GM and Chrysler, falling wages and basic income
At GM and Chrysler, autoworkers and their union have agreed to concessions to “save” the companies, to save their jobs. Wages are falling. There have been many reports of falling wages, as well, in businesses and industries around the country.
That’s more evidence for why we need Citizen Dividends, a guaranteed basic income.
Economist Paul Krugman discusses falling wages in his New York Times column today. He notes the paradox in this and other areas of economics. Workers in one company or industry can save their jobs by accepting lower wages, but when many companies do so that creates downward pressure on all wages and all workers, and thus more unemployment.
Wages fall. Workers have less money to spend. Workers also have more incentive to save, preparing for harder times ahead. Less spending means less economic activity generally. Economic conditions worsen. Employment falls. It’s a “vicious circle” according to Krugman, and he concludes the column by warning of the prospects for long term economic stagnation.
We can break the circle by implementing Citizen Dividends. Conservatives ought to support this idea because it will stimulate economic activity. Markets will be more free, more active, more productive, because more people will have more money to spend. The guru of free market economists, Milton Friedman, endorsed the negative income tax for that reason. Liberals, including Krugman, ought to support this idea because it will help workers directly, protecting everyone from economic hardships.
Most conservatives, however, are reflexively anti-government, and opposed to any new programs, especially programs that would help ordinary people. Most liberals are merely timid, afraid to endorse anything so bold as Citizen Dividends. Their idea of an aggressive program to end hunger and homelessness is to increase the Earned Income Tax Credit.
If we ordinary citizens want real reform, we have to demand it. We have to get angry and start talking about these ideas with our family members, friends, and neighbors. This is a key part of the solution to many of our problems, including health care reform and reversing climate change.
It’s up to us. If we really want to save GM and Chrysler, and help their workers, and possibly save our own jobs, we can do all that and more by demanding and winning Citizen Dividends.
To learn more about these ideas, visit the home page and other material on this web site, www.IncomeSecurityForAll.org.
You can read the complete plan, the idea and how we can implement it, in Peaceful, Positive Revolution, which is available from Tendril Press.
I hope you’ll also comment on this blog. And please help spread the word.
Steven Shafarman
Tags: conservative support, jobs, liberals, ordinary Americans, Paul Krugman
May 11th, 2009 at 5:10 pm
One point I think you should mention on this bailout of GM: with something like $25 billion already spent, and with Time.com’s article today (http://www.time.com/time/business/article/0,8599,1897321,00.html) predicting that bailing out GM may cost $100 billion, we can simply divide the cost of the GM bailout by the number of total GM employess (about 100,000): $100,000,000,000 / 100,000, giving us a taxpayer contribution of $1 million dollars for each GM job “saved”. Wouldn’t that million dollars per job be better spent on 40 Guaranteed Incomes of $25,000 apiece? Especially if this were coupled with a simple restructuring of the US Tax Code, so that every adult can choose, each year, which tax-bracket they want, either (1) pay a flat 25% tax on your income (with no deductions or reporting to the govt on how you spend your money), or (2) receive a NEGATIVE INCOME-TAX stipend of $25,000, and pay a flat 50% tax on any other earnings (again with no deductions). [Note that at the breakeven point of earnings of $100,000 per year, a person would do better to choose the first tax-bracket, of 25% flat tax. Also note that corporations would not be eligible for the second-tax bracket, but would simply pay 25% of their Net Income, and still be required to show detailed income and expense statements ... after all, we have to keep the accountants employed!]
Thanks for this great site!
Loren