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Major Economic Change Needed

By Nick Egnatz

Unchecked capitalism and the two-party Democratic/Republican political system are both responsible for our financial disaster and completely incapable of correcting the mess they have created. The Democratic Party celebrated giving workers a minimum wage increase to $6.55/hour when a livable wage for basic needs would range from $11.41 (two adults, no kids, both working) to $25.49 (two adults, one staying home with 2 kids). These figures compiled by the Vermont Livable Wage Campaign are again for basic needs and assume employer paid healthcare. The livable wage for a single person living alone with no children is $14.86, again with paid company healthcare.

It is simply immoral that our broken political parties have given us this $6.55 gruel. Worker productivity has increased 40% since the advent of the Reagan Era and at the same time real wages, adjusted for inflation for the 100 million U.S. workers without a college degree, have declined. And as their wages have declined, workers have watched mouths agape as the average CEO, who used to make 40 times what his average worker made, now makes 500 times!

Or to look at it another way, since 1966 the bottom 90% of U.S. workers have seen their wages adjusted for inflation fall, while at the same time the top 10% of earners have reaped the entire benefit of the huge increase in productivity. At the same time, our top earners have seen their income taxes drop from the 90% range to 35%.

We are facing the most serious economic crisis since the Great Depression and there are three underlying factors

1) Workers’ wages not keeping up with increase in productivity

2) Free trade policies which have financially encouraged corporations to outsource everything under the sun, including income much of which is no longer subject to U.S. taxes

3) Deregulation of lending

Nearly a century ago Henry Ford revolutionized factory work in America when he started paying his workers $5 a day, more than double what others were paying. He said raising wages "has the same effect as throwing a stone in a still pond" by creating an "ever-widening circle of buying" that increases everyone's prosperity. This is the kind of stimulus package we need.

But both bailouts and stimulus packages will do nothing unless President Elect Obama makes a new social contract with the American people. A guaranteed livable wage, single payer national healthcare and the ability to live with dignity when unable to work are not just the ranting of this idealistic dreamer.

Article 25 (1)

“Everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care and necessary social services, and the right to security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond his control.”

This is the Universal Declaration of Human Rights, championed by Eleanor Roosevelt and unanimously passed by the United Nations, including the United States, sixty years ago. The Declaration is accepted as a fundamental of international law and it’s high time we started living up to it for our own workers.

We have recently witnessed the complete inability of our capitalistic system to insure “Life, Liberty and the pursuit of Happiness”. Capitalism needs to be regulated. If banks are failing, nationalize them and get rid of their bloated managers. Same with car companies and anyone else with a desire to be bailed out.

Now is the time for bold action. If private business cannot employ our citizens at a livable wage, let the government do it. For small businesses that would be forced out of business, let the government subsidize a portion of the increase in wages until the business is able to support it itself. Increase the top income tax to a 90% rate like it was in the Forties, Fifties and Sixties when America’s middle class flourished. Make the wealthy pay social security taxes on all their income, like the rest of us. Bring the troops home from both Iraq and Afghanistan and cut the military budget in half and then half again. Enact fair trade laws. Use these funds for single payer national healthcare, guaranteed livable wage and increased retirement benefits.

For too long Democrats have cowered in fear while Republicans have lambasted them as ‘tax and spend’. With the exception of Clinton’s last years, both parties since Reagan have been ‘borrow and spend’ with the Bush Jr. Administration setting the world record for fiscal irresponsibility. Let me be the first to say that I am no economist, but it doesn’t take one to know that “borrow and spend” is not infinitely sustainable.

Basic economics is supply and demand. Author and radio host Thom Hartmann has written extensively on this subject. Supply is created by what we produce and as our productivity increases so does our supply. Demand is created by the wages we pay our workers. Since our country’s founding there has been a relationship between the two with both productivity and wages rising pretty much in unison. That is until Ronald Reagan came along and instituted his “supply-side, voodoo economics”. Since then we have seen the 40% increase in productivity with no net increase in inflation adjusted wages. As our working class has attempted to keep pace by financing with home equity loans and credit cards, they have been hit with the double whammy of huge increases in the cost of healthcare and this has driven increasing numbers of honest hard working Americans to bankruptcy. Please bear in mind that this was already happening to working Americans when the financial house of cards, created by Wall Street and our two political parties, came crashing down.

Guaranteed employment at a livable wage will be the stimulus our economy needs for an immediate turnaround from the abyss we are staring into. Single payer national healthcare will not only satisfy the moral responsibility our government has to its citizens, it will allow our manufacturers to compete on a more level playing field with their foreign competition. Increased social security benefits will allow our seniors to live with dignity as called for in the Universal Declaration of Human Rights.

The rich who benefit from our labor can afford to pay and pay they should. Higher taxes for the rich have always been the price of admission for them into a civilized society that allows them to become wealthy in the first place. The obscene fortunes amassed by our wealthy have come at the expense of honest hardworking Americans who have been pushed to bankruptcy and beyond. Our country has always flourished with much higher taxes on the rich and it will do so again.

This is the promised land of change. And leading us there is the destiny of our new president.

The author resides in Munster, Indiana and is a Vietnam veteran, member of Veterans For Peace and an activist for peace. In 2007 he was named “Citizen of the Year” in Northwest Indiana by the National Association of Social Workers for his peace activism.


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Your piece is right on target in its analyzation of the problem/situation.
Now, what do you propose can be done in this climate of greed, bailouts, and overcoming a "money gravity" that trickles UP?

I'm certainly ready to do SOMETHING; although, calling Congress and expecting to be taken seriously is like expecting Corporations to "see the light" and bring jobs back on shore.


I mostly agree with you. We must remember that the "forces" of the past eight years are still with us and we have to hope and believe that the will may be there, the ability to achieve some of these goals may not. The Republicans were all too quick to demand the disgusting, thieving bailout of the Wall Street crooks.* And it is they who are fighting the economic stimulus bill tooth and nail.

I have so many thoughts on the economic issues, but will just list a few.

1. Of course, we must have jobs first of all for people to go to -- we can do this by creating "green" jobs and expanding efforts to use suitable energy alternatives and working to fight global warming.

2. I agree that people should be able to make suitable living wages. The problems with that is that companies can just pick and get "cheap Labor," avoid taxes (through many corporate loopholes) by moving to other countries. The area of taxes from the companies abroad is a greatly overlooked one and there should be investigations.

3. There needs to be regulations governing banks/investment companies, and businesses, in general. Banking and investment companies need strict regulations. While there are some guidelines in place as concerns the rights of employees, they really don't hold much weight and employees are pretty much subject to the whims of the company they work for. The last eight years grew worse and worse in that respect, thanks to Bush's policy of corporate enabling.

4. The anti-trust laws are a joke. There has been a steady growth of huge conglomerates in a relatively short period of time. Smaller companies have simply been "eaten up" by the already large companies. A good example of that is what happened just recently when Chase, Bank of America, and Citibank, took over the failing banks or investment companies, thereby enlarging themselves further. It is these huge conglomerates that we are all up against. They set the pace for pricing, what kind of service they will or will not provide, etc. and dare we to have a problem, we can scream our bloody heads off to someone in India or the Philippines, etc. I think everyone can relate to that experience.

5. The Pentagon's budget is obscene and has been for some years now. We already have enough nukes, military equipment, etc. to blow the world up several times -- the budget could easily be cut in half and reallocated to people in this country, jobs, healthcare, education, veterans, infrastructure, and all the seriously underfunded social issues you can think of.

Here are a few charts which readily show the absurd imbalance in our budget:

U.S. Military Spending vs. the World in 2008

Proposed Federal Discretionary Budget for YR2008

U.S. Defense Spending since 2001

*which, according to Lindorff were probably overblown! But, but, we were told the "sky would cave in" without it!!!!!

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