A Twelve Step Program to Restore Prosperity: The Bernie Sanders Plan

December 13th, 2014
in Op Ed

by L. Randall Wray, New Economic Perspectives

Here's a summary of the plan Bernie Sanders has set out, along with my comments (in italics).

1.) We need a major investment to rebuild our crumbling infrastructure. $1 trillion investment to create 13 million decent paying jobs and make this country more efficient and productive.

Follow up:

Agreed, but let's not settle for a mere 13 million jobs. We need twice that. And, of course, the "price tag" is irrelevant-so long as we create useful jobs that pay living wages, we can "always afford" to pay for them. By creating jobs we are not just investing in infrastructure, but we are also investing in our people, enhancing their participation in our society and providing them with the means to support their families. We can always afford that.

2.) The United States must lead the world in reversing climate change and make certain that this planet is habitable for our children and grandchildren. Millions of homes and buildings need to be weatherized, our transportation system needs to be energy efficient and we need to greatly accelerate the progress we are already seeing in wind, solar, geothermal, biomass and other forms of sustainable energy. Transforming our energy system will not only protect the environment, it will create good paying jobs.

Agreed. Millions of additional jobs can be created, at the wage and benefit package we decide to pay. We can train an army of the employed to bring the USA into the 21st century, much as the New Deal's job programs brought America into the 20th century. We're going to need to go well beyond these infrastructure-type jobs, however. We also need to put people to work providing care services for our aging population.

3.) We need to develop new economic models to increase job creation and productivity. Instead of giving huge tax breaks to corporations which ship our jobs to China and other low-wage countries, we need to provide assistance to workers who want to purchase their own businesses by establishing worker-owned cooperatives. Study after study shows that when workers have an ownership stake in the businesses they work for, productivity goes up, absenteeism goes down and employees are much more satisfied with their jobs.

Mostly Agreed. We need to think beyond restricting job creation to our nation's private undertakers. A federal government program of direct job creation-at a living wage-eliminates the necessity of using tax breaks and wage subsidies to try to induce the undertakers to create jobs. A Universal Job Guarantee Program ensures everyone can work at a living wage. Private undertakers will need to offer similar conditions in order to compete. However, there is room for workers' cooperatives: let workers join together and propose projects. (This is what Argentina experimented with in its Jefes program.) The Job Guarantee program can pay wages in the coops for some predetermined period (say, 18 months), letting them get on their feet. If the coops can out-compete private undertakers, let the undertakers go under.

4.) Union workers who are able to collectively bargain for higher wages and benefits earn substantially more than non-union workers. Today, corporate opposition to union organizing makes it extremely difficult for workers to join a union. We need legislation which makes it clear that when a majority of workers sign cards in support of a union, they can form a union.

Agreed. Eliminate the barriers to unionization. Capitalism is a rigged game, giving far too much power to the undertakers. As J.K. Galbraith argued long ago, unions are a necessary second leg to the countervailing powers stool. The third leg, of course, is government. But our government's leg is hanging on by a thin thread. If anything, unions need more power today than they had in the early postwar period because our government is practically impotent.

5.) The current federal minimum wage of $7.25 an hour is a starvation wage. We need to raise the minimum wage to a living wage. No one in this country who works 40 hours a week should live in poverty.

Yes. $15 per hour with full and free health, childcare, education, maternity leave, and retirement benefits would be a start.

6.) Women workers today earn 78 percent of what their male counterparts make. We need pay equity in our country - equal pay for equal work.

Agreed, and the best way to ensure that is to provide a universal job guarantee program that pays a living wage with full health, childcare, education, maternity leave, and retirement benefits to ensure that no private undertaker could pay women less than that. Beyond that, we'll need to ramp up anti-discrimination enforcement.

7.) Since 2001 we have lost more than 60,000 factories in this country, and more than 4.9 million decent-paying manufacturing jobs. We must end our disastrous trade policies (NAFTA, CAFTA, PNTR with China, etc.) which enable corporate America to shut down plants in this country and move to China and other low-wage countries. We need to end the race to the bottom and develop trade policies which demand that American corporations create jobs here, and not abroad.

Here I have to mostly disagree, because I think the Senator is focusing on the wrong issue. We do need fair trade-to ensure that global undertakers do not exploit desperate workers around the world. We need to block imports of any goods or services produced in inhumane conditions anywhere in the world. However, NAFTA and so on have little to do with trade. These have to do with protecting "intellectual property rights" and forcing "free markets" run amuck on the rest of the world. We need to overturn all of these "agreements" that have devastated developing nations and enriched Wall Street, Silicon Valley, and USA Agri-business. Forget the factory jobs. Factories will never again be an important source of work for Americans. Most factory jobs will be taken by robots, anyway. What we need, instead, are good jobs in America. Forget about taking jobs away from China and the developing world. When the USA and the UK developed, they did not have to compete for factory jobs with more developed and wealthier nations. Give the developing world a chance to join the developed world. The already wealthy nations need to focus in jobs in services, with a scattering of jobs in high tech industry, agriculture, and construction. Our workers today and in the future will work with humans, not with machines.

8.) In today's highly competitive global economy, millions of Americans are unable to afford the higher education they need in order to get good-paying jobs. Further, with both parents now often at work, most working-class families can't locate the high-quality and affordable child care they need for their kids. Quality education in America, from child care to higher education, must be affordable for all. Without a high-quality and affordable educational system, we will be unable to compete globally and our standard of living will continue to decline.

Universal, free, education is needed from cradle to grave. In public schools. All Americans, no matter their age, should have a right to free public school education from pre-school through graduate school. There is no plausible excuse for rationing public school education. Our nation can no more have "too much education" than it can have "too much happiness" or "too much kindness". Here the only question is whether we have the resources to expand the supply of public education. At the college and university level, the answer is obvious: the supply of PhDs greatly outstrips the number of openings for faculty; all we need to do is ramp up federal government financing of public universities. At the elementary and highschool levels, we need more teachers. The solution is better pay, and free education at our teacher's colleges. One of the main barriers to producing more teachers is that the cost of college is prohibitive-who wants to incur tens of thousands of dollars of debts to become a lowly paid school teacher? Eliminate all financial barriers to college education.

9.) The function of banking is to facilitate the flow of capital into productive and job-creating activities. Financial institutions cannot be an island unto themselves, standing as huge profit centers outside of the real economy. Today, six huge Wall Street financial institutions have assets equivalent to 61 percent of our gross domestic product - over $9.8 trillion. These institutions underwrite more than half the mortgages in this country and more than two-thirds of the credit cards. The greed, recklessness and illegal behavior of major Wall Street firms plunged this country into the worst financial crisis since the 1930s. They are too powerful to be reformed. They must be broken up.

Agreed with the sentiments but we must go further. Shut them down and investigate their leadership for crimes. Indict where there is evidence. Prosecute and convict as many as possible. And then incarcerate the guilty. Breaking up Wall Street's banks is not sufficient. They should be shut down, and a stake driven through their evil vampire blood sucking hearts. Return to small, segmented banks and mutual saving and loan associations. They promoted the capital development of the economy.

10.) The United States must join the rest of the industrialized world and recognize that health care is a right of all, and not a privilege. Despite the fact that more than 40 million Americans have no health insurance, we spend almost twice as much per capita on health care as any other nation. We need to establish a Medicare-for-all, single-payer system.

Yes, take Wall Street out of our health care system. Provide free universal health care with a single payer-the federal government. Limit private health insurance to elective nose jobs and tummy tucks.

11.) Millions of seniors live in poverty and we have the highest rate of childhood poverty of any major country. We must strengthen the social safety net, not weaken it. Instead of cutting Social Security, Medicare, Medicaid and nutrition programs, we should be expanding these programs.

Agreed. Eliminate financial barriers to seniors working-let them collect their Social Security benefits while they continue to work without penalties. And guarantee employment at a living wage to any senior who wants to work. And, yes, raise all Social Security benefits to the maximum now paid. It makes no sense to penalize workers who made less during their working lives with less retirement pay. Those who earned more while working had a chance to accumulate private savings and private pensions. There is no justification for giving them more generous Social Security benefits. Pay all seniors a living pension through Social Security and give them free healthcare through Medicare.

12.) At a time of massive wealth and income inequality, we need a progressive tax system in this country which is based on ability to pay. It is not acceptable that major profitable corporations have paid nothing in federal income taxes, and that corporate CEOs in this country often enjoy an effective tax rate which is lower than their secretaries. It is absurd that we lose over $100 billion a year in revenue because corporations and the wealthy stash their cash in offshore tax havens around the world. The time is long overdue for real tax reform.

Partially correct. Eliminate preferential treatment of capital gains and unearned income. Tax all income-no matter the source-at a progressive rate. Impute all corporate profits to owners and tax it as income. Eliminate all corporate tax breaks and subsidies, but also eliminate corporate taxes. Tighten accounting standards to eliminate tax avoidance by shifting or hiding profits. Punish off-shore income by imputing it to owners with double the tax rate applied to income earned domestically. The issue is not "lost" tax revenue. Uncle Sam has the magic porridge pot-he doesn't need the revenue. The issue is fairness and promoting the public interest. All income-no matter the source-benefits the recipient. As we economists say "money is fungible". Whether it is wage income, interest income, or capital gains. At the same time, no public purpose is evident in moving income offshore for tax purposes. Discourage that by taxing it at twice the normal rate. Not because Uncle Sam needs it, but because he ought to discourage creation of tax havens. Yes, I know it is hard to catch. So tax it and then impose very high penalties for evasion. Uncle Sam will never catch all evaders, but he can make them fearful.

Outlaw corporate buy-backs. Eliminate stock options awarded to CEOs, or tax gains on those at confiscatory rates. No public purpose is served by either corporate buy-backs or stock options. If corporations do not serve identifiable public purposes, take back their corporate charters and subject owners to full personal liability for all debts and misdeeds of the firms.

Let's see how many people would want to own Citibank or British Petroleum if they would be held liable for crimes and misdemeanors of those firms.

To be clear, I think Senator Sanders has laid out a bold plan, most of which progressives ought to embrace. I won't be holding my breath to see if Hillary will match it.

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