PRICE OF CIVILIZATION CHAPTER 10 AND 11

• 1. Raise employment and Quality of Work life

• 2. Improve the quality and access to education

• 3. reduce poverty

• 4. Avoid Environmental catastrophe

• 5. Balance the federal budget

• 6. Improve Governance

• 7. National Security

• 8. Raise America’s Happiness and Life Satisfaction

GOALS

• America’s job crisis reflects a failure in the labor market, not in the macroeconomy

• Because of this, lasting solutions will not be helped through boosting credits or a stimulus package, but through improving the skills & life of the workforce

1. EMPLOYMENT

• A big problem in the workforce is for youth age 16-19 because the long-term strategy should be educational attainment and skill information

• The goal of high school completion is 90% and bachelors degree at 50%

• Sachs says blaming poor teachers and then blaming unions for protecting them is part of alluring “magic bullet” because evidence shows most kids that drop out of high school are off track by 4th grade

• Focus on ECD, or Early Childhood development

2. EDUCATION

• All along the path, there are large educational cost

• New York in median school districts, they spent $16,000 per student, in the 95 percentile districts, they spent $29,000 per student

• Fix healthcare.

• As of now, primary care doctors are ‘connectors’ between patients and specialists and not everyone can connect

3. REDUCING POVERTY

• We have to further invest in the core infrastructure; it needs to be ready to introduce smart and sustainable energy

• We are coming to a tipping point at which electric vehicles become a commercially viable proposition without government support

• Active Labor Market policies target building skills, creating flexible working conditions, and matching workers with appropriate jobs. This is what Sachs wants the United States to look towards

• Power Plants- NIMBY: Not in my backyard has changed to BANANA build absolutely nothing anywhere near anything

4. ENVIRONMENT

• Need to fix military spending. Military spending is 5% of the GDP and consumes about 1 trillion dollars per year

• Ending the wars in Iraq and Afghanistan and laying off some of the high-tech dubious weapons solution to save $300 billion

5. THE BUDGET

• Stabilize goals – the gross national product won’t allow for the health of children, the quality of education, it will not include the beauty our poetry, the strength of our marriages, the intelligence of public debate, or the integrity of our public officials

• The HDI or Human Development Index is the best way to combine economic indicators with social aspects including literacy rates, school enrollment, and life expectancy

6. GOVERNANCE

• We need a shift from Hard Power (military force) to soft power (diplomacy and assistance)

• Around $150 billion is dedicated to Iraq and Afghanistan per year so the United States is forced to weigh their options and end both these wars

7. NATIONAL SECURITY

• The Buddhists in Bhutan look at Gross National Happiness which focuses on psychological well- being, time use, community value, culture, health, education, environmental diversity, living standard, and governance

• Quality o f life can be explained by a combination of measurable economic, political, health, job security, and community indicator

• Out of 178 countries that were tested on ‘life satisfaction’ Denmark ranked 1st, Sweden 2nd , Norway 3rd and the united States 13th

8. HAPPINESS

SPENDING

• 39% of government spending was covered in 2011, by borrowing. This is equal to about 1.4 trillion dollars.

• Almost half of congress’s population are millionaires due to lobbying efforts

• Civilian programs are being paid with borrowed money which

leads to political paralysis

PRESIDENTS

• Reagan put the government on a system of repeated tax cuts

• Clinton managed to balance the budget and revenues soared up to 20% of GDP

• Interest rates were around only 2% mandatory programs only accounted for 10% of GDP

• Politicians use “earmarks” or pet projects within congressional districts as examples of how they can cut the budget

• Reagan wanted to cut the “welfare queens” who stole from the pubic purse and illegally collected welfare

TO CUT OR NOT TO CUT

• Earned Income Tax Credit rebates taxes to poor working families and is incentive for the poor to work

• TANP or temporary assistance for needy families only makes up .1% of GDP

• If the government eliminated foreign aid, earmarks, and TANF programs, they could save .5% of the GDP

• Sachs also says we need to end wasteful agriculture subsidies

LIST OF THINGS TO SAVE 18.6 TRILLION DOLLARS1. White house and congress

pending – 800 million

2. 3 year wage freeze on fed workers – 20 billion

3. Reduce size of fed workforce – 13 billion

4. Reduce fed travel – 1 billion

5. Sell excess fed real estate – 100 million

6. Eliminate all earmarks – 16 billion

7. Reform Medicare – 3 billions

8. Repeal long term affordable care act – 11 billion

9. Reduce Medicare fraud – 1 billion

10.Reform Medicare cost sharing – 10 billion

11.Restrict Medicare supplemental insurance – 4 billion

12.Dual eligibilities – 7 billion

COUNTRY INTAKE

• We have to augment certain spending programs

• Ireland has the high budget deficit spending problem in the world

• The countries in the deepest budget crisis in 2010 weren’t the ones with the highest government spending but those with the lowest tax revenues of citizens like Greece, Ireland, Portugal, Spain, the U.K, and the U.S

TAXES AND BUDGETS

• The U.S and Europe have a Value Added Tax or VAT as a cornerstone of the

budget which in Europe constitutes 10 percent of the GDP

• Northern Europe is actually ahead of the United States in many ways like education performance, subjective well-being, poverty rates, and life expectancy

• Americans are going to need more to pay for civilization

• The federal government pays for 65% of the budget; states and local governments pay for 35%. Having different taxing at different levels of the government is known as fiscal federalism

WHY NOT LEAVE DECISIONS UP TO THE LOCAL GOVERNMENT?

• 1. Funding for federal issues like national defense, interstate highway systems, and a national power grid

• 2. Local government taxation would mean communities compete against each other and would in turn result in a national race to the bottom

• 3. It would be harder to mobilize people. Tiebout equilibrium is a term to describe finding the perfect place to live with parks, good schools, low

crimes, etc.

THEN WHY NOT USE ALL FEDERAL FUNDING

• The subsidiarity principle should happen at the local level for

implementation, which holds that the public good should be provided by the lowest level of government that can provide it

• For example, schools for local levels, highways for states, and national security for the federal government

• The top 1 percent in America pay roughly 31% of their income to the federal government. In 1970, this number was 47%.

• Corporate income tax now has so many loopholes that it went from 3.5% of the U.S GDP to 1.5%

• The top 1 percent hold 35% of the nation’s wealth, which is equal to the bottom 90%. That wealth is around 20.6 trillion dollars

• There is also tax evasion, which in 2001 was 345 billion dollars or 16 percent of taxes owed.

• The U.S could also easily tax oil, gas, and coal to increase revenue and decrease effects on climate change. The nominal excise tax rate has been fixed at 18.4 cents per gallon since 1994.

• Even a minimal levy on each stock trade or foreign exchange could rake in billion of dollars which currently show up in bonuses on Wall Street.

• The VAT is good, but it tends to receive more from the lower and middle income families rather than the rich

• To balance the budget, GDP would have to increase by 6%

• The issue shouldn’t be about the share of taxes paid by the rich, but rather the level of taxation relative to income