Finally, A Simple Plan That Can Reverse Inequality and Save America's Sinking Middle-Class
Author and entrepreneur Peter Barnes.
Photo Credit: peter-barnes.org
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Editor’s Note: As economic inequality grows in America, very few people have put forth solutions that can revive the middle class. Peter Barnes is a writer and entrepreneur whose focus is improving capitalism to solve big problems like climate change and inequality. Steven Rosenfeld spoke with Barnes about his latest book, With Liberty and Dividends For All: How To Save Our Middle Class When Jobs Don’t Pay Enough .
Steven Rosenfeld: Your book starts with a very sober assessment of the American middle-class. It’s shrinking. It’s disappearing in our lifetime. And the reason is that most work-related income is not enough. It’s insufficient and that’s getting worse. Tell me about that.
Peter Barnes: One can throw out all the numbers, but rather than do that, just think back. Some of us, like myself, are old enough to remember when there were lots of good-paying steady jobs, both in the private sector and public sector. They had benefits, covered health insurance, and provided pensions. That was what the middle-class was built on when I was growing up. Now, for a variety of reasons, including globalization, and automation, and the decline of labor unions, that is no longer the case. And most of the younger people who are entering the labor market today don’t get jobs like that.
It’s kind of a “you’re on your own economy.” Everybody temps. They have more than one job. They’re always marketing themselves on LinkedIn or something like that to get the next job. They don’t get health coverage. They have to pay for their own pensions and so forth. On top of which, education costs are way up. Students have debts they have to pay. All these things are different and they are not changing. They are going down, not up, as far as the middle-class goes.
Steven Rosenfeld: Yes, but your crucial observation is that work-related income is not enough.
PB: Right, well, that’s the point. We can’t rely on good-paying jobs to sustain a large middle-class in the future. It’s not enough. It’s not going to work.
SR: Your solution comes from taking a close look at what you call the “river of money” flowing in the American economy, and redirecting or redistributing the wealth that comes from the assets and institutions all citizens share. You call it “co-owned wealth.” So break this down for us. What should be shared? What is co-owned wealth?
PB: Even though good-paying jobs are in decline, there’s a lot of wealth in our economy. It produces an enormous amount of wealth. So the economy, as a whole, is okay, but the money isn’t flowing to labor.
So if we want to have a middle-class we have to take somehow from the wealth that we actually do have, and spread it around in ways that aren’t tied to people’s time-clock labor. All right, so what is all that extra wealth out there that doesn’t come from labor? A lot of it, if you really start to dig deeper, below the surface, is wealth that is either stuff that we inherit—like all the gifts of nature; the soil, the water, the air, the minerals, the trees, etc. Also, a lot of our wealth comes from stuff that society created—all of our science, knowledge, techologies, that stuff.
Plus, and here’s the key to it, there’s a lot of social infrastructure—such as the financial systems, or legal systems, our copyrights and patent laws. All of these create enormous amounts of wealth. This is wealth that is not created by individuals, not created by private corporations, but created by society. So what I’m saying is that some of that wealth should be shared equally among everybody. And that would be the basis for supplementing labor income.