INCOME IS THE PRIORITY REFORM

JOE

What will a Biden administration work first, once it has been inaugurated ? (I am assuming that Biden will in fact be elected; as of today, all the polls forecast a landslide Biden win.) I beg that he and his team work on income inequality first.

Our economy cannot aspire to its actual potential if most people haven’t enough money to participate. In and around big cities, the minority who have plenty command the prices for most everything. The more costly the item, the more that the well-off command it — real estate being the example that shuts out the most people. Boston is trying all sorts of unworkable fixes in search of a solution, none of them responding to the basic fact : people do not have enough money.¬†There really is no other wise way but to raise — by law or otherwise — the wages that workers earn.

If it costs $ 500,000 to bring qa housing unit to market, you can try, artficially, to make that purchase “affordable” by restricting the sale price. Yet this does not work. The builder cannot offer one home at a loss without pricing the next home higher than market in order to cover his loss on the “:affordable” unit. This conundrum can be avoided, however, if a potential buyer earns enough to afford a market-rate home.

So, what do I suggest ? This : the minimum wage should be at least $ 15/hour, maybe $ 22/hour in hot-spot big cities. (Geneva, Switzerland just raised ITS minimum to $ 25/hour. $ 30/hour, frankly, would not be too high in places like New York, San Francisco, Honolulu.)$ 15/hour sounds radical, but in fact it’s timid. At $ 15 an hour, a full-time worker earns barely $ 600 a week. That’s not at all enough to afford stuff in Boston, much less New York. Two $ 15/hour incomes would suffice, yet even these, pooled together, would leave little room for discretionary purchases. At $ 22/hour, a full time worker earns $ 880 a week. That begins to approximate enough, but by no means is a $ 3520 monthly income a liberation.

Businesses would certainly not survive having to take on the entire burden of such large raises in pay, and I am not asking them to. (Yes, I am asking businesses to do better. No business should be able to get away with paying workers so little that they need taxpayer assistance to get by.) What we can do is appropriate taxpayer money to provide people — includng those who can’t work or who work only part time — a basic monthly income, as some have suggested. $ 2,000 a month has been advocated; it seems generous to people living in not-so-prosperous regions and hardly enough for people living in booming cities, yet it is a start, and with interest rates at little above zero, deficit financing of this Federal support begs to be used.

A Biden administration should enact Federal support legislation, and it should work on two accompanying reforms : curbing stock market speculation and short-term strategies; and raising taxes on money income of more than $ 2,000,000 annual. There is absolutely no reason why top executives of large firms should get paid tens of millions of dollars yearly.¬† Firms can pay executives in stock — which the Securities Acts of 1934 and 1940 require them to hold for five to eight years — but in cash, why ? It is all too easy for director boards to grant huge pay to the executives they supposedly oversee. Boards should include at least two members who are union or who represent¬†a firm’s wage workers. Instead, big firms should be financially and legally encouraged to pay their wage workers more — maybe much more.

Some will say that these reforms are socialism. They are not that. But yes, they constitute a significant limitation on management discretion. I cannot oppose this sort of limitation. Allocations of the nation’s commercial money are out of whack. Because they are out of whack, a major portion of our people cannot buy into the discretionary economy, and it is there, in non-essential purchase, than economy finds its most vibrant growth, its innovations, its legitimacy in the minds of those who vote. Survival purchases, such as food, cell phone, clothing,. transportation, utilities, and child care certainly fuel the economy, but these purchases can’t grow much. Their only growth is population increase. Discretionary purchases, however, can expand. There’s a whole universe of goods and services that people can buy if they have the money to buy them.

I’m looking to a Biden administration to get this ball rolling — in a big way and broadly-based.

— Mike Freedberg / Here and Sphere