Wealth Gap Fix? 8 Ideas to Help Average Americans Catch up With the 1 Percent
Everyone could use a hand now and then. With millions of Americans still struggling to find their footing in a post-Great Recession economy, the debate over whether we should give government-backed help — and to whom we should give it — has reached a fever pitch. It’s true millions of people are no better off now than they were decades ago. Yet, our lives have improved dramatically by some measures, as well.
This has created a smokescreen effect to some degree. While the average American lives a relatively nice life, huge numbers of people are “left behind.” The rich get richer, while the common person treads water. We typically refer to this as income inequality.
While income inequality has finally become a topic of discussion among business and political leaders, we are still without a real plan or set of proposals to effectively deal with it. Some believe the market will correct itself, and people will start finding good, well-paying jobs. Others think the government should get involved and start helping people at the bottom in a more unbridled fashion. The debate rages on.
But what about market-based solutions? Sure, the government can go around handing out checks, essentially in some sort of wealth redistribution effort. But are there ways we could make a few tweaks that would allow the market and natural order to self-correct more efficiently? A new paper from the American Enterprise Institute thinks so.
From author Dean Baker and the AEI, here are eight market-based proposals that may help curb income inequality.
1. Remove protections for certain professionals
As the AEI report reads, “reducing protections for highly educated professionals” is the first market-based approach to addressing inequality. Specifically, the report points to doctors and physicians in the U.S., who earn significantly more than their counterparts in other countries. The barriers to entry in America are higher, but if we were to bring some of those down, more people could have access to doctors. If we let foreign doctors come work in communities that need them, the idea is we could lower prices and increase access to health care.
But that’s just one example. There are many professions that have high (sometimes needless) barriers to entry.
2. Facilitate medical travel
The cost for health care is out of control in the U.S. That’s not news to anyone. And unsurprisingly, many common and routine procedures can be done in other countries for much cheaper. The idea the AEI report puts forth is to help people travel to these countries for cheaper procedures. The report names India and Thailand as two examples of countries that have medical facilities built to cater to a “Western population,” where people stand to save tens of thousands in medical costs.
3. Allow for internationalization of Medicare
Essentially, this means we would allow people to buy into other country’s health care systems. Because so many Americans (Medicare recipients, specifically) have familial ties in other countries, this proposal would let them access other country’s systems. The government then would make payments to those countries. While it seems questionable, this could actually relieve some pressure off the Medicare system, allowing for older people to access cheaper health care options.
4. Rework patent financing for new drugs
One reason health care costs are so high is because medication and drugs are incredibly expensive. Often, you can buy identical drugs in other countries for a fraction of the price. Why is that? Typically, drug companies cite the high costs of research and development.
Drugs take years to develop at incredible costs. Drug companies are then awarded patents for the drugs they develop — a monopoly that allows them to recoup the costs. Although this makes sense on its face, it hits consumers hard.
This proposal would rework that system and have the public (via the government) pay for more research and development of drugs and medications.
5. Drop corporate taxes; replace with public equity
Here’s a curveball. This proposal not only seeks to revamp our corporate taxation system but to replace it with something unorthodox. Instead of taxing companies in the traditional style, the government (the public) buys equity in the companies. This way, the public would have non-voting shares in a company or equity in some form.
6. Replace copyrights with tax credits
Now we’re getting a bit into the weeds. This proposal would allow content creators or creative workers to forgo copyright protections for their work in exchange for individual tax credits. The idea here is copyrights are getting harder to enforce, and creative workers lose as a result. Giving a tax credit for individual works should incentivize more people to produce more work, the AEI report said.
7. Add work-sharing alternatives to unemployment insurance
This proposal would help keep workers working, even if their employers are in layoff mode. The idea is to incentivize employers to keep workers on the payroll rather than fire or lay them off, by giving employees the option to work fewer hours. The government (through any number of programs) would then subsidize workers’ salaries. This would keep people at work while integrating unemployment insurance and other programs to make sure they don’t go underwater.
8. Tax vacant property
In many cities, many properties sit vacant. This creates issues for a number of reasons, not least that the space could be used to house people. This has been an issue in Vancouver, British Columbia, where huge swaths of empty housing have driven rent prices through the roof. If you’re a property owner, a tax would incentivize you to rent or sell. This would increase housing supply and help drive down rent, in theory.
What about a universal basic income?
The AEI paper outlined the preceding eight inequality solutions. But what about another popular idea: a universal basic income?
The universal basic income has been picking up steam lately, with countries actually experimenting with it in some communities. A universal basic income basically gives each citizen a check every month or year. This check is meant to help cover the costs of basic necessities, including food and rent. In most universal basic income proposals, welfare and government assistance programs are abolished. You’re instead getting the money to spend where you see fit.
There’s a lot of debate as to whether a basic income model would actually work. The fact is we don’t really know, and the risks associated with floating a nationwide trial balloon are pretty large. This is a popular idea, however, for helping curb growing inequality. Will we actually have a universal basic income in some shape or form come to fruition in the U.S.? We’ll have to wait and see.