On mEXH 19, 2020, Michael Bloomberg writes on Bloomberg.com and RealClear Politics:
A strong recovery requires immediate relief to be coupled with long-term investment.
Never before has a public-health emergency created such widespread economic paralysis. As government officials work to slow the spread of the coronavirus, treat the afflicted, and save lives, it is essential that Congress and the president take immediate actions to stabilize a dangerously teetering economy and lay the groundwork for long-term recovery.
The relief bill spearheaded by House Speaker Nancy Pelosi and signed into law by President Donald Trump Wednesday was an important first step in helping American workers hit hard by the crisis. Its main provisions — including creatingtemporarypaid leave for many workers, extending unemployment insurance, and providing more funding for food stamps andchildren’s health insurance — will strengthen the nation’s social safety net.
But that must only be the start. All over the U.S., small and large businesses are closing their doors, and as they do, they are drawing down their lines of credit to pay their bills. Getting them help now is absolutely urgent — both for their survival, and to protect the financial system from the shock that is sure to come.
In 2008, Congress gave the administration and Federal Reserve authority to prevent a financial crisis from becoming an economy-wide catastrophe. Now, it must extend the same kinds of authority to prevent an economy-wide catastrophe from undermining the financial system that is essential to recovery.
Those emergency powers were wielded effectively by the Bush and Obama administrations, including using an exchange stabilization fund to guarantee money market funds, protecting millions of individual investors and ensuring that there is a market for businesses to issue commercial paper. Today, Congress must again move swiftly to give the administration the emergency powers that may prove necessary to hold the financial system and economy together.
Stabilizing the economy now and helping businesses survive must be priority number one. But providing immediate relief shouldn’t be the only strategy for achieving those goals.
In the months ahead, when the public-health emergency slows and hopefully passes, one of the fundamental obstacles to restoring economic growth will be public uncertainty. Consumers will not resume spending, businesses will not rehire workers, and investors will not leave safe havens until they are confident that we are on the road to recovery. In other words, the economic crisis that American communities will experience could far outlast the public-health emergency — unless Washington takes decisive action now to lay the foundation for recovery.
Delay will only prolong the pain. But swift action — by giving both markets and main-street businesses something positive to look forward to — can stanch some of the losses now and speed the recovery later, so that we emerge from this crisis a stronger nation.
One of the best ways to restore faith in the economy when the public-health emergency abates would be to ensure that it coincides with the largest public investment in infrastructure in generations. I know from my time as mayor of New York that public investment in infrastructure is a highly effective way to increase private-sector investment and business activity — and inspire confidence in the future.
At the same time, an infrastructure bill is a chance to build the clean energy economy our country needs — and to create the jobs necessary to do it. The bill should include major new investments in wind and solar power, a national transmission grid, energy efficiency for buildings, and the electric-vehicle manufacturing industry, which will benefit U.S. automakers. Those investments will create millions of new jobs, including for many Americans who lose work in the oil, gas and coal industries.
If Congress passes a major infrastructure and clean-energy bill before the April recess, shovels can start hitting the ground when workers, businesses and investors are looking for signs of hope, indications of growth, and reasons to believe that the worst has passed. And while it can take years to complete a project, the act of investment — and putting people to work — sends exactly the kind of signal to the marketplace that our country will need.
In my campaign for president, I outlined a comprehensive plan for repairing America’s existing infrastructure — 47,000 bridges and 2,000 dams require critical repairs, for starters — and modernizing it to reduce traffic congestion, cut pollution and carbon emissions, improve resiliency, and spur new economic opportunity, including by extending broadband to communities that don’t have it.
These kinds of investments were badly needed before the coronavirus began laying waste to our economy. Now, they are absolutely imperative. And while they will not be a cure-all — none exists — they will help restore faith in the future of the country at a time when we will badly need it.
We have seen this strategy work before. In 1933, President Franklin D. Roosevelt — himself diagnosed with polio, an epidemic that also led to closures of public facilities — declared, “The only thing we have to fear is fear itself.” We have come to think of that famous utterance as referring to public fears about the Great Depression generally. But in fact, Roosevelt was referring to a specific kind of fear: the “nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance.”
In the 100 days that followed, Congress heeded Roosevelt’s call and began converting retreat into advance. Now it’s time to do it again.
Gary Reber Comments:
Michael Bloomberg has penned an editorial column in which he calls for embarking on the largest public investment in infrastructure in generations, with government issuing new money to finance this. This money will be backed, as it is today, by government debt, repayable with future taxpayer dollars. (See https://www.bloomberg.com/opinion/articles/2020-03-19/coronavirus-economic-response-should-include-infrastructure?srnd=opinion)
Under Bloomberg’s long-term plan, projects would be initiated to build the clean energy economy our country needs. The projects would include major new investments in wind and solar power, a national transmission grid, energy efficiency for buildings, and the electric-vehicle manufacturing industry, which will benefit U.S. automakers.
As with all past taxpayer-supported government stimulus programs, the advocates, including, in this case, Bloomberg, argue support for such investments to create millions of new jobs, including for many Americans who lose work in industries impacted by globalization and tectonic shifts in the technologies of production. While it will take years to complete such projects, Bloomberg argues, and I agree, “the act of investment — and putting people to work — sends exactly the kind of signal to the marketplace that our country will need.”
What’s missing? –– Who should own the new productive capital assets the taxpayer-funded projects will create? It will not (and should not) be our government who will “put the shovels in the ground” but private sector companies who will be awarded contracts. While the investment in private sector companies will definitely result in the creation of jobs for anyone able to work, what is missing in Bloomberg’s editorial is how will the owners of the companies awarded contracts benefit?
Throughout our history, taxpayer-supported stimuli have concentrated capital asset ownership and further enriched, via ownership, the wealthy capital asset ownership class, who become the employers of the workers needed to execute the projects contracted. The workers are excluded from gaining ownership stakes in the companies that employ them and have only their wage earnings to show for the bailouts by taxpayers (meaning themselves).
If I had campaigned for President, I would have outlined a comprehensive “Own The Future” plan that sets requirements for workers (non-management and management employees) to share in the ownership of the new productive capital assets to be formed, and not just argue for job creation. The plan’s agenda would ensure that workers gain access to and the means to acquire personal ownership stakes in the capital assets formed on an annual basis, and be rewarded with a new source of earnings –– full dividend payouts on their shares of for-profit corporations.
One component of the plan would be to dramatically raise the corporate tax to at least 90 percent with the caveat that full earnings paid out by a corporation to the owners of the corporation would be 100 percent tax deductible. While also eliminating all payroll taxes, this corporate deduction would eliminate the income tax on corporations and would tax all dividends paid out as personal income of the owners, along with wages, dividends, gifts and inheritances, and other sources of income. To grow, corporations would issue and sell new stock representing new capital asset formation. Incentivizing or requiring corporations to finance their growth by issuing and selling new stock would create opportunities to broaden capital asset ownership.
We certainly do not want to issue tax cuts in the way we did in the past as that would result in another major giveaway to corporate America and the top 1 percent. For example, a 2004 tax holiday designed to prompt corporations to bring home profits they had parked overseas was an idea to incentivize them to spend the money on jobs and domestic investment. Instead, the controlling owners of corporations spent the money on stock buybacks to benefit themselves and certain shareholders and fatten executive pay.
In addition to worker-ownership requirements tied to taxpayer-supported government stimuli, I would have the Federal Reserve and commercial banks make interest-free capital credit loans available on an annual and equal allocation basis to EVERY child, woman and man for investment in the corporations growing our economy, both established companies and viable startups, with feasible growth projects. Such capital loans would be solely repayable with the full earnings of the investments paid down in pre-tax dollars out of what the assets underlying that stock yield. In this way, we can create new capital asset owners simultaneously with the growth of the economy and see EVERY citizen’s wealth portfolio grow annually as we build a responsible growth economy that protects and enhances our environment, and supports general affluence for EVERY citizen. Not only would citizens benefit from a new source of income –– dividends –– but millions of jobs would result.
If Bloomberg’s plan is implemented, it will result in another major giveaway to the controlling owners of corporate America, sold solely on the basis that the investments would create jobs and stimulate further private sector investment.
In addition to reforming government tax policy and monetary policy, we need to design trade policy so that we decouple from our dependence on the slave-wage labor and unregulated, environmentally destructive policies of authoritarian, human rights violating countries, such as Communist China. As a result of trade policies sanctioned by previous governmental administrations, we are experiencing the disastrous impact of our reliance on such foreign entities and our shutting down of supply chain and finished goods and products manufacturing in our country. We now need to shift to massive investments in building up our own homeland manufacturing capabilities and renewed investment in the common good with a vision of social and economic justice, woven into the ways we interact with and care for one another.
Simultaneously, and this is extremely important, we must empower EVERY child, woman and man to gain personal ownership stakes in the viable growth projects to be carried out by both established corporations and viable startups. Thus, the policy direction from now on needs to create new owners of productive capital assets simultaneously with the responsible expansion of the economy, ensuring both protection and enhancement of our environment. This will entail reform of our monetary system, tax laws and trade policies.
An emergency challenge is before us. We need leaders who will step up and advocate for this paradigm change in the structure of our private property-based economic system, ensuring that EVERY citizen will own wealth-creating, income-producing capital asset property.
One aspect of the solution is the enactment of the proposed Capital Homestead Act (aka Economic Democracy Act and Economic Empowerment Act) at http://www.cesj.org/learn/capital-homesteading/, http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-a-plan-for-getting-ownership-income-and-power-to-every-citizen/, http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-summary/ and http://www.cesj.org/learn/capital-homesteading/ch-vehicles/. And The Capital Homestead Act brochure, pdf print version at http://www.cesj.org/wp-content/uploads/2014/11/C-CHAflyer_1018101.pdf and Capital Homestead Accounts (CHAs) at http://www.cesj.org/learn/capital-homesteading/ch-vehicles/capital-homestead-accounts-chas/.
Also support the Agenda of The JUST Third WAY Movement (also known as “Economic Personalism”) at http://foreconomicjustice.org/?p=5797, http://www.cesj.org/resources/articles-index/the-just-third-way-basic-principles-of-economic-and-social-justice-by-norman-g-kurland/ and http://www.cesj.org/resources/articles-index/the-just-third-way-a-new-vision-for-providing-hope-justice-and-economic-empowerment/.
And support Monetary Justice at http://capitalhomestead.org/page/monetary-justice.
For an in-depth overview of solutions to economic inequality, see my article “Economic Democracy And Binary Economics: Solutions For A Troubled Nation and Economy” at http://www.foreconomicjustice.org/?p=11.
Gary Reber is the founder and Executive Director of For Economic Justice (www.foreconomicjustice.org), and an advocate and author for economic justice through broadened ownership of wealth-creating, income-producing physical productive capital. Mr. Reber is a member and on the board of directors of the Center for Economic and Social Justice (CESJ) and the Coalition for Capital Homesteading. Mr. Reber founded with binary economist Louis Kelso, Agenda 2000 Incorporated in 1967 to advocate policies and programs to broaden productive capital ownership in urban development projects.
