A Just Society

In case you thought income inequality wasn’t bad enough, the 2008 recession made it worse. September Census Bureau stats for 2008 household income show a decline in incomes across the board, but less of a decline for those in higher brackets.

If we are to live in a just society we need to adequately develop effective programs for eradicating poverty and shifting toward greater income equality.

It is pretty clear that to move in that direction will take large and long-term public investment. Such public financial capacity will come mostly from taxation and some modest “earned income” that comes to the government through license and regulatory fees. This can be a more conscious means of making government move active in reducing poverty and to support revenues to make the reduction and abolition of poverty an ongoing part of government’s work.

Here are some ideas of how to do that:

1. The government can charge licensing and regulatory fees for the use of public land for commercial recreation enterprises and for natural resource mining. So too with other public assets such as the broadband (satellite) foundation for a wide range of commercial electronic uses. This includes electronic financial transactions, the scale of which is so great that even a very small transaction cost would be entirely reasonable and easily assimilated by business.

2. Procurement: The model borrowed from the private sector here will be along the lines of Wal-Mart’s company operations. Just asWal-Mart creates the market price to ensure consumer affordability, so to can government negotiate price and conditions of labor, both to improve life for low-income workers and to reduce cost to the public treasury through discount pricing. Imagine if the purchase of police cars was a government-negotiated transaction; if the purchase of paper was made on the basis of cost-saving and environmental protection; if school building produced employment for low-income families living near schools and was the basis of a greening program using new technologies (perhaps invested in by government); and gas for school buses was purchased in bulk.

3. Public mandates: There are a variety of “commodities” that are produced through public policy and then turned over to the private sector. An example of this is student loans, which have been guaranteed by the federal government and administered for profit through private enterprise. Recently, the Obama administration closed down this industry so that loans can be more efficiently and cheaply made available with profits accruing to the public treasury. This example can be expanded on quite a significant scale. For example, auto insurance, which is required in order to drive a car is a commodity created by the government and could also be managed in a similar fashion to student loans.

4. Research and development: Currently, tax breaks are used to entice business and to attract it to particular locations. The film industry, for example, receives major abatements for bringing film making to particular states. In some instances, the savings can be up to 42% of the overall production costs of a movie. The rationale for these tax credits is that jobs will be developed locally. However, it would not be unreasonable to think of the abatement as a direct investment in the business enterprise and for the government to earn a direct and specific share of profit.

5. A fund is needed to provide supplementary support to social programs when other resources are in temporary decline (as in a recession). All of the above mechanisms may be used as a revenue stream for an Anti-Poverty Reserve Fund, or APR program. This Fund would be a trust that can supplement public programs as needed and grow continuously in order for resources to be available to combat the particular face of poverty at any given time.

Some historical examples serve to remind of the great potential power stored in government:

-Trains in the US, and subways in NYC. They were and are key to developing a national economy, to economic growth. They started in the private sector, but it became clear that competition was deadly and inefficient; government rightly took over; these are textbook examples of “natural monopolies.”

-Internet. The government made the investments in computers and in transmission lines, and created the “rules” and protocols that made the internet possible.

-Airlines. Government investment makes the industry possible, from government investment in aircraft technology to zoning and investment in airports to air traffic control.

Sadly, there was no ongoing profit sharing that included the public as primary venture capitalist. Instead, we waited on taxes from corporations dedicated to hiding as much profit from IRS as possible.

Now is the time for change.