Money put toward green-energy projects such as wind farms, solar plants, and electric cars are investments that will create a boatload of jobs, reduce our demand for foreign oil, and make our environment cleaner.
Money put toward infrastructure such as new roads, bridges, and high-speed rail systems are investments that will make it cheaper and easier for businesses to ship goods across the country or for Americans to travel and go on vacation.
Money put into health care research is an investment that will cut down on the costs diseases inflict on our economy and, as a bonus, give us a healthier, more productive workforce.
Even money put toward social welfare programs such as food stamps and unemployment benefits are investments. Moody’s did research into this and found that for every dollar invested in expanding the food stamp program, the economy generates an additional $1.73.184 And for every dollar invested in unemployment benefits, the economy generates an additional $1.64. That’s a pretty good return on investment.
Ever since Ronald Reagan said, “The nine most terrifying words in the English language are, ‘I’m from the government and I’m here to help,’ ”185 conservatives have been hell-bent on convincing all of us that government can’t do anything right. That all it can do is spend—or waste—money.
But this ridiculous talking point ignores an entire national history of worthwhile investments—from Jefferson’s Louisiana Purchase, to Lincoln’s land-grant colleges, to FDR’s New Deal, to Eisenhower’s interstate highway system. All were investments made by our government that created enormous wealth in the long term for the nation in the form of new jobs, better education, and more efficient transportation. And they all more than paid for themselves by the increase in tax revenues that comes with increased economic activity.
After the crash, we must recapture this spirit of investment in the people.
Card Check
It’s no coincidence that the rise of the oligarchs and the corporate state has coincided with the decimation of organized labor.
As the rates of unionization have steadily declined over the last thirty-plus years, so, too, has the share of national income held by the middle class. And as union rates have declined, the share of wealth in the hands of the superrich has increased.
There is a direct correlation between the wealth inequality that pushed us to the Crash of 2016 and plummeting union rates.
With unionization rates at historic lows for modern America, it’s clear labor needs a new weapon to fight back against the Royalists. They need what’s called “card check.”186
Under current law, if some workers want to form a union, then 35 percent of the workforce has to sign a petition or a card stating they agree to be unionized. From there the National Labor Relations Board will set up an election, and if half of the workforce votes to unionize, then they have a union.
Under this current procedure, employers have several tools—both legal and illegal—to disrupt the organizing process, including intimidating or firing employees, spreading lies and misinformation about unions, threatening to close down stores, delaying union elections, and so on. Organizing is an uphill battle, which is why union busters have been so successful breaking up unions while organizers have had so much trouble starting new unions.
But card check would level the playing field. With card check, there is no election and employers never have to catch wind of what’s going on. Basically, if 50 percent of all the workers sign a petition or card indicating they support forming a union, then that union is immediately recognized by the NLRB without the extra, added step of an election and without an opportunity for employers to twist arms.
With card check, unions can reverse the tide in the war against labor and actually start chipping away at the corporate state. They can start demanding better wages and benefits, limiting political coercion in the workplace, and funding political candidates who will continue the fight in the halls of Congress.
In 2008, when Democrats took control of Congress, there was a huge push by labor to have card check passed. It was part of the Employee Free Choice Act, known as EFCA. Unfortunately, those efforts failed, and ever since then, card check has been absent from the national debate—a testament to how successful the Royalists have been in crushing organized labor.
But now is as good a time as ever to bring card check back.
Printing Money
FDR famously said, “The best welfare program is a job.” And then he set about creating the WPA and the CCC and dozens of other institutions that put millions back to work.
Putting people back to work is always the best way to recover from an economic disaster. Jobs programs not only transformed people from being consumers of government resources (unemployment benefits and welfare) to being taxpayers but also produced goods and services that increased the overall value of the economy and the wealth of the nation.
The argument against government jobs programs during a time of recession is that they require deficit spending. Government deficits, it is said, are bad things that ultimately do bad things to economies.
Let’s face it, however: That’s a simple fallacy. When governments borrow money, they issue bonds. People in the private sector want a place to put their money that will return a reasonable interest rate on their investment and is supersafe. Government bonds fill that need. In fact, it would be safe to say that government deficits, in large part, simply represent private-sector savings. And the private sector needs a safe place to put its money.
Another strategy to produce the revenue for governments to become the employer of last resort is to simply issue the money. Our Constitution gives Congress this power. And a growing number of economists, led by Professor Stephanie Kelton, at the University of Missouri in Saint Louis, and Dr. Steve Keen, in Australia, are suggesting that during times of severe economic crisis a government should do just that.
The main argument against simply printing money is that it would depreciate the country’s money supply, thus producing inflation. But this type of devaluation of currency inflation is extremely rare. So long as the government is only printing enough money to get employment up to full employment, or something close to it, these modern monetary theorists say there will be no inflation.
Instead, they say that inflation is caused by shortages. In the 1970s in the United States there was a shortage of oil caused by the Arab oil embargoes. Because oil is so intrinsic to so many parts of our economy, that caused shortages, and the resulting increase in the price of oil led to inflation.
Similarly, in Zimbabwe, when President Robert Mugabe took away farmland from farmers and passed it out to his cronies, most of them had no farming expertise. Because they didn’t know how to farm, the crops failed, and there was a countrywide food shortage. The shortage of food drove up the price of food, which produced a general inflation, which devastated their economy.
In fact, the United States regularly brings money into being from nothing. During the banking crisis of 2008–09, the Federal Reserve created tens of trillions of dollars out of thin air, and distributed it to banks, corporations, and even wealthy individuals worldwide. It produced no inflation.
In general, with fiat currencies like we have here in the United States, the money supply should expand or contract to reflect the overall size of the economy. So when money is brought into being to put people back to work, and when those working people are now expanding the economy, that “printed” money is not inflationary. And by putting people back to work, the government ends the depression.
Jubilee
The largest of the economic dislocations of the post-Reaganomics era has been in the area of debt. As productivity has climbed since 1980, wages have remained flat, and enormous profits have gone to corporations, with fat paychecks going to their CEOs and stockholders. But workers have seen no gains, so they’ve had to turn their homes into ATMs, rely on their credit cards, and have their children take out student loans. Debt has exploded.
Whil
e government debt in the United States is in the neighborhood of $15 trillion, private-sector debt is over $40 trillion. This is absolutely unprecedented for our nation, and will make it very difficult to climb out of the hole that the Great Crash of 2016 will cause.
Unwinding this debt will be one of the largest challenges our government will confront. And one tried-and-true method to unwind debt is called a “debt jubilee.”
The biblical jubilee happened every fifty years, when all the wealth was distributed evenly to everybody, and all the slaves were freed. A debt jubilee would have to be much more selective.
For example, we currently have over $1 trillion in student loan debt in the United States. Arguably, none of this debt should ever have been run up. College education is free in most developed countries, and it used to be free in much of the United States. So if the government were to simply take that $1 trillion in debt and wipe it out, it would go a long way toward saving working-class America and our economy.
Housing debt is a bit more complex, but FDR created what was, in effect, a housing-debt jubilee in the 1930s. He created a government agency that bought up people’s distressed mortgages, and rolled them over into thirty-year, low-interest, fixed-rate loans. By the time the last of these loans were paid off in the 1960s, the federal government had actually shown a profit on the program. And while it didn’t much help the banksters, it saved millions of American homeowners.
Since the banking crisis of 2008, our federal government has been largely playing the same role, only for the mortgage companies instead of the consumers. Over 95 percent of all new mortgage debt in that time has been backstopped by the federal government. It would be much more efficient to take the bankers out of the equation, and for the government to simply become the lender of last resort for its citizens, just like it should be the employer of last resort.
No Billionaires!
And finally, after the Crash of 2016, it’s time we as a nation have a serious discussion about outlawing billionaires.
Just ahead of the Great Crash, the wealthiest one hundred people in the world had a combined net worth of $1.9 trillion—making them wealthier than the entire GDP of nations such as Italy, Mexico, Spain, Canada, Australia, and about 170 other nations.
This is the economy we got when Ronald Reagan and the Royalists drastically slashed taxes on the superrich in the early 1980s.
But just as we learned during the Gilded Age and the Crash of 2016, it’s impossible to build a healthy, stable economy on the backs of a few billionaires.
That’s because billionaires are not job creators; they are somewhere between symbionts and parasites. That’s not meant as a personal insult against billionaires, many of whom are decent people. But it’s meant as a statement of common sense. If vast fortunes are being hoarded in the hands of very few people who can’t possibly spend that much money in their lifetime or their kids’ lifetime or even their kids’ kids’ kids’ kids’ lifetime, then it’s essentially being wasted.
This is the point billionaire Nick Hanauer was making in his recent TED talk187 explaining why rich people aren’t job creators. As he said, “There can never be enough superrich Americans to power a great economy. The annual earnings of people like me are hundreds, if not thousands, of times greater than those of the median American, but we don’t buy hundreds or thousands of times more stuff.”
If the four hundred richest billionaires in America could generate just as much economic activity alone as the rest of us can, then maybe there’d be an argument for such vast wealth. But they can’t. The typical billionaire doesn’t buy thousands more pairs of pants, or dine out thousands more times, or buy thousands more cars than the typical working-class American.
Hanauer concludes, “I can’t buy enough of anything to make up for the fact that millions of unemployed and underemployed Americans can’t buy any new clothes or cars or enjoy any meals out. Or to make up for the decreasing consumption of the vast majority of American families that are barely squeaking by, buried by spiraling costs and trapped by stagnant or declining wages.”
Imagine walking into a classroom of kindergarteners and finding that just one kid is in possession of nearly all the toys. Just one kid has thousands of toy cars, army men, and building blocks piled up like Scrooge’s money bin, filling half the classroom; one or two of the kids have a dozen or so toys; and the rest of the class of kids have to share just one dinky, old rag doll. No one could possibly think that’s a healthy way of distributing toys to a kindergarten class. That one kid couldn’t even play with all his toys.
Would we call that kid a toy creator? Would we tell all the other kindergarteners that they can only play with toys when that one student decides to share them?
Of course not. Yet that’s exactly what we do with billionaires in our economy. Billionaires who can’t spend all the money they have, and are more and more reluctant to invest that money in their workers, their businesses, or their communities.
So what good are they?
It’s time to put in place a new wealth tax in America, one that prevents the accumulation of all wealth over $1 billion. If you can’t get by on $1,000 million, then you probably shouldn’t have access to that much money in the first place. There’s nobody who can’t make it on $1 billion. So any wealth over $1 billion, 100 percent of it goes to helping the rest of the country have a decent life.
That money can lift 49 million Americans out of poverty and move the 46 million Americans on food stamps into the middle class. They will—by the “invisible hand” of human instinct and need—better know how to spend the money and generate economic activity than the billionaire class, which currently has its excess trillions stashed in off-shore bank accounts.
This wealth tax would also break up giant monopolies and open up the market for small businesses. We shouldn’t rely just on the Bain Capitals and the Koch brothers to start or buy up new businesses. If the riches of the billionaire class were redistributed (a word progressives should embrace), then more and more Americans could have access to start-up capital and earn a living as entrepreneurs.
Trust me, the billionaires can spare it. The total wealth of the average American family is $57,000.188 Convert that into hundred-dollar bills, and it’s a stack about two inches tall. The one-percenters, at an income of around $300,000 a year, earn a stack every year that’s about a foot high. But the average wealth of the billionaires on the Forbes 400 list is $4.2 billion. Convert that into a stack of hundred-dollar bills and it would reach over two miles into the sky. It would be a navigation risk to aircraft.
It’s time to start funneling the riches produced by the American economy to the real job creators: working-class people who are spending money. And the best way to do that is to roll back the Bush and Reagan tax cuts, and reinstitute as much as a 90 percent top marginal income tax rate on the Royalists—where it was throughout the middle part of the twentieth century, America’s golden age of the middle class.
Chapter 14
Green Revolution
[F]or the sake of our children and our future, we must do more to combat climate change… [T]he fact is the twelve hottest years on record have all come in the last fifteen. Heat waves, droughts, wildfires, floods—all are now more frequent and more intense. We can choose to believe that Superstorm Sandy, and the most severe drought in decades, and the worst wildfires some states have ever seen were all just a freak coincidence. Or we can choose to believe in the overwhelming judgment of science—and act before it’s too late.
—President Barack Obama, 2013 State of the Union Address
One of the biggest challenges we face when it comes to ending wars is what President Dwight D. Eisenhower termed the “military-industrial complex.”
When you drive out to the wealthy Virginia suburbs just a few miles from the Pentagon, you can find communities—both gated and open (but with private security patrolling the streets)—with mile after mile of mansions. Ten-, twenty-, thirty-bedroom affairs, with six- or te
n-car garages, and a house in the back where the butlers, maids, cooks, nannies, gardeners, pool man, and other servants live.
These are the homes of the CEOs and senior executives and lobbyists for the military-industrial complex (which, since 9/11, has added “security” to its name). Missiles, drones, and tanks; nerve gas, weaponized anthrax, and biological weapons; nuclear bombs, X-ray body/truck/building scanners, and electronics to spy on everybody from the Chinese to you and me—all built these homes. And the people who live in them get richer and richer whenever we march off to war.
While there are—literally—millions of people who make their living off the war machine central to the American Empire, the really big bucks are concentrated in the hands of a few dozen corporations and their suppliers. That consolidation makes them very, very powerful when it comes time to decide how much money to spend with phony Astroturf “Citizens for a Better America” type of advertisements to either build up or tear down any particular member of Congress or candidate for president.
Similarly, our power industries are concentrated in only a few hundred hands nationwide. Hub-and-spoke centralized power generation is how this country started, with George Westinghouse and Thomas Edison competing to see who would ultimately build the giant power plants from which tendrils of high-tension lines would supply entire cities with electricity. (Westinghouse won the competition, by the way, because Edison stubbornly held on to direct current—DC—power when the advantages of alternating current—AC—were so manifold.)
So there is only one power line going into your home, and it’s coming from one power substation for your neighborhood, which is supplied by one giant power plant that’s feeding a large chunk of your town.
The Crash of 2016 Page 24