Hey there – it’s Paul, Civic Action team member and Business Insider columnist. A few weeks ago, my team asked you to send in your questions about the economy, and you sent in queries about everything from inflation to the minimum wage. This week, I’m back to answer a few more questions. Read on to learn more about our current economic moment. >>

Is it possible to tax the rich in a way that involves investing the revenue directly in lower-income households?

Absolutely! In my home state of Washington, for instance, our leaders passed a tax on the exorbitant capital gains profits of a handful of the state’s super-rich residents. The 7% tax on annual profits of more than $250,000 from the sale of stocks and bonds won’t affect the daily lives of Washington’s wealthiest residents, but that revenue will make a huge difference in the education of Washington state’s children. And the best part is that those investments in public education will improve the economy for everyone – even the super-rich – by making Washington a more attractive destination for parents and by improving educational outcomes for the next generation. It’s a win-win. And at the same time that they passed the capital gains tax in Washington state, our leaders passed the Working Families Tax Credit [link: [link removed]], which returns up to $1200 in cash rebates annually to some 400,000 of the state’s working households. On a federal level, leaders could raise taxes on the wealthy and corporations and use that revenue to bring back the child tax credit, which slashed child poverty in America by 30% last year [link: [link removed]].

What is the best way to encourage private companies to become democratically owned by their workers?

We just saw an interesting policy solution for exactly this problem in California, where the legislature passed an innovative new law which creates a Fast Food Council [link: [link removed]] that legislates worker protections for every fast food establishment in the state. The council will be made up of lawmakers, employers, and fast-food workers, and they’ll work together to determine wages, scheduling, and other important matters. This is one step down a path that could end in something like the sectoral bargaining systems [link: [link removed]] that many European countries employ, in which all workers in a given industry bargain for wages with all employers at the same time. Because fast-food franchises are legally classified as small businesses and not as corporate employers, sectoral bargaining is one of the only effective ways to unionize employees at franchises – otherwise organizers would have to go store-to-store and host hundreds, even thousands, of costly individual union drives. I’d also love to see Congress embrace something like Elizabeth Warren’s proposal [link: [link removed]] that workers must make up at least 40% of their corporation’s board, which has been the law in Germany for decades.

What anti-monopoly laws and regulations are currently on the books and what can be done to strengthen enforcement of these laws and regulations?

There are a ton of antitrust laws on the books, and the Biden Administration has been very strong in its attempts to end corporate consolidation [link: [link removed]] in the banking [link: [link removed]], publishing [link: [link removed]], agriculture, and tech industries [link: [link removed]]. But part of the problem is that the legal definition of a monopoly is ancient – it’s from the progressive reform era at the dawn of the 20th century. The politicians who wrote the antitrust laws that broke up Ma Bell simply couldn’t foresee a company like Google, which basically corners the market on email, search engines, and online video, as well as a massive share of the online advertising market. Is Google technically a monopoly? Not in the eyes of American law, and neither is Amazon (which both sells products and simultaneously competes with those products using its own brands that have been created using proprietary Amazon sales information) or Facebook (which has responded to threats from up-and-coming social media services by either buying competitors outright, in the case of Instagram, or by mercilessly replicating competing services like Snapchat and TikTok.) In short, we’re addressing the problems of the 21st century with tools that are more than a century old, and it’s vital that we rewrite these laws from the top down so that we can break up this new generation of Standard Oils and American Tobacco Companies.

What are the consequences to the average citizen if the gross domestic product does not continue to grow year after year?

Honestly, the GDP is an overrated metric when it comes to measuring the health of the American economy because it only measures the well-being of the wealthiest Americans and corporate profits. If the GDP shrinks, it means that unemployment numbers have likely climbed and many Americans are having trouble getting by. But if the GDP grows by a significant amount in a given quarter, it’s not like ordinary Americans get a bonus check in the mail – that money mostly stays up at the top of the income scale. The media likes to pay attention to GDP because it’s easy to compare to previous numbers, like a report card for the economy. But the economy would be better for everyone if we replaced the GDP with a stat like the Human Development Index [link: [link removed]] or the World Economic Forum’s proposed five-point dashboard [link: [link removed]] that measures the health of the economy using metrics like environmental health and the rate of income inequality. If paychecks are growing, families are housed, and people have money to spend in their local communities, the economy is strong for everyone – including those at the top.

P.S. If you love political speeches or just good writing about the economy, I’d recommend you read Bobby Kennedy’s March 1968 remarks at the University of Kansas [link: [link removed]], where he talks about exactly these failures of the GDP to measure quality of life. It’s a master class in political economy, packed into a single, beautifully written speech.

Thanks for reading this special Q&A. Thanks again to everyone who submitted a question. And as always, I’ll address more economic topics in future emails to help cut through the economic jargon and provide easy-to-understand economic news. – Paul Constant, Team Civic Action



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