Two years ago, our country was on the brink of economic collapse, but with a Herculean (if flawed) effort on the part of the federal government, we managed to pull back from total collapse to mere stagnation. Unemployment has been hanging around 9.8% percent for over a year, and although we are creating jobs now, we are not creating nearly enough to absorb our growing population, much less to re-employ all those people who lost their jobs in the crisis. We are stuck, so we can either muddle through as we have been since the stimulus package started to run dry, or we can try something radical. Such as look at the facts and respond accordingly.
What are the facts? As I see it, in no particular order of importance:
1) We cannot afford to inflate the deficit any more than it is already growing, so the best solution has to be deficit-neutral.
2) An economy is strong not when everyone has a lot of money, but when money is flowing freely from one person to the next in a virtuous cycle that adds jobs and wealth to the overall economy. Therefore, a healthy economy needs to have appropriate levels of buyers, sellers, manufacturers, servicers, laborers, law enforcement, and financiers/bankers (among many other sectors) to keep the money flowing and the economy growing. If any one of these sectors fails, the money pipeline gets clogged and everything starts to shut down. Therefore, in an economy that is stagnating like ours is, we need to see which sector is proving to be the bottle-neck and address the problem directly.
3) Right now, we are seeing two sectors that are hurting the rest of the economy the most: the banks (due to the foreclosure crisis), and the buyers (who lost their jobs when the banks ran out of money). First, the banks: The credit freeze that started this mess in 2008 never really thawed; the banks over-corrected for the years of loose-lending practices by making only the safest bets, and who can blame them? Why should they lend to any normal human being when they can lend unlimited money to the federal government with money they get virtually for free from the Federal Reserve. Basically we're paying the banks to step between the Fed and our Treasury, so it doesn't look like we're just printing money. The added benefit is that the government can then afford to continue to give them all that free money without anyone actually having to pay for it. Clearly the banks need to be weaned off the government teat so they have a reason to go back to the business of lending real money to real people.
4) In the meantime, however, the real problem with our economy is that demand is sluggish, due to persistently high unemployment. Even with a constricted banking sector, corporations are sitting on record profits and close to $2 trillion in liquid assets, so they don't need loans or employment subsidies. At the same time, they are not spending any of that money (and therefore not creating jobs) because it seems unlikely that anyone will be able to purchase the extra output. With smaller businesses, they would also be able to get by for a time without the banks if demand increased and bulked up their sales receipts. So while we do still need to address the banking crisis, it is really the lack of demand that most crippling to our economy.
5) The Republican solution to this problem is to cut taxes, which has the virtue of putting more money into people's pockets, and they prefer to enact such cuts across the board. Unfortunately, this approach has already shown its limitations, what with the utter failure of the Bush tax cuts to create any jobs over the last decade. It was tried again in the Obama Stimulus package, but its success was limited because people tended not to spend the money but instead either saved it or used it to pay off prior debts.
6) The more typical Democratic solution is to spend money, particularly in needed areas such as unemployment benefits, food stamps, education, and infrastructure. This approach is far more stimulative and forward-thinking than tax cuts that ultimately lead to greater hoarding at the top 2% of our society, but it puts the cart before the horse: spending on infrastructure is supposed to create a large number of jobs all at once, but employing people directly happens to be the most expensive way to create a job.
Now, what is the appropriate reaction to this set of facts? Let's start by dropping the pretense that any of these solutions can somehow escape the label of "redistributing wealth" - including and especially tax cuts for the upper class. Our nations richest members may pay a much larger percentage of overall tax receipts, but they are the ones who financially benefit the most from our governments' operations, and it is only right that they pay for what they receive in the way of subsidies, favorable civil laws and courts, a tariff system that protects them from unfair competition from abroad, and a very expensive standing army that is stationed around the world, providing silent (and sometimes not-so-silent) oversight of America's economic interests. If the rich did not get taxed at a much higher rate than the lower classes, the poor would then be subsidizing the government largess from which only the richest Americans benefit. Therefore, cutting taxes for the rich - especially in this time of historically low income taxes - amounts to the redistribution of wealth upwards, which is exactly what we have seen in the years of the Bush tax cuts.
Any choice we make will have repercussions on wealth distribution in one way or another, so we have to stop acting as if we can choose not to redistribute wealth, and instead focus on figuring out the best way to unplug the clog in the economy, with the end goal being that if at all possible, absolutely everyone benefits. Nothing less than a win-win-win proposition will suffice, so please consider the following: The best way to pump up sagging demand in the economy is to give every tax-paying American a free debit card, worth perhaps $600-$1200 per year (exact amount to be determined at a later date). Here is how I see it working:
A) The first condition is that if you want the card you have to apply for it; there are several reasons for this, one being that that the money will then go to those who are most likely to spend it. In addition, those who are philosophically opposed to receiving money from the government will not be forced to participate. Finally, it would also weed out the fairly well-off; they will tend not to apply since they don't need it and the more well-off they are, the more it will seem like too much trouble to bother with, even if the application process is simple and painless. This will make the middle-class the greatest direct beneficiaries of the policy.
The only other requirement is that you must have paid a minimum amount of income taxes the year prior. This way it can be billed as a tax cut, because you are just giving people their hard-earned money back.
B) Upon a successful application, you will receive a debit card that gets topped off at $50-$100 every month. You can spend it on anything you want, but you must spend it or you will lose it, so the stimulative effect will be similar to that of food stamps (which has one of the highest ratios out there), except that a much larger portion of the economy will benefit.
C) The program should last for a pre-designated period of time, preferably at least 3-5 years. This will reduce the amount of uncertainty in the market by letting our corporations know the new level of demand that they can expect for a long enough period of time that they can plan ahead for it. This is a key point, because the augmented, sustained demand will give them both the incentive and the stability they need to start spending all that money that they've been hoarding over the last couple years. Once they start spending, there will be a virtuous cycle in which they employ more people who can then spend more money, and the economy as a whole grows far, far faster than we might otherwise expect. In short, this program could provide us with an unprecedented opportunity to ignite the entire economy with one, well-placed spark.
D) Then there is the question of how to pay for it. Despite the rise of the Tea Party movement and their credo of lower deficits, we have seen in the Obama tax-cut deal that it is still politically feasible both to cut taxes and to increase spending without paying for any of it, and perhaps this program should operate on the same principle. Although I am no expert at this, I estimate that this program would cost less than $50-$100 billion per year, which is chump change compared to the Stimulus and near-$2 trillion deficits. However, a better solution would be budget-neutral, and in this case taxing the richest Americans makes a lot of sense, not only because we all need this program and they happen to be the only ones who can afford to pay for it, but also because we would just be giving all that money right back to those same people in the form of increased sales receipts for their corporate holdings, so they don't really lose anything and in the meantime the economy grows and everyone will benefit well beyond the direct effect of the actual money spent.
In sum, under this program we can stimulate the economy, grow our way out of this recession, give Americans their own tax money back, make sure every American benefits, pay for it fully, and side-step the banking mess altogether. Of course, we will still need to deal with the banks and the housing market at some point, but a robust economy will inevitably ease those problems as well, and in the meantime these sectors don't have to be an obstacle to our overall economic progress.
While I have tried to maintain an ideological balance in the structure of the program, I know that Congress is now the place where good ideas go to die, but there is no way to know what will happen if no one even proposes the idea, so let this be my contribution to the discussion and if you like the concept, please pass it on to anyone you think might be interested, and let's see what happens!
Thursday, December 30, 2010
Thursday, November 4, 2010
President Obama, the Hoards Are Coming
Democrats are reeling. Not two years ago, they were talking about a permanent Democratic majority, and now House Democrats have taken a serious "shellacking," as our president so aptly put it.
In less than two days since the midterms, President Obama - who still has more power than they do - extended an olive branch, and Republican Minority Leader Mitch McConnell extended a knife, claiming that his only priority was denying President Obama re-election in 2012.
Mr. President, in a few hundred years, your style of leadership may be all that is needed of an American president. Folks on the opposing side will probably respond a lot better to a genuine willingness to share governance and to work in a cooperative spirit. But that day is a long way off, and today we need a president who is willing to get his hands dirty - not by playing dirty, but by showing up, hitting hard, and getting it RIGHT for God's sake! That's why we elected you, not just to get shit done, but to do it in a way that just makes so much sense that you can't help but want to be a part of it. We made a good choice in electing candidate Obama; President Obama, you need to trust the American electorate and give us the gifted, articulate orator whose wisdom and obvious fairness we voted for in the first place.
At the same time, we as a people need to set an example for this progressive vision. We need to work together within our own community to show a united front to those who stand self-righteously on the backs of the poorest 95% of the country. Who cares if gay people get what they want before the immigrant population does? Instead of saying, "My turn! My turn!" we should have been saying, "No, after you! I insist!" We can agree to disagree about what the health care bill should have looked like, but can we all just agree that this is a step in the right direction, and that we have far better things to worry about than whether we can ever get a public option thrown in there somewhere?
What we have is an emboldened, radicalized Republican party on the rise, about to obtain vast legislative and investigative power, and wielding an agenda that is wholly and unequivocally destructive to this country and potentially the planet. It is not hyperbole to say this, nor is it a partisan position. This is what even moderate Republicans will tell you when no one is listening, and it is what we know based on hard data and expert opinion.
As progressives, we cannot afford to close our eyes and hope the craziness will just go away on its own. Millions of people have lost their homes and their livelihoods due to the free-wheeling, government-abusing ways of the Bush Republican party, so we know how bad bad can get, and based on what they're so proudly telling us, we know it can get so much worse.
This is why we need to learn to be comfortable wielding power. We need to be willing to have those confrontations that will almost certainly get ugly, but hold true to our principles and NOT roll over. We must prove that the way of inclusion and equality holds the force of truth, in stark contrast to the empty platitudes of freedom (for the rich to pollute the air we all have to breath) and free markets (which worked out so well for us in the end, right?). We have two years to prove to the reasonable, voting liberals and independents out there that we do not hurt ourselves when we help others, and those who poison the well are not the ones you want to put in charge of the water supply.
President Obama, please stand up and lead this charge to greatness!
In less than two days since the midterms, President Obama - who still has more power than they do - extended an olive branch, and Republican Minority Leader Mitch McConnell extended a knife, claiming that his only priority was denying President Obama re-election in 2012.
Mr. President, in a few hundred years, your style of leadership may be all that is needed of an American president. Folks on the opposing side will probably respond a lot better to a genuine willingness to share governance and to work in a cooperative spirit. But that day is a long way off, and today we need a president who is willing to get his hands dirty - not by playing dirty, but by showing up, hitting hard, and getting it RIGHT for God's sake! That's why we elected you, not just to get shit done, but to do it in a way that just makes so much sense that you can't help but want to be a part of it. We made a good choice in electing candidate Obama; President Obama, you need to trust the American electorate and give us the gifted, articulate orator whose wisdom and obvious fairness we voted for in the first place.
At the same time, we as a people need to set an example for this progressive vision. We need to work together within our own community to show a united front to those who stand self-righteously on the backs of the poorest 95% of the country. Who cares if gay people get what they want before the immigrant population does? Instead of saying, "My turn! My turn!" we should have been saying, "No, after you! I insist!" We can agree to disagree about what the health care bill should have looked like, but can we all just agree that this is a step in the right direction, and that we have far better things to worry about than whether we can ever get a public option thrown in there somewhere?
What we have is an emboldened, radicalized Republican party on the rise, about to obtain vast legislative and investigative power, and wielding an agenda that is wholly and unequivocally destructive to this country and potentially the planet. It is not hyperbole to say this, nor is it a partisan position. This is what even moderate Republicans will tell you when no one is listening, and it is what we know based on hard data and expert opinion.
As progressives, we cannot afford to close our eyes and hope the craziness will just go away on its own. Millions of people have lost their homes and their livelihoods due to the free-wheeling, government-abusing ways of the Bush Republican party, so we know how bad bad can get, and based on what they're so proudly telling us, we know it can get so much worse.
This is why we need to learn to be comfortable wielding power. We need to be willing to have those confrontations that will almost certainly get ugly, but hold true to our principles and NOT roll over. We must prove that the way of inclusion and equality holds the force of truth, in stark contrast to the empty platitudes of freedom (for the rich to pollute the air we all have to breath) and free markets (which worked out so well for us in the end, right?). We have two years to prove to the reasonable, voting liberals and independents out there that we do not hurt ourselves when we help others, and those who poison the well are not the ones you want to put in charge of the water supply.
President Obama, please stand up and lead this charge to greatness!
Wednesday, August 25, 2010
"Don't you think it emboldens the enemy…?"
This was the rhetorical question that conservatives would ask in response to anyone's criticism of President George W. Bush's decision to invade Iraq. After all, the reasoning went, people on the other side of the world have instant access to international news just like we do, and they will know if there are voices in our country that are undermining our leaders' ability to execute the war. It will embolden them, making them feel like our leaders have one hand tied behind their backs whenever our troops show up for the fight.
Of course, the whole point was that we shouldn't have had any "enemies" to embolden, because we already had Saddam under our thumb, he had nothing to do with 9/11, and he really wasn't a threat to us. We just couldn't figure out that he needed his people to believe that he had Weapons of Mass Destruction far more than he needed us to believe that he didn't. So it was a pointless war that has destroyed countless military and civilian lives, drained our treasury, and redirected our resources from Afghanistan to the point where we may wind up giving that piece of land back to those who actually did give safe harbor to our attackers. And of course there was never any actual evidence to suggest that war protests in America made more American soldiers die.
But never mind all that. Although democracy thrives on a healthy debate, perhaps it is better for us all to work toward the same goal – even if some of us don't agree with it – than it is to try to move forward as a house divided. Got it. Makes sense. Thank you for the wisdom lesson.
Fast forward a few years, and now we have the proposed "mosque" controversy (actually, it's a cultural center with a prayer room which promotes inter-religious cooperation and tolerance, and it is led by the "go-to" man of the Bush Justice Department on matters of promoting peaceful relations with Islam), which magically appeared out of an election-year vacuum. Yet even the staunchest of conservative opponents to the "mosque" have had to admit that there is no question as to the right Muslims have to build a "mosque" near Ground Zero, but they still think it is insensitive for promoters of peace to show up where a lot of people who conflate a terrorist attack with an entire religion are walking by.
Once again, although some of us can't believe that we even have to have this conversation, it is still good for our democracy to talk about the things that matter to us. So the "mosque" matters. However, unlike the scarcity of evidence to establish that protesting a pointless war is a bad thing (especially since it turns out that the war protestors were right, and our government should have listened to them), we have already seen on Islamic extremist blogs and Web sites that news of these protests against the "mosque" is being met with glee, because the notion of American intolerance for Islam is a key plank in the "Islam must destroy America or be destroyed by America" platform. And what could be a greater example of our intolerance to Islam than our actual intolerance for a peace-promoting Islamic cultural center?
So here is my rhetorical question for those who oppose the "mosque"/cultural center: Don't you think it emboldens our enemies when your protests send them countless new recruits?
Of course, the whole point was that we shouldn't have had any "enemies" to embolden, because we already had Saddam under our thumb, he had nothing to do with 9/11, and he really wasn't a threat to us. We just couldn't figure out that he needed his people to believe that he had Weapons of Mass Destruction far more than he needed us to believe that he didn't. So it was a pointless war that has destroyed countless military and civilian lives, drained our treasury, and redirected our resources from Afghanistan to the point where we may wind up giving that piece of land back to those who actually did give safe harbor to our attackers. And of course there was never any actual evidence to suggest that war protests in America made more American soldiers die.
But never mind all that. Although democracy thrives on a healthy debate, perhaps it is better for us all to work toward the same goal – even if some of us don't agree with it – than it is to try to move forward as a house divided. Got it. Makes sense. Thank you for the wisdom lesson.
Fast forward a few years, and now we have the proposed "mosque" controversy (actually, it's a cultural center with a prayer room which promotes inter-religious cooperation and tolerance, and it is led by the "go-to" man of the Bush Justice Department on matters of promoting peaceful relations with Islam), which magically appeared out of an election-year vacuum. Yet even the staunchest of conservative opponents to the "mosque" have had to admit that there is no question as to the right Muslims have to build a "mosque" near Ground Zero, but they still think it is insensitive for promoters of peace to show up where a lot of people who conflate a terrorist attack with an entire religion are walking by.
Once again, although some of us can't believe that we even have to have this conversation, it is still good for our democracy to talk about the things that matter to us. So the "mosque" matters. However, unlike the scarcity of evidence to establish that protesting a pointless war is a bad thing (especially since it turns out that the war protestors were right, and our government should have listened to them), we have already seen on Islamic extremist blogs and Web sites that news of these protests against the "mosque" is being met with glee, because the notion of American intolerance for Islam is a key plank in the "Islam must destroy America or be destroyed by America" platform. And what could be a greater example of our intolerance to Islam than our actual intolerance for a peace-promoting Islamic cultural center?
So here is my rhetorical question for those who oppose the "mosque"/cultural center: Don't you think it emboldens our enemies when your protests send them countless new recruits?
Wednesday, May 26, 2010
Dominant Power Structures
There is an old story about a Native American chief who was brought to Spain in the early years of colonization. When he saw the resplendent nature of the royal court after seeing the desperate poverty that everyone else lived in, he wondered aloud why the people did not kill the aristocracy for the obvious injustice they were doing to the people.
The same question could be asked today.
We live in a capitalist society, so we expect a certain amount of unequal wealth distribution. The promise of greater riches for harder, more innovative work is what incentivizes people to do and contribute more than they might otherwise do. Having lived in Africa, I have seen one of the alternatives to this system - In tribal culture, those who make even slightly more than they need are required by tribal norms to share with those who have less than they do. This is a great way to ensure survival for the tribe as a whole, but it also prevents anyone from being able to accrue enough capital to make bigger investments that will eventually lead to greater prosperity for all. So to be clear, I am not an anti-capitalist by any stretch of the imagination.
At the same time, however, has democratically-governed capitalism done away with the excesses of aristocratic greed? Did we really think aristocratic excess was nothing more than the product of an antiquated feudal system? Of course not. It wasn't the system that kept the powerful in control, it was the choices of everyone involved in the system that kept power concentrated in the hands of a few.
In the America of today, the people do not believe in inherited power. We have no kings and absolutely no inherited public offices. This is, obviously, a step in the right direction - but is it enough?
Today, although political power is no longer bestowed upon one's children, individual wealth is inherited from one generation to the next, and wealth still buys political influence. The aristocrats of old were thrown out of power by the rising merchant class, only to have them evolve into the "Robber Barons" of the 19th century and the financial "Masters of the Universe" in the 20th-21st centuries. The only backstop to this pernicious cycle is democracy, where the people can elect officials who will enact laws that prevent the most powerful from becoming a leach on the less fortunate. When the Great Depression hit in the 1930's, the people finally recognized that the wealthy elite had no credibility, and good, common-sense legislation was able to make its way through Congress into law.
And yet the wealthy elite still have considerable political power, which has only gotten stronger since the 1980's when everyone started to forget about the Great Depression and its causes. Top CEO's make thousands of times more money than their lowest-paid workers, and yet for some reason we do not see this as an outrage. In the past we shrugged our shoulders at unequal power and chalked it up to the "divine right of kings" to rule their lands. Now we shrug our shoulders because "the wealthy earned their money and should be able to keep it." Rarely do we as a society ask, "What did society do to help the wealthy earn their money, and what responsibility do wealthy people have to give back to the people and systems that pushed them up to the top?" Even more importantly, do we really believe that an hour of anyone's work is worth thousands of times more than anyone else's hour of work? What could possibly justify such thinking?
There is a reason why those in power remain in power, and it is not just because they have the resources to protect themselves from popular uprisings. They also have the power of ideas. If you convince a person that the powerful should remain powerful, he will not even try to rise up against you. You have won without ever having to crush an uprising. This is what all dominant power structures have in common - they justify unequal power distribution in a way that pacifies the least powerful. The justifications have evolved over time - from "Might makes right," to "The divine right of kings," to "The rich deserve their money."
If we wish to live in a society that works equally well for everyone, we have to stop believing in any idea that maintains dominant power structures. Sure, we live in a society that rewards merit more than any other that came before us, but that does not mean that merit is the only - or even dominant - factor in wealth accumulation. We have to recognize that power attracts the power-hungry, and any system that does not put the brakes on this natural human tendency will eventually become top-heavy and collapse under the weight of the wealthy elite's greed, excess, and a lack of accountability.
The same question could be asked today.
We live in a capitalist society, so we expect a certain amount of unequal wealth distribution. The promise of greater riches for harder, more innovative work is what incentivizes people to do and contribute more than they might otherwise do. Having lived in Africa, I have seen one of the alternatives to this system - In tribal culture, those who make even slightly more than they need are required by tribal norms to share with those who have less than they do. This is a great way to ensure survival for the tribe as a whole, but it also prevents anyone from being able to accrue enough capital to make bigger investments that will eventually lead to greater prosperity for all. So to be clear, I am not an anti-capitalist by any stretch of the imagination.
At the same time, however, has democratically-governed capitalism done away with the excesses of aristocratic greed? Did we really think aristocratic excess was nothing more than the product of an antiquated feudal system? Of course not. It wasn't the system that kept the powerful in control, it was the choices of everyone involved in the system that kept power concentrated in the hands of a few.
In the America of today, the people do not believe in inherited power. We have no kings and absolutely no inherited public offices. This is, obviously, a step in the right direction - but is it enough?
Today, although political power is no longer bestowed upon one's children, individual wealth is inherited from one generation to the next, and wealth still buys political influence. The aristocrats of old were thrown out of power by the rising merchant class, only to have them evolve into the "Robber Barons" of the 19th century and the financial "Masters of the Universe" in the 20th-21st centuries. The only backstop to this pernicious cycle is democracy, where the people can elect officials who will enact laws that prevent the most powerful from becoming a leach on the less fortunate. When the Great Depression hit in the 1930's, the people finally recognized that the wealthy elite had no credibility, and good, common-sense legislation was able to make its way through Congress into law.
And yet the wealthy elite still have considerable political power, which has only gotten stronger since the 1980's when everyone started to forget about the Great Depression and its causes. Top CEO's make thousands of times more money than their lowest-paid workers, and yet for some reason we do not see this as an outrage. In the past we shrugged our shoulders at unequal power and chalked it up to the "divine right of kings" to rule their lands. Now we shrug our shoulders because "the wealthy earned their money and should be able to keep it." Rarely do we as a society ask, "What did society do to help the wealthy earn their money, and what responsibility do wealthy people have to give back to the people and systems that pushed them up to the top?" Even more importantly, do we really believe that an hour of anyone's work is worth thousands of times more than anyone else's hour of work? What could possibly justify such thinking?
There is a reason why those in power remain in power, and it is not just because they have the resources to protect themselves from popular uprisings. They also have the power of ideas. If you convince a person that the powerful should remain powerful, he will not even try to rise up against you. You have won without ever having to crush an uprising. This is what all dominant power structures have in common - they justify unequal power distribution in a way that pacifies the least powerful. The justifications have evolved over time - from "Might makes right," to "The divine right of kings," to "The rich deserve their money."
If we wish to live in a society that works equally well for everyone, we have to stop believing in any idea that maintains dominant power structures. Sure, we live in a society that rewards merit more than any other that came before us, but that does not mean that merit is the only - or even dominant - factor in wealth accumulation. We have to recognize that power attracts the power-hungry, and any system that does not put the brakes on this natural human tendency will eventually become top-heavy and collapse under the weight of the wealthy elite's greed, excess, and a lack of accountability.
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