The Platform – Part II: Ensuring Opportunity

A major premise of Fulfilling the American Promise in the Connected Age has been about opportunity in our nation. In fact, it’s the first point of definition of the American Promise in the Principles of FAPITCA: “our people have freedom of access to an equal opportunity to succeed (or to fail).” Freedom is at the root of this definition, and both success and failure are possible outcomes. America’s brand of capitalism has never been promoted as a guarantee for “success.”

John Locke's "Two Treatises of Government" - 1690. Source: Wikipedia

Source: Wikipedia

To make capitalism work at maximum efficiency, however, government and commerce need to interact with each other to ensure equal access to opportunity. The roots of this are acknowledged in the Declaration of Independence, as Thomas Jefferson channeled the likes of John Locke and George Mason proclaiming in our Declaration our unalienable rights of “life, liberty and the pursuit of happiness.”

 

VA Declaration of Rights

VA Declaration of Rights Virginiamemory.com

Locke and Mason both wrote about “life, liberty and property” [1] or “…life and liberty, with the means of acquiring and possessing property…” [2] During the era of the authorship of these documents, Locke, Mason and Jefferson considered the pursuit of happiness to mean both personal “ownership” (freedom) and the property one could acquire.

We posited in our outline for the FAPITCA Platform that in effect our Declaration provides a foundation for equal access to “a baseline income that provides a foundation to support the ‘pursuit of happiness’ and that this baseline income should offset practical living expenses while making it possible to pay reasonable taxes and to loosen ties to government support.” Whether this is manifested in a higher minimum wage or a renewal of support for businesses and governments to work together to create more and better opportunities for our nation’s unemployed is a topic to be discussed in more depth than within this blog.

In any event, the creation and sustainment of access to opportunity to obtain ownership of property (personal and tangible) certainly appears to have been the intent of the Founding Fathers! [3]

A major issue we face in the political quagmire of Congress and all too many statehouses today is how to visualize ways to create opportunity and get our economy back on track…ways that don’t smack of “socialism” or “welfare state” politics. It is a tough problem, but it’s not as intractable as it seems.

America has been at these very challenging “inflection points” before and we found ways to overcome them. In fact, in Dead Men Ruling, C. Eugene Steuerle argues that America has faced at least two of these kinds of crises we face today: in the post-Revolution when America faced the choice of amending the Articles of Confederation and writing a new American Constitution; and “at the start of the Progressive Era, when the nation’s leaders began to add the governmental structures that proved necessary for an emerging world power.” [4]

In both instances, our elected leadership (granting that the delegates to the Constitutional Convention in 1787 were in fact elected) found ways to compromise and push forward in the interests of the nation and the American people. They saw the future of America and worked together to address the challenges they knew they would face: they visualized and compromised. This ability to visualize and compromise has not been successfully applied in our politically-driven world lately, even though we have some of the best Connected Age technologies we could ever hope for! We have the tools that our forefathers could only dream of and yet our Congress won’t use them…very sad.

One of Steuerle’s key points is that our previous era’s leaders found ways to work together and considered the challenges we faced in the post-Revolution and the start of the Progressive era as opportunities for the nation rather than threats to their political careers. “Because elected officials who acted would often pay the ultimate political price at election time, they were often reluctant to act, and delays in achieving fundamental reform imposed additional burdens on the public. Not surprisingly, the current turning point requires much the same focus and presents the same political threats and theatre to the elected officials of our time,” Steuerle notes.

But our leaders in the past found the courage to compromise and act to set America up for success rather than the failure upon which our political leaders of today seem bound to engage. Disregarding Locke, Mason and Jefferson, our current crop of edge-driven representatives in both houses want to choke back opportunity for fear of looking too liberal, too progressive and too inclusive of the younger generations. They seem to be more concerned about reelection in spite of the opportunities this current situation offers – their courage and leadership are lacking. Their current approach fails to recognize the successes we found in opportunities like Steuerle cites.

All that said, there are a few straightforward proposals in which we could start using our Connected Age technologies to visualize and even predict how well we could move forward in this time of great opportunity. We could start using the technologies described in past FAPITCA blog posts to model and observe the interactions of people, tools and policies to project a future environment for success that matches the outcomes about which Steuerle writes. More importantly, if we are objective enough, we could use these technologies to create compelling, unemotional arguments for experimentation and possible adoption. Good ideas only go so far; we also need action and effective execution of ideas and plans. That’s another good use for visualization!

Below are several proposals that we might consider as part of our interaction experiment. Using the modeling technologies we’ve discussed elsewhere (here and here), we could build integrative models that visually demonstrate how one proposal interacts with another, or even all of them. By integrative models, we mean modeling in a fashion that highlights synergy between the elements of the models that shows dependencies in context, not attempts to cherry-pick pet projects – we have to see how all of these things work together to avoid the “unintended consequences” of one change here and another change there. We need to show holistic impacts.

We don’t claim that any of the following are original to us, and they certainly haven’t been “scored by the Congressional Budget Office,” but they are a viable starting point. We present these proposals as the basis for generating good hypotheses and experimentation; call them thought experiments at this point.

Some of the initial things to model include:

– A proposal that we lift the cap on Social Security contribution limits from its present limit of $117,000, while lowering the contribution rate from 7% to 5%. This will be a “tax increase” for people whose earnings are in excess of about $163,800, but a “tax cut” for all other workers. [5] Indirect compensation like corporate benefits and perks could also be subject to this 5% contribution on the personal income side. Self-employed would pay a flat 10% and all would continue to contribute 1.45% to Medicare. We call this first proposal sparing a nickel for Social Security.

– Increasing the minimum wage to a pay scale that rewards work more than not working. Whether $10 an hour or $15 an hour is appropriate, these rates of pay can be easily modeled in an integrated fashion as we’ve been discussing. The bottom line is that the level of income must be sufficient to empower living in a safe home that supports raising a family and pumps more money back into the economy. The scale of payback to the economy from many more folks who could then live fuller lives that achieve the American Promise will be much greater than the money a few wealthy Americans would “pump” into the economy. Scale is on our side here and we must use it.

The first two proposals could actually be combined in legislation as part of what we might call the 2014 “Rewarding Work in America Act.” Using the modeling techniques we referenced above and just applying basic economic principles, it should be straightforward to show that these first two proposals will put more money in the pockets of lower and middle income working people, boost the economy and address several of the income inequality issues that appear to be worsening. We must reward work, which means we must get people back to work so that they can earn a living wage and create their own positive impact for the economy!

– Eliminating tax breaks that ONLY benefit the wealthy, such as eliminating all mortgage interest and tax deductions for second homes. It no longer makes sense to provide these kinds of tax breaks to people wealthy enough to own second homes—or a boat because it happens to have plumbing aboard. The “return on investment” for these kinds of deductions is ineffective in an economy that’s changed as much as ours has in the Connected Age. If we must add deductions that stimulate the economy, let’s find deductions that benefit everyone.

– Making a meaningful contribution to our young people by:

   — Eliminating ALL interest on student loans if paid back in a finite period (say five-ten years)

   — Exerting downward pressure on tuition by providing a cap of no more than $50,000 as eligible for the “interest-free” provision

   — Encouraging state universities through a variety of means to embrace a “two-and-a half” rule which provides that no state university can charge more than two-and-a-half times the cost per student to that of the per-student costs of the state’s high schools. (The actual number would be subject to the modeling recommendations, but we hold that it should not cost states that much more to educate freshman and sophomores than seniors in high school.)

   — Offering more extensive and inclusive forms of public service such as AmeriCorps, Peace Corps and similar organizations that can both pay grant money for education and create invaluable work experience. We want to restore the value of public service to young people and our nation; these programs should be inspired by the contributions of the various forms of the GI-Bill that have positively impacted those who served in our nation’s military

   — Convening a national panel to explore what we can do to reengineer our colleges to stimulate lower tuition costs and deliver greater education value (it is inexcusable for the cost of a college education to exceed inflation costs so severely.)

– Reducing corporate taxes and at the same time encouraging and enforcing paying taxes on corporate income rather than “protecting” that income in foreign banks or holdings. American earnings belong in America as much as possible, to be invested into our own economy and infrastructure and most importantly, our people. Hiring Americans, paying taxes and supporting American research and development are some of the most patriotic things our businesses can support. America needs our businesses and companies to be part of the solution that saves and preserves our economy and environment—government cannot and should not do that alone.

Could these types of collaborative and interactive solutions serve to increase both opportunity and the tax base (without really increasing the rate of taxes paid)? That’s a sound and testable hypothesis anyway. These types of actions can provide win-win for both parties and it can be demonstrated through low-cost experimentation. In spite of this fact, neither party will talk seriously about these proposals, or if they do they talk about one, they exclude the others. All of these things, and probably others, are part of a system of success: the American Promise.

The refusal to compromise and do right for America is withholding equal access to opportunity. Far too many in America do not have access to Fulfilling the American Promise because too many of our leaders, and our electorate apparently, can’t see the opportunities and visualize how to achieve them. It seems they prefer to be frozen into stalemates and inactivity because of the challenges…that’s not the America most of us grew up to appreciate!

Increased access to opportunity presents us a remarkable path forward towards Fulfilling the American Promise – that’s why this is our first platform plank in FAPITCA. Unfortunately, how America (and most of the West) approaches production, consumption and marketing contribute to the cloudy visuals we suffer these days. We’ll talk about that next time.

Originally posted by Carl and Chuck Hunt, 5/29/2014.

NOTES:

[1] This was labeled as property in Locke’s Two Treatises of Government, although it also referred to the concept of “estate”. See also Beeman, R., Our Lives, Our Fortunes and our Sacred Honor, Basic Books, NY, 2013, pp. 394-398.

[2] As written by George Mason in the Virginia Declaration of Rights; this document was a significant source of inspiration to Jefferson and to many of the committee who drafted the Declaration of Independence.

[3] We do not address the national shame of slavery or dispossession of the American Indians from the lands on which they lived during this time, discussed very recently and in more detail in James Fallows’ blog post “The Civil War That Does Not End,” but the idea of “personal ownership” for all would surely have applied had America been founded in this day and age.

[4] Dead Men Ruling: How to Restore Fiscal Freedom and Rescue Our Future (Kindle Edition), The Century Foundation Press, Washington, DC, 2014.

[5] Employers would also save by paying a matching 5% instead of the current 7%, although their contribution could be phased out at some point, say $175,000 or $200,000, based on the findings of the models.

2 thoughts on “The Platform – Part II: Ensuring Opportunity

  1. As a career state university professor, I have witnessed escalating costs and associated tuition hikes, and I agree that the system is broken. However, consideration of the relative costs of high school versus university education should include the differing relative roles of these institutions. High schools primarily focus on education, whereas universities integrate three fundamental goals: education, research and service. The funding required to support the basic research and service roles at a university would need to be part of the model, probably altering the proportionate funding of high schools versus universities. But surely, a well reasoned consideration of how our universities are funded and what costs should be passed on to students is way overdue.

    • Thanks for the voice of experience and reason about our initial thoughts on this subject, Larry! We look forward to chatting more about what a useful model might include.

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