Fairness – or the lack of it – dominates the discussions and positions taken in this presidential election cycle. Whether explicit or implicit, the messages from both candidates and the voters revolve around selected groups of people in America either getting, or not getting, what they deserve. Sanders advocates breaking up the big banks so Americans will not bear the unfair burden of bailing them out. Trump rails against the allegedly unfair riches that illegal aliens are taking from American workers. Clinton is essentially the candidate for the unfair status quo, with corporate money paying off politicians for unearned privileges. Cruz advocates a massive, unfair and unearned tax cut for the wealthy.
Given the intractability of American politics, it may seem like a hopeless task to reconcile these various policy positions. Yet, it is possible. It can be done if we return ourselves to a basic principle that used to prevail in this country: aligning risk with reward. If you take a risk and do well, you get the reward. If it doesn’t work out, you accept your loss. Put another way, if you make a decision, you have to be ready to accept the consequences, good or bad.
This sounds quite obvious, but much of the unfairness and inequality we have in America today is based on the seeming suspension of these rules. Wall Street bankers can take huge risks and then have the rest of us make them whole when things go wrong. We can fight wars with with other people’s children and borrowed money. Our corporations ship jobs abroad but still expect tax cuts.
Here are five policy recommendations that might guide thinking on how to bring fairness and prosperity to the country without compromising too many of each party’s values:
- Corporations can pay no taxes… If tax cuts are based on the previous year’s hiring of Americans. The more a corporation increases the dollar value of the salary and benefits it pays in the United States, the more tax breaks it can get from the US government. That seems fair, right? If they want to repatriate the $1 trillion they have overseas tax free on the promise of “creating jobs,” let them create the jobs first. Then they can have tax cuts, and perhaps some advantage in government contracting. Put documented, legal-to-work Americans to work and reap the benefits. Kick Americans out of work and pay the price. Otherwise, American companies will expect an unfair, unearned tax cut despite cutting millions of American jobs.
- Banks will be bailed out…. If the law is changed to make it clear and ironclad that the banks will face complete liquidation and reorganization under government authority – the financial equivalent of martial law. This should also allow for claw backs of personal wealth from top executives. This way, risky banking practices can lead to bankruptcy, unemployment and public disgrace. With these real world incentives, the banks will likely adjust their risk taking and probably divest themselves of high risk units – break themselves up, in essence, under market forces. Otherwise, the bankers can do whatever they please, safe in the knowledge that their bad ideas will have no consequences, that working Americans will pony up their wages in to keep them in their mansions even if they crater their businesses.
- The Pentagon can have an unlimited budget… If the core military is reduced in size and any deployment of American troops is based on a conscripted expeditionary force paid for by an immediate tax increase. This way, if politicians want to wage war, they must put their voters (and their own children) in harm’s way and pay for it. If a threat isn’t serious enough to warrant a draft and a tax increase, it’s not a threat we should fight. It’s certainly not a war we would win. Otherwise, we will continue to pursue military adventures that cause Americans to suffer, add to our debt and have little effect on the world – expect perhaps to make it less safe for America.
- Hedge Fund Managers can pay capital gains tax rates on their bonuses…. If they agree to put their own personal assets at risk. Their tax rate will be based on the proportion of their personal assets they pledge to back their own funds. If they do well, that’s great. If they make bad investments, they lose money – that’s what capital gains tax is for. Otherwise, people who buy and sell stocks with other people’s money get the unearned privilege an unfairly low tax rate.
- Health care will become more affordable… If the government spends the money it is planning to spend on subsidies to buy out the stock of the major health insurance companies and create a massive, privately owned, government regulated single payer. The stockholders of the insurance companies will be paid for their holdings. The citizens will get uniform, fairly priced coverage with the advantage of single payer market dominance. Otherwise, the big health insurers, hospital chains and drug companies have been allowed to reap an unfair profit at everyone else’s expense.
Each of these ideas has flaws and would have to overcome massive political opposition. However, the approach can be workable because it is based on restoring a human reality to American politics that has been effectively suspended for many years. Privileges and bonuses must be earned. Taking risks must entail facing the consequences. This will not solve all of America’s problems, but it will align the forces of government, business and the electorate to find suitable, equitable solutions to the major issues of the day.