It is currently popular in America to believe in supply side economics which basically means less government intervention in business. The idea as I understand it is that by giving the people on the top of society more money they will have more money to employ the rest of society. Given that there are smart people on both sides of this issue, I will certainly agree that this argument has some appeal to reason.
The other view of economics is demand side or Keynesian economics. This view has it that government spending can rescue a failing economy. This was arguably successful enough to prevent a peasant revolution during the Great Depression, though many people like to claim that it was World War II which successfully ended the depression. There is some truth to the fact that WWII did bring the US to a state of high employment - through government spending which says that demand side economics worked when it was applied in a large enough dose.
It is unfortunate that our economy tends to react fairly slowly to the decisions made by our government. If it reacted more swiftly perhaps the debate could be ended between the supply and demand side. As it is, it is nearly impossible to prove that any given stimulus whether it be supply side or demand side in origin is the cause of success or failure in our economy.
Of a more fundamental nature than the mathematical logic of supply side versus demand side economics is "Why doesn't the law of supply and demand keep the system in balance?" It is currently popular to believe that it would work if the government would get out of the way. I believe this is the basic idea behind libertarianism and the current Tea Party movement.
I wish to present my view on why the law of supply and demand is inadequate for dealing with a technological society. The fundamental problem is that most people are not really needed to perform work in order for our society to operate.
The number of farm workers has shrunk to around 1% of the population as a result of increasing use of technology in farming. Tractors work quite well compared to using oxen or horses to till the fields. We also have a whole host of other inventions which help make it possible for 1% of the population to feed us all.
So, the farming improvements freed people up to do other things. During the 20th century large numbers of Americans worked in factories of all forms. Over time the technology used in factories improved to require fewer workers. To compound this loss of jobs, our large corporations have improved their profits by moving manufacturing overseas. Who could blame a business person for trying to increase profits?
To stress my point, I would like to imagine a time in 20 to 50 years when the technology has become so far advanced that robots produce everything we need. I realize we are not there and perhaps robotics will be somewhat less successful, but it surely will improve. So, let's assume that at some future date in this century that only 1% of the population is required to work. Well, this sounds great to me! Hurray! People can relax and take up art, writing or music for personal development.
But suppose that 1% of the people work and 99% of the population is unemployed. Should the 99% be permitted to live or die? If at each step businesses always operate to increase their immediate profits, then the only result is that the 99% should die. Now if the 99% die, will the businesses have any customers? Who will buy all the shiny new toys and watch all the wonderful 3D movies with spectacular graphics if only 1% have enough money to survive?
The point is fairly simple: our technology has made it possible for more and more people to live in relative wealth. This is indeed generally true in the US. Even our "poor people" do fairly well compared to previous eras of history. I live in the South where it gets quite hot for about 5 months a year. I doubt that many people in the South live without air conditioning. I remember growing up without AC and it got a little uncomfortable during the heat. Of course, we were more adjusted to the climate then and the discomfort was nothing like the hot 11 days I experienced after Hurricane Katrina knocked out the power in my area. Air conditioning is a wonderful luxury enjoyed by nearly all.
Now I have a belief that the maximum long-term profits for the rich people in America would be achieved by maintaining a healthy middle class to maintain a market for goods and services. I also have a fear that our current rush to try to trim the cost of government will send the economy spiraling into a depression worse than the Great Depression.
We have recently made only a small effort to try to alleviate the problems caused by the recent recession. My personal belief is that our 2 political parties are more intent on winning elections than getting our country out of the mess we are in. There has been some effort at stimulus but it has not included the institution of government-run programs like the WPA and the CCC. The stimulus money is roughly evenly split between tax cuts, job creation based on federal contracts, grants and loans and spending benefiting individuals like extensions to unemployment benefits, spending for education and health care. This means that about 2/3 of this stimulus is targeting supply side and 1/3 targeting the demand side. It appears that the stimulus has not been adequate.
Now our Congress has behaved like children with respect to increasing our debt limit. This is silly, since they approved the spending and tax cuts which caused the debt limit to be increased in the first place. I know that some of the newer members of Congress didn't approve the previous budgets which got us in trouble, but the country must still honor its debts.
In my dream world where everybody is rich and famous and lives forever, I would choose for everyone who works to pay taxes. I think the rich could certainly survive a tax increase, but the concept of splitting people into opposing groups is illogical. We are all in this together. We all need to be fairly well off for the rich to be as rich as possible. We all need our technological society to do well in general. What would be wrong with imposing a graduated income tax and having 90% of the working people pay at least some income tax? The only argument against this is that poor working people don't make enough money to afford to pay taxes. Let's raise the minimum wage. We can give with one hand and take it away with the other. The net result is fairly close to no change, but you end up with a lot more people contributing to our society.
The primary purpose behind having everyone pay taxes is to work toward better mental health. Perhaps there is some truth to the adage: "Idle hands are the devil's workshop." I think it is better for a person to feel like they are contributing toward the success of the nation as opposed to continually beating the system.
Also in my dream world I would eliminate nearly all the tax breaks that we give. One of my favorite targets is the tax deduction for interest paid on a home. Why should we try to encourage people to take on great debt? Houses would be cheaper without the tax breaks. There are a laundry list of tax breaks for big businesses to the extent that the top 400 income earners pay about 17% income tax. Surely they could pay a higher rate than %17 without risking bankruptcy. The problem here is that the country is controlled by the rich and powerful. They have a financial interest in making laws which benefit them. They need to back off having personal greed as the primary goal in life. There are other goals and "You can't take it with you." Again the problem here is that the people at the top do not see it to be in their interest to worry about the poor and least powerful people. Until they do, then we will continue to have a complicated tax system which allows the wealthiest to pay low tax rates. Here I am referring to a fairly small percentage; there are many millionaires who do pay a healthy share of taxes.
Another tax break I would like to eliminate is the tax break on long-term capital gains. Why should people who have the good fortune to make money by simply investing capital get any break on long-term investments? What is a long-term investment anyway? An investment for 1 year or more is considered long term. This means that earning one million dollars over a 1 year investment term would be be taxed at 15%. On the other hand a person who sells some property after owning it 20 years and doubles their money has probably not even kept up with inflation. Having simply a 1 year time span is crazy. This encourages people to do creative money management to avoid taxes and does little to encourage long-term investment. It would be better to tax capital gains based on income with an inflation factor times the number of years invested to make it where people are paying taxes on money really earned.
Should we give tax breaks to oil companies? How about to solar energy companies? In the case of oil companies they don't need it. In the case of solar energy and other forms of renewable energy and energy conservation it is in our collective interest to have these succeed. I don't pretend to know whether this means we should give people tax breaks for solar energy. It sounds good, but until it is economically feasible it won't make much of an impact. I disagree with tax breaks for ethanol, since corn could be a food source which we probably need more than ethanol. I don't particularly like having the government subsidizing any economic adventure, though it inevitably will. We have effectively subsidized farming and oil to the point of causing some of our problems. I recall reading that the true cost for a Big Mac should be in excess of $10 except for subsidies and that the true cost of gas should be about $12 a gallon. If people faced the true cost of things when making decisions, then perhaps we would have more people remaining in cities, cutting our use of gasoline. Maybe people would cook their own food.
Now the real question for Ray's Dreamland is "What jobs will people do?" That's a little tough to decide. I agree that it is better for people to be employed than not. If this could happen due to businesses employing them, that might be the ideal scenario. I don't think this is what we have experienced recently. Giving tax cuts to businesses and high-wage earners has apparently not done enough to stimulate the economy. Instead we find ourselves in a debt problem which has meant ruining the US credit rating with little increase in jobs. It is apparently time to get some people employed by the government doing worthwhile tasks which desperately need attention. As much as possible I would prefer that these not turn into boondoggles where some businesses get rich while few jobs get created. So, I would prefer government jobs of some type which pay enough to be above the poverty level. I realize some of our needed infrastructure might be best handled by contracts with private companies.
I don't really like the idea of people who are able to work getting money for not working. There is a small movement to supply people with a "Basic Income Guarantee". This could work, though I (probably from a lifetime of brainwashing) would prefer that people instead work doing something beneficial for society. Maybe at some point the only things we could do better than robots might be artistic endeavors. Right now we need bridges built, roads constructed, railways built, highways cleaned, cities refurbished, and many more things which people should feel proud to do to help society. I conclude then that it would be better to have the government raise taxes (on everyone) and employ those people which our technological society would otherwise leave stranded.
Money is only useful in terms of what it can inspire people to do. Having a lot of money in the bank is fairly pointless. Having a nice home and car and eating delicious food is worth spending money. Money needs to circulate to be any use. You don't eat money - you must spend it.
Is my dream world possible? I think it is technically possible. It is socialism, which has become a taboo word in America. We already have a lot of socialism, but through the magic of button-pushing talking heads have convinced people that socialism evil. It ain't necessarily so. Much of Europe is further along with socialism than we are. In fact we're the about the only first world nation without a government run health care system. Does that make our private run health care better? Perhaps, in some cases, but our overall health is ranked about 40th in the world while we spend far more than other nations for health care. Socialism is not all bad. Nor is capitalism.
How do we get to the dream world? It looks like a pointless question at this point, since most Americans have been fed a lot of nationalist propaganda about the evils of socialism and the marvels of capitalism. As long as people continue to elect the same people to run the country we will not make the switch. We apparently favor a dog-eat-dog society over one where people take responsibility for taking care of their neighbors.
Will everyone be equally rich in Ray's Dreamland? Of course not. In all human societies there will be people who are more creative or aggressive than others and these people will float to the top. Complete sharing of the wealth is probably counter-productive. Some of these creative and aggressive people end up creating things which benefit society and having no incentive for improvement would dampen the enthusiasm of most people. I think it's just fine for some people to be richer than others and that this is an inevitable part of human nature which is pointless and probably stupid to try to eliminate.
That's it for now. I don't have any schemes for taking anyone's riches or overthrowing the government. Best wishes to all, rich and poor.
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