Corporations Can Stop Socialism By Actually Circulating Money Through the Economy Again
First World Comforts Like Healthcare & Education Have to Be Paid For By Someone. Consumers Can Only Afford It If We De-Incentivize Greed.
“Socialism” sure seems to be popular in America these days, huh?
I put this in quotations because actual socialist policies like government funded healthcare and education are being lumped in with the fight for a $15 per hour minimum wage and the decision by a CEO of a privately owned company to have the starting salary for his employees be $70,000, and people are talking about these ideas with an unprecedented volume. Worrisome lack of understanding of what socialism actually is by its critics aside, one thing is for sure: a lot of people like “socialism” now.
While some corners of the media and political sphere attribute its rise to a generation of lazy and entitled Millennials having more representation in society, or a decades-long communist plot to erode American values through media manipulation, there’s another, more simple, more factual and less insulting theory as to why socialism is on the rise: people are broke.
In 2013, Pew Research Center announced that American income inequality had reached the highest point it had since 1928 — you know, that period of time right before the Great Depression. “In 1928, the top 1% of families received 23.9% of all pretax income, while the bottom 90% received 50.7%,” wrote Drew DeSilver in the article. “But the Depression and World War II dramatically reshaped the nation’s income distribution: By 1944 the top 1%’s share was down to 11.3%, while the bottom 90% were receiving 67.5%, levels that would remain more or less constant for the next three decades.”
“But starting in the mid to late 1970s, the uppermost tier’s income share began rising dramatically, while that of the bottom 90% started to fall. The top 1% took heavy hits from the dot-com crash and the Great Recession but recovered fairly quickly: Saez’s preliminary estimates for 2012 (which will be updated next month) have that group receiving nearly 22.5% of all pretax income, while the bottom 90%’s share is below 50% for the first time ever (49.6%, to be precise).”
In his book released the following year, “Capital In the 21st Century” Thomas Piketty spelled out what this means for our society: that we’re entering a sort of neo-feudal era where the majority of Americans will become as serfs and indentured servants.
Most recently, this confrontation of income inequality was the cornerstone of Bernie Sanders’ 2016 presidential campaign, and his continued focus as he’s returned full-time to the Senate in the Trump era.
America is a first world country (for the time being), and being citizens of allegedly the greatest country in the world, we expect a first world level standard of living: quality education, quality healthcare, and, in general, “Life, Liberty and the Pursuit of Happiness,” as promised by The Constitution.
The growing economic inequality is a threat to all of these things. Healthcare is tantamount to life and liberty, and affordable higher education is pretty crucial to the pursuit of happiness, especially as the rest of the world gets smarter and more economically advanced. Both healthcare and education are industries that now primarily focus on profit — and with disastrous results. Americans pay the most for healthcare in the entire world yet ranks the worst in quality among high income nations. Student loan debt for Americans has ballooned to the trillions of dollars, but we rank 14th in the world in cognitive skills and educational attainment.
This isn’t cool.
The economy remembered by Baby Boomers is pretty much a fairy-tale to their Millennial and Gen Z children. The Old Economy Steve memes summarize the shift perfectly. Imagine what life would have been like if you could graduate college (or even just high school) and immediately get a job that easily affords you a home and the ability to raise children. Hell, maybe your spouse won’t even have to work, with money to spare for avocado toast and $5 lattes. For many Baby Boomers, this was reality that Millennials can only experience in re-runs of old school sitcoms.
American wages aren’t what they used to be. In 2015, the US Census Bureau concluded (as if we even needed their verification) that wages have not kept up with the cost of inflation. AOL.com reported, “The U.S. Census Bureau measured the median male full-time worker made just over $50,383 in 2014 — and if you measured the median male full-time worker in 1973 using 2014 numbers, they’d make more than $53,294.”
Once upon a time, per the Old Economy Steve memes, college tuition could be paid by working a part time summer job. Now the average cost of a four year bachelor’s degree is $38,600 to $133,920. College graduates would be lucky to get a job with a salary of $35,000 right after finishing school. The cost of healthcare (both out of pocket expenses and insurance premiums) have skyrocketed as well. And don’t get me started on avocado toast and rising cost of lattes.
Wages not keeping up with inflation isn’t exactly happening by accident either. The economic policy institute credits American wage stagnation to the abandonment of full employment, globalization policies that allow American jobs to be shipped overseas to lower wage workers, declining union density, failure to sequentially and adequately raise the minimum wage (it’s currently more than 25% below its peak in 1968), and financial de-regulation that has sky-rocketed the compensation of executives at the expense of workers in their companies. And if you haven’t noticed yet, most of these changes happen to align directly with the agenda of a certain political party that preaches “trickle down economics.” But there is plenty of blame to go around. In 2015, Apple, Google, Intel and Adobe were actually found guilty of conspiring with each other to suppress engineer wages.
What we need is real trickle down economics.
Capital gains are taxed lower than wages and revenue, and there is little incentive to actually produce goods on US shores, so American business now is characterized by executives rapidly building companies for the purpose of selling them off to a competitor or finding ways to extract as much labor as possible from as few American workers as they can get away with.
When the middle class was at its height, its because companies were actively expanding into local communites, investing in property, paying high wages to lower their AGI and being team players in the circulation of money through the economy. Now the goal is to vacuum up as much wealth as possible, spend it on yachts and stash it in offshore bank accounts. In fact, it’s getting so bad, that American megabrands are struggling financially as their middle-class targets have less and less money to spend, while luxury and artisanal goods compete for a smaller and smaller class of consumers who can actually afford them.
Circulation of money through the economy is the real issue here.
In the “good ole days,” the majority of Americans were well paid and had a lot of money to spend. This created more jobs in the service and retail industries. Which increased sales tax revenue. And let’s not forget: all those salaries increased income tax revenue.
Critics of socialism accuse the ideology of supporting some sort of unfair re-distribution of wealth. But the fact of the matter is, we’ve already had a massive re-distribution of wealth from the middle and lower classes up to the financial elites, and now the majority of people are unable to sustainably afford a first world standard of living.
I assure you, that wealth is going to be transferred back to the middle and lower class out of pure necessity. The question is: will this redistribution happen as a result of the highest earners in the “free market” reigning themselves in to avoid death by a mob of pitchforks, or will it come from the impoverished masses begging the government to come in and save them?
