Monday, May 17, 2021

There are moral issues beyond the disincentive to work

There are moral issues beyond the disincentive to work 

The unemployment and showdown were part of the treatment for the pandemic. With vaccines in arms and the removal of possible vectors (who were going down with earned immunity anyway) means it is time to stop the chemo, as well as the cannabis (the enhanced unemployment and stimulus checks).  Paying people to stay idle while the demand for goods and services increases will lead to inflation and stagnation - even HYPERSTAGFLATION. I have been quite vocal in using this term. At least Republicans seem to be listening.

The moral issues behind work and pay were pre-existing conditions, which Biden has made progress on. The enhanced Child Tax Credit is an act of justice and a way to get the economy moving. Making it refundable makes sure that those who need it the most, get it. Continuing these reforms, which has been proposed, are a good down payment on a just wage. Double the amounts and we will be getting closer.

The Biden proposals included a higher minimum wage. This is also necessary to put people back into the labor force. A higher minimum wage means that firms with lower wages have an advantage over those who do not unless all people seeking work have better alternatives. A statutory wage ends this incentive.

In the long term, the answer is employee-ownership and control of the firm. These firms must eventually feature employee democracy, consumer and mortgage finance, cooperative purchasing (even homes) and direct (rather than governmental) human services. Until they do, employee ownership is just capitalism lite. 

Tax reform is a way to get there. End taxes on capital gains and capital income through the personal income tax and establish an asset value added tax at the same rate at point of sale or distribution. End the mutual fund exemption, mark the base to market at option exercise and the first sale after inheritance, gift or donation (including stock donations to the Church) and zero rate the tax on sales to qualified ESOPs and distributions to members. Let inertia take care of the rest.

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