Financial insecurity among the Public

There is little doubt that much of the turbulence and uncertainty in recent politics stems from the financial insecurity Americans are feeling. There are many explanations for this – the uncertainty in the current job market and the dramatic fluctuations in the American economy. One only needs to watch the ads on TV to appreciate that investment firms, retirement systems, and financial consultants are all seeking to reassure households that their futures can be more secure.  With the increasing abolition of pension programs and the privatization of alternatives, it is no wonder that such promises have emerged.  All of this has come about while salaries and wages in many sectors have failed to keep up with the general costs of living, let alone inflation.

The American public has long counted on owning a home (and the growing equity in which this implies) as a means of assuring financial stability…what passes for the “American Dream.” In the past, there was a common presumption that home equity would steadily increase over the course of a homeowner’s lifetime, and that it would then be possible at the end of a breadwinners’ earning years to “cash out” with substantial holdings. This investment could supplement, if not guarantee, a comfortable retirement. In fact, one’s “Golden Years” were thought to consist of three components: social security based on one’s earning years; a pension drawn from one’s employers; and the equity drawn from a home and a paid-off mortgage. People were sometimes encouraged to draw on this home value as a “home equity loan,” also called a “reverse mortgage.”

But all this is no longer a certainty. It is no wonder that President George W. Bush’s proposal in 2004 for privatizing social security met with overwhelming disapproval. It was a factor that probably cost him re-election. It is still, practically speaking, the political “sacred cow” of  politics, even though the Federal government has by various unobtrusive means reduced its real purchasing value. It is no wonder, therefore, that the general populace continues to feel more and more financially vulnerable as years pass. The disparities of household income and wealth have grown profoundly, and continue to widen. Moreover, home values differ widely depending on geographic regions, and boom-bust cycles no longer offer the growing equity for later reliance.

In the 2020 Democratic primary, Andrew Yang, a successful entrepreneur, sought to capture and respond to this sentiment.  His signature issue was to promise to every American citizen over the age of 18 a monthly $1,000 “Freedom Dividend.” His understanding of this need was drawn from his observation of the turbulence and insecurity that the general citizenry today faces.  To Yang, the Freedom Dividend’s benefits would lead to “healthier people, less stressed-out people, better-educated people, stronger communities, more volunteerism, and more civic participation.” By making the distribution universal, current eligibility programs that rely on personal scrutiny, costly governance and its bureaucracy would be reduced. In fact, what is elsewhere known as a Basic Income Guarantee, has been implemented in other nations with general acclaim. The idea has been proposed as long ago as in Thomas Paine’s Agrarian Justice. 

While the Basic Income Guarantee is growing in acceptance, it is not by itself likely to completely reassure the general public.  But, stabilizing the increasingly unpredictable economy can be achieved by the public collection of income from ground rents that are now subject to boom-bust cycles based on speculative practices. Studies have shown that ever since the rise of industrial economies over two centuries ago, there have been regular recessions, depressions, and what were once called “panics,” roughly every 18 years.  If the public captured the unearned rents that otherwise flow to idle hands, the speculation in lands could be stemmed. Greater stability by instituting such revenue structures would comfort the public universally – business, commercial and household. 

Neither a Basic Income Guarantee nor any personal retirement accounts now growing in usage are likely to address comprehensive household needs. Savings and investment programs should still be encouraged. When greater guarantees of financial security are in place, the personal and household assurances that are suggestive today offer a basis for discussion that is now, for the most part, lacking.

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