A Beautiful Mind (with a Big Mouth?) by John C. Dean - HTML preview
Download the book in PDF, ePub, Kindle for a complete version.
Capitalism and Plight of the American Family
To get a good understanding of the economy we want to know how the economy functions and where the income goes and how much. We want to know who pays the taxes and how much. We’d like to know where and how much is the discretionary income amongst Americans and where income is lacking. Into this discussion enters government spending and deficits and debts. Is any type of government spending more productive for the economy than any other? Are tax rates set up reasonably? Is the free market really free or a play ground for the rich to manipulate markets with power and money? Does Capitalism need to be adjusted with guidelines and regulations to stabilize it and keep everyone fed and clothed and housed? Not that I have any power to affect change, I’d still like to understand the mechanisms in our economy.
After World War II the nation went back to a peace time economy and it surged forward with gusto. Suburbia was born. And things were good. We even led in the reconstruction of Europe (the Marshall Plan). Wartime was not productive in producing the fun things of common life. The auto industries pretty much stopped manufacturing new cars and instead built tanks. There was a shortage of everything: gasoline, rubber, metal, tin cans, sugar. The shortage in war labor was made up by women, who joined the working world of industry in droves. But the economy didn’t directly do anything for the public in the way of peacetime products or services which directly enhance normal living during the war. Instead spending was increased to cover the war machine and people involved.
So after the war the conversion of the military ranks into a civilian work force with an attendant change of products in industry plus the marriage and family boom, and the housing boom, the economy took off. New cars were in production again. There was severance pay for many GIs to spend on the economy. Companies that helped the war effort did real well and could hire all kinds of help for their new peacetime production industries. Construction work was up. In the 50s President Eisenhower initiated an interstate highway system to link the country and facilitate interstate commerce. This created a lot of jobs. America’s market was mobile. A bonus out of this growth was the family vacation on the road with visits to national parks and other beautiful sites. The new work force bought new cars and trailers and roamed the highways during the 50s and 60s. The attendance at parks went from a few hundred thousand to over 10 million in a few short years. Plastics became big. The economy was booming with expansion everywhere.
Then came more war: the Korean war and the war in Viet Nam. The greatest beneficiaries were the war industries: defense plants, development companies, arms manufacturers, oil, and banking. All benefited from the war process, and benefited tremendously. President Kennedy; however, became an obstacle to the Viet Nam war and to the continuing profit of the war industries. He had signed an executive order to bring home all 15,000 troops by the end of 1965 with an initial installment of 1000 in December, 1963. His executive order to remove all American troops from Viet Nam had just gone into action when he was killed.
He was also going to cut back the CIA, who had incessantly interfered with his foreign policy by conducting covert military ops within Viet Nam to push the South into a war with the North ; Cuba, to sabotage industrial and military targets of the Castro regime, and projects elsewhere. He had started a peaceful process with the Soviet Union to put a ban on testing nuclear weapons, and he wanted peaceful coexistence with the Soviet Union as he outlined in his Graduation speech at American University in June of 1963.
He had also changed his position and was going to cut oil depletion allowances which gave the oil industry untaxed profits in the 100s of millions that other companies did not get. It’s like a condolence bonus for the loss of the oil that the oil companies sell. You’d think that the US felt sorry for the biggest and richest companies in America and let’s them take the first 27% of their sales profit tax free each year while other companies pay tax on every dollar of profit. This remained for 40 some odd years due to back room politics.
And Kennedy was also in favor of civil rights and space travel as part of the new generation of Americans under him. So he was killed for big business, war business. There is a distinct possibility that the cold war of arms build up and nuclear stockpiling would not have happened if he had been allowed to pursue a course of world peace. It is my opinion that the Viet Nam war and subsequent wars of choice, have not been necessary to preserve our nation or its way of life. Instead Oil, defense industries, and banking have pushed us into war for bigger profits. They are connected to our intelligence operatives abroad and sabotage things and create strife to stimulate military intervention. The US has since grown to dominate world business expansion with military forces in 130 nations and is the one and only super power on the planet. Simply said: we’re the biggest imperialist nation on the planet, and we do things our way, (by force if need be). American soldiers die for big business and not for our freedom.
The reason I mention this is because if that defense money had been spent building housing for the lower middle class and the poor people in America, it would be doing something productive. It would be doing well. That money could be the seed money for jobs in solar technologies. The people in foreign lands would still hear about us and if we were doing peaceful charitable things, they would hear this and be attracted to the ways of the US. and our non-military missions. The money might start up a different sort of automobile industry that didn’t follow orders from the oil industry and, instead built a lot more green and clean, and economic cars. The money might be invested in projects within the nation to put unemployed to work, where they, in turn, spend their money on the economy, and it continues up the ladder being spent more than once, to enhance more than one life. The multiplicative effect of a peacetime economy gets more money circulating and creates more demand so production increases, and more people are hired. In turn, their unemployment stops and they spend their wages on the economy, more than when they were unemployed, and this takes the economy doubly in the right direction. When the economy collapsed, money didn’t disappear, it just froze up. It changed hands and then didn’t move. Why isn’t it circulating and creating jobs? Some people made a lot of money and they’re sitting on it. It’s not getting to where it needs to be. To stimulate the economy, the lower end of the financial spectrum needs goods and services purchasing dollars, backed by jobs, to correctly drive a real market. I demonstrate this in Chapter 4.
It’s understandable that the advancement of civilization (with mass production run by computers) has eliminated the need for us to work so hard to provide the products for normal living: food, clothing, house ware, furniture, TVs and cell phones, and music systems.... etc. that everyone wants. But when people are laid off and put on unemployment as a result of this efficiency in industry, the economy suffers. People that don’t have jobs stop driving the market and the rich, who already own every imaginable toy, don’t have a propensity to spend so the market starts dieing. At the low end, those struggling, burden the merchants, the landlords, the utilities, the banks, etc with their failure to make payments. So the small businesses, in turn, get stressed and start closing. Overall the money didn’t disappear; it just got stuck near the top. Let’s take a look at the economy.
The graph on the next page shows the percent of tax filers, (starting with the poor ones), that have the income per year shown or less for 2007. The government puts out a lot of data to help us understand what’s happening. There were 141 million tax returns from 111million households employed in 2007 and represented on that curve, and the income they got is shown on that curve. Unemployed and under employed get help from the government, or live with relatives, but they’re not on the curve. The Bureau of Labor Statistics showed 7 million unemployed and 79 million not in the workforce for 2007 (http://www.bls.gov/cps/cpsaat1.pdf ). What percent of these are unemployed but fell off the radar (didn’t report their continuing unemployment) is unknown to me. Maybe there’s 10-20million of them, but I don’t know. Remember that there are a lot of 2 worker families so a household may be 1 or 2 people working with one or two tax filings (single, separate, joint married), or 1 working and the other one laid off, or?
The curve shows an abrupt rise in income in the highest 5% of the filers, which cannot be reasonably displayed. $7,800,000 average income of the top .1 % of tax returns (all 141,000 of them) would be about 7 pages above the top of the page on the graph. The annual earnings of the “population” is displayed in area segments. You could think of the curve below as all American taxpayers standing
side by side, lined up in increasing income from left to right with a stack of the amount of money they make per year in front of them. The last 141,000 of them , the highest .1% of Americans in income rises to a pile 7 pages high off this page. Adding up there piles is like multiplying the number of people in a given section by the average income they get in that segment. The average income in the first 50% section is $14.8K. So the total income is the number of tax filings (half) 70.5million times $14.8K or $1043 thousand million or $1043 billion or 1.04 thousand billion or $1.04 trillion. The second area in blue between 50 and 75% of the filers represents .25 X 141million filers or 35.25million whose average income is (32.9 + 66.5)/2 = $49.7K , the average of the two ends where income is 32.9K at 50% and 66.5K at 75% and the connection between these points is close to a straight line. So this region produces the product of 35.25 million, times the average wage per tax return, or 35.25M X $49.7K or $1.75trillion. This area calculation where we take the average height is basically turning the area of the wedge or trapezium (shown in the graph) into an equivalent area rectangle, which area is easy to compute (height X width). Determining the area under the curve is the purpose of integral calculus, a branch of higher math familiar to technical nerds like me. But the basic idea is simple. It involves adding up the accumulative area under the curve, which can be done very accurately using a simple manual technique that employs straight line approximations of the curve. The method is described in Appendix 1 section 2. So you don’t need integral calculus to do it. Get out your calculator and check these numbers if you’d like. I tallied up the areas where the 99-99.9 region has $410K- $2 million in income with an average of $820K and produces 820X141X.009= $1.040T. The .1% final area has the average $7.8million. (reference shows 7.4M which I believe is inconsistent with other data provided), and totals $1.1T
The total of the little area regions is then the total taxable income of the entire working force, and it is $9.4 trillion for 2007. The only thing this excludes is capital gains which are taxed separately. One can play with adding these little regions and compare blocks of workers. The top 1% makes 2.14/9.4 = 22.8% of all the (non capital gain) taxable income. The top 5% make about 40% of this money. Now this is just taxable income excluding capital gains. It doesn’t count money not taxed through tax loopholes or money earned by tax evaders. 47million returns paid no taxes despite positive or negative Adjusted Gross Incomes through application of the Earned Income Tax Credit or other device. It should be clear that about half of Americans are doing ok and the other half is struggling, especially down at the low end, while the high end is off the map with pleasure and financial security. Tax evasion cost $345Billion in tax revenue for 2007 http://www.census.gov/compendia/statab/cats/income_expenditures_poverty_wealth.html .
Redoing the plot with stacks of money in relative size to a human being reinforces the evident inequalities in income, visually. The basic unit is a small stack of ten dollar bills, shown enlarged at the beginning of the chart to the left. It is the size of a stack of 10 dollar bills adding up to $5,000. Then there’s a model of a human being to show the relative size of the money stacks to a human. At each point along the curve, the money stack is the total adjusted gross income from all sources except capital gains for that American filing for the year. It’s slightly over the shoe at the 20% point of working filers, and goes to about the waist at the 90% position. At 95% it’s up to the neck and goes up to twice the height at the start of the 99% position ($410K). From 99-99.9 the average income is four times the tax filers’ height. And from 99.9 to 100% the average income is over $7Million dollars per household, but it starts around 2 million which is shown in 4 stacks next to each other at the right end. At this 1% end, the tax rate is not as important to their luxurious living as the size of the stacks left for use after taxes.
A s it is, the rich pay nearly all the income tax the government collects, and in a greater proportion to their taxable income than the lower half of the nation, which might already seem more than fair. This taxation argument is true but very deceiving and has nothing to do with fairness. It is only good when comparing income tax to taxable income (excluding capital gains and other types of tax that most of us have to face that are insignificant to the rich). The other taxes, we all face, swamp out the poor people’s income so there is no money left to live off of, while the rich, who, for instance, are not bothered by social security tax, property tax and sales tax in comparison to the poor, have piles of cash with enormous back-up to their style of living after taxes even if the tax rate is 50%. But we still need to be thorough and refine our numbers a bit more to clarify our picture. First we’ll add capital gains to get the complete income. Wolf showstop1% next 9% lower 90% Capital gains 20.2%
$601 Billion $770 Billion $347 Billion per http://sociology.ucsc.edu/whorulesamerica/power/wealth.html for $1.718T total in capital gains. The federal income taxes are:
Taxes of $1.164T 40.4% 29% with (2.9% ,0-50%)
- $470Billion - $356Billion - $338Billion (-$32B) for the same three groups.
I have also split up the other income for interest, dividends, business income, and rents from the salaries included in the income curve, and calculated credit card interest payments, and Social Security taxes for our three groups (and more) in appendix 1, items 4, 5, 6, and 10, and with the help of Wolf’s tables that follow.
Wealth distribution by type of asset, 2007
Investment Assets Top 1 percent Next 9 percent Bottom 90 percent Business equity 62.4% 30.9% 6.7% Financial securities 60.6% 37.9% 1.5% Trusts 38.9% 40.5% 20.6% Stocks and mutual funds 38.3% 42.9% 18.8% Non-home real estate 28.3% 48.6% 23.1% TOTAL investment assets 49.7% 38.1% 12.2%The resultant table for net income follows:
% population top.1% avg 99-99.9% avg 90% 75% 50% 25% 0
Income/wages $174K $174K $98.2K 63.5K 32.9K 15K 0
extra income $9.3M $930K $34.2K 8 K 0 0 0
Fed income tax -$1.73M -$178K -$11.9K -4.9K -2.3K 0 0
Credit card Int. -$2.4K -$2.4K -$2.2K -1.7K -.57K 0 0
SS/Medicare tax -$9.6K -$8.8K -$7.5K -4.9K -2.5K -1.3K 0
Net Income $7.732M $915K $111K $60K $27.5K $13.7K 0
__Distribution of Earnings and Taxes for 2007_______
The above table shows what earners get to keep after federal taxes, social security taxes, and credit card interest payments as usable income to eat on, live somewhere, and to pay their state income taxes, sales taxes, and property taxes.Yippeee!!!!
The extra income minus income taxes, social security and Medicare taxes and credit card interest yields much higher income for the top 10% and less net income for the lower 75%. The effective income tax rate including SS and Medicare and income tax would be the sum of these taxes divided by the gross income , or.1% .9% 90-99% 75% 50% 25%
18.4% 16.9% 14.7% 13.7% 14.6% 8.7%
Now it’s still true that the top incomes pay, not only a greater amount of tax per capita, but a greater percentage of their income on tax than the lower income earners. Of course I haven’t included property tax. But what is not shown is that the lower tax payers cannot even afford the taxes they pay as it cuts into the vital necessities of life: food, clothing and shelter. To appreciate the relative problem in the economy of poverty and riches, one needs only to pencil out a reasonable subsistence budget for the range of incomes, respecting the opulent living of the rich and barely housing and feeding the poor. I was raised upper middle class, I live middle class, and I have rich and poor friends, not to say I’m any expert, but I can estimate basic living for these groups reasonably, I believe. A projected subsistence budget for the range of Americans follows.
% population .1% avg .9% 90% 75% 50% 25% 0 Income/wages $174K $174K $98.2K 63.5K 32.9K 15K 0 extra income $9.3M $930K $34.2K 8 K 0 0 0 Fed income tax -$1.73M -$178K -$11.9K -4.9K -2.3K 0 0 Credit card Int. -$2.4K -$2.4K -$2.2K -1.7K -.57K 0 0 SS/Medicare tax -$9.6K -$8.8K -$7.5K -4.9K -2.5K -1.1K 0 Net Income $7.732M $915K $111K $60K $27.5K $14K 0 House value $4M own $2M own $.7M $.2M rents rents 0 Housing$/yr $25K $15K $40K $15K $15K $12K $10K Prop. tax 1.3% $52K $26K $9.1K $2.6K 0 0 0 Food/yr $30K $20K $13K $8K $5K $5K $4K Utilities $5K $4K $3.5K $2.5K $2K $2K $2K Transportation $40K $30K $8K $5K $4K $3K $2K Intrnet/phone/TV $4K $4K $3K $1.6K $1K $1K $1K Clothing/misc $100K $6K $5K $3K $1K $1K $1K Medical $50K $20K $4K $6K $2K 0 0 Total budget $306K $125K $85.6K $43.7K $30K $24K $20K $ left over $7.426M $790K $25.4 $16.3K -$2.5K -$10K -$20K Taxes/income 18.9% 19.3% 21.5% 17.3% 14.6% 7.7%
American Subsistence Budget 2007
Some of the 50% people actually own homes, since rent payments nowadays are comparable to house payments, so it pencils out. But I’ve shown them renting. If they worked extra to save up a down payment, the rent money should cover a house payment, insurance, and taxes. $1250/mo. rent could be a 2-3 bdr condo or house, or it could be, with 10% down on a $200K house at 5% for 30yrears:
Mortgage (P+I) $966.27
Tax (T) $216.66
Insurance (I) $66.66
Total Monthly Payment (PITI) $1249.61 (or $15K/yr)
tax and is22.5%,higher than any other group. Now Bailey’s Building and Loan
might give the 50% guy such a loan, but old man Potter and his bank would rather keep these people renting forever. (movie: “ It’s a Wonderful Life” 1947, Frank Capra), and we all live in “Pottersville” these days, so they’re renting, in my table. What is clearly evident from the table is that the lower half of the tax filers cannot subsist without government help. That may translate to the lower 60-70% of the population. Another way to understand this is to plot a subsistence curve and a net income curve and look at the difference curve. It is a reality check and shows the deficit for the poor and the surplus for the rich.
2007 American Economy in a Nutshell
So what has caused this collapse at the low end? It’s simple. In the 1950s, 60s, and 70s, employment was up with house buying wages, and the economy was thriving. The people did not need anywhere near the level of support that the government provides these days in welfare and Social Security and Medicare were not as big a drain. But Capitalism promotes movement of the money to the top with a loss of jobs and a lower economy for the poor. With any inflation the low end buys less goods and services when the economy goes down for them so the rich make things cheaper, export labor, and work for reductions in the taxation of the rich, which makes for less government funding available, and instead the debt of the government grows. Unions are weaker, automated high speed production is more prevalent, and the poor end lose more jobs. So people take a cut in pay to keep their job. Jobs are sent overseas so that goods may be purchased more cheaply while the owners make more money. This would be good for the nation if it didn’t cost jobs. But it does. Wages would cover the cost of living and finance a home for a high school kid working in America in the 50s and 60s. But inflation (which is essentially runaway greed by companies, using supply and demand as the carrot) helps those who raise prices first, and/or have a closed market without much competition. Others need to respond when their costs go up and so it ripples through the market, giving the fixed wage worker less buying power. This has happened fairly slowly over 50 years, where minimum wages did not keep pace with inflation; it first caused Mom to go out and get a job. And the people worked more than one job or extra hours on their job to maintain their style of living. But housing costs went up, and rental costs. Medicine increased 4 times as fast as the consumer price index between 1980 and 2007. Legal issues grabbed attention as legalese wafted its pitch filled smoke into the economy and fewer hand shakes made deals. People started locking their doors at night, taking the keys out of the ignition while stopping somewhere. Corporations figured how to beat out the family farmer at the market. New car prices rose. Everyone wanted to make more profit. So the economy got tougher for the low end consumers and corporations edged out the small businesses in key areas.
Oil people are at the top, naming their own price. Their vast fields do not report the need to raise prices. It’s their greed and the supply they control. I did notice that they became kind when the markets collapsed and gas suddenly went down from 4 to below $3 a gallon in the fall of 2008. I don’t think that this was due to a comparable drop in gas use in America. It may be the oil companies manipulating the market to get the most out of it. They can raise or lower the price of gas and throttle the market up or down a bit to preserve a healthy enough economy to rake in the petrol dollars, while sitting on battery technology. Because they can lower the price of gas at the pump by more than a buck and still make profit, I suspect them for gauging the public and monopolistic practices. They control the auto companies in America, and gas hogs have been on the agenda way too long. And now big business is ravaging the Amazon basin for its trees and have been busting governments around the world with bad financial deals threatening bankruptcy to get the favors of their natural resources. The World Trade Organization forced countries to invest in American derivatives or be heavily fined. If their practices are not illegal because of their control of governments and laws, then they’re immoral and should be illegal.
And we could create guidelines for a “new” free market system that is not run by immoral tyrants, but still offers a wonderful challenge to any entrepreneur.
item 1965 2010 Ratio of cost 2010/1965
bacon $.89/lb $4.50 5
eggs $.53/doz $1.80/doz 3.4
gas $.31/gal $3.10/gal 10
milk $.95/gal $ 2.85 3
movies $1 $10 10
home $14,000. $180,000 12.9
Min wage $1.25 $7.25 5.8
Health Care 7.2%GDP65 16%GDP2010 43
Price Ref $1 $6.91 6.91
I put this together from various sources and with some calculations to get to the final data shown. But the information to do this is from:
http://www.thepeoplehistory.com/60sfood.html for prices in the 60s
http://familyimpactseminars.org/s_wifis18c01.pdf p/o health care change w/GDP http://www.bls.gov/data/inflation_calculator.htm consumer index
www.bea.gov/national/xls/gdplev.xls - GDP changes 719B1965- 14T2010
http://en.wikipedia.org/wiki/Income_tax_in_the_United_States#Types_of_income min wage
I believe the important information from the above table is that the low end took a pay cut in buying power down to 5.8/6.91 = 84% of 1965 wage while homes rose by 12.9/6.91 = 1.87 or 87% in the current era; medical care rose by 43/6.91 = 6.2or 520%, gas rose by 10/6.91 = 1.45 or 45% and the low end hung in there with milk and eggs and bacon. So as long as he lives outdoors, has good health, and rides a bicycle he’s ok; as long as he can hold down that minimum wage job and get to work on time. Although I would call capitalism like this, as it took place, a failure for not preserving the life style of the bulk of Americans over time, and I have some ideas for recapturing those beautiful days (only with clean air and green policies in energy). The following shows some of my ideas.
The housing market is allowed to inflate with the push from real estate
people and accelerated appraisals based upon selling comps (comparisons), that don’t slow down inflation and changed overnight in 2006-2007. The cure might be to have average inflation of 2-3% per year financed with the 10-20% down, as controlled by banks, who would be limited by regulations in their practices to this safe approach. If the buyer wants the more sharply inflated home, then he can put more money down on it. Otherwise lenders will refuse the 80-90% loans on fast rising properties. Comps would then be documented for maybe 5 years to show the slow growth rate, and buyers and sellers would be coached about this. This should tame the housing market. I’d regulate out the unrealistic practices, like interest only loans with balloon payments (except for commercial purposes, where buyers understand well and may want this type of service). I’d require an offering of fixed interest rate 30 yr loans on housing for all home buyers. The credit doesn’t really matter as much as the money down. With enough money down no one is going to be foreclosed, especially on a smaller loan with lower payments. I’d regulate interest rates not to gouge the poor at all. Maybe Co-ops by the poor could help the poor as well.Co-Op Home Financing by/for the Poor
Imagine a co-op type company (owned by its members) that takes in $300/month (or thereabouts) from each of a group of working, but low or bad credit prospects that join the co-op This is set up like a house down payment savings account. They need stable jobs at a decent level of income that can cover a house payment and taxes and insurance (if they had no rent to pay). If they get behind two months on the $300/mo, then at the point where the third month is due, they’re out, and half their total previous input is returned to them. If they want to put more in, then they save quicker, and gain grace on the due date for the next payment. The members with a nominal 20% of the average middle class house invested in the co-op may
house hunt for their house. When they find itandclosing costs plus 20% down
are available in the clients account, the co-op buys the house with partial equity rights for the client, whose now called the “equity renter”. The Co-Op uses the funds in the account of the particular client who is getting the house. The Co-Op charges the client the amount per month to cover the principal and interest, plus pro rata taxes and insurance, plus $100 dollars/mo. and the client stops paying the $300. , moves in, and starts paying the co-op the house payments that cover Co-Op costs plus $100/mo. The Co-Op is strong and gets good rates from banks or credit unions. These rates are passed onto the client with the only addition being $100/mo. At the end of the loan term the title is transferred over to the individual member if he wishes to quit the co-op, or it remains in the co-op, which keeps the property taxes down, but the member needs to pay $100/mo, association fee to maintain the connection and protection of the co-op. This would be a God send for the poor who normally get gouged to pieces or may never qualify for a house and who lose everything when they fail to make 3-4 payments. The foreclosure rules for the Co-Op might involve being 3-4 months behind in total payments but they could make partial payments to forestall the accumulation of 3-4 months total in arrears. The co-op could evict the “equitable renter” at 3-4 months total in arrears; and offer the house at it’s current market value to other co-op members who may have 20% in their accounts (or otherwise available).
Maybe the house is large enough to accommodate 2 families. So co-op families may join forces to cut costs. The house stays in the “Co-Op family” of lower credit people; or if no one qualifies, the co-op may sell the house on the open market and keep half the net proceeds (after expenses) while returning the other half to our original “buyer(s).” This way the poor family that can not afford the house at this time, struggled for 6-9 months making partial payments until 3-4 months worth of a full payment was accumulated in debt and gets kicked out, still gets some equity out of it to help them in their lives. Maybe they want to stay in the co-op, or maybe they don’t. That’s up to them. If they do they revert to the $300/month rule to save up again. Maybe their settlement is enough to find a less expensive house that they can afford or gives them a big leg up towards another try, with no $300/mo payments due for quite awhile (if they put in a sizable portion of their equity return). The Co-Op gets the half equity for the defaulting member to maintain its financial strength in the banking market where it deals for good loans, and keeps up payments whether or not the equitable renter performs. So the Co-op is always current with the bank and new owners step in on old interest rates and the backing of the Co-op when they take over as equitable renter.
This way the Co-Op financiers are not trying to hurt the buyer, they are a group of low or bad credit people who want to help each other. In a group, they have house buying power and may get good fixed rates and good terms through their coop. When times are tough they have a Bailey’s Building in Loan working for them, and not old man Potter (who would fleece them until they die). They still need a decent down payment for the house. At $300/mo (about the size of a car payment) they’d save up $3600/yr. It would take 5 and one-half years to save up $20,000., not an unreasonable time to save up for a house. $30,000. would take 8 years and 4 months. This is way better than the variable interest rate loan that hurts buyers later.“Surpriiissse, got ya....well it’s your fault....you should have read the small print on page 18 of the trust deed. It’s not my fault you don’t have glasses.” “Don’t feel rushed or anything to sign it during our 30 minute appointment, you could always go out into the lobby and study it and come back; what’d’ya mean you don’t read legalese; it’s everywhere. Just bring your questions back in and I’ll try to answer them for you”. “I’m sorry, that’s the best we can do; Would you like to cancel?”
I’d regulate the lumber companies that change the cost of supplies in mid construction to give fixed costs for 3 months for home builders. The game of upping prices to make more would then be stifled.
For health care, I’d survey affordable services for different health
conditions, crank in probability of occurrence, and limit the average service that the government covers to a more basic service and not unlimited use of the highest technology for every patient, and every occurrence, when it is so much more expensive. It is wonderful that medicine has advanced so brilliantly in the last 40 years, but it has advanced itself out of the wallets of a huge majority of the American people. Even if we regulate profits of medical suppliers, hospitals, and doctors for each service they give, the evolution in medicine ensures that more procedures come into being and greater miracles are accomplished with these more services and the costs still go up. We can’t afford any increases. In fact we need decreases. The single payer government plan is constructed to out perform private plans at the same levels of health coverage. The premiums should be set to be an affordable portion of the family’s budget, maybe 5%. Wouldn’t it help to set up and coordinate services over areas with a queuing system that would allow service if doctors were available within a decent distance to provider and set of time constraints, despite average restrictions on the patient’s policy. In other words, why not keep the doctors pretty busy so that they make good money, while providing the best health care possible to as many as can be covered at a decent price for the poor. Isn’t this how Kaiser has thrived and keeps adding new hospitals? Let the private health insurance companies have their own system worked out, with negligible queues, and keeping their doctors mostly occupied for good income but maybe fresher for their higher pay and better working conditions? Or? Anyone wanting even more service is free to acquire it on his own planning and financing. There is nothing about the government limiting what people can get in health care, they’re just limiting what the government is going to pay for people’s health care. In the next chapter I cover it more thoroughly, but there are several fixes that help. Hunting down Medicare fraud is cost effective and could save 3-10% and maybe more of a $2.4T budget (about $75-240 billion). Cutting procedures is cost effective, cycling between the general care physician and the specialist should not require a superfluous, get to know you visit, that delays the patient’s return to good health. A simple phone call message from the general to the specialist would suffice with one insurance approval cycle. Maybe 10-50% of visits could be cut. The sequence of diagnosis should cover possible inexpensive cures first when time permits. Insurance company overhead is atrocious and they are bilking the system of needed care. A 6% savings ($150 billion) is available here. Hospitals over-bill, anticipating being underpaid and trying to compensate in advance. Then collections people want the big number, and 2 million people are affected by wrong bill medical bankruptcies each year. The government spends 30B on medical research each year, so find the cures and have the drugs made cheaply, instead of paying American drug companies 2-3 times as much as foreign companies want for the same medicine. Why not partner on drug research and development to make sure the companies are not cooking the books with losses, and then pay off the company’s share when a good product is discovered, making their production costs as small as possible with no requirement to recoup development dollars, and power to make a generic quickly. Make it work first, then
worry about free enterprise. Insurance companies burning 15-20% of moneys available for health care providers just doesn’t work, period. Drug companies recouping huge advertising and development costs just doesn’t work. Let’s make it cheaper and
significantly reduce the cost to our elderly, and to Medicare, and stop caudling the drug and other medical service industries. Why not announce the new miracles on the internet. Make a good youtube movie ad, cheap. Sonny boy can get grandma to view it. Aren’t you sick of those erectile dysfunction ads?
The oil companiesneed to be taken over and taught good manners.
They are too large and too powerful and are the reason for foreign wars that kill our children and help bankrupt us. They physically stifle competition, or they legally stifle progress, by tying someone up in court until they’re broke. They influence judges and congressmen. They lie with their proliferation of bad science (like they didn’t know smoking was harmful, and they pay scientists to say there is no global warming). They purportedly paid Ed Clark, Lyndon Johnson’s attorney, $4Million for the murder of JFK, which Ed allegedly helped organize (so said a junior attorney of Ed’s, also committed to Lyndon Johnson’s service for over 5 years, at the cost of his own disbarment) “Blood, Money & Power”, by Barr McClellan. They fix the price of gas and they raked in the first 27% of gross profit
tax freewith their depletion allowances in the 60s. That’s like hidden profit not
reported for tax purposes. That’d be like $200-300 million extra dollars per major oil company per year in the 60s. That’s enough of a reason to kill a president, No? JFK was going to cut this lucrative advantage big oil had maintained from previous administrations, and Texas Oil cut him down (Chapter 10), and a Texan moved into the White House.
Theconsumer price index is obviously not tied to housing cost directly, which cost is the biggest single family expense. I would tie the minimum wage and the consumer price index more toward the cost of housing to provide an opportunity for all Americans to dream and work toward a place of their own.GUIDELINES FOR NO LOSE CAPITALISM?
I love the freedom and opportunity of capitalism, but its reward, money, should not be used to stifle other’s competition in the market place. “I got mine, now I’ll use my money to keep you down” doesn’t sound too ideal or friendly. Or stifling a process that provides better performance so that the old ways can continue to be profitable; or lying about the science involving health issues of the planet or of people (oil and tobacco companies). These activities should be regulated out of
capitalism.What would be the ideal market place and what would be the guiding principles for its establishment and its support to thrive?Individual accomplishment is respected. The benefit /detriment of the product or service to society is important and no short term gain at the cost of long term health of people or planet should be allowed. Production costs are significantly less than retail costs
Only temporary loss (for long term gain) is practical: e.g. selling at a loss for inventory clearance of discontinued items. A company’s money should not stifle another company from competing effectively (as in undercutting the market to drive competition out), or tying them up in court. (selling with a gain while undercutting is fine).
No threat of or actual coercion or violence is used in competition.
Except in Research and Development, Contracts are bid with knowledge of the entire job and in good faith. Running a project with incompetence, delays, or errors should be grounds for termination of the contract with some remuneration. Expected returns for the buyer should be his determination up front or guaranteed by the proposing team. No lying economic hitmen trying to hook a nation into bad debt for later favors (the stealing of the other country’s oil). (Confessions of an Economic Hit Man, John Perkins, 2004, Berrett-Koehler Publ).
No monopolies or coordinated group of companies to control the market place would be allowed. A breach of this policy may lead to nationalization of the businesses involved or splitting and divesting functions into separate companies.truth in advertising, positive advertising only Elimination of legalese and fine print in contracts. Maybe a way to terminate the contract needs to be agreed upon within the contract, prior to signing.
The health of the planet has more priority than that of its inhabitants (since planet health is vital to its inhabitants). Reversing the pollution of the land and the oceans, guarding of animal habitats, reduction of green house gases, preservation of natural resources, and protection of fresh water supplies are amongst the most important priorities we have. Environmental studies may keep some development or production plans from being carried out for the health of the planet.
Companies may not sit on the introduction of patented technologies (that benefit society) in order to maximize company profits with the old technology or for any other reason. Patents will not be respected for inventions that are held off the
market by the company.Markets should freely grow around the discoveries of modern science and not be stifled. Use it or sell it or lose it.
The advancement of technology may not be blockaded by any business. Any vital link in the chain of technological advances that is needed for the next discovery will be made public with generous one-time remuneration from the government, half to the inventor and half to the company that employs him.
Smothering small businesses by taking a temporary loss to undercut them in the market place and starve them out is prohibited. Any larger company in such practice will be liable to and for the business losses of the smothered company because of this practice. Clearance of old models is excepted. Undercutting a competitor’s price with a gain is normal business.
The benefit of production contracts with large retailers that force the unit price down must be shared by the producer in his business with all other companies. A large retailer may not force a special reduced unit price just for himself. The economy must be shared with all the producer’s other customers. This is done to help insure the survival of the Ma and Pa store if the mega store moves out of town for lack of sales. Its advantage is one stop shopping.
No kick backs or bribes or other cheating or lying. If you connive to get more, you’re put on an international list, and labeled for life as a selfish, non team player. Government employees are fired and listed for life, and possibly prosecuted in criminal court.Competition is encouraged, consistent with the maintenance of good job
opportunities for workers in all countries. The health of the whole flood the market with more and cheaper foreign product should be accompanied by
market needs to be considered. Demand goes down with layoffs. To
more demand.Displaced workers should be retrained and used elsewhere, so that the rising demand in new workers will
meet the increase in product. The balance of increased demand with
increased production keeps the marketplace in balance. The guideline is, then, to retrain and employ laid off employees when planned production increases are made with outside labor or machinery is purchased to speed up production.
Free enterprise is not intended to maximize company profits at all costs. Free enterprise should, instead, be consistent with an improved and sustainable standard of living for all the world’s owners and workers with the promotion of peace.
Adding Wealth to The EquationThe plight of the American worker has already been demonstrated. Adding wealth to the mix only shows an increase in the split of money. Wolfe’s tables show:
Top 1 percent Next 9 percent Bottom 90 percent Deposits 20.2% 37.5% 42.3% Pension accounts 14.4% 44.8% 40.8% Life insurance 22.0% 32.9% 45.1% Principal residence 9.4% 29.2% 61.5% TOTAL other assets 12.0% 33.8% 54.2% Debt 5.4% 21.3% 73.4% From Wolff (2009).http://sociology.ucsc.edu/whorulesamerica/power/wealth.html
In 2007, $57.7 Trillion was the net worth of all (US) Americans ($72.1T in assets minus $14.4T in liabilities). This consists of stocks $7.7T, $13.2 corporate net worth, $5.4T non-corporate business wealth, Add equity in our homes $12.5T, more for commercial real estate equity, plus financial securities, trusts, deposits, pension accounts and Life insurance cash value. Except for home ownership and debt, the lower 90% of American households own less than the top 10%. Here’s some numbers. The top 10% own the balance up to 100% for each type asset.
THE LOWER 90% OF THE POPULATION OWN:http://sociology.ucsc.edu/whorulesamerica/power/wealth.html...business equity 7%,
financial securities 2%,
trusts 21%, deposits 42%
stocks and mutual funds19%,
non-home real estate 23%,
pension accounts 41%
and life insurance 45%.
This at a glance tells us that per capita, the upper 10 % own between 10 and 500 times as much as the average person in the lower 90% of income, depending upon type of asset. This is because they are 1/10th the population owning up to 98% of a given type asset. In financial securities they own 49 times (98% to 2%) more as a group than the lower 90%, so per capita ownership is 9 X 49 = 441 times stronger in financial securities. In life insurance the top 10% (which is equivalent in number to 1/9th of the 90% group) own 55%, so per capita the upper 10% own 55/45 X 9 = 11 times the per capita of the lower 90% group. With home ownership real estate removed from consideration, as it is not very liquid, the upper 10% control about $40Trillion dollars worth of liquid assets in addition to their huge advantage in total income. With the lower 90% owning 73% of the debt (.73 X 14.4T, or 10.5T) and 62% of the home real estate (.62 X 18T, or 11.6T). The difference is home equity. There is only a trillion in equity to add to the lower 90% wealth, in 2007; it’s not liquid, and it happened before the crash of the housing market, so it disappeared. The top 1% of earners owned 34.6% of the privately held wealth in 2007.
These days (March 2010) with the deflation of housing, I believe that the net worth of the US is about $50 Trillion. About $7T of that is in the equity of American homes and is not liquid. The financial wealth of America (net worth minus personal housing) is then about $43 T. From the below pie chart on the split of financial wealth, 1% would own about .43 X 43= about $18.5Trillion. The next 4% have 29% ($12.5T), the next 5%, (11%)$4.7T; the next 10%, (10%)$4.3T, with the bottom 80% owning 7% ($3T).http://sociology.ucsc.edu/whorulesamerica/power/wealth.html
For the exercise it is worthwhile to redo the money stack bar chart to show what is in reserve that is liquid enough to back people up in rough times. The new piles created will again be a per capita share for the income range shown.
This money stack bar chart uses fifties rather than tens to shrink the appearance of the piles by a factor of five, plus it moves the piles of financial wealth far into the background in the center of the chart with a shrinking of the corresponding human model reference to keep the piles on one page, and the result is a stronger pronouncement of what has been said. The rich have an overwhelming advantage over the poor,
In the 1% region the division of wealth will be assumed to be half to the .1% group and half to .9% group. The top .1% group would then have a financial wealth of $9.3Trillion or $83.8M/household. The .9% group, $9.2M /household. The next 4% $2.8M/household, the next 5%, $847K; the next 10% $387K and the bottom 80% $33.8K/household. We should make a rising distribution out of the lower 80% and 80-99% groups. This is done in Appendix 1, item 6. Use of that data together with the income data, already presented, allows construction of the new chart shown. (and this was true even in the 60s when their tax rate was 90%). The wealthy already have the funds to create more jobs and do not need any tax reductions for stimulus in this direction. Could they be holding onto their excesses waiting for the fire sale when the US is at its lowest point in the economy?
The Wealth and Income money stack bar chart simply shows that the rich end has between 5 times the annual income in back-up (80-99% people) and 10 times the annual income back-up (the top 1%) to support the top 20% of the people. With
subsistence shown in the budget table this extra wealth actually translates to 300 years of subsistence for the .1% group assuming they bury their wealth in the back yard and live off of it without earnings,80 years for the .9% people, 18 years for the 90% people and 6 years for the 80% people. There is a small
back-up below 65K income of $40K or less, decreasing to 0 at 0. This subsistence maintains the house, pays the property taxes and nicely budgets the corresponding life style, without the owners doing any work and while not even taking simple interest on the savings, It’s literally buried wealth in the back yard that’s dug up for use. I’d say it was a pirate’s fortune for the top 10%. Aaarrrhhh Matey!!! For the 80-100% group it seems to me that the best way to cover the poor end is to harness the economy with the appropriate regulations and then establish and hold a more productive lower 50% of the population with better wages, enough to buy a house without a college education. I would promote this in lieu of taxation for welfare. Then kids will grow up faster and make lives for themselves earlier, and become strong independent, free spirited Americans. Mom or Dad may stay home to keep up the nurture of the nest, so the kids are always supported with love, and the folks can keep them out of mischief. Welfare could dry up for the most part. People will be happier and drug use will go down, and hope will rise. This is better than raising taxes to support people with handouts for more than one reason. No government handling or working with this money (no government overhead, more efficient), and a much happier and productive lower 50%, bringing returns to industry from a positive work attitude that wouldn’t be there with handouts. So the Gross Domestic Product, GDP, a measure of a country’s economic health, should go up. So find them jobs, pay them a livable house owning wage, and watch the strength of America grow. What’s the alternative? Depression, Death or welfare? In this system it may be possible that low income illegal aliens would be identified more easily. The livable wage would not be for them and their government welfare could dry up. Then it’s a matter of finding businesses who work off book and pay cash wages, cheating IRS and work out a settlement. We cannot have an open ended source of poor people to take care of and a stable economy also. We need to take care of our own poor to get strong and then manage what we can for the poor people of the world. Some flexibility may be available to help some number of illegals after the legals are cared for.
If we export our “new” economic system, then other countries will be able to benefit from the plan in capitalistic sustainability that helps raise up their poor. This is especially needed in Mexico where the split in wealth is very high.
Let’s take a look at the flow of moneys in the economy and see if we can’t understand how to help things work better. I am not an economist, but then again, the best thinking of our economists (or lack of thinking and doing) got us to where we’re at, with over 50% of our population suffering economically (and big bail outs for crooks). Also I need to understand the economic model and be able to explain it easily. So I created one on the next page. If you’re an economist, I apologize for my lack of understanding of your various models and ask you to humor my simple common sense approach to the flow of money in the economy.
All workers rich and poor are in one box. Then I lump all industry and business capital in the top right box, including health care, banks, gas stations, Disneyland, restaurants, shops, malls, stores, all commodities, brokerages, all corporations etc. Then I have a government box that collects taxes and pays out on its spending, and borrows money, which debt is like Uncle Sam’s grave. (He’s almost finished, and so are we; that’s why I’m writing this book.)
The arrows between boxes would be things like wages & extra income, and work; goods and services and their cost in money transferred. There would be taxes and borrowed money, and government payments to their employees, to health care providers, to industry for government contracts, to people for pensions, Social Security, welfare and unemployment, etc. Then there are exports and imports, and investment. Now as a good measure, the arrows in and out of the government (excluding Uncle Sam’s shovel full) would exactly equalize. Then Sam would have an empty shovel and could sit down and take a rest. Even better, the inflow would be greater than the outflow so that Sam could get out of the grave and watch it be refilled, reducing the threat to Sam and us. And the best would be significant conversion of government workers into the private sector, reduction of the size of government, lowering the tax rate, while paying down the debt, and increasing the economy and flow of goods and services.
The interface between business and the workers is extremely important. The workers are the consumers of goods and services, and they consume a high percentage of what they get from the wage part of the income. If the lower
90% of workers wages increase, consumption goes up by about that increase. So the business box gets back what it feeds the worker’s box in wages. The workers spend it for goods and services. These lower 90% people’s standard of living goes up with the increase, and a constant demand for more goods and services is made. The part of the income that comes into the worker’s box from the government that is used to pay military and civil service salaries and pensions is balanced by the taxes paid (out of this box) to make this possible. The available goods and services money is the income minus the taxes. So if civil service and the military dried up and blew away and so did the taxes for them, the total for goods and services purchases should remain the same when the remaining private work force gets the tax money back (that the government workers would have spent), and because the same number are working for the peacetime part of the economy. When the ex-government employees are picked up, their salaries are the savings in taxes paid by that group , restoring everyone to their original pay,
but increasing the private sector productivity. So government taxes used to support their own workers do nothing to help the economy. The economy would be better if those workers were in the private sector, with the business machine paying their wages (with an equal tax reduction) and getting the additional benefit of their work.The
interaction of the business machine with the work force is something like the running of a steam locomotive. The business machine is the locomotive and the coal car. The workers are the coal shuttlers and need access to that coal (money) to stoke the engine with their work and make the sucker run. The speed of the train is the rate of production/sales of goods and services. If the locomotive cuts down the supply rate of the coal to the workers, then the engine will slow down. Greater access to coal means faster stoking of the burn box where power/speed is enabled. The profit is a percentage of that speed. A smart locomotive will give the stokers more access to the coal and even hire additional stokers so that it can develop max speed (and profit). Government workers are doing government stuff and not stoking the business engine. A better economy has them stoking the locomotive for higher company profit.
The money in the worker’s box for total income is either spent on goods and services, investment, or taxes. If they don’t buy something with it, and don’t give it to the government, then they have it left over to save and invest. Even simple savings is an investment. The investment money received by the business machine funds new loans, buys stock, builds capital, and transfers debt for that money over to companies who may use the money to pay down business debts that cost them more than what they will pay the investor. So the Business machine gets stronger.
Meanwhile the trading on the stock market is a big gambling process. The investment money in the stock market is paid to buy the stock requested so , after a commission, the investor gets shares sold that day by other investors of the company he wants, and the brokers get their commissions for buying and selling. Gambling on the market flow either raises or lowers the stock’s value that our investor just bought. Meanwhile company X is chugging along like usual filling its orders and paying its employees and responding to the demand for goods and services and not the whims of the “I’d rather be gambling than working” people playing the stock market that day. Whatever fake to the left, fake to the right, and punt play the market shows that day is just the market. No matter whether the market goes down or up they still own the same percentage of the company in share holdings. If the company’s cruising with good business it’s value truly did not change, nor did the holdings of the stock owners, who didn’t trade that day (even if the market said they took a loss). People lose money when they sell stock for good companies (stock worth more than the market price) and buy stock in a bad company that’s not worth it (a company with too much hot air, a company with a net worth divided by the number of shares equaling a lower value than what they paid that day). Although big gamblers (the rich in the market) can work to buy up controlling interest in good companies and go in and elect their own board and gut the company that may be worth more in parts than the whole divided by the number of shares outstanding. Such gamblers don’t care about the workers at this company or its overall success, they just see dollars to be had and do what they need to get them. That’s what bothers me. The US economy should not be vulnerable to these shrewd inhumane money grubbers, and it’s the government that should intervene to make it safe from this hostile behavior. This is where the rich boys play, and the stakes are high. My proposal to make capitalism responsive to all people is do-able, and it increases the market economy and perhaps its safety from the stock market.
If companies are required to retrain and find displaced personnel work, then Mr. Gut-man will lose his shirt playing this game with a good company that is carrying some weak parts. No more slice and dice for the quick buck, for these addicted money gluttons that like to roll in other people’s money, playing a heartless money game. Although I respect the desire of people to gamble, it should be side bets with other rich people and not interfere directly with workers’ lives. Anyone buying a business should be doing it to keep and improve the same, with respect for the work force. I think my ideas for a newer form of capitalism cover the needs of both ends of the economy, and shrink the government. To continue to lay off workers for the increased efficiencies of business and give all the proceeds to the rich causes depression at the low end and is not sustainable nor humane.
In summary, the economy of the U.S. is based upon free market capitalism and is out of balance and not so free. The process promotes the movement of income and wealth to one side, leaving the other side to continue to lower its standard of living. Trying to take money from the wealthier side in the form of taxes and pay it out to the poor side does not help the economy, as discussed above. That process produces a break even in the economy, with emotional discontent on all sides, and an increase in government overhead. It does help the poor; however, the money is better redistributed to the lower level workers through better wages, which come out of the business sector that is owned by the wealthy side. So if business focuses on sustaining itself with livable (house owning) wages for its employees, and at the start perhaps less profit for the owners, then that cost will be returned to the market in terms of a real increase in the purchase of goods and services which ups the economy and helps to restore this investment to the owners as a percentage of the growth of the market. This is partially enabled by the much higher propensity of the poor end to purchase goods and services. New dollars in their hands pump up the economy more than new dollars in the hands of the wealthy, as the wealthy have a lower propensity to purchase. In the meantime the government is way too fat and inefficient and does not work within itself to fix this inefficiency, as civil servants are on the dole (so to speak) as much as poor people in a welfare state. Using them to redistribute tax money and, indeed, collect tax money, is wasteful spending that would be obviated if the business sector paid a livable wage in the first place and welfare wasn’t required. So in addition to a return from the increase in the purchase of goods and services, brought on by better wages, less tax rate is
required (giving the rich another money boost)and less government bureaucracy
is needed in the process. So we may transfer the government workforce to the private sector a bit more in this process where another increase is accomplished in the economy when they are paid with private sector dollars, (which they use to
increase the purchase of goods and services in the overall economy). What is
needed to make this happen is a change in the self discipline of the rich who get stuck going after the quick buck, rather than nurturing their stable source of wealth, a thriving overall economy. When they recognize their power in this regard to drive the market with better wages (house buying wages), then the economy may soar and remain at a higher level with
If the wealthy do not move to increase these jobs, then they face greater taxation and the disappointment for all in a growing welfare state. Now welfare may be dealt out differently: more goods and services and less cash, perhaps.
Maybe the government can build a protection barrier between the poor and their demise that allows them to lift themselves up and compete while
getting basic support. Here are some thoughts. Homeless people need shelter, food, and clothing. One might build little personal sleeper units that shield out the elements and give the occupant a secure place to rest his head, while being inexpensive to build and easy to maintain. This would get human beings out of alleys and trash bins and into something built for them, that’s safer. They’d be located in cities and maybe loaned out each night, first come first serve. I’d build public shower/rest room facilities with some ratio in mind, and I’d provide meals.
I’d work with local organizations already in place. I’d create jobs: to clean out and hose out units in the morning, jobs in the kitchen, gofer jobs, toting food in, trash out. I’d set up connections to Goodwill and Salvation Army and give vouchers to the poor to shop for clothes. I’d provide a place to hang out. Addicts would get food, clothing, shelter, basic medical, and referral to
support groups, but no money. Family groups could have similar, but larger sleeper units with bunk beds. Maybe there would be areas where a more permanent community of homeless could live and have their personal sleeper unit for use so they wouldn’t have to stir in the
At the next level, maybe we have houses in the community where men and women can live separately as singles, 2 or 3 per bedroom, and share in the house work, with a decent rent. Food, clothing, rent and transportation would be covered by vouchers from this program. No cash benefit yet, no drinking or drug use, and a commitment to seek work daily would be the routine. Numerous private homes already exist like this for recovering addicts and alcoholics. A similar set-up could be implemented for the poor. Maybe there are small basic home units that families can rent or buy into with program vouchers at this level.
A lot of these type units could be new construction using green principles. See the floor plan above. It is less than 500sqft, like a remote cabin. It is a place where families may reside while looking for work or while in retraining. The program would cover their rent, utilities, food, basic health care, transportation and clothing with vouchers and provide the balance in cash of their monthly allotment for their other needs. Families could then pay for their laundry and other purchases from the cash they receive. Addicts/alcoholics would be removed from this environment and dealt with as homeless singles with no cash allowance, or in single recovery homes, if they stayed clean and sober. For the most part, however, the economy would be strengthened with wages so that a lower middle class would have the same buying power as they did in the 60s, but with much less taxation of the rich than 90%. I believe we can divine such an economy that works for everyone. Let’s take a look at the Federal budget, government revenues, government spending, and Social Security and Health Care spending, and see what can be made of it, while we lie on the sand on North Shore, Oahu.