How to Terminate Income Inequality in the U.S.: The Implementation of an Annual Bonus Plan for Workers, in Addition to the Existing Management’s Bonus Plans.

Many signs appear to indicate that the U.S.A. is on the verge of its collapse.

If we have a look at history, it seems that all empires tend to collapse over time. The Roman empire, the British empire, the Spanish empire, the Soviet Union, to name a few, all the empires reach a level of maturity, it seems, after which they inevitably collapse, after a period of decadence.

So, are we witnessing the inevitable collapse of the U.S.A.?

Is the U.S.A.going through a period of decadence?

We believe that, yes, the U.S.A. has been facing decadence for a while, right now exacerbated by the rise of right-extremist groups, the surprising and disgraceful election of someone like Donald Trump, of low, if any, moral standards, and the unthinkable trend toward socialism shown by a part of the American society.

The collapse though can be easily avoided, as we shall propose later.

In our opinion, the unilateral rupture in 1971 (under Nixon’s Government) by the U.S.A., of the agreement reached among the leading nations (29 leading occidental economies) at Bretton Woods, by which each participant country agreed to discontinue unilateral devaluations to increase exports, maintaining the value of its currency supported by gold or dollars (fully convertible into gold at the fixed price of $ 35 per ounce), marked the beginning of the decadence of the U.S.A.

With all commercialized products (noticeably oil) priced in dollars (and these pegged to gold at $ 35 dollars per ounce), the rupture of this agreement by Nixon’s Government, abandoning the free convertibility of dollars to gold, meant in fact, that the U.S.A dollar became the worldwide foreign currency reserve unit, and the United States the only country able to print new dollars to supply both, its needs, and the needs of the international community.

That way, by maintaining the policy of an overvalued dollar, the U.S.A.’s Fed was able to contrive that cheap exports to America from the rest of the world (settled in dollars, later converted into U.S.A.’s Treasury debt, for example), were exchanged by printed dollars, increasing substantially the national debt while keeping inflation low (In part, thanks to cheap imports, in dollar terms).

Such a policy, clever as it is, only works for a while in my humble opinion, conducting, if overextended, as some U.S.A.’s Governments did, inexorably to unsustainable levels of public debt, like the ones we are seeing today.

In fact, public U.S.A.’s debt has reached the astronomical figure of $22 trillion, according to Wikipedia:

The U.S. debt is the sum of all outstanding debt owed by the federal government. On February 11, 2019, it exceeded $22 trillion. It passed the milestone of $21 trillion on March 15, 2018. The U.S. Treasury Department’s “Debt to the Penny” shows the current total public debt outstanding.

Add to this the private debt, which also reached incredibly high levels, as private citizens tried to keep the living standards they learned from their parents: Higher education for their children, an owned house, a car, some travel both, internally and abroad, and basic staples of life, like food, clothes, etc.

But, in spite of substantial gains in productivity, wages of middle-class and poor Americans, however, had not kept high enough to maintain such living standards, so people resorted to debt.

In spite of substantial gains in productivity, wages, especially low-level wages, have shown no increases during the period 1964–2008, as the graphic shows. Graphic: https://rwer.wordpress.com/2010/11/20/graph-of-the-week-usa-productivity-and-real-hourly-wages-1964-2008/, in Google Images.

As Porter Stanberry indicates in his June 2019 newsletter:

Debts have ballooned to absurd amounts. The number of students with debts over $100,000 has quadrupled in the last ten years. Stansberry says most of this money will never, ever be repaid. Americans also have more than $1 trillion in credit card debt, and more than $1 trillion in auto loan debt — all record highs”.

Student debt (2006–2016).

Student debt. Graph: Taken from Porter Stansberry newsletter, June 2019.

“The Economist reported in June 2014 that U.S. student loan debt exceeded $1.2 trillion with over 7 million debtors in default. In 2014, there was approximately $1.3 trillion of outstanding student loan debt in the U.S. that affected 44 million borrowers who had an average outstanding loan balance of $37,172”

Source: Wikipedia

In fact, wages not followed substantial gains in productivity, with most of the extra gains going to Management’s salaries and bonuses, in detriment of workers, whose wages show a small increase or a decrease in salaries in real terms:

Most Americans are Getting Poorer: Cumulative change in real wages, by wage percentile

The graphic shows how wages evolved between 1980 and 2010, with a very modest increase in middle wages, while low-level wages actually decrease, during those 30 years. Source: Economic Policy Institute, in June 2019 newsletter of Porter Stanberry

“The foundation of the middle class in America was a long history of consistently rising wages. For millions of Americans, life got a little better, year after year, as the value of their wages increased and our economy grew into the world’s largest.

But this is no longer happening”

Taken from the June 2019 newsletter of Porter Stanberry.

So, there are clear signs of decay in today’s American society: The mentioned rise of extremist groups like the Kukus Clan, the White Supremacists, or Black Lives Matter; the election of populist, lier without remorse, Donal Trump; the disrespect toward the national anthem, shown by some NFL players; the emergence and increased popularity of new Socialist politicians, like Alexandria Ocasio-Cortez, and her crazy proposals; the riots and protests in Baltimore, Charlottesville, Ferguson, and Milwaukee; too many arguments and no-solutions to the immigration problem and stubbornness about “The Wall”; treatment of children-inmigrants at concentration-like camps at the border with Mexico; etc.

Some of those signs appear to defend some ideals, but what they’re really about, underneath it all, is money… and hopelessness.

The text above, in bold letters, taken from the June 2019 newsletter of Porter Stanberry.

I really hope the American society doesn’t take the dangerous path of Socialism, preached falsely by some politicians, as the just solution to all people’s problems.

An alternative, easy to implement, would be the recognition by Management and by the companies’ Boards of Directors, of the much needed-to-success, contribution of workers to the profits of the enterprise.

The institution of an Annual Bonus Plan for Workers, in addtion to the existing (in most firms) Management Bonus Plans, with funds obtained from these last, excessively generous Plans, and partially from the company’s annual profits, would stop on its tracks the trend toward implementation of Socialism in the U.S.A., the rise of extremist groups, and the apparition in the political arena of dangerous populists.

I hope businessmen react on time and are not blinded by avarice.

--

--

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store