For many years now I’ve advocated an economy that gets the best bang for the buck. In face of calamity calls for cutting costs on social security, Medicare and Medicaid, I argued that this big three accounts for millions of jobs and release of capital owing to direct and immediate benefit to the sectors of retirement and healthcare. Others would argue that if eliminated the regressive payroll tax would put more spending power into the hands of working people who would on a steady basis stimulate the economy. However, it is not quite that simple. Except for the lower income bracket—and by definition less payroll tax—other brackets with a greater windfall need not immediately spend the savings. In a way this scenario is a microcosm of the American economic structure: The poor spend mostly on necessities; the well off spend on pricier commodities and also the luxury of investing. The drawback, of course, is that only six plus percent of one’s wages is at stake here; surely, we cannot expect employers to match what no longer exists—nor expect salaries to go up commensurate with employers’ cost savings. On the other hand, at least for a time, anyway, payroll tax is a bank for other societal needs, along with its major impetus of getting $billions circulating to retirees, disabled, orphaned, and to the healthcare sector and many retail outlets.
Others argue why have taxes at all aside from bare essentials and national defense—after all, who but the self knows better? This is precisely the problem: human nature is driven by self-interest, a far cry from national interest. The common good is not just some liberal abstract having no bearing on reality; it is the core of the social contract to protect the weak from predators who in the current economic crisis have been running wild from banks to Madoff.
Aside from the much maligned "entitlements"—even healthcare for veterans—other appropriations such as low-cost housing, food stamps, school lunches actually add to the need for distributing cash to the flow of the economy. Each of these dollars help sustain jobs in home building, supermarkets, farming and schools, let alone building a healthier population. Of course, the most effective tool to greater circulation is in raising wages, particularly on the lower scale. There is the myth that low wages are somehow justified because individuals flock to these jobs because they have no greater ambition. Even if true, there are millions of these people are not afforded advanced education or simply are not by nature equipped for it. These dead-end jobs are nonetheless essential for an efficient economy, and should be treated with the stature of seniority and apprenticeship, consequently rewarded for loyalty. Would, for instance, there be a housing meltdown if there were not this unforgiving wealth gap? Nor did these subprime mortgages in any way put a dent in rising homelessness; it mostly worked against the rental sector. Stealing from Paul to pay Peter does not help the economy unless there is a demand in both sectors. As in healthcare where it makes no sense to continue the present hidden code of insurance whereby those with insurance actually pay higher premiums for uninsured care, so, too, there is no logic to the hidden costs of welfare and multitude of other benefits by continuously shortchanging those who work on a lower level. Bring them up to par and most of the economic injustices will disappear.
Needless to say, the argument goes small businesses will suffer. We keep hearing that small business is the backbone of the economy, yet in the past decades, conglomerates—Wal*Mart, Target, Walgreen, McDonald’s as an example—have shown no mercy for the little guy. Neither do the big guys have any higher wages or fringes than Mom and Pop offer. Of course the strongest argument against a true living wage as opposed to a stagnant minimum wage is that businesses must compete with the slave wages of foreign countries, putting the domestic manufacture at a disadvantage, but it does not hold true with retailers who primarily rely on cheaper foreign goods. The cost of their inventory does not go up, only the price and not necessarily commensurately, provided profits are moderate. Nevertheless small business owners always argue that if they don’t fire because of the enactment they surely won’t hire. This has never held true. As for the manufacturer having to compete with much lower foreign wages, have they even tried to? Or were they simply bottom line folks who saw the huge profits coming out of the sweatshops. What good does it do really to dislocate workers, killing towns and cities at a much greater cost in the end—what price greed? Where is community pride when manufacturers pull up stakes and should it even be allowed for them to come back and sell their products to the very community they abandoned? Outrageous. Better to work a fair deal before laying off workers or abandoning a community that the company and community mutually served well.
Whenever an economy hurts the first reaction of the business realm is to go to the jugular of costs—labor—only to compound the malady. Layoffs may help the bottom line but it also shrinks productivity rather than making it leaner and efficient. Seldom does management consider labor as multidimensional: citizen, household member, consumer, provider of education, low level investor who is intertwined in the success of a nation and its wealth. Depriving millions of these facets of the working man, white, blue or green collar, is self destructive. For a country to work, its citizens must work. For in the end, the true wealth of a nation is in its labor.