A LITTLE LENGTHY, BUT THIS IS HOW I WOULD BRING BACK "THE AMERICAN DREAM"
An interesting debate. I have talked about the issues with income inequality and on balance agree with Dalio that Capitalism has left a lot of people behind and that "The American Dream" is less attainable than it was in the past.
It is hard to argue that the middle class is still intact. I think their are various secular forces at work that have caused this to happen. The biggest by far is the rapid ascent of technological expertise that have eliminated many jobs across all demographics and kept a lid on any wage growth.
One only has to look at the floor of the New York Stock Exchange as a great example of this. In the late 90s when I started working on "The Floor" there were thousands of people working down there. There were brokers trading in the "crowds" and for the most part if you wanted to buy or sell a stock that was more or less the only venue that was available. Because of all that trading, there were numerous other jobs created: People running tickets around the floor to other booths, people shining shoes outside the floor, employees at the "luncheon club" and various small businesses around the NYSE.
Then came technology. Over the 2010s, different technological innovations changed the entire look of "The Floor." Now there were multiple venues (most electronic) where people could trade stocks. Spreads tightened in the markets, leading to less profits for "Traders" on the floor. If one looks at the Floor of the NYSE today, it is a ghost town. CNBC still broadcasts from down there, but behind them, there are almost 0 brokers. It is more like a Museum than a market. Thousands of jobs were eliminated, never to come back. That technology has spread to other areas of Wall Street and eliminated more jobs on trading desks.
I tell the story of the NYSE to show one example of how technological advances wiped out an industry. But, like most things it does not operate in a vacuum. So it also killed Shoe-Shining, small restaurants and various other derivative industries.
That is the problem, but what is the solution?
The Democrats seem to want the government to simply remedy the situation by wiping out student loan debt, making college free, taxing the hell out of the rich and making healthcare free for everyone. I may be wrong in that assessment but it seems like their litmus test right now.
The GOP seems to think that it will fix itself with less regulation, lower taxes and free wielding entrepreneurial instincts, and corporations using lower tax rates to invest in the people and factories.
What I cannot understand is why their can't be some kind of private / public partnership and compromise. The quickest way to bring back the American Dream in my opinion, is through appropriate education and taking better care of the health of our people.
The Democratic plans for the most part are non-starters. First of all, the government balance sheets both Federal and State / Local are messes. Blame it on Entitlements, Defense Spending, Pension Promises that can't be met and a host of other issues. But nevertheless, they are a mess so you can't simply spend your way out of it. Second, taxing the rich is a nice soundbite but it is a speck of revenue compared to expenditures on government programs.
It is clear that the GOP tax cut for corporations did not have its desired effect, unless the desire was simply to drive up the levels of the Dow Jones Industrial Average and S&P 500. Companies bought $1 Trillion of their own stocks instead of spending that money on people or plants. Other companies repatriated their cash and bought other companies for "synergies." The parlance of "synergies" simply means - fire a bunch of people that have duplicative jobs. Does a company need two people running the mailroom? Does a company need two people in any other operational position? Probably not. So you can fire one and expand your operating margins assuming you don't lose too much revenue. So in many ways this tax cut really hurt the ordinary American. And just for the total insult, they kept the carried interest loophole in place.
Why not make compromises on most of these issues to attempt to rebuild the middle class and at least give people hope the American Dream exists, instead of trying to make everyone hate each other?
Raise the corporate tax back to 27-28%. It still much lower than the 35% it was two years ago but brings in some much needed revenue.
Work with Facebook, Google, Amazon, Apple, Microsoft and others to set up real schooling for the jobs of the future. Instead of bashing them every day in the press, encourage them to use their cash hoards to work with the government to get people in position for higher paying jobs, especially in lower income areas. Who knows more about the future of technology and jobs than these companies?
Cut Defense Spending. It is way out of whack in my opinion with a world where we are pulling back from defending everyone (which I agree with)
Raise the Social Security age to 70. Life expectancy, while dipping slightly recently, has increased over the years, so why not make this entitlement in line with reality?
Cut pensions. Pensions funds in a word are screwed. They have factored in 6-7% hurdle rates to meet their obligations. Ain't going to happen. So now they have moved out the risk curve into private equity which is less liquid and more opaque.
Instead of trying to make universal healthcare, why not focus on some of the problems causing the issues on the healthcare system. Opiates and morbid obesity are tow that come to mind. Can't we allocate resources to combat those before it is too late instead of focusing on the operation afterwards? Bring back physical education in schools.
A mandatory year of service for people at 18 to fix our infrastructure and build morale.
Term Limits for all of Congress so that these representatives actually work to do something productive then simply try to get reelected.
Legalize marijuana and other drugs. Regulate and tax. Use proceeds to focus on education and recovery.
In conclusion, I believe the system doesn't work for many people. But, it will not get better if we simply spend our days beating the hell out of each other on Social Media. We need to make sacrifices. Everything from accepting that our pensions need to be cut, that social security needs to be extended, that corporate tax rates are too low and that we can't simply spend our way out it using some ridiculous MMT idea.
There was a time when our citizens stormed beaches together to save our American Dream. I think we can make sacrifices as well that aren't the ultimate sacrifice.