A New American Mixed Economy

(A brief essay proposing the creation of a new American mixed economic system. Written in September 2019 by Aaron Kelley.)

Traditional American economic philosophy states that all people should have the opportunity to act, work, or do business freely… if these activities do not hurt others. However, it does not traditionally state that an organized government should always attempt to provide a stable and competitive alternative to unstable, private sector work. The melding of these views, however, could help us develop a new and optimized version of the American mixed economy that is aligned with current American economic values. Very simply put, a general statement reflecting this new economic creed—one that is surely realizable in the United States—is this: “The American government should be responsible for the employment of all its citizens.”

This does NOT mean that every citizen should be forced into labor. One should surely be free to choose to live in any manner they desire, including in a lifestyle without “traditional” means of gainful employment in the national economy. However, those who do not contribute to the economy (or to society) in some meaningful way, whether it be in the public, private, or nonprofit sectors, should NOT be provided with any benefits from the national, state, or local governments beyond that which is just necessary to sustain life—that is, emergency and preventative healthcare and basic provisions of food and shelter.

In our compassionate society guided by the declaration that “freedom from want” is an innate and universal human right, however, and because these things are prerequisites for finding gainful employment in respectable society, these are also the responsibility of the government to provide to all its people. To reiterate, though, in order to maintain the economic health of the nation, government-provided benefits must not exceed that which is required for survival and the pursuit of general employment. For, if more is given to a person than is deserving, they may be tempted to become reliant on this aid and never choose to actively participate in the economy.

In our optimized mixed economy, most of the government’s efforts should be directed at employing all citizens who may have found no opportunities to contribute productively:

  1.  The government’s top priority should be to guide its capable citizens into employment in the private sector of the economy, so that the nation’s people and businesses may be directly enriched by this citizen’s productive individual efforts. Additionally, with the private sector naturally offering much greater possibility for professional advancement of its contributors, it benefits citizens with the natural inclination to improve their quality of life to participate in this sector of the economy. Higher wages and room for advancement will be available to all those with the skills and motivation to achieve them in this competitive environment.
  2. For those, however, who are unable to find private work, who through the conscious and patriotic choice elect to serve their fellow countrymen, or who simply desire the stability provided by a government career, a public option for employment should always be offered. Whether this employment be in existing or traditional governmental agencies, in public works departments, in the military, or in some other part of the bureaucracy, the wages provided by these positions—which naturally are likely to be lower, on average, than those potentially found in private sector work—would be stable, and would open the door for all public sector participants to more programs provided by the government as a benefit of this employment.

In simple terms, all who can work (even in some very limited capacity) should be required to work if they want anything but the basest of government-provided benefits. All may choose to attempt to find work in the private or nonprofit sectors, which will naturally have greater risks and greater potential rewards. However, all should also be provided the opportunity to work in an expanded public sector, receive a stable wage, and receive all socialized benefits available to any gainfully employed citizen still in need of assistance.

To be clear, those who make a substantial enough salary in any sector to comfortably opt-out of government-provided benefits should be free to do so, and such people should in fact be encouraged to actively seek out privately provided alternatives to those services with which the government competes (i.e., for health insurance). However, they should certainly also be permitted to remain in any government provided programs, with their tax dollars covering these programs as if they were privately provided and privately billed. The rates and tiers at which government benefits will change from freely provided to billed in taxes must be determined by subject matter experts… but this mechanism would ultimately seek to replace current government subsidies and tax-breaks based on income levels.

Briefly breaking down the public sector: it would consist of existing agencies or departments as well as potentially many additional administrative agencies and public service departments. It could, additionally, consist of some single nationalized or publicly owned industry that is aimed at lowering overall tax burden and funding our complex government programs. Such an industry could, perhaps, be in a cutting-edge or near-future, high-tech field such as asteroid mining or other such fields related to outer space. In this sector, professional advancement and high wages would not be guaranteed… but job security and government provisions always would be.

In the third (or, nonprofit) sector, existing and new nonprofits would continue to exist with their current strict constraints and restrictions on activities and money usage. In this system, it would perhaps be possible to allow for an increase in the number and type of income-oriented activities performed by these organizations while allowing them to still maintain their tax-exempt status. A caveat to this, however, would be that such organizations choosing to take advantage of the additional income-generating activities would be required to maintain their minimum wages at a certain, life-sustaining level if they want to maintain full nonprofit and tax-exempt status. Finally, participants in this sector would only be taxed on government-provided services to which they freely choose to “opt in”.

Finally, we come to the private sector. In our new system, participating private sector organizations would be free to do nearly anything if they do not actively hurt the climate, the state, or any human being. In this sector, there would be no minimum wage. However, there would also be a fairly high level of corporate taxes and a concerted effort by the government to close all discovered tax loopholes. Citizens participating in this sector will be able to opt-in to government programs based on their wages, if they so choose to do. A unique feature of this sector would be that corporate taxes could be tiered based on the wages provided to a business’s industrial laborers, the amount of money earned by the company’s chief executives, and the amount of money given to charities or other third sector organizations. A ratio or equation can no doubt be created to determine optimal “employee-executive-charity” values for different types of private sector organizations, be they small family-run companies or enormous conglomerates.

The model described above, though rather complex, would create a substantially fairer and optimized mixed-economic system in which all who want work will work and all who need help will receive it… while simultaneously penalizing free-riders, providing a wide social safety net, and incentivizing participation in the private sector of the economy. Now we must modify the American educational system to better account for this dramatic economic reform…

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