Wednesday, December 3, 2014

Looking for a Deal

The Raw Deal or Some May Call the Real Deal

As my fingers hunt for the right keys on this laptop, millions of my fellow citizens, are out hunting for a 'deal', a 'bargain'. Black Friday is the penultimate holiday for consumerism in the U.S. And for a large majority of those bargain hunters, price is the lone distinguishing factor for the item sought. Now it could well be that the consumer's 'deal' is based upon low wages and compensation at the retail outlet or anywhere along the supply chain. Or it might be arrived at by a firm not paying its fair share of taxes or by cheating on regulations. But the bulk of consumers are either not aware or are not concerned with those costs born by others.

Let me confess, I am not totally exempt from this cultural focus. I was taught by my Depression surviving parents to shop for price, to be thrifty, to wait for the sale price. But part of that thrifty orientation was also getting by with what you had, making do, or repairing rather than replacing. At heart I think we are led to believe via marketing and advertising, that even if we may never make it to enjoy the income of the 1%, if we are shrewd enough, we can enjoy many of the same accoutrements they enjoy.

While we're busy hunting bargains, the extreme wealth and associated power that goes with it, continues to concentrate into fewer and fewer hands. And those hands are better able to shape what we know and think about the world. One recent example is the $100,000,000 spent by the Koch brothers to bombard the public with messages during the election about candidates and causes they believe in. You or I can't do that. And, of course, the Koch brothers are perhaps only the most extreme example.

This consolidation of power, whether by meglo-maniacs or nation states, is a poison on a finite planet with a growing human population. It's ironic that the day before Black Friday is perhaps this nation's most celebrated day of sharing, followed immediately by a day of addictive acquisition. Perhaps there is no better symbol of the irony than Walmart where millions are lined up to unwittingly line the pockets of four of the top eleven wealthiest people on the planet,  while their workers can't buy a living wage and where some of their own stores have collection boxes for shoppers to help their employees eat.

 Credit: Our Walmart

I am flabbergasted that the irony escapes, or is denied, by so many. But not by Dr. Peter Dreier, E.P. Clapp Distinguished Professor of Politics, and chair of the Urban & Environmental Policy Department, at Occidental College wrote on Black Friday,

      "Economists note that if Walmart paid its employees at least $25,000 a year, a million and a half workers would be lifted out of poverty. That would mean more money staying in communities to support local businesses, helping to create at least 100,000 new jobs.  Demos, a nonprofit research group, released a report finding that Walmart could easily pay every employee $14.89 without raising prices by simply not buying its own stock to further enrich the Walton family."(more here).

So What Are Some New Ideas or to Borrow from FDR, a New Deal?

Here are my suggestions for a New Deal to replace the Raw Deal that so many in our human family have been offered. The data is conclusive and near unanimous, that income inequality has skyrocketed. This has occurred most notably in the U.S. and the U.K. since the combined efforts of the Thatcher/Reagan policies that reduced taxes on the wealthiest and attempted to starve all the functions of government (save military spending). The wealthy can afford their private education, health care, transportation, etc. so they need not worry about the others. They get to hand down their wealth in greater and greater amounts to their children, who like George W. Bush was born on third base but thinks he hit a triple.

1) The New Deal would put a 10 times wage ratio in place. That's generously more than the 9 times rule in place at the very successful 85,000 employee owned Mondragon Co-operative in Spain. We will initially tie that ratio to a base equal to the median household income, currently approximately $50,000. This means that the highest income would be $500,000. All income above that is taxed at 100%.


The new IRS report for the 400 largest incomes (2010) was just released. The average income of the top 400 was reported as $265 million. Under my proposal  they would have to scrimp by on only $500,000 (of course they probably have enough wealth that that figure is meaningless). The tax revenues raised from these 400 tycoons alone under this policy would be $105 BILLION. 

2) Capital gains are taxed at the same rate as real income.

3) Selling of stock held for less than six months is penalized with a progressive tax. The tax increases correlated to the shortness of time the stock is held, e.g., if you hold for less than a day, you pay a penalty equal to the amount exchanged. If you hold for more than six months, no penalty! This reduces speculation, and specifically speculation driven by computer programs that add no real value to the economy.

The increased revenues to government from these three policy changes could provide for free K-16 education for all who are adequately prepared; universal health care; investments in renewable energy; energy, resource, and transportation efficiency; and stewardship of our natural resources. The government becomes the employer of last resort, so that everyone has a job, a livelihood and makes a contribution to the society.

4)  Institute participatory budgeting - give the citizens a direct voice in how those revenues are spent. In 2008 the American Political Science Association formed a task force to look at democracy, economic security and social justice as the economic convulsion was hitting. That task force completed its report in 2011 Democratic Imperatives: Innovations in Rights, Participation, and Economic Citizenship. The report recommends more public governance through mechanisms like public budgeting.

The Participatory Budgeting Project

In participatory budgeting citizens get to suggest programs and projects to spend some portion of tax revenues and then vote for their choices. Programs and projects receiving the most votes get funded. The benefits to the community and the democratic culture are many.

There are clearly more ideas we could test and try out that would move us away from exponential growth on a finite planet, where the benefits accrues mostly to a small minority. It is way past time we come together to discuss the possibilities for building a more sustainable future. To wait any longer to do so invites increasing struggle for many and will leave our children a world more badly broken.