By Karen Rubin, News & Photo Features
Andrew Yang, entrepreneur candidate for the Democratic nomination for president, says he intends to fight what he predicts will be widespread unemployment and economic catastrophe brought about by artificial intelligence and robots by giving each adult a “dividend” of $1000 per month. Where will this money come from? Well, he claims a Value Added Tax (a regressive tax on consumers) and just requiring profitable companies like Amazon to pay their fair share will do the trick (I am doubtful).
With Democrats being accused of turning USA from Capitalist to Socialist over just the insinuation of universal health care and free community college, what would you bet the chances are of Yang’s proposal (actually, his only one in his bid to lead the country) actually happening?
Here’s a better idea: lower the cost of living.
The cost of living – mainly housing in decent neighborhood (that is, with access to decent public schools) – has tripled ever since women achieved greater rights and access to jobs. Whereas before, American households (in the glorious 1950s) could make do with one “breadwinner” in the house and only spend 25 percent of one income on housing; by the 1990s, households spend 50 percent of two incomes on housing, so women working outside the home became more an imperative than a choice to fulfill their professional ability. Much of that is supply and demand – housing costs rose because they could, and housing in the “best” neighborhoods was in short supply.
While this was happening, the government did little to promote parental leave or affordable child care, pretty much wiping out a family’s ability to save money for college funds or retirement, let alone home ownership.
Let’s see what else is pushing up the cost of living (existing): health care. Health insurance premiums, deductibles, co-pays are through the roof. Then you have all the other insurances: car insurance, home or apartment insurance, flood insurance, long term care (who can actually afford that?).
People shouldn’t be indentured servants to pay off student loans, be pushed into bankruptcy over unpaid hospital bills, have to work two or three jobs to provide food and shelter to their children. And there is no justification for health costs and college tuition to rise at rates two and three times inflation.
Of course taxes are rising, as well, along with utility rates, and necessaries such as food and clothing. And thanks to the climate catastrophes, costs for basics – food, clothing, shelter and disaster aid to repair destroyed infrastructure – are also rising to unsustainable levels.
It may be necessary to instead of paying people not to work (which actually would just create a ground floor for inflated prices of $1,000/month or $12,000/year), what makes more sense in society is moving toward a living standard where it isn’t necessary to have two people working to support a family, where 40 percent of Americans who couldn’t cover a $400 emergency and 80 percent of Americans are one emergency away from bankruptcy, don’t live with that perennial anxiety.
Today’s economy is dependent on consumer spending which accounts for two thirds of Gross Domestic Product. Sustaining GDP growth requires conspicuous consumption, gorging on the earth’s dwindling resources and exacerbating climate change that will promote scarcity, raise the cost of necessity and hasten the demise of species and civilization.
But Trump, who knows that a strong economy is his only hope (except for Russia, China "help") to win in 2020, is hysterical because of concerns about an economic slowdown, even recession, that would torpedo the myth that he has done anything to build the economy, as opposed to dismantle and derail it. To keep consumer confidence propped up, he thinks just reciting propaganda will do the trick. If that doesn’t work, he will pull out all the short-term tools to juice the economy he can, just to get through to November 2020 (then he doesn’t actually care) – without actually improving lives or the economy.
Lower interest rates now, when they are already at historic lows, before there is an actual recession? Weaken the dollar (that would be currency manipulation such as he is attacking China for) to prop up exports? Cut the payroll tax so that Medicare and Social Security are further weakened (basically stealing from retirees tomorrow), so that they can argue to reduce benefits?
Reminder: Trump has ballooned the budget deficit (which Obama was successfully lowering) to over $1 trillion because of an ill-conceived tax cut that directed 83% of the benefit to the already obscenely rich (and powerful) without spending a dime on infrastructure or anything else. And with the chaos and ill-will caused by his trade wars and tariffs, instead of businesses investing, innovating, maintaining American technological leadership in the 21st century, he has short-circuited all of it.
The real reason for his trade war is to collect the billions in tariffs – actually a regressive tax on people who can least afford it – to help close that budget shortfall. Government shutdown? He thinks he saved money. Same with his efforts to punish states and localities that provide sanctuary for immigrants. And punishing Blue States with the limits on SALT (State and Local Taxes) deductions.
You understand his glee in cutting access to food stamps for 2.5 million underpaid, struggling people, and steal free school lunches from 500,000 kids, imposing work requirements in order to qualify for Medicaid (an oxymoron). And these policies – this “sacrifice” being demanded from the most vulnerable – is being extracted during a historic economic boom. What happens when the inevitable downturn comes, people lose their jobs and need to collect unemployment insurance, Medicaid, food stamps?
You think pulling out of the Iran Nuclear Deal was about nuclear weapons? It was about restoring sanctions to cut out Iran as competitor in oil market, so he could give Putin the much needed boost he asked for in oil prices, and could boost his own Big Oil donors (at the same time, he’s handing out waivers to oil industry and cutting back on subsidies to biofuel, wind, solar producers).
The colossally corrupt Republican tax cuts of 2017 haven’t produced the promised investment boom (they were warned it wouldn’t), but rather 83% of the benefit went to the pockets of the already obscenely rich and enabled the richest companies, including Amazon, to pay zero in taxes. Meanwhile, Trump’s tariff wars are a big contributor to manufacturers cutting back. General Motors laid off 4,500 workers in Lordstown, Ohio, Ford is laying off 7,000 workers, the Carrier Plant which Trump had crowed he had saved, has laid off some 600 workers. Cheatsheet documented nearly two dozen companies in 2018 that laid off workers instead of expanding – and that was before Trump’s tariff wars disrupted supply chains and generated such uncertainty, companies are afraid to take on the risk of new investment. (And now we learn that the Bureau of Labor Statistics has revised downward the number of jobs created in 2018 by a whopping 500,000, while the growth in GDP has never reached the 4% promised – so much for the “Trump miracle”.) (See also: Washington Post, The Trump vs. Obama economy -- in 15 charts)
Trump only knows how to deprive and destroy, to lie and cheat. He doesn’t know how to build, to progress, to improve.
Instead of cutting payroll taxes to juice consumer spending (effectively buying votes), which will cut funding to Social Security and Medicare (unlike when Obama did it to stave off a Great Recession, Trump won’t have the ability to borrow money to make up the difference). Instead, he should raise or even remove the cap on payroll taxes which actually would enable the payroll taxes to actually be lowered for everyone, from 6.5% to say, 3%.
Instead of cutting food stamps (which he thinks will reduce his $1 trillion budget deficit), he should recognize SNAP benefits benefit the entire family, community and economy, with a 54% rate of return to taxpayers; $1 billion in new SNAP benefits generates $1.54 billion in GDP and would support the farmers harmed by Trump’s tariff war (instead of giving them $15 billion bailout).
He should address immigration reform – the US is facing a shortage of labor (the reason so many immigrants came in the first place was to build Industrial America at the turn of the 20th century). Here’s the interesting thing: immigrants who come for menial jobs wind up having children who go to medical school or launch businesses. (44% of Fortune 500 companies were founded by an immigrant or their child; non-green card holders aren’t allowed to collect benefits; undocumented workers pay some $11 billion into Social Security system each year which they will never collect). And by the way, how many billions of dollars is being wasted to capture, imprison, harass and process undocumented immigrants?
He would be addressing health care costs with meaningful health care reform.
He should be implementing policies for universal pre-K and affordable child care. He should be allowing people burdened with student debt to refinance (like homeowners do) at the lower interest rates.
He should end the tariffs and trade wars – that would immediately stimulate. But he is waiting for 2020 to do that, after the economy has softened, so he can come along and look like he fixed the crisis he created.
He should take advantage of what he claims is a booming economy (and still-low interest rates) and be investing in climate resiliency and clean, renewable energy and sustainable agriculture – to prevent the worst, costly impacts of climate change and generate millions of jobs that robots can’t do.
Actually, these are in the proposals being outlined in extraordinary detail by Democratic candidates who want to take over from this failed administration – Elizabeth Warren, Bernie Sanders, Amy Klobuchar – health care, climate action, immigration reform, trade, criminal justice reform, fair taxation.
Trump could tell Mitch McConnell to let the Senate vote on the Raise the Wage Act, which would give 34 million Americans a raise – that would certainly goose consumer spending and boost the economy. In fact, Trump is taking credit for increases in wages that have nothing to do with him or the Republican Tax Scam of 2017 – but go back to Obama raising the minimum wage for federal workers and contractors, sparking more states to raise the minimum wage, as well as expanding overtime pay (8.2 million would lose overtime pay if Trump is successful in changing the rule.)
What else would bring down the cost of living while continuing to improve the quality of life: make quality schools available in communities where housing is more affordable, and yes, have more decent, affordable housing. (This should be the avenue for “reparations” to make up for centuries of systemic racist policies.)
Besides robots and Artificial Intelligence, job creation will also be hampered by the environmental pressure to end planned obsolescence and waste, to focus on reusing, recycling, conserving. That means jobs will shift from reliance on manufacturing to services. There will also be fewer workers because families are having fewer children (advantageous in a resource-strapped planet) – big families are no longer necessary to work the farm or replace children who die prematurely (because of improved healthcare). Instead of making family planning harder (even illegal), the government should be facilitating family planning.
Trump sees all of these can be counted as debits against a ledger; the Democrats see them as investments in a better society, just as constructive as a business loan or mortgage to buy a home.
Trump won’t bother with any of these constructive solutions because these would actually help people, raise living standards, improve the quality of life, help people make progress, be as productive as they can be and fulfill their potential in their life – that is the American Dream. He doesn’t believe in investment; his business philosophy has been bankruptcy and fraud, cheating investors, suppliers, workers and tax payers.
His vision of America is one that is split between an obscenely rich ruling class and everyone else.
The notion of reducing the cost of living will upset politicians whose reelections depend upon rising GDP, and give heart attacks to economists who have no mechanism to address “deflation.”
If this sounds like there needs to be fundamental, structural, systemic change in American society, well yes – towards social, economic, political, environmental justice.
And Elizabeth Warren has plans for that.
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