“The economy,” as that term is used by economists, politicians, pundits, and ordinary people, generally refers to GDP, gross domestic product.

Here’s an op-ed from the New York Times entitled “G.D.P R.I.P” that discusses why GDP is seriously flawed as a measure of national welfare.

After discussing some of the flaws, the author states that:

[I]t would be fairly easy for President Obama to convene a panel of economists and other experts to join the Bureau of Economic Analysis in creating a new, more accurate measure. Call it net economic welfare. On the benefit side would go such nonmarket goods as unpaid domestic work and ecosystem services; on the debit side would go defensive and remedial expenditures that don’t improve our standard of living, along with the loss of ecosystem services, and the money we spend to try to replace them.

The complete piece is here.

That would be a good step in the direction of more meaningful and useful discourse. Though it’s just a small step, it would almost surely make a real difference in helping people understand the value of income security for all. Guaranteed income is the most direct way to promote economic welfare for individuals and society as a whole.

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

Official unemployment is now 9.5 percent, according to the U.S. Department of Labor. As reported in the New York Times:

The American economy lost 467,000 jobs in June and the unemployment rate edged up to 9.5 percent in a sobering indication that the most painful downturn since the Great Depression has yet to release its hold.

(Note the passive phrasing: “the economy lost 467,000 jobs … the unemployment rate edged up.” That’s so common. Much more honest and meaningful, in my opinion, is to focus on real people, not abstractions. “Another 467,000 people lost their jobs last month.”)

The complete Times story is here.

It’s important to remember that 9.5 percent is just the official number. It excludes people who have given up looking for jobs, those who are only working part-time but would like full-time jobs, and those who have only contingent work. Including all of those, using what some analysts call “Effective Unemployment” the rate is 18.70 percent and the Effective Number of Unemployed is now 30,172,000.

Effective Unemployment is the subject of blog posting from Steve Clemons in the Washington Note:

Each month, I receive from Leo Hindery an update on “America’s effective unemployment rate” which includes not only the official unemployment figures but other data points showing off-the-books unemployed or underemployed people.

…

Hindery writes:

Here is a June 2009 version of the summary that calculates the Effective Unemployment Rate, which is now 18.70%, and the Effective Number of Unemployed, which is now 30,172,000.

There are currently 14,729,000 officially unemployed workers, as just announced. However, this figure does not include the combined 15,443,000 workers either (1) in the “labor force reserve” because they have abandoned their job searches (i.e., 4,278,000) or (2) underemployed because they are “part-time of necessity” (i.e., 8,989,000) or “otherwise marginally attached” (i.e., 2,176,000).

…

It’s important to see the entire picture of America’s jobs profile — no matter how unpleasant.

What are those 30 million people, the effectively unemployed, going to do? How are they going to manage? There aren’t enough jobs, and there won’t be. That would be obvious if we were not so numbed, distracted, and confused by the passive language.

Let’s give every one of the 30 million a guaranteed basic income of, say, $1,000 a month. Every adult citizen ought to get the same amount. Guaranteed. Unconditional. We can and must ensure that every citizen has an income independent of any job. Income security for all.

Millions of Americans demanded guaranteed income in the 1930s, and that’s how we won Social Security. In the 1960s, Martin Luther King Jr. and many moderate politicians and many leading economists also endorsed guaranteed income. It’s time to update the idea and enact it.

The complete plan, the idea, the benefits, and how we can make it happen, is in Peaceful, Positive Revolution,.

Additional information is on the home page and elsewhere on this web site.

I hope you’ll also comment on this blog. And please help spread the word.

Steven Shafarman

That phrase, “saved capitalism,” is one many historians use to describe Franklin Roosevelt’s actions in response to the Great Depression. We got Social Security; the FDIC, to insure bank deposits; the SEC, to protect investors and restore confidence in financial markets; and other government agencies and programs.

Roosevelt also reconceived government as “the employer of last resort.”

We’re now in the midst of the Great Recession, and Barack Obama is responding by trying to update or resurrect Roosevelt’s legacy. That appears logical, because current conditions are generally attributed to decades of deregulation. One form of deregulation has been the failure – most notably by the SEC, the Federal Reserve, and the Treasury Department – to apply and enforce regulations.

Though Obama’s approach is keeping things from getting too much worse, it’s not enough. It’s only providing aid to people who are losing their jobs, bandaging the failed government programs, and comforting the victims of Wall Street’s excesses and crimes. Aiding, bandaging, and comforting are good, often necessary, but in this case mostly just rearranging the deck chairs on a sinking ship. The deck-chairing can’t go on much longer. The ship really is sinking.

We need more fundamental reform, a peaceful, positive revolution.

It’s time to update an idea millions of Americans supported in the 1930s, an idea that was nearly enacted in the 1960s, an idea that actually has its roots in the founding of our nation. That idea is guaranteed income. We can and must ensure that every citizen has an income independent of any job. Income security for all.

In the 1960s, guaranteed income was a mainstream, moderate idea. Martin Luther King called for it in his last book, and a plan to provide it passed the House of Representatives by two-to-one, but was blocked in the Senate. Proponents including leading economists from the left and the right.

In the 1930s, mass movements for guaranteed income security generated the political will for Social Security, and that history is document on the official web site of the Social Security administration.

As for the Founders: Thomas Jefferson and Thomas Paine clearly endorsed ideas about income security. Think for a moment about the real meaning and logic of “life, liberty, and the pursuit of happiness.” Life requires food and shelter, and therefore an income to pay for food and shelter. Liberty is denied, at least partly, to people who cannot afford basic necessities. And happiness, though it is clearly more than money, almost always requires some income. If we sincerely believe in the ideals of the Declaration, it makes sense to enact income security for all.

The updated idea is to set some amount, say $1,000 a month, and provide that to every adult citizen. It should be enough for food and shelter, but just enough, so people still have strong incentives to work and earn.

Why don’t we have that? Because we individuals and We the People are not demanding it.

The complete plan, the idea, the benefits, and how we can make it happen, is in Peaceful, Positive Revolution,.

Additional information is on the home page and elsewhere on this web site.

I hope you’ll also comment on this blog. And please help spread the word.

Steven Shafarman

But first:

Are you tired of news about “the economy”? When you listen to the people on TV and radio – the reporters, commentators, and authors; the bankers, CEOs, and economists; and the politicians, too – do you sometimes wonder if they even know what they’re talking about?

If you were to ask them a simple direct question, “What is ‘the economy’?”, do you think they could answer it? Most couldn’t, because it’s an abstraction.

Economists and some of the smarter politicians, President Obama, say, would likely define the phrase in terms of the GDP. That’s the total production of goods and services, all the stuff, but GDP is still rather abstract. And it includes lots of stuff that’s never used or shouldn’t be produced, such as weapons, crime, waste, and pollution.

A proposal: Turn off the talkers or tell them to shut up. Don’t be distracted or hypnotized or brainwashed by “the economy.” Let’s focus, instead, more concretely and specifically on our own economies. That’s important because there’s “the economy” of finance and Wall Street and economic analysts, and it’s very different than “the economy” of Main Street and ordinary people.

How is your economy? Do you have enough money? Could you get by if you or your spouse lost your job? What if you, your spouse, your child or a parent became seriously ill?

The way to fix “the economy” is to start with real people and our immediate needs and concerns. The most simple and direct strategy is to enact an idea that more than 1,200 economists endorsed in the 1960s – including economists from the left and the right who later won Nobel Prizes – and that is guaranteed income.

Instead of bailing out banks and subsidizing big corporations, we can and should give the money to ordinary people. Every adult citizen ought to get a basic income of, say, $1,000 a month tax free. Give the same amount to everyone, rich or poor, employed or unemployed, so we can distribute it with minimal bureaucracy and a real increase in equality.

“Citizen Dividends” would promote the general welfare, and we can pay for it by cutting the current programs that serve and subsidize only the special welfare of select individuals, groups, businesses, or industries. The general welfare, not the special interests. Bailout the people, not the banks.

This is a serious policy proposal. A guaranteed income plan passed the House of Representatives in 1970 by two-to-one, but was blocked in the Senate. Martin Luther King called for guaranteed income in his last book, describing it as necessary for real progress on homelessness, racism, and education. “There is nothing except shortsightedness to prevent us from guaranteeing an annual minimum – and livable – income for every American family. The time has come for us to civilize ourselves by the total, direct and immediate abolition of poverty.”

Before that, millions of Americans joined mass movements for income security in the 1930s, and their demands were key to enacting Social Security and other innovations. Similar ideas inspired the political reforms of the 1890s. Earlier proponents included Thomas Jefferson, Thomas Paine, and Abraham Lincoln.

Why don’t we have it? Because we’re not demanding it. We will have it if each of us tells our friends and neighbors about these ideas, and if we then start working together as citizens, as members of the We the People.

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

Obama has pledged to enact health care reform this year: “When times were good, we didn’t get it done. When we had mild recessions, we didn’t get it done. There’s always a reason not to do it. Now is exactly the time for us to deal with this problem.” Here’s evidence: worsening economic conditions are causing 14,000 people to lose their health insurance every day.

Health care reform, regardless of the specific plan, will be much more likely to succeed and much more likely to pass Congress when everyone has a guaranteed income for food and shelter at least. Just about everyone – liberals and conservatives, Democrats and Republicans, doctors and insurance companies and public policy advocates, proponents of insurance reforms and advocates of single payer “Medicare for all” – agrees on one point: reducing the costs of health care is essential for any plan to succeed. We have to find ways to cut costs.

Income security for all will reduce the costs of health care. That’s because poverty is closely correlated with poor health. When everyone has at least a basic income for food and shelter, more people will eat better, sleep better, take better care of their loved ones. People will have money to invest for routine and preventive care. That will mean fewer visits to the emergency room, which is currently where a lot of very poor people receive their primary care. Emergency room medicine is extremely expensive.

There will consequently be far less urgency about reforming the system. We’ll be more able to take the time to allow individual states to experiment with their own programs to achieve universal care. Current attempts in Massachusetts, Hawaii, Maine, and other states are getting only mixed results, but those programs are sure to be much more successful when everyone has income security. They may be able to refine their approaches, and one of them may be the model for national reform. National reforms often start with individual states.

If Obama and Congress are able to agree on some national plan this year, great. We can then enact income security for all, and thereby make that plan much more successful at both improving health outcomes and controlling costs. If Obama fails, income security for all can be the first step toward a new model for national health care.

Steven Shafarman

The numbers are just about everywhere, so there’s no need to cite or link to sources.

Conventional policies are little more than rearranging the deck chairs on a sinking ship. Government has a duty to help the poor, most of us believe, aiding and comforting people when necessary. A duty, too, to ensure that there are enough lifeboats and they don’t leak. But no amount of bandages or duct tape can keep us from sinking further.

The core assumption that government should be saving, creating, or providing jobs – that’s what we have to abandon, that’s how we can best save and restore the ship of state.

Ensure that everyone has some income independent of any job. Break the link between jobs and income.

Steven Shafarman

Depending on the day, the specific bailout being discussed, and the caller’s mathematical skills, the amount suggested might be $1,000 for every American, or $2,000, $10,000, $70,000, or a million. Hosts and invited guests routinely acknowledge the anger that drives such statements, but rarely discuss the idea in any detail.

Too bad those callers don’t know the history of guaranteed income. They’d be a lot more convincing if they cited the economists, politicians, and other authorities from the 1960s.

It’s easy and fun. When talking to conservative hosts like Rush Limbaugh, mention Milton Friedman first. With Rachel Maddow and other liberals, talk about Martin Luther King, George McGovern, and John Kenneth Galbraith. King gets favorable responses from most people, actually, though very few know about his support for guaranteed income. Few know much of anything about him, apart from the “I have a dream” speech and the Nobel Peace Prize in 1964.

Talk about the 1930s, too. The story of Francis Townsend and Social Security is a good one (though probably not if you’re talking to Rush Limbaugh.) There’s also Thomas Paine and Thomas Jefferson. It’s hard to quarrel with “life, liberty, and the pursuit of happiness” — if you can get people to think clearly and concretely, and to understand that life and liberty require at least a little bit of cash.  The whole history is here.

Also fun, true, and useful is talking about what a boon Citizen Dividends will be for “the economy.” Markets will be more free and more fair when everyone can afford to participate. Lots of us will use the extra income to start small businesses, pursuing the American dream of being self-employed and creating jobs for other workers. Secure income will remove a lot of the personal risk. Small businesses have historically been, by far, the major engine for creating jobs.

This web site and the Income Security Institute seek to make these ideas much more readily available. The next time you hear anyone say that our government should give money directly to ordinary Americans, send them to www.IncomeSecurityForAll.org. Thanks.

Steven Shafarman

Those are fairly obvious, though often not asked, and the answers typically come in a cloud of conventional assumptions and rhetoric.

Here’s a fourth: Would that still make sense if we had Citizen Dividends, a guaranteed basic income for every adult citizen?

“No” is the answer in many cases. If every adult citizen had a basic income, say $1,000 a month, a lot of government spending would become unnecessary. No more bailouts of banks and other big corporations. Not so much value or meaning to the talk about “stimulating the economy” and “creating jobs.”

Every adult American, employed or unemployed, will be able to afford food and shelter. Those who are unemployed will be able to manage while they find or create jobs for themselves. Our government will promote the general welfare only, not the special welfare of any specific individual, group, region, business, or industry. That’s what most items in the government’s budget actually do: provide some special welfare, promote some special interest.

Moreover, it is absolutely true and very well documented that the real engine for creating jobs and stimulating economic growth is small business. Small businesses are the engine for innovation and increasing productive. Small businesses, not big ones, ought to get government support, if government is going to provide any sort of support, tax credits, subsidies, or other assistance.

The best way for government to support small businesses is through Citizen Dividends. Individual citizens will invest their money and their time to start businesses. That, after all, is a core component of the American dream, to own your own business and be your own boss. Citizen Dividends will make it possible for everyone who shares that goal to pursue it. This is one way government can support all small businesses, instead of only some, picking winners and losers. Thus, this is an approach that conservatives ought to embrace.

Conservatives ought to embrace this idea, also, as a way to mobilize popular support for cutting government. If conservatives want validation for these assertions, they can find it in Milton Friedman’s books Capitalism and Freedom and Free to Choose, both of which called for a negative income tax. This is by far the most efficient, most cost-effective, most reliable, and most ethical way to help the poor. It’s truly the conservative means to achieve liberal ends.

Please help spread the word.

Steven Shafarman

Here’s the opening paragraph from the Washington Post report:

MESA, Ariz., Feb. 18 — President Obama unveiled a foreclosure-prevention package Wednesday that would pour more than $75 billion into arresting one of the root causes of the nation’s economic spiral by helping as many as 9 million homeowners obtain more affordable mortgage terms.

And here are two paragraphs from the New York Times:

It could ultimately cost taxpayers as much as $275 billion – $75 billion in direct spending to keep people in their homes and the rest in additional financial backing for the government-controlled mortgage giants, Fannie Mae and Freddie Mac.

But analysts and administration officials alike cautioned that it would not come close to halting the tidal wave of foreclosures. Nor would it provide much help to millions of homeowners who are “under water,” or holding mortgages that are bigger that the market value of their houses.

So 9 million homeowners will get help with their mortgages. Many more than that will benefit indirectly, of course, but it’s still another example of the flaws, failures, and absurdities in conventional economic policies. And, as the Times noted, millions of homeowners will still be “under water” and not getting any help.

Where does the $75 billion to $275 billion actually go? To banks, and therefore to their officers and shareholders.

Suppose we had Citizen Dividends, and every adult American is getting $1,000 a month. That’s $2,000 for a couple, in addition to whatever they earn or get from other sources. Almost everyone would have the money to pay their mortgages without any added government assistance. No interfering in the mortgage markets. No subsidizing the banking or housing industries, or any other special interest, which includes the 9 million people who are supposed to benefit from the Obama’s plan.

Citizen Dividends is the most efficient, cost-effective, market-friendly, and therefore conservative approach to stopping home foreclosures. How do we  get self-professed “conservatives” to understand that? Many of them, unfortunately for them and the rest of us, seem to use “conservative” as a synonym for “anti-government,” so they refuse to consider the benefits of a BIG.

The challenge is to educate everyone, of course, because most “liberals” also ignore these ideas. Please help spread the word.

Steven Shafarman

Reading and listening to the news, it’s interesting to note the abstract, passive language. One formulation I like is “The economy shed 598,000 jobs.” Shedding? It suggests that the economy is a dog and jobs are so much excess hair.

The more fundamental concern, in my opinion, is with that abstract term, “the economy.” To be quite literal and precise: There is no such thing as “the economy,” which means “it” has never lost, shed, saved, or created any jobs.

That abstract language is a key reason for many of our problems. Terms like “the economy” and “the market” create a fog that makes it difficult for us to see clearly. Economists, politicians, journalists, and most of us ordinary folks, too, are lost, sometimes seeming to be hypnotized by the words.

Or worse, this abstract language makes it seem as if “the economy” has some great magic and power, and we must defer to it and serve it. Almost a modern form of idolatry.

One way to free ourselves from the illusions and delusions is to think more concretely, to focus on ordinary people and our everyday lives. The first step toward fixing “the economy” is to ensure that every individual has an income for food and shelter. That should be the priority in our politics and public policy.

Steven Shafarman