Sometimes we all become complacent in our lives, especially when times are good. When we are struggling we see all the problems in the world, when we are doing well we don’t pay attention to them as much. There isn’t anything necessarily wrong with that, because you can’t spend all your time trying to fix the world. It just won’t happen, but there needs to be leadership and a voice for people who can’t defend themselves. People that never did anything wrong, but were just born into a bad situation. For years now, no one has fought for these people. It’s a lot easier to ignore a problem, than fix a problem. With that being said I want to share a few statistics:
-There are 1.5 million American children that are homeless.
-There are 15 million American children that live in poverty. (20%)
-The national dropout rate is 8%. The drop out rate for African Americans, Hispanics, and Native Americans are 9.3%, 17.6%, and 13.2% respectively.
These are the numbers that explain why we are less competitive globally then we were 25 years ago. We are abandoning our own, and not giving everyone a chance. This appears to be a humanitarian problem, but I can assure you that is a 100% economic problem and the solution lies within economic reform.
Now, if you have read anything I wrote I think it’s safe to say I absolutely do not believe in economic equality. I believe in capitalism, and we should all embrace it and work hard to make our way in the world. Although, I believe in something I like to call geographic equality. I don’t think that we should become complacent in allowing perpetually impoverished areas to continually be forgotten. The stats above represents years of turning our backs on these people that live in impoverished areas.
If you talk to someone who is successful and they say they came from the Bronx, you are immediately impressed because you assume what they went through growing up. You assume they were surrounded by crime and burdened with poverty. No offense to anyone who has made it out of a tough area, but I want to squash that stigma. I want to make progress in all areas in the country that the GDP per capita is considered at or below the poverty line. This is what I mean when I say geographic equality. Someone growing up in Greenwich, CT should have the same opportunity as someone growing up in Compton, CA.
My solution is to use tax reform to promote economic growth. We should designate all areas in the country in which the GDP per capita is at or below the poverty line, and allow all businesses that open new locations to operate federally tax exempt. This will incentivize big business to open up locations in these areas which will provide job growth and add more value to the area. Also, this will add more freedom for entrepreneurs from these areas to open up their own business. They will still have to get a business loan, but they won’t have to dish out 25 to 30 percent of their profits to Uncle Sam. If the business has 5 employees or 500 employees in these areas they will benefit from keeping 25 to 30 percent of their profits. That will give them the ability to grow further, which will require more jobs in the area, which in turn will add more economic prosperity to the area.
This plan isn’t perfect but I think it is way more effective than programs like HUD that are designed to promote home ownership in these areas. What’s the point of promoting home ownership if there are no jobs? The mindset of “it creates more responsibility for the homeowner” is myopic. It’s not about responsibility, it’s about sustainability. Sustainability creates value, value creates pride, pride creates responsibility. The way you do that is through tax reform, not handouts or preferential loan treatment.
The initial response would be anger from Republicans, until they understood the fact that if you create more economic value in these areas then it makes the economy grow faster. The GDP growth won’t be noticed initially, but in time you will see the spike in economic activity hit macroeconomic measures of the economy.
One thing I can guarantee is that you will see the amount of homeless children in the country decline. You will see the child poverty rate decline, and you will see the high school drop out rate (of all ethnicity’s) decline. This is how you reform the education system. You have students that aren’t distracted about where they’re going to sleep that night, students that aren’t distracted about if there will be food on the table and students that see a light at the end of the tunnel. You see role models created in these impoverished areas because of their legitimate entrepreneurial success. Economic development is the key to fixing impoverished areas.
We can’t continue to ignore the problem anymore. If we want to be more competitive globally, we need to give all children in the country a chance to show their value. Let’s say 3% of all students are considered a genius, then it benefits us to increase the sample size. Instead of 3% of 100 let’s aim for 3% of 200. If we want to be innovative in the future, we need to give everyone a chance. My plan for geographic equality is a good starting point to achieve wider spread economic prosperity in the country.
For the record, I believe the plan would finance itself (from a tax perspective). If you allow new business’s in this area to be federal tax exempt, then the government will see an initial decrease in tax revenues. But if you look 3, 5, and 10 years down the road you will see the GDP per capita (taxable base) increase, you’ll see less people relying on social programs, and you’ll see a spike in economic activity in areas that haven’t experienced it in years. When it’s all said in done, the government will make a ton of money through this initiative. It’s much better than funding failing social programs for another 20 years.
So just think about this solution, and think if we can accept another half century of failed economic policy. Can we accept 1.5 million homeless children in the country and 20% of our children living in poverty? I hope your answer is no. So let’s be proactive and fix this to show the world that we don’t turn our back on our own. This is how we become a great nation again, the economic benefits are just a plus.
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