A Modest Proposal
“We cannot attain [lasting prosperity] in a nation half boom and half broke. If all our people have work and fair wages and fair profits they can buy the products of their neighbors and business is good. But if you take away the wages and the profits of half of them, business is only half as good.” FDR July 24, 1933
We need an economic climate that not only gives our workers sufficient security but also allows potential customers to afford our products. That is precisely what we now lack:
- At 14 million, unemployment is the highest since the Great Depression.
- At 64% workforce participation is the lowest since Reagan’s 1980-81 recession.
- At 43% the percentage of those unemployed for longer than 6 months is the highest since the US first started keeping such records in 1950.
“No country, however rich, can afford the waste of its human resources. Demoralization caused by vast unemployment is our greatest extravagance. Morally, it is the greatest menace to our social order.” FDR Sept. 30, 1934
- At $1.4 trillion, annual corporate profits are at a record high. Adjusted for inflation, they have doubled since 1990, CEO pay tripled. Meanwhile, average production-worker pay has increased just 4%.
- Real wage rates, adjusted for inflation, have declined 7% since 1972.
- Wages as a share of the total economy have declined from 52% to 44% since 1960.
- The top 1% get 23.5% of the income, their highest proportion since 1928, just before the onset of the Great Depression.
- The top 5% own 69% of the financial wealth in this country, ten times the share of the bottom 80%.
- The US ranks 93rd in world income-equality, behind Iran, China, Russia and Egypt!
“A very substantial share of corporate earnings must be paid out in wages, or the soil from which these industries grow will soon become impoverished.” FDR Nov. 14, 1937
No wonder Occupy Wall Street has spread to over 2,000 cities and towns!
For far too long we have allowed well-heeled far-right think tanks, the Heritage Foundation, the American Enterprise Institute, the Koch brothers’ charitable foundations, the Cato Institute and their ilk, to dictate the public discourse. We suffer from an historic inbalance between capital and labor, the forlorn consequence of following the jaundiced advice of these so-called conservatives, imposters whose policies conserve nothing except their own narrow class interests!
“There are those who fail to read both the signs of the times and of American history. They would try to refuse the worker any effective power to bargain collectively, earn a decent livelihood and to acquire security. It is those short-sighted ones, not labor, who threaten this country with that class dissension which in other countries has led to dictatorship and the establishment of fear and hatred as the dominant emotions in human life.” FDR Sept. 6, 1936
Some have reproved Occupy Wall Street for critiquing our economic system without proposing specific policy solutions. But OWS doesn’t claim to have all the answers; they wisely refrain from telling us how to think or what to do: that is their very strength. Instead, they invite all of us to incubate the creative ideas that will bring about real social change.
That we may start our own think tank I offer a few modest proposals, only a beginning, an invitation to dialogue. What so impressed me about FDR’s Fireside Chats was his ability to craft a comprehensive vision, his individual programs reinforcing each other to create a balanced plan, like a well-built house braced and strengthened in all the right places.
- Yes, enact a small financial transactions tax, but also:
- Tax stock profits and other capital gains at the same rate as workers’ wages. When I buy stock in a company, I do not lift a finger to produce any of its goods and services, yet I pay only a 15% capital gains tax while most of that company’s productive work force pay at least 25% of their wages in income taxes.
“The employer-employee relationship should be one between free men and equals. We refuse to regard those who work with hand and brain as different from or inferior to those who live from their property.” FDR Sept. 6, 1936
- Forgive all outstanding student loans. Now, not in 20 years! Not since the days of indentured servitude has our society treated its youth so badly. They come into adult life saddled with huge debts, now collectively in excess of $1 trillion. The big corporations love it because it hands them a captive army ripe for easy exploitation. But what does it do for the potential creativity of these young adults, stifled too soon under the burden of this yoke?
“I am not for a return to that definition of Liberty under which for many years a free people were being gradually regimented into the service of the privileged few. I prefer that broader definition of Liberty under which we are moving forward to greater freedom, to greater security for the average man than he has ever known before in the history of America.” FDR Jun. 28, 1934
- Enforce a low ceiling on the proportion of loans permitted in student financial aid packages. Provide financial support for institutions who offer grants instead of loans. Extend interest-free grace periods prior to repayment till at least five years after completion of college or professional school.
- Institute a massive WPA program to stimulate the economy, employ primarily young adults and restore those areas ravaged by natural disasters. In my geographic area alone, roads, bridges, farmland and landscapes need billions of dollars of restoration funds that their local economies can’t provide.
“Now we have plenty of capital, banks and insurance companies loaded with idle money; plenty of industrial productive capacity and many millions of workers looking for jobs. It is following tradition as well as necessity, if government strives to put idle money and idle men to work, to increase our public wealth and to build up the health and strength of the people–to help our system of private enterprise to function again...the first duty of government is to protect the economic welfare of all the people in all sections and in all groups.” FDR Apr. 14, 1938
- Levy a tax on instigators of risky loans. Tax mortgages requiring less than 20% down payment, tax all variable-rate mortgages and student loans with inflated delayed balloon payments at rates commensurate with the degree of risk. We have sin taxes, why not risk taxes?
- Using that revenue, create a federal housing agency to forestall foreclosures. Require mediation to seek more acceptable alternatives. Foreclosures have devastated neighborhoods, housing values and economic security, swelling the ranks of the homeless, displacing and impoverishing millions of people. To a large extent, this recession was, and remains the result of a housing bubble perpetrated by greedy irresponsible banks.
- Enact comprehensive cradle-to-grave single-payer health care for all citizens that cuts out profit-making private insurers and is financed not by employers but by higher income taxes on both individuals and corporations.
- Make all brackets of corporate income tax rates progressive.
- Okay, all you strict constructionists: here’s one for you! In their profound wisdom, our Founding Fathers proposed Article 1, Section 8, Clause 11 of the Constitution which vests the power to declare war on Congress. Unlike Amendment II, its language is clear and unmistakeable, though politicians have gone to great lengths to obfuscate it. Let’s re-institute it in the literal spirit in which it was offered, that we will not invest that much power in one individual, lest we revert to monarchy. Our endless procession of ill-defined, ill-advised undeclared wars and police actions, not our modest social programs, has laid waste to our treasury.
Mr. Obama, the time for timidity is long since past. Big problems require bold solutions. As FDR said on Apr. 12, 1938 when the economic recovery from the Great Depression, threatened by opposition to his programs, was foundering,
“To abandon our purpose of building a greater, a
more stable and a more tolerant America would be to miss the tide
and perhaps to miss the port. I propose to sail ahead...For to reach
a port, we must sail—sail, not lie at anchor, sail, not drift.”