We live in an economy driven by consumer spending. That means when more people buy goods and services the economy grows, when spending slows down or stops, the economy contracts. Working-class people, those earning less than two or three times the federal poverty rate, spend most of their income each month. After covering such basic necessities as food, shelter, transportation, and medicine there’s not much left for things like retirement savings, college funds, or nice vacations.
Some argue that the best way to encourage economic growth and prosperity is by lowering taxes on billionaires and large rich corporations. In theory, this allows that the wealthiest among to invest in the economy, and drives job creation, but without increased demand for a product or service, there will be no need to hire more workers or expand production. If you want to create jobs you need to increase demand, and demand only increases when people have money to spend.
One of the most common ploys used to increase demand has been the expansion of easy credit, especially in the form of high-interest credit cards. A more equitable and sustainable approach to growing our economy would be to simply pay workers better wages. As logical as that sounds to most people the truth is banks, credit card companies, and most leaders in corporate America prefer seeing workers and students shackle themselves to high-interest loans in exchange for things advertising campaigns are designed to make us crave.
This is one reason why every effort to increase the federal minimum wage meets such stiff opposition, and to be fair, many small employers simply can’t afford to pay their employees any better and remain competitive. Our economy is a vicious machine designed by rapacious predators to ensure that those at the bottom end up fighting each other over the smallest pieces of the pie, like crabs in a bucket.
Over the past few years, another idea has been gaining popularity: a universal or guaranteed basic income. UBI for short. UBI is just what the name implies, a basic income that provides every member of a society with a monthly stipend large enough to keep themselves fed and housed at a subsistence level. There are plenty of studies and websites where you can explore the idea in greater depth, but if you want to see a consumption-based economy boom the best way to do it is to just give everyone free money.
“But, that’s socialism!”
Yes, it is, and so is your mother’s Social Security check, and the SNAP benefits the couple down the street receives that helps to feed the three foster children they’ve taken in, as are the pensions our tax dollars help fund that allow police officers, firefighters, career military personnel, and state and local government employees to retire years before the rest of us. The roads you drive on every day are paid for with tax money. That’s socialism, as are the pipes that bring you potable water and carry away your poop, as well as the unemployment benefits someone you know has relied upon to survive since the pandemic shut down their workplace last year. It’s all socialism, and it’s been with us since before we were born, and guess what, capitalism is still here and doing just fine. It ain’t going away any time soon. Socialism is just the things that we do as a society that we could not afford to do, or do as well, on our own.
You do realize that the funds our less fortunate neighbors receive in unemployment, SNAP benefits, and other social programs all go straight back into the economy, in the form of groceries, utility bills, transportation, and housing, right?
These programs stabilize and support the economy, so let’s take a look at how just one of these economic stabilizers, the SNAP program, benefits us all. The following quote comes from the U.S. Department of Agriculture’s Economic Research Service (USDA ERS): “[D]uring an economic downturn, when unemployment increases and wages fall, more individuals become eligible for SNAP and enroll in the program. As SNAP participants spend this increased Federal assistance, income is generated for those involved in producing, transporting, and marketing the food and other goods purchased by SNAP recipients. The impact of this increased spending by SNAP households “multiplies” throughout the economy as the businesses supplying the food and other goods—and their employees—have additional funds to make purchases of their own. This multiplier effect on the economy may extend well beyond the initial money provided to SNAP participants.”
“Although the multiplier theory is well known, the size of the multiplier from increased SNAP benefits is less clear. A recent ERS study examined the multiplier impact of a hypothetical $1 billion increase in SNAP benefits and found that this expansion of benefits during a slowing economy would increase Gross Domestic Product (GDP) by $1.54 billion and support 13,560 jobs, including nearly 500 agricultural jobs (farming, forestry, fishing, and hunting). The expanded benefits would also boost income in the agriculture industries by $32 million.”
According to our own Randolph County county commissioners, “[a]griculture is one of Randolph County’s primary economic drivers; encompassing 1,500 farms, employing approximately 8,000 people, and generating 13.5% of the total dollar value produced by county businesses in the amount of $569 million in 2017.”
That hypothetical billion dollar increase in SNAP enrollment would be a boon to the local economy, but just in case you still don’t get it, here’s another example of socialism at work right here in our community. Between 1995 and 2020, Randolph County farmers received almost seventeen million dollars worth of farm subsidies.* That’s socialism folks, and most of us would be worse off without those funds flowing through the local economy.
If larger enrollment in the SNAP program produces greater economic security for workers in agribusiness and associated industries, doesn’t it stand to reason that putting more money into the pockets of all workers would lead to more widespread growth and stability across the entire economy?
“But, the deficit!” I hear you saying, “How do we pay for it all?”
That’s a legitimate question, and the obvious answer is we pay for it by raising taxes on the people who benefit most from our economy: billionaires and large wealthy corporations.
Sixty years ago the wealthiest people in America paid a top marginal income tax rate of over 90 percent. We were in the middle of the biggest economic boom this nation had ever seen, with a strong and then still growing middle class. Today billionaires pay taxes at a far lower rate while their employees pay far more as a proportion of their own incomes.
Are you doing better than your parents or grandparents were at the same age? I know I’m not. Everything costs ten times what it used to, lasts half as long, or less, and most of us have at least one maxed-out credit card charging us interest rates that ought to be illegal, but hey, the billionaires are doing great, and that’s what counts. Right?
Since the beginning of the pandemic last year, 650 billionaires have seen their collective wealth increase by a trillion dollars. That’s a difficult figure for me to wrap my head around, so let’s try to put that number in a little perspective.
If by some miracle you were able to earn one hundred thousand dollars every year beginning on the day you were born, it would take ten thousand years to amass one billion dollars, assuming that you never spent a dime of it. A trillion equals 1,000 billion. No one earns a billion dollars, let alone hundreds of billions or trillions, and yet we allow a handful of people to control astronomical sums while paying little to nothing in taxes.
If they are fortunate some people will earn a few million dollars over the course of a lifetime, but most of us never reach the first million. I’m not talking about saving up a million dollars. I mean the sum total of every nickel we ever earn, so forgive me if I have a hard time feeling bad asking people like Elon Musk, Jeff Bezos, or Bill Gates to cough up a few billion in taxes every year to sustain the workers doing the hard work that makes them all billions richer each and every year.
In an essay published November 27, 1932, beloved American humorist Will Rogers wrote, “[President] Hoover was an engineer. He knew that water trickles down. Put it uphill and let it go and it will reach the driest little spot. But he didn’t know that money trickled up. Give it to the people at the bottom and the people at the top will have it before night… it will at least have passed through the poor fellow’s hands.”
A lot has changed in the ninety-three years since Will Rogers wrote those lines, but at least one thing remains the same: trickle-down economics still doesn’t work. Tax cuts for huge corporations and billionaires only benefit those at the top, and those benefits still happen at the expense of the very least among us. That’s why the best way to sustain a consumer economy that works for everyone is to give everyone a little cash, on a regular basis, with no strings attached. The billionaires will still end up with most of it, but on its way into their pockets, that money will pass through many less fortunate hands and in the process do a lot of good for a lot more people.
*Upon further investigation, it appears that the table showing the number and amount of farm subsidies received by Randolph County agribusinesses, linked from a government resource, contains some errors. I found businesses listed as far away as Albemarle, which is definitely not in Randolph County. The fact remains, however, that many of our staunchly Republican, conservative, anti-socialist farmers in this county have been accepting those payments over the years.
Again, I think farm subsidies serve a valid and beneficial purpose by helping to stabilize prices and supplies of farm products. I also find the cognitive dissonance and hypocrisy of these business owners, who so often are vehemently opposed to “socialism” and anything associated with the Democratic Party, to be deeply troubling. Politics is not a team sport. Very often it comes down to life or death. Choose wisely.