Many people will ask why America needs a basic income because our economy is doing well. Strangely, those people are correct but the numbers show most Americans are not sharing in the prosperity.
Notably, America’s gross domestic product (GDP) grew from $16.155.26 trillion in 2012 to $19.39 trillion in 2017, Trading Economics calculates. The GDP is the total of all the goods and services sold in a nation. Hence, America is making a lot of money, but average Americans are not.
In contrast, the real median personal income; the amount of money the average American makes, was $31,099 in 2016, the Federal Reserve Bank of St. Louis estimates. In addition, the average household income in the United States was $60,336 the Department of Numbers calculates.
Americans have Little Money
That $60,336 sounds good until you realize it represents several people and do a little math. For instance, the average household in the United States held 2.6 people in 2017, Arcgis.com estimates.
Divide $60,336 by 2.6 and you get an average individual income of $23,206.15 a year; well below the St. Louis Fed’s estimate. Hence, average Americans are making little money.
Things get worse when you figure in a husband, wife, and two kids; the classic American family. In detail, divide $60,336 by four and you get an income of $15,084 a year.
Incredibly, $15,084 a year is close to the federal individual poverty guideline of $12,490 a year. Thus, many Americans are living close to poverty.
How Much Money Americans Should Have
The numbers demonstrate average Americans are not participating in the USA’s breakneck economic growth.
For instance, if we were to distribute the 2017 US GDP equally to every American the median personal income could be $53,128.54 a year. To explain, $53,128.24 is the 2017 US per capita gross domestic product, Trading Economics calculates. To clarify, the per capita gross domestic product is a nation’s GDP evenly divided among all citizens.
Furthermore, America’s average household income would be $138,134 if we based it on per capita GDP. To elaborate if you multiply $53,128.45 by 2.6; the average household size, you get $138,134.
Moreover, the average per capita household GDP for a family of four in 2017 was $212,514.16. Hence, most Americans do not share in the growing national prosperity.
Why America Should Redistribute Wealth
The obvious conclusion we can draw from these numbers is that income inequality is real and potentially America’s number one problem. However, we rarely hear about it on the news or in the mass media.
Fortunately, average Americans are not stupid, most of them realize something is wrong with the economy. Hence, they listen to politicians like US Senator Bernie Sanders (I-Vermont), US Senator Kamala Harris (D-California), Andrew Yang, and US Senator Liz Warren (D-Massachusetts) who propose wealth redistribution schemes.
The basic income; proposed by Yang and Harris, is the best of the wealth redistribution schemes because it will distribute the most money to the most people quickly. To explain, under a basic income scheme government distributes the proceeds of a tax to every citizen as cash.
Specifically, Yang proposes the federal government pay a $12,000 a year Freedom Dividend to every citizen over 18. Yang wants to finance his Freedom Dividend with a value added tax (VAT) on all business transactions.
Under Yang’s scheme the average personal income will grow to $43,099 a year or $35,206 a year for someone in the average 2.6 person household. Note: Yang’s plan discriminates against families with children because the Freedom Dividend begins at age 18.
Americans are broke and Drowning in Debt
We need to discuss solutions like basic income because average Americans’ lack of money threatens our nation’s future.
How can Americans buy vehicles, video games, groceries, homes, smartphones, clothes, and all the other trappings of modern life if they are making only $23,206 a year? Presently, many people make up the difference through debt.
Not surprisingly, Americans owed $13.51 trillion in personal or consumer debt in December 2018, Nerd Wallet estimates. Specifically, the average US household owes $28,033 in auto loans, $184,417 in mortgages, and $6,929 in credit card debt, Nerd Wallet calculates.
In addition, the average American household owes $47,671 in student loans, Nerd Wallet estimates. In fact, total US student loan debt in December $1.44 trillion, which exceeds the total auto loan debts of $1.27 trillion.
Can a Basic Income Save America from itself?
The numbers reveal that average Americans are broke and drowning in debt. Thus, it is not surprising that Americans are listening to politicians who propose radical economic solutions like the basic income and a jobs guarantee.
This situation threatens our future because average Americans may no longer have enough cash to keep our economy going. Less cash means less economic activity. Add an aging population and rising technological unemployment to the mix and we could soon face a situation like the Great Depression of the 1930s. To explain, the Great Depression began when most economic activity ground to a halt.
Under these circumstances, some sort of basic income will be necessary to keep our economy functioning. However, mainstream politicians refuse to consider the possibility. Largely because they fear being mocked by journalists for proposing a “free money scheme.”
The numbers demonstrate America needs a basic income and Andrew Yang’s success shows average Americans understand the reality. Thus, the important question is how do we convince the politicians America needs a basic income. My guess is the only way to achieve that goal is to use the ballot box to deprive politicians who oppose the basic income of their cushy jobs.