A Message for President Biden: (and to all  others who are concerned about our future)

The United States needs a bold new list of achievable economic initiatives that can reverse the malevolent trends of the past 20 years. Left unchecked, the current economic trends portend an outcome at least as serious as climate change will be, if left unchecked. In particular, GDP needs to be boosted to generate the profits, jobs, income, and tax revenues to pay for the current recession caused by the Covid-19 virus. In addition, the distribution of US wealth and income needs to be put on course to a new vision where millions of residents have a chance to share in the prosperity they helped to produce. Americans are eager for change now. The opportunity for change is here. New planning must start now. It begins with acknowledging that a new Living Wage standard is needed as a measure of how well we are doing.

Let us, at a minimum, adopt a new Living Wage Scale--not as a matter of law--but as a vision and a handy reference for changing the conversation away from bare subsistence levels, or poverty levels, or minimum wage levels suitable for the 1950s. We need a new, relevant Living Wage Scale that is consistent with a fair distribution of the income and wealth that we are all producing today. The Living Wage would help to shift the conversation away from the outdated 1950s and into the 2020s. We can begin by adopting the Glasmeier/MIT Living Wage Scale as a viable goal. Here are the Three Steps needed to lay the groundwork for a new economic future, suitable for and achievable by the wealthiest country in the world:

1. Adopt the Glasmeier/MIT Living Wage scales. A household living wage today across the US is in the range of $60,000 to $90,000 annually. This is do-able.

2. Repeal and replace the Estate Tax laws back to their 2015 rates and intentions. Example: the Walton siblings inherited $23 billion in unearned and untaxed wealth in 1993 when their father, Sam Walton, died. Today, that inheritance has grown to $175 billion, still unearned and untaxed. According to Forbes, we have 614 more billionaires who will leave many trillions of dollars all projected to be unearned and untaxed in estates and handed to their offspring to grow in perpetuity, unearned and untaxed. Put another way, the present inequality gaps have burgeoned to supporting a few families in regal opulence on one side, while forcing millions of families into squalor on the other side. This huge divide is the way to end a free society in favor of dynasties of autocratic families--or worse..

3. Reverse the current 70/30 savings/spending percentages of new money flows from the Fed, and redirect higher M1 Money flows to credit unions. Currently, we have $13 trillion in savings (M2-M1), and only $5 trillion in circulation (M1) where 4,300 commercial banks decide who gets how much. ( Translation: The foxes are guarding the henhouse). We need to redirect more new money flows to our 5,009 credit unions (with 105 million members), so that more M1 money is made available to small businesses and individuals--where 70 percent of our jobs, GDP, income, taxes, and wealth are created.

Step 1 requires only a Presidential Executive order. It merely starts the new conversation about wages to be consistent with real needs and our values.

Step 2 requires only that we tax the unearned and currently untaxable inheritances--especially those that soar into the billions of dollars. Our personal wealth total is currently $124 trillion with the great majority of it held by very few families. Reinstating the tax on inheritances over $5 million is not only fair, it is needed to help pay for part of our economic recession brought on by the Covid-19 virus.

Step 3 is at the heart of boosting GDP while reducing our dual wealth and income inequality gaps. Income and wealth Gini coefficient estimates of 0.50 and 0.90 tell an embarrassing story. These same gaps arising from greed have also created and exaserbated virtually all the economic tragedies associated with poverty: hunger, crime rates, incarcerations, suicides, mental health issues, drug usage, teen pregnancies, illiteracy rates, lower life expectancies, and social immobility. The cause/effect relationships are identifiable via a meta-analysis of US and world correlation data (the Spirit Level). Redirecting M1 money flows via credit unions is vital to this leg of the solution.

Inaction is not an option. Left unchecked, we are on-course to an economic collapse unparalleled in our history, created by ideologues who knew exactly what they were doing.  The numbers do not lie.  At a present growth rate of 7.2 percent CAGR, our wealth inequality gap will grow to 32 times its present severity in the next 50 years, (1.072^50 = 32.34) while our economy will be producing far below its optimal output. That is the road to revolution, or oblivion, or both. Why? Because 90 percent of all new wealth will continue to flow to those at the top of the wealth curve. With these changes, however, we can grow the economy and begin to close both wealth and income gaps where everyone--rich and poor--would benefit. But we must begin to act boldly now.

We are at a critical decision crossroads. The linkages shown all support this message. Economists who are familiar with the data can easily deduce that the same families now worth $110 trillion in wealth will hold $3.56 quadrillion of wealth in 50 years, while those living in poverty will remain in poverty. A rising tide may raise all boats, but rising wealth does not raise those who must live in poverty. Remember: Zero wealth raised to any power is still zero wealth. There are no programs in place today to prevent that inglorious end to a free society and a return to feudalism--the very system America was established to defeat. The expanded M1 linkage to credit unions is the key to the success of this proposal. Ultimately, we would need 70 percent of our money supply flowing into M1, and 30 percent in M2 - M1. The Federal Reserve is fully staffed to make the needed changes and to monitor their effectiveness. The rest is up to us.

Sincerely,

Edward Phillips