A Progressive Reform Program for America
10 March 2018 | Pago Pago, American Samoa
Kimball J Corson
Someone asked here recently what kind of reforms would our economy require to be better for all of us. I had written this article but could not find it then. It outlines the changes our economy needs to be more fair and equitable for all of us. It also shows how out of whack and inequitable our present economy is. These reforms would take us in the direction of the Scandinavian countries and their economies which many mistakenly think are socialistic. Reform is clearly needed for the US.
Toward an Honest, Fair and Equitable Economy
that Serves Us All
The democrats have no message, no plan and no leaders. They sawed Bernie Sanders off at the knees and have become a party of Republican lites and neoliberals. They don't care about what is going on and what is needed. They are lost. Progressive policies are our only real hope so I provide a road map here of what needs doing as an economist.
What is going on is simple. The rich have bought congress off to rig the economy against the fast declining middle class. It needs to be un-rigged. The U.S. economy suffers from two major problems: stagnant real growth across all income ranges, except for the top 10&, and rising income and wealth inequality, Growth stagnation of the real economy arises from deficient real aggregate demand outside of the top 10% and deficient aggregate demand, in turn arises from rising income and wealth inequality and bogus, harmful policies bought by the rich. While income inequality is growing and has multiple causes, at present, the dominate causes in operation are
1) the demise of marginal productivity pricing of labor and the misappropriation of all labor productivity gains since 1973 to increased CEO and management compensation (a redistribution of income analogous to corporate cannibalism) and to corporate profits.
2) our refusal to tax economic rents adequately, especially land rents,
3) the invention of new high technology and financial schemes by a relatively few in the top end or the economy of the upper 10%, and
4) government policies and practices enriching the already rich.
These four problems have made income inequality so bad that it has destroyed the middle class and thereby growth in aggregate demand and placed us in a new "lower low" without good growth for all because the rich have become predatory on the middle and lower classes and because they hoard their new income gains and don't spend enough more to avoid deficient aggregate demand. Government, with its bought laws, acts to make the income inequality much worse by all the bought favors for the rich and by reducing income taxes on the rich. It is a corrupt mess in which Democrats are fully complicit. They are a part of the problem; not a part of any solution at present and yet it would seem the Democratic party is only real path to reform. Our's is only a two party system but hope is slim because the Democrats have become neoliberals who support the libertarian core policies of lower taxes, smaller government and hands off markets and patently failed austerity policies.
The U.S. economy has in turn been chopped into two parts: a ‘dynamic’ high tech/industrial/FIRE sector that is shedding jobs (the economy of the upper 10%), and a ‘stagnant,' 'survivalist’ sector which acts as an ‘employer of last resort’. The bottom 90% percent of adult Americans have an average individual pretax and transfers income of $30,438, down almost 10% from a decade earlier, an income that is on par with Greece. The bottom 50% -- 117,000,000 individuals -- have an average annual pretax and transfer income of $16,200, little better than the average family income in Mexico and lower than the average annual income in virtually all of the other 32 advanced OECD nations. Almost 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 10% is why our economy is stagnant and stalled out in its new "lower low," even with what additionally the bottom 90% are able to borrow and spend. The rich and wealthy, in turn, cannot spend money fast enough and don't have the time to even enjoy what they have even though they desperately want more/
Sensible people need to attack the libertarian austerity mantra of "cut taxes," "make government smaller" and "not interfere in the economy" and all such austerity policies by showing the problems they have created and by explaining they lead to bad economic results. What is needed is better and bigger government to do what capitalism and markets cannot or will not. The following is a progressive reform program that moves us toward an honest, fair and equitable economy that serves us all and is what is needed instead of the mess we have--
1) raising taxes substantially --
-----a) and very progressively on upper incomes
-----b) and on inheritances, both to fund infrastructure and higher education in America
-----c) on the banking industry to tax the right to create new money for free and loan it out at interest
-----d) on capital gains to 100% minus any underlying real growth in the asset involved, to wring the blue sky and rents out of asset valuations and destroy Wall Street's casino operation
-----e) cutting corporate welfare, including depletion allowances
-----f) at a low rate on stock and bond trades in secondary markets
-----g) on domestic income held offshore with some amnesty
------h) interest carry forward on investments so beloved by the hedge fund industry
2) adopt the Stiglitz recommendations for de-rigging the economy against the middle class and in favor of the rich.
3) adopt a set of fair and all encompassing usury laws instead of the none we have now to prevent the huge annual interest rip off we have now of the American public and especially the poor
4) revise campaign financing laws to get money out of politics and reinstate a modicum of honesty and public service into politics and impose a duty on politicians to represent the public interest as well as their constituents.
5) expand government substantially by --
-----a) adopting a massive and majorly labor intensive infrastructure program, coupled to a jobs guarantee program to increase employment and fix our infrastructure while interest rates remain low, to rebuild the middle class and the environment we live in
-----b) adopting a program of free higher education for those qualified but only at credible and good or better existing universities, keeping for profit institutions out of it
------c) adopting laws reversing what the Trump administration has done and will do,
------e) adopting loan and grant programs for injured states transitioning away from libertarian austerity policies
------f) adopting basic modern monetary theory policies and practices that abandon the budget restraint and focus instead on inflation and aggregate demand as a system of financial reform to aid funding of these proposals along with the taxes proposed
------g) reestablishing and enforcing the earlier antitrust laws regardless of whether business likes them and whether courts want to be bothered with them
------h) adjusting welfare reform to workfare reform where everyone does what they can to aid and promote the public interest. Able bodied people should only be provided transitional and retraining help. The key is everyone should honestly do what they can to help.
------i) blocking all efforts to defund Medicare and Social Security
------h) adopting a program of Medicare for all
6) enforcing our laws equally against one and all which is not at all done presently
7) revising business regulations to simplify them, reduce costs and make regulations "bright line," and then enforce them strongly and penalize captive regulators and those who capture them.
8) reforming and repairing our badly broken system of military expenditure to something more sensible and proportionate to the real threats against us by foreign powers.
Progressives, and perhaps even Democrats (if they woke up and recovered their roots), would could win with these programs if they were properly explained as I have here. The public needs a better grounding in economics, free of the propaganda and lies it has been fed and bought into.
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 that and want to protect their wealthy patrons instead, who oppose the public's interest and seek primarily their own. A progressive take over of the Democratic party is needed. Bernie Sanders was too old and not enough of an economist to be able to pull it off. It is doable and America would be transformed so much for the much better.