I will say, however, that I’d be open to a “Medicare-for-all” type solution to health care with supplemental private insurance for those who can afford it.  The idea being that Medicare would cover anyone unable to afford private insurance and/or people hit with a freak illness/condition that tends to be uber-expensive and would cause a private insurance company to drop a person (or not pick them up in the first place).  Over the long haul, people who could afford supplemental private insurance would probably receive better care, but I don’t think we’d have a problem with that so long as EVERYONE had minimum coverage and could get whatever medical treatment they needed that society had paid for.  This isn’t altogether different from the food stamp program.  People typically are given enough to pick up the essentials (milk, bread, eggs, etc.) at their local grocery store and avoid starvation but not near enough to regularly dine at fine restaurants.   

Why can’t the gubb­mint buy up dis­tressed prop­erty, raze the crappy ranch-​​style home on it, and turn it back into the farm­land from whence it came? Or a play­ground, or just green space?

This is hardly a new idea. Robert Moses did that in New York City, and Reginald Thomson did it in Seattle. When Mule Rider gets up in arms about the evils of central planning, these are, I’m sure, the sorts of examples that come to mind.

That’s not to say that they’re always failures. The renaissance of the Embarcadero in San Francisco is an unqualified success. So was Portland, Oregon’s waterfront revival precipitated by its own freeway removal. But it seems that the results have been uneven at best.

We’re already back to a return of at least 25% to 35% of the ini­tial $1 tril­lion invest­ment, and that’s just in the first year. Any invest­ment that pays this kind of return in just the first year is an invest­ment that any busi­ness owner would be dying to make.

Ouch. This is truly awful analysis. An ROI of 25% means that at the end you have 125% of what you started with. What you described instead is having 25% of what you started with. That’s an ROI of –75%, not +25%. Any investment that pays that kind of return in the first year either needs to do a hell of a lot better in subsequent years, or it’s an investment that will turn a business owner into a former business owner. “Dying”, at least, was an accurate word to use.

I left this alone in part to leave breathing room for Mule, and in part because I’ve been at a security conference and haven’t had much free time. But here’s my take on your proposals.

I agree with those who say that a shortened workweek would be a farce for all salaried employees. Mandating an across-the-board increase in pay of 14% would simply make American employees less competitive than their counterparts in other countries. Applying this level of pressure on employers, then, would serve to make offshoring more attractive. Best case, you get some increase in employment, but it certainly wouldn’t be the instant 14% you allege.

Unfortunately, because of that one lynchpin, the rest of your argument falls apart. A smaller increase in employment, while useful, wouldn’t generate the level of tax revenues you projected.

Removing the age requirement for Medicare is fine, and removing the cap on contributions may well cover the increased number of people. The good news is that doubling the number of people covered wouldn’t translate to doubling the amount of money needed, since younger people need less care. Regardless, the impact on employment is not likely to be that great unless the bulk of employers become unwilling to provide health coverage themselves. Certainly some employers would drop coverage, an action that for employees would likely eat up the 14% you mentioned above, so for those employers it would perhaps be a wash in the big picture.

Lowering the Social Security collection age would certainly free up some jobs, probably amounting to a drop of about a point in U3. It comes at a significant increase in cost, one that I am not at all convinced would be covered by removing the contribution cap. Unlike Medicare, doubling the number of recipients does double the amount of money the program costs. I’ll have to do some digging in the census data to get a sense of just how many people this would add, but the big dropoffs start at about age 70, so going from 65 to 60 is probably going to add around 30% to the number of recipients (purely an educated guess).

With all of those criticisms, I still believe it’s worth thinking outside the box, and you did that here.

Does Wal-Mart actually save anyone money?  When you run in to get a gallon of milk and a loaf of bread and you purchase a new t-shirt, some DVDs on sale, and a set of sheets cause they’re just too dang cute, do you really save money?

On tax credits —

Mule is right, we need to have substantial incentive for companies to hire more workers when we ask them to cut back the hours of existing workers while maintaining the same take-home pay.

Let’s say the goal is to hire twenty million new workers. Let’s give a $50,000 tax credit to each company that hires a new worker under this program. Twenty million workers times $50,000 each is a $1 trillion incentive program.

America can do that. We’ve seen two programs on that scale in the last five years. Neither of them produced twenty million new jobs. This one would.

How can we possibly pay for that? Here are some further numbers.

I chose $50,000 as a sort of average salary. The actual tax credit should be equal to the annual gross pay of the new employee. As I said in a comment above (#13), around 13% to 15% (I forget exactly) of employee wages is paid back to the federal government in the form of payroll taxes. Right away, that money comes back.

Another part of the income of these new employees will be returned in the form of federal income tax. How much comes back depends on how much the workers are paid, their number of deductions, and so on. Let’s conservatively say an additional 10%.

More will come into federal buckets from excise taxes, tobacco taxes, gas taxes, and so on, because the new employees will spend their pay.

We’re already back to a return of at least 25% to 35% of the initial $1 trillion investment, and that’s just in the first year. Any investment that pays this kind of return in just the first year is an investment that any business owner would be dying to make. Conservatives keep saying we need to run America like a business.

Additionally, state and local governments would have a windfall of additional sales taxes, property taxes, gas and cigarette taxes, income taxes, etc., etc. It would be hard to see less than an immediate 50% return directly to the public sector, in the first year alone.

As I said, most of the additional wages of these twenty million new workers would be spent by them. We’re talking about an additional $1 trillion of economic activity (as I said, the tax credit matches the take-home pay of new employees, up to $50,000 each, which means a $1 trillion stimulus equates to at least $1 trillion in additional wages). This means more haircuts, more trips to the dentist, more dinners out, more Cheerios, more clothes purchased, to the tune of perhaps $700 billion (I subtracted out the taxes to get to take home pay).

Plus, the employers got these new employees nearly free, which means the cost of their increased production was drastically reduced. They’d be able to buy more raw materials, which means more sales taxes and still more economic activity, and still more people paid to do it, which means more income taxes and gas taxes and excise taxes and on and on.

Stimulus spending works, when it is actually spent on jobs. The spending pays for itself, very quickly.

Mule, thanks again for your response!

Peo­ple who are strictly salaried, no mat­ter how many hours they
work, and I sus­pect this makes up a fairly big por­tion of the total,
will just keep on truck­ing as it will not affect them at all .

This is why federal law needs to take actual working hours into account. You’re right that the real work week already is far more than 40 hours. I wrote that kind of tongue-in-cheek. Even for hourly workers, the average week tends to have increased dramatically over the last decade, partly because workers are taking 2 or 3 or even 4 part-time jobs.

The economy needs to improve so this can be dealt with reasonably.

Many
employ­ees who are hourly and tend to fill up their entire 40-​​hour
week being busy and/​or doing some­thing pro­duc­tive will likely not
have their hours cut, as the employer would find it ben­e­fi­cial to
just pay 5 hours of over­time instead of hir­ing some­one else.

This is possible, and it’s why there needs to be substantial tax incentives for actually hiring people. I’ll get to that.

 You’d
have to have some pretty steep tax incen­tives to alter their deci­sion
on that, and then you get into inef­fi­cien­cies in the labor mar­ket
that wind up a net loser to soci­ety. 

Not necessarily. In fact, I suggest that this would not be true. We had a better economy before the collapse of 2007–2008, when there were more people employed. Employing more people shouldn’t lead to a worse economy. It would mean more consumers, more demand, more tax revenue. That’s not necessarily less efficient, because it also alows (even demands) more production.

Lastly, there are all the peo­ple
who “work” 40 hours a week.  By that, I mean there’s enough slack time
in what they do that they could get their job done, if need be, in only
30–35 hours a week.  So these peo­ple will now just get off work at 3:30
instead of 4:30, forc­ing them to be more effi­cient in get­ting things
done in their work week. 

That might have been true a decade ago, but American workers are already pushing the limits of productivity. Employers are getting more work, more production, out of American workers than they ever have before. With all the millions of layoffs in the last few years after the crash, workers have been forced to do even more. Many workers are complaining that they are now doing the work of two or three or even four people. I can’t imagine the average worker being able to do what they do now in less hours.

I’ll make a separate comment to talk about tax incentives.

shortchain,

it seems to me that, if pro­duc­tiv­ity increases, doesn’t that mean
that human­ity can pro­duce enough for every­body with­out every­body
hav­ing to work?

That depends on what happens to that increased productivity.

Since WW2, the productivity of the American worker has steadily increased. Until the 1980’s, the income of the American worker pretty much kept place with productivity increases. This makes sense; workers should benefit from their increased productivity.

Reagan slashed taxes for the immensely wealthy. Since the 1980’s, income for American workers pretty much flatlined. Income (and wealth acquisition) for the top 2% exploded.

Since the 1990’s, over 90% of the increase in American wealth has gone to the top 1%.

Currently, the 400 wealthiest Americans own more than the bottom 150 million combined.

The five wealthiest members of the Walton family (who own Wal-Mart) — five of them — are worth more that the bottom 30% of Americans combined.

The wealth generated by increases in productivity is going to the American aristocracy, just as Thomas Jefferson and Abraham Lincoln and Grover Cleavland warned it might. The vehicle for this transfer of wealth is the tax structure, which allows the very wealthy to accumulate pretty much unlimited wealth.

The programs I suggest in my article can be easily paid for. We just need to tax the people who have taken most of America, and then bought politicians to rewrite the tax code to let them take even more.

Monotreme,
I can answer question 1).  It costs too much.

I don’t know how too answer your second question — but it seems to me that, if productivity increases, doesn’t that mean that humanity can produce enough for everybody without everybody having to work?  Of course, that assumes that the goal is not for everyone to simply make their own income as large as possible and to hell with everyone else.

Mono,

I like your idea #1. Cool thought.

As for #2 — the fact of slowing population growth was factored into the restructuring of Social Security back in the 1980s. Ronald Reagan and Tip O’Neill worked out a solution to save Social Security. (I know you know most of this history, maybe all of it, but some of our readers might not, so please bear with me.)

Until the 80’s, SocSec was run as a pay-as-you-go system, where current workers would pay for the retirement expenses of current retirees. This was necessary because SecSec has only been around since the 1930’s, and the first beneficiaries were already retired, and hadn’t paid in to the system. Pay-as-you-go also worked, because there were far more young people paying in than retired people drawing out.

It was realized, though, in the 70s and 80s that population growth was slowing, though the Baby Boomers would move through the age cohorts like a swallowed elephant through a snake. When they started retiring long about 2010 or so, there would not be enough people paying in to support the Boomers’ retirement benefits. So starting in the mid-80’s, the Social Security tax was increased markedly, to build up a surplus.

Currently (if I remember right) both employers and employees pay about 6.5% of income (that makes a total of 13% — maybe I’m a percent or two off) up to a maximum income of $106,000 or so. Far less than that was needed to pay for current retirees. The rest is used to buy government bonds, which are safely socked away until the Boomers retire.

We are now into the era where Boomers are starting to retire. The Social Security trustees will cash in those bonds, and that will pay the excess amount that Boomer retirees need, over and above what current workers are paying in. This means that the Trust Fund is being drawn down (as it was designed to do) and will be entirely emptied (as it was designed to do) around 2035 or 2040 or so. By that time, virtually all of the Boomers will have died off.

At that time, the Social Security FICA tax can be reduced again, and Social Security can go back to being the pay-as-you-go plan it was designed to be.

The projections made back in the 1980’s were remarkably accurate as far as how much money was going to be needed, and when it would be needed. Thirty or forty year on, it needs some tweaking, but not very much. All we really have to do is to get rid of the upper cap on contributions — make all income subject to the FICA tax. That will not only pay for the relatively small shortfall we’ve got due to changing circumstances, but it will keep Social Security solvent forever.

It’s true that my suggestion for lowering the retirement age will put additional demands on SocSec. However, people retiring earlier means their initial payments will be lower, since payouts are partly based on how much you earned in your final years before retirement. And if the ideas I presented result in greater employment (as I think they would), that means there will be more people paying in to help cover the additional current costs.

I’d need someone with better actuarial skills than me to help calculate whether the lowered payouts and increased contributions would cover the additional retirees. There may be some further tweaking needed, but there are a lot of ways that can happen. It’s a conversation perhaps for another time, if anyone seriously considers proposals such as this.