Charles Skelley: Creating working capital in the US to support the social programs

The Federal Government should be supervising the creation adequate Working Capital throughout the USA to match the scope of US social programs.
As President, Charles Skelley will work effectively to balance the US desires for social programs against the US needs for Working Capital. When presidents Lyndon Johnson (Democrat) and Richard Nixon (Republican) boosted payouts for the Social Security, Welfare, Medicare, and Medicaid programs in the 1960’s and 1970’s, the Federal Government should have started creating enough new Working Capital to pay for those “Great Society” programs. The first Earthday, April 22,1970, also started the US on a very expensive commitment to control pollution.
A credible rule of thumb is that the S&P 500 stock market index has consistently paid about 7% annual dividends, relative to its “tangible book value”, since 1926 (when that S&P500 index began to be computed). So the US social programs can be analyzed according to this guideline. We can estimate how much more Working Capital would be needed in the US, so that the “dividends” from incremental Working Capital would diffuse throughout US society to pay for various Social “transfer payment” programs (while the incremental Capital itself creates productive jobs — such as exports, alternative energy, or pollution control programs).

Transfer payments in the US (through the Federal Government) in 2004 totaled $1361.7 billion, according to official government statistics. By contrast in 1963 (the last year of Kennedy’s presidency, transfer payments totaled $29.8 Billion. (reference)
If 1963 prices are multiplied by 6.17, that roughly adjusts for inflation through 2004.
So lets assume the inflation-adjusted amount of US transfer payments was $184 billion (expressed in 2004 dollars) for the year 1963.It follows that an additional burden of $1178 Billion per year (when expressed in 2004 dollars) was imposed on Productive US workers (and their employers) between 1963 and 2004, due to merely the INCREASE in Federal “transfer payments”.
The concept of 7% annual dividends from Working Capital makes it simple to estimate that the Federal Government should have planned for, and supervised the actual creation of, about $17 TRILLION DOLLARS of fresh new Working Capital in the private sector during 1963-2004, just to pay for the INCREASE in Federal transfer payments between 1963 and 2004, without penalizing the Productive Workers. (Other estimates for the size of the US Working Capital shortage might arrive at different values for the total shortage. But in general, the evidence for a capital shortage in the US is overwhelming.)

American households now need two fulltime paychecks to live as well as a 1950’s household with one fulltime paycheck. And the reason is this missing Working Capital in the US — roughly $17 Trillion of Working Capital as calculated above. When manufacturing jobs disappear in the US, that lowers the purchasing power of everyone who spends “dollars” in our society, not just the people who are directly employed in manufacturing.

It appears that if the US had built new houses that were 33% less costly during 1968-2008 (and diverted the savings into US corporate Working Capital), then we could have supported the cost of the US “Great Society” programs plus our expensive pollution control programs.

If US productivity gains had grown faster by 2% annually, compounded annually for 40 years (during 1968-2008), the end result would have doubled the purchasing power of the average full-time US worker’s paycheck in 2008. And the extra productivity would have allowed one fulltime paycheck today to support a US family as well as one-paycheck did in 1968.


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