Bernie Sanders Is The 1 Percent’s Worst Nightmare: How He Promises To Upend America’s oOligarchy

Bernie Sanders is the 1 percent's worst nightmare: How he promises to upend America's oligarchyEnlargeBernie Sanders (Credit: AP/John Locher)

On May 28, 2015, Jim Newell writes on Salon:

Most news articles about Bernie Sanders in the mainstream media include the phrase “avowed socialist” or “avowed democratic socialist.” The phrase has become hackneyed to the point that one struggles to remember when “avowed” was used to describe anything other than Bernie Sanders’ left-wing politics. If nothing else, Sanders’ campaign for president, which he (re)announced in Burlington, Vermont, on Tuesday, will forever link the word “avowed” with the words “democratic) socialist Bernie Sanders” in the minds of political junkies, much like fans of “The Simpsons” can no longer hear the words “dental plan” without immediately thinking “Lisa needs braces!”

The use of “avowed” connotes a taboo. That Sanders would avow his belief in socialism, or democratic socialism, or anything containing the term “socialism,” is a sly way for reporters to imply that he has zero chance of appealing to red-blooded Americans. It is equal to, if not worse than, being an avowed worshipper of Satan or the New York Yankees.

Labels are fun. But what things does Bernie Sanders believe? Are they things that some other Americans might believe? And where do they fit within the confines of the Democratic Party, of which Sanders is not a member but will be competing for its presidential nomination?

Ahead of his campaign launch, Sanders gave an interview with the underground left-wing pamphlet CNBC, outlining one of the basic premises of his campaign: that he’ll advocate for the very things that mainstream Democrats for decades have been insisting they don’t believe, like so-called redistribution of wealth.

SANDERS: “What is my dream? My dream is, do we live in a country where 70 percent, 80 percent, 90 percent of the people vote? Where we have serious discourse on media rather than political gossip, by the way? Where we’re debating trade policy, we’re debating foreign policy, we’re debating economic policy, where the American people actually know what’s going on in Congress? Ninety-nine percent of all new income generated today goes to the top 1 percent. Top one-tenth of 1 percent owns as much as wealth as the bottom 90 percent. Does anybody think that that is the kind of economy this country should have? Do we think it’s moral? So to my mind, if you have seen a massive transfer of wealth from the middle class to the top one-tenth of 1 percent, you know what, we’ve got to transfer that back if we’re going to have a vibrant middle class. And you do that in a lot of ways. Certainly one way is tax policy.”

Sanders’ language is important here. You’ll note that he does not actually use the term “redistribution” of wealth. That’s because the term “redistribution” implies that the status quo, in which wealth is stacked at the top, is the natural order of things. The status quo is simply one of various possible distributions of wealth as determined by the current set of laws governing the country. Prior to Reagan, there was a different set of policies that led to a different distribution of wealth — strong labor rights, higher, more prohibitive marginal tax rates on the very wealthy, and so forth. As Sanders says, it’s not about “redistributing” wealth — it’s about recalibrating the distribution to one that was better. His challenge in appealing to voters will be decades of free-market agitprop that’s conditioned lower- and middle-income people to believe that policy directly challenging the super-wealthy’s right to be super-wealthy would mark the end of human civilization, and the death of God.

The Washington Post’s Greg Sargent puts it nicely in his loose breakdown of economic differences within the Democratic Party:

“As I’ve noted before, at risk of oversimplifying, there are two poles that define the economic debate among Democrats. There’s the agenda that tends to focus more on boosting wages and economic mobility and opportunity: Family-friendly workplace policies designed to remove barriers to work, such as paid sick leave and universal child care; more investments in education, job training and infrastructure; a minimum wage hike; and so on. These policies are embraced by most mainstream Democrats.
“Then there’s the agenda embraced by Sanders, Elizabeth Warren, economist Joseph Stiglitz, and others. This agenda is more focused on diagnosing inequality as the result of an economy and political system that is broadly rigged (as they like to put it) in favor of the very top. The main culprits are, among other things, insufficient financial rules and oversight; lopsided influence over the political process enjoyed by the wealthy and corporations; and a tax code that is not only not progressive enough, but is unfairly gamed to protect certain types of wealth.”

Another way of making the distinction: between those who are more oriented toward increasing equality of opportunity, and those who are motivated toward increasing equality of outcome. Liberals deviated from “equality of outcome” because they did not want to be perceived as Communists. And so the Democratic Party for the past few decades has been about indirectly helping the lower and middle classes by improving education and job training and all those other things that Sargent mentions.

What Sanders recognizes — and what many more lefties have come to recognize since the financial crisis — is that equality of opportunity doesn’t work if you first don’t move toward greater equality of outcome. No, this doesn’t mean total equality of outcome. There still will be tiers — everyone can breathe! But the idea would be to make sure that the people at the bottom first aren’t starving to death. Our culture is filled with a few inspirational stories of people who came from absolutely nothing but managed to break the cycle of poverty and make something of themselves. That’s wonderful. What the vapid culture doesn’t tell you, though, is that they are rare exceptions in an economy that mostly keeps people born into the top at the top, and people born at the bottom in the bottom. And that bottom is getting bigger while the top gets smaller.

Bernie Sanders wants to narrow the gap with direct downward transfers of wealth in order to make life less shitty for most people. Why, he’s even avowed these positions. Scary stuff.

http://www.salon.com/2015/05/27/bernie_sanders_is_the_1_percents_worst_nightmare_how_he_promises_to_upend_americas_oligarchy/?utm_source=facebook&utm_medium=socialflow

Bernie Sanders advocates wealth redistribution through aggressive progress tax extraction on the wealthy ownership class. Unfortunately, what is not recognized is that the rich are rich not because of job status, but because they serious OWNERS of wealth-creating, income-producing capital assets. Redistribution directly undermines the principles of private property ownership, a core American value. While redistribution of excessive wealth at death is arguably appropriate, redistribution during life takes from those who are “productive,” both in terms of their labor and the “tools” they OWN. On the other hand, arguably those who earn more should pay progressive more in taxes to support societal development in ways beneficial to EVERY child, woman, and man.

Bernie Sanders, under his Economic Platform, needs expand his thinking beyond the redistribution of existing accumulated wealth and focus his leadership in an  effort to create simultaneously with economic growth new capital owners by empowering EVERY citizen to acquire FUTURE wealth-creating, income-producing capital assets on the basis that the investments will generate their own earnings and pay for themselves without the requirement of past savings.

In this way, opportunity to acquire personal OWNERSHIP of future capital asset formation will ensure that the already wealthy 1 percent do not OWN America’s future.

Without this core, fundamental foundation of universal personal OWNERSHIP sharing the corporations growing the economy, it will be impossible to achieve the other aspects of his platform and stop America’s shift to an oligarchy.

Read Bernie Sanders’s Populist, Policy-Heavy Speech Kicking Off His Campaign

WASHINGTON, DC – APRIL 30: U.S. Sen. Bernard Sanders (I-VT) speaks on his agenda for America during a news conference on Capitol HillAlex Wong/Getty Images

On May 26, 2015, Ezra Klein writes on VOX:

On Tuesday afternoon, Sen. Bernie Sanders gave a rousing speech kicking off his campaign in his home state of Vermont.

“This campaign,” Sanders said, “is not about Bernie Sanders. It is not about Hillary Clinton. It is not about Jeb Bush or anyone else. This campaign is about the needs of the American people, and the ideas and proposals that effectively address those needs.” Sanders went on to deliver a surprisingly policy-heavy speech. Here are his prepared remarks, minus the thank-yous and glad-to-be-heres at the beginning.

Today, here in our small state — a state that has led the nation in so many ways — I am proud to announce my candidacy for president of the United States of America.

Today, with your support and the support of millions of people throughout this country, we begin a political revolution to transform our country economically, politically, socially and environmentally.

Today, we stand here and say loudly and clearly that; “Enough is enough. This great nation and its government belong to all of the people, and not to a handful of billionaires, their Super-PACs and their lobbyists.”

Brothers and sisters: Now is not the time for thinking small. Now is not the time for the same old — same old establishment politics and stale inside-the-beltway ideas.

Now is the time for millions of working families to come together, to revitalize American democracy, to end the collapse of the American middle class and to make certain that our children and grandchildren are able to enjoy a quality of life that brings them health, prosperity, security and joy – and that once again makes the United States the leader in the world in the fight for economic and social justice, for environmental sanity and for a world of peace.

My fellow Americans: This country faces more serious problems today than at any time since the Great Depression and, if you include the planetary crisis of climate change, it may well be that the challenges we face now are direr than any time in our modern history.

Here is my promise to you for this campaign. Not only will I fight to protect the working families of this country, but we’re going to build a movement of millions of Americans who are prepared to stand up and fight back. We’re going to take this campaign directly to the people – in town meetings, door to door conversations, on street corners and in social media — and that’s BernieSanders.com by the way. This week we will be in New Hampshire, Iowa and Minnesota — and that’s just the start of a vigorous grassroots campaign.

Let’s be clear. This campaign is not about Bernie Sanders. It is not about Hillary Clinton. It is not about Jeb Bush or anyone else. This campaign is about the needs of the American people, and the ideas and proposals that effectively address those needs. As someone who has never run a negative political ad in his life, my campaign will be driven by issues and serious debate; not political gossip, not reckless personal attacks or character assassination. This is what I believe the American people want and deserve. I hope other candidates agree, and I hope the media allows that to happen. Politics in a democratic society should not be treated like a baseball game, a game show or a soap opera. The times are too serious for that.

Let me take a minute to touch on some of the issues that I will be focusing on in the coming months, and then give you an outline of an Agenda for America which will, in fact, deal with these problems and lead us to a better future.

Income and Wealth Inequality: Today, we live in the wealthiest nation in the history of the world but that reality means very little for most of us because almost all of that wealth is owned and controlled by a tiny handful of individuals. In America we now have more income and wealth inequality than any other major country on earth, and the gap between the very rich and everyone is wider than at any time since the 1920s. The issue of wealth and income inequality is the great moral issue of our time, it is the great economic issue of our time and it is the great political issue of our time. And we will address it.

Let me be very clear. There is something profoundly wrong when the top one-tenth of 1 percent owns almost as much wealth as the bottom 90 percent, and when 99 percent of all new income goes to the top 1 percent. There is something profoundly wrong when, in recent years, we have seen a proliferation of millionaires and billionaires at the same time as millions of Americans work longer hours for lower wages and we have the highest rate of childhood poverty of any major country on earth. There is something profoundly wrong when one family owns more wealth than the bottom 130 million Americans. This grotesque level of inequality is immoral. It is bad economics. It is unsustainable. This type of rigged economy is not what America is supposed to be about. This has got to change and, as your president, together we will change it.

Economics: But it is not just income and wealth inequality. It is the tragic reality that for the last 40 years the great middle class of our country —once the envy of the world — has been disappearing. Despite exploding technology and increased worker productivity, median family income is almost $5,000 less than it was in 1999. In Vermont and throughout this country it is not uncommon for people to be working two or three jobs just to cobble together enough income to survive on and some health care benefits.

The truth is that real unemployment is not the 5.4 percent you read in newspapers. It is close to 11 percent if you include those workers who have given up looking for jobs or who are working part time when they want to work full time. Youth unemployment is over 17 percent and African-American youth unemployment is much higher than that. Today, shamefully, we have 45 million people living in poverty, many of whom are working at low-wage jobs. These are the people who struggle every day to find the money to feed their kids, to pay their electric bills and to put gas in the car to get to work. This campaign is about those people and our struggling middle class. It is about creating an economy that works for all, and not just the one percent.

Citizens United: My fellow Americans: Let me be as blunt as I can and tell you what you already know. As a result of the disastrous Supreme Court decision on Citizens United, the American political system has been totally corrupted, and the foundations of American democracy are being undermined. What the Supreme Court essentially said was that it was not good enough for the billionaire class to own much of our economy. They could now own the U.S. government as well. And that is precisely what they are trying to do.

American democracy is not about billionaires being able to buy candidates and elections. It is not about the Koch brothers, Sheldon Adelson and other incredibly wealthy individuals spending billions of dollars to elect candidates who will make the rich richer and everyone else poorer. According to media reports the Koch brothers alone, one family, will spend more money in this election cycle than either the Democratic or Republican parties. This is not democracy. This is oligarchy. In Vermont and at our town meetings we know what American democracy is supposed to be about. It is one person, one vote — with every citizen having an equal say — and no voter suppression. And that’s the kind of American political system we have to fight for and will fight for in this campaign.

Climate Change: When we talk about our responsibilities as human beings and as parents, there is nothing more important than leaving this country and the entire planet in a way that is habitable for our kids and grandchildren. The debate is over. The scientific community has spoken in a virtually unanimous voice. Climate change is real. It is caused by human activity and it is already causing devastating problems in the United States and around the world.

The scientists are telling us that if we do not boldly transform our energy system away from fossil fuels and into energy efficiency and sustainable energies, this planet could be five to ten degrees Fahrenheit warmer by the end of this century. This is catastrophic. It will mean more drought, more famine, more rising sea level, more floods, more ocean acidification, more extreme weather disturbances, more disease and more human suffering. We must not, we cannot, and we will not allow that to happen.

It is no secret that there is massive discontent with politics in America today. In the mid-term election in November, 63 percent of Americans did not vote, including 80 percent of young people. Poll after poll tells us that our citizens no longer have confidence in our political institutions and, given the power of Big Money in the political process, they have serious doubts about how much their vote actually matters and whether politicians have any clue as to what is going on in their lives.

Combatting this political alienation, this cynicism and this legitimate anger will not be easy. That’s for sure. But that is exactly what, together, we have to do if we are going to turn this country around — and that is what this campaign is all about.

And to bring people together we need a simple and straight-forward progressive agenda which speaks to the needs of our people, and which provides us with a vision of a very different America. And what is that agenda?

Jobs, Jobs, Jobs: It begins with jobs. If we are truly serious about reversing the decline of the middle class we need a major federal jobs program which puts millions of Americans back to work at decent paying jobs. At a time when our roads, bridges, water systems, rail and airports are decaying, the most effective way to rapidly create meaningful jobs is to rebuild our crumbling infrastructure. That’s why I’ve introduced legislation which would invest $1 trillion over 5 years to modernize our country’s physical infrastructure. This legislation would create and maintain at least 13 million good-paying jobs, while making our country more productive, efficient and safe. And I promise you as president I will lead that legislation into law.

I will also continue to oppose our current trade policies. For decades, presidents from both parties have supported trade agreements which have cost us millions of decent paying jobs as corporate America shuts down plants here and moves to low-wage countries. As president, my trade policies will break that cycle of agreements which enrich at the expense of the working people of this country.

Raising Wages: Let us be honest and acknowledge that millions of Americans are now working for totally inadequate wages. The current federal minimum wage of $7.25 an hour is a starvation wage and must be raised. The minimum wage must become a living wage — which means raising it to $15 an hour over the next few years — which is exactly what Los Angeles recently did — and I applaud them for doing that. Our goal as a nation must be to ensure that no full-time worker lives in poverty. Further, we must establish pay equity for women workers. It’s unconscionable that women earn 78 cents on the dollar compared to men who perform the same work. We must also end the scandal in which millions of American employees, often earning less than $30,000 a year, work 50 or 60 hours a week — and earn no overtime. And we need paid sick leave and guaranteed vacation time for all.

Addressing Wealth and Income Inequality: This campaign is going to send a message to the billionaire class. And that is: you can’t have it all. You can’t get huge tax breaks while children in this country go hungry. You can’t continue sending our jobs to China while millions are looking for work. You can’t hide your profits in the Cayman Islands and other tax havens, while there are massive unmet needs on every corner of this nation. Your greed has got to end. You cannot take advantage of all the benefits of America, if you refuse to accept your responsibilities.

That is why we need a tax system which is fair and progressive, which makes wealthy individuals and profitable corporations begin to pay their fair share of taxes.

Reforming Wall Street: It is time to break up the largest financial institutions in the country. Wall Street cannot continue to be an island unto itself, gambling trillions in risky financial instruments while expecting the public to bail it out. If a bank is too big to fail it is too big to exist. We need a banking system which is part of the job creating productive economy, not a handful of huge banks on Wall Street which engage in reckless and illegal activities.

Campaign Finance Reform: If we are serious about creating jobs, about climate change and the needs of our children and the elderly, we must be deadly serious about campaign finance reform and the need for a constitutional amendment to overturn Citizens United. I have said it before and I’ll say it again. I will not nominate any justice to the Supreme Court who has not made it clear that he or she will move to overturn that disastrous decision which is undermining our democracy. Long term, we need to go further and establish public funding of elections.

Reversing Climate Change: The United States must lead the world in reversing climate change. We can do that if we transform our energy system away from fossil fuels, toward energy efficiency and such sustainable energies such as wind, solar, geo-thermal and bio-mass. Millions of homes and buildings need to be weatherized, our transportation system needs to be energy efficient, and we need a tax on carbon to accelerate the transition away from fossil fuel.

Health Care for All: The United States remains the only major country on earth that does not guarantee health care for all as a right. Despite the modest gains of the Affordable Care Act, 35 million Americans continue to lack health insurance and many more are under-insured. Yet, we continue paying far more per capita for health care than any other nation. The United States must join the rest of the industrialized world and guarantee health care to all as a right by moving toward a Medicare-for-All single-payer system.

Protecting Our Most Vulnerable: At a time when millions of Americans are struggling to keep their heads above water economically, at a time when senior poverty is increasing, at a time when millions of kids are living in dire poverty, my Republican colleagues, as part of their recently-passed budget, are trying to make a terrible situation even worse. If you can believe it, the Republican budget throws 27 million Americans off health insurance, makes drastic cuts in Medicare, throws millions of low-income Americans, including pregnant women off of nutrition programs, and makes it harder for working-class families to afford college or put their kids in the Head Start program. And then, to add insult to injury, they provide huge tax breaks for the very wealthiest families in this country while they raise taxes on working families.

Well, let me tell my Republican colleagues that I respectfully disagree with their approach. Instead of cutting Social Security, we’re going to expand Social Security benefits. Instead of cutting Head Start and child care, we are going to move to a universal pre-K system for all the children of this country. As Franklin Delano Roosevelt reminded us, a nation’s greatness is judged not by what it provides to the most well-off, but how it treats the people most in need. And that’s the kind of nation we must become.

College for All: And when we talk about education, let me be very clear. In a highly competitive global economy, we need the best educated workforce we can create. It is insane and counter-productive to the best interests of our country, that hundreds of thousands of bright young people cannot afford to go to college, and that millions of others leave school with a mountain of debt that burdens them for decades. That must end. That is why, as president, I will fight to make tuition in public colleges and universities free, as well as substantially lower interest rates on student loans.

War and Peace: As everybody knows, we live in a difficult and dangerous world, and there are people out there who want to do us harm. As president, I will defend this nation — but I will do it responsibly. As a member of Congress I voted against the war in Iraq, and that was the right vote. I am vigorously opposed to an endless war in the Middle East — a war which is unwise and unnecessary. We must be vigorous in combatting terrorism and defeating ISIS, but we should not have to bear that burden alone. We must be part of an international coalition, led by Muslim nations, that can not only defeat ISIS but begin the process of creating conditions for a lasting peace.

As some of you know, I was born in a far-away land called Brooklyn, New York. My father came to this country from Poland without a penny in his pocket and without much of an education. My mother graduated high school in New York City. My father worked for almost his entire life as a paint salesman and we were solidly lower-middle class. My parents, brother and I lived in a small rent-controlled apartment. My mother’s dream was to move out of that small apartment into a home of our own. She died young and her dream was never fulfilled. As a kid I learned, in many, many ways, what lack of money means to a family. That’s a lesson I have never forgotten.

I have seen the promise of America in my own life. My parents would have never dreamed that their son would be a U.S. Senator, let alone run for president. But for too many of our fellow Americans, the dream of progress and opportunity is being denied by the grind of an economy that funnels all the wealth to the top.

And to those who say we cannot restore the dream, I say just look where we are standing. This beautiful place was once an unsightly rail yard that served no public purpose and was an eyesore. As mayor, I worked with the people of Burlington to help turn this waterfront into the beautiful people-oriented public space it is today. We took the fight to the courts, to the legislature and to the people. And we won.

The lesson to be learned is that when people stand together, and are prepared to fight back, there is nothing that can’t be accomplished.

We can live in a country:

Where every person has health care as a right, not a privilege;
Where every parent can have quality and affordable childcare and where all of our qualified young people, regardless of income, can go to college;
Where every senior can live in dignity and security, and not be forced to choose between their medicine or their food;
Where every veteran who defends this nation gets the quality health care and benefits they have earned and receives the respect they deserve;
Where every person, no matter their race, their religion, their disability or their sexual orientation realizes the full promise of equality that is our birthright as Americans.
That is the nation we can build together, and I ask you to join me in this campaign to build a future that works for all of us, and not just the few on top.

Thank you, and on this beautiful day on the shore of Lake Champlain, I welcome you aboard.

http://www.vox.com/2015/5/26/8662903/bernie-sanders-full-text-speech-presidential-campaign

Bernie Sanders, under his Economic Platform, needs to ensure that he will lead  the effort to create simultaneously with economic growth new capital owners by empowering EVERY citizen to acquire FUTURE wealth-creating, income-producing capital assets on the basis that the investments will generate their own earnings and pay for themselves without the requirement of past savings.

Without this core, fundamental foundation of universal personal OWNERSHIP sharing the corporations growing the economy, it will be impossible to achieve the other aspects of his platform and stop America’s shift to an oligarchy.

You’ve Met Hillarynomics. Now Meet Left-Of-Hillarynomics.

Joe Stiglitz unveils “Rewriting the Rules” in DC on May 12, 2015.Win McNamee/Getty Images

On May 27, 2015, Dylan Matthews writes on VOX:

Hillary Clinton has yet to lay out a detailed economic platform, but knowing the people she listens to on the matter, and judging from her 2008 campaign, it’s not too hard to guess what it’ll be. She’ll call for a bigger safety net for working parents: more child care subsidies, paid leave for new mothers and fathers. She might call for a slight increase in taxes for the rich. But she’s always been a fan of markets. Her agenda — like President Obama’s, like former President Clinton’s — has been defined by a faith that markets are creating wealth reasonably effectively, and that their major flaw is they don’t distribute income as evenly as they should. Let businesses do their thing, redistribute a bit, and you’re basically set.

But a recent report — authored by Nobel laureate economist Joseph Stiglitz along with Roosevelt Institute fellows Nell Abernathy, Adam Hersh, Susan Holmberg, and Mike Konczal — suggests this basic assumption is badly mistaken. The problem isn’t just one of distribution, the report argues. The problem is that the economy is fundamentally broken, shot through with opportunities for the rich to get richer not by building wealth but through exploitation and taking. We’ll need redistribution, yes. But first the whole system needs to be rethought.

The mystery of rising wealth and stagnant income

Rich peopleTim Graham/Getty Images

The report, titled “Rewriting the Rules of the American Economy: An Agenda for Shared Prosperity” and released on May 12, is a far-reaching indictment of economic policy as it’s been conducted in recent decades, which have resulted in sluggish growth and booming inequality, with wealth growing considerably faster than incomes. One central question, according to the report, is why is this even possible. Conventional thinking holds that wealth should be invested and, through investment, put to productive use, with those investments creating job opportunities and higher wages.

Alternatively, if few productive investment opportunities are available, the return on invested wealth should start falling. It ought to be a self-correcting cycle in which wealth cannot outpace incomes for long. But the return from capital remains high, and wages are stagnating. Something’s gone wrong.

Investing in rents rather than production

The Beatles, a few days after they met Elvis.Getty Images

Buying these guys’ back catalog: good for you, not good for growth.

The problem, Stiglitz and his co-authors write, is that the rise in wealth isn’t coming from productive investments.

It’s coming from what economists call rents — a metaphorical extension of the 18th-century practice of small farmers paying rent to landlords for the right to use the total inert asset of land.

Stiglitz and his co-authors extend the idea to include a wider and more modern array of rents. A patent or a copyright, for example, can be a valuable financial commodity to own, even without being productive in the way a factory or tractor is. To see the distinction, imagine you have $300 million and can either invest it in a startup or use it to buy the rights to the Beatles’ songs. In the former case, you’re providing money that a company can then use to hire people, produce goods, and generally create wealth in the world.

In the latter, you’re producing nothing; you’re just grabbing something that someone else produced and claiming the proceeds from it.

“Rent-seeking,” as economists call it, is generally viewed as economically counterproductive. It’s especially counterproductive when it becomes so lucrative as to provide a more attractive outlet for people’s money than real investments.

The report’s authors argue that’s exactly what’s happening with Wall Street. Its growth has fueled a big rise in credit — credit that tends to go to those who already have wealth, often in the form of rents, exacerbating existing rent-based problems. Financiers have also identified novel ways to rent-seek.

“Too big to fail” status, for example, can count as a rent. It increases the value of firms like Goldman Sachs or JPMorgan Chase not by making them more productive, but by providing an implicit government subsidy. Trading mortgage-backed securities for profit, similarly, does little to actually increase wealth but a lot to redirect it. That makes it attractive as a business activity for banks and hedge funds, redirecting their energies from profitable activities that create wealth.

How the government helps

Ronald Reagan outlines his tax cut planReagan Library

Ronald Reagan outlines his tax cut plan in July 1981; the cuts could have hurt growth by encouraging rich people to rent seek.

Many of these rents are explicitly created by government policies. “Too big to fail” is an obvious example, but financial deregulation more broadly has made speculation vastly more profitable in recent decades, encouraging rent-seeking on the part of financial firms.

Stiglitz and his co-authors also finger tax cuts for the wealthy as a culprit. They cite research by Thomas Piketty, Emmanuel Saez, and Stefanie Stantcheva finding that countries that slashed their top marginal tax rates the most in recent decades also saw the biggest increases in inequality before taxes. That might make sense if the tax cuts boosted growth, but that wasn’t really what happened. What happened instead, Piketty, Saez, and Stantcheva argued, was that the tax cuts gave top earners bigger incentive to extract rents for themselves, to bargain hard to increase their share of the company’s wages. In the 1950s, when the top marginal tax rate in the US was 91 percent, getting an extra $1 in income through rents only yielded $0.09 after taxes. Today, it means getting $0.60. That’s a sixfold increase — a huge increase in the incentive to find rents for oneself.

Protections for intellectual property also make rent-seeking more attractive, often at the expense of the public interest.

There’s little empirical evidence, Stiglitz et al. argue, that intellectual property is a significant incentive for innovators. Plenty of major technological advances with enormous economic implications — from Alan Turing’s outlining of the “Turing machine” model of computation to the discovery of the structure of DNA to Tim Berners-Lee’s creation of the World Wide Web — were never patented or otherwise protected by the intellectual property regime. But IP rules do serve to increase the cost of goods like prescription drugs and create a barrier to entry for firms trying to compete against companies with large IP holdings.

How to stop rent-seeking

houseShutterstock

This house brought to you by a loan from the government.

The agenda that Stiglitz, Abernathy, Hersh, Holmberg, and Konczal arrive at for reducing financial rent-seeking should look pretty familiar. It’s a straightforward left-of-the-Democrats economic platform. They want to raise taxes on the wealthy by hiking rates and converting deductions (which are most valuable for the rich) into credits (which are worth the same to everybody). They want tougher enforcement on Wall Street. They want to end “too big to fail” by imposing a capital surcharge on large, risky firms, and to create a financial transactions tax to discourage short-term trading. They want subsidized child care, smaller prison populations, immigration reform, and Medicare for all.

Not all of this can be explained through the prism of reducing rent-seeking. Subsidized child care, for example, doesn’t really do a whole lot to curb bank speculation.

But all the same, limiting banks’ opportunities to profit without actually creating wealth is a major throughline. It motivates the report’s most striking proposal, a plan to replace the current housing finance system, in which government and quasi-governmental agencies like Fannie Mae/Freddie Mac and the Federal Housing Administration back up private loans from banks to ensure mortgages remain affordable, with a “public option” for mortgages, in which the federal government just loans money for houses directly. That would largely eliminate banks’ involvement in consumer housing finance, depriving them of an arena rich in rent-seeking opportunities.

There are subtler ways in which the agenda would grow the economy by undermining rent-seeking, as well. The report calls for expanding subsidies for higher education, such as by making community college free (as Obama has proposed) and making income-based repayment of student loans universal, as it is in Australia, to minimize the burden of paying them back while in one’s 20s and at the nadir of one’s earning potential. That doesn’t directly relate to the financial sector; most student loans in the US are already issued directly by the federal government.

But it’d make it easier for students from elite universities with loan burdens to avoid going to work on Wall Street, and, as economists Benjamin Lockwood, Charles Nathanson, and Glen Weyl have argued, directing young people into productive careers instead of finance could grow the economy.

In other words, Stiglitz, Abernathy, Hersh, Holmberg, and Konczal have found a way to rearticulate left-of-center economic policies as more than just attempts to even out the income distribution or expand the safety net for its own sake. Those are worthy goals, but so is boosting economic growth. The report challenge the idea that growth requires getting out of the way of the market, and embraces the notion that it requires constant, active government intervention. It’s a necessary and bracing challenge to years of conventional wisdom, in which being “pro-growth” and “pro-market” were seen as basically equivalent. Markets fail, Stiglitz and his co-authors remind us, and when they do the government is needed to set them right.

http://www.vox.com/2015/5/27/8670749/stiglitz-report-rent-seeking

 

Here Are 7 Things People Who Say They’re ‘Fiscally Conservative But Socially Liberal’ Don’t Understand

A handsome big moustached hipster man smoking cigarette in the city (Shutterstock)

On May 22, 2015, Greta Christina writes on Raw Story:

“Well, I’m conservative, but I’m not one of those racist, homophobic, dripping-with-hate Tea Party bigots! I’m pro-choice! I’m pro-same-sex-marriage! I’m not a racist! I just want lower taxes, and smaller government, and less government regulation of business. I’m fiscally conservative, and socially liberal.”

How many liberals and progressives have heard this? It’s ridiculously common. Hell, even David Koch of the Koch brothers has said, “I’m a conservative on economic matters and I’m a social liberal.”

And it’s wrong. W-R-O-N-G Wrong.

You can’t separate fiscal issues from social issues. They’re deeply intertwined. They affect each other. Economic issues often are social issues. And conservative fiscal policies do enormous social harm. That’s true even for the mildest, most generous version of “fiscal conservatism” — low taxes, small government, reduced regulation, a free market. These policies perpetuate human rights abuses. They make life harder for people who already have hard lives. Even if the people supporting these policies don’t intend this, the policies are racist, sexist, classist (obviously), ableist, homophobic, transphobic, and otherwise socially retrograde. In many ways, they do more harm than so-called “social policies” that are supposedly separate from economic ones. Here are seven reasons that “fiscally conservative, socially liberal” is nonsense.

1: Poverty, and the cycle of poverty. This is the big one. Poverty is a social issue. The cycle of poverty — the ways that poverty itself makes it harder to get out of poverty, the ways that poverty can be a permanent trap lasting for generations — is a social issue, and a human rights issue.

If you’re poor, there’s about a two in three chance that you’re going to stay poor for at least a year, about a two in three chance that if you do pull out of poverty you’ll be poor again within five years — and about a two in three chance that your children are going to be poor. Among other things: Being poor makes it much harder to get education or job training that would help you get higher-paying work. Even if you can afford job training or it’s available for free — if you have more than one job, or if your work is menial and exhausting, or if both of those are true (often the case if you’re poor), there’s a good chance you won’t have the time or energy to get that training, or to look for higher-paying work. Being poor typically means you can’t afford to lose your job — which means you can’t afford to unionize, or otherwise push back against your wages and working conditions. It means that a temporary crisis — sickness or injury, job loss, death in the family — can destroy your life: you have no cushion, nobody you know has a cushion, a month or two without income and you’re totally screwed. If you do lose your job, or if you’re disabled, the labyrinthine bureaucracy of unemployment and disability benefits is exhausting: if you do manage to navigate it, it can deplete your ability to do much of anything else to improve your life — and if you can’t navigate it, that’s very likely going to tank your life.

Also, ironically, being poor is expensive. You can’t buy high-quality items that last longer and are a bargain in the long run. You can’t buy in bulk. You sure as hell can’t buy a house: depending on where you live, monthly mortgage payments might be lower than the rent you’re paying, but you can’t afford a down payment, and chances are a bank won’t give you a mortgage anyway. You can’t afford the time or money to take care of your health — which means you’re more likely to get sick, which is expensive. If you don’t have a bank account (which many poor people don’t), you have to pay high fees at check-cashing joints. If you run into a temporary cash crisis, you have to borrow from price-gouging payday-advance joints. If your car breaks down and you can’t afford to repair or replace it, it can mean unemployment. If you can’t afford a car at all, you’re severely limited in what jobs you can take in the first place — a limitation that’s even more severe when public transportation is wildly inadequate. If you’re poor, you may have to move a lot — and that’s expensive. These aren’t universally true for all poor people — but way too many of them are true, for way too many people.

Second chances, once considered a hallmark of American culture and identity, have become a luxury. One small mistake — or no mistake at all, simply the mistake of being born poor — can trap you there forever.

Plus, being poor doesn’t just mean you’re likely to stay poor. It means that if you have children, they’re more likely to stay poor. It means you’re less able to give your children the things they need to flourish — both in easily-measurable tangibles like good nutrition, and less-easily-measurable qualities like a sense of stability. The effect of poverty on children — literally on their brains, on their ability to literally function — is not subtle, and it lasts into adulthood. Poverty’s effect on adults is appalling enough. Its effect on children is an outrage.

And in case you hadn’t noticed, poverty — including the cycle of poverty and the effect of poverty on children — disproportionately affects African Americans, Hispanics, other people of color, women, trans people, disabled people, and other marginalized groups.

So what does this have to do with fiscal policy? Well, duh. Poverty is perpetuated or alleviated, worsened or improved, by fiscal policy. That’s not the only thing affecting poverty, but it’s one of the biggest things. To list just a few of the most obvious examples of very direct influence: Tax policy. Minimum wage. Funding of public schools and universities. Unionization rights. Banking and lending laws. Labor laws. Funding of public transportation. Public health care. Unemployment benefits. Disability benefits. Welfare policy. Public assistance that doesn’t penalize people for having savings. Child care. Having a functioning infrastructure, having economic policies that support labor, having a tax system that doesn’t steal from the poor to give to the rich, having a social safety net — a real safety net, not one that just barely keeps people from starving to death but one that actually lets people get on their feet and function — makes a difference. When these systems are working, and are working well, it’s easier for people to get out of poverty. When they’re not, it’s difficult to impossible. And I haven’t even gotten into the fiscal policy of so-called “free” trade, and all the ways it feeds poverty both in the U.S. and around the world. (I’ll get to that in a bit.)

Fiscal policy affects poverty. And in the United States, “fiscally conservative” means supporting fiscal policies that perpetuate poverty. “Fiscally conservative” means slashing support systems that help the poor, lowering taxes for the rich, cutting corners for big business, and screwing labor — policies that both worsen poverty and make it even more of an inescapable trap.

2: Domestic violence, workplace harassment, and other abuse. See above, re: cycle of poverty. If someone is being beaten by their partner, harassed or assaulted at work, abused by their parents — and if they’re poor, and if there’s fuck-all for a social safety net — it’s a hell of a lot harder for them to leave. What’s more, the stress of poverty itself — especially inescapable, entrapped poverty — contributes to violence and abuse.

And you know who gets disproportionately targeted with domestic violence and workplace harassment? Women. Especially women of color. And LGBT folks — especially trans women of color, and LGBT kids and teenagers. Do you care about racist, homophobic, transphobic, misogynist violence? Then quit undercutting the social safety net. A solid safety net — a safety net that isn’t made of tissue paper, and that doesn’t require the people in it to constantly scramble just to stay there, much less to climb out — isn’t going to magically eliminate this violence and harassment. But it sure makes it easier for people to escape it.

3: Disenfranchisement. There’s a cycle that in some ways is even uglier than the cycle of poverty — because it blocks people from changing the policies that keep the cycle of poverty going. I’m talking about the cycle of disenfranchisement.

I’m talking about the myriad ways that the super-rich control the political process — and in controlling the political process, both make themselves richer and give themselves even more control over the political process. Purging voter rolls. Cutting polling place hours. Cutting back on early voting — especially in poor districts. Voter ID laws. Roadblocks to voter registration — noticeably aimed at people likely to vote progressive. Questionable-at-best voter fraud detection software, which — by some wild coincidence — tends to flag names that are common among minorities. Eliminating Election Day registration. Restricting voter registration drives. Gerrymandering — creating voting districts with the purpose of skewing elections in your favor.

Voter suppression is a real thing in the United States. And these policies are set in place by the super-rich — or, to be more precise, by the government officials who are buddies with the super-rich and are beholden to them. These policies are not set in place to reduce voter fraud: voter fraud is extremely rare in the U.S., to the point of being almost non-existent. The policies are set in place to make voting harder for people who would vote conservative plutocrats out of office. If you’re skeptical about whether this is actually that deliberate, whether these policies really are written by plutocratic villains cackling over how they took even more power from the already disempowered — remember Pennsylvania Republican House Leader Mike Turzai, who actually said, in words, “Voter ID, which is gonna allow Governor Romney to win the state of Pennsylvania, done.”

Remember former Florida Republican chairman Jim Greer, who actually said, in words, “We’ve got to cut down on early voting because early voting is not good for us.” Remember the now-former North Carolina Republican official Don Yelton, whoactually said, in words, that voter restrictions including voter ID were “going to kick Democrats in the butt.” Remember the Texas Republican attorney general and candidate for governor Greg Abbott, who actually said, in words, that “their redistricting decisions were designed to increase the Republican Party’s electoral prospects at the expense of the Democrats.” Remember Doug Preisse, Republican chair of Franklin County (Ohio’s second-largest county) who actually said (well, wrote), in words, that Ohio Republicans were pushing hard to limit early voting because “I guess I really actually feel we shouldn’t contort the voting process to accommodate the urban — read African-American — voter-turnout machine.” (And no, the “read African-American” clarification isn’t mine — it’s his.) Remember… oh, you get the idea. Disenfranchisement is not some accidental side effect of Republican-sponsored voting restrictions. Disenfranchisement is the entirely intentional point.

And on top of that, you’ve got campaign finance laws saying that corporations are people, too — “people” with just as much right as you or I to donate millions of dollars to candidates who’ll write laws helping them out. When you’ve got fiscal policies that enrich the already rich — such as regressive tax policies, deregulation of businesses, deregulation of the financial industry — and you combine them with campaign finance laws that have essentially legalized bribery, you get a recipe for a cycle of disenfranchisement. The more that rich people control the political process, the richer they get — and the richer they get, the more they control the political process.

4: Racist policing. There’s a whole lot going on with racist policing in the United States. Obviously. But a non-trivial chunk of it is fiscal policy. Ferguson shone a spotlight on this, but it isn’t just in Ferguson — it’s all over the country. In cities and counties and towns across the United States, the government is funded, in large part, by tickets and fines for municipal violations — and by the meta-system of interest, penalties, surcharges, and fees on those tickets and fines, which commonly turn into a never-ending debt amounting to many, many times the original fine itself.

This is, for all intents and purposes, a tax. It’s a tax on poor people. It’s a tax on poor people for being poor, for not having a hundred dollars in their bank account that they can drop at a moment’s notice on a traffic ticket. And it’s a tax that disproportionately targets black and brown people. When combined with the deeply ingrained culture ofracism in many many many police forces — a police culture that hammers black and brown people for the crime of existing — it is a tax on black and brown people, purely for being black or brown. But Loki forbid we raise actual taxes. Remember the fiscal conservative mantra: “Low taxes good! High taxes bad!” High taxes are bad — unless we don’t call them a tax. If we call it a penalty or a fine, that’s just peachy. And if it’s disproportionately levied by a racist police force on poor black people, who have little visibility or power and are being systematically disenfranchised — that’s even better. What are they going to do about it? And who’s going to care? It’s not as if black lives matter. What’s more: You know some of the programs that have been proposed to reduce racist policing? Programs like automatic video monitoring of police encounters? An independent federal agency to investigate and discipline local policing, to supplement or replace ineffective, corrupt, or non-existent self-policing? Those take money. Money that comes from taxes. Money that makes government a little bit bigger. Fiscal conservatism — the reflexive cry of “Lower taxes! Smaller government!” — contributes to racist policing. Even if you, personally, oppose racist policing, supporting fiscal conservatism makes you part of the problem.

5: Drug policy and prison policy. Four words: The new Jim Crow. Drug war policies in the United States — including sentencing policies, probation policies, which drugs are criminalized and how severely, laws banning felons convicted on drug charges from voting, and more — have pretty much zero effect on reducing the harm that can be done by drug abuse. They don’t reduce drug use, they don’t reduce drug addiction, they don’t reduce overdoses, they don’t reduce accidents or violence that can be triggered by drug abuse. If anything, these policies make all of this worse.

But they do have one powerful effect: Current drug policies in the United States are very, very good at creating and perpetuating a permanent black and brown underclass. They are very good at creating a permanent class of underpaid, disenfranchised, disempowered servants, sentenced to do shit work at low wages for white people, for the rest of their lives.

This is not a bug. This is a feature.

You don’t have to be a wild-eyed conspiracy theorist to see how current U.S. drug policy benefits the super-rich and super-powerful. It is a perfect example of a “social issue” with powerful ripple effects into the economy. And that’s not even getting into the issue of how the wealthy might benefit from super-cheap prison labor, labor that borders so closely on slavery it’s hard to distinguish it. So people who are well-served by the current economy are strongly motivated to keep drug policy firmly in place.

Plus, two more words: Privatized prisons. Privatized prisons mean prisons run by people who have no interest in reducing the prison population — people who actually benefit from a high crime rate, a high recidivism rate, severe sentencing policies, severe probation policies, and other treats that keep the prison population high. It’s as if we had privatized fire departments, who got paid more the more fires they put out — and thus had every incentive, not to improve fire prevention techniques and policies and education, but to gut them.

Privatization of prisons is a conservative fiscal policy. It’s a policy based on the conservative ideal of low taxes, small government, and the supposedly miraculous power of the free market to make any system more efficient. And it’s a policy with a powerful social effect — the effect of doing tremendous harm.

It’s true that there are some conservatives advocating for criminal justice reform, including drug policy reform, on the grounds that the current system isn’t cost-effective. The problem with this, as Drug Policy Alliance Deputy State Director Laura Thomas points out: When you base policy decisions entirely on whether they’re cost-effective, the bottom line will always take priority. Injustice, racism, corruption, abuse — all of these can stay firmly in place. Human rights, and the human cost of these policies? Meh. Who cares — as long as we can cut government spending?

6: Deregulation. This one is really straightforward. Deregulation of business is a conservative fiscal policy. And it has a devastating effect on marginalized people. Do I need to remind anyone of what happened when the banking and financial industries were deregulated?

Do I need to remind anyone of who was most hurt by those disasters? Overwhelminglypoor people, working-class people, and people of color.

But this isn’t just about banking and finance. Deregulation of environmental standards, workplace safety standards, utilities, transportation, media — all of these have the entirely unsurprising effect of making things better for the people who own the businesses, and worse for the people who patronize them and work for them. Contrary to the fiscal conservative myth, an unregulated free market does not result in exceptional businesses fiercely competing for the best workers and lavishly serving the public. It results in monopoly. It results in businesses with the unofficial slogan,“We Don’t Care — We Don’t Have To.” It results in 500-pound gorillas, sleeping anywhere they want.

7: “Free” trade. This one is really straightforward. So-called “free” trade policies have a horrible effect on human rights, both in the United States and overseas. They letcorporations hire labor in countries where labor laws — laws about minimum wage, workplace safety, working hours, child labor — are weak to nonexistent. They let corporations hire labor in countries where they can pay children as young as five years old less than a dollar a day, to work 12 or even 16 hours a day, in grossly unsafe workplaces and grueling working conditions that make Dickensian London look like a socialist Utopia.

And again — this is not a bug. This is a feature. This is the whole damn point of “free” trade: by reducing labor costs to practically nothing, it provides cheap consumer products to American consumers, and it funnels huge profits to already obscenely rich corporations. It also decimates blue-collar employment in the United States — and it feeds human rights abuses around the world. Thank you, fiscal conservatism!

***

This list is far from complete. But I think you get the idea.

Now. There are conservatives who will insist that this isn’t what “fiscally conservative” means. They’re not inherently opposed to government spending, they say. They’re just opposed to ineffective and wasteful government spending.

Bullshit. Do they really think progressives are in favor of wasteful and ineffective government? Do they think we’re saying, “Thumbs up to ineffective government spending! Let’s pour our government’s resources down a rat hole! Let’s spend our tax money giving every citizen a solid-gold tuba and a lifetime subscription to Cigar Aficionado!” This is an idealized, self-serving definition of “fiscally conservative,” defined by conservatives to make their position seem reasonable. It does not describe fiscal conservatism as it actually plays out in the United States. The reality of fiscal conservatism in the United States is not cautious, evidence-based attention to which government programs do and don’t work. If that were ever true in some misty nostalgic past, it hasn’t been true for a long, long time. The reality of fiscal conservatism in the United States means slashing government programs, even when they’ve been shown to work. The reality means decimating government regulations, even when they’ve been shown to improve people’s lives. The reality means cutting the safety net to ribbons, and letting big businesses do pretty much whatever they want.

You can say all you want that modern conservatism in the United States isn’t what you, personally, mean by conservatism. But hanging on to some ideal of “conservatism” as a model of sensible-but-compassionate frugality that’s being betrayed by the Koch Brothers and the Tea Party — it’s like hanging onto some ideal of Republicanism as the party of abolition and Lincoln. And it lends credibility to the idea that conservatism is reasonable, if only people would do it right.

If you care about marginalized people — if you care about the oppression of women, LGBT people, disabled people, African Americans and Hispanics and other people of color — you need to do more than go to same-sex weddings and listen to hip-hop. You need to support economic policies that make marginalized people’s lives better. You need to oppose economic policies that perpetuate human rights abuses and make marginalized people’s lives suck.

And that means not being a fiscal conservative.

http://www.rawstory.com/2015/05/here-are-7-things-people-who-say-theyre-fiscally-conservative-but-socially-liberal-dont-understand/

 

Walter Reuther On The UAW & Collective Bargaining (1958)

“Walter Reuther, President of the United Auto Workers, expressed his open-mindedness to the goal of democratic worker ownership in his 1967 testimony to the Joint Economic Committee of Congress as a strategy for saving manufacturing jobs in America from being outcompeted by Japan and eventual outsourcing to other Asian countries with far lower wage costs: “Profit sharing in the form of stock distributions to workers would help to democratize the ownership of America’s vast corporate wealth, which is today appallingly undemocratic and unhealthy.”

Germany Shows The Way On Labor


Worker Michael Keil checks a Golf VII during a 2012 press tour of Volkswagen’s plant in Zwickau, Germany. (Jens Meyer/Associated Press)

On April 29, 2015, Harold Meyerson writes in The Washington Post:

“Policy,” says David Rolf, the Seattle union official chiefly responsible for the first successful campaigns for a $15 minimum wage, “is just frozen power.” By which measure, the problem with U.S. trade policy for the past quarter-century is that it reflects the growing imbalance of power between investors, able to profit from global markets, and workers, who have lost the institutions that once enabled them to improve or at least maintain their jobs and incomes.

Beyond question, the entry of China, India and the former Soviet bloc into the world labor market has exerted downward pressure on jobs and wages throughout the advanced industrial world. In the United States, that pressure has been particularly intense and widespread. As one paper published last year in the Review of Economics and Statistics concluded, U.S. workers forced out of their jobs by globalization between 1984 and 2002 saw their wages decline by between 12 percent and 17 percent. And that was before the full weight of Chinese competition descended on American manufacturing and an additional 55,000-plus U.S. factories shuttered their gates.

But globalization has not had so grim an aspect in every advanced economy. Like the United States, Germany is home to a large number of iconic manufacturers — Volkswagen, Daimler, Siemens, to name a few — that have factories all over the world. Yet Germany frequently has the world’s largest trade surplus while the United States perennially runs the world’s largest trade deficit. More remarkably, German manufacturing workers make a good deal more than their American peers: Their hourly compensation averaged $46 in 2012, $10 more than the U.S. average, according to a Labor Department survey.

To be sure, Germany’s advantage is partly due to the euro’s undervaluation of German goods. But the fundamental difference between Germany’s experience of globalization and our own is the result of a vastly different balance of power between capital and labor. German worker organizations wield power in ways that would astound their U.S. counterparts — above all, by virtue of the legal requirement that the boards of all sizable corporations be equally divided between workers and management.

On Tuesday, I met with eight leaders of IG Metall — the union of Germany’s manufacturing workers, and by most measures the most powerful union on the planet. Like workers throughout the advanced industrial world, they’ve not been able to stop the decline of some of their older industries. “We’ve lost jobs every day in steel and shipbuilding,” said Horst Mund, the union’s international director.

But in auto, aerospace, electronics, high-speed rail and defense technology, their experience has deviated completely what we’ve seen in the United States.

The strategy of the German unions has been to allow, often reluctantly, their globe-trotting corporations to perform the less skilled, lower-value work in lower-paying nations but to insist on keeping the most highly skilled and compensated work in Germany. With world-class worker training, the union and the companies “continually upgrade our productivity,” said Reinhard Hahn, a union leader who also is a member of Siemens’s board. Workers in China do the final assembling of the Airbus A320, but that constitutes just 3 percent to 5 percent of the plane’s total value: The precision parts are made in Germany, many by small firms linked to the global production chain through the union’s own efforts, Hahn said.

With Airbus soon to open a similar assembly plant in Alabama, U.S. workers now compete not with Germans but with Chinese for low-end jobs. As predicted some years ago by the Boston Consulting Group, low-wage Southern labor has begun to erode the Chinese advantage in low-cost production, and foreign firms are flocking there. The role of the South in the global production chain increasingly resembles that of the pre-Civil War era, when it provided the cheapest labor in a chain that created the millionaire clothing manufacturers of Manchester, England.

Congress is poised to vote on a measure that would ease the passage of a massive trade deal, the Trans-Pacific Partnership. My Post colleague Dana Milbank has written that any such deal should be linked to major increases in infrastructure projects, to compensate for the lost jobs, and in worker training programs. I’d go Dana one further:

When we set the standards for globalization, we need to ensure benefits flow to workers as well as investors, and that won’t happen absent the kind of fundamental shift in power from shareholders and management to labor that the German system embodies. Like earlier trade deals, the Pacific pact offers no such rebalancing. It freezes policy — and the rewards of globalization — to reflect our massive imbalances of power and income.

http://www.washingtonpost.com/opinions/germany-shows-the-way-on-labor/2015/04/29/b9bc811c-ee9e-11e4-8666-a1d756d0218e_story.html

This article is yet another in a continuous stream of articles focused on “jobs as the ONLY means to be productive and earn an income.” In particular, this article is about the balance of management (representing the ownership class) and labor (the non-owner worker contingent of a corporation). The workers are represented by unions (where they still exist), always focused on contract negotiations that will result in higher and higher wages and better benefits, without a corresponding increase in worker productivity. It is technological change that makes tools, machines, structures, and processes ever more productive while leaving human productiveness largely unchanged (our human abilities are limited by physical strength and brain power––and relatively constant). Most changes in the productive capacity of the world since the beginning of the Industrial Revolution can be attributed to technological improvements in our capital assets, and a relatively diminishing proportion to human labor. Capital, in binary economist Louis Kelso’s terms, does not “enhance” labor productivity (labor’s ability to produce economic goods). In fact, the opposite is true. It makes many forms of labor unnecessary. Because of this undeniable fact, Kelso asserted that,  “free-market forces no longer establish the ‘value’ of labor. Instead, the price of labor is artificially elevated by government through minimum wage legislation, overtime laws, and collective union bargaining legislation or by government employment and government subsidization of private employment solely to increase consumer income.”

The union movement, even in Germany, is entirely focused on wage-related protections and increased compensation, as this article attests. The labor union movement really should transform to a producers’ ownership union movement and embrace and use its collective bargaining advantage for represented workers to become capital owners in the growth of the corporations they are employed by. Unions should play the part that they have always aspired to––that is, a better and easier life through participation in the nation’s economic growth and progress. As a result, labor unions will be able to broaden their functions, revitalize their constituency, and reverse their decline.

Kelso argued that unions “must adopt a sound strategy that conforms to the economic facts of life. If under free-market conditions, 90 percent of the goods and services are produced by capital input, then 90 percent of the earnings of working people must flow to them as ‘wages’ of their capital and the remainder as wages of their labor work…If there are in reality two ways for people to participate in production and earn income [their labor and their ownership of capital assets], then tomorrow’s producers’ union must take cognizance of both…The question is only whether the labor union will help lead this movement or, refusing to learn, to change, and to innovate, become irrelevant.”

Unions are the only group of people in the whole world who can demand a real Kelso-designed Employee Stock Ownership Plan (ESOP), who can demand the right to participate in the expansion of their employer by asserting their constitutional preferential rights to become capital owners, be productive, and succeed. The ESOP can give employees access to credit so that they can purchase the employer’s stock, pay for it in pre-tax dollars out of the assets that underlie that stock, and after the stock is paid for earn and collect the capital worker income from it, and accumulate it in a tax haven until they retire, whereby they continue to be capital workers receiving income from their capital ownership stakes. This is a viable route to individual self-sufficiency needing significantly less or no government redistributive assistance.

The unions should reassess their role of bargaining for more and more income for the same work or less and less work, and embrace a cooperative approach to survival, whereby they redefine “more” income for their workers in terms of the combined wages of labor and capital on the part of the workforce. They should continue to represent the workers as labor workers in all the aspects that are represented today –– wages, hours, and working conditions –– and, in addition, represent workers as full voting stockowners as capital ownership is built into the workforce. What is needed is leadership to define “more” as two ways to earn income.

When labor unions transform to producers’ ownership unions, opportunity will be created for the unions to reach out to all shareholders (stock owners) who are not adequately represented on corporate boards, and eventually all labor workers will want to join an ownership union in order to be effectively represented as an aspiring capital owner. The overall strategy should assure that the labor compensation of the union’s members does not exceed the labor costs of the employer’s competitors, and that capital earnings of its members are built up to a level that optimizes their combined labor-capital worker earnings. A producers’ ownership union would work collaboratively with management to secure financing of advanced technologies and other new capital investments and broaden ownership. This will enable American companies to become more cost-competitive in global markets and to reduce the outsourcing of jobs to workers willing or forced to take lower wages.

Kelso stated, “Working conditions for the labor force have, of course, improved over the years. But the economic quality of life for the majority of Americans has trailed far behind the technical capabilities of the economy to produce creature comforts, and even further behind the desires of consumers to live economically better lives. The missing link is that most of those unproduced goods and services can be produced only through capital, and the people who need them have no opportunity to earn income from capital ownership.”

Walter Reuther, President of the United Auto Workers, expressed his open-mindedness to the goal of democratic worker ownership in his 1967 testimony to the Joint Economic Committee of Congress as a strategy for saving manufacturing jobs in America from being outcompeted by Japan and eventual outsourcing to other Asian countries with far lower wage costs: “Profit sharing in the form of stock distributions to workers would help to democratize the ownership of America’s vast corporate wealth, which is today appallingly undemocratic and unhealthy.

“If workers had definite assurance of equitable shares in the profits of the corporations that employ them, they would see less need to seek an equitable balance between their gains and soaring profits through augmented increases in basic wage rates. This would be a desirable result from the standpoint of stabilization policy because profit sharing does not increase costs. Since profits are a residual, after all costs have been met, and since their size is not determinable until after customers have paid the prices charged for the firm’s products, profit sharing [through wider share ownership] cannot be said to have any inflationary impact on costs and prices.”

Unfortunately for democratic unionism, the United Auto Workers, American manufacturing workers, and American citizens generally, Reuther was killed in an airplane crash in 1970 before his idea was implemented. Leonard Woodcock, his successor, nor any subsequent union leader never followed through.

But ESOPs are designed for those who are employed. What about the majority of the population who are not represented by unions where they are employed and those who are not employed at all?

The answer is in the law of contracts. Under “modern” methods of finance it is possible — even preferable — to form new capital using the present value of the anticipated future stream of income embodied in a contract. This contract (called a “bill of exchange”) enables corporations with “feasible capital projects” (meaning they pay for themselves out of their own profits) to grow without having to retain earnings (and reinvest) — earnings can be paid out to the people to whom they belong: the shareholders. People have financed capital projects this way from the dawn of civilization.

New capital asset formation should not rely on “past savings,” that is, on past reductions in consumption held in the form of money. As Dr. Harold Glenn Moulton pointed out in his 1935 classic, “The Formation Of Capital,” however, past savings are actually the least efficient to finance new capital formation.

Why? Because reducing consumption cuts demand for consumer goods (obviously), and the demand for new capital goods relies on there being an increase, not a decrease, in the demand for consumer goods, or no rational person would finance new capital — if it’s not going to pay for itself out of future profits (which won’t materialize if people aren’t consuming the increased goods and services), you’d just be throwing your money away.

What’s the solution?  Finance using “future savings” –– not past reductions in consumption turned into money, but future increases in production turned into money. World leaders need to know that, given the right tax and monetary reforms, every family, and every child, woman, and man can become an owner of capital without taking anything from anybody else — and everybody can be better off.

To use the “future earnings” method of finance on a universal scale that will empower EVERY child, woman, and man to acquire capital ownership shares representing the growth assets of American corporations, the Federal Reserve will need to perform what they were invented to do: 1) provide adequate liquidity to the private sector 2) in the form of an elastic, asset-backed currency with a stable and uniform value for 3) qualified capital projects. Regulating clearinghouse operations also legitimately comes under a central bank.

Louis Kelso’s breakthrough was to tie the money creation powers of a commercial and central banking system to the need for expanded capital ownership, thereby emancipating humanity from “the slavery of savings” that presumably dictated either that only the rich could as a rule own new capital, or that “ownership” must become meaningless in a State-controlled economy that redistributes earnings.

Using the function of the Federal Reserve we would be able to give to EVERY child, woman, and man an opportunity to individually share in the growth of the economy. By adopting expanded expanded ownership proposals with a reformed Federal Reserve system, we can make it possible for people without existing savings to purchase capital and secure the wellbeing and independence of the American family.

Because the Federal Reserve was hijacked by the very people it was intended to keep in check, the money power became even more concentrated under the Federal Reserve Act of 1913 than under the National Banking Act of 1863, and State control of the economy — and élite control of the State — became the orthodox political and economic position within a generation.

With the Just Third Way and Capital Homesteading platforms of the Center for Economic and Social Justice (www.cesj.org), however, we have the opportunity to turn things around through a new vision of an economically just future for all that restores the sovereignty of the human person and the family as the fundamental unit of society.

Universal capital ownership will also defuse political power. “Power,” as Daniel Webster pointed out nearly two centuries ago in 1820, “naturally and necessarily follows property.”

The institutional barriers preventing people from becoming owners are not necessarily specific laws (those can be changed almost at will), but a tax system that discourages widespread ownership, and a monetary system that is not open to use by all qualified people. It’s access to money and credit that determines who owns, not a specific law. We need to reform institutions to make it possible for ordinary people to own capital. The key is capital ownership, not more government or private sector control of ordinary people.

Under the Just Third Way’s more just and simple tax system, access to ownership of the means of production in the future would by provided to every child, woman and man by requiring the government to lift all existing legal and institutional barriers to private property stakes as a fundamental human right. The system was made by people and can be changed by people. Guided by the right principles of economic justice, “we the people” can organize and demand that the system be reorganized to make true economic democracy the new foundation for true political democracy. The result of this movement of new justice-committed leaders and activists will be inclusive prosperity, inclusive opportunity, and inclusive economic justice.

Support the Agenda of The Just Third Way Movement at http://foreconomicjustice.org/?p=5797, http://www.cesj.org/resources/articles-index/the-just-third-way-basic-principles-of-economic-and-social-justice-by-norman-g-kurland/, http://www.cesj.org/wp-content/uploads/2014/02/jtw-graphicoverview-2013.pdf and http://www.cesj.org/resources/articles-index/the-just-third-way-a-new-vision-for-providing-hope-justice-and-economic-empowerment/.

Support the Capital Homestead Act at http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-a-plan-for-getting-ownership-income-and-power-to-every-citizen/ and http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-summary/. See http://cesj.org/learn/capital-homesteading/ and http://cesj.org/…/uploads/Free/capitalhomesteading-s.pdf.

U.S. Senate Sells Out American Workers By Passing Fast Track Trade Bill 62-37

US-Senate-Building

On May 23, 2015, Keith Brekhus writs on Politicus USA:

A Trade Promotion Authority bill passed the U.S. Senate 62-37 Friday night, with 48 Republicans and 14 Democrats voting for the measure. The bill now heads to the U.S. House where it faces an uncertain future. The measure gives Congress the ability to vote up and down major international trade agreements negotiated by the White House but strips Congress of the ability to amend or filibuster such agreements. Fast track authority is designed to make it easier to push through trade agreements, and the bill was seen as a necessary step towards approving the controversial twelve nation Trans-Pacific Partnership (TPP) trade agreement.

President Obama favors the agreement, as do a majority of Senate Republicans. However, liberal pro-labor Senators likeSherrod Brown (D-OH), Elizabeth Warren (D-MA) and Bernie Sanders (I-VT) have argued that the bill will make it easier for corporations to avoid worker protections and to lower wages by moving jobs overseas.

Organized labor has argued that fast track authority undermines American workers. The AFL-CIO issued a recent statement, that read:

We’ve seen the devastating cost of bad trade deals over the years, so we know that fast track trade promotion authority is not the way to ensure that the American public receives the full and thorough debate on the vast implications of the Trans-Pacific Partnership.

In stark contrast to the AFL-CIO’s assessment, President Obama described the agreement in glowing terms, stating:

Today’s bipartisan Senate vote is an important step toward ensuring the United States can negotiate and enforce strong, high-standards trade agreements. If done right, these agreements are vital to expanding opportunities for the middle class, leveling the playing field for American workers, and establishing rules for the global economy that help our businesses grow and hire by selling goods made in America to the rest of the world.

President Obama’s rosy optimism sounded hauntingly similar to Bill Clinton’s positive appraisals for the North American Free Trade Agreement (NAFTA) before he pushed it through Congress with bi-partisan support in the 1990s. However, a briefing paper by Robert E. Scott at the Economic Policy Institute noted that the optimistic predictions of President Clinton and pro-NAFTA economists never came to pass.

In his publication, “Heading South: U.S.-Mexico trade and job displacement after NAFTA“, Scott estimated that by the year 2010, U.S. trade deficits with Mexico totaled over 97 billion dollars and he estimated that the negative effects of NAFTA had displaced over 680,000 U.S. jobs. Trade agreements that encourage more imports and fewer exports tend to displace domestic workers and tighten an already tough job market while pushing manufacturing jobs out of the country where employers can exploit cheaper labor.

Unfortunately, President Obama seems to be following the path taken by former President Clinton, by aligning with multinational corporations and “free trade” Republicans rather than with organized labor. Multinational corporations who exploit cheap labor overseas, such as the Nike shoe company, will benefit from the agreement. Meanwhile, American manufacturing jobs could continue to shrink, as domestic plants find themselves unable to compete with companies who pay lower wages overseas.

The U.S. House has an opportunity to reject the bill, but given the bill’s popularity with Republican Senators, it is difficult to envision the GOP-controlled House defeating the bill. That difficulty is compounded because some Democrats are also likely to back the President in supporting the bill.

Still, the individual votes could be unpredictable. In the Senate,48 of 54 Republican Senators voted YES. Mike Enzi of Wyoming did not vote. Of the five Republicans who voted no, Susan Collinsof Maine is traditionally regarded as a moderate, but the other four are hard-line conservatives, which means the more conservative GOP House could also offer up some surprise votes. Republican Senators Rand Paul (KY), Mike Lee (UT), Jeff Sessions (AL) and Richard Shelby (AL) were the four conservatives who voted against fast track trade authority.

30 Democrats opposed the measure, along with the two Independent Senators who caucus with the Democrats, Angus King of Maine and Bernie Sanders of Vermont. 14 Democrats backed the proposal. Those 14 Democrats were Michael Bennet(CO), Maria Cantwell (WA), Ben Cardin (MD), Tom Carper (DE),Chris Coons (DE), Dianne Feinstein (CA), Heidi Heitkamp (ND),Tim Kaine (VA), Claire McCaskill (MO), Patty Murray (WA), Bill Nelson (FL), Jeanne Shaheen (NH), Mark Warner (VA) and Ron Wyden (OR).

While the fast track agreement appears to be a raw deal for American workers, there is the possibility that even if it passes, President Obama will negotiate good faith agreements with other nations, that safeguard worker protections and do not undermine American workers. Some of the more liberal Senators who voted to permit fast track authority may be operating under that assumption. However, that authority will likely be extended to future presidents as well, and there is no guarantee that fast track authority, once passed, will not empower the next Republican president to negotiate a terrible deal for American workers.

The Senators should have voted this bill down. Now the responsibility for protecting American jobs from future bad trade deals has been passed into the hands of the U.S. House. Sadly, it is hard to feel optimistic about the fate of the American worker, if he or she is now depending upon John Boehner’s Republican-controlled House to do the right thing.

http://www.politicususa.com/2015/05/23/u-s-senate-sells-american-workers-passing-fast-track-trade-bill-62-37.html

This agreement will promote the interests of giant, multinational corporations over the interests of labor, environmental, consumer, human rights, or other stakeholders in democracy, AND FURTHER CONCENTRATE OWNERSHIP OF THE NON-HUMAN PRODUCTIVE CAPITAL MEANS OF PRODUCTION! It will export production and jobs to countries with far lower labor wages and standards while enriching the OWNERSHIP interests of the already wealthy ownership class.

The REAL STORY is a story about the collusion among a globally wealthy ownership class to further concentrate private sector ownership in ALL FUTURE wealth-creating, income-generating productive capital asset creation on a global scale. A sorta FREE TRADE ON STEROIDS!

This is a battle between two property system choices: economies such as China in which the productive capital assets are primarily state-owned or state-sponsored communism or socialism and economies such as the United States, Great Britain, Canada, Mexico, Australia, Japan, etc in which the productive capital assets are primarily privately owned, although also largely concentrated among less than 10 percent of the population so as to require massive earnings redistribution, and thus welfare support open and disguised.

But there is another alternative, a balanced Just Third Way (http://www.cesj.org/thirdway/thirdway-intro.htm), based on an understanding of binary economics, by which over time the economy’s productive capital assets will become almost entirely individually owned by 100 percent of the citizens. Such an economy would produce efficiencies of production fully using ever-advancing technologies of production that will fuel a greater growth of the world economies by eliminating the problematic condition of the exponential disassociation of production and consumption through ordinary citizens gaining access to FUTURE productive capital ownership to improve their economic well-being, without taking anything away from those who already own.

It is critical that private property ownership in productive capital be extended to ALL people because of the increasing power of productive capital to produce more and more of the wealth or products and services needed and wanted by society. Because productive capital––the non-human factor of production––is an independent productive power separate from human labor power, and represents an increasing role in creating wealth, the question to be addressed is: Who has the right to acquire ownership of productive capital?

While people have private property rights in their own labor, due to tectonic shifts in the technologies of production it is not enough for individual survival if people cannot get jobs, or if jobs, in reality are no longer doing a substantial part of the wealth creation. As exponential technology shifts destroy jobs and devalue the worth of labor, people need not only private property rights in their own labor, but also private property rights in the productive capital assets that are doing ever more of the work.

We as a nation, and other nations, can no longer limit people to personal rights while restricting ownership acquisition rights in wealth-creating, income-producing productive capital assets to those already well-capitalized. To be a just society, all individuals MUST have effective property rights not only in their labor and personal use possessions but also in FUTURE productive capital asset creation. Because of this imbalance, the result has been that the consumer populous is not able to get the money to buy the products and services produced increasingly by the non-human factor––physical productive capital––as a result of substituting machines for people. And yet you can’t have mass production without mass human consumption.

Broadened, private sector individual ownership of FUTURE productive capital assets as a societal objective is the ONLY individual private property-rights approach that will provide solutions to income inequality, unemployment, underemployment and anemic GDP growth––all of which is rooted in the tectonic shift in the technologies of production and its concentrated ownership. This reality, as a practical matter, is destroying jobs and devaluing the worth of labor, widening the income gap between the rich and poor and struggling (each resentful and suspicious of the other), and resulting in our inability to achieve double-digit GDP growth in the United States and other countries.

To solve this challenge, several policies must be implemented in the United States:

1. Tax reform is needed to incentivize broadened individual ownership of corporations by their employees. As an incentive, provide a tax deduction to corporations for dividend payouts, which would tighten-up the right of each owner to his or her full share of profits, a basic and historic right of private property. It would eliminate double and triple taxes on corporate profits, shifting the burden of taxation to personal incomes after exempting initial incomes that would allow low and middle class citizens not to pay taxes on incomes needed to cover basic living expenses. It will also encourage corporations to finance their growth through the issuance of new full voting, full dividend payout shares for financing their productive capital growth needs through Employee Stock Ownership Plans (ESOPs) and Capital Homestead Accounts (CHAs). Politically we need to insist that politicians lift barriers to the democratization of future ownership opportunity based on sound principle, rather than redistributive taxation.

2. As increasingly more workers acquire ownership stakes in FUTURE corporate productive capital assets using ESOP financing mechanisms, workers will build second incomes to support their living expenses, which in turn means they will be better “customers with money” to support demand for the products and services that the economy is capable of producing. By reason of the higher marginal spending rate on the part of workers second incomes, more of the additional income earned by the new capitalists (who have many unsatisfied consumer needs and wants) will be spent on consumption than if the income had been earned by those capitalists who now have concentrated the ownership of productive capital exclusively, and who have few, if any, consumer needs and wants. Such broadened incremental consumption will fuel a demand for more consumer products and services, which in turn will provide incentive for greater productive capital investment.

3. For all Americans, the Federal Reverse needs to create an asset-backed currency that can enable every man, woman and child to establish a Capital Homestead Account or “CHA” (a super-IRA or asset tax-shelter for citizens) at their local bank to acquire a growing dividend-bearing stock portfolio to supplement their incomes from work and all other sources of income. The CHA would process an equal allocation of productive credit to every citizen exclusively for purchasing full-dividend payout shares in companies needing funds for growing the economy and private sector jobs for local, national and global markets. The shares would be purchased using essentially interest-free credit wholly backed by projected “future savings” in the form of new productive capital assets as well as the future marketable products and services produced by the newly added technology, renewable energy systems, plant, rentable space and infrastructure added to the economy. Risk of default on each stock acquisition loan would be covered by private sector capital credit risk insurance and, if necessary, government reinsurance, but would not require citizens to reduce their funds for consumption to purchase shares.

4. Reform the tax code such that the tax rate would be a single rate for all incomes from all sources above an established personal exemption level (for example, an exemption of $100,000 for a family of four to meet their ordinary living needs) so that the budget could be balanced automatically and even allow the government to pay off the growing unsustainable long-term debt. The poor would pay the first dollar over their exemption levels as would the stock fund operator and others now earning billions of dollars from capital gains, dividends, rents and other property incomes.

5. As a substitute for inheritance and gift taxes, a transfer tax should be imposed on the recipients whose holdings exceeded $1 million, thus encouraging the super-rich to spread out their monopoly-sized estates to all members of their family, friends, servants and workers who helped create their fortunes, teachers, health workers, police, other public servants, military veterans, artists, the poor and the disabled.

6. Eliminate all tax loopholes and subsidies.

These polices would result in rapid and substantial economic growth with the GDP rate in double digits. As a result of the stimulus effect, more REAL, decent paying job opportunities and further technological advancement would be created while simultaneously broadening private, individual ownership of FUTURE wealth-creating, income-generating productive capital assets, which would support second and primary incomes for ALL Americans.

In this new FUTURE economy, a citizen would start to benefit financially at the time he or she enters the economic world as a labor worker, to become increasingly a capital owner, whose productive capital assets contribute as a non-human worker earning a second income, and at some point to retire as a labor worker and continue to participate in production and to earn income as a capital owner until the day you die.

As we ALL contribute to the building of a FUTURE economy that can support general affluence for EVERY man, woman and child, at some point as the technologies of production further advance there will be far less need for human workers and productive capital asset ownership will become the primary income source for most people. As general affluence becomes more widespread people will be free and economically secure to pursue their creative desires and pleasures, further contributing to the cultural and societal development of the country.

Support the Agenda of The Just Third Way Movement at http://foreconomicjustice.org/?p=5797

Support Monetary Justice at http://capitalhomestead.org/page/monetary-justice

Support the Capital Homestead Act at http://www.cesj.org/homestead/index.htm and http://www.cesj.org/homestead/summary-cha.htm. See the full Act at http://cesj.org/homestead/strategies/national/cha-full.pdf

See “Financing Economic Growth With ‘FUTURE SAVINGS': Solutions To Protect America From Economic Decline” at NationOfChange.org http://www.nationofchange.org/financing-future-economic-growth-future-savings-solutions-protect-america-economic-decline-137450624 and “The Income Solution To Slow Private Sector Job Growth” at http://www.nationofchange.org/income-solution-slow-private-sector-job-growth-1378041490.

 

New Study Proves U.S. Is Controlled By Rich And Powerful Elite

Wealthy

It’s not exactly breaking news that the United States is an Oligarchy and that Democracy in this country has gone the way of the dinosaur and the Dodo Bird. But when other countries are looking at us and pointing their fingers, the problem has gone beyond just being anecdotal.

On May 22, 2015, Richard Zombeck writes  on Liberals Unite:

Former Labor Secretary, Robert Reich, has been railing about it for years, warning of the dire consequences of an elite few pouring billions into our political process in order to sway legislation, regulation and inevitably profits their way.

“When billionaires supplant political parties, candidates are beholden directly to the billionaires. And if and when those candidates win election, the billionaires will be completely in charge.”

Reich writes extensively on his blog and also manages to find his way all over the internet. He even produced a film, “Inequality for All,” documenting how the wealthiest 1% siphoned trillions of dollars from hard working Americans. It’s not clear how many people have watched it, but it’s clear that those who did aren’t sufficiently pissed off enough.

In another article, “The Rise of the Working Poor and the Non-Working Rich,” Reich points out that what despite many in Congress would have us believe, the rich really don’t work for their money.

“It’s also commonly believed, especially among Republicans, that the rich deserve their wealth because they work harder than others.

“In reality, a large and growing portion of the super-rich have never broken a sweat. Their wealth has been handed to them.

“The rise of these two groups — the working poor and non-working rich — is relatively new. Both are challenging the core American assumptions that people are paid what they’re worth, and work is justly rewarded.”

Last month the BBC in England (that’s a different country) reported that Princeton University Prof. Martin Gilens and Northwestern University Prof. Benjamin I Page concluded a study showing that the “U.S. is dominated by a rich and powerful elite.”

The report was picked up by mostly Liberal media in the U.S. never really making it to an outlet as relatively substantial by comparison as the BBC. Here’s the extended interview with the authors of the study on the Daily Show talking about the 10 years of research.

You might think, “Big deal. Everyone knows that,” but in the case of this study, the two professors have actually, after extensive and exhaustive research, come up with data to prove this.

Gilens and Page reviewed answers to 1,770 survey questions on public policy issues. They broke the responses down by income level and then examined how often certain income levels and interest groups saw those policies come to light.

They found that policy changes supported by only one in five rich folks was adopted about 18% of the time, while changes with high support (four out five) were adopted about 45% of the time. One could assume that a policy raising the income for low wage workers might be one of those policy questions and lowering the taxes on people making more than $500,000 per year might be another.

The resulting consensus to the survey?

“When a majority of citizens disagrees with economic elites and/or with organized interests, they generally lose. Moreover, because of the strong status quo bias built into the US political system, even when fairly large majorities of Americans favor policy change, they generally do not get it.”

They then end with this:

“Americans do enjoy many features central to democratic governance, such as regular elections, freedom of speech and association and a widespread (if still contested) franchise. But we believe that if policymaking is dominated by powerful business organizations and a small number of affluent Americans, then America’s claims to being a democratic society are seriously threatened.”

This might be a great big “Duh” to most people, but prior to any data actual being collected all we had were theories and rhetoric – regardless of how accurate we thought they were or how painful obvious we might have felt it was.

As Eric Zuess, of Counterpunch writes:

“American democracy is a sham, no matter how much it’s pumped by the oligarchs who run the country (and who control the nation’s ‘news’ media.) The US, in other words, is basically similar to Russia or most other dubious ‘electoral’ ‘democratic’ countries. We weren’t formerly, but we clearly are now.”

Maybe we, as Americans, just need to stop pretending that we have some sort of equal opportunity in this country and that, for at least the last few decades, we’ve been fooling ourselves. England has a House of Lords and House of Commoners right out there in the open and for all intents and purposes embraces their classist system. It’s only a matter of time before we allow it right out there in the open as if it’s the way it’s always been.

http://samuel-warde.com/2015/05/new-study-proves-u-s-controlled-by-rich-and-powerful-elite/

This is an important article to read. While not directly stated political power has always and continues to follow property OWNERSHIP  The rich are rich, not because they work harder but because they OWN the technologies that make their tools, machines, structures, and processes ever more productive while leaving human productiveness largely unchanged (our human abilities are limited by physical strength and brain power––and relatively constant). The vast majority of Americans are ignorant of the fact that  fundamentally, economic value is created through human and non-human contributions, and only understand the labor contribution in the form of jobs.

The scheme of things is the wealthy ownership class stays unseen by the masses and keeps the 99 percent ignorant of the means the 1 percent use to enhance their wealth. I am not talking about the thinking and creative entrepreneur who nurtures his or her ideas and builds a start-up business to produce a product(s) or service(s) founded on his or her ideas. I am talking about ALL the rich who have experienced success but NEVER talk about why they are rich. I am talking about expanding and broadening the capital asset ownership shares of successful, viable corporations growing our economy, which at present are narrowly OWNED in the sense that a tiny few OWN the majority of stock and thus control decision-making.

Fundamentally, the reason people are rich is because they own wealth-creating, income-producing capital assets––whether entrepreneurially created by them or inherited. It is OWNERSHIP, not a job, except in the rare case of athletes, movie stars, or CEOs of corporations, that generates personal wealth. Thus, they effectively keep this “secret” from the 99 percent, who are relegated to job slavery as their ONLY means of earning an income.

Our education system has failed the 99 percent because it has not taught the ordinary citizen about basic principles of private property, finance and advanced financial mechanism that can empower one to acquire capital asset wealth using pure, insured, interest-free capital credit on the basis that the earnings from the investment will pay off the loan. Once payed off, the capital asset will then be OWNED by the person who benefited from the loan, and continue to produce income for that person. This vital knowledge is not taught in our educational system at any level. Yet, those who have stumbled upon or have been tutored by another, or read enough books that provide such insight, books that are not part of any school curriculum, are the people who use the knowledge to build financially profitable portfolios of diversified corporate stock..

If the 99 percent really understood the paramount importance of OWNING in an economic system based on private property, as is the foundation of the United States of America, they would be focused on broadening the opportunity and personal ownership of productive capital assets simultaneously with the growth of the economy. This should be the primary political focus, not job creation or minimum wage boosting, or stronger safety nets and poverty programs, all which are not the individual empowerment solutions to economic inequality.

The Not-So Nordic Bernie Sanders

On May 22, 2015, Paul Street writes on CounterPunch:

Speaking to George Stephanopoulus on ABC News’ “This Week” three weeks ago, the recently declared Democratic Party presidential candidate Bernie Sanders identified himself with the “the democratic socialism” of Scandinavia. In Denmark, Norway, and Sweden, Sanders told Stephanopoulos, politics and society are “very democratic…health care is the right of all people…college education, graduate school is free…retirement benefits, childcare are stronger than in the United States of America. And in those countries, by and large, government works for ordinary people and the middle class, rather than, as is the case right now in our country, for the billionaire class.”

“I can hear the Republican attack ad right now,” Stephanopolous said, “He wants American to look more like Scandinavia.” Sanders shot back: “And what’s wrong with that? What’s wrong when you have more income and wealth equality? What’s wrong when they have a … higher minimum wage than we do, and they are stronger on the environment…? Look…we can learn from other countries. We have the highest rate of childhood poverty of any major country on earth, at the same time as we are seeing a proliferation of millionaires and billionaires. Frankly, I don’t think that is sustainable. I don’t think that’s what America is about.”

One could certainly argue with Sanders about how democratic and socialist his “Nordic model” countries really are and about whether or not savage inequality is “what America is about” (maybe it is). Still, it’s nice, I suppose, to see a major party presidential candidate look past the doctrinal blinders of American Exceptionalism to embrace the social and democratic accomplishments of people in other nations and to advance the notion that the U.S. might (imagine) have something to “learn from other countries.”

Revealing Comparisons

Nearly nine years ago, any lingering doubts that I might have harbored about the reactionary nature of the soon-to-announced Democratic presidential candidate Barack Obama were undone by reading numerous American-exceptionalist passages in Obama’s 2006 campaign book The Audacity of Hope. There Obama mused rhapsodically on “just how good” even “our [the United States’] poor…have it” compared to their more destitute counterparts in Africa and Latin America. Obama took this comparison to be evidence for his argument in Audacity that US capitalism – “the logic of the marketplace” and “private property at the very heart of our system[s] of liberty [and] social organization” – had brought Americans “a prosperity that’s unmatched in human history.” Obama omitted considerably less American-friendly contrasts between the US and its fellow rich nations in Western Europe and Asia (Japan), where capitalism comes with
paulstreetconsiderably more social equality and security than can be found in militantly hierarchical nations like Haiti, Nigeria, South Africa, and the United States.

This was a very different approach from that of Dr. Martin Luther King, Jr., who Obama has claimed as a major influence and whose bust sits behind the “first Black president” in the Oval Office. A “democratic socialist” like Sanders, King challenged American Exceptionalism in the summer of 1966, when he noted the greater poverty that existed in the United States compared to other First World states. “Maybe something is wrong with our [capitalist] economic system,” King told an interviewer, observing that there was no or little poverty, slums, and unemployment in “democratic socialist” countries like Sweden. The “beacon to the world” and “city on a hill” had something to “learn from other countries” King was suggesting. The learning process, King felt, meant “question[ing] the capitalistic economy” since “an edifice which produces beggars needs restructuring.”

Against Spiritual Death

But here the parallel between Sanders today and the mid-late 1960s King drops off in a critical way. King’s increasingly open left sentiments (he ended his life advocating mass civil disobedience on behalf of “the radical reconstruction of society itself”) were intimately connected to his righteous and eloquent criticism of the American military empire. For King by at least 1966, the Black-led poor people’s struggle against American poverty and inequality was inextricably bound up with radical criticism of the mass-murderous US war on Vietnam and the US Empire more broadly. King referred repeatedly to what he called the nation’s “triple evils that are interrelated”: racism, economic exploitation (capitalism), and militarism/imperialism. As King explained in a 1967 speech titled “Where Do We Go From Here”: “The problem of racism, the problem of economic exploitation, and the problem of war are all tied together. A nation that will keep people in slavery for 244 years will ‘thingify’ them – make them things. Therefore they will exploit them, and poor people generally, economically. And a nation that will exploit economically will have to have foreign investments and everything else, and will have to use its military might to protect them.”

At New York City’s Riverside Church on April 4, 1967 (one year to the day before he was killed), King described the United States as “the leading purveyor of violence in the world today.” He mentioned some of the horrible things he had learned about US actions in Southeast Asia:

“[The Vietnamese] must see Americans as strange liberators…the people read our leaflets and receive regular promises of peace and democracy – and land reform. Now they languish under our bombs….as we he herd them off the land of their fathers into concentration camps. They know they must move or be destroyed by bombs. They watch as we poison their water, as we kill a million acres of their crops. They must weep as the bulldozers roar through their areas preparing to destroy the precious trees. They wander into the hospitals, with at least twenty casualties from American firepower for one ‘Vietcong’-inflicted injury. So far we may have killed a million of them – mostly children… What do they think as we test out our latest weapons on them, just as the Germans tested out new medicines and new tortures in the concentration camps of Europe?”

King broke with both sides of the American Exceptionalist coin: (A) the notion that the United States is so breathtakingly splendid that it has nothing to learn from the rest of the world and everything to teach others and (B) the notion that the United States is unique among world history’s great powers in the fundamentally benevolent, democratic, humanitarian, and non-(and even anti-) imperial intention and nature of its foreign policies.

For King, it was both immoral and impractical to break with only the first side of the coin. Explaining why he had turned openly and loudly against the Vietnam War, King noted that “a burden of responsibility was placed upon me in 1964: I cannot forget that the Nobel Prize for Peace was also a commission – a commission to work harder that I had ever worked before for ‘the brotherhood of man.’ This is a calling which takes me beyond national allegiances …to the making of peace” (Barack Kill List Obama had a different take on his Nobel Peace award).

In a series of lectures on the Canadian Broadcasting System, King reflected on the remarkable wave of race riots that washed across U.S. cities in the summers of 1966 and 1967. He made no apologies for Black urban violence. He blamed “the white power structure…still seeking to keep the walls of segregation and inequality intact” for the disturbances. He found the leading cause of the riots in the reactionary posture of “the white society, unprepared and unwilling to accept radical structural change,” which” produc[ed] chaos” by telling Blacks “that they must expect to remain permanently unequal and permanently poor.”

King also blamed the riots to no small degree on Washington’s “war in [here he might have better said “on”] Vietnam.” The military aggression against Southeast Asia, King noted, sent poor blacks to the front killing lines to a disproportionate degree. It advanced the notion that violence was a reasonable response and even a solution to social and political problems. It also stole resources from the federal government’s briefly declared and barely fought “War on Poverty.” As King ruefully observed at Riverside Church:

“There is…a very obvious and almost facile connection between the war in Vietnam and the struggle I, and others, have been waging [against poverty and racism] in America. A few years ago, there was a shining moment in that struggle. It seemed as if there was a real promise of hope for the poor – both black and white – through the poverty program. There were experiments, hopes, new beginnings. Then came the buildup in Vietnam and I watched the program broken and eviscerated as if it were some idle plaything of a society gone mad on war, and I knew America would never invest the necessary funds or energies in rehabilitation of its poor so long as adventures like Vietnam continued to draw men and skills and money like some demonic destructive suction tube. So I was increasingly compelled to see the war as an enemy of the poor and to attack it as such.”

Budgetary matters and the particulars of Vietnam aside, King added that “a nation that continues year after year to spend more money on military defense than on programs of social uplift is approaching spiritual death.”

In answering his “call…beyond national allegiances,” King stood to the portside of leading U.S. 1960s social democrats like Bayard Rustin, A Phillip Randolph, and Michael Harrington.  These and other left leaders (e.g. Max Shachtman and Tom Kahn) were unwilling to forthrightly oppose the US-imperial assault on Indochina because of their misplaced faith in pursuing the fight against poverty in alliance with the pro-war Democratic Party and the AFL-CIO.

Rustin, Harrington, and Randolph were practical as well as moral fools on this score. Besides opposing the war on moral grounds, King understood very well that the expenses of empire precluded serious anti-poverty spending.

Bernie’s Imperial Omission

Which brings us back to Bernie Sanders. Anyone who wants to bring the “Nordic model” of “democratic socialism” to the United States must surely confront a core and critical difference between the United States and Scandinavia. Forty-seven years after King’s assassination and despite the disappearance of any credible military rival to the US with the end of the Cold War, the Pentagon budget today accounts for more than half of US federal discretionary spending (symptomatic of “a society gone mad on war”). The US generates nearly half of all military spending on the planet. This giant war and empire (“defense”) expenditure ($1.2-1.4 trillion or more each year) maintains (among other things) more than 1000 US military installations spread across more than 100 “sovereign” nations. “Financially,” the U.S. peace and justice activist David Swanson writes, “war is what the U.S. government does. Everything else is a side show.”

Military outlays on the current U.S. scale carry enormous social, human, and environmental, opportunity costs. They cancel out spending to address massively unmet social, human, and environmental needs – needs that Sanders talks about in knowledgeable, populist, and properly angry terms. The trade-offs are disturbing. As Swanson observed last December:

“The cost of one weapons system that doesn’t work could provide every homeless person with a large house. A tiny fraction of military spending could end starvation at home and abroad. The Great Student Loan Struggle takes place in the shadow of military spending unseen in countries that simply make college free, countries that don’t tax more than the United States, countries that just don’t do wars the way the U.S. does. You can find lots of other little differences between those countries and the U.S. but none of them on the unfathomable scale of military spending or even remotely close to it”(emphasis added).

Military budgets are drastically smaller in Scandinavia, to say the least. Defense accounts for 3.1% of central government spending in Finland, 3.2% in Denmark, 4.3% in Sweden, and 4.8% in Norway.

So where is the call to drastically slash the Pentagon System and introduce a great social and environmental peace dividend in the Sweden- flattering Sanders’ program for social-democratic change on the Nordic model in the United States? Nowhere. As Swanson notes, Sanders’ politics and policy agenda are usefully acronym-ized as “PEP” to mean not just “Progressive Except for Palestine” (standard among top Democratic politicians, the nominally “independent” and pro-Israel Sanders included) but also “Populist Except for the Pentagon.” Sanders’ top 12 proposals include calls for major investments in infrastructure, measures and programs to reverse climate change, an end to corporate welfare, federal support for worker-owned coops, a real livable minimum wage, the restoration of union organizing and collective bargaining rights, equal pay for women, single-payer health insurance (Medicare for All), progressive taxation, expanded Social Security, college affordability, the break-up of the big Wall Street banks, and end to NAFTA, CAFTA, and permanent normal trade relations with China.

 

This is all good and essential stuff that Leftists, left-leaning progressives, and others have been advocating for quite some time. Still, there are three glaring omissions. First, there’s no call for a Financial Transaction Tax – for a levy on transactions made by the nations’ hugely profitable, taxpayer-subsidized and federally protected financial giants. Such a tax would create significant public revenue to fund federal social and environmental programs.

Second, there’s no reference to the nation’s savage racial disparities or to the intimately related problems of persistent de facto racial apartheid and racist mass arrest, incarceration, felony-marking, and police abuse. This is a glaring oversight in light of Ferguson (Michael Brown), Staten Island (Eric Garner), Baltimore (Freddie Gray) – to mention just the top three racial hotspots of 2014 and 2015 – and the rise of the Black Lives Matter movement to protest the ongoing epidemic racist police killings across the country.

Third, and most relevant to the main topic of this essay, there’s nothing on the need to drastically cut the nation’s giant “rogue superpower” military budget, itself a giant form of corporate welfare and the revenue source for “the single biggest contributor to climate change, namely the military” (Swanson). By Swanson’s analysis, this conspicuous and social-democratically self-defeating omission is explained largely by the fact that Sanders (who supported the Pentagon’s installation of a hugely expensive F-35 fighter jet base in Vermont in the name of “jobs” and “growth”) at the end of the day is on board with the American military project:

“What do you invest in infrastructure? It’s not as though Sanders doesn’t know about the trade-offs….he blames ‘the Bush-Cheney war in Iraq’ for costing $3 trillion. He says he wants infrastructure instead of wars. But routine ‘base’ military spending is $1.3 trillion or so each and every year. It’s been far more in recent years than all the recent wars, and it generates the wars as Eisenhower warned it would. It also erodes the economy…The same dollars moved [from the military] to infrastructure would produce many more jobs and better paying ones. Why not propose moving some money [out of the Pentagon]? Why not include it in the list of proposals? In Sanders’ case, I think he’s partly a true believer in militarism. He wants good wars instead of bad wars (whatever that means) despite the belief in ‘good wars’ requiring ongoing military spending. And partly, I think, he comes at it from a deep habit of ‘supporting’ the troops and veterans for both sincere and calculating reasons. He’s also a PEP in the Palestine sense.”

The problem is more than just fiscal and budgetary. It’s also moral and spiritual. If Dr. King were alive today, he would denounce the “spiritual doom” at the heart of the contradiction between the United States’ gargantuan military spending and the comparative paltriness of its welfare state in a time when 1 in 5 US children live in food insecure households and 14.7 million US children live below the federal government’s notoriously inadequate poverty level. At the same time, King, unlike Sanders, would not be able to stay silent about such appalling crimes as US client state Israel’s horrific killing of many hundreds of children in Gaza last year and in 2008. King would never join Sanders in keeping mum about the vicious “collateral damage” inflicted on civilians by President Kill List’s endless jihad-recruiting drone strikes across the Muslim world.

Sanders has transcended one side of the American Exceptionalist trap – the notion that the U.S. has nothing to learn from other countries and people. Great. The other, foreign policy side of the trap still exercises great pull over him as it did over previous U.S. progressives who could not break free from the corporate and militaristic Democratic Party. And here’s the rub: clinging to the second side of the trap (the notion of a good American Empire and “good [US] wars”) tends to render null and void a politician’s effort to act on his or her rejection of the first side by advancing progressive social and democratic and environmental policies of uber-white Scandinavian – or French or German or (in a less Caucasian vein) Latin American (Venezuela, Bolivia, Ecuador, Uruguay, Argentina, Cuba?) – inspiration. Is this not an almost embarrassingly elementary lesson of post-World War II US history for any “Left” worth its label? Uncle Sam cannot fund a “Nordic” social democracy to end poverty, provide free and high quality health care, fund college, build green infrastructure, avert global warming and generally advance equality, sustainability and justice at home while also paying for a giant military war and empire machine at home and abroad. He has to choose. And so does Bernie if he wants more Left progressives to take his “democratic socialism” more seriously. Along the way, it would help if he would pay more explicit attention to the United States’ appalling racial disparities and oppression.

http://www.counterpunch.org/2015/05/22/the-not-so-nordic-bernie-sanders/

 

Buffett: Stop Blaming The Rich For Income Inequality

 

On May 22, 2015, Dan Bigman writes on Forbes:

The world’s third-richest man weighed in on the national debate over rising levels of income disparity in the United States yesterday, saying that while the gaps between the country’s haves and have nots are definitely increasing, it is not the fault of those at the top. Nor will it be solved by traditional methods, like improving education or hiking the minimum wage. His solution: a pragmatic, direct way of helping incomes rise for the working poor across America by increasing access to the Earned Income Tax Credit.

“No conspiracy lies behind this depressing fact: The poor are most definitely not poor because the rich are rich,” Buffett, who’s net worth we clock in at $71.3 billion, wrote in a Wall Street Journal opinion piece published late yesterday. “Nor are the rich undeserving. Most of them have contributed brilliant innovations or managerial expertise to America’s well-being. We all live far better because of Henry Ford, Steve Jobs, Sam Walton and the like. Instead, this widening gap is an inevitable consequence of an advanced market-based economy.”

That’s not to say the gap isn’t growing. Citing data from The Forbes 400 list of the richest Americans, he said that the total net worth of those on the list in 1982, the first year the list was compiled, was $93 billion. In 2014, that number was $2.3 trillion, up 2,400%. At the same time, median household income in the United States rose only about 180%, he said.

Improving education, won’t work fast enough, or go far enough, he said. And fighting to raise the minimum wage—currently in vogue among many on the left—won’t bridge the gap either, he says, and may actually backfire by hurting employment.   “The better answer,” he said, is an expansion of the earned income tax credit, a federal tax credit targeted at working class Americans which gives them a credit starting with the first dollar they earn and rises until it hits a ceiling, then phases out from there.

According to the Center on Budget and Policy Priorities, more than 27 million taxpayers got the ETIC in 2013 and in the 2012 tax year, the average EITC was $2,982 for a family with children.

“There is no disincentive effect: A gain in wages always produces a gain in overall income,” writes Buffett. “The process is simple: You file a tax return, and the government sends you a check. In essence, the EITC rewards work and provides an incentive for workers to improve their skills. Equally important, it does not distort market forces, thereby maximizing employment. “

That distortion is the main criticism of opponents of raising the minimum wage. Arbitrarily increasing the amount employers are required to pay workers, as cities like Seattle, and most recently Los Angeles have done, is a disincentive to hiring or retaining workers, especially those at the lower end of the economic latter who most need a job.

“I may wish to have all jobs pay at least $15 an hour,” writes Buffett. “But that minimum would almost certainly reduce employment in a major way, crushing many workers possessing only basic skills. Smaller increases, though obviously welcome, will still leave many hardworking Americans mired in poverty.”

It’s an argument that probably won’t sit well with many on the left accustomed to blaming employers and the rich for the pain of the poor, but, like most things Buffett says and does, it isn’t aimed at being popular. It’s aimed at actually getting something done.

http://www.msn.com/en-us/money/markets/buffett-stop-blaming-the-rich-for-income-inequality/ar-BBk7Alo?ocid=ASUDHP

Warren Buffett  in this article suggests that the wealthy aren’t responsible for inequality. He is WRONG. The wealthy are wealthy because they OWN the non-humans means of production and have rigged the system for their benefit by  hiring all the lobbyist that create the financial mechanisms that continuously concentrate wealth-creating, income-producing capital asset OWNERSHIP among themselves and fix the tax loopholes and deductions which make the rich richer. Warren Buffett is clearly no progressive thinker.

Abraham Lincoln said that the purpose of government is to do for people what they cannot do for themselves. Government also should serve to keep people from hurting themselves and to restrain man’s greed, which otherwise cannot be self-controlled. Anyone who seeks to own productive power that they cannot or won’t use for consumption are beggaring their neighbor––the equivalency of mass murder––the impact of concentrated capital ownership.

Any justice-minded person should be angry at the system and want to reform the system, but as well there are wealthy capital owners, such as Warren Buffett, who have been able to enrich themselves and have not lifted a finger to acknowledge that they are rich because they own wealth-creating, income-producing capital assets. Nor have they not spoken out about broadening capital ownership.

Those who are overwhelmingly benefiting from the current unjust system, such as Warren Buffett and others, should be shamed for hogging capital ownership and not seeking to lift ownership-concentrating Federal Reserve System credit barriers and other institutional barriers that have historically separated owners from non-owners and link tax and monetary reforms to the goal of expanded capital ownership. Doing so would enable the poor and others with no or few assets (the 99 percenters) to overcome the collateralization barrier that excludes the non-halves from access to productive capital.