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A new social contract
In today's advanced technology society, being able to get a job earning a living wage should be a right. If everyone knew they would get a job when their education was complete, they could just focus on the skills needed to maximize their income for their interests. There should be no involuntary unemployment.
There needs to be two components to this plan: a Full Employment strategy and a Living Wage guarantee. The basic concept is everyone who wants to work will always have a job earning at least the minimum wage. And anyone working will earn enough to afford housing and the basic necessities of life in the area in which they work.
This simple change in combination with free market capitalism should result in a more just and a more peaceful society.
The essence of the social contract is that if you obey the law, you will have a job earning a living wage. Your social position will depend upon the knowledge and skills you acquire.
We need a new social contract.
ISIS is proof that we need to improve the lives of all. It is not enough that most people are doing well. No one should be left behind in the fight for universal Justice.
It is government's responsibility to ensure Full Employment - that is not the function of business.
The jobs of the future will come from research, education and infrastructure improvements. These services do not produce a profit, they are an expense.
In today's advanced technology society, being able to get a job earning a living wage should be a right. If everyone knew they would get a job when their education was complete, they could just focus on the skills needed to maximize their income for their interests. There should be no involuntary unemployment.
Full Employment and Living Wage policies will stabilize Capitalism. I call it a Just Economic System. Capitalism works great for 95% of the people. I envision a system that works for 100% of the people.
Unemployment: "Being involuntarily unemployed is harmful to the human spirit."
The purpose of the economy is to ensure the efficient allocation of labor for the common good. The goal of the modern economy is to provide Full Employment and a Living Wage for all.
Demand drives a market economy. Without consumers, there can be no economy.
There are two economies: the profit generating economy and the non-profit generating economy. The objective is to balance the two economies in order to maintain Full Employment.
The goal for each individual is not to maximize money; but, rather to maximize the service received for the effort expended. Taxes purchase a better world.
Tax money is required to fund the non-profit services provided by government. The objective is not to avoid taxes, it is to keep everyone employed who wants to work.
Let's have a serious talk about money. The Republican Party in the US is obsessed with money and wealth. They are concerned about debt. There are some real concerns: interest on the national debt and inflation. We need a strategy to avoid these two problems.
There are other things to be concerned about: unemployment, climate change and terrorism.
I believe these issues are related. Capitalism is the best economic system so far devised; but, it relies on allowing some members of society to suffer so the majority of the citizens can do well. I consider this to be unjust. I also believe this problem with the economy fuels terrorism. While many people hold strongly felt religious beliefs which put them at odds with the life style of the "west", I believe it is the failure of government to ensure the active participation of all citizens in the benefits of technology that drive terrorism.
Many of the wealthy see government as a threat to their goal of building wealth and have convinced many in the middle class that taxes are a bad thing. This is a false idea.
There are two main segments in the economy: the profit making products and the expense related products. In order to maximize the strength of the economy, we need to properly balance these two segments with a well structured tax policy.
The real issues are: how much money should be in circulation at any point in time and what should be the interest rate. Another issue is why should money be borrowed? I believe it is a mistake to fund consumer demand by borrowing except for housing and transportation. These two items are both expensive and necessary for a reasonable life style.
Now for the questions:
Q. What happens when there is too much money in the economy?
A. Inflation.
Q. What happens when there is too little money in the economy?
A. Deflation.
Q. What happens when the wealth gap increases in an economy?
A. The rich bid up the price of necessities above the price low income earners can afford.
Q. What happens when the wealth gap decreases in an economy?
A. More people can afford the necessities of life.
Q. How much money should be in the economy?
A. Enough to provide Full Employment and a Living Wage for all.
Inflation occurs when there is more money to purchase goods and services than there are the quantity of goods and services available. When the price of a product goes up, business will generate more of the product. So, some inflation is good. But, the rate of inflation needs to be managed to prevent destroying wealth.
One way to control inflation is to tax the sale of the product which is in limited supply to reduce the demand. A national sales tax provides a mechanism to rapidly change the tax on any given product class to keep inflation for that product under control.
Using the interest rate to control inflation fuels the business cycle and destroys jobs.
Tax and save or borrow and spend. That should control the money supply. Control inflation with a national sales tax managed by the central bank by product class rather than the interest rate.
Leave the interest rate near zero. Make profit by building things not lending money!
We can turn over inflation control to the computers at the central bank of each country. Everyone has a job. The market makes buy/ build decisions. Government can focus on laws to prevent harm and stop trying to control the market.