Poverty is not an abstraction. People wear it on their faces, carry it on their backs as a constant companion—and it is heavy.
On March 5, 2017, Denis Kucinich writes on The Nation:
Let me begin by sharing with you the story of an inner-city Cleveland family of seven, two adults and five children all under the age of 11.
The family did not own a home. They were renters. As the family grew, it became ever more difficult to find rent. At one point the old car in which they roamed the city in search of rent became their living quarters. Evenings, the father and mother and a newborn slept in the car’s front seat, and the four other children, in the back.
They found rent by understating the number of children, which, when discovered, led to eviction and the same cycle of wandering as urban nomads. The father, a truck driver, had a war-related injury that occasionally required medical treatment, taking him out of work. Bills piled up, which led to garnishments. The mother suffered from post-partum depression, compounded by noisy, rambunctious children.
The children were sometimes out of school, as the family did not know where its next shelter or its next meal would come from.
This inner-city family lived in 21 different places in 17 years, including a couple of cars.
When we gather today to speak of poverty and inequality, I understand, because I was the oldest child in that inner-city family, which grew to nine persons, a family that was riveted to a day-to-day struggle to survive.
Ours was an intense experience of poverty and inequality that led to social disorganization, chronic instability that made daunting every encounter with every institution in a society, instability that created severe emotional difficulties in four of the seven children. Poverty and its partner chaos can play on people’s minds.
One of my most powerful memories was of listening to the sound of my parents’ counting pennies to pay utility bills. “Click, click, click,” I could hear the pennies drop, one by one, as they hit the metal top table.
Today I can hear those pennies dropping all over America for families not able to scrape together the cash to pay their bills, families who lack adequate housing, families who do not have adequate health care, families trying to raise children in a chaotic urban environment, families who truly do not know where their next meal will come.
In America today there are tens of millions of people with a hard-luck story. Tens of millions out of work, in ill health, in search of affordable rent, having neither a place nor a home to call their own; millions of people for whom, as Langston Hughes put it, life “ain’t been no crystal stair.”
No one who escapes such an environment physically or economically does it alone. There are teachers, coaches, doctors, lawyers, aunts, uncles, neighbors who appear as angels in our lives, who catch us when we are about to fall, who lift us up at the right moment, who show us a different path, who guide us in a new direction, who transport us to new possibilities, new futures.
But for every person upon whom fortune smiles, opportunity calls, and destiny stirs, there are many others for whom the future is obscured, for whom society is harsh, punitive, and unwelcoming.
I call these people my brothers and sisters, my cousins, my kinfolk who are ill-fed, ill-clothed, lacking in basic health care, working (if able) for low wages, hostages to debt, owning little, credit starved, renting if they can, and estranged from even rudimentary knowledge of wealth creation.
Poverty is not an abstraction. People wear it on their faces, carry it on their backs as a constant companion, and it is heavy.
Those of us acquainted with that condition often lack understanding of the nature of the material world, and, since access to material wealth seems random, are prey to the notion about wealth preached ironically by the Pardoner in The Canterbury Tales, “Radix malorum est cupiditas,” ‘The love of money is the root of all evil.”
One does not need to have taken a vow of poverty to be poor, one needs only the unconscious or conscious acceptance of the underlying precepts of a class-based society, the meek acceptance of a doctrine of predestination, the assumption of one’s status as merited and the acceptance of a political economy that equates one’s personal wealth with one’s innate value as a human being, while the so-called invisible hand of the marketplace quietly dips into the public till, and “moral hazard” is a polite term for theft.
All are created equal, indeed, but all do not have the same access to privilege, nor the same friends inside the government or financial centers of power, nor the same accountants.
Our reality is socially constructed and culturally affirmed. We have come to accept a system of things as inevitable without challenging the assumptions upon which a system is based.
Where does money come from? How is it made?
Before answering that question, let me state the obvious: Our political economy is structured to create poverty and inequality.
Nineteen of every 20 dollars of new wealth created goes to the top 1 percent. The top 1 percent has more wealth than the bottom 90 percent.
This cataclysm for our democracy was accelerated with the subprime meltdown of a decade ago.
According to the National Center for Policy Analysis, as many as 10 million families lost their homes to foreclosure during the housing crisis, and as a result had to move, in some cases resulting in a resegregation of city neighborhoods.
During this period, the Federal Reserve created trillions of dollars and gave them to banks, while Congress authorized $700 billion to bail out banks, without passing a program to make sure that the masses of people underwater in their mortgages or those caught up in no-doc low-doc schemes would have a chance to hold onto their homes.
Meanwhile, one of the few investments held by the middle class, home equity, plummeted as housing values sank in many city neighborhoods.
Much of America has not recovered from the carnival of financial corruption of a decade ago—except for the finance economy, of course.
For those barely holding on to middle-class status, the median income for a four-person family is just over $54,000. Yet the average US household with credit card debt owes more than $16,000 to credit card companies. On average, those with a mortgage owe $176,222, with auto debt owe $28,948, and with student loans owe $49,905.
Health-care consumes about 17.8 percent of America’s GDP, or three trillion two hundred billion dollars. The Kaiser Foundation reports that the average month premiums for family coverage in 2016 is $1,511 a month, or $18,132 a year.
The country is held hostage by insurance companies, while politicians wrangle over what is the best system of predatory for-profit health care, as pharmaceutical companies receive near-unlimited patent extension and public funding for 84 percent of new drug research, yet price their products out of the reach of millions of Americans, while their stocks perform at twice the Standard and Poors stock index.
The health-care industry is not the only institution casting Americans into poverty. The average family of four sees some $13,200 a year of its collective wealth deposited into America’s largest piggy bank, the Pentagon, which, according to noted economist Chalmers Johnson, now siphons off about a trillion dollars annually from all sources to prosecute several wars simultaneously, while managing nearly 800 military bases in 130 countries, this while never successfully completing an audit and having trillions in accounts that cannot be reconciled.
Martin Luther King Jr. said, “A nation that continues year after year to spend more money on military defense than on programs of social uplift is approaching spiritual doom.”
The cost of the war against Iraq, alone, adds $3 trillion to the national debt while bolstering the bi-party line that there simply is not enough money to meet domestic needs. Families have no reserves. More and more people are tethered to low-paying jobs, with few, if any benefits. Jobs are not there for young people coming out of school. The burden of debt, its extractive nature, forces survivors to borrow and borrow and borrow, to go deeper in debt.
In biblical times there was debt jubilee. Today we have not a jubilee but debt peonage for many, with a national debt compounded by environmental disasters, military misadventures, and Wall Street bailouts, and seldom suffered by those who helped to create it.
The bailout of Wall Street, the utter neglect of Main Street, the collapse of the housing market, the obscene escalation of the cost of private health care, the metastatic cancerous military leviathan point to a massive ethical failure in a society where egalitarian principles have been discarded in favor of a warped, Darwinian, meritocratic society built by gamblers insured by the government, insurance companies subsidized by the government, defense contractors made extravagantly rich by the government, banks that forced people out of their homes and were then bailed out by the government.
Growing poverty and inequality in America and other countries can be tied to a dismantling of the public sphere through the privatization of public services, which imposes the rentier’s premium on parking meters, toll booths, waste and sanitation services, water and sewer fees, and health care, to name a few.
In urban areas privatization looms as a major economic issue. People, through taxes, fees and utility rates, pay once for public services to be created. Once services are privatized, the public is forced to pay again and again, at higher rates, for less service.
The public is told that money is saved. Whose? Wages are cut, services are reduced, increased rates and fees follow. The loss of public accountability and political control shifts onto the public as increased economic burdens and the social and economic costs borne by displaced public workers.
In such a climate, unions are under attack, since they exist to promote economic justice. The right to organize, the right to collective bargaining, the right to strike, the right to decent wages and benefits, the right to a secure retirement, the right to sue an employer for maintaining an unsafe work place, all these rights and more are at risk. Labor unions helped to build economic equality. Their demise means less bargaining power for all American workers.
The ability to bargain collectively is essential in a democratic society, for upholding opportunities for advancement.
A recent article in The Atlantic estimates that “$1 trillion of America’s $6 trillion in annual federal, state and local government spending goes to private companies.”
A few examples are in[fra]structive. In Chicago an investigation showed that the city received $974 million less than the parking-meter franchise was worth.
Forty years ago, I was elected mayor of Cleveland, a city of 700,000, on a commitment to block the privatization of an electrical system which was worth at least a quarter of a billion dollars and was to be sold for $88.1 million, a scheme promoted by the state’s largest bank, a business partner of the private utility seeking to acquire the city’s division of light and power.
When I refused to sell the system, the bank forced the city into default over $5 million in debt, taken out by my predecessor. Subsequently, its municipal electric system intact, the people of Cleveland saved as much as a half-billion in combined charges for taxes and electricity bills.
Tom Johnson, mayor of the City of Cleveland at the turn of the 20th century, disciple of social reformer and progressive economist Henry George, brought to Cleveland the cheapest streetcar fares and the lowest-cost electricity through public ownership.
He once said, “I believe in municipal ownership of waterworks, of parks, of schools. I believe in the municipal ownership of these monopolies because if you do not own them, they in turn, will own you. They will rule your politics, corrupt your institutions and finally destroy your liberties.”
The ultimate privatization that reframed the entire of our economic and social system and set the stage for a permanent debt mentality occurred in 1913, when the money supply of the United States was privatized through the creation of the Federal Reserve.
Prior to the passage of the Federal Reserve Act, the US Constitution, Article 1, Section 8, placed the power to coin or create money with the United States Congress. That changed under the Federal Reserve. Central banks took over control of the money supply.
From that point on, money equaled debt. The Federal Reserve usurped the power of the government to spend money into circulation and assumed for central banks the power to create money out of nothing, a device called quantitative easing, and give it to their member banks.
In Cleveland, the banks focused a profit-taking scheme on lower-income black and white neighborhoods, touting low-documentation and no-documentation loans, which were bundled into securities and became the collateralized-debt obligations that collapsed and pulled the entire economy down 10 years ago.
It was all fraud, and it was underwritten by the never-audited Federal Reserve, the erstwhile cop who walked off the beat when the pinstripe-wearing robbers were casing the neighborhoods of our cities, bankers cum croupiers, trolling for unsuspecting dreamers in search of that elusive first home, or an upgraded second home, not really knowing about adjustable rates, balloon mortgages, and penalties attached to late payments, but trusting the assurances of their friendly banker, who suddenly reversed years of redlining policies and made loans available without proof of ability to repay.
When you are desperate for a home, you sign on the dotted line. I think back to my parents, who never owned a home, and I can tell you that, if given the offer extended to thousand in Cleveland’s neighborhoods, they would have signed on the dotted line, taken the keys, celebrated, and months later been devastated by foreclosure.
The privatization of the money supply is one of five major factors in poverty and inequality today, the other four being the emergence of the military-industrial-intelligence-congressional complex, the maintenance of the for-profit health-care system, and the erosion of public education through the creation of charter schools and the tremendous lifelong debt burden placed on those seeking higher education.
Today we face a renewed threat of privatization that could dramatically thrust the American people deeper into poverty. The privatization of Medicare will make health services inaccessible to millions of elderly. The privatization of Social Security would cause the jackpot lights to flash and spin at Wall Street’s casino as retirees check stock advances, declines, and unchanged to discern what the value of the monthly check will be when it arrives at the mailbox.
The planned privatization of the Post Office will mean the end of universal service, less rural delivery, higher costs pricing people out of basic mail service, and cuts to three-days-a-week delivery.
The prison-industrial complex is set for growth with privatization schemes that raise serious constitutional questions.
More and more military services are being privatized, which of course makes for an additional incentive for businesses to support wars and to support the politicians who vote for wars.
As the national debt rises toward $20 trillion, the debate intensifies over privatization of Medicare, Social Security, the Post Office, and government service at all levels, a practice that steals the commonwealth and institutionalizes poverty and inequality as wealth accelerates upwards, furthering economic divisions and erasing the cultural memory of public service, devouring the civic soul, once the animating principle of community, the spirit breath of participatory democracy.
As wealth accelerates upwards, the mass of people are told we cannot afford a living wage, cannot afford a full-employment economy, cannot afford universal pre-K, cannot afford school breakfast and lunch programs, cannot afford supplementary-nutrition programs, cannot afford women’s and infant-care assistance, cannot afford more adult education, cannot afford free public college and universities, cannot afford guaranteed retirement security, cannot afford Medicare for all, cannot afford a guaranteed annual income. We are constantly told that the country cannot do these things because it would add to the debt, or destroy individual initiative.
Let me tell you that we can reverse this entire system. Thanks to my wife, Elizabeth, who came to the United States to study monetary policy with Stephen Zarlenga of the American Monetary Institute, I began to explore the equation of money with debt, and the ways of the Central bank that create money out of nothing for the benefit of private banking through quantitative easing and another device known to the industry as fractional reserve banking and recognized by the rest of society as great moral hazard.
As a result of studying the structure of the system, as a member of Congress, I drafted the National Emergency Employment Defense act, which reclaims the power appropriated by the Federal Reserve through the Federal Reserve Act of 1913 and enables the government to issue money debt-free to meet the job creation, infrastructure repair, health care, education, and retirement-security needs of Americans.
Some believe that such a system would be inflationary. Then let me ask: Why has the Federal Reserve created trillions of dollars and placed us in a deflationary period? The middle class does not have enough money to buy goods.
The consumer economy is stalled. The Fed-created money did not get into the right hands. How is it that 19 of 20 new dollars of increased income have gone to the top 1 percent? Really? It is because the system is engineered to transfer wealth upwards, a perpetual inequality machine.
Through reclaiming our constitutional heritage, we can lower taxes and have a full-employment economy, universal pre-kindergarten, school breakfast and lunch programs, full funding for public education K-12, free college and university, guaranteed retirement security, Medicare for All, and a guaranteed annual income, eliminating poverty.
This is not magic. It requires a shift in federal policy, away from private banks’ running the economy, solely in the interest of private banks, to the government’s reclaiming its ability to be able to spend money into existence to meet the needs of the country, without going into debt.
Private banking would continue through dollar-for-dollar reserves, and have to survive without its government-granted license to speculate.
The government could reduce taxes, increase productivity, enable America to reach new heights of wealth shared by all, or we can stumble along our present course, with the children of the 99 percent being indentured servants to the 1 percent, with more than 50 million in poverty while political parties tinker with a totally corrupt system en route to death on the installment plan institutionalized by a government in thrall to banks, insurance companies, and the military-industrial complex.
Imagine an America whose government was not prepossessed with military force projection around the world, a government that set aside failed doctrines of interventionism, unilateralism, and first strike to concentrate on the practical needs of its citizens for jobs, for health care, for housing, for education, for retirement security, for safe neighborhoods, for clean air and clean water; a government that derived its support not from the power of its armaments but from the power of its commitment to the humanity of its citizens.
Abraham Lincoln spoke at Gettysburg of a nation, “conceived in liberty and dedicated to the proposition that all men are created equal.” The inner equality of our political heritage must be matched by our constant striving for economic justice.
If we have the intent, the vision, and the courage to reclaim the reality of equality, we can make poverty a thing of the past. Now, perhaps, you can understand that when I first began my public career, 50 years ago, as a candidate for City Council, I focused on economic issues, making sure phone, gas, electric, water, and sewer bills were kept low; that privatization schemes were rejected; that perishable foods were labeled and dated; that neighborhoods were safe, recreation facilities in repair, and the quality of life in the city was optimum, wherever it intersected with city services, especially the police, fire department, and housing.
Forty-five years ago, I advocated free public transit in Cleveland and was met with objections that, if transportation was free, why, everyone would be riding the bus!
Exactly.
https://www.thenation.com/article/our-political-economy-is-designed-to-create-poverty-and-inequality/
I applaud former Congressman Denis Kucinich for a insightful treatise on economic inequality. But his solutions are disastrous for future generations.
As my colleague Dawn Brown at the Center for Economic and Social Justice (www.cesj.org) states: “This is a poignant statement of the problem, including the central role played by a flawed money creation system in creating poverty and inequality. However, Dennis Kucinich ignores the potential of Section 13, paragraph 2 of the Federal Reserve Act to grow a just and sustainable economy, that puts economic power into the hands of every citizen, not government at any level. His solutions, particularly his idea of putting the power of money creation in the hands of Congress (aka “the politicians”) is disastrous. To give politicians free rein to create money to fund their pet projects, create pork, and other opportunities for corruption, will not lead to a stable currency, economy or political system. The Capital Homestead Act [aka Economic Democracy Act] puts the power over the money system in the hands of the citizens, growing businesses and a truly competitive banking system. This plan would finance feasible economic growth without taxpayer dollars, create real not artificial jobs, create an asset-backed rather than government debt-backed currency, and create many layers of financial checks-and-balances. Most important, the Capital Homestead Act would enable every child, woman and man to become a full owner in the companies that are automating production more and more. Kucinich rightfully decries the plutocrats who have become drunk on their own greed, but he loves and trusts the power of government (and those who run it) far too much.
Unfortunately, there is nothing in what Kucinich says that speaks to empowering citizens through capital ownership, or creating asset-backed money that stimulates broadly owned private sector growth. His thinking reflects good intentions, but bad economics: He wants to enable the government “to issue money debt-free to meet the job creation, infrastructure repair, health care, education, and retirement-security needs of Americans.” “Debt-free” money implies that money being generated by the government has nothing of value standing behind it and never has to be repaid — with the ownership of everything “purchased” with that money belonging to the government. It’s even worse than today’s government debt-backed, or Wall Street debt-backed, money.
The people of Ohio and Cleveland should be getting the idea of the Capital Homestead Act to Dennis Kucinich.
See references to the proposed Capital Homestead 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/.
For more on how to accomplish such structural reform, see “Financing Economic Growth With ‘FUTURE SAVINGS’: Solutions To Protect America From Economic Decline” at http://www.foreconomicjustice.org/?p=17032 and “The Income Solution To Slow Private Sector Job Growth” at http://www.foreconomicjustice.org/?p=9872.
