Neither Mitt Romney nor Barack Obama even mentions six alternative economic policies that, deployed together, would reduce unemployment, increase workers’ real earnings and decrease the federal deficit.
This presidential election arrives five years into a severe economic crisis that both Republican and Democratic policies failed to end. The latest unemployment rate (7.8 percent) is not even halfway back to the 2007 level of 5 percent, from the crisis high of 10 percent. Jobs have not recovered, but corporate profits and the stock market did, thanks to huge government bailouts. Average real weekly earnings of most workers fell 2.4 percent from October, 2010, to the present – during what business, media and political leaders enjoyed calling a “modest recovery.” That 2.4 percent real wage drop means that workers lost the equivalent of six days’ wages (one week and one day) per year between late 2010 and now. Income and wealth inequalities thus deepened further across the crisis. No end of these developments is in sight.
Do Obama and Romney (O and R) debate alternative policies to overcome this enduring economic crisis, given the failed policies to date? No. First, they exclude smaller party candidates who do advocate some alternative policies. Second, they exclude key alternatives from their statements and arguments.
Here are a few of those alternative policy options that O and R agree to ignore.
1. In the last comparably severe economic crisis, a key policy was federal employment. Franklin D. Roosevelt created and filled over 12 million government jobs from 1934 to 1941 (not counting military employment that exploded thereafter). O and R act as if Roosevelt’s policy never happened.
2. Under Italy’s Marcora Law (successfully functioning since 1985), unemployed Italians can choose either to take weekly unemployment checks or to receive all of them in an up-front lump sum payment. To qualify for the lump sum, they must combine with at least nine other unemployed persons’ similarly chosen lump sums to form the start-up capital of a new cooperative enterprise run entirely by those workers. Such workers’ self-directed enterprises (WSDEs) have been durable job-creators that inspire exemplary levels of work, commitment and productivity. Neither O nor R has said one word about this employment policy alternative.
3. Mondragon Corporation – a collective of over 100 cooperatives and WSDEs – began in 1956 and is now among Spain’s ten largest corporations. Most of its more than 100,000 workers are also members, who make all the basic decisions governing the corporation. They prioritize job creation and job-retention rather than profits. Spain’s Basque region – where Mondragon cooperatives are concentrated – has an unemployment rate around 11 percent, while the rate for the mostly capitalist enterprises in the rest of Spain now exceeds 25 percent. A collaboration or alliance with the Mondragon Corporation to apply its lessons in the US is another policy option that O and R never discuss.
4. The US too has long included many workers’ or producers’ cooperatives – rough equivalents of WSDEs. Their accumulated experience and know-how are invaluable resources for alternative policies. The model for this might be the Small Business Administration (SBA), long active in the US. The SBA assists small capitalist businesses to form, grow, survive and compete with big business, thereby preserving small business jobs. A parallel WSDE Administration could do likewise for existing and new WSDEs. Besides reducing unemployment, Americans would acquire an important new freedom of choice. They could practically compare democratic self-governance inside WSDEs with traditional top-down hierarchically-organized capitalist enterprises. Once again, O and R say nothing about any of this.
5. The alternative policies listed above would cost money to implement properly. Presidential candidates could and should debate alternative policies to raise the needed revenues. For example, government could return federal tax rates on business profits and on high personal incomes to their levels in the 1950s and 1960s. Rates were then much higher (and loopholes fewer) than today. Higher rates were justified then to provide the means needed to rebuild the US economy after the damages and dislocations of The Great Depression and World War II. Individuals and businesses were to contribute in proportion to their capabilities. The same justification applies now to rebuild from the damage done by the last 30 years of deepening economic inequality and the extreme economic crisis since 2007. Returning to the higher individual income tax rates of the 1950s and 1960s would tap the richest, most-able-to-pay Americans. Given the trillions now hoarded by businesses unwilling to invest in a crisis-ridden economy, no great fall in business investment would result from taxing them more. These revenue increases could pay for the four policies above and further stimulate the economy. O and R ignore this tax option even though it would lower federal budget deficits that both candidates claim are a major concern.
6. The last alternative policy example could raise significant new revenues for the government to use to stimulate economic growth. This alternative policy would simultaneously reduce gross injustice in our tax system. In the US, cities and towns rely on property taxes. Land, housing structures, commercial and industrial buildings, cars are major kinds of property subject to a tax on their values. However, property exempted from such a tax includes stocks, bonds and all other securities. If you own a $100,000 house, an annual property tax is required, but if you sell it and buy $100,000 in stocks, no property tax is required. This property tax system favors the tiny minority of US citizens who own the majority of stocks and bonds. An alternative policy (long overdue) would extend property taxes in the US to include stocks and bonds. A federal property tax on stocks and bonds would raise many billions from those most able to pay, beneficiaries of the property tax system’s gross injustice. Such a federal property tax could also lower the government’s deficit. O and R exclude any mention of this policy alternative.
The likely direction of the US economy is suggested more by the policy alternatives that O and R ignore, than by their statements and debates – until a social movement for basic change challenges their silences from below.