We Can All Do Better (13 page)

High-tech innovation and an educational system to support it are critical components of our long-term job strategy. But there has to be more. That's where high-quality jobs come in—professional jobs such as engineering, research and development, finance and software production. When international trade expands, these areas grow disproportionately. For example, the U.S. trade surplus in business services has nearly tripled since 2003.
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Sophisticated data analysis and effective use of information technology will generate even more jobs. Coming down in the wage scale to quality service jobs but generating opportunity for further employment growth are jobs that meet real human needs: long-term healthcare for the elderly that is life-affirming instead of end-of-life warehousing will require trained workers; childcare that allows parents to work and children to flourish needs to be skilled; continuing education and travel and self-discovery all need
specialized guides. High quality service jobs such as these, besides providing new jobs opportunities, will produce a more humane country.

Beyond effecting deficit reduction, establishing a giant infrastructure program, making investment in basic research, and subsidizing community colleges, government should reduce the costs it imposes on businesses. Cutting the top corporate tax rate would be one way, but it would have an uneven impact, given the great variation that companies pay because of loopholes. The two most effective actions relate to healthcare and employment taxes. The United States is unique in the way it seeks to provide health care for its citizens. It burdens companies with the responsibility and gives them tax incentives to offset only some of the costs. A company's chief social obligation should be to create jobs; providing for people's healthcare and education ought to be the government's responsibility. If the cost of healthcare could be borne by the federal government with something like a Medicare-for-all program, companies would have more money to pay higher wages to their workers. By eliminating the private insurer, you could save between $350 billion and $400 billion a year in administrative costs.
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If everyone was covered by the health care system, costs would be easier to control, and incentives could prompt health care providers to compete on price and quality. It could be a win for everyone.

To raise our standard of living and create more jobs, we also need a dramatic shift in our tax system. The 22 million Americans who are counted as unemployed or underemployed hide the total number of people not working. The Bureau of Labor Statistics reported in 2009 that among the non-institutionalized adult population of 235 million, only about 140 million had jobs, which means that roughly
95 million people were not working. Bringing some of these people into the workforce would be a tremendous benefit, not only for them but for the whole economy. The answer isn't a temporary cut in Social Security taxes. These cuts, done in the name of stimulus, have reduced unemployment very little, even as they have drained money from the Social Security Trust Fund.

Today, 40 percent of federal revenues come from taxes on employment.
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Every job comes with a 15.3 percent tax in the form of Social Security, and Medicare. The employer pays half and the employee pays half. The employer alone pays the unemployment tax of as much as 2 percent. These taxes act as a tremendous disincentive for companies to hire workers, and mean that the employee has less take-home pay. Try explaining to a young person why the FICA deductions will be good for him in fifty years, and you will see a face full of incredulity. We know the price signal works, so if we want more jobs, we should cut the taxes on job creation. You do that not by cutting the top income tax rate on the “wealthy job creators” but by eliminating the taxes directly related to employment, which affect all companies and all workers.

To replace the funding for these bedrock social programs, for which there is broad public support, we should enact a tax on “things.” “Change the relative price of people versus things,” says Ashoka founder Bill Drayton.
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It could be a value-added tax on everything but labor, or a gasoline-tax increase, or a set of taxes on specific pollutants, such as lead or nitrous oxide, or an energy inefficiency tax on, say, the 25 percent least efficient cars, appliances, and commercial buildings. The new taxes would be dedicated to a fund for Social Security, Medicare, and unemployment compensation.
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For forty years, taxes on non-labor things or natural resources have been low. Drayton's Get America Working! estimates that the combination of cutting taxes on jobs and increasing them on non-labor
factors of production would result in a 30-percent price shift in favor of job creation. More elderly would return to the workforce (68 percent say they want to work
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), as jobs proliferated. Dependency would drop. In addition, the price shift, according to Drayton, would be so great that it could “increase employment over a capital cycle by roughly 40 million full-time equivalent, new, permanent, sustainable, chiefly good jobs.” As more jobs were created, there would be faster economic growth, thereby generating further revenues for government investment.

The groups that will benefit from this tax shift are, first of all, the Americans who have been hit hardest by the recession or have been caught in the structural changes in our economy over the last thirty years. And then there are all those groups who don't count in the narrow unemployment statistics, especially the elderly, the young, people with disabilities, minority dropouts, and women at home or temporarily out of the workforce. They, too, would benefit as the broad effect of the tax shift took hold.

We are so far out of shape as a nation that what's needed is no less than a revolution in our behavior and an overhauling of our patriotism. Galloping personal credit and runaway government deficits can no longer enthrall us. We can no longer entertain the belief that people are basically selfish and markets have all the answers. We need to see our connections, both to one another and between the actions we need to take and the results we desire.

America is like a championship team that has hit a slump. A few losses in a row can make team members begin to doubt themselves. Then something happens to remind them of who they are, what they have achieved, and what they can achieve again. Their ability to overcome adversity is one of the reasons they're a championship team. Never underestimate the resilience of the American people. If you've lost your job and your health insurance and your pension
has been cut in half, you dig down deeper and work harder. You refuse to give up. You find some reason to believe in tomorrow. That's who we are. We can lose our homes, our jobs, even our friends or family members, and—like the Joads at the end of John Ford's film of Steinbeck's
The Grapes of Wrath
—we'll go on. “We're the people that live,” says Ma Joad. “Can't nobody wipe us out. Can't nobody lick us. We'll go on forever, Pa. We're the people.”

O
n a gray March morning in 1933, President-elect Franklin Delano Roosevelt, wearing striped pants, cutaway, and silk hat, moved by car up Pennsylvania Avenue to the U.S. Capitol. The braces on Roosevelt's polio-stricken legs clanked against the sides of his open car as he got out. Leaning on the arm of his eldest son, James, he slowly made his way through the rotunda and down the steps to the Capitol's east front. Preceded onto the platform by outgoing President Herbert Hoover, white-bearded Chief Justice Charles Evans Hughes, and Vice President John Nance Garner, Roosevelt was about to be sworn in as president of the United States.

The country was in deep economic depression. Five thousand banks had failed, and with them went the savings accounts of 9 million Americans.
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Fifteen million people were looking for work.
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There were no jobs. Each failed job search reduced the applicant's
self-esteem and increased his hopelessness. Apartments were repossessed and homes were foreclosed on. Couples moved in with their relatives. Having children or getting a divorce became too expensive. Men sold Christmas cards for a little cash, borrowed off their insurance policies, and stoically stood in bread lines. When the Soviet Union advertised for six thousand skilled workers, offering them jobs in Russia, more than a hundred thousand responded. As literary critic Edmund Wilson wrote from Chicago, “There is not a garbage dump in the city that is not diligently haunted by the hungry.”
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Confronting the biggest national crisis since the Civil War, Roosevelt stood and, braced on James's arm, approached the rostrum. Veteran broadcaster Ed Hill noted that if Roosevelt had sufficiently overcome his invalidism by forcing himself to walk, he had the personal qualities necessary to lead a nation crippled by economic depression.
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With a stone-faced Herbert Hoover looking on, the Chief Justice administered the oath of office. Roosevelt's left hand lay on the family Bible, opened to 1 Corinthians (“Though I have all faith . . . and have not charity, it profiteth me nothing”), his right hand extended toward the heavens. He had asked that the oath be administered a sentence at a time, so that he might slowly and firmly repeat the words of the Chief Justice. When they finished, President Roosevelt turned to the rostrum, his face grim and unsmiling, surveyed the crowd of over a hundred thousand as the sun broke through the clouds, and launched into his first inaugural address:

This is preeminently the time to speak the truth, the whole truth, frankly and boldly. Nor need we shrink from honestly facing conditions in our country today. This great nation will endure as it has endured, will revive and will prosper. So, first of all, let me assert my firm belief that the only thing we
have to fear is fear itself—nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance. . . .

What Roosevelt did here was address the emotional state of the country. He became the symbol of hope; and then he turned to the specific circumstances of the country.

A host of unemployed citizens face the grim problem of existence, and an equally great number toil with little return. . . . And yet our distress comes from no failure of substance. We are stricken by no plague of locusts. . . . Practices of the unscrupulous money changers stand indicted in the court of public opinion, rejected by the hearts and minds of men. . . . They know only the rules of a generation of self-seekers. They have no vision, and when there is no vision the people perish. Yes, the money changers have fled from their high seats in the temple of our civilization. We may now restore that temple to the ancient truths. The measure of that restoration lies in the extent to which we apply social values more noble than mere monetary profit. Happiness lies not in the mere possession of money; it lies in the joy of achievement, in the thrill of creative effort. . . . These dark days will be worth all they cost us if they teach us that our true destiny is not to be ministered unto but to minister to ourselves and to our fellow man. . . .

In these words, he identified the cause of the peoples' pain. It was not the people themselves, but Wall Street, whose values represented only a sliver of human possibility. He then went on to make specific policy recommendations.

Our greatest primary task is to put people to work. . . . [T]here must be strict supervision of all banking and credits and investments. There must be an end to speculation with other peoples' money. And there must be a provision for an adequate but sound currency. . . . I favor, as a practical policy, the putting of first things first.

He had respect for our system of government with its balance between the legislative and executive branches, and thus he urged Congress to act on his substantive program or develop one of its own. And he also put Congress on notice:

But in the event that Congress shall fail to take one of these two courses, in the event that the national emergency is still critical . . . I shall ask the Congress for the one remaining instrument to meet the crisis—broad executive power to wage a war against the emergency, as great as the power that would be given to me if we were in fact invaded by a foreign foe. . . . We do not distrust the future of essential democracy. The people of the United States have not failed. . . . [T]hey have made me the present instrument of their wishes. In the spirit of the gift, I take it.

After the inauguration, FDR went back to the White House, reviewed the inaugural parade with General Douglas MacArthur, and then, while a White House reception was in progress, went to the Lincoln Study, where he presided over the swearing-in of his entire cabinet, whose members had all been confirmed by the Senate just a few hours earlier.