A Macro Agenda for America's Economic Problems: the Big Stuff
05 July 2017 | Pago Pago, American Samoa
The U.S. economy suffers from two major problems: a secularly stagnant growth, and rising income wealthy and job inequality . Secular stagnation arises from deficient aggregate demand and deficient aggregate demand, in turn arises from rising income and wealth inequality. While income and wealth inequality are growing and have multiple causes, at present, the dominate causes in operation are
1) our bought off congress has, by new laws and regulations, rigged the economy to require greater income inequality (income tax, corporate welfare ,etc, etc) and wealth inequality (reduced inheritances taxes; no other wealth taxes),
2) the demise of marginal productivity pricing of labor and the conversion or misappropriation of all labor productivity gains since 1973 to increased corporate profits and management compensation (a redistribution of income analogous to corporate cannibalism) and
3) the new invention of high technology by a relatively few in the top end or the economy of the upper 1/3.
These three problems have made income inequality so bad that it has destroyed growth in aggregate demand and placed us in a new lower low because the rich hoard their new income gains and don't spend enough more and everyone else gets by on what they had in 1973. Government, with its bought laws, acts to make the income inequality worse by bought favors for the rich and by reducing income taxes on the rich. It is a corrupt mess.
The U.S. economy has in turn been chopped into two parts: a ‘dynamic’ high tech/industrial sector that is shedding jobs (the economy of the upper 1/3), and a ‘stagnant,' 'survivalist’ sector which acts as an ‘employer of last resort’. The bottom 50 percent of adult Americans -- 177,000,000 of them -- have an average annual income of $16,200, little better than the average and income in Mexico and lower than the average annual income in virtually all of the other 32 advanced OECD nations. About 40 percent of America's working age population is now unemployed. Think about these matters for a moment.
The reduced or stalled purchasing power of those not in the economy of the upper 1/3 is why our economy is stagnant and stalled out in its new "lower low," even with what additionally they are able to borrow and spend. The rich and wealthy, in turn, cannot spend enough and don't have the time to even enjoy what they have.
The government needs to drop the libertarian mantra of "cut taxes," "make government smaller" and "not interfere in the economy" or all such austerity policies by doing the following things --
1) raising taxes substantially or imposing taxes on --
-----a) and very progressively on upper incomes,
-----b) on inheritances,
-----c) on the banking industry for the right to create new money for free and loan it out at interest
-----d) on capital gains to ordinary income rates
-----e) cutting corporate welfare, including depletion allowances
-----f) on stock and bond trades in secondary markets
-----g) on domestic income held offshore with amnesty
2) adopt a set of fair and all encompassing usury laws,
3) revise campaign financing laws to get money out of politics
4) expand government substantially by --
-----a) adopting a massive and majorly labor intensive infrastructure program, to increase employment and fix our infrastructure,
-----b) adopting a single payor national health insurance program for major medical expenses,
------c) adopting laws reversing what the Trump administration has done and will do,
------d) adopting on an experimental basic income program for the bottom 20%, without cutting the safety net
------e) adopting loan and grant programs for injured states transitioning away from libertarian austerity policies
------f) adopting basic, but not all MMT policies and practices: use sovereign credit and and abandoning the budget restraint
5) revise business regulation to simplify it, reduce costs and make it "bright line," general regulation and then enforce it
These changes, without more, if properly done would radically transform America and the economy, but many Americans and most conservatives and republicans are not well enough educated in economics to know it.