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Mike Kaurich

Nothing New Under The Sun … Except A Ray of Hope

By | #SaveBmore, External Monologue | 5 Comments

This past week or so, the ChangeEngine crew has been debating how to “save” Baltimore. This city, like many others, faces severe challenges, from crippling poverty to crumbling public schools to gun violence and blight. Many of these issues go far beyond the city itself, echoing much larger social and economic trends. The debate rages on as to what can free us from our plight — more bike lanes, get rid of the Baltimore Development Corporation, overhaul the tax structure with a hand grenade. But the truth is that the larger trends are difficult for one individual and maybe even once city to overcome, and that none of them are new.

America’s cities have been afflicted with poverty since the start of the industrialized age. This country has gone through at least four cycles of extreme inequality in that time. Rockefeller and the robber barons, their wealth adjusted for inflation, are still to this day the richest individuals that ever lived. They had more money than the Pharaohs of Egypt, Britain’s Royal Family, and many other historical figures most would consider extraordinarily wealthy and powerful. To give an idea of the wealth these men had: in 1893 the economy crashed, and J.P. Morgan bailed out the government. That’s right — a private individual bailed out the U.S. government. For all the spectacular wealth amassed by private individuals before the most recent financial crisis, it was the government that came to the rescue of J.P. Morgan Chase — the banking leviathan founded by J.P. Morgan himself. The roaring twenties caused inequality to balloon up once again, and the stock market crash of 1929 created another great glut of despair. We are at a similar point now. Not to get all Battle­star Galactica up in here, but “All this has happened before, and all of it will happen again.”

Or perhaps not. It’s true that we are approaching Gilded Age levels of inequality. Our social and economic system has created an enormous disparity in wealth not only between individuals, but also between local municipalities and cities. While “world cities” like San Francisco, Chicago, D.C., New York, and Boston have transformed themselves, rising out of seemingly irreversible chaos and decline in the 1970s and 1980s, others like Detroit, Cleveland, New Orleans, and of course Baltimore are struggling to attract new residents and find employment for those that remain, further perpetuating the crisis. But just because a cycle exists, doesn’t mean we can’t break it. In fact, that same dire history might show the very path to salvation. All hope is not lost. Our wretched circumstances may be just what we need to wake us from our slumber.

The economic crash of 1893 helped galvanize the first progressive movement. The 16th, 17th and 18th amendments were passed, allowing for the income tax, direct election of senators, and women’s right to vote. Democracy and equality rose from the excesses and collapse of the Gilded Age. Since we are now in an age quite similar — hell I will go as far to call it the Second Gilded Age — maybe we should take some cues from the past. We need to demand more accountability and transparency from our local governments, change our electoral laws so a person with only 25 percent of the vote cannot become the defacto winner of a council seat, and, most of all, pressure the federal government to live up to their end of the bargain and allow programs like Social Security to be extended or radically changed. We need to leverage the power of our online and offline social networks to rally around causes and create the transformative change that has so long eluded us.

True, some of these issues are bigger than Baltimore and need bigger solutions. But many of those larger solutions can start right here at home. More democracy, accountability and participation can save Baltimore, and might just save us all.

IMAGE CREDIT. [Wikimedia Commons].

How Free Money Can Save Us All

By | ChangeEngine, External Monologue | 3 Comments

While Baltimore attempts to ban the destitute from its streets and those who rely on food stamps to meet their basic needs face cuts, a radical experiment in poverty reduction is being contemplated an ocean away. In Switzerland, one of the world’s richest nations, voters will soon go to the polls to decide whether every Swiss citizen should receive a “basic income.” Under its terms, the only thing a Swiss citizen over the age of 18 would need to receive around $1,000 U.S. a month is a pulse. Yes, you read that correctly. You only need to be alive, merely exist, and you get $1,000 cash.

This idea has sparked a great deal of debate here in the states, setting the tongues of the chattering classes a-wagging with equal parts indignation and inspiration. Many dismiss the idea as impractical, madness. But the question that needs to be asked is, if the Swiss can do it, why can’t America — the richest and most powerful country in human history? And whether, given the way our economic system works now, we might not be the ones who are crazy.

Meet Jake

But don’t we already have welfare for those in need? Work harder and you will get somewhere, goes the American mantra. Well, lets take a hard look at the welfare system … Meet Jake, a 25 year old male with no dependents. Jake has a job working at Walmart. Luckily enough, he gets to work 40 hours a week at minimum wage. Unlike some of his colleagues, he earns $13,920 a year pre-tax in the state of Maryland. Between the current benefit programs, which include SNAP (Supplemental Nutrition Assistance Program), EITC (Earned Income Tax Credit), and Section 8 housing credits, Jake receives about $590 a month. If Jake wasn’t eligible for Medicaid, which in Maryland he would be, another $180 a month from the Affordable Care Act would come his way to get health insurance. Jake would only get a few hundred bucks extra under the Basic Income plan. And a large number of these programs are means-tested; creating a perverse incentive for those most in need — the less poor you get, however incrementally, the worse off you are. By supplying a basic income, work would actually pay off for Jake, and he would have a reason to strive for better pay and advancement.

But the problem of welfare isn’t just the amount of money but the message that’s sent in how it’s distributed. Stores that accept SNAP benefits have large signs stating what they can and can’t be used for. No hot food, no prepared food, no booze or tobacco. So on SNAP Jake can’t head to the deli counter and get a hoagie to-go or some of Eddie’s Mac and Cheese to share with his kids for dinner. The system assumes that the poorer you are the worse your choices will be, which is being proven wrong in many countries around the globe. The fact of the matter is that cash payments, with little to no strings attached, work. A majority of recipients in such programs spend the money on fixing their house, better food, expanding or creating small businesses, and their education.

Try to do any of this under the current regime, and Jake will get a rude awakening. Section 8 housing vouchers, while they are supposed to be universally accepted, are often refused by landlords. That is assuming you are getting them in the first place because the process for those benefits can take months or years. SNAP benefits need to be reapplied for every six months and don’t you forget! Because if you do you are going to spend at minimum a whole day down at the welfare office getting it straightened out. How is someone working hourly on minimum wage, who has kids or has to go to school supposed to do this? The amount of red tape is astounding. Think of how much energy would be saved — and unleashed — by simply replacing all of this with a basic income.

Free Money and The Protestant Ethic

“But it is still free money and why would you work if you get free money? We will all get lazy!” yells my inner economist. But what if I told you that wasn’t the case? When Canada ran an experiment in the town of Minocome, productivity and work rates only dropped by 1 percent on average. The groups that dropped the most were new mothers and teenagers supporting their families. The mothers spent more time with their children and the teens spent time in school. That sounds like a win-win to me. Our friend Jake could go back to school part-time to become a carpenter, finish his GED, or gain other skills. American productivity levels are off the charts, while the share of profits for most Americans has declined. It is about time the American Worker got their fair cut of the pie.

The best part is that a basic income is financially doable. All we need is the political will. Jake would no longer have to cut through red tape to try to make a better life for himself. Every American would get a bigger cut of the productivity they already put into the system. The cash payouts would empower renters to become homeowners, single mothers to spend more time with their children, and give young adults in this struggling economy the security to start their own business. A basic income could be the fuel that allows America to thrive in the 21st century.

IMAGE CREDIT. Wikimedia Commons.