How can we slow (1) increasing income inequality & (2) National Debt? Possible solutions might include Keynsian and trickle-up economics. Might the Moral Equivalent of War increase social capital and wealth taxes?

1. How can we slow increasing:
1. Income Inequality &
2. US Debt?
Paul H. Carr

2. How can we slow increasing:
1. Income Inequality
-Political Polarization &
2 . National Debt ?
•ECONOMIC SOLUTIONS
-John Maynard Keynes’ Nat. Debt Mgt.
-“Trickle Up” versus “Trickle Down”
- Might the “Moral Equivalent of War”
increase social capital and
wealth taxes?

3. GREATER ECONOMIC JUSTICE
Our capacity for justice makes
democracy possible.
Our inclination for injustice makes
democracy necessary.
Reinhold Niebuhr (1892 – 1971)

4. 1929 Recession Recovery
1% Unemployment:
Best Income Equality
this century.
2008 Recession Recovery
3.5% Unemployment
Worst Income Inequality

5. 2012 Unemployment after 2008 recession peaked at 10 %
2020 Unemployment down to 3.5%. Historic low?
2008 Recession 10%

6. When did we achieve our
best unemployment of 1%,
&
best income equality?
1944
June D- Day Normandy Landing

7. July 1944,The Bretton
Woods Conference,
UN Monetary and
Financial Conference,
730 delegates from 44
Allied Nations,
John Maynard Keynes,
British Treasury Secretary,
key figure.
Sept 2019, Paul & Ginny at the
Mt Washington Hotel, Bretton
Woods, NH

8. 1944 Unemployment bottomed out at
a historic low of 1%.

9. 9
1929
Recession
2008
Recession
1944 lowest income inequality
1981 Income inequality increased.

10. From MIT Press Book, "Polarized America: The Dance of Ideology & Unequal Riches,”
Income inequality contributes to political polarization.

11. Political polarization, income
inequality, have all increased
dramatically in the United States
over the past three decades..
The pattern in the social
indicators has been matched by
a pattern in public policies with
regard to taxation of high
incomes and estates and with
regard to minimum wage policy.
We seek to identify the forces that
have led to this observation of a
social turn about in American
society, with a primary focus on
political polarization.
MIT Press 2006

12. Political polarization over slavery led to the most deadly war in US history.

14. The top 10% own 84% of the stocks.

15. Median household income $61,372

16. 2008: Increasing student debt
Since 2017 tax cut, national debt increasing at $trillion per year.
1946 GI Bill, Government funded college educational opportunity: Trickle-Up Economics.
Decreasing national debt after WWII.
WWII

17. “Trickle up”
capital, for the
needy at the
bottom, will
eventually be
available to
the rich.
Does capital
“trickle
down”?

18. 18
1929
Recession
2008
Recession
Low income inequality, 1944 -1980
Inequality increased in 1980

19. Median Income $61,000. – 24% = $46,360
Richest Income $6,100,000 - 23%. =. $4,697,000

20. The December 2017 law was not as drastic as the “trickle-down” tax
cut from 1980 – 1089.
Corporate rate of
48% decreased to
35%
Top individual tax
rate of 70%
decreased to
28%
21%
1980. 1990
Clinton
Tax
Increase,
US
Budget
Surplus
90% Tax rate
starting in 1942
1940 1970
2017
Decrease
For
Corporations

21. A RISING TIDE FLOATS ALL BOATS ?
TRICKLE-DOWN ECONOMICS
The objectives of the top tax cuts in 1980
and 2017 were to stimulate the economy,
ie increase GDP. It was expected to result
in an increase in the tax revenue to the
government.
1. No GDP increase.
2. Increased income inequality.
3. Increased our national debt.

23. YACHT, NEWPORT, RI

24. From 1980-1987, growth decreased from 3.5% to 3.0% as per the trend.
Reagan tax cuts did not increase GDP growth downward trend.
Dot Com
boom
increased
GDP above
trend line

25. After 2017 Tax Cut, No Increase In GDP Growth

26. Reagan Tax Cuts
70% to 28%
OUR NATIONAL DEBT INCREASED IN 1980
PAID OFF NATIONAL DEBTS BEFORE AFTER WINNING
Debt was decreasing before 2017 tax cut
WWII Ends
Won Cold War
Recession from
deregulation of Banks

27. Impact of 1981 & 2017 tax decreases were increased national debt
and increased income inequality.
Corporate rate of
48% decreased to
35%
Top individual tax
rate of 70%
decreased to
28%
21%
1980. 1990
Clinton
Tax
Increase,
US
Budget
Surplus
90% Tax rate
starting in 1942
1940 1970
2017
Decrease
For
Corporations

28. 20% of 65+ old
seniors cannot
afford to retire,
doubled since 1985

29. Debt now Increasing $ trillion/year after 2017 tax cuts.
Payed down debt after WWII, WWI, Civil War
WWII
Civil War

30. A TIPPING
POINT FOR
US DEBT

32. KEYSIAN ECONOMICS
1. During a recession, the
government should
temporarily increase
spending financed by
increased debt.
2. Reduce the debt after the
recession.

33. Unemployment after the 1929 crash peaked at 21%
In 1944, unemployment down to 1 %
Unemployment after 2008 crash peaked at 10%

34. 1998
Surplus
Reagan tax
cuts
decreased
deficit
temporarily..
After1929 crash,
Hardly any deficit
spending until WWII
2008 crash
deficit

35. The Dot-Com boom, plus tax increases, and lower
government spending fueled the 2000 budget surplus.
1998-
2001
Surplu
s
1998-
2001
Surplus

36. KEYSIAN ECONOMICS
1. During a recession, the
government should temporarily
increase spending financed by
increased debt.
2.We are not reducing National
debt now that the recession is over.
3. In the next recession, we will
need to increase debt again and
lower interest rates, presently at
low rates below 1%.

37. to
Corporate rate of
48% decreased to
35%
Top individual tax
rate of 70%
decreased to
28%
21%
1980. 1990
Clinton
Tax
Increase,
US
Budget
Surplus
90% Tax rate
starting in 1942
1940 1970
2017
Decrease
For
Corporations
Reduced tax rate made more income inequality, political polarization, & US debt.
Solution : Increase the highest tax rate, but HOW?
WWII,
Korean War
Vietnam War
Less trust in government
Increase social capital with Moral Equivalent of War

38. WWII POSTER
How we defeated
Hitler Germany and
Japan’s Rising Sun
(1945).
Paid off WWII, Korean
and Vietnam Wars
debt (1980), Landed
Man on the Moon (‘69)
Patriotism against
enemies is the
Social Capital
that bound us
together.

39. "The Moral Equivalent of War (MEOW)"
“One of the classic problems of politics: how to
sustain political unity and civic virtue in the absence
of war or a credible threat." American psychologist and
philosopher William James, 1906,
SPACE & EARTH RACES
• Cold War against USSR communist expansion.
• We had a “Space Race” to land a man on the moon in
1969..
• We now need a “Earth Race” to meet the economic
threat of climate change.
• War against Coronavirus.

40. U.S. Climate Report Warns of
Damaged Environment and
Shrinking Economy
Nov 23, 2018
Thirteen federal agencies predict:
Global warming could knock 10% off
our economy by 2100, double that of
the 2008 recession.
Projected climate losses per year:
$141 billion from heat-related
deaths,
$118 billion from sea level rise and
$32 billion from infrastructure
damage. TOTAL $291 billion/yr
Solutions:
-Carbon fee plus dividend.
-Next generation reactor buildout
- Vegetarian/vegan diet

41. Southern states with hot climates stand to suffer more,
with Florida taking the brunt, as it must also deal with sea level rise.

42. The deserts in the US Southwest will expand into the central farm belt.
- Farmable land in under-populated Canada will increase.
Let’s hope the Canadians will not build a wall to keep us out..

43. PHILIP KOTLER is the S. C.
Distinguished Professor of
International Marketing at the Kellogg
School of Management. He has been
honored as one of the world's leading
marketing thinkers. He received his M.A.
degree in economics (1953) from the
University of Chicago and his Ph.D.
degree in economics (1956) from the
Massachusetts Institute of
Technology (M.I.T.), and has received
honorary degrees from twenty-one
foreign universities. He is the author of
over 57 books and over one hundred
and fifty articles.
• He has been a consultant to IBM,
General Electric, Sony, AT&T, Bank of
America, Merck, Motorola, Ford, and
others.
• The Financial Times included him in
its list of the top 10 business thinkers.

44. 44
1929
Recession
2008
Recession
2016, Kotler asked me,
“Are you an economist?”

45. After the abandonment of the
state-controlled economy of
Communism in the USSR in
1989, the world has:
AUTHORITATIVE CAPITALISM IN
Russia and China
DEMOCRATIC CAPITALISM in
US and Europe
NATO countries in Europe are
anti-communist, but more
socialistic than the US
Feb. 2016. Kotler said, “Bernie
is not a socialist, but a capitalist
with a heart.”

46. Can US capitalism work better for the bottom 50% ?
PROBLEMS
• Income inequality and
political polarization
increased in the 1980s
• SOLUTIONS
• Higher taxes for rich
• Education (GI Bill, WWII)
• Paid sick leave for the
bottom 50%
• Anti-Corona Virus War.

47. How can we slow increasing:
1. Income Inequality
-Political Polarization &
2 . National Debt ?
•ECONOMIC SOLUTIONS
-John Maynard Keynes’ Nat. Debt Mgt.
-“Trickle Up” better than “Trickle Down”
- Need the Moral Equivalent of War to
increase social capital and
wealth taxes