American Buyout: A modest proposal for thwarting global economic collapse, saving civilization, preserving democracy, and paying every citizen of the United States $100,000. Cash.

By Robert C Whitehair

Here’s a shocking truth: We’re on the brink of global catastrophe because of a simple mistake that has gone unnoticed for almost a century.

How is this possible? Because every economy in the world is based on this mistake.

This is not an abstract threat in a faraway future. Every US citizen will soon

• Language: English
• Publisher: Robert C. Whitehair
• Release date: Sep 17, 2019
• ISBN: 9781733088510

Robert C Whitehair

Robert C. Whitehair, PhD, has been building mathematical models for more than forty years. His influential work helped develop the widely used Integrated Business Planning methodology. American Buyout is the result of his efforts to build and balance an analytical model of the entire US and global economy-initially for fun. Then it got serious.

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Destroy the Box

You never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete.

– R. Buckminster Fuller

Our economy is about to collapse. It will take democracy and civilization with it when it goes!

We have a remarkably easy way to save ourselves.

Interested?

American Buyout is a grassroots, nonpartisan initiative to ensure a safe and prosperous future for all citizens of the United States. We’ll achieve this by creating an economy that works for everyone and provides:

Livable wages,

Universal health care,

Universal education,

Tax relief, and

Debt relief.

To make this a reality, all you need to do is think differently.

To be specific, you need to think differently about how economies work.

That might sound unappealing. Who wants to think about how economies work at all? Most people would rather write a haiku about innovations in dental hygiene.

There are two key reasons why thinking differently is important.

First, all conventional economic theory, and everything you currently believe about how economies work, is wrong. Seriously. Conventional economic theories can’t solve our most pressing problems. In fact, conventional economic theories lead to solutions that are directionally wrong. They make existing problems worse. In many cases much worse. Yet we’re relying on them to save us from catastrophe.

Let that sink in.

Some of the more noteworthy implications of this problem will affect you directly. By the year 2030, the vast majority of Americans will be experiencing extreme financial hardship. This is already underway, and more bad news arrives daily.

Today, according to analyses of recent studies by CBS News, CNN Business, and Yahoo! Finance (among others), almost half of Americans struggle to afford their basic needs, such as food and housing.(1,2,3) If nothing is done, this number will soon increase to 95%.

Tens of millions of Americans cannot afford health care. The biggest increase in the uninsured rate in the last decade occurred in 2017.(4,5) In the near future, few Americans will be able to afford health care.

As reported by Forbes, over forty-four million Americans have student loans. The total amount of the debt is over $1.5 trillion.(6) This crushing debt is overwhelming the economy.

Humanity’s very existence is threatened by extinction levels of environmental destruction because of misguided economic management policies.

Global financial stress is growing rapidly. Historically, similar economic conditions have resulted in catastrophic social unrest and world wars.

In the next few years, we will face a global economic collapse that will result in the destruction of civilization and democracy. (Not necessarily in that order.)

Don’t fret too much. American Buyout will thwart these impending calamities.

Here’s the second reason you should be interested in thinking differently:

Affluence.

Yours.

American Buyout will help make every American affluent. If you’re not affluent now but would like to be, then thinking differently is well worth the effort!

If you’re already affluent and would like to remain so, thinking differently represents an outstanding insurance policy. The destruction of civilization would adversely impact your current affluence. That’s risk worth mitigating.

Before continuing, let’s deal with a few obstacles to thinking differently.

The initiative does not depend on increasing tax rates. American Buyout will only reduce tax rates. Eventually, income taxes will be entirely eliminated.

American Buyout does not rely in any way on transfer payments. American Buyout is not a form of social welfare.

American Buyout is not socialism. If you feel compelled to label things, you can think of American Buyout as supporting an enhanced market economy.

American Buyout is based on a theory called Newtonian economics. Newtonian economics presents a new way of thinking about how economies work and corrects problems with existing economic theories. It formally defines a previously underappreciated phenomenon (market surplus) and introduces a new method for correctly analyzing economic value. Most important, Newtonian economics introduces a management framework called national vesting. These concepts are presented in the remainder of this book.

For now, let’s focus on making everyone affluent and avoiding all those disasters.

This will be easy! And fun!

Thinking differently is simple. All you need to do is recognize that the economy of the United States generates far more value than we realize and we can easily monetize the excess value to fund viable solutions to our most pressing problems.

That’s it. That’s all there is to it.

Here’s a question to demonstrate: What would you buy if you had $7.5 trillion to spend?

For perspective, consider the following:

The entire US economy is worth about $21 trillion per year.(7)

The current federal budget of the United States is approximately $5 trillion per year.(8)

Adjusted for inflation, the Golden Gate Bridge cost $1.5 billion to construct.(9)

In 2018, the total value of new homes sold in the United States was approximately $250 billion.(10)

In 2018, the total value of all new cars and trucks sold in the United States was approximately $600 billion.(11,12)

For $1.5 trillion, you could buy every person on the planet—approximately 7.7 billion people—the complete boxed set of The Beatles’ original recordings. (That doesn’t include shipping.)

In 2018, approximately six hundred thousand new homes were sold and approximately eighteen million new cars and trucks were sold.(13,14)

So, with $7.5 trillion, you could buy the Golden Gate Bridge, six hundred thousand homes, eighteen million cars and trucks, and 7.7 billion boxed sets of The Beatles’ original recordings, and you would still have more than $5 trillion left to spend. You could then pay for the entire budget of the US federal government.

What if you had $7.5 trillion to spend every year?

The problem is obvious. If you had $7.5 trillion to spend every year, you would quickly run out of places to keep all your stuff.

Instead of buying stuff, consider some alternatives:

Supplementing current wages to ensure every American worker earns a livable income would cost approximately $3 trillion per year.

Providing universal health care for citizens of the United States would cost approximately $1 trillion per year.

Providing universal education for citizens of the United States would cost approximately $1 trillion per year.

So, you could provide livable wages, universal health care, and universal education for $5 trillion and still have $2.5 trillion to spend. Per year.

You probably see where this is going. The market surplus of the United States is so massive it can be leveraged to avert myriad catastrophes and make every citizen of the United States affluent. In fact, you could throw in an extra $100,000 for every one of those citizens. Cash.

American Buyout represents a modest proposal for making all this a reality.

This is a book about solutions. I will not deceive you: The details of the proposal are counterintuitive and get a bit complicated at times. Mathematics is involved. It’s only third-grade math, but it’s still math. At points, there is a lot of math. Sure, you’ll find songs, games, sports, mysteries, dramatic tension, fascinating historical trivia, and much, much more—but there is no denying that effort will be necessary on your part.

The success of American Buyout will depend on you. In order to thwart the impending global economic collapse, save civilization, and preserve democracy, you will need to think differently.

Some Background

Modern observations deprive all former writers of any authority, since if they had seen what we see, they would have judged as we judge.

– Galileo Galilei

You’re wondering how someone could find trillions of dollars of value that no one else knew existed.

It was an accident.

I’ve been building mathematical models of one thing or another for more than forty years. These thousands of computer models have spanned hundreds of industries and involved sophisticated financial systems and unique economic analyses.

Many years ago, a talented DuPont researcher and I developed the Global Integrated Planning System, known as GIPSY. At the time, DuPont was trying to decide where to build a chemical plant. The investment would cost billions of dollars and significantly affect DuPont’s financial performance for decades.

By the time I joined the project, potential sites had been narrowed to one in Mexico and one in Singapore. Each had its own site evaluation team, and their customized mathematical analyses unsurprisingly favored their own sites. So, to resolve the matter, we built a fully integrated mathematical model that produced a complete set of DuPont’s own financial performance measures and reporting statements.

In the end, the new plant was built . . . in Spain.

This adventure caused a minor stir in the industry. We had proved that the best site had been ruled out because of underlying subjectivity.

We gave seminars detailing the academic aspects of our work, which led to a methodology known today as Integrated Business Planning. I used my DuPont lesson to create economic models that clients couldn’t find anywhere else.

Naturally, I also built a comprehensive analytical model of the entire US and world economy.

There was just one problem: I could not get the model to balance.

The significance of relying on integrated financial statements is they must balance. When they don’t, you’ve missed something. You’ve missed a significant source of cost or revenue, or there’s something wonky with the balance sheet. When you incorporate every possible consideration and the model still doesn’t balance, something is wrong. It’s possible that you’ve uncovered criminal fraud. It’s also possible that you’re criminally incompetent. At times it can be difficult to determine which is the case.

It took me a long time to realize there was a third option: an honest mistake. And a subsequent battery of tests definitively showed only one possible conclusion as a result of that mistake:

All conventional economic science is wrong.

I decided somebody should fix it. Unfortunately, no one volunteered, so here goes . . .

The Flying Pig Overture

It ain’t what you don’t know that gets you in trouble. It’s what you know for sure that just ain’t so.

– Mark Twain

If you stepped outside and saw pigs flying around, you’d realize something was wrong. Pigs can’t fly. You wouldn’t need mathematics, a college degree, or careful study to conclude there’s a problem. You wouldn’t need an expert to explain to you that flying pigs are incontrovertible proof that something is wrong. Well, guess what?

Economic science is full of flying pigs

My proposal is based on thinking differently about how economies work. The approach presented here, Newtonian economics, corrects problems in conventional economic theory.

Given that the fate of humanity is at stake, a certain amount of skepticism on your part is reasonable. Let’s revisit some of the claims I made in the introduction to this book.

You might be skeptical about whether the United States can afford universal health care. You almost certainly believe it’s impossible for the United States to provide universal health care and simultaneously reduce taxes. This is the basis for a divisive national debate. Most of us agree universal health care should be offered to every citizen, but we can’t agree on how to pay for it.

You probably also support the general concept of a livable wage—but you may be concerned it would make US companies uncompetitive. What’s the point of forcing companies to pay a livable wage if it puts them out of business? A livable wage is only meaningful if people have jobs.

Well, it is possible to provide universal health care while simultaneously reducing taxes! It is possible to implement a livable wage while simultaneously increasing the competitiveness of US companies! Newtonian economics solves critical problems like these.

You might ask, "If Newtonian economics is so great, why hasn’t someone already suggested it? Like, maybe, Newton?"

The answer is simple: Our understanding of economic reality is so grossly distorted that we don’t recognize obvious solutions to our most difficult problems. We don’t realize we are thinking wrongly.

The universal affluence test

The economic flying pig phenomenon has been in plain view for decades. Every economic expert is aware of its existence. Pundits and policy makers routinely remark on it. Professional economists derive increasingly convoluted reasoning to explain it.

Appreciating its significance is actually quite easy. All you need to do is ask yourself two simple questions, and you’ll see the phenomenon for what it is: flying pigs that conclusively prove all conventional economic science is wrong.

Question 1: Why do humans organize economic systems?

There’s only one answer to this question: Humans organize economic systems to increase their productivity.

Just to be clear, the definition of productivity is the rate at which goods and services are produced.

While some might argue that economic systems provide a variety of benefits, the only reason for humans to cooperatively participate in an economic system is because they wish to increase the amount of goods and services they produce by boosting their efficiency, not their effort.

Question 2: Why do humans want to increase productivity?

Humans want to increase productivity because they want to consume more goods and services. We want more and better food. We want warm, comfortable, stylish clothing. We want safe, luxurious dwellings, preferably with indoor plumbing. We want faster internet access!

In other words, humans want money. Lots and lots of money we can use to buy more and more goods and services. Humans organize economic systems in order to increase productivity and, consequently, affluence.

John Maynard Keynes is one of the most influential and well-respected economists in history. Time magazine named him one of the most important people of the twentieth century. His economic theories are instrumental in managing every national economy in the world.

In 1930, Keynes famously predicted our economic future. He said that steadily increasing productivity would result in universal affluence, which would be fully achieved by the year 2030. He said people would only work fifteen hours per week. He said people would only work because they wanted to, not because they needed to. He said a lot of things.

From Economic Possibilities for Our Grandchildren (1930):

For many ages to come the old Adam will be so strong in us that everybody will need to do some work if he is to be contented. We shall do more things for ourselves than is usual with the rich to-day, only too glad to have small duties and tasks and routines. But beyond this, we shall endeavour to spread the bread thin on the butter—to make what work there is still to be done to be as widely shared as possible. Three-hour shifts or a fifteen-hour week may put off the problem for a great while. For three hours a day is quite enough to satisfy the old Adam in most of us!(15)

Keynes explicitly stated that the primary purpose of economic science is to make this vision of universal affluence a reality. The explicit objective of economic science is to enable growth in productivity to the extent that every participant in the economy is affluent.

Given the proximity of the year 2030, I think a progress report is warranted. How close are we to realizing Keynes’s vision? How close are we to universal affluence?

The numbers don’t make sense

The good news is that from 1964 to 2014, productivity in the United States increased by more than 300%!(16) This fine achievement is consistent with Keynes’s prediction and aligns perfectly with the objective of economic science.

We must be making great progress toward universal affluence and a fifteen-hour week, right? If productivity went up 300%, then affluence must have increased commensurately. Conventional economic science dictates this. So, how much have wages gone up? How much has average income increased? At least 300%, right? Right?

From 1964 to 2014, productivity in the United States increased by more than 300%.

From 1964 to 2014, average hourly wages in the United States increased by . . .

Nothing.

According to government data, wage growth was stagnant from 1964 to 2014.(17) There was no meaningful increase.

Even worse, some studies suggest that average wages actually declined.(18)

Think on that for a bit. Let the implications sink in.

The sole purpose for organizing an economy is to increase affluence.

The affluence of an economy is a function of its productivity—its ability to produce goods and services efficiently. The more goods and services an economy produces, the more affluent it is.

The affluence of an economy is characterized by average wages. Wages represent our ability to consume goods and services. When wages go up, we can consume more goods and services.

From 1964 to 2014, productivity increased by more than 300%.

From 1964 to 2014, the growth in average wages was stagnant.

The rate at which goods and services are produced quadrupled.

Affluence should have increased proportionally. Average wages should have gone up significantly to reflect growing affluence.

But average wages did not increase. Affluence did not increase. The average ability to consume did not change.

What happened to all the increased production?

Imagine if you quadrupled your production at work. What would you expect? You would expect an increase in pay.

How is all this even possible?

Flying pigs.

The basic premise for all conventional economic science is that affluence increases as a result of increased productivity. That hasn’t happened. Instead, we have a dramatic increase in productivity accompanied by stagnant or decreasing wages. This is the economic equivalent of flying pigs. Not just little pigs, either. Vast swarms of enormous, corpulent pigs.

So, what does this mean? It means all conventional economic science is wrong, and those pigs are flying us straight into a global catastrophe.

Baseball and the Law of Supply and Demand

A nickel ain’t worth a dime anymore.

– Yogi Berra, New York Yankee Hall of Fame catcher

Are you making at least $67 per hour? If not, you’re underpaid. We’ll get to that in a minute. It involves math, but don’t worry! It also involves baseball.

Productivity has increased, so why haven’t wages?

If you search for terms like stagnant average wages on the internet, you’ll find thousands of related articles. You’re likely already aware of this hotly debated phenomenon—but you almost certainly don’t realize it violates the foundational principles of all conventional economic science.

It’s intuitively easy to