So here’s the quick sketch of reality in America:
13 million people without jobs (including the low participation rate) – 8.1% unemployment rate in America
2 Trillion Dollars of Corporate and Private Sector earnings, sitting on the sidelines, collecting no interest.
If you invested all 2 Trillion dollars into creating 13 million jobs, you’d have average salary/benefits of $153k/person. But better yet, the majority of the investment will bring back a higher return on investment that 0.1%. So the rich get richer! But not by much – perhaps on average 5-8% of their investment, while the middle and lower classes can see their lifestyle and salaries rise 1.5-3x whatever it is now.
Okay, so perhaps it’s unrealistic to invest all the money. But what about just 25%? $500 billion injected in startups, new projects, new technologies….which will beget others to take the plunge and pull in their sweat equity. Once the pump is primed there’s no stopping: innovation spurs competition, and in order for companies to stay current and not get left behind they’ll have to spend $$. Or they’ll end up like Kodak. Really, we just need a few industry leaders to make a few big splashes and show how “easy it was” to make the rest of the pack follow. We – the entrepreneurs, the corporate managers, the people – just need to say “yes” to unlock all that frozen capital.
Well, we also need good ideas, well-educated specialists and a host of morally-sound leaders with long-term views.
So what will happen if we DON’T do this? If the capital just stays frozen, and the unemployed stay unemployed, and the gulf continues to widen? Well, then the incentives to do good work will be misaligned. The American Dream is about social mobility, and with capital locked in the 1%, social mobility stops being possible. It’s as simple as that. The social cohesion in the country will fray even more; being able to relate to each others’ viewpoints will dwindle, political parties will continue to polarize, and we will be facing some sort of civil unrest (potentially an escalation to civil war). It’s a historical cycle – every time in history the haves vs the have-nots gets too strained, there’s a revolution and it gets messy. Think of France in the 18th century, Russia in the 19th (and 20th) – the only way China avoided a civil war in the past 20 years is that they have a HUGE emphasis to discourage dissent, by whatever means possible.
That’s what I think. I don’t think anyone can honestly say we should keep lurching from crisis to crisis, and putting on the band-aids on society. If anyone plans on living in America for the next 20-45 years in relative peace, we need to step up the initiative and create jobs, together.