So...none of this is really new, but I would like to kind of string together the problems that existed before 2020, with the economic crisis and its "recovery", as well as the massive inflation of the 2020s. For a while, I've been treating the two issues separately, approaching them from within the context of the phillips curve.
From 2008-2021, we were on the "unemployment" side of the phillips curve where the problem was perceived to be the lack of jobs. Unemployment was high, wages were low, prices were stable as inflation was also low, but people couldn't afford to live. Much of my existing political views arose within this window of time. I saw the problem as trickle down economics. We insist on giving all of the money to the" job creators", and expecting them to create jobs, but they don't create jobs, because there isn't profit in creating work for its own sake. And when they do create jobs, the jobs are exploitative, they pay poorly, and they work you as hard as they can. My support for UBI came out of this because I believed that we needed to reduce income inequality through massive redistribution, as well as liberate people from coercion to work. This means more money goes to the bottom, they can spend more, it creates more demand, which creates jobs that way, and due to the mild work refusal, it also ensures workers are well treated and they command higher wages. Admittedly, if not properly managed, it could be inflationary, but within reason, it would actually produce a better quality of life for the lower classes, massively reducing income inequality as it redistributes wealth from, say, the top 25% to the bottom 75%.
However, I've kinda pulled back on pushing UBI too hard through the Biden administration because of the inflationary period we experienced after 2021. The conventional logic is that inflation is caused by too much money chasing too few goods. More money means more demand, means more inflation. Pushing a UBI in this environment could theoretically throw fuel on top of the fire. While much of the inflation was driven not by workers' wages but corporate greed, still, the logic was that Biden had too much stimulus which wasn't paid for, and this led to pent up demand. However, despite this, it seemed like workers continued to struggle, and the cost of living crisis hasn't abated. I've discussed housing lately, and how the problem is that they're appealing to the top end of the market, while shutting out the bottom. But honestly? And this is where we start seeing a unified theory of everything, isn't this EVERYTHING? The fact is, I've noticed this kind of demand in my own consumption habits. I've discussed gaming and how they wanna charge $80 for games, and $450 for a nintendo switch, and $800-1200 for a next gen console in a few years, and it's crazy. How can people afford this? Normal people can't afford this. But, as we know, they're appealing to the most wealthy demographics. They don't care about the middle class any more. They're being priced out of things, which is why they're angry in the Biden and Trump2 eras. With Biden, we had full employment, and Biden got inflation "under control", but people were still unhappy. Why? because their cost of living went up and their wages weren't keeping up. We're living in a new gilded age. And with Trump's second term, he aint helping either, if anything, tariffs are making the situation worse.
We're living in a new gilded age. Golden on the outside, rotten within. The numbers say things are good, but we know deep down they're not. Something is fundamentally wrong with the economy. And I think I've finally figured out what that is. And it should be obvious. It's income inequality. Most of the economic gains since the 1970s have gone to the top 20% of income earners. Like 10% of people are now responsible for half of consumer spending, and in the modern era, this is causing companies to shift from appealing to middle class Americans, to appealing to the wealthy. The top 20% of income earners are too price insensitive. When prices raise for things like vacations, or consumer goods, they just throw more money at the problem. If you're making, say, 6 figures, it's easy. Meanwhile, the bottom 80%, and specifically the bottom 50% are struggling to keep their heads above water. Their rent is out of control, and has massively inflated in the past few years. Food prices are up. Healthcare and education were never really affordable in the first place. And now their consumer goods are going up. They can't afford to live. The math isn't mathing. Our modern consumerist society was based on the principles of Fordism, basically, pay your workers enough to buy your stuff. But with the trickle down era, we've forgotten that. From 2008-2021, and even before that, going back to the 1970s, the living standards of the middle class, the ACTUAL middle class, not what we call the "upper middle class", which is just "the upper class" has declined, while that upper crust has gotten most of the gains. At this point, they're going on insane spending bonanzas, while the rest of Americans struggle. THe issues of the 2020s are the same issues we've had all along from the 1970s-2010s, just in a different form. Rather than employment being weak and wages being low, companies are actively raising prices, as they move away from the actual middle of the economic spectrum, toward the wealthy. This is the end result of the trickle down experiment. What happens when the wealthy get all of the money? Well, the rest of society gets shut out, and it just starts appealing to fewer and fewer people, who have more and more of the wealth. We have this idea of society that we work, we get money, and then we consume. But if this economy doesnt work from the bottom up, basically what happens is the poor become the slaves of the middle class and the wealthy. And as the middle class declines, with some either being inducted into the new "upper middle class", or go down into basically the working class, well, things decline into a more two class structure. The middle class loses their status and becomes angry about it, hence the populism of the modern era, which neither party really properly addresses since neither wanna address income or wealth equality at all, and the upper class become these out of touch yuppies who have zero price sensitivity since they'll throw as much money at the problem as they need to in order to get what they want. Hence the 2020s. And when you talk on forums and have people talking down to you and saying BUT INFLATION, many of those are the upper class yuppie types who have a degree, a job that uses their degree, and make the big bucks. So what do they think about throwing a few more hundred at a gaming console or a game? In their mind, it's cheap. It's like a day out, which is also ridiculously expensive these days. It's like, whatever. Who cares? That's just how the economy is, if you can't afford stuff, that's your problem. Ya know, the typical Reagan line.
And during the Reagan era, we could say the system still served the majority well enough where they did buy into personal responsibility, but looking at it a generation out, it's obvious that that stuff is the problem. It's been the problem all along. Because it's just squeezing the bottom 75% while the top 25% live better than ever. So what needs to be done? Well...basic income. Again.
But won't it cause inflation? Well, if what's driving much of current inflation being the top 25% having too much money, and the bottom 75% not having enough, then no. If the current problems are driven by ridiculously high income inequality that is shutting most ordinary Americans out of a decent life, then redistributing that income should rectify the problem, and also change the incentive structure that we currently have. It should bring Fordism back. What we dont need is trickle down economics, but trickle up. Democrats talk about from the middle out, I talk about from the bottom up. If we redistribute income via a UBI, with a 20% tax funding a $16,000 UBI per adult, and a $5,500 UBI for a child, this is what we get:
I made this for my book, but I figured I'd post it here since it's a nice handy dandy chart. Green means you benefit from UBI, red means you dont. Generally speaking, 71% of individual income earners benefit, with around 78-84% benefitting household wise depending on how we count that. It would be a redistribution from that top 20-25% of income earners to the bottom 75%. And what would that do? It would reduce income inequality to something more akin to what we had in the New Deal era, or what exists in a European social democracy. The top 20-25% would NOT like this, as it would tax them, but again, if the problem is them having too much money, and everyone else not having enough that helps them. It would give the poor more money, it would make the middle class a bit better off but nothing too too crazy. And it would change the incentives of companies to, instead of targeting primarily that top 20-25% of people who have most of the money, to instead target more consumers. This means that maybe we would see housing targeted toward middle class consumers. And maybe more consumer goods would be targeted at the actual MIDDLE class again. And maybe our society would actually fricking work for a change. It's a nice idea, ya know?
So....no longer is it, well, UBI was good back in 2008-2021 when unemployment was the problem, but it isnt good now because inflation. Rather....if the inflation really is from corporations targeting an increasing minority of consumers where most of the wealth is concentrated, maybe spreading out that wealth among more people would cause businesses to pursue more consumers in the first place.
And...if we wanna go back to the war on normal people and how communities are dying because jobs aren't working, maybe UBI would take wealth from those city centers where everyone now has to go to have a shot at the american dream and distribute it back to "main streets" in small towns again. Or maybe it'll still go to walmart and amazon. Either way, these businesses would be trying to appeal to EVERYONE again, rather than appealing to an increasingly small minority of people who have more and more money.
Capitalism doesn't work unless everyone gets money. Even monopoly, a game created to demonstrate the exploitativeness of the housing market, relied on a UBI to keep the game going. If we want capitalism to work again, we need a UBI. Period. This is why my own "new New Deal" centers around UBI, and then from there, I also address stuff like universal healthcare, and free college, and now I'm tackling housing again. But even for stuff like housing, uh....yeah, again, the lack of UBI is what's driving part of the problem. The fact is the system doesnt care about the poor because there's no profit in it. But that's why we need trickle up economics rather than trickle down. We need businesses to go where the money is, and if everyone has money, businesses will be more likely to invest in more places, rather than our current system of "well if you're poor have you considered moving to a major city where rent is $3000 a month?" Because let's face it, a lot of neolibs and conservatives want people to do just that, not understanding how fricking tone deaf that is.
But yeah, that said, I'm sticking by my original vision, if anything, I believe in it more than ever. Because I understand that yeah, even inflation of the 2020s comes from the same problems that have existed all along. It's just a different manifestation of the problems of reaganism, trickle down economics, and the fact that the economy is only working for a small minority of people, and not everyone. If we wanna raise living standards, we gotta take wealth from the top 25% and redistribute it to the bottom 75% or so.
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