Wealth and income inequality have been staples of 2016 primary presidential candidate Bernie Sanders. This continues to be the main thread of every message that comes from him and his camp. When asked why he continues to trumpet that message he has said that he will continue to talk about it until people listen and change happens. I suppose you could say that it was his persistence that has driven me to consider the “what” of income inequality more deeply.
I should preface anything I write going forward by saying that I am not an economist, or political scientist. I am not a governor or a senator or anyone famous, I am a software engineer who stops thinking about zeros and ones from time to time and agonizes about objective ways to make America a better place to live. As a father, I am deeply vested in life 30 or 60 years from today even if I’ll never live to see it.
I do believe strongly in Bernie’s message. He clearly wants to bring balance to the economy and he wants to eliminate poverty in the richest country on the planet. I think his “why” is very clear, even if his “how” is still a little fuzzy. But after much consideration, I’m starting to think that his “what” is off to a wrong start.. I don’t know what Bernie feels is the reason for this income inequality outside of the rich getting richer. But if you peel that back, it still doesn’t answer the question. What is causing the gap to continually widen, and will socialist agenda’s permanently heal the problem or temporarily mask the deeper issue?
What Is The Problem
When we are talking about the “working class” we are really talking about a select group who are mostly working manual labor or low skill jobs. These may include assembly factory jobs, fast food, or agriculture to name a few. Wages in these jobs have been in decline and always hovering at the lowest legal limits. Some food industry jobs actually pay less than minimum wage because of tips used as a supplement to push wages over the minimum standard. Wages are being pushed down wherever possible, and jobs are automated whenever possible. The real issue with working class jobs is that it requires a level of education that can be duplicated by a machine. The value of manual labor is in decline as long as we can build a robot to do it tirelessly, and wage free.
The top 1% or even the top 10% are not earning their riches from salaries. These people are not making their money from anything that they do with their hands. The richest people in America are getting rich off of everything BUT their salaries. They own property, they trade stocks, they make investments, and they reach a point of critical income from secondary sources that their salaries make up a small part of their yearly earnings. The closer to the top you get the less your annual salary has an effect on your ability to produce income. My point is, the rich are getting richer off of age old tactics that hearken back to the oldest days of civilized America; property ownership, leases, stocks, bonds, carried interests, capital gains. Meanwhile, the labor force is constantly changing, constantly evolving.
Even though the working class jobs have evolved through the decades, they’ve always maintained a certain level of consistency until recently. Someone hunting or gathering could transition easily to agriculture. Someone in agriculture was exposed to simple machinery enough to start working in a factory, either bending steel or assembling farm equipment. When the tractors came, we started to see a decline in farmers because it took 1/10th the manpower to do 10-times the work but there were factory jobs to pick up the slack. This survived for a long time, until the technological revolutions and the expansion of a global economy. Now automation is eating these jobs for lunch.
When I was born there was no such thing as a Software Engineer. Software was not a word, and Engineers drove trains. When I was born there was no Internet, and certainly no such thing as Blogging. The rise of technology has sparked an entirely new branch in the tree of opportunity. As with any living thing however, a new bloom may be a sign that an old branch is dying. Manual labor, factory jobs, fast-food and more; they are suffering from the rot of economic evolution and there is no saving them.
There are many desperate people who are trying to hold out long enough to see themselves through the last days of the great industrial revolution, but there wasn’t enough gas in that tank to get us through a transition into the high tech world. The question is no longer about saving the coal mines or bringing back the factory jobs. The question now is what to do with an entire generation of workers that time has forgotten. What do you do with a 55 year old coal miner who can’t read? What do you do with a town who’s only export was a forest that was cut down 20 years ago? Their spirits are broken. They would gladly work an honest day’s labor in a coal mine over the prospect of going to school, learning to read, getting a GED, to enroll in a college program, to become a cellular tower technician in 8-10 years. That isn’t a road to success for them, it’s not an option, not at this stage in their life…
Fight For $15?
Raising minimum wage feels like a short term solution. We live in a global economy, built on a pyramid of costs. Something as every-day as a shirt has to be traced backwards, to the staff making the shirt, to the company selling the fabric, to the machines and laborers threading the fabric, to the threads that come from cotton processing factories, to the fields and farmers growing the cotton. Suddenly, in a world where everyone in that chain is making $15 an hour, you are staring at a $50 shirt. The problem of someone making $7/hr trying to by a $20 shirt just because $50 problem for someone making $15/hr. Did we really help anyone? This is compounded by the fact that small businesses will likely downsize because they don’t have the pockets of large businesses to absorb the cost during the price transition. Suddenly you have less people making more money in a more expensive economy. The theory that increasing wages will cause CEO’s to then lower their own to make up the difference is a pipe-dream. The middle class will be the one’s to suffer before the upper class see a penny leave their pockets.
I don’t think this problem can be fixed entirely, but I think it can be made better. Sadly it would take the kind of integrity that doesn’t exist in America. The Neo-Conservative Republican party of today is hellbent on watching the nation burn, and their fire burns so much brighter than the flaccid impotence of the Democratic party trying to protect it with weak-tea compromises.
It would take a matrix of social programs, working together, to lift everyone.
- Strip corporations of government influence. Stop the corporate campaign donations. Limit donations to a modest $2,000 or less.
- Endowment Programs – Deep corporate taxes (50%+) for the extraction of fossil fuels in a state or the pipeline transport of fossil fuels through a state. 100% of funds should be protected from legislative rule, because you know lawmakers will spend it on something stupid. State residents are paid an endowment; an even amount per household, not acreage or some variable quantity that would allow gaming of the endowment or favoring the more fortunate.
- Have severe penalties for employers of illegal immigrants. Stop blaming the people looking for work and start putting the blame on the employer looking to pay $3/hr under the table.
- Pass laws to make it illegal to sell prescription drugs at a price higher than Canada. There’s no reason why the same drug, same potency, same label, is 20-times more expensive here than a quick drive to Canada.
- Simplify the tax code. Eliminate all of these capital gains loopholes and exemptions. All income, compensations, carried interests, should be treated as income; period. Rich people aren’t getting rich from the same income that you and I are being taxed and it doesn’t make sense. The slate needs to be cleaned; we need a do over.
- Promote a “Made in USA” and “Buy Local” kind of America with import tariffs that price-match local products. Use the tariffs to rebuild the infrastructure, putting some of that working class to paving our roads and building our bridges.
These solutions aren’t going to solve racism, or prison overpopulation, or social issues, or education costs that plague us today, but it might at least be a step towards saving flyover country. These are here-and-now solutions that don’t even touch on issues such as clean energy or education for future generations. The problems we face here in America are great and this is a small slice of a truck-sized pie, but it’s affecting more than 50% of the population in the States. All it takes is a little integrity, something that our lawmakers lost a long time ago…