Unemployment

Why are higher wages a Win-Win Solution?

 

Everyone knows that having money enables us to cover our needs and live in a comfortable manner, however the less we earn, the higher prices go up, the more taxes we pay and the more wealth is accumulated in the hands of a few means that the less opportunities exist to change the way the economic model works now. But, we have to learn this has not always been ‘the way the world works.’

Let’s take the most usual example. The growing rate of income inequality in the United States of America and around the globe has its most recent roots in 1978 when the taxation to the rich was diminished and the financial industry deregulation, enabling the infamous 1% to grow richer and richer to the exorbitant data that we find today wherein 400 individuals may hold half of the wealth of the entire Nation. The problem in itself is not their wealth, but how it is used – meaning, it’s not being reinvested back into the economy in ways that it reaches the population – it mostly goes to bailouts, lobbying, political campaigns or other forms of capital investment that are not taxable. From my perspective, this ability for the corporate powers to define what the government does is what the ideal of ‘Free Market’ becomes when government does not regulate the greatest casinos on Earth – Wall Street – and exorbitant amounts of invisible money are able to be created out of thin air, out of bidding on the actual assets and work that real people do, which means that this world is in reverse: human labor – whichever form it is – has been ousted from the benefits of any form of ‘economic efficiency’ or ‘growing economy’ in GDP numbers, and instead, the middle and working class have been tied to a noose where instruments used for further polarization of society, such as inflation along with a stagnant rate of wages for over 35 years have led to the ongoing crisis since 2008 worldwide: a few people having all the money they want and the rest having less and less power of acquisition, which results in an ever straining bubble about to burst when realizing that even those with great wealth depend on those that helped create their great wealth in the first place: the middle class that is now being eradicated to become part of the poverty lines.

As Nick Hanauer nailed it: Costumers are the Real Job Creators and explains how the middle class expenditure is what has made companies like his own the extremely profitable business it is. Why? Because the more people can afford to buy, the more businesses win – therefore, the less people can afford buying products = the less profit great business owners have. It is obvious that limitations in one side of the society inevitably catch up on the wealthy rest too, if those millions do not generate economic activity.

 

The problem with wealth is that it’s not reintegrated back to society, it’s mostly spent in some other forms of investments, are equally ‘bubbly’ goods such as gold, hedge funds, art or financing government members to deregulate the markets, which only continues to widen inequality.

When looking at the problem and tracing the point back to how individuals go from middle class to poverty, one can see that there has been a problem overlooked when large corporations take the jobs of small businesses, resulting in going-out-of-business  which means jobs are lost; when technology reduces the amount of human labor required, when having no ‘good job opportunities’ forces underemployment and lower wages because we have collectively accepted that ‘it’s best to have at least a shitty job with bad wages than nothing,’ which in turn makes the idea of ‘higher education being the key to live well’ another planned obsolescence tactic to rather generate debt in college people so that their working money – if they do happen to find a good job – is able to be slashed In half to pay for an education that most likely won’t get people having the job that was expected to give three to four times more than what they earn on a yearly basis, plus paying taxes that won’t go back in social benefits. This is the current straining reality: the problem is the structure of how money is being used, but also the complacency and ignorance to accept things ‘how they are’ instead of realizing that: this is Not the way life’s meant to be, this is Not the way economies have always operated. We have reached the bottom and we can only go that far.

 

income-inequality-living income

 

What happens when wages are not good enough?

Besides growing discontent toward governments, corporations through protests and worker’s strikes, some of the immediate coping mechanisms that newly unemployed people do is saturate credit cards to pay for basic needs like food/services/transportation and education, take low-end jobs or resort to criminal activities, resulting in worse consequences at a collective level. Others went through the expectancy of ‘earning more money’ through refinancing their houses – which created the big bubble that burst in 2008 – leaving many in a declared state of poverty and bankruptcy, working two or three jobs to make ends meet – and sometimes not even that is enough. Using up savings or retirement funds for healthcare bills became a way to care for the essentials, leaving many homeless people living in tent cities while millions of houses are left empty and owned by banks that essentially propitiate debt to make profit… and we have fallen for it.

This is obviously a stressful and unacceptable situation considering that personal taxes paid to the IRS are not directly benefiting people with any form of unemployment plans – which have been recently cut for millions of Americans – as well as the 40 billion cut in food stamps over a decade – or creating of ‘new jobs’ since we know that the problem is this gaping inequality stemming from the stagnation of wealth in the hands of a few and having the rest having to cope with inflation, debt, rising health costs, topped credit cards, gigantic mortgage and college debts that seem insurmountable since wages have not gone up at all since then 1970’s.

On top of that, paying taxes without getting any support back is a slap in the face considering that:

“The US is now locked into a system whereby the government issues bonds to generate the funds for their operations, bonds that are backed up by the taxation of the public’s own labor. […] the most outrageous fact of all is that not one cent of the money collected by the income tax goes toward payment of government services. This startling admission was confirmed by the Private Sector Survey on Cost Control, better known as the Grace Commission, a Congressional investigation that was appointed by President Reagan in 1982 and concluded:

“With two thirds of everyone’s personal income taxes wasted or not collected, 100 percent of what is collected is absorbed solely by interest on the federal debt and by federal government contributions to transfer payments. In other words, all individual income tax revenues are gone before one nickel is spent on the services [that] taxpayers expect from their government.”

  – James Corbett

 

End the Torment with Living Income Guaranteed

 

Solutions

The Debt hole is able to be stopped first of all by stopping the need to go into debt and because right now it might be impossible to ‘create jobs’ from out of thin air – since there’s no economic flow – a first and necessary input that generates a new flow has to be created: to provide a Living Income to people that currently are unemployed and give Higher Wages to those that do work. This is why we support the movement that is gaining momentum in the US to raise wages from the average $7.25 to 15 dollars or more, as it is well know that people that earn higher wages become loyal workers, enhance their dedication and working skills with the general incentive of gaining more money, which means a higher quality living standard, better quality products, better education as well as considering that higher power of acquisition is the best cure to an anemic economy. This will in turn not only truly generate ‘jobs’ but a better quality jobs in new ventures that will go beyond the usual retail and service industry, which currently has the most job placements and the least pay, keeping a stagnant society designed to manufacture, serve with no use of our true skills and potential that we all have as human beings.

Therefore the real capital that must be recognized is ourselves: the human capital, understanding that any speculative bubble will eventually burst as it should, since it was never real in the first place and instead, focus on supporting the ‘middle class’ with better wages, which in turn will create better job opportunities and eradicate poverty by providing a Living Income to everyone that so requires it.

This will also remove the need to create ‘extra funds’ – and their eventual cuts in the emergency of further ‘budget crisis’ – for unemployment or pension plans, since the provision of a Living Income is No Longer linked to Personal Income Tax, but through other means that we suggest are used to fund the Living Income, such as using the money that goes to military budget, foreign aid, nationalizing companies that profit from the use and sales of natural resources and value added tax, which will in turn create a system that stands by its own spending-movement profit rather than taxing the poor to siphon those funds to pay governmental debts.

 

The Living Income Guaranteed model will not only enable the provision of a basic income or living income in a sustainable manner, but it will also enable the following changes in the economy of any nation that implements it:

 

Suggested Documentaries:

 

Living Income Guaranteed - Eradicating Poverty

We know the extent of poverty in the world yet we keep pretending that our picture perfect life is all that exists – would we ignore the neglect of life if it was at our doorstep?
We can change this picture with a
Living Income Guaranteed by Equal Life Foundation
www.livingincome.me

artwork by Matti Freeman