After this last election cycle, Democrats control no branch of the federal government. At the state level we control 18 out of 50 governorships, 16 of 49 state legislatures (the state of Nebraska has a unicameral non-partisan state legislature but 35 of 49 members list their party affiliation as Republican), and 14 of 49 state senates. I’m sure if you kept on boring down to dog catchers, you’d find that the voters overwhelmingly prefer Republicans to round up their wandering canines.
Now that the Democratic Party’s alliance with finance capitalism and higher education bureaucrats has finally led us to complete political insignificance, perhaps it is time to re-evaluate what it is we want this country to look like. One key issue that has become clear in this last election cycle is that American workers no longer trust us to deliver the modest prosperity that we call the American dream. They want the Republicans to make them great again, even if that leads to considerable hardship for all kinds of folks.
There is a certain level of tribalism in their decision. They resent the condescension of pinko coastal intellectuals like myself. Some of them do have a vision of America that doesn’t include people like me, or like my family – see any random headline from Mr. Bannon’s website. There is some level of misogyny in their decision: president-elect Trump looks and sounds like a tough guy, while Secretary Clinton, tough as she is, is manifestly a woman and who can count on a woman to be tough when needed?
But I’m going to continue to believe that most of the 60 million or so Americans who voted for the orange tornado did so because they aspire to a better life in material terms and think their man can bring about change in government that will make that possible. In other words, I’m going to take the narrative of the left-behind working class white voter seriously and consider what sort of policies can we adopt that will truly help. It is indisputably true that the majority of Americans have been left behind by what passes for a recovery after the 2008 financial crisis. Indeed, wages have stagnated or declined in real terms since the 1950s, and what wage growth there has been over that period has gone to the people at the top of the income scale. The average American is worse off today than he or she was 50 years ago in real (inflation-adjusted) terms. I remember my dad telling me in the early 1970s that we were living in the golden age of America and it was all downhill from there. I laughed at the pessimism of the old man, but he was right. I will never achieve the level of economic security that he achieved, and I’m in the top half of earners. How much worse is the daily worry and fear and rage of people lower down the scale from me?
The real tragedy of the 2016 election is that it has brought to power a team that has promised to destroy what is left of the prosperity of the average American. They intend to engage in trade wars with our largest trading partners. They are going to pull subsidies for the clean energy industries of tomorrow, allowing China to move ahead in developing cutting-edge technologies like high-speed rail and surpassing us in what is the last area we have a lead. They are going to gut health care and subject millions of Americans to the choice between eating and caring for their children’s health. Or at least that’s what they’ve said, though every time the big guy opens his mouth you get a different story on these matters. Whatever they do, I imagine that by the next election cycle, people who voted for Trump because he promised that the prosperity of the 1950s would come back will have become disillusioned. Time for us to present a viable alternative.
Our alternative needs to take into account the basic principles of the new politics. We can’t be about serving interest groups, especially Wall Street. We can’t be about polishing up the solutions of the 1930s and presenting them in new guises. People don’t want anarcho-liberalism of the Paul Ryan/Ayn Rand variety; the pathetic results of small-government conservative candidates in the Republican primaries demonstrates that. But they also don’t want the old big government big daddy taking care of them. They want new solutions to new problems. Solutions we propose need to be revolutionary, yet practical. We need to trust people to look out for their own interest and be responsible for themselves. We should reduce the level of government interference in people’s lives to the minimum necessary to make sure the public is not being ripped off.
We need to be true to the basic progressive idea, the one we progressives have forgotten about over the last 30 years or so – nobody gets left behind. None of us are free if any of us are unfree. The freedom from want is a basic freedom. By freedom from want, I mean that nobody should be so short of the basic necessities of life as to be willing to sacrifice their other freedoms to survive. It was lack of this freedom that led the world to fascism in the 1930s. This was one of the four freedoms that we fought for in World War Two, according to FDR. For him, it was as important as the freedom of speech or of religion or the freedom from fear. It is legitimate for government to act to protect those freedoms. People who live in a trailer park in small-town Indiana have as much right to a fulfilling life, good health, a meaningful job, and a path to success for themselves and their children as anybody who lives in Portland or San Francisco or Boston.
People want to have jobs and earn their living through meaningful work, which is why my first idea is going to seem rather strange, but bear with me and I’ll explain. I think that we should eliminate all the poverty and entitlement programs that provide income to people who don’t have enough to live on and replace them with a guaranteed minimum income that every citizen is entitled to. We figure out how much it takes to live a decent life in each region of the country, and then we give government checks to people who fall below that level. And, this is important, if somebody can earn an income, we don’t cut off their GMI checks right away, we phase it out so that people are encouraged to make a transition to earning a living without having to justify themselves to some bureaucrat down at the welfare office. So if in your region it costs $500 a month to rent a small apartment and other living expenses for a single person are $1000 a month, then you will get $1500 whether you are unemployed by choice or you’re going to school or because you got laid off or because you are disabled or whatever. If you get a job that pays $1000 a month, we won’t take away your $1500 right away, maybe you will be $1400 for a couple of months, then $1300, and so on.
The merits of this system over the current way we take care of the poor are many. First, it motivates entrepreneurship. If the risks of failure are just that you go back on GMI, you are much more likely to take a risk to start a business or get training for a better job or produce some good that society needs but maybe isn’t ready to pay for. I expect that with this system in place, tax revenues will increase as more people get higher incomes. Next, it cuts out most of the bureaucracy. There will still have to be somebody checking that GMI recipients aren’t cheating the system, but nothing like the enormous bureaucracies we have to manage all the varieties of welfare, food stamps, social security, unemployment, and so on. The savings alone will probably be enough to pay for expansion of the system. Next, GMI encourages personal responsibility and respects the dignity of the recipient. You don’t have to go to some bureaucrat in some dingy office and sit in line with other down-at-heel beneficiaries of the government’s charity. You don’t have to justify your claim at all, other than to show your income (which we all do for income tax purposes anyway, and the level of cheating is pretty small). And nobody is checking how you use the money. If you spend all your GMI on drugs or gambling or whatever, well, we tried to help you (though if you have a health problem like addiction, read on). Finally, as a national program indexed to the cost of living in each region, GMI is flexible, allowing people to move from place to place so that the work force can be the most productive.
One of the big disappointments of the Obama years was the unfulfilled promise of Obamacare. It is amazing that millions of people got health care coverage who did not have it before. What is disappointing is that, in an attempt to compromise with Republicans, we did this by preserving the existing system of employer-provided health care and supplementing it with a Rube Goldberg scheme of personal subsidies, regulated marketplaces, and Medicare expansion. In the spirit of GMI, I would recommend getting rid of the whole teetering edifice, Medicare included, and replace it with a much simpler system. I’m dubious about the government’s ability to deliver medical care in this country. I know the Brits love their National Health Care, but Britain is a smaller and more homogenous country than the US. Here’s my proposal.
Require employers who are currently providing health insurance to their employees to transfer those payments to the employees as wages. Figure out what the average cost for health care is in each region and give employees a tax deduction for that amount, and supplement GMI payments by that amount. The recipient will have to keep track of his or her health care expenditures, and when they exceed the average in any year, a catastrophic insurance plan operated by the government kicks in and pays all remaining expenses. Since the average is driven up by a few very expensive patients, most people will not spend the entire allocation in any given year. They will end up with a little money in their pocket most of the time. This will encourage them to seek cheaper alternatives.
People can do their own record-keeping and retail shopping for doctors and pharmacies. Or, for those who want an institution to care for them, we can encourage people to belong to coordinated care organizations, like we have here in Oregon, or similar institutions – maybe health insurance companies could fulfill this role – who would take a monthly subscription, keep track of payments and give the reimbursement check at the end of the year. They could also negotiate on behalf of their clients with providers or even operate health facilities or pharmacies and give better prices than the competition. We would be using people’s own greed to drive down medical costs.
This contrasts sharply with the current system, where the ordinary consumer of medical services has no idea how much they actually cost. Being a nerd, I tend to look at the receipt and see how much the medicine actually costs. There is one drug I take on a regular basis for a chronic condition. I have noticed a wide variation in the list price of this stuff at different pharmacies in the US: from $110 to $175 for a month’s supply. One last year, in Burkina Faso, I ran out and had to seek the drug at a pharmacy there. I had to do a bit of searching but finally found it at the main hospital pharmacy. A month’s supply cost me $35, a third of the cheapest price in the US. I refuse to believe that the US medical system has to be three times as inefficient as that of Burkina Faso. It’s just that the American consumer isn’t sensitive to price – this prescription costs me $15 regardless of the list price.
This medical system will cost some money. The extra payments to GMI recipients would probably cost about the same as today’s Medicare/Medicaid outlays. The catastrophic care insurance would be expensive, but this system would also reduce demand on emergency rooms and actually deliver a lot of the benefits Obamacare promised. And, as hundreds of millions of people worked to reduce their health care spending, the average cost of care would reduce, lowering those payments to GMI recipients and the amount of tax-free income workers receive.
Which brings us to the question of taxes. Right now, we have dozens of different taxation systems and levels in this country, even at the federal level. Different kinds of income are taxed differently. Social Security/Medicare/Medicaid taxes are charged differently from income taxes. There are break points that are kind of arbitrary and seem only to serve as signals to deform people’s economic behavior to reduce their tax liability. Once again, in the spirit of getting rid of unnecessary complexity and treating everyone fairly, I recommend a flat tax. Nobody should have to pay taxes on basic necessities. GMI is designed to provide for your basic necessities. Health care is a basic necessity. Therefore, they shouldn’t be taxed. Everybody gets the equivalent of GMI plus their health care costs tax free. Beyond that, you pay a percentage of your income to the government. Everything is totally clear to everybody. You don’t get to consider the value of your stock options or the profits from sale of your Manhattan office tower a different kind of income from your salary, avoiding the ridiculous sight of a billionaire like Mr. Trump paying no taxes for decades and top Silicon Valley executives having salaries of like $10,000 a year. The simplicity of the system would probably reduce tax avoidance and thus increase revenue, and the reduction in staff and assets necessary to administer the system would be another savings.
But what about charitable contributions? What about home loan interest deductibility? And on and on, you hear them scream. My answer is that taxes are intended to provide the government with the funds it needs to carry out its legitimate functions. If we think that supporting charity is a good thing and a legitimate function of government, let the government subsidize it. Similarly with home ownership or oil well drilling or whatever else we want the government to support. Again, we’re honest and aboveboard, it’s simple and easy to figure out where your money is going as a taxpayer.
There’s plenty more for progressives to talk about, of course. I haven’t touched on foreign policy hardly at all. The environment is a crucial issue. Racism and immigration and all the things people that get people terrified about Trump are real problems. But the only way we are going to win elections and get the power to take care of these problems is if we can promise workers that we will do something about the pervasive long-term decline in their standard of living. Without economic justice, we can’t have justice on these other issues.
Think about it. See you next week.