for poverty wage rates. (This data comes from The National Jobs for All Coalition (njfac.org)and State of Working America, 2006/2007, and the Bureau of Labor Statistics, May, 2008.)
Another way to tell the story is to say that the rate of full-time workers working below a poverty level wage is 16.4%, almost one in six, or 25 million workers. Add part-time low-paid workers (8.1%) for a total of 24.5% who earn below poverty wages. Just how it is possible for one in six full-time workers to earn poverty wages while only one in eight households live in poverty is not explained. Maybe very long work hours, double income families, and earned income tax credits which reaches 23 million taxpayers explains it. But wages fall below poverty in one in six full-time jobs (16.4%), and full-time jobs are not to be found for one in nine workers (11.6%). Combine these two very distinct groups, and 28% of the workers (42.8 million adults of 153 million, or 2 out of 7) are either unemployed, working part-time involuntarily, discouraged from looking for work, or working for less than poverty wages. This figure is important; we have the world’s largest national economy but a significant minority are not surviving well.
In a report Movin' On Up by the Center for Economic and Policy Research (February, 2008), they conclude that "almost one out of every five Americans in working families, or 41 million people, is 'missing the middle' --- that is, is living below the minimum middle-class living standard for the area in which they live." Typically these families living below the middle "would need to see their income --- from all sources, including the value of work supports --- increase by almost $10,000 to secure a toehold in the middle class." The report factors in the value of government support --- TANF, food stamps, EITC, housing assistance, child care assistance, and Medicaid/SCHIP. Still some 20% fall short of the middle-class bottom rung.
Only 23% of U.S. jobs pay above $17 an hour and provide both health insurance and pension plans. By their calculation 29% are "bad jobs" paying less than $17 an hour with no benefits.
The percentage of those families earning less than 50% of the median family income increased from 18% to 22.5% from 1969 to 2002. And many experts claim the official poverty rate is an unrealistically low assessment of real poverty. In 1999 Clinton’s Secretary of Labor tried to raise it by 6% points, but Congress rejected the proposal.
For every five job seekers there was one job opening in May, 2008, according to the Bureau of Labor Statistics (3.7 million job openings, 18.5 non-full-time workers willing to work) (see njfac.org for details). Full employment without government assistance will be difficult to achieve.
The book Hardships in America states that 28.9% of families with children under 12 cannot afford all four essentials of food, shelter, medical care and child care. This book surveyed 600 localities and compared 4 different family sizes for 2,400 variables.
Our economy produces over $40,000 per citizen, which is also over $87,000 for every worker, yet the median income for workers over 25 is $32.140. To state another version, the average income for workers is almost three times the median income. Distribution of the economy’s income is amazingly tilted towards the top. The top one percent earn more than the bottom 50%. The top one percent receive 18.4% of the national income while the bottom 60% receive 20.3% (see inequality.org or State of Working America, 2006/2007 page 79).
In wealth, the top one percent own more than the bottom 91%, 33.4% vs. 30.4%. Comparing the top one percent to the bottom 50 percent (who own 2.5% of the national wealth), the average net worth is nearly 700 times greater ($16,675,000 average wealth vs. $25,000, see U.S. Federal Reserve, Report of Consumer Finances, Currents and Undercurrents, 2006, page 11).
Roosevelt and Economic Rights
In San Francisco on September 23, 1932 at the Commonwealth Club Roosevelt, not yet president, gave a speech calling first and foremost for a ---
“redefinition of rights in terms of a changing and growing social order.” He proposed “the development of an economic declaration of rights, an economic constitutional order” that would recognize that “every man has a right to live,” which also entailed “a right to make a comfortable living.” A person “may by sloth or crime decline to exercise that right; but it may not be denied to him.” Roosevelt complained that under modern conditions, equality of opportunity had become a myth. He argued that the economic declaration of rights was necessary to ensure a system that would be “more permanently safe” and contended that a new conception of government was necessary to promote the values of American individualism, properly understood. (quote from C. Sunstein, page 68)
In January, 1944, Roosevelt gave his State of the Union message to Congress in which he laid out a set of economic rights:
>The right to a useful and remunerative job in the industries or shops or farms or mines of the Nation;
>The right to earn enough to provide adequate food and clothing and recreation;
>The right of every farmer to raise and sell his products at a return which will give him and his family a decent living;
>The right of every businessman, large and small, to trade in an atmosphere of freedom from unfair competition and domination by monopolies at home or abroad;
>The right of every family to a decent home;
>The right to adequate medical care and the opportunity to achieve and enjoy good health;
>The right to adequate protection from the economic fears of old age, sickness, accident, and unemployment;
>The right to a good education.
All these rights spell security. And after this war is won we must be prepared to move forward, in the implementation of these rights, to new goals of human happiness and well-being.
The “right to a useful and remunerative job” is the foundation for full employment and security. But how will this work? How does free enterprise guarantee full employment? Private employers cannot be forced to hire unwanted employees. And, as in the Tijuana example, “free enterprise” in the U.S.A. is being undermined by virtual slavery conditions or “too free enterprise” in other poorer nations. Wage rates in central Mexico are 12% of U.S. rates, in the maquiladoras they are 6%, and in China they are 3%. Under modern conditions the “equality of opportunity has become a myth” and free enterprise never has and probably never can provide full employment. Government must intervene to secure economic rights. Government will be the “employer of last resort,” argues L. Randall Wray in his book Understanding Modern Money. The market will be altered by a socially determined exogenous force called national will to achieve a non-market goal, full employment and security for all from hardship. Will that destroy the market? Or will it achieve both security for all citizens from hardship and preserve the incentive for individuals to excel and gain wealth? Will the trade-off between freedom and security destroy freedom? Do we settle for security for most but not all?
What is an economy for? Why do we need Roosevelt’s economic rights? How do we achieve a moral standard of security without destroying market freedom? If people work in slave-like conditions do we want their products on our shelves? Are we inconsistent to allow two labor standards to compete together? Don’t we undermine and eventually destroy our higher standards? For what purpose? So that everyone can labor under the lower standards and achieve the same level of penury and insecurity? Of the world’s 6 billion inhabitants, our workers compete now with many who earn less than $5 a day.
In her book The Forgotten Man Amity Shlaes argues that Roosevelt’s New Deal programs got in the way, impeded recovery. Business executives and the wealthy class refused to invest because Roosevelt made them insecure, she claims. I came across a statement that sounded familiar. During the Depression almost everyone had a theory of what to do to end it: the grocer, the barber, the bus driver, your waitress, your neighbor. For more than a decade unemployment was very high. The book ably points out it was at 3.3% in 1927, --- at 5% in 1929, --- at 17.4% in 1931, --- at 23.2% in 1933, --- 21.3% in 1935, --- 13.5% in 1937, --- but up again to 17.4% in January, 1938, --- 14.6% two years later, 1940. There were 9.5 million unemployed in 1940, and in 1943 there were 500,000 unemployed. Eleven bad years of 13% to 23% unemployment.
What ended the Depression? If you say, “The war,” you are only partly correct. Say anything but that. It’s an important question. The answer is the government intervened. People agreed to sacrifice their freedom for security, wealth for survival, lives for preservation. All out war calls for all out sacrifice. But having made the immediate war sacrifice they also destroyed the persistent economic hard times. The 1950s did not resemble the 1930s. By redistributing money to working people during a period of full-employment caused by the war effort, aggregate demand or consumer purchasing power was restored. The New York Times’s economic web section (The American Way of Debt, July 20, 2008) shows a graphic of U.S. household’s average savings compared to indebtedness (basically savings vs. mortgages). Data comes from the Federal Reserve. From 1920 to 2008, in only four years did the savings rate exceed the indebtedness rate. Those years? 1942, 1943, 1944, 1945. In the 50s the savings-to-debt ratio was between 1 to 4 and 1 to 7. In 2007 the ratio was 1 to 271. The question hangs for us now, if we slip into a prolonged, very slow or negative economic growth period, how will we restore employment and economic health short of taxing wealth and redistributing it?
To call Roosevelt’s subsequent increase in federal spending an “intervention” is not accurate. More accurate would be to call it a mobilization or transformation. To quote from John Garraty’s book, The Great Depression,
“The United States responded more slowly to the threat of war, but by 1938 national security expenditures were twice what they had been in 1934. Total federal spending rose from $6.8 billion in 1938 to $8.9 billion in 1939. (The big proportional increase came in 1941, when federal spending rose from $13 to $34 billion.)
These huge expenditures necessitated heavy borrowing and stimulated economic activity. Whether one argues that government spending per se ended the depression or whether the war is given the credit depends on how far back in the causal chain one wishes to go. Keynes’s theory ‘explained’ why spending was necessary in the 1930s.
If these details are correct, total public spending increased from 5 to 10 times between 1932 and 1941.
From 1938 to 1941 federal spending increased five fold, from $6.8 billion to $34 billion. According to The United States Public Debt, 1861 to 1975, an article by Franklin Noll, PhD. (EconomicHistory.org) the national debt increased in the years from 1932 to 1945 from $17 billion to $270 billion, a sum 16 times greater. What actually happened? Capital resources were transferred out of banks into savings and war bonds by both wealthy and non-wealthy citizens . This is what society does to thrive and maintain progress. It shares resources. This transfer of capital resources ended the depression. This applies to the entire world and all humanity. This brings up the question I mentioned about taxing and redistributing wealth. How else do you get a market economy going when the winner of the poker game has all the chips? As Marriner Eccles, the head of the Federal Reserve under F. D. Roosevelt once said, the winner of the poker game has to give back some of his chips to the losers for the game (capitalism) to go on.
There are many ways today beside taxing wealth. But equitable distribution is needed for a vibrant economy. This is the theme of Jeff Madrick’s book Why Economies Grow. The Individual Development Account, the Earned Income Tax Credit, raising and indexing the minimum wage, and subsidizing government work projects --- aside from the military budget --- are some policy choices. Taxes under Eisenhower were kept at the top rate of 91% for his term in office. Today's top income tax rate is 35%, and effectively it is 25%. Toomuch.org reports that the effective tax rate for incomes over $5 million was around 51% compared to today’s 25%. The rich might reject the sacrifice of their “property” but they may be out-voted by a majority who see the light of a more just economy and the cause of greater widespread prosperity. The interests of economic royalists and plutocrats may not accord with the general interest. Democracy implies an economic dimension to it.
I don’t believe I’ve made an iron-clad case for this plan, but the general outlines are there. Such government intervention may be a blessing towards security and happiness that includes 7 out of 7, not just 5 out of 7.
This essay takes its inspiration from these books:
1. The Second Bill of Rights, FDR’s Unfinished Revolution and Why We Need It More Than Ever by Cass Sunstein
2. The Ownership Solution, Toward a Shared Capitalism for the 21st Century by Jeff Gates
3. Understanding Modern Money by L. Randall Wray
4. Why Economies Grow by Jeff Madrick
5. The Squandering of America by Robert Kuttner
6. The End of Economic Warfare, a book I don’t plan to write.
Those books are magnificent books. They probably point to the way to spread and maintain prosperity. I wish I had time to read them and report on them. I don’t have time. Madrick’s book points to the benefits of broadly dispersed purchasing power. Wray’s book proposes that the government become the “employer of last resort,” thereby providing full employment and, for a real bonus, maintaining a permanent check on inflation. Gates’ book wants to reengineer capitalism so that more people are intimately connected to economic decisions of corporations. Sunstein’s book, as already noted, provides a basis for insuring economic rights as a corollary to the original human rights of the Bill of Rights. And Kuttner’s book shows how the three decade-long experimentation with neutered, deregulated, laissez-faire economics has destroyed or “squandered” our common wealth. And the book I won’t write would have portrayed a profound social morality that would abolish poverty and economic warfare.
This blog will have to wait. I hope you’ll comment on this essay.
Any of my essays are available on pdf. Send me a note, benleet@earthlink.net
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