Stimulus for All?
The staggering gulf between the rich in America and everyone else is the root cause of our financial crisis. We can only stimulate the economy if we solve inequality.
There would have been no sub-prime mortgage crisis had there not been poor families with unstable jobs to trick with bad loans. There would not be outlandish interest rates and record consumer debt had credit schemes not been invented to sucker those with limited cash. Healthcare costs would not be bankrupting families if we had established health as public benefit, not a private privilege.
More to the point, these and other structural inequalities were allowed to spiral out of control because our government got out of the financial regulation business at the behest of big corporations and the super-rich who wanted their profit -- and thus, inequality -- to grow.
Trying to revive our stalled and stumbling economy without addressing the fundamental problem of inequality that got us here is like trying to fix the flat tire on your car just by adding air. It's no solution at all: there's still a hole in your tire.
There is a giant hole at the bottom of the American economy that has been engulfing poor families for decades, but which many others are noticing for the first time as they too are falling through it.
The Congressional Budget Office recently forewarned that if there is no government action, the nationwide unemployment rate could approach 9% by 2010. In the Bronx borough of New York, where there has been little government action for years, unemployment is already at 8.3%. The same in Detroit. President-elect Obama recently suggested that in the absence of a stimulus package, unemployment could hit double digits. But in parts of Appalachia, unemployment has been over 13% for years. In Youngstown, Ohio, the unemployment rate is over 14%.
Meanwhile, we're finally acknowledging the national crisis that 47 million Americans lack health coverage and 79 million more have significant healthcare debt. But poor families and low-wage workers have been without adequate health coverage for decades. Inner-city African Americans and Latino immigrants have long received substandard care through unequal services.
In our increasingly interconnected and complex world, it's naïve to think something isn't a problem until it affects us directly. If compassion for others wasn't a sufficient wake up call, hopefully the low balance in your retirement account now is. Lani Guinier and Gerald Torres suggest that the canary in the coalmine, whose premature suffering warns the miners of impending danger, is a fitting metaphor for communities of color and poor people whose experience at the margins of our society illuminates crises threatening us all. We're in this financial crisis now because we failed to heed the signs of danger as noxious inequality rose all around us.
Few have talked about the financial crisis in terms of rich and poor. Most of the focus is on the "disappearing middle class." But where do you think the middle class is disappearing to? They're not sailing their yachts to Hawaii. The middle class is rapidly joining the ranks of the poor, reeling from the inevitable, gravitational, polarizing pull of inequity.
Barack Obama himself said that, in addition to providing "a jump-start to the economy" we should use the stimulus package to "put a down payment on some of the structural problems that we have in our economy." What might that look like?
Well, while construction jobs are valuable and important, those jobs don't usually go to those at the bottom of our economy. And communities like Detroit and Youngstown have infrastructure needs that go far beyond buildings alone. They need early childhood education programs and health clinics and better schools -- which happen to be areas more likely to employ women and people of color and low-income communities. In addition to physical infrastructure, the stimulus package should invest in community and human infrastructure -- and related jobs -- as well.
And similarly, we should not only be helping those who have lost their healthcare recently, but also make a down payment on affordable, quality healthcare for all. Many children and families haven't had any health coverage for some time, many others are receiving unequal care due to racial disparities, others are finding the hardships of the financial crisis multiplied by mounting healthcare debt. Reinvesting in Medicaid and the State Children's Health Insurance Program and removing the barriers to participation in these programs would not only lift the financial burden on families and state governments but be a significant down payment toward ultimately universal care.
The Campaign for Community Values, a national alliance of more than 150 community organizing groups organized by the Center for Community Change, is bringing grassroots leaders to Washington everyday to press this agenda on Capitol Hill. You can help by visiting www.communitychange.org and joining our list.
In his inaugural address, President Kennedy said, "If a free society cannot help the many who are poor, it cannot save the few who are rich." For the economic stimulus package to work, it has to get everyone working -- and make our economy work for all of us. And that means finally addressing the inequality that got us into this mess.
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Economic inequalities have already been studied in depth. The work in question is Karl Marx's "Das Kapital". It resulted in his "Manifesto of the Communist Party" and various attempts to implement a form of Communism around the world.
Before you have me pegged as a raving conservative, the reason I know so much about this is that I studied all of the above and was very sympathetic to the ideals (NOT the implementation) of Communism back in college. I am very much a liberal.
The problem is that human nature does not work for the common good is motivated by what is good for "number 1". I once worked in Germany and met an East German who explained how "equal pay" reduced everybody to going through the motions and not doing a proper day's work.
Unfortunately there has to be financial incentive for extra effort and there cannot ever be true economic equality. However I would aspire to the Danish model (I lived and worked in Denmark for 3 years) where "nobody is poor but nobody is very rich either". This works pretty well with just enough inequality to act as incentive without the extremes of neocon America.
Hierarchies resolve the question of who dies. An experiment done with apes tested how their community dealt with critical scarcity. Food was reduced to less than enough to sustain them all. The higher ranks had no problem with this and ate as well as ever. The lower ranked began to die. Obviously, a community has to keep up its strength and cannot totally die out by denying food to all its members. Among people, this means famines are for areas under alien control. People still die of hunger in India even as India became a food exporter, but the terrible famines that characterized India under British control no longer happen. In the United States, censuses have occasionally been taken of the homeless indicating their numbers are not so great. Of course not, the next step is their early death, and their dead are not counted.
There are other mechanisms that regulate population to match it to food and water. Poor children are more neglected and tend to die young. Even more, poor mothers tend to miscarry. Abortion and infanticide are more extreme. Today, in a time of reliable infant formula, wealthy families no longer use wet nurses: young women who let their children die so as to trade off their mother's milk for security.
Everything mday48 says is true, and it amounts to saying, many people will have to endure as well as they can without health care. You will notice that roads are also expensive and fairly elaborate, yet almost every home is approachable by car. It's not just a matter of priorities. Care can be increased with paramedics and nurses under merely some kind of doctor supervision. This is actually a pattern in some universal care countries like Australia that has vast thinly occupied regions. The United States doesn't have to abandon any of its citizens.
I heard there giving great incentives for a new horse, and mud bricks good to be the King!!!
I am very disappointed over Obama's stimulus package. I thought he was going to give us a big tax cut and now I hear that they are going to give me $500. What is that? That is not going to help me do anything but pay down on one of my bills. He is however, continuing to give banks and loan companies big amounts of money. Our government still doesnt get it. If Middle America doesn't get a substantial amount of money, our economy will not improve. He needs to give consumers the money, and not to people who already have money. The other thing is that i have excellent credit, and the credit card companies are only sending me high interest rate offers. What is that about?
Decent post. However i am not in agreement with everything she said. Inequality has always existed, not only in our country, but in other countries as well, even countries with universal health care. Universal health care would be nice, but seems unrealistic for a country of our size and population. Lets say, hypothetically, that in four years we achieve some type of national health care. There will still be obstacles to care. The largest one being that there are not enough doctors and nurses to supply service. Poor people will still get the short end of the stick, having to wait hours, days, weeks, or more to be able to see a doctor. While the wealthy will still be able to pay more to get faster and probably better service. If you want to truely provide care for people, make education easier to obtain and less costly.
You ought to be ashamed of yourself. People die in this country every hour of every day because of lack of universal healthcare. It's not a matter of waiting and getting it later, it's a matter of none at all. None. If you're not dying on the hospital steps, they're not going to treat you and if you have cancer, when it is really too late is when you're dying on the hospital steps. How bad does breast cancer or pancreatic cancer or any of the others have to be before it's the kind of crisis that makes you illegal not to treat? Didn't you know that? Your appendix has to actually burst or you're going to be sent home, where it will and then maybe you might die. What happens is that in your horror and despair at being so sick, you say that yes, you will pay the bill. You don't have a choice. You're real scared, and you know you don't have the money, or insurance and know that the hospital bililng department is going to hound you the rest of your days, but you just don't have another choice. It's awful. And how could you say that? Poor people will have to wait. As it is now, there's nothing for us to wait for, except the bill collector from the hospital to garnish our minimum wages..
She is right. The bailout cannot go on forever. We cannot bailout every city in everystate and every business.
Interest rates...the greatest unbridled abuser of interest rates is the IRS. IRS = Government sanctioned thieves.
YES!!! And they're about to get more of your (and My) power with this 'bail-out' (code word for pork spending and socialism)... I can't believe that all people aren't freaked out about this... another $ trillion to the national debit...
No substantial disagreement with the sentiment, but it’s more useful to approach this from a mechanistic analysis. For example, an economy is the product of the movement of wealth, rather than it’s simple existence. Welfare payments trump “trickle-down” subsidies because the desperate are much more obliged to recirculate resources than those who know no need. Also, a major reason health care is so expensive in America is that multiple providers introduce a tremendous redundancy in administrative and purchase costs. A single payer system can yield great economies of scale in those areas.
As always, something potentially beneficial can be done badly. The financial bailout is an excellent example. Hillary’s original healthcare initiative is another. Rigorous accounting, transparency, clarity, and simplicity of utilization should all be tests of any social endeavor attempted.
$7,500 free money for first-time home buyers. Totally unacceptable.
Make it $7,500 for any new-home buyer. Or nothing at all.
By what reasoning should we pay developers and construction companies for something the country gains nothing from?
Put the money in to wind energy. Put the money into trains. Put the money into fixing bridges. That's construction - and useful to everyone.
How about free homes for everyone... a home is a "right" yes?
The reasoning is called free market capitalism and it works pretty well!
Wind doesn't create enough power.. Nukes is the way to go... cheap and safe. Trains? people don't want trains...
Exactly. Even Sens. Kennedy and Kerry are against those noisy windmills in their back yards (or is it "yods"?). Wind and solar will be also-rans for the next several decades, compared with coal, oil, and (beyond the next several decades) nuclear.
Choo choo train systems were good a hundred years ago. These days, we want and need to get from point A to point B without having to worry about adhering to schedules, and fearing our ONE route being blocked by an accident or other problem. The big lie is that the government subsidizes roads, so why not rails? The flaw in that argument is that subsidies for the roads are paid for by the gasoline taxes, while on the other hand, what goes in the fare box for trains must be subsidized.
The best way to spur the economy is to get money into the hands of people who will invest. Spending and consumption alone do not create jobs. Where do you go if you want a job - to a rich person or to a poor person?
My tax plan: 1) Lower tax rates across the board. 2) Eliminate the Earned Income Credit. 3) Everyone must pay at least $100 in Federal income taxes. (Call it "American Dues.") 4) Eliminate the standard deduction so everyone must itemize (and not get free deductions).
Trains?
Watch Zeitgeist (addendum) [Oct. 2008]
google it.
well worth 2 hours of your time
You might want to take a future train (4000 mph)
The stimulus package won't do any more good than spit against a forest fire. It doesn't put enough money in the hands of consumers and we are a consumer-driven economy. Apparently, unless the American public is spending itself into bankruptcy, there is an economic slowdown. When I was growing up in Texas it was against the law to charge any more than ten percent interest on loans. Branch banks were also illegal the idea being for a financial institution not to get 'to big to fail.' Meanwhile, some of these companies "too big to fail," that we bailed out, were loaning money at a lot higher rate than ten percent. When a deal is too good for the lender there is a risk the loan won't be repaid. And that's what we are seeing now on a massive scale -- default.
Sterling Greenwood
Aspen Free Press
Inequality? Stimulus? Fat cats? One answer...no way...but here's a dirty little secret that everyone wants to participate in...but no one wants to fix:
It's funny how no one will respond to one thing that we all participate in that continues to inflate everything.
PERCENTAGE INCREASES...if you don't believe it take two folks...one that makes $100,000 and one that makes $20,000...then add a "cost of living" raise to each (use 10% to make it easy to figure) and project it out for 10 years...the dollar spread gets bigger every year...even though the cost of "market basket" items is the same for both folks...the guy/gal on top comes out really good...with enough left over to invest/save...the one on the bottom can't even cover the increase in the cost of the market basket.
This occurs everywhere and inflates the upper level payments in everything from corporate pay to government pay and pensions...Think how much that inflates Social Security Payments alone for those earning the maximum...compared to those making the minimum...we even have cops and firefighters that now make 6-figure incomes thanks to this dirty little secret...of course they're at the top not the guys in the field.
Unless there is a major undoing of the Reagan era supply side economics policy, all the stimulus money poured into the system will wind up in the pockets of a tiny minority of very rich at the top of the social pyramid . It is the nature of human economic activity that wealth tends to aggregate into a small grouping, and unless there is concerted government actions to get that money back into consumer circulation through high tax rates and redistribution programs, the average citizen will not share in the wealth of the nation and will need to fall back on ever increasing debt. In other words, within a few years we will be right back to were we are today.
At some point within the not too distant furture there will begin a political movement in rebellion against the institutionalized wealth inequality in America. The problems will become particularly more obvious soon as the hundreds of thousands of demobilized troops who have served multiple combat tours serving their country will come home to an economy that will not provide them with jobs or the opportunity to support families or own homes or even have the most modest expectations of a decent life.
Downward redistribution of resources is indeed necessary to counter the “natural” concentration of wealth in a market system, but it is very important to include oversight (accounting and accountability) and cost containment mechanisms, as poor people in general are no more upright than the rich with regard to exploiting the system unfairly. Although, perhaps with less outright pure greed.
Granted, the capitalist model doesn't guarantee (and perhaps maybe might not even practically allow) that someone could rocket from the lower 20% to the upper 20%. But it has always allowed upward mobility for those who worked hard.
Redistributionism (known by other names, too) results in one 20% group wanting the government benefits of the 20% group below them. Aspiring to be poor is the perverse result.
"America, THAT'S the spirit!"
We got into this fiasco because we spend too much money… everybody. You can'tgo to a Nordstroms, or a Mervyn’s without being enticed to make your purchase on credit. We have created a nation addicted to buying things with IOUs. And the IOUs have just come due.
Our government encourages unbridled spending in the American public so it can report a vibrant economy. After all, if people are spending, the country’s economy is booming, not accounting for the fact that people are spending money they don’t have. Our trade deficit is shameful, because we don’t manufacture anything, that’s why we must continue to announce our consumption to the world, to show that we’re still a “growing” economy. Guess what, consuming is not growing, it's not investing in our economy, it's not creating jobs, it's just consuming and we do way too much of it in this country.
Yes, mortgages were sold that people didn’t understand, but there were also tons of greedy speculators, people operating on flawed financial practices of paying no interest loans, counting on appreciation to grow their assets. Not to mention the home equity loans which people spent, with nothing to replace their equity, except the hope that upon sale of their home in the future, exorbitant appreciation would replace the equity lost. Well, that bubble rightly popped.
Time to get real, America. We earned these hard times. We can hold them on layaway no longer.
I've believed for quite some time that private debt would create more immediate problems than the public (national) debt. My prediction has come true. Now I'm watching the slow train wreck of a bloated national debt becoming a morbidly obese national debt all in the name of "stimulus." This is not going to be pretty.
You have all missed the point. The neocon criminals, the banks the stock markets, Black water, the Carlile group, Haliburton and Bectel to name a few have stolen all their profits from the US treasury, ie the US tax payers. To fix the economy we need to take all that stolen money back and put it in to the US economy. If this country is to regain it's place in world society it need to re-become the manufacturing country of the world. And to do so we will need to produce the things the world and the US populations want. Not junk from GM, Chrysler and Walmart. But new real products which will help the environment and have a value to consumers.
The leftover 350 billion, needs to be spread into the taxpayers pocket. People will have money to spend and put money in a bank. Also some of the money that the govt. spends on welfare and other programs can be paid by individuals.
Thanks for the post -Here's my two cents:
The stimulus package obviously does not add “real money” into the economy, so the only good argument for the stimulus package is that it increases spending patterns. So why is the AICPA spending money on an ad campaign that tells everyone to reduce spending patterns?
Read more here:
http://thinksketch.wordpress.com/2009/01/10/spend-more-now-save-more-now/
-Thinksketch
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