The Bigger Picture Part II

In part one (just below) I showed how middle class and lower class Americans have suffered huge decreases in wealth and incomes, especially in the last 35 years, while upper class Americans have made great gains.  This has particularly affected African-Americans whose family life has disintegrated, trapping them in inner cities.  To add to the misery of inner-city life, in cities like Detroit, not only has there been white flight, but those African-Americans who had somehow become successful have also moved out.

Black murder-rates have now reached 10X those of other races, and blacks now account for 85% of all inter-racial crimes. Since almost all victims of black murders are blacks themselves, it behooves all races to try to work together to reverse these trends, even if radical measures are necessary

I identified four areas that can be worked on that are the sources of the problem:

 1. the welfare state led to the disintegration of the African-American family.

2. low and unskilled factory jobs have disappeared in inner cities.

3. the wholesale decline of private sector unions.

4. income tax rates have been cut drastically since 1981 when the highest rate was 70%.

Some solutions will anger liberals; some will anger conservatives.  Cooperation and compromise are necessary before our society disintegrates completely, even though solutions some will call ‘radical’ are necessary.

 The Welfare State

Since AFDC Welfare came into vogue with President Johnson’s Great Society, the number of black children  born out-of-wedlock has reached almost 75%, whereas before AFDC, the black rate was the same as the white rate, leaving us with a society in which millions of fatherless, young black men roam.

The only solution to this problem is to leave AFDC in place for those now receiving it, but end it for new recipients; and replace it with emergency assistance for those needing temporary help, possibly for a period of up to six months, which cannot be repeated for at least three years.

Inner-City Factory Jobs

The federal government should not only subsidize, but guarantee investment in factories built by entrepreneurs in inner cities.   The government should not only establish tariff protection for products of these factories, but guarantee product sales for the early years of production.  We subsidize farmers, and I can remember when cereal grains were burned, potatoes were dyed blue, and milk was dumped.

Why not subsidize an activity that can help restore lost neighborhoods and lost souls?

Restore the Health of Private Sector Unions

I chaffed when I was forced to join a union after I landed my first good job, and later, as an owner of a business, I fought against any attempt at unionization.   It is only recently that I have come to understand the state of income and wealth disparity in this country and to understand the role of union decline in furthering this disparity.

Private-sector union membership has fallen from a peak of 35% of the total private industry labor force in 1950 to a little over 6% today.  There can be no doubt that the decline in factory wages is somewhat keyed to the decline of unions.

Private-sector unionization must be encouraged by federal legislation outlawing “right-to-work” laws as they affect unionization of non-public workers.  “Right-to-work” laws should only be applied to public-sector workers.  This means that “union shops” would be legal in all states (they are illegal in 23 states), and new workers would be required to join and support the existing union.

The Tax Code

The only direct way to ameliorate income and wealth disparities is through income and estate taxes.  I know that some will say that increasing taxes will depress economic activity, but I believe that that is only true for taxes on investment income, which I would leave alone.  I wish that certain tax shelters and tax loopholes could be closed, because the upper 1% of income earners actually pay less taxes than the next lower earnings group, however that is a complex subject beyond the scope of this article.

The current top income tax rate on incomes over $400,000 is 39.6%, a recent increase from 35%.  In 1981, before the Reagan tax cuts, the top rate was 70%. 

I believe that a new top rate of 70% should be applied to incomes exceeding $5,000,000 per year.

The current estate tax is 40% on estates exceeding $5,250,000.  Because of the devastating effect high estate taxes have on family-run farms and small businesses, I would leave this system alone.

 

Note:  All statistics presented in this and in my preceding article are from recognized sources that were stated in previous articles on these subjects in this blog.