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Chapter 9: Wealth and Life Style


Economics is too important a field to be left to economists. I have maintained throughout Politics for Better or Worse that political science is wherever influence and power are in motion. Economics deals with the production and distribution of wealth (to take one of its more popular definitions) and to understand general politics without understanding the gaining, spending, and transformation of wealth is impossible.* To propose policies for a better society without proposing economic policies is equally impossible. Wherever you strike politics, the bloody wealth flows.

* See, for example, the very first dialogue of A1 and Bill on page 41.

If this point is accepted, critics may still raise three debatable objections to out butchery of boundaries. "Granted that politics is partially economics, and vice versa, a competent economist should be hired for treating these matters. Call in a specialist." There are several answers to this statement, not the least of which is, "Who knows what a competent economist is except that he carries a union card and has some people who agree with him?" The Nixon Administration between 1968 and 1972 used at least two sets of competent economists to ride in opposite directions, one a group that said in effect, "To beat inflation, go the way of manipulating the money supply and raising unemployment," the other a group that said, "Spend freely on certain things that are `public policy' and set up a system to restrain prices all along the line to beat inflation." As I pen these lines, the wholesale price index for December 1972 is reported to have taken the steepest rise since 1951.

However, the main reason for breaking down this concealed defense of boundaries is that a public policy is a combination of different kinds of knowledge--political, sociological, historical, psychological, ecological, economic, etc. That is, a policy proposal usually has no boundary; there is never a boundary where a major policy proposal is being made in this book. And this book aims only at major policy proposals, asking, "Do you agree that this goal must be reached soon and will this policy achieve it?"

Now comes the second objection. "Your proposals are economically unsound. You can't do this..." Well, then, if the proposals are unsound, take your own ax in hand and do a better job. Discuss, debate, amend, put up different proposals that you think are able to do more in a shorter time for the world. But don't try to keep us from felling what we believe are the most rotten trees in the forest.

I am sorry to have to say that economists today are still a narrow group, focused on minor problems, who will not be of much assistance to the questions of world survival until they are dragged into the struggle. If what I think are the biggest problems and solutions of the politics of wealth are not clamorously assaulted as being naive, unsound, and economically dangerous by many people, I should have to confess that I have not struck at the worst problems with the most relevant solutions.

The third objection to our hacking away at economic problems is that the minds of elementary students of politics are unprepared for them. (This was said by a reader: "unsuitable and harmful to the young student... they should first have courses in economics and then they will (by definition, presumably) be able to critically examine the proposals put forward.") Aristotle once wrote that a man (a woman, never) should begin the study of politics only at the age of thirty! Now if all fields played this "After you Alphonse, please!--No, after you, Gaston!" game, no one would be ready to study anything, including the alphabet. (Interestingly, some of the best educators have begun to put off the teaching of the ABCs as not being so important as other things in the first years of education.) Anyhow, rarely is a course in economics required before a course in politics, and, where so, it is almost sure to be largely irrelevant--"just another prerequisite."

As you can see from the very first sentence of this chapter, I am giving up a simplistic notion of laissez-faire and saying that economic institutions, like all others, need a system that will ensure operations in the public interest. I feel that election campaign funds, although a typical political science topic and by no means one of the least important of them, have to make way here, at any rate, for some more fundamental considerations of an economic source. Perhaps, indeed, the policies of this book will indirectly tend to solve the problem of campaign funds. I haven't worked the connection out at all.

It is important to get across the basic notion of credit as used in this chapter. It includes ideas of dignity, equality, the potential for providing something useful to society that every person has, and, finally, the hard facts of political economy that must be faced squarely by social science students.


This dialogue makes many points. I suggest that the students might summarize what the dialogue says, building on the paragraph immediately following it. (Incidentally, the Sanskrit phrase means "unclean excetions.")


Here we encounter the five bugaboos, which, with their solutions, constitute a good part of the text of this chapter.


Here we say that the United States has not changed the cause of wealth and poverty in the world very much. Students might be asked to prepare their own evidence, the sources of the holdings of any person, be he rich or poor, with whom they are acquainted; what proportion is owing to his luck, to his ability, to his marriage, to his parentage, sitting on a growing or a diminishing pile, and to apportionment by the government or other authority. Concerning tax avoidance by the very wealthy, in 1969 300 persons of over $200,000 adjusted gross income paid no federal income tax.

George katona, et al., as reported in 1969 in a 1968 Survey of Consumer Finance,a study by the Survey Research Center of the University of Michigan, asked a sample of American heads of families to estimate their expected income for the year. The percentage saying it would be higher next year amounted to 74 percent of those under 25; 69 percent of those between 25 and 34; 59 percent of those between 35 and 44; 55 percent of those between 45 and 54; 38 percent of those between 55 and 64; and 27 percent of those 65 or older.


In the second paragraph, I am trying to distinguish what I call in another book "neo-poverty" and paleo-poverty," which has to do with tacky habitat, low-protein diet, worn clothing, and poor medical care. The number of paleo-poor is not diminishing and may actually increase as automation cuts ever more sharply into the ranks of the young, the old, and the low and middle skill groups. Public health officials testifying before the Senate Select Committee on Nutrition and Human Needs declared in 1969 that in their personal survey of health care among the poor, "the crisis is not coming: it is here.... we are shocked and still reeling." (Baltimore Sun, November 4, 1969)


Tom Alexander, writing in Fortune, February 1970, estimated the annual direct cost of pollution in America at 14-18 billion dollars. This page brings us to the end of our discouraging view of the last generation's progress in life-styles. I did not give figures here because of the complicated arithmetic and the chapter. A quick general check on my accounting may be made by comparing 1945 and 1965 disposable personal income per capita at constant 1958 prices, as contained in the Statistical Abstracts for the United states. Disposable income means roughly all wages and profits personally received, less taxes. In 1945, the figure was $1642; in 1965, $2198, an increase of $556 for the twenty years; without making most of the allowances that we have made in the text, the increment of real income per year was $26. Making such allowances, the increment might even be a negative one, unless of course we add the long-term personal credit, which, as I have pointed out in the text, is a true form of income. In my calculations in the text, credit rescued a situation which actually turned into a negative increment over the twenty-year period.


Speaking of automobiles, as we do jokingly at the foot of this page, a 1972 government study shows that having a car in America is no joke at all. The study estimated that the average American motorist who bought a 1972 car would spend nearly $14,000 over the next ten years and/or 100,000 miles. That estimated assumes that he bought a standardsized sedan for about $4400. The money went for gas. $2787; maintenance, $2147; insurance, $1,350; parking and tolls, $1800; and taxes, $1319. The total does not include the eleven new tries that the owner would probably have to buy over the ten-year trip from the assembly line to the junk yard. One wonders at the boldness or madness of the Russians who have begun to produce models of the Italian Fiat at Togliattigrad. Here the product line begins at $5600, and I hate to think what will happen to the cars when they hit the local roads (or their substitutes).


I add here another quotation to the one concerning cash subsidies for agriculture. This comes from the Christian Science Monitor of January 2, 1973. In an editorial, the newspaper declared:

"Harvard nutritionist Jean Mayer pointed out the other day that $5 billion a year is spent by the federal government on farm subsidies. Almost all of it goes to `medium and large farming enterprises and to nonfarmers for keeping their land out of farming.' And just as pertinent: `Besides aiding tobacco and cotton growers, these subsidies go, for the most part, to those who grow the calories in our diets.' The point the nutritionist is making is that government policy supports the `empty-calorie' American diet--empty of the nutrients of low-calories fruits and vegetables--which lead to estimates that one-third of the typical food budget is misspent."

Concerning the deterioration of the world economy, I must reluctantly refrain from details, although I briefly take up the matter again later on. It seems to me that we are about to arrive at a point of exhaustion in the world's resources and a degradation of the world's environment, and I'm not alone: The possibilities are dramatically portrayed in the "limits of growth" studies.* Very few of the 160 nations of the world pay the lower half of their workers more than $300 per year. No country, whether rich or poor, has adequate housing; only half the nations have a population free from wasting diseases; only half have over 50 percent literacy; only half have no powerful caste or highly privileged class systems; few have a free press; only a third show powerful urges to modernize, and where they are trying to modernize they tend to head both ways like the two-headed disoriented horse in our text. So unless some great new reforming horse is unleashed to the world, mankind will be knocked down before it can ever struggle to its feet.

* The best known of these studies is The Limits of Growth, by D.H. Meadows, et al. (New York: Universe Books, 1972).

"With the 5 percent... consuming as much as the other 95 percent ..." may perhaps be an exaggeration. First, because in the past few years the rapid growth in production of other countries such as the U.S.S.R. and Japan makes the figures less in GNP terms; second, because the figure does not reflect the potential quality of life, since an Indian or Brazilian can live as well as an American on a lot less energy consumption. But, on the other hand, a greater proportion of America's one-third of the world's energy burn-up goes into personal use, in comparison with the countries that are still tooling up. Americans are living off a proportionately much greater plant investment too, holding over from the past. That is, we are using world resources taken from the past.

I would not say that the American lot is enviable: the quality of life in the U.S.A. is going down; a great deal of the U.S. GNP is wasted; and other countries are statistically at least improving the position. By the time the full-blown world economic crisis arrives in a decade, more or less, the U.S. will have the company of another dozen nations in this self-imposed trap.


Here I introduced without definition a number of terms related to taxes. Perhaps a student might oblige the class by researching succinct definition on behalf of everyone.


I do not stress sufficiently the enormous waste of skills in the tax machinery of America, both on the governmental side and on the compliance side. I have found no statistics on the professional and paraprofessional persons engaged in the tax industry, but I would venture that a significant portion of all the business , legal, and administrative skills of the country , not to mention the investigative skills, go into this ramified and diverting pursuit.


Policy IX begins the last section of this chapter. We seek to reduce social wastes and to give value to everybody's personal potential.


The justification of my proposal for a single equal per capita tax rests partly with the so-called "tax mess" already described. However, it will be difficult to understand why so absolutely regressive a tax is proposed as the sole basis for all government finance in the United States (or elsewhere). There is almost nothing in economic literature to recommend it. One might read George H. Hildebrand's Poverty, Income Maintenance, and the Negative Income Tax, which was put out by the Cornell School of Industrial Relations in 1967, but I think it best to work on this problem de novo, with fresh ideas and imagination, followed ultimately by the inevitable computer model. So far as I can follow out the ramifications of such a tax, the population would soon adjust to it as a direct, visible, and responsible system in which everyone might play an equal part. For instance, the unionized segment of the American labor force would probably immediately get the increment needed to pay their tax. The nonunionized corporate employees would promptly receive a partial and ample raise in pay, coming from corporate tax savings. One has to forcibly appreciate the chaos, complexities, waste, avoidances, inequalities, and contradictions of the present tax system to comprehend the full advantages of a simple tax system and how anyone in his right mind would be so bold as to propose a fully regressive tax as the most just in effect.

A cash payment, rather than a single tax on land, as Henry George proposed, is more in keeping with contemporary complex technology and economies where wealth, income, and power are derived from myriad sources. Incidentally, Alice Mary Hilton and others associated with the Institute for Cybercultural Research set forth the case for living certificates, credit cards, and student salaries in the 1950s.


And so we proceed to the equally unknown territory of PESCALA. A student might well volunteer a serious paper on the Roman republican system of "bread and circuses." PESCALA avoids the silting over of liberties by demands on one's time, movements, pleasures, and independence, especially early and late in life. The government is becoming totalitarian, in the strict sense of the term, in many ways. It may be composed of nice people "just like you and me," but they are shoveling the silt that will ultimately confine all of us to our offices watching the clock, to our rooms watching the (licensed) TV set, awaiting inquests into our latest efforts to gain some small privilege.


I think that we may have said enough in this book about power-sharing and value-sharing in general to justify our proposals about the inheritance of great wealth. It would be inconsistent with the other principles of this work to allow the government to accumulate the assets and the other controls that go with the great family fortunes. Their capital should be redistributed, by their hands if possible, throughout the culture and society.


With lamentable brevity, I deal with the problem of extending basic reforms to the world. Several crises are simultaneously approaching in the areas of pollution, the crack-up of authority, decrease in arable land, overpopulation, exhaustion of common sources of energy, and accelerating demands in developing countries. The problems of America are part of, though in a sense separate from, these world problems. It appears to me that a world planning institution (call it a world government) has to be established speedily to set and enforce world priorities upon nations. Whether this job is done through the United Nations or through an executive committee of the great nations matters little. The best philosophy and policies that I might offer such a group are extensions of those principles and policies that I have placed before our beginning students of government. Nothing is too good for our boys and girls.


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