A Pandemic Dividend for Every American
The idea of including citizens in the wealth stream made possible by public investments is, in turn, related to a myriad of proposals for universal basic income popularized by Andrew Yang, Andy Stern, and Peter Barnes. Those ideas source their funds from either the public treasury or, in the case of the Alaskan Permanent Fund and other funds described by Barnes, from a fraction of the earnings that private entities extract from exploiting common environmental assets. Ideas in this vein are on the horizon. The immediate crisis, however, involves the need for a public quid pro quo to establish what conditions, if any, should be attached to the disbursement of unprecedented amounts of taxpayer dollars to rescue private sector firms during the Covid-19 crisis.
We propose that any future Covid-19 related federal assistance to private sector firms should be allocated among three groups: existing shareholders, employee trusts, and a National Wealth Fund. Specific allocations should be calculated by determining the fair market value of governmental infusions of cash and loan guarantees as a percentage of the fair market value of individual firms. Because employee trusts represent internal agents—employees—whose motivation and concrete efforts will significantly determine the likelihood of business success, they should be proportionally favored over a National Wealth Fund in the allocation of shares.
Whether the starting point of economic policy discussions is the present Covid-19 emergency or the perennial topic of economic inequality that preceded it, strategies that rely upon wages alone will not get the job done. In addition to income, wealth creation must be shared. Federal economic programs that support the private sector today such as the Export-Import Bank mostly offer trickle-down rewards for workers. When those programs succeed, jobs may be preserved or even expanded. But the truly significant long-term economic benefits the government makes possible accrue to a narrow group of shareholders.
The best way to improve on conventional policy designs is by enabling broad-based ownership. The Federal Home Loan Act of 1932, or FHLA, was perhaps the most radical federal policy intervention of the twentieth century. The FHLA and the bills that followed it put the borrowing power of the federal government at the service of ordinary American workers. That assistance took the form of loan guarantees, which convinced lenders that millions of relatively low-net-worth borrowers should receive home mortgages.