Charlottesville: The Real Meaning of the Rise of the Alt-right, the KKK, Breitbart, Bannon, and Trump: The USA Has Bad Economic Policy and Bad Public Education.
What is readily apparent to anyone who carefully analyzes the phenomenon of the rise of the Alt-right, the KKK, Breitbart, Bannon, and Trump, is that it all derives from the low level of education of the white middle and lower classes, along with their economic struggles which are due precisely to their low level of education given the highly competitive global economy. Those struggles are exacerbated by a flawed conventional economic policy which fails to understand how to quickly end recessions and prevent unemployment from rising to high levels. In fact, if our standard economic policy was to implement timely, carefully calculated QE-financed tax rebates to cut short incipient recessions and prevent unemployment from rising above 5%, we would never have deeply disaffected citizens suffering from great financial stress due to unemployment. All by itself, the avoidance of prolonged recessions and high unemployment would reduce the appeal of demagogic, xenophobic, racist forces even among the poorly educated and unskilled.
It should be clear that our public education must be vastly upgraded. The upgrade must involve five main factors which no politicians of either major party ever mention or are even aware of. Those five factors are 1) a public school curriculum properly devised for the highly competitive and complex global economy; 2) strict class discipline with lots of homework, the key to academic success and the traditional formula of all successful private schools; 3) mandatory study hall and individual tutors and mentors for students having academic and psychological difficulties (that’s the only way to prevent dropouts and ensure a high graduation rate. I know that from personal experience, having taught economics/investing in several “failing” NYC public high schools as a volunteer. Academic success combined with being mentally well adjusted is the only way to prevent poverty, addiction, and violent crime); 4) well-organized after-school activities in the arts and sports, as well as vocational training in multiple fields, even on weekends, holidays, and during the summer holiday to keep underprivileged students off the streets and engaged in constructive activities; 5) all-day public school, from nursery through high school, to free parents to work.
The public high school curriculum should include four years of the following courses to ensure that high school graduates are well-prepared for the global economy: 1) The United Nations Universal Declaration of Human Rights and the history of human rights violations; 2) economics/finance/investments; 3) 20th Century world history in great detail (all students must understand the causes of World War I, the causes of the Great Depression, the causes of communism and fascism and why they failed, the causes of World War II and the Holocaust, the causes of the Cold War, the causes of the Israeli/Palestinian conflict, the causes of Islamic terrorism); 4) history of art/architecture/design; 5) history of music; 6) logic and critical thinking; 7) ethics; 8) introductory law; 9) foreign languages/cultures; 10) comparative religion; 11) psychology, including “group therapy” classes and good-parenting workshops. The United States must have the best public schools in the world.
Additionally, high quality charter schools should be promoted. Competition makes public schools better. School choice is of great importance. Finally, we need a voluntary, demanding, prestigious National High School Graduation Exam, certifying a high level of academic achievement for those who pass it, and providing scholarships to public universities for students of low and middle-income families.
This comprehensive education reform would lead to a dramatic reduction in racism, xenophobia, violence, poverty, crime, and addiction, to a dramatic increase in social cohesion and economic prosperity, and to much lower taxes, particularly if QE-financed tax rebates became the standard fiscal policy stimulus in order to always cut short incipient recessions and prevent high unemployment.
It must be noted that tax rebates are the most effective and fair form of fiscal stimulus since they have immediate effect and since all taxpayers would receive the exact same stimulus check from the U.S. Treasury. Had the 2009 $800 billion Obama stimulus program consisted entirely of a tax rebate, all taxpayers would have received a $5,000 rebate check from the US Treasury. A family of two taxpayers would have received two checks, for a total of $10,000. Not only would the economy have immediately recovered, but the housing/banking crisis would have been stopped in its tracks, as families having trouble keeping up with their mortgage payments would have suddenly had the means to keep current.
Over $3 trillion of QE financing was used by the Federal Reserve in recent years to save the banks. Why shouldn’t QE financing by the federal government also be used to finance tax rebates, when they are required to nip recessions in the bud and to keep unemployment low? As for widespread fears that QE is necessarily inflationary, being essentially printed money, we have seen that QE is not inherently inflationary, as inflation has remained at historically low levels despite $3 trillion of QE. In fact, QE is never inflationary when properly calibrated, i.e., so as to not result in excess aggregate demand (“demand-pull inflation”).
Why shouldn’t QE also be used in times of slack to finance essential educational and infrastructure programs? Especially since QE-financing is cost free, as it consists only of “virtual” debt and does not increase the nation’s “real” debt. In fact, QE-financed Treasury bonds held until maturity by the Federal Reserve evaporate in thin air; they totally disappear at no cost to the Treasury or the taxpayers. Furthermore, there is no absolute need for the Fed to ever reduce its balance sheet (i.e., its holdings of Treasury bonds) by selling its holdings in the bond markets, as it seems to believe. So long as inflation is low due to excess aggregate capacity, the Fed can simply hold on to its bond holdings until maturity, at which point they are simply erased.
We must finally realize that recessions and high unemployment are not inevitable phenomena, that they can be largely avoided with the right economic policy, i.e., having QE-financed tax rebates as the standard stimulus tool to be used as soon as the economy tips into recession. We must also finally realize that recessions and prolonged unemployment must be avoided since they cause severe social crises, apart from their economic cost. And we must finally realize that we need to reform our public schools so that all our students graduate from high school very well educated and psychologically well adjusted. All this is absolutely required to have economic and social prosperity. We actually need all Americans to be not simply very well educated, but to be “Renaissance” men and women. That’s not beyond our capability. It only depends on our will. Our governments have failed the nation miserably over the past 50 years. It’s high time to wake up and understand the causes of our severe problems, and to implement effective solutions.
August 13, 2017
© Edward Sonnino 2017