Citizenship Dues and Non-profit Investing – Creating and Maintaining the Middle Class

Our recent history shows us how we created and maintained a prosperous middle class and still had a Forbes 400 to write about. The Greatest Generation can add this to their list of accomplishments.

Not only is average per capita income down between generations –

– The bottom 90% is significantly down from Greatest to Boomer generations.

At the end of WWII, our national debt was almost 120 percent of our GDP, higher than today, and we had millions of GIs coming home looking for productive jobs. What was the nation to do? What did our Congress and Presidents do? What did the Greatest Generation do? They got together and worked for the benefit of the common good.

First, there was significant non-profit investing and job creation by the federal government:

• We started the interstate highway system,
• We helped millions of GIs get college degrees,
• We created Medicare,
• We sent several Americans to the moon and back.
• While we completed this non-profit investing, we also fought two costly wars in Korean and Vietnam and paid down the national debt from 120% to 32% of GDP.

Not only did we have enough revenue to pay for investing in America’s infrastructure –

– We had enough revenue to pay down the national debt – before Reagan/Bush.

Second, citizens, and corporations, paid their share of citizenship dues to cover the costs of all this investing while at the same time raising their standard of living:

• Individual citizenship dues, as a percentage of income, ranged from 23 to 94% over 24 brackets in 1945 to 0 to 70% over 16 brackets in 1979,
• Corporate citizenship dues, as a percentage of profit, ranged from 25 to 53% over 3 brackets in 1945 to 17 to 46% over 5 brackets in 1979,
• Unemployment averaged around 5.2%
• Households managed with one wage earner
• Corporations competed for employees by offering pensions and health care
• Worker’s wages matched their productivity increases and we had equal distribution of income growth,

The wages of the Greatest Generation kept pace with their productivity gains.

But not so for the Boomer Generation.

The income growth of the lowest paid Greatest Generation kept pace with top earners.

But not so for the Boomer Generation.

If non-profit investing plus sufficient citizenship dues helped free the Greatest Generation to become great, maybe we should try that again? That is before the wealthiest of the boomer (my) generation becomes known as the generation that destroyed America by hoarding their dues and preventing non-profit investing.