Balance Stimulus

This proposal originally appeared in an article called the three most important issues which has been scrapped.  In that article I led with a redundancy in Bernie Sanders Green New Deal that cost roughly 2 trillion dollars, which was an allocation for grants to maximize energy efficiency on homes and buildings.  Redundant because energy efficiency doesn’t reduce emissions if grid energy is 100% renewable.  Something mentioned in the article discussing his Green New Deal.  I mentioned this to prepare people for a 1.5 trillion dollar price tag on a balance stimulus, and I felt the biggest obstacle to a balance stimulus was convincing people that we could spend an additional 1.5 trillion dollars.  

Covid-19 comes along and before I can publish the book we spend $2.2 trillion and I now have evidence and an example.  At the same time I’m lamenting the expenditure because we cannot spend like that all the time.  The other positive effect of the media’s exaggeration of Covid19 is we have wrecked the economy, and what is going to be needed more than investment, which there shouldn’t be a shortage of is an empowered consumer to purchase the goods and services that lead to profits, reinvestment, and is the evidence of growth.  The need existed in the lack of opportunity for the bottom half of the country, but now an additional need exists to increase the investment and purchasing power of people who are unemployed or whose businesses will go under.  That’s nothing to celebrate.   

My criteria for poor is the bottom 40% of the wealth distribution who possess no and negative wealth (.1% collectively, the bottom 30% negative .3 percent.). (1) Wealth is the accumulation of surplus income. People whose income only meets their expenses and for many does not, are in a condition that is poor by definition: “lacking sufficient money to live at a standard considered comfortable or normal in society.”(2) If you do not have enough money to meet your expenses you are not living at a level that is comfortable or normal. At least not for the time being, as normal could change if more than 50% of the population possess no or negative wealth. We are somewhat already there based not only on the bottom 50% possessing only 1.2 percent of the wealth distribution, but based on the individual median income in consideration of expenses. It is valid to point out that there are some people in the negative wealth category who are there with a great deal of assets but more debt than assets.  While true, it doesn’t change the fact that the majority of people who are in the bottom 40% of the wealth distribution are there because their income doesn’t provide them an opportunity to save.

1: Statista 8/9/2019, “Wealth Distribution in the United States 2016”, by Erin Duffin.

2: Oxford Dictionary

When we hear about median income we hear it in terms of household income, but the average household size in the United States is 2.6 people.(3) People hear $60,000 and for many it seems like a high number but only because the number typically represents more than 1 person’s income. (4) The individual median income is only $31,000 per year. There are few places in this country a person can live comfortably on $31,000 per year, which is of course why people have roommates or remain in committed relationships. 

3: Arcgis 8/5/2019 “2019 USA Average Household Size” by Esri

4: United States Census Bureau 9/12/2018 “Income, Poverty, and Health Insurance Coverage in the United States 2017 ($61,372)

5:  Federal Reserve Bank of St. Louis, 9/13/2017 “Real Median Personal Income in the United States”. Source: US Census Bureau $31,099 Individual Median Income

The lowest cost of living in the United States is New Mexico which has an average cost of living of $41,300 per year. (6)  Half the people in this country cannot afford to live on their own in New Mexico at the average cost of living. This cost of living figure represents the state average.  There are of course ghettos across the country where people live on less, but it does establish that the poor can probably be considered more than 50% of the country individually.  Half the people in this country cannot afford to live alone in the state with the lowest cost of living, maintaining average (normal) expenses.  That is the definition of poor applied to at least 50% of the population, and likely more considering an individual income of 41,300 is probably at least 60 percentile or higher.  Over half the country is poor individually by the definition of the word.  

6:  USA Today 5/10/2018 “Cost of Living: The Purchasing Power of the Dollar in Every State”, by Michael B Saunter.

I came across a study from the Brookings Institution claiming 44% of workers are low wage workers earning less than 10.22 per hour. (7)  The 44% is somewhat misleading because the study excludes self-employed people from the study for a lack of reliable data which does inflate the percentage of workers who are counted as low wage.  53 million workers meet their criteria of 10.22 an hour or less.  Which represents about 1/3rd of the workforce, and 1/4th of the adult population.  I include this statistic because it provides a picture of the income below the median.  Half the people in this country earn 31k individually or less, and 25% earn between 18k and 31k, and 25% earn less than 18k per year individually.

7: Martha Ross, Nicole Bateman, 2019 “Meet the Low Wage Workforce”, Metropolitan Policy Program at Brookings.

Andrew Yang proposed a $1000 a month guaranteed universal income.  A universal basic income does not solve inequality because it doesn’t increase the proportion of money held by the bottom 50%.  According to his plan he would fund it by increasing the price of everything by 10%.(8) He is increasing the price of items and subsidizing the cost to the adult population which increases the money in circulation and will produce inflation.  Prices will increase because of the tax and prices will increase because money will be more plentifully in circulation.  This will benefit in the short term some middle grouping whose income isn’t so small that items require larger proportions of your money than it did before, but also not so big where the devaluing of the currency has affected what your income used to represent in its overall purchasing power.  Long term the top 50% is adversely affected because they are likely to have savings, which will be devalued by a universal income.  The bottom 50% will be adversely affected in the short term, as items require a greater proportion of their money to purchase.  

8: Dan Cooney, 9/9/2019 “How Would Andrew Yang Give American’s $1000 per month?  With this Tax.”  PBS NewsHour Politics.

GDP was roughly 20 trillion dollars per year which in the short term leaves the universal income funding about 500 billion dollars short.  An economist in the cited article claims that Yang’s value added tax would only raise 1.3 trillion dollars per year, and I’m sure his methods are more sophisticated and probably more accurate than my own.  I’m just not sure how a VAT of 10%, which is essentially a universal sales tax, would generate less than 10% of GDP, since the total goods and services in the country (20 trillion), would be taxed at 10%.  

Seeing that the interest of the poor should be prioritized since class is the most determinative of disadvantage and systemic imposition, I cannot support a plan that further disadvantages the poor.        

What poor people need is money and they don’t need it incrementally, they need it in a lump sum.  What I propose is an allocation of 1.5 trillion dollars to be distributed to the bottom 50% of the country which has a number of benefits and potentials to reduce spending. I’ll discuss the funding aspect of it once I describe a possible distribution mechanism and explain the benefits and effects. We create three tiers from the bottom 50% of income earners. The bottom 20%, the middle 10%, and the top 20% of the bottom 50%. The purpose is to ensure a distribution that maximizes the servicing of need. The bottom 20% receive 800 billion, the middle 10% 300 billion, and the top 20% (of the bottom 50%) 400 billion. Per head the bottom 20% will receive $18,000 each, the middle 10% $12,000 each, and the top 20% (of the bottom 50%) $6,000 per person. A lump sum exempt from inclusion into the individual’s taxable income.  

The benefits of a lump sum begins with relief of stress from economic obligations. For people who are in the bottom 50% of the income distribution financial stress is nearly ever present. People are constantly concerned about having the funds to meet obligations, current, future, and possible. The amount of money being provided is enough to relieve the concern of having money to meet expenses for a person who has been living on a qualifying income. In the absence of that stress people are in a position to think about their interests and are also possessed of the means to create their own opportunity; reflective of an Adam Smith quote I read years ago “Money, says the proverb, makes money. When you have a little, it is often easier to get more. The great difficulty is to get that little.”(9) Some will start businesses, some will pay off creditors, some will take a vacation, purchase transportation, pay off fines to get their license, make some purchase they wouldn’t otherwise have been able to make, and some will save it for the peace of mind it provides. Whatever is done with the money, it improves the quality of life for disadvantaged people, and provides them an opportunity to improve their circumstances.

9: Adam Smith, 1776 “The Wealth of Nations” Book I, Chapter IX, pg.111 (I did not read the book, I came across the quote on a wikiquotes page years ago and remembered the quote for it’s accuracy in describing the fundamental deficiency of capitalism, which also reveals how to correct to ensure underclass inclusion in decisions of production.

Will it work for everyone?  Definitely not, but what if it worked 40% and allowed them to improve their circumstances in perpetuity, measured by a proportionate reduction in benefits, and a 5 year boom in social mobility?  We are eliminating wasteful spending on expansive bureaucracy and saving money on benefits.  Maybe we try it again in 5 to 6 years if still required and see if we can produce the same results.  If not, it worked once and we have to figure out another way to prevent our population from becoming trapped by systemic circumstances.  If it continues to reduce reliance on government programs and proves effective at allowing people in the bottom to create their own opportunity and pushing up the bottom to simulate our economy overall, then the balance stimulus could become a feature of our economic system, reducing the size of government, increasing taxes collected, and improving the lives of everyone in the country.    

Even in the short term, some of the funding will be gained back as programs require less funding, where for most of the year people will not qualify for benefits, and long term as people who used to qualify for benefits no longer require them in perpetuity having used the balance stimulus money to create income opportunities.  It is much better for poor people to be given money which provides them the choice to decide what they want as opposed to seeking out what help is available and on what terms.  Providing services, services the condition of being poor but does little to provide poor people the opportunity to escape the status.  Evident by the widespread and ongoing existence of poor people in this country.

A balance stimulus more than anything else will eliminate the divisions along racial, gender, ethnic, sexuality, and many other lines that are over emphasized. When you have the money to do what you want to do and to create your own opportunity, you’re less concerned with the advantages and perceived advantages of other people. It will reduce discontent in general, as well as crime including random incidents of mass murder. 

How do we achieve a balance stimulus through a government who represents the interests of industry at the exclusion of the public?  This should be the number one interest of the bottom 50% of income earners, as the difference between republicans and democrats in the absence of a balance stimulus does little to nothing to improve their quality of life.     

The next group is the comfort class representing roughly 60 to 90 percentiles of income earners.  These are your liberal and conservatives who tend to be the most concerned with the political charade, where to varying degrees they have the means to live comfortably and many have the ability to create their own opportunity.  They have the means to take quality vacations, typically have adequate time away from work or at least adequate means to have quality time away from work, and are also more likely to do work that they like. This isn’t to say many in this broad grouping aren’t living paycheck to paycheck, but their paychecks allow for the accumulation of assets, greater access to the consumer market, and many are able to fund their own venture to do what they want to do.  There is a mix in this group where this group is interested in services in the lower and middle portions of the group, or lower taxes the further you move up. This is the medicare for all and probably the bulk of the student debt relief, gun control, gun rights, anti abortion, and defenders of all other frivilous causes they take up because their lives are generally good.  They have no interests other than small modifications or the morality they derive pleasure from imposing on others.  

Most people identify with this group despite not actually being in it.  This is the middle class and tend to be those who have found contentment in the reality that is presented to them.  This is evident in that this group and the groups above them are the most inclined to vote.  The system has validity to them because they benefit from it.  Whereas the poor tend not to vote because no matter who is in office, their situation doesn’t change and no one has any solutions that are going to improve their access to liberty.  The balance stimulus will give the poor an opportunity to flex their muscles in election, and I will explain how after I brief the final two categories.  

The next 9+ percent are the affluent who don’t need anything from the government and their personal interests are exclusively tax related even if some of their expressed interests are social justice spawned from their responsibility for their advantage.  

The final fraction of a percent are the super wealthy and industry.  These are the deciding interests. On the local level it tends to be developers as well as large corporations who fund campaigns to be in the running for government contracts, permits, and other advantages through state and local governments. On the federal level it is the same thing.  These are the deciding interests who craft policy by being the near exclusive selectors of candidates based on the requirement of money to compete in politics. Their interests are tax policy, subsidies, government contracts, and other policy and legislation that creates an advantage in domestic markets as well as markets abroad.  The business world is for the appearance of compassion and charity which is why they engage in philanthropy to improve the value of their brand in the eyes of the population who values such charitable behavior.  Yet while they engage in philanthropy they are largely responsible for the very problems they like to be seen making contributions to.   

I’ve generally identified class interests but still haven’t provided how we achieve a balance stimulus.  Poor people vote much less than other classes.  The middle class and affluent make up the bulk of voting people in this country, and class among voters is not indicative of which party they are going to vote for.  They are split between democrats and republicans, some for substantive reasons like taxes and services, but most based purely on inherited party bias and words they like to hear.  A unified poor bloc of voters who is voting exclusively for the balance stimulus can decide the election in nearly every federal voting district in the country.  If we create the voting bloc which may already be underway (I’ll explain), promote the idea, each person running for office is going to have to take a position.  We vote for those who pledge their allegiance to the balance stimulus.  If there is $18,000 on the line for the bottom 20% of income earners, $12,000 for the next 10%, and $6,000 for the next 20%, people will show up to vote for something that improves their lives to that degree.  If poor people unite behind a balance stimulus they can be the sole interests deciding elections and politicians will respond.  

There are angles that create support for the middle and upper class and even industry.  People and even corporate entities do not want to be disliked by the public. If your wages are relatively proportionate to your expenses, and for many people they go without what most people consider to be necessities, you still cannot create your own opportunity and you have little to nothing to pass down to your progeny for them to be able to create their own opportunity.  For people of color there are connections to past racism being responsible for this, but it is also true of poor white people because money is indicative of opportunity and accumulation. Meaning generation after generation doesn’t benefit from accumulating anything to pass down because wages are generally equal to living expenses. The balance stimulus is a racially inclusive reparations package where those whose advantage relies on a system that leaves other people trapped will have the opportunity to support something that draws us nearer to balance.  

The balance stimulus is an opportunity to improve class perceptions, and for corporate entities, it is an opportunity to improve their image and assert their brand.  In the case of retailers, a Balance Stimulus can ensure increased profitability through an enabled consumer. For financials there is the prospect of increased profitability through debtors who gain the means to repay their debt.  For the states and cities there is the anticipation of increased sales tax revenue, and other revenue as disadvantaged people pay fines, driver’s licensing fees, auto registration and purchase other state products associated with assets that improve opportunity.   The greatest asset would be overt support for it where companies could boast that they support the Balance Stimulus to give poor people opportunity, and naturally, poor people will be more inclined to their brand over the brand of others. I mention these things because a Balance Stimulus does have features that serve the interests of the industrial deciders as well as the upper classes.   

For the middle class they know moving forward, that the Balance Stimulus brings the interests of the poor nearer to or in line with their own through the opportunity for income it creates.  Where poor people who have opportunities to prosper creating mobility into the middle class which adds numbers to their class interest.   

We can and should do this.