Читать книгу The Uprising of the Pandemials - Federico Dominguez - Страница 16

According to a recent study, the salary of the CEOs of American companies grew by 940% since 1978, as opposed to 12% for their workers. On average, the CEOs of major American companies earn 178 times more than an average employee, (11) receiving an annual compensation of $14 million in 2019 (12). Companies cannot be forced to pay their workers more, doing so would curtail the proper functioning of the market and would affect the economy. But given such a great difference in salary, some kind of income support mechanism must be put in place for those who earn the least.

There are two major groups affected by stalled salaries. On one hand, those who cannot cover their basic needs; and on the other, citizens who have been experiencing stagnant salaries and can no longer maintain the middle-class lifestyle they are accustomed to.

For the first group, governments have created complex support mechanisms that include food stamps, economic aid for their children, social housing, subsidized loans, discounted public transport rates, among other programs. They represent an entanglement of social programs, coordinated by hundreds of federal, state, and local offices. Their beneficiaries must go to government offices and fill out complex forms, losing valuable time they could have spent working. In many cases, these programs discourage work because they are granted without requiring anything in return or are suspended if the recipient exceeds a certain income level. This generates the need for complex and costly state machinery to supervise these programs, frequently resulting in a form of control for many authoritarian governments. But above all, they do not respect or dignify their beneficiaries, making them feel dependent on the state. Most of these people do not want to be given things for free, they simply want their work to allow them to sustain the standard of living that was taken from them.

The most effective known program for tackling poverty without undermining the freedom and dignity of individuals, while also being easily implemented, is the EITC (Earned Income Tax Credit). It is a federal government program in the United States that supplements the earnings of low-income workers through fiscal credit. It was first implemented in 1975 by President Gerald Ford, then expanded by President Ronald Reagan, and further developed by President Bill Clinton. It is very simple: up until a certain income, for every dollar a worker earns, the state pays them an additional sum. It operates like a negative-rate income tax. This framework issues payments that range from $529 to $6,667 annually. It is a simple, effective, easily enforceable program.

For many specialists, it is the most effective program in fighting poverty given that it promotes work and grants higher sums to parents of small children. This translates into better living conditions and future prospects for the children of these families. Some countries like the UK have implemented similar programs but none on such a massive scale. According to an analysis by the Center on Budget and Policy Priorities, this program complements the income of 28 million Americans and lifts 5.6 million out of poverty, including 3 million children. The EITC reduces the level of poverty of another 16.5 million people, including 6.1 million children. (13)

Some studies show that this program pays for itself thanks to the long-term benefits it generates. The state saves billions of dollars in uncollected taxes and social aid for eligible workers, in addition to further savings by improving the prospects for their children. (14) Not only is it effective in terms of human dignity, but it also saves taxpayers money and promotes economic growth.

The second group includes workers who, though they may not be poor, have experienced stagnant income for several years and can no longer preserve the middle-class standard of living they used to enjoy. This group has been abandoned by the state. The minimum threshold for income tax eligibility could be increased and if that were not enough, some of these workers could be included in EITC. This would be a good way to reduce the massive levels of income disparity without generating distortions in the economy. The middle class spends most of its income on consumption, so the positive impact on the economy would be immediate.

This program could be implemented in several countries. In addition to being easily enforceable and effective, it can easily be expanded during periods of economic hardship. In a world where technological change will only further widen the income gap, these types of programs will start to become more relevant.

It is important in designing these programs that they not to lose their focus on individual human dignity. In my opinion, there should only be three welfare plans. The EITC, which helps those who do work but do not earn a sufficient income; an unemployment subsidy for those who are unemployed but want to work; and a disability pension to help people who unfortunately cannot work due to their physical condition. Anything else is state control and feeds a complex state technocracy.