Sifting through the Ashes, part 39 – Economics

Greetings and Salutations;

I was just involved in an interesting discussion about taxes and thought I would expand a bit on my opinions here. A major issue in America is the income/wealth gap between the richest and poorest citizens. This is a topic that brings up much discussion when it arises, as the obvious solution is to lower that gap size. I address this in more detail later on in this essay. As such, I am going to address the question “Does great wealth/income disparity help or hurt society?” and, how can we fix the problem.

I argue that a wealth gap does hurt society as a whole. When it reaches a certain point, it no longer is an incentive for increased production, nor, does it reflect accurately, the contribution that the very wealthy make to society. I point you to this article as an interesting discussion of the issue.

I maintain that in today’s society, the economic leverage that the very rich have (and here I am including corporations, although they are a separate issue), allows them to exploit the workers. They are able to undercut the systems that workers fought for over the decades, such as unions, fair hiring practices, and regulations on work. This ends up with workers that are underpaid, but desperate to keep their job because the effects of losing that job are far greater than the enforced poverty and abuse they endure. It can result in employees forced to work in hazardous conditions. Is this erosion of compensation, benefits, and protection good for society, though? I maintain it is not. While it may result in far greater profits reaped by the rich, the money ends up tucked away in investments and offshore accounts, where it ceases to help society as a whole, and benefits ONLY the rich. These actions have the long term effect of damaging worker morale, causing productivity loss, and a degradation of their quality of life…It leads to the dystopian view presented by the situation of the Eloi and the Moorlocks in H. G. Well’s precautionary tale “The Time Machine”.

In the late 1800s/early 1900s as the Industrial Revolution was spinning up, we had such figures as J. P. Morgan, Andrew Carnegie, the Rockefellers, and the like, who were either “Robber Barons” or “Captains of Industry” depending on one’s point of view. They lived lives of unimaginable luxury. Carnegie, for example had so much money he was able to build and fund libraries and schools all across the United States. And yet, during that time, the wealth gap was in the vicinity of 70 times from the lower to the higher economic class. Today, it is up in the vicinity of 400 times…and, frankly, I see damn few of these current robber barons using their fortunes to improve America. Here is an interesting examination of that time in America.

Since that period, though, the wealth of the country has undergone a large shift, leaving the Middle Class behind, and losing ground. More and more of this tier of society are finding themselves slipping into poverty and going from some level of economic security, to living from paycheck to paycheck, and having to decide which bills get paid this month. Today, for example, there is not one state in the Union where a single person, holding a minimum wage job, can afford safe, secure housing. More and more it takes both partners in a relationship working full time to have sufficient income to have any level of economic security. Here is a more detailed look at how the wealth in America has migrated since 1900 and how it is affecting society. It is, alas, not a pretty picture. However, it does, fairly clearly, point out the negative impacts of an increasing wealth gap on society, and, how the money flow has changed in the past 120 years or so.

In the Bible, there is a saying “To them that much has been given, Of them much will be required”. This is not a concept that was created new by those writers, either. It has been around, perhaps, as long as homo sapiens has walked the Earth. If we go back to near prehistoric times, there is a tradition that the best hunters would share their kills with the entire tribe…and NOT keep all of the riches to themselves. This same attitude persists in some cultures today, thousands of years later. The end result is that the tribe, as a whole, prospers. No small group is hoarding wealth, nor are any in danger of dying from starvation… So, yes, I do think that the very rich should carry the lion’s share of the burden of keeping America a great place to live.

I remind us that up to the Reagan Administration, we had tax rates of up to 90%, and far fewer loopholes than exist today. There were two major features of that period of American history. 1) Most Americans had a level of financial security that allowed one person, working a 9 to 5 job, to own a home, and support a family, and STILL have money for luxuries, vacations and the like. 2) America’s growth in the area of industrialization and technology boomed and brought us to a point where we were the world’s leader in those fields. Granted there were issues galore to deal with, but, from an economic standpoint, America was in a very positive place for MOST citizens. Reagan’s “reforms” of the tax code though, cut the rates for the rich, made little changes for the rest of us, and left America slipping onto a slick, downhill slide that has resulted in economic problems of amazing magnitude.

So…how can we fix the problems? Do we become a “Communist State”, where the government owns everything, and doles out wealth on an “as needed” basis? Well, no…This rapidly becomes a dystopian nightmare, as history has shown us time and time again. The people in charge, having no serious limits to their power, ALWAYS pump money and power to their friends, and ignore the needs of the country as a whole. There are several other somewhat similar forms of government, that all boil down to a dictatorship with a few in charge of the power and wealth, and the rest being dependent on their largesse. The end result of this path is almost inevitably an armed revolution that brings a bloodbath, and overthrows the existing rulers, only to allow equally bad rulers to take their place. I point out the Russian Revolution against the Tzar, The French Revolution, and the the Cultural Revolution in China as three examples of this sort of failure. I, though, have come to appreciate and support the idea of Democratic Socialism, such as advocated by Bernie Sanders all these years. Here is a somewhat idealized goal of this form of government, laid out for our edification and education. While this link does lay out the ultimate goal, it is not terribly far off. I have seen a number of employee-owned businesses in my life, and, in general, they are far better for the workers than the more typical, pure capitalistic model. They create far fewer very rich folks, but, they do ensure that all workers are adequately compensated. In addition, they tend to improve productivity, because we ALL will work harder to make something we have skin in a success, than some job that is just a paycheck to us.

For me, the question is this: “How much money does one person need?”. Just off the top of my head, if someone were to write me a check for, say, $5 million, free and clear, it would not only take care of my wife and my needs for the rest of our lives, but, it would provide me with resources to improve the world in many ways. That sounds like a lot of money, I know…but, it is less than 6 minutes from the Military’s budget. It is less than Jeff Bezos is compensated in half an hour. It is about what Bill Gates increases his fortune at over a 4.3 hour period. It is somewhat less than Devos collects in 10 Days or less. And, I am talking about a one-time payment here. Just putting it in the bank would generate nearly enough income to take care of many of the bills. So how much money does one person NEED? I certainly understand that wants far outstrip needs. I might WANT $1 billion. but, would I NEED it?

Would this change fix all the problems of society? Of course not. No one is claiming that. But, those that have great wealth shouldering more of the costs of society will ensure that the vast income gap present today will shrink a bit, and fewer Americans will end up in economic insecurity. Even if tax rates on the very rich were raised to 50%, and many of the loopholes were closed, they would still have the resources at hand to ensure that their family would not have to work for several generations out from today. Add to that increased compensation for most Americans, and prosperity could return to some extent. As a part of these changes, though, I also support a Universal Basic Income, to be paid to all Americans, and to be paid for by increased tax revenues. I believe this is a vital part of an equitable society because automation is expanding into new fields, and as such, we are going to see far fewer jobs in the fairly near future. I have written a short essay on the effects of Automation, and why the UBI is a vital part of dealing with it. What will those people whose jobs disappear because software can do them more cheaply do to keep the wolf from the door? I have written another essay on automation and how it is affecting reality in a greater and greater way, so will not repeat that here. Sufficient to say, there are very few jobs that will be left that robots cannot perform more cheaply, and quicker than humans. I am not arguing that these changes are all bad. These changes can result in a more hassle free, and quicker experience. However, the question remains…what happened to the people that are no longer working? Are they forced on to welfare now? Are they living with relatives and scraping by as Uber or DoorDash drivers? Would their lives be improved with a UBI, and would they find it easier to walk away from work that exploits them? I maintain the answer to these questions is a solid Yes.

There are equitable ways to address the issues of wealth inequities in America. However, they face formidable opposition, based not on logic, or, rational thought, but, alas, rather such factors as ignorance, greed, and the indoctrination against the changes via massive propaganda campaigns. In spite of this, I remain firmly convinced that, without some significant changes in American Society to deal with the wealth gap, the future is dark. I do not want America to add another revolution, such as I touched on before, to the pages of history. They are always a bloody, unfair, and wasteful way to implement change. Rather I would like to see wisdom and compromise used to evolve us to a society that is more fair for all citizens…. In discussing these issues in social media, I run into a fair number of people who maintain that the Government has no call to engage in any of these actions…as it has no responsibility for its citizens. I find this premise specious, for several reasons.

  1. In the Constitution, the very root of this country and its laws, the founding fathers wrote this preamble..
    We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defense, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.” Note, especially, the phrase “Promote the General Welfare”. This, in my view does not mean be a nanny state and put everyone on Federal Aid. Rather, it means to me that it is the responsibility of the government to ensure that All citizens are protected from such poverty and need that it endangers their lives.
  2. There are some very valid arguments about certain responsibilities the Government has to its citizens…and these go far beyond being a military power, or a colonial power. Here is a well put discussion of three of those responsibilities.
  3. The words of the Preamble to the Constitution also call for the government to ensure that all citizens are equally treated by society and the law. Obviously this ideal has NEVER been reached in the area of ethic relations, or, for that matter in terms of economic stability and security. Perhaps it is past time that we, citizens, pick up that “Good Trouble” that generations past have raised, and push America forwards towards what it should be…not what it is.

Because of the attempts of the fascists to destroy America during the previous administration, the damage that administration did to both the economy and America’s standing in the world, the terrible costs of the Pandemic that struck the world in 2020, and the rise in extremism (which I have written about elsewhere) in America, we are in a very fragile moment in our history. The question right now is this: “What will we do about it?” Will we accept the status quo as the only possible path? Will we work to push America back to a path closer to what the Founding Fathers envisioned? Will we shrug our shoulders at the toll economic disaster and disease is taking on our citizens, even as it increases in coming years? Or will will work to elect Federal and local administrators that will take the Preamble of the Constitution to heart, and actually change our path to a more positive one?

A very wise man said “All that is required for Evil to succeed is for people of good will to do nothing”. If we do nothing, I weep for the future of America.

Pleasant Dreams.

God Help Us All!

Be Safe, wear your mask, wash hands properly, practice social distancing!

Bee Man Dave.

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