Part 4
| 171 CHAPTER 12: LACK OF UNDERSTANDING LEADING US AWAY FROM UNITY When I first introduce my proposal for The Seed Money Act, there are often questions. I’ve compiled a list of the most frequently asked questions, as well as the responses for each below. What is the Seed Money Act? The Seed Money Act is a socially and fiscally responsible way to abolish poverty and restore balance to the federal budget. Once it becomes law, the Act will be an unconditional, permanent, regular grant to every American household, set to an amount that’s equal to the federal poverty guidelines. For example, for a single-person US household in 2020, this amount would be just over $1,000 per month. For our repayment scheme, we ensure that everyone has repaid their seed money grants by the time their earned income reaches a set threshold through a tax deducted from their wages.
172 | END POVERTY. MAKE TRILLIONS. How did you come up with the amount of $200 billion? The US census calculates how many households are below the poverty line and by how much. If we multiply the total number of households below the poverty line by the average deficit per family, the cost of getting everyone in America to the poverty line works out to approximately $155 billion. The number has been rounded up to $200 billion to lessen the marginal tax rate on the poor. That number, of course, increases if we want to lessen the marginal tax rate, increase the seed grant amount, etc. Can we afford to invest $200 billion a year to end poverty and make trillions? The real question is, can we afford not to? Ending poverty requires a redistribution of a trivial amount of existing money, but it’ll require a shift in the way wealth is divided in this country. The Seed Money Act won’t adversely affect middle- or upper-income households, and it’s not going to change the amount of the average household income. The goal of The Seed Money Act is to give people enough money so they’re not in poverty. Ninety million people in the US deal with poverty over a five-year window. For a single-person household this money would mean $13,000 a year. Consider that the richest twelve thousand households in America have $11.6 trillion in assets. A $200 billion transfer doesn’t change their lives at all. Where specifically will the $200 billion in seed money come from? There are several approaches we can take. One approach would be a minor tax adjustment on the highest income earners. That’s the simplest, and most logical approach. If we didn’t want to tax the rich, another approach would be to reduce spending on a variety of other government projects to offset the costs. The US federal budget in 2020 was $4.79 trillion, so finding $200 billion in savings requires a reduction of other program spending of just four point two percent. A last approach would
CHAPTER 12: LACK OF UNDERSTANDING LEADING US AWAY FROM UNITY | 173 be to take half of the $400 billion we already spend on welfare, food stamps, and unemployment programs and use that to fund the $200 billion in seed money. That’s the least desirable approach, as it reduces the impact of the Seed Money Act by rapidly eliminating our current social welfare system. A likely political outcome is a combination of these approaches. If poverty were such an easy thing to eradicate, why hasn’t it been done already? In Part 2, I explain how the concept of poverty evolves as a society progresses economically and technologically. In the US, direct cash transfer programs now make up forty-three percent of the $380 billion we spend on our social safety net programs. The Earned Income Tax Credit (EITC) is a negative tax. Temporary Assistance for Needy Families (TANF) is a temporary direct cash transfer to the poor. Supplemental Security Income (SSI) is a partial income paid to low-income individuals who are disabled, blind or senior citizens. It took decades of legislation to install these programs and bring our social safety net spending to a point where American society is ready for the Seed Money Act, but we can do better and eliminate poverty altogether without a single government program. We are also finally technologically advanced enough to be able to easily implement the Act to completely eradicate poverty in the US. Could we have eliminated poverty in the past? I believe so, but given the progress we’ve made as a society, it’s never been easier or more profitable to end poverty than it is now. What makes this plan so different from others suggested in the past? Many current and past proposals share similarities with the Seed Money Act. I avoid referring to these other plans, and the individuals proposing them, not out of disrespect or arrogance, but so the Seed Money Act can be judged on its own merits.
174 | END POVERTY. MAKE TRILLIONS. Won’t government bureaucracy get in the way? The US government proved it could quickly step up to provide economic stimulus during the coronavirus pandemic. As of March 7th, 2021, Congress had approved $5.82 trillion in total for stimulus. If the cost of the Seed Money Act is $200 billion a year, we could’ve covered the cost of eliminating poverty for nearly thirty years with the current COVID-19 stimulus appropriations. Because the seed money would be given in the form of a grant, it means there’d be no strings attached, so there’d be no need for government oversight. Since every American household would receive this money, there’d be no additional burden placed on the government to decide who qualifies for the money. What happens to all the social programs already in place to support poor people? Do they just go away? The price tag to eliminate poverty, given the expected returns, is so very low, we don’t need to cut current programs. However, it would be irresponsible not to engage with the incredible savings opportunities if we were to improve the efficiency and effectiveness of our social welfare programs by using seed money to eliminate poverty directly. Isn’t poverty a mindset? How do you change somebody’s mindset? We currently have generous welfare programs that provide many in- kind donations to the poor (i.e., we give things, not money). These services are given and restricted on an income basis. As a person makes more money, they lose services. These kinds of welfare programs discourage the poor from earning more when they’re close to the program income cut-offs. This is a waste of money and counterproductive. The Seed Money Act eliminates the welfare trap. Everyone receives seed money grants regardless of how much they earn. Once an individual earns income, they’re taxed on that income, but the seed money grant
CHAPTER 12: LACK OF UNDERSTANDING LEADING US AWAY FROM UNITY | 175 remains the same. For every extra dollar you earn, you’ll be taxed, but you’ll always make more than you would have if your income didn’t increase. Everyone would be motivated to focus on what they can gain through work rather than what they stood to lose from making more income. We don’t want to keep the poor impoverished. That costs us too much in terms of dollars and social instability. We want poorer people to earn more and pay taxes like the rest of us. The Seed Money Act makes sure we’re all aligned toward this goal. If you give poor people money, will they know what to do with it? It’s safe to say that, if you give seed money to someone unable to provide for their basic needs, they’ll use the money to address those needs. For many, the concept of seed money can feel radical. To answer this question, we first must ask ourselves, who knows what the poor need? We can use the federal poverty guidelines to approximate how much an essential basket of goods would cost, but as we all know as shoppers, everyone has their own tastes. Some would rather have a bigger home and eat cheaply. Some would rather buy used clothing and spend their extra money to dine out at a restaurant on occasion. All of this is fine. We must ask ourselves, if the poor can’t decide what they need, then who can? People will absolutely make some purchases they’ll regret. Who hasn’t? If we’re worried about our abilities to responsibly spend seed money grants, then we might want to include personal finance and household management courses in our school curricula. We all make ‘dumb’ purchases sometimes, spend more than we make, fail to understand the risks associated with debt, and make poor investments. We could all benefit from learning how to better manage our money, not just the poor. If everyone has seed money, does that become the new poor? There are two types of poverty: relative and absolute. Relative
176 | END POVERTY. MAKE TRILLIONS. poverty means having less than someone else. Absolute poverty means lacking basic human needs like food, clothing and shelter. The Seed Money Act eliminates absolute poverty, which means there’ll be no more homelessness, hunger, or crippling poverty. Relative poverty will still exist. People will still have to compete, but it’ll be for things they want rather than things they need, which creates a better, more inclusive model of capitalism. Why invest in poor people? Aren’t they poor because they’re lazy? We have this misperception that says poor people are lazy. The reality is, being poor usually means working two or three different jobs to try and make enough for a forty-hour work week. And that’s usually in jobs that don’t have benefits. When it comes to lifting people up, there’s this false narrative that tells us when we help poor people it’s a handout, but when we help big business through tax breaks, etc. it helps stimulate jobs. The fact is, we’re serving corporations over people across this country. If we flipped this around, and started investing in our people instead of corporations, the corporations would still benefit because they’d have more customers and a workforce that’s educated, healthy, and able to contribute in a meaningful way. Won’t poor people waste their seed money on drugs and alcohol? When someone’s living on the street and living on $10 a day, there’s no incentive to stay sober. They choose to buy something that’ll numb their pain and help them escape from the reality of their situation. Data collected from transfer payment pilot studies indicate that the use of alcohol, tobacco, and drugs for those dealing with extreme poverty drops when they receive regular cash payments. Simply put, the money they receive gives them more options and they no longer seek coping mechanisms to help them deal with the devastation that comes with extreme poverty. With enough money, they can get off the streets, afford
CHAPTER 12: LACK OF UNDERSTANDING LEADING US AWAY FROM UNITY | 177 rent, have a hot shower, and buy food for themselves. These are basic needs they can now afford. If you give poor people money, where’s the incentive for them to help themselves? The average American doesn’t want to live at the poverty line. Poor people are no different from those living well above the poverty line. Human wants are infinite, and we live in a society with a seemingly endless choice of goods and services, if you have the money. Beyond money, most people like to work, and they want meaning in their lives. Contrary to popular belief, the poor don’t want to sit around and do nothing their entire lives. We all have wants beyond the essentials. We all want to feel needed and provide a useful service to society. Won’t your plan hurt the middle class? The Seed Money Act finally provides middle-class Americans with a social safety net. Right now, middle-class families are on their own when they fall upon hard times. Most citizens are, unfortunately, a missed paycheck away from falling into poverty themselves. This plan ensures absolutely no one ever falls to homelessness and hunger. When something catastrophic happens to a middle-class family, they don’t need to stand in embarrassing lines or fill out confusing forms. Their seed money grants are automatic and guaranteed, just as a true safety net should be. That’s good for everyone in an increasingly demanding and expensive world. Poverty must be good for someone, right? If having poverty in a capitalist society was economically beneficial,, then the poorest countries in the world would have the best economic performance. But that’s not how capitalism works. Wealthy countries have such a competitive advantage because their citizens aren’t focused on survival and worrying about things like getting shot at or starving
178 | END POVERTY. MAKE TRILLIONS. to death. They’re free to think about building businesses, innovation, human capital, and solving problems. Poverty is a drag on the entire society. No really, who benefits from poverty? The only people who really benefit from poverty are a small subset of businesses we’re subsidizing as taxpayers. These include slum lords and payday lenders. Most successful businesses—whether it’s a Costco or Starbucks, etc.—invest in their employees. They understand it’s much better to have a workforce that’s excited to come to work, and recognize it’s almost impossible to be a productive member of society if their employees are starving or sleeping on the street. Is this communism, socialism, or capitalism? The Seed Money Act will simply increase access to the production that exists and is controlled by the marketplace. That’s about as capitalist as you can be. There’s much confusion around the terms communism, socialism, and capitalism. So much so, I often find them to be useless terms in conversation. To address these questions, I first like to share how I define these ideas. Capitalism is a system of economic production where private citizens can own capital and deploy capital. In reality, no purely capitalistic society exists. Every national government owns at least some of the natural resources and capital within that country. Most, including the United States, have a central bank that’s the largest asset holder in the nation. Socialism is a much broader political, social, and economic idea where the private pursuit of wealth isn’t the primary aim of society. In socialist theory, the national government is often viewed as the appropriate counter to the shortcomings of capitalism, the most important being wealth inequalities and the associated poverty. Every country in the world has some socialist programs, including the United States. Socialist programs run by the state include public schools, roads, hospitals, farm
CHAPTER 12: LACK OF UNDERSTANDING LEADING US AWAY FROM UNITY | 179 subsidies, government provided childcare, health insurance, government backed and subsidized mortgages, government-run utilities, indoor plumbing, and more. Communism is an idea that doesn’t exist in reality. In a state of communism, all production would be owned by the workers, and the need for any government would therefore disappear. Decisions would be made by people directly, and all goods would be shared based on needs. Some argue communism is nothing more than a utopian dream that runs counter to human nature. Proponents believe communism is the economic goal of society, something to strive for regardless of whether a truly communist society is achievable. No country has come close to implementing communism in this sense, but several have made it their stated goal. I don’t believe the countries with the stated goals of achieving communism have gotten any closer to building such a society than those claiming to be purely capitalist and free-market driven societies. When most people in the United States think of communism, they think of China and the former Soviet Republic. Both countries initially had systems of nearly complete state-ownership of capital. The Soviet Republic collapsed, and modern Russia is a capitalist country with social programs no different than America and most of the world. China has shifted ownership of much of its capital to private citizens and is economically quite similar to most modern economies in having a mix of state- and privately-owned businesses (though China remains more tilted towards state-owned businesses than the United States). The world’s most financially successful companies are a mix of state- and privately-owned enterprises. All of them significantly benefit from state welfare in one form or another. The mainstream debate around communism, socialism, and capitalism is largely void of any practical understanding of our current global economic systems. We must realize that the primary act of government is to redistribute resources. Pay close attention to how and to whom those resources are being distributed. The biggest welfare recipients tend to be the wealthiest citizens.
180 | END POVERTY. MAKE TRILLIONS. I thought poor people were mostly criminals. Are we helping criminals? When someone is living in extreme poverty, the urge to steal can be compelling. Even a few dollars can make a big difference for the hungry. But people don’t have to commit crime to survive when their basic needs are met through seed money. An individual attempting to re-enter society after being incarcerated doesn’t need to return to a life of crime to sustain themselves if they’re receiving grants sufficient to cover their costs for shelter, clothing, food, and transportation. Of course, there will still be crime, but we can eliminate crime that occurs from the desperation of poverty. So how do we make The Seed Money Act a reality? When a proposal such as the Seed Money Act is developed, the concept must be written in the form of a draft bill. Once the bill has been drafted, it must be sponsored by a member of Congress to be formally presented to the House of Representatives and the Senate for debate and vote. Representatives of Congress typically sponsor and vote for bills they believe are important to their constituents. We can help make this happen by telling our Congressional representatives that the Seed Money Act is important to us. Is this a Republican or Democrat party idea? Poverty is a bi-partisan problem. The Brookings Institute found that in 2016, of the forty-seven point eight million Americans living in poverty, twenty-five point one million of our nation’s poor lived in districts represented by Republicans, while twenty-two point seven million lived in districts represented by Democrats. Fans of either party should be disappointed with these results. Poverty isn’t an inevitability. We don’t have to have poverty in this country. By coming together and realizing that we’re throwing away trillions of dollars
CHAPTER 12: LACK OF UNDERSTANDING LEADING US AWAY FROM UNITY | 181 by not ending poverty, we can declare victory in this war, and make a lot of money doing it. The Seed Money Act sounds great in theory, but do you have evidence that suggests it will work in real life? Another way to phrase this question is, “Does sharing money work?” Of course it does. As the wealthiest country the world has ever seen, we have enough to make sure everyone can eat and have a roof over their heads. It’s strictly a matter of sharing the wealth that already exists. In doing so, we’ll lift the poorest members of society off the ground and allow them to become productive members of society as well, creating even more wealth overall. There are numerous examples of how unconditional cash transfer programs like these have drastically improved poverty in efficient ways. The best example in the United States is the Earned Income Tax Credit program, one of the greatest poverty-reducing programs we’ve ever implemented. When people have absolutely nothing, giving them money is extremely helpful. When I see a homeless person begging for money, I’m hesitant to give them cash. Shouldn’t I just buy them a coffee or sandwich instead? If you want to give someone a hand up instead of a handout, consider giving them cash. Despite not knowing their circumstances, we need to respect their autonomy as adults. Giving money is a way of saying, “Here, solve your problems,” rather than deciding what you think they need. When a person is in need, they’ll take what they can get, even if it’s just a cup of coffee or a sandwich. But we give them a greater sense of dignity when we give them money. It allows them the freedom to make decisions for themselves and is the ultimate sign of respect.
182 | END POVERTY. MAKE TRILLIONS. How will the Seed Money Act influence arts and culture in our country? Art can influence change in the world. Artists of all kinds, including those in the visual arts, musicians, performing artists, and writers communicate their ideas through their art. But artists are typically paid by the project, contract, or gig. These people are often forced to supplement their income to get by, especially when they’re starting out. Sometimes talented would-be artists choose not to pursue their passion for this reason. With seed money, these professionals will be able to pursue their craft without fear of poverty.
| 183 FINAL THOUGHTS Now that you have a clear understanding of the plan, I ask you join me in recommending that Congress grant seed money to all US households equal to the federal poverty guidelines each year as the first step in the budgeting process. Once we pass this bill to end poverty, there’ll be lifeblood in all our communities again, and they’ll begin to shine. I have no doubt we’ll end poverty worldwide and make trillions of dollars doing it. I ask you consider doing the following five things to help us end poverty:
- Use social media! Knowledge is everything. Take what you’ve learned in this book and share it with your friends and family. We need to make ending poverty a worldwide topic of discussion. Please follow End Poverty. Make Trillions. on social media and visit the website endpovertymaketrillions.com. Like, comment, and share your favorite content, or create your own content using #endpovertymaketrillions.
- Write to Congress! Send your representative a letter or e-mail with the subject: “Let’s End Poverty. Make Trillions!” Let them know why you want everyone to have at least some opportunity. Share your experiences with poverty, and how a little money could change your life, or the lives of your loved ones.
- Recommend this book to a friend! All the proceeds from this book will go towards investing in low-income communities and advocating for seed money.
- Organize! If you’re a community leader, talk to the members of your organization about ending poverty, and how we can save trillions of dollars doing it. Together, our voices grow louder. Host events, canvas the neighborhood, reach out to local politicians and business leaders, march, protest, be seen and be heard!
- Love! It all starts with love. See every human being and every creature on this planet. Whether we like it or not, we’re all in this
184 | END POVERTY. MAKE TRILLIONS. together. We’ll no longer ignore people sleeping on the street or crying out for help. Be the salt and the light of the earth. I truly thank you for caring enough about either ending poverty or making trillions of dollars for our country. Both are laudable causes. I’m a firm believer that debate sharpens ideas, and I welcome you to talk to your political and community leaders, as well as your friends and neighbors, about the ideas presented to you. Please feel free to send me a message with your views, whether in support of or against my proposal. For more information about the proposal, or to reach me, visit www.endpovertymaketrillions.com. I look forward to the discussions and am hopeful about the change we can make. We’ll never have a perfect society, but we can try. Let that be our purpose.