The Revolt Against The Ruling Class

AgentsofRevolt8315

As Robert Reich puts it, “Political insiders don’t see that the biggest political phenomenon in America today is a revolt against the ‘ruling class.’” Are Trump and Sanders agents of this revolt?

http://www.nationofchange.org/2015/08/03/the-revolt-against-the-ruling-class/

 

Worker Pay Is Rising At The Slowest Rate Ever Recorded

On August 1, 2015, Robert Reich writes on RSN:

Worker pay is rising at the slowest pace ever recorded. But it’s worse than that because the new data include everyone who’s paid — including top CEOs and Wall Street moguls. The fact is, most people’s pay is stagnant or dropping when adjusted for the costs of living, including rents that are going through the stratosphere.

Conservative Republicans like this. They’ve long said that Americans are living beyond their means and that the best way to revive the economy is for pay to drop. That’s why they don’t want to raise the minimum wage, why they advocate so-called “right-to-work” laws that destroy unions, why they’re in favor of outsourcing jobs abroad through “free trade” policies like the Trans Pacific Partnership, and why they’re happy for companies to shift from hiring people full time to relying on independent contractors and part-time workers.

But Republicans have it completely backwards. When pay stagnates or declines, people don’t have the money to buy beyond necessities — which causes the economy to slow, as it’s been doing (the latest report showed the U.S. economy grew at an annual rate of 2.3 percent in the latest quarter, but the Commerce Department also marked down its growth numbers for prior years). Add to this the record share of workers who don’t know how much they’ll earn from week to week or even from day to day, because of the increasing reliance on part-time and independent contract work. That uncertainty is also holding back spending, which, in turn, retards the economy.

Repeat after me: Higher wages for middle and low-income workers are good for the economy. Lower wages are bad.

http://readersupportednews.org/opinion2/277-75/31605-worker-pay-is-rising-at-the-slowest-rate-ever-recorded

 

Why Jimmy Carter Thinks The U.S. Isn’t A Real Democracy Anymore

JimmyCarter8115

The U.S. is a system of “Economic Elite Domination” and former president Jimmy Carter blames the broken campaign finance system, which has caused the country to no longer function like a democracy. At least he speaks the truth!

http://www.nationofchange.org/2015/08/01/why-jimmy-carter-thinks-the-us-isnt-a-real-democracy-anymore/

 

Is A New Political System Emerging In This Country?

American flag

(Photo: Ryan Bodenstein/flickr CC 2.0)

On March 25, 2015, Tom Engelhard writes on Moyers & Company:

Have you ever undertaken some task you felt less than qualified for, but knew that someone needed to do? Consider this piece my version of that and let me put what I do understand about it in a nutshell: based on developments in our post-9/11 world, we could be watching the birth of a new American political system and way of governing for which, as yet, we have no name.

And here’s what I find strange: the evidence of this, however inchoate, is all around us and yet it’s as if we can’t bear to take it in or make sense of it or even say that it might be so.

Let me make my case, however minimally, based on five areas in which at least the faint outlines of that new system seem to be emerging: political campaigns and elections; the privatization of Washington through the marriage of the corporation and the state; the de-legitimization of our traditional system of governance; the empowerment of the national security state as an untouchable fourth branch of government; and the demobilization of “we the people.”

Whatever this may add up to, it seems to be based, at least in part, on the increasing concentration of wealth and power in a new plutocratic class and in that ever-expanding national security state. Certainly, something out of the ordinary is underway and yet its birth pangs, while widely reported, are generally categorized as aspects of an exceedingly familiar American system somewhat in disarray.

1. One Percent Elections

Check out the news about the 2016 presidential election and you’ll quickly feel a sense of been-there, done-that. As a start, the two names most associated with it, Bush and Clinton, couldn’t be more familiar, highlighting as they do the curiously dynastic quality of recent presidential contests. (If a Bush or Clinton should win in 2016 and again in 2020, a member of one of those families will have controlled the presidency for 28 of the last 36 years.)

The 2012 presidential campaign was the first $2 billion election; campaign 2016 is expected to hit the $5 billion mark without breaking a sweat.

Take, for instance, “Why 2016 Is Likely to Become a Close Race,” a recent piece Nate Cohn wrote for my hometown paper. A noted election statistician, Cohn points out that, despite Hillary Clinton’s historically staggering lead in Democratic primary polls (and lack of serious challengers), she could lose the general election. He bases this on what we know about her polling popularity from the Monica Lewinsky moment of the 1990s to the present. Cohn assures readers that Hillary will not “be a Democratic Eisenhower, a popular, senior statesperson who cruises to an easy victory.” It’s the sort of comparison that offers a certain implicit reassurance about the near future. (No, Virginia, we haven’t left the world of politics in which former General and President Dwight D. Eisenhower can still be a touchstone.)

Cohn may be right when it comes to Hillary’s electability, but this is not Dwight D. Eisenhower’s or even Al Gore’s America. If you want a measure of that, consider this year’s primaries. I mean, of course, the 2015 ones. Once upon a time, the campaign season started with candidates flocking to Iowa and New Hampshire early in the election year to establish their bona fides among party voters. These days, however, those are already late primaries.

The early primaries, the ones that count, take place among a small group of millionaires and billionaires, a new caste flush with cash who will personally, or through complex networks of funders, pour multi-millions of dollars into the campaigns of candidates of their choice. So the early primaries — this year mainly a Republican affair — are taking place in resort spots like Las Vegas, Rancho Mirage, California, and Sea Island, Georgia, as has been widely reported. These “contests” involve groveling politicians appearing at the beck and call of the rich and powerful and so reflect our new one percent electoral system. (The main pro-Hillary super PAC, for instance, is aiming for a kitty of $500 million heading into 2016, while the Koch brothers network has already promised to drop almost $1 billion into the coming campaign season, doubling their efforts in the last presidential election year.)

Ever since the Supreme Court opened up the ultimate floodgates with its 2010Citizens United decision, each subsequent election has seen record-breaking amounts of money donated and spent. The 2012 presidential campaign was the first $2 billion election; campaign 2016 is expected to hit the $5 billion mark without breaking a sweat. By comparison, according to Burton Abrams and Russell Settle in their study, “The Effect of Broadcasting on Political Campaign Spending,” Republicans and Democrats spent just under $13 million combined in 1956 when Eisenhower won his second term.

In the meantime, it’s still true that the 2016 primaries will involve actual voters, as will the election that follows. The previous election season, the midterms of 2014, cost almost $4 billion, a record despite the number of small donors continuing to drop. It also represented the lowest midterm voter turnout since World War II. (See: demobilization of the public, below — and add in the demobilization of the Democrats as a real party, the breaking of organized labor, the fragmenting of the Republican Party, and the return of voter suppression laws visibly meant to limit the franchise.) It hardly matters just what the flood of new money does in such elections, when you can feel the weight of inequality bearing down on the whole process in a way that is pushing us somewhere new.

2. The Privatization of the State (or the US as a Prospective Third-World Nation)

In the recent coverage of the Hillary Clinton email flap, you can find endless references to the Clintons of yore in wink-wink, you-know-how-they-are-style reporting; and yes, she did delete a lot of emails; and yes, it’s an election year coming and, as everyone points out, the Republicans are going to do their best to keep the email issue alive until hell freezes over, etc., etc. Again, the coverage, while eyeball gluing, is in a you’ve-seen-it-all-before, you’ll-see-it-all-again-mode.

However, you haven’t seen it all before. The most striking aspect of this little brouhaha lies in what’s most obvious but least highlighted. An American secretary of state chose to set up her own private, safeguarded email system for doing government work; that is, she chose to privatize her communications. If this were Cairo, it might not warrant a second thought. But it didn’t happen in some third-world state. It was the act of a key official of the planet’s reigning (or thrashing) superpower, which — even if it wasn’t the first time such a thing had ever occurred — should be taken as a tiny symptom of something that couldn’t be larger or, in the long stretch of history, newer: the ongoing privatization of the American state, or at least the national security part of it.

Though the marriage of the state and the corporation has a pre-history, the full-scale arrival of the warrior corporation only occurred after 9/11. Someday, that will undoubtedly be seen as a seminal moment in the formation of whatever may be coming in this country. Only 13 years later, there is no part of the war state that has not experienced major forms of privatization. The US military could no longer go to war without its crony corporations doing KP and guard duty, delivering the mail, building the bases and being involved in just about all of its activities, including training the militaries of foreign allies and even fighting. Such warrior corporations are now involved in every aspect of the national security state, including torture, drone strikes and — to the tune of hundreds of thousands of contract employees like Edward Snowden — intelligence gathering and spying. You name it and, in these years, it’s been at least partly privatized.

All you have to do is read reporter James Risen’s recent book, Pay Any Price, on how the global war on terror was fought in Washington, and you know that privatization has brought something else with it: corruption, scams and the gaming of the system for profits of a sort that might normally be associated with a typical third-world kleptocracy. And all of this, a new world being born, was reflected in a tiny way in Hillary Clinton’s very personal decision about her emails.

Though it’s a subject I know so much less about, this kind of privatization (and the corruption that goes with it) is undoubtedly underway in the non-war-making, non-security-projecting part of the American state as well.

3. The De-legitimization of Congress and the Presidency

On a third front, American “confidence” in the three classic check-and-balance branches of government, as measured by polling outfits, continues to fall. In 2014, Americans expressing a “great deal of confidence” in the Supreme Court hit a new low of 23 percent; in the presidency, it was 11 percent and in Congress a bottom-scraping five percent. (The military, on the other hand, registers at 50 percent.) The figures for “hardly any confidence at all” are respectively 20 percent, 44 percent and more than 50 percent. All are in or near record-breaking territory for the last four decades.

It seems fair to say that in recent years Congress has been engaged in a process of delegitimizing itself. Where that body once had the genuine power to declare war, for example, it is now “debating” in a desultory fashion an “authorization” for a war against the Islamic State in Syria, Iraq and possibly elsewhere that has already been underway for eight months and whose course, it seems, will be essentially unaltered, whether Congress authorizes it or not.

A president who came into office rejecting torture and promoting sunshine and transparency in government has, in the course of six-plus years, come to identify himself almost totally with the US military, the CIA, the NSA and the like.

What would President Harry Truman, who once famously ran a presidential campaign against a “do-nothing” Congress, have to say about a body that truly can do just about nothing? Or rather, to give the Republican war hawks in that new Congress their due, not quite nothing. They are proving capable of acting effectively to delegitimize the presidency as well. House Majority Leader John Boehner’s invitation to Israeli Prime Minister Benjamin Netanyahu to undercut the president’s Iranian nuclear negotiations and the letter signed by 47 Republican senators and directed to the Iranian ayatollahs are striking examples of this. They are visibly meant to tear down an “imperial presidency” that Republicans gloried in not so long ago.

The radical nature of that letter, not as an act of state but of its de-legitimization, was noted even in Iran, where fundamentalist Supreme Leader Ali Khameneiproclaimed it “a sign of a decline in political ethics and the destruction of the American establishment from within.” Here, however, the letter is either being covered as a singularly extreme one-off act (“treason!”) or, as Jon Stewart did onThe Daily Show, as part of a repetitive tit-for-tat between Democrats and Republicans over who controls foreign policy. It is, in fact, neither. It represents part of a growing pattern in which Congress becomes an ever less effective body, except in its willingness to take on and potentially take out the presidency.

In the 21st century, all that “small government” Republicans and “big government” Democrats can agree on is offering essentially unconditional support to the military and the national security state. The Republican Party — its various factions increasingly at each other’s throats almost as often as at those of the Democrats — seems reasonably united solely on issues of war-making and security. As for the Democrats, an unpopular administration, facing constant attack by those who loath President Obama, has kept its footing in part by allying with and fusing with the national security state. A president who came into office rejecting torture and promoting sunshine and transparency in government has, in the course of six-plus years, come to identify himself almost totally with the US military, the CIA, the NSA and the like. While it has launched an unprecedented campaign against whistleblowers and leakers (as well as sunshine and transparency), the Obama White House has proved a powerful enabler of, but also remarkably dependent upon, that state-within-a-state, a strange fate for “the imperial presidency.”

4. The Rise of the National Security State as the Fourth Branch of Government

One “branch” of government is, however, visibly on the rise and rapidly gaining independence from just about any kind of oversight. Its ability to enact its wishes with almost no opposition in Washington is a striking feature of our moment. But while the symptoms of this process are regularly reported, the overall phenomenon — the creation of a de facto fourth branch of government — gets remarkably little attention. In the war on terror era, the national security state has come into its own. Its growth has been phenomenal. Though it’s seldom pointed out, it should be considered remarkable that in this period we gained a second full-scale “defense department,” the Department of Homeland Security and that it and the Pentagon have become even more entrenched, each surrounded by its own growing “complex” of private corporations, lobbyists and allied politicians. The militarization of the country has, in these years, proceeded apace.

Meanwhile, the duplication to be found in the US Intelligence Community with its17 major agencies and outfits is staggering. Its growing ability to surveil and spy on a global scale, including on its own citizens, puts the totalitarian states of the 20th century to shame. That the various parts of the national security state can act in just about any fashion without fear of accountability in a court of law is by now too obvious to belabor. As wealth has traveled upwards in American society in ways not seen since the first Gilded Age, so taxpayer dollars have migrated into the national security state in an almost plutocratic fashion.

New reports regularly surface about the further activities of parts of that state. In recent weeks, for instance, we learned from Jeremy Scahill and Josh Begley of theIntercept that the CIA has spent years trying to break the encryption on Apple iPhones and iPads; it has, that is, been aggressively seeking to attack an all-American corporation (even if significant parts of its production process are actually in China). Meanwhile, Devlin Barrett of the Wall Street Journal reportedthat the CIA, an agency barred from domestic spying operations of any sort, has been helping the US Marshals Service (part of the Justice Department) create an airborne digital dragnet on American cell phones. Planes flying out of five US cities carry a form of technology that “mimics a cellphone tower.” This technology, developed and tested in distant American war zones and now brought to “the homeland,” is just part of the ongoing militarization of the country from its borders to its police forces. And there’s hardly been a week since Edward Snowden first released crucial NSA documents in June 2013 when such “advances” haven’t been in the news.

News also regularly bubbles up about the further expansion, reorganization and upgrading of parts of the intelligence world, the sorts of reports that have become the barely noticed background hum of our lives. Recently, for instance, Director John Brennan announced a major reorganization of the CIA meant to break downthe classic separation between spies and analysts at the Agency, while creating a new Directorate of Digital Innovation responsible for, among other things, cyberwarfare and cyberespionage. At about the same time, according to the New York Times, the Center for Strategic Counterterrorism Communications, an obscure State Department agency, was given a new and expansive role in coordinating “all the existing attempts at countermessaging [against online propaganda by terror outfits like the Islamic State] by much larger federal departments, including the Pentagon, Homeland Security and intelligence agencies.”

This sort of thing is par for the course in an era in which the national security state has only grown stronger, endlessly elaborating, duplicating and overlapping the various parts of its increasingly labyrinthine structure. And keep in mind that, in a structure that has fought hard to keep what it’s doing cloaked in secrecy, there isso much more that we don’t know. Still, we should know enough to realize that this ongoing process reflects something new in our American world (even if no one cares to notice).

5. The Demobilization of the American People

The New Robber Barons

In The Age of Acquiescence, a new book about America’s two Gilded Ages, Steve Fraser asks why it was that, in the 19th century, another period of plutocratic excesses, concentration of wealth and inequality, buying of politicians and attempts to demobilize the public, Americans took to the streets with such determination and in remarkable numbers over long periods of time to protest their treatment and stayed there even when the brute power of the state was called out against them. In our own moment, Fraser wonders, why has the silence of the public in the face of similar developments been so striking?

After all, a grim new American system is arising before our eyes. Everything we once learned in the civics textbooks of our childhoods about how our government works now seems askew, while the growth of poverty, the flatlining of wages, the rise of the .01 percent, the collapse of labor and the militarization of society are all evident.

The process of demobilizing the public certainly began with the military. It was initially a response to the disruptive and rebellious draftees of the Vietnam-era. In 1973, at the stroke of a presidential pen, the citizen’s army was declared no more, the raising of new recruits was turned over to advertising agencies (a preview of the privatization of the state to come) and the public was sent home, never again to meddle in military affairs. Since 2001, that form of demobilization has been etched in stone and transformed into a way of life in the name of the “safety” and “security” of the public.

Since then, “we the people” have made ourselves felt in only three disparate ways: from the left in the Occupy movement, which, with its slogans about the one percent and the 99 percent, put the issue of growing economic inequality on the map of American consciousness; from the right, in the tea party movement, a complex expression of discontent backed and at least partially funded by right-wing operatives and billionaires and aimed at the de-legitimization of the “nanny state;” and the recent round of post-Ferguson protests spurred at least in part by the militarization of the police in black and brown communities around the country.

6. The Birth of a New System

Otherwise, a moment of increasing extremity has also been a moment of — to use Fraser’s word — “acquiescence.” Someday, we’ll assumedly understand far better how this all came to be. In the meantime, let me be as clear as I can be about something that seems murky indeed: this period doesn’t represent a version, no matter how perverse or extreme, of politics as usual; nor is the 2016 campaign an election as usual; nor are we experiencing Washington as usual.  Put together our one percent elections, the privatization of our government, the de-legitimization of Congress and the presidency, as well as the empowerment of the national security state and the US military and add in the demobilization of the American public (in the name of protecting us from terrorism) and you have something like a new ballgame.

While significant planning has been involved in all of this, there may be no ruling pattern or design. Much of it may be happening in a purely seat-of-the-pants fashion. In response, there has been no urge to officially declare that something new is afoot, let alone convene a new constitutional convention. Still, don’t for a second think that the American political system isn’t being rewritten on the run by interested parties in Congress, our present crop of billionaires, corporate interests, lobbyists, the Pentagon and the officials of the national security state.

Out of the chaos of this prolonged moment and inside the shell of the old system, a new culture, a new kind of politics, a new kind of governance is being born right before our eyes. Call it what you want. But call it something. Stop pretending it’s not happening.

http://billmoyers.com/2015/03/25/new-american-order/

 

Trickle-Down Economics Must Die, Long Live Grow-Up Economics

The myth of inequality-driven economic growth and how to achieve real prosperity for all

 This article was published on August 1, 2015 by Basic Income:
“Economics, as it has been practiced in the last three decades, has been positively harmful for most people.” — Economist Ha-Joon Chang

For over thirty years we’ve treated something as fact which is actually false. Economists we trusted to know better, didn’t, and so people have suffered and continue to suffer. This pernicious economic myth is the idea that a rising yacht lifts all tides, or as more popularly described, “trickle-down economics.” If we are to start running our economy in a way we could one day describe as notably less insane, we must finally come to see it for what it actually is.

An Undead Idea

This belief that it’s good economics to give a relatively greater and greater share of the pie to the top of the economic spectrum because the absolute sizes of all remaining shares will grow, has taken some mortal hits in recent years by some major players, most notably even the OECD and IMF. In fact, it has now reached the point that the idea even being left alive at all in the minds of anyone, makes it a good candidate as an extra in The Walking Dead.

Surveying the data, we’ll start with Wall Street bonuses versus the economic multiplier effects of higher velocity money, go on to economic growth research in relation to distributional inequality, and end with what we know from global cash transfer evidence and the economic effects of billionaires. Let’s burn this undead idea of inequality-driven economic growth with napalm and bury it in concrete shall we?

Section 1: Multiplication

After looking at some numbers, Mother Jones back in March 2015 tweeted a memorable chart along with possibly an even more memorable comment.

This chart alone is perhaps enough to warrant a trip to the nearest window to shout out, “I’m mad as hell, and I’m not going to take this anymore!

Wall Street earned twice as much in year-end bonuses alone as all full-time minimum wage workers combined earned the entire year.

What Mother Jones neglected to mention however is something that goes well beyond “fucked up”, and something which did not go unmentioned in a piece by the Institute for Policy Studies after identical news the year prior.

Every extra dollar going into the pockets of low-wage workers, standard economic multiplier models tell us, adds about $1.21 to the national economy. Every extra dollar going into the pockets of a high-income American, by contrast, only adds about 39 cents to the GDP. These pennies add up considerably on $26.7 billion in earnings. If the $26.7 billion Wall Streeters pulled in on bonuses in 2013 had gone to minimum wage workers instead, our GDP would have grown by about $32.3 billion, over triple the $10.4 billion boost expected from the Wall Street bonuses.

Yeah, you just read that right. In 2013, by giving huge bonuses to those on Wall Street instead of low-wage workers, we actively prevented the creation of about $22 billion in additional national wealth. In 2014, we did the same thing, but to an even larger degree, preventing about $23 billion in additional national wealth that would have otherwise been created, had those billions in bonuses been distributed to low-income earners instead.

In 2013 and 2014, by giving huge bonuses to those on Wall Street instead of low-wage workers, we actively prevented the creation of almost $50 billion in new national wealth.

Year after year, we prevent new wealth creation. Why is this the case? What causes such a big difference in wealth creation, such that money at the bottom is over three times more effective at driving economic growth than money at the top?

Well, economists call it the “multiplier effect” whose origins are in what’s called the “marginal propensity to consume.” It describes how those with little money spend it quickly and those with lots of money don’t.

Fast Money vs. Slow Money

Simply put, monetary exchanges have a frequency rate — a “velocity” — and this velocity is far higher at the bottom than at the top. When you have a lot of money, each individual dollar for the most part just kind of sits around. Sure, it may be put to use eventually, but these dollars are more like gold coins inside Scrooge McDuck’s bank vault. Occasionally they get swam in, but they’re really just there to be counted and look shiny. Additionally, they can even get sent overseas, to sit around in vaults elsewhere.

Looking at the latest money velocity charts and comparing today’s numbers to the historical record, is all one need do to see what happens to the overall rate of market exchanges when we start letting the top accumulate more and more of the total money supply.

Source: St. Louis Fed

The velocity of each dollar in our total money supply is now lower than it’s ever been recorded, in all of U.S. history.

We are exchanging the dollars in our money supply more slowly than even during the Great Depression. The result has been an economy growing more and more tilted everyday, such that even Disney itself, a company built on middle class consumption, is actively leaving it behind in an accelerating sprint towards that shrinking population with money to spend in greater and greater amounts.

Meanwhile, that shrinking amount of money that’s still accessible in hands at the bottom? It’s changing hand after hand, and quickly. That dollar is no coin in a bank vault. It helps buy a gallon of milk, which pays a cashier, which helps buy a haircut, which pays a hair stylist, which helps buy a ticket to a movie, which pays a concession stand worker, which helps buy a dinner for two, and on and on it goes, like a fiery hot lava potato.

Source: CRS

Food stamps are perhaps the best example of how quickly money gets spent at the bottom. When you have so little income that you need SNAP to eat, you’re spending every dollar of it. There’s no not spending it, because it has to be spent in order to stay alive. The result?For every dollar spent on food stamps, GDP grows almost $2.

The mechanism of how this works is effectively illustrated in a parable Tim Ellis shared on his blog that I recommend reading to further illustrate how money at the bottom does not stand still. Such money instead facilitates exchanges within the economy, which is the entire point of it all. That’s what an economy is. It’s all the exchanges that take place between the people who comprise it. When these exchanges aren’t taking place, there is no economy. But it’s also not only about the rate of exchange.

Section 2: Subtraction and Addition

It’s not just that someone with little money has enough money to spend that expands an economy. The most effectual part is that a dollar is also removed from the hand overflowing with dollars. Who knew Robin Hood oversaw such an effective economic stimulus program? But that’s how it works and also in a way that stabilizes the entire economy according to a new model built by Ricardo Reis and Alistair McKay of Columbia University and Boston University.

It’s the redistribution that has a lot of kick,” Reis said in an interview. “The usual argument for transfers is basically Keynesian. We find that has very low impact in our model.”

According to Reis and McKay, there is no better way of creating a more stable economy than to expand tax-and-transfer programs that specifically reduce inequality; like food stamps, and social insurance. A healthy economy is not one of extreme inequality, but one where everyone has enough money to spend into it, to the point they can start saving what they don’t need to spend.

A healthy economy is not one of extreme inequality, but one where everyone has enough money to spend into it, to the point they can start saving what they don’t need to spend.

When the only ones capable of making exchanges are a small percentage of the population, the entire economy suffers because the many are excluded for the benefit of the few, but this benefit too is an illusion. There is no real benefit. Pretending otherwise is like thinking that cutting off the blood in your body to everything except the brain is good for business. It’s not. It’s good for gangrene.

OECD Findings

In a December 2014 report titled, “Trends in Income Inequality and its Impact on Economic Growth”, the OECD found that inequality slows economic growth.

Source: OECD

“Rising inequality is estimated to have knocked more than 10 percentage points off growth in Mexico and New Zealand over the past two decades up to the Great Recession. In Italy, the United Kingdom and the United States, the cumulative growth rate would have been six to nine percentage points higher had income disparities not widened, but also in Sweden, Finland and Norway, although from low levels. On the other hand, greater equality helped increase GDP per capita in Spain, France and Ireland prior to the crisis.

One sentence from the report stands out in particular, as something absolutely vital to focus on to achieve strong economic growth.

The impact of inequality on growth stems from the gap between the bottom 40 percent with the rest of society, not just the poorest 10 percent. Anti-poverty programs will not be enough, says the OECD.

It is not enough to tax and transfer only from the top to the bottom.

Transfer recipients must include at least about half of the entire population. The incomes of the middle class must be increased alongside those living under or near the poverty line, and all of this entirely at the expense of the top. By not doing this, we all lose, even the rich.

Between 1990 and today, US GDP grew from $6 trillion to what is now almost $18 trillion. The OECD is saying that had we not allowed our inequality to grow alongside it, our GDP would have grown an extra trillion dollars. And had we reduced our inequality, our GDP would now likely be somewhere north of $20 trillion instead of $17.7 trillion.

But we didn’t do that. We instead shoveled money hand over fist into the pockets of those with already overstuffed pockets, and to this day we continue to do so. However, this behavior is beginning to be questioned by even more growth experts than the OECD. The IMF is now asking them too.

IMF Findings

In June of 2015, the International Monetary Fund upped the ante with an even more damning report on the effects of income inequality on economic growth than the OECD.

Source: IMF

According to the IMF, increasing the share of the total pie of the top 20% by just 1%, (by say throwing bonuses at them)decreases economic growth by 0.08 points. It actually damages the economy. Overall wealth decreases. On the other hand, increasing the share of the bottom 20% by the same 1%,increases economic growth by 0.38 points, that makes it five times more effective and in the direction we actually want. Similar growth increases are seen in decreasing amounts for the middle three quintiles, with 0.33 points, 0.27 points, and 0.06 points respectively.

In other words, transferring money from the bottom to the top actually slows GDP. It erases national wealth. It shrinks the pie. Whereas doing the opposite, transferring money from the top to the bottom, is the equivalent of throwing Viagra at GDP. It quickly grows the pie. When the bottom 60% get a larger share, everyone greatly benefits, including the top 40%.

The OECD data points to redistributing from the top to the bottom 40%.

The IMF data points to redistributing from the top to the bottom 60%.

No data points to redistributing to the top from the bottom, which is — unfortunately for everyone — exactly what we’ve been doing for decades. Redistribution actively already exists, and it’s in the wrong direction for GDP growth.

The United States: Taking from the working poor and middle classes to give to the rich for 40 years.

So this idea that we should ever let inequality increase because it grows the total pie is completely and utterly false. By letting inequality increase, the entire pie actually shrinks. If we want the pie to grow we need to shift some of that stagnant wealth of the top 20% over to the other quintiles, and the more we shift towards the bottom and middle, the faster the pie will grow for everyone.

“Policies that help to limit or reverse inequality may not only make societies less unfair, but also wealthier.” — OECD, 2014

This is a huge reason, if not the best reason, for everyone to support the idea of universal basic income: increased economic growth that benefits everyone. By reducing the rate of wealth accumulation of the top 20% in a way that better distributes that income to everyone else, we see the potential to build national wealth at historic new rates.

A BIG Economy

I’ve estimated before that the total additional cost required to give every adult citizen a basic income guarantee (BIG) of $1,000 per month and every citizen under eighteen $300 per month would be around $1.5 trillion after the elimination of expenses no longer required with a basic income. This is roughly 8.5% of GDP. (Note: the total cost of child poverty alone is 5.7% of GDP)

If that revenue is removed from the vaults of the top 20% where it is sitting stagnant, and distributed to the bottom 60% (no need to alter the distribution for the 60–80% according to the OECD or IMF), that’s about a 2.83% increase for each quintile combined with the growth from the 8.5% decrease in the 5th quintile. If these are then multiplied by the IMF numbers per 1% increase, the total combined result is a 3.45% growth estimate, for a new total GDP growth rate of potentially 6.44% with a universal basic income in place.

This may sound high, and admittedly quite wonkish, but I believe it’s also likely we’ll see second and third order effects along the lines of increased productivity, and wage increases through higher bargaining power, which would both result in potentially even larger increases to GDP growth with basic income than the IMF or OECD data points to.

Source: multpl

Our GDP growth rate right now is 3%, and we’ve had around this growth rate for decades. With a basic income functioning as a means of reducing the share of the top 20%, and increasing the shares of the bottom 60% by giving everyone $1,000 per month, we should expect to see a new GDP growth rate of around 5–7%. We haven’t seen anywhere near this kind of growth since the 1980s, but perhaps we can see it again, if we start crafting policies that make sense using what we know, instead of continuing to rely on myth-driven policies that only serve to benefit — in an illusory way — an extremely small portion of our society.

This sounds too good to be true, right? Transferring cash from high income earners to low and middle income individuals and families can’t possibly result in as high of growth rates in the real world as on paper. What evidence is there for such claims? It must be impossible.

Well, let’s look at the observed economic effects of basic income and basic income-like policies, and also the observed evidence of anti-UBI, reverse Robin Hood policies, which further enrich the already rich.

Section 3: Evidence for Growth

Conditional and unconditional cash transfer programs have been spreading all over the world for decades now. At first it may have been surprising to observe large multiplier effects, but today it surprises no one. It’s expected. What we see with raises for the rich however, is not.

Effects of Cash Transfer Programs

Every dollar given to the bottom of the socioeconomic spectrum in cash transfer program after cash transfer program results in more than a dollar being added to the economy, sometimes even more than two. Anunconditional cash transfer program in Lebanon of sufficient size to be considered a basic income illustrated this especially well with a result of $2.13 for every $1.

Source: International Rescue Committee

Nothing in the above graph is below $1.50 for every $1. The World Bank found similar multiplier effect results in Lesotho, Ghana, Ethiopia, and Zambia.

Source: The World Bank

Combined with all the evidence we have for the entrepreneurial effects of unconditional cash transfers, it’s no surprise at all why these multiplier effects exist.

In Namibia, when given basic incomes, self-employment jumped 301%. In Liberia, when given basic incomes, 1/3 of recipients started their own businesses. In India, when given basic incomes, recipients were twice as likely to increase their productive work as those in control villages. In Kenya, when poor people were given cash unconditionally, 90% of them used it to start their own businesses or purchase livestock.

Remember again the evidence from food stamps in the US where every $1 adds almost $2, and know how it too increases entrepreneurial activity. The above multiplier effects are not just due to the data being from less-developed countries. When cash is given to those without enough cash to meet all their basic needs, economies grow. This is in stark contrast to what’s observed when the same dollar is handed as a bonus to a millionaire or billionaire.

Effects of Multi-Millionaire CEOs

Possibly the best example of taking from the poor to give to the rich is what we’ve seen with executive compensation trends for decades. Adjusted for inflation, wages and salaries have gone down, while CEO pay has gone up. The argument is that the better a CEO is paid, the more valuable they are to the company and thus warrant being paid over 300 times more than everyone else in the company. The problem is, the exact opposite is true.

Research from the U.’s David Eccles School of Business found that CEOs who receive higher incentive pay often lead their companies to decreased financial performance. The study found that the highest paid CEOs earn significantly lower stock returns for up to three years. Additionally, CEOs with an average compensation of more than $20 million were associated with an average yearly loss of $1.4 billion for their firms.

Paying CEOs more money results in companies that perform worse. Again, just as modeled by the IMF, overall wealth is erased by shifting more of it into the hands with most of it already. Companies that avoid raises for rank and file employees to instead give raises to chief executives perform worse, and contribute to negative growth in the same way as nations doing the same thing collectively.

Effects of Billionaires

The very presence of billionaires in a nation’s economy has now been looked at specifically in hopes of discovering how it affects the economic growth of the national economies of which they are part.

Leaving aside moral questions, do billionaires accelerate or slow down a country’s economic growth? Depending on the answer to these questions, even those generally inclined in the media and politics to boost the fortunes of billionaires might have to rethink their stance. After all, if it turns out that having more billionaires doesn’t favor GDP growth, the policy suggestion to reduce income concentration at the top moves from a moral argument to one about economic growth and prosperity.

These questions led to some very interesting research findings by Jan Svejnar and Sutirtha Bagchi after applying econometric techniques to data on billionaires published by Forbes.

We discovered that billionaire wealth that arises from being politically connected has a strongly negative effect on growth. In contrast, the effect of politically unconnected billionaire wealth on the overall economy is indistinguishable from zero. That means that billionaire cronies constrain economic growth, while billionaires who aren’t cronies on average don’t do so. Why are these findings important for the rest of us? They indicate that public policy toward income and wealth distribution needs to take into account the nature of wealth accumulation.

So not only does the presence of billionaires in an economy not result in stronger economies as trickle-down economics would suggest, but the type of billionaire actually matters. A billionaire who does not invest money into politics for economic gain has essentially zero effect on GDP growth.

Looking again at the IMF chart to the left, this time with green bars I’ve added to reflect billionaires, the effect on growth of politically unconnected billionaires is located between the 4th and 5th quintiles, right at the 0.0 line. They add nothing to economic growth, nor do they slow it. The politically connected billionaires though — the Koch brothers as a prime example — they are off the chart with a bar so far into the negative they make the other billionaires look responsible for the damage their political machinations are wreaking.

Conclusion: Division

Our politics have become a twisted version of the principles we claim to hold dear, where everyone is to have a voice in this supposed democracy of ours. Instead, dollars have become speech, and where dollars are speech, the voices of the many are drowned out in a deluge of the best speech money can buy.

When 1% of the electorate has the majority of the voice, democracy does not exist. When 1% of the electorate owns the majority of the stocks and bonds, the economy is effectively privately owned. The phrase “going public” with each new IPO holds little actual meaning today. When 1% of the electorate is able to rig the game in their favor, they do, but as if that isn’t bad enough, a rigged game destroys the game itself.

By allowing our inequality to grow to the point it exists now, every single one of us is supporting something against our own best interests, poor and rich alike. To continue to allow our economy to fallaciously serve only the interests of a small fraction of the population, everyone will be worse off.

We need to recognize myths where they are perpetuated and the myth of trickle-down economics can not be allowed to stand any longer in the 21st century. To grow our economies we need to accept the policies that enable economies to flourish. Policies that reduce our inequality — policies likeuniversal basic income designed to move stagnant money from the hands at the top not spending it into the hands of all those who will — are the policies we need.

No more trickle-down economics.

Without a pump to circulate money throughout our entire economy, systemic failure is inevitable. Essentially, the economy needs a heart, not more blood, because on its own, money has one net direction — up. It’s time for our economics to grow up too, in realization that all economies are built from the ground up, upon the shoulders of the many — not the few — who comprise them.

The fact that even the phrase “trickle down” as a description of government policy was born in the mind of a comedian, should serve as a sober reminder of how the joke has always been, and without needed changes will continue to remain, entirely on us.

Read the full quote and context here

View story at Medium.com

Where Will President Sanders Get All The Money For His Many Programs?

Political revolutionary Senator Bernie Sanders (I-VT) speaks to guests at a town hall meeting at Valley High School on July 24, 2015 in West Des Moines, Iowa.

Political revolutionary Senator Bernie Sanders (I-VT) speaks to guests at a town hall meeting at Valley High School on July 24, 2015 in West Des Moines, Iowa.
Photo by Scott Olson/Getty Images
On July 31, 2015, Victor Tiffany writes on the Syracuse Progressive Examiner:

 

It’s a question seen in the comment section of the Washington Post and on other news sites and political blogs around the Internet. “We’re broke” conservatives will falsely claim. In fact, the United States has “unprecedented abundance.” David DeGraw argues, “In the United States, there is at least $100 trillion in wealth.” That’s enough to pay off the entire national debt five and a half times! The United States is not broke; the federal government has been intentionally under-financed.

DeGraw writes about the need for people to break out of mental slavery, and if Senator Sanders is going to be successful with his revolutionary bid for the White House, millions of middle of the road voters, so-called moderates, will have to break out of their mental slavery, or at least part way out. Voting for a democratic socialist will be a huge leap for mentally enslaved Americans. That jump begins by recognizing our own mental slavery.

Mental slavery, DeGraw explains, is essentially the consequence of having our minds shaped by years and years of political, commercial and state propaganda. Most people’s understanding of the world is deeply distorted by the convincing but false claims made by brilliant propagandists. Glenn Beck’s followers, for example, believe that progress is bad, progressivism is “a cancer,” and Bernie Sanders is a “communist.” Beck is a corporate tool. That is a claim progressives backing Senator Sanders readily understand. Secretary Clinton is also a corporate tool which is why she gets so much campaign money from Wall Street. It is why she tentatively supported the unconstitutional fast track legislation. Of course, President Obama is a corporate tool as well. In other words, they are neo-liberals.

A society with inequality this severe is highly unstable and will eventually destroy itself. ~David DeGraw

Before Senator Sanders launched his campaign as a “political revolution,” the need for revolution was evident. DeGraw writes, “Due to corruption, wealth and power have become consolidated to the point where the richest 400 Americans now have as much wealth as 200 million Americans. When measuring freedom in any society, as famed American sociologist and psychologist John Dewey put it, “There is no such thing as the liberty or effective power of an individual, group or class, except in relation to the liberties and effective powers of other individuals, groups or classes.” A society with inequality this severe is highly unstable and will eventually destroy itself. The aristocracy knows that. That’s one of the reasons why we are seeing the militarization of local police forces, especially in cities with high poverty rates.”

Sanders wants to increase the top marginal tax rate on the “1%” — Americans making obscene amounts of money — to 90% which is the top tax rate from WWII until President Kennedy lowered it to 70%. The wealthy will spend millions and millions of dollars on super PACs to convince the public that electing Sanders to the White House will be bad, but that’s just more enslaving, political propaganda. Sanders supporters will have to work (a word that was stressed repeatedly during the live-feed portion of the thousands of home meetings Wednesday night) hard to help Democrats (for now and the moderates in the middle of the political spectrum late next year) understand that the American economy flourished during the 1950s. Redistribution of income from the wealthy, who have far more than they need, to Americans working on highways, mass transit systems and non-fossil fuel energy development will revive the sluggish economy. The sluggishness in the economy is due to insufficient effective demandfor goods. The 1%, or more precisely, the 0.1%, have too much of the nation’s wealth.

ECON 101: Supply-side (low taxes on the wealthy) economics has failed middle class Americans. Senator Sanders is proposing a massive shift toward the demand side of the economy by putting taxes taken from the 1% and spending that money on desperately needed projects. The jobs created will put that money into the pockets of the 99% enabling them to buy more which in turn will stimulate the economy.

During WWII, there was massive spending on military equipment which pulled the United States out of the Great Depression. During the Sanders administration, something close to that level of spending will need to resume to fight the common enemy of mankind, climate change.

Bernie Sanders’ candidacy for the White House is progressive’s chance to assert influence inside the Democratic Party, but it’s much more than that. It is also a necessary political revolution to take the country back, not from the “other” party, but from the oligarchs and plutocrats controlling both major parties. Millions of Democrats will need to break out of their mental slavery to accomplish this.

For a growing number of Senator Sanders’ supporters, it is Bernie at the top of the Democratic Party ticket or else they will write-in his name on the ballot during the general election and let the chips fall where they will. That is a threat that might just jolt the mentally enslaved — “we need a woman in the White House” — Democrats out of their slumber. Another neo-liberal in the White House will be a disaster for the climate in general and for Americans specifically, especially when it comes to the three trade and regulatory regimes referred to as Obamatrade.

http://www.examiner.com/article/column-where-will-president-sanders-get-all-the-money-for-his-many-programs

 

U.S. Employment Costs Post Smallest Increase On Record

On July 31, 2015, Reuters posts:

U.S. labor costs in the second quarter recorded their smallest increase in 33 years amid tepid gains in the private sector, but it likely was a temporary setback against the backdrop of diminishing labor market slack.

The Employment Cost Index, the broadest measure of labor costs, edged up 0.2 percent, the Labor Department said on Friday. That was the smallest gain since the series started in the second quarter of 1982 and followed an unrevised 0.7 percent increase in the first quarter,

Economists polled by Reuters had forecast the employment cost index rising 0.6 percent.

The deceleration in labor costs in the second quarter likely does not suggest a material slowing in wage growth, as commissions inflated worker compensation at the start of the year. Labor market slack has diminished significantly over the last few years, which is expected to start putting upward pressure on wages.

At 5.3 percent, the unemployment rate is close to the 5.0 percent to 5.2 percent range that most Federal Reserve officials onsider consistent with full employment.

The ECI is widely viewed by policymakers and economists as one of the better measures of labor market slack. It is also considered a better predictor of core inflation.

Wages and salaries, which account for 70 percent of employment costs, rose 0.2 percent in the second quarter. They had increased 0.7 percent in the first quarter.

Private sector wages and salaries also rose 0.2 percent after gaining 0.7 percent in the prior quarter.

In the 12 months through June, labor costs rose 2.0 percent,

the smallest 12-month increase since last year, and slipping further below the 3 percent threshold that economists say is needed to bring inflation closer to the Fed’s 2 percent medium-term target.

http://www.cnbc.com/2015/07/31/us-q2-employment-costs-index-up.html

 

Socialism, American-Style

On July 25, 2015, Gar Alperovitz and Thomas M. Hanna write in The New York Times:

THE great 20th-century conservative economist Joseph Schumpeter thought the left had overlooked a major selling point in pressing the case for public — i.e., government — control over productive capital. “One of the most significant titles to superiority,” he suggested, was that public ownership produced profits, which means not having to depend on taxes to raise money.

The bulk of the left never took up Schumpeter’s argument. But in an oddly fitting twist, these days the mantra of public control in exchange for lower taxes has been embraced by a surprising quarter of the American political leadership: conservatives.

The most well-known case is Alaska. The Alaska Permanent Fund, established by a Republican governor in 1976, combines not one, but two socialist principles: public ownership and the provision of a basic income for all residents. The fund collects and invests proceeds from the extraction of oil and minerals in the state. Dividends are paid out annually to all state residents.

Texas is another example of conservative socialism in practice. Almost 150 years ago the Texas Permanent School Fund took control of roughly half of all the land and associated mineral rights still in the public domain. In 1953, coastal “submerged lands” were added after being relinquished by the federal government. Each year distributions from the fund go to support education; in 2014 alone it gave $838.7 million to state schools. Another fund, the $17.5 billion Permanent University Fund, owns more than two million acres of land, the proceeds of which help underwrite the state’s public university system.

Similar socialized funds — sometimes called sovereign wealth funds — are common in other conservative states. The Permanent Wyoming Mineral Trust Fund, with a market value of more than $7 billion accumulated from mineral extraction, is almost a direct expression of Schumpeter’s doctrine: Socialized ownership has helped to eliminate income taxes in the state.

Such “socialism, American style,” can produce odd reversals of conservative-liberal political alignments. One of the largest “socialist” enterprises in the nation is the Tennessee Valley Authority, a publicly owned company with $11 billion in sales revenue, nine million customers and 11,260 employees that produces electricity and helps manage the Tennessee River system. In 2013 President Obama proposed privatizing the T.V.A., but local Republican politicians, concerned with the prospect of higher prices for consumers and less money for their states, successfully opposed the idea.

Although state forms of public ownership have not been a major goal of the modern left, activists have begun to pick up on the idea that owning wealth in ways that benefit local communities is important. In Boulder, Colo., climate-change activists have helped win two major victories at the polls in a fight to municipalize the current utility owned by Xcel Energy. Publicly owned utilities also commonly return a portion of their profits, socialist style, to the city or county to help supplement local budgets, easing the pressure on taxpayers.

There are, in fact, already more than 2,000 publicly owned electric utilities that, along with cooperatives, supply more than 25 percent of the country’s electricity, now operating throughout the United States.

In one of the most conservative states, Nebraska, every single resident and business receives electricity from publicly owned utilities, cooperatives or public power districts. Partly as a result, Nebraskans pay one of the lowest rates for electricity in the nation.

The list goes on. More than 450 communities have also built partial or full public Internet systems, some after significant political battles. Roughly one-fifth of all hospitals are also currently publicly owned. Many cities own hotels, including Dallas — where the project was championed by the former Republican mayor Tom Leppert. Some 30 states directly invest public funds in promising start-up companies.

Moreover, contrary to conventional opinion, studies of the comparative efficiency of modern public enterprise show rough equivalency to private firms in many cases. (They aren’t perfect, of course: Many public agencies, boards and corporations that control enterprises are not fully accountable or transparent in their operations.)

With skepticism about capitalism growing among minorities and young voters, will we see more such endeavors in the future? Pendulums have a way of swinging, sometimes very sharply, when big economic tsunamis hit. It is possible that in the next big crisis, both sides might see the wisdom and practical benefits of public ownership, and embrace Joseph Schumpeter’s point even more boldly than they do today.

http://www.nytimes.com/2015/07/23/opinion/socialism-american-style.html?_r=0

Norman Kurland, President, Center for Economic and Social Justice (www.cesj.org) comments:

This was sent to me today by Gar Alperovitz.  He clearly supports mobilizing “people power” to advance “democratic socialism” and ownership of productive capital by the State or some other “collective.” He also opposes monopoly capitalism, even when it is called “social or compassionate capitalism,” where ownership power is and will remain concentrated in a tiny elite who control money and ownership control and profits from productive enterprises.

CESJ, on the other hand, opposes all forms of “Socialism” and “Capitalism” and advocates “The Just Third Way,” a system based on the binary theory of economics conceived by Louis O. Kelso and Say’s Law of Markets, a theory rejected both by Karl Marx and John Maynard Keynes.

Both Keynes and Marx blindly advanced the labor theory of production, arguing that labor is the only source of what’s produced for human consumption, while Kelso realistically saw that ever-advancing technology, robotics, advanced information and management systems, land and other non-human resources were displacing humans in almost all forms of economically productive work.

Marx, Keynes and socialists like Gar Alperovitz do not support private property and a just, free and competitive market system as important elements that must be included within any set of systemic and legal reforms that promote a free, just and democratic society, as proposed by the the Just Third Way.  These reforms are critical for lifting existing barriers to enabling every child, woman and man to enjoy the equal opportunity to share ownership of several trillion dollars in newly created growth assets in the U.S. private and public sectors and transfers of existing assets . . . without redistributing property rights from existing owners. These reforms are already existing under existing laws for millions of American private sector workers through 100% leveraged democratically managed S-Corp Employee Stock Ownership Plans (ESOPs).

Note that in Gar’s article he favors the current system where citizens of Alaska receive profits but have no ownership stake in the revenues from oil produced by the State.  Former Senator Mike Gravel, a member of CESJ’s Board of Advisors and a strong supporter of Kelso’s binary economic vision, had a plan in which those dividends would come from ownership of assets by every citizen.  It was called a “General Stock Ownership Corporation” or “GSOC” passed in 1971 by Congress as chapter U  of the Internal Revenue Code for a 5-year period.  Alaskan conservatives won and the Senator and the people lost a potential major advance in economic democracy.  Compare this article in the American University Law School Review and Senator Gravel’s letter with Gar’s article and decide which approach is more empowering to all citizens.

Under CESJ’s Just Third Way and proposed Capital Homestead Act reforms to the monetary, finance, tax and inheritance laws all citizens. This would include workers in the public and non-profit sectors, the unemployed, underemployed, homekeepers, those unable to work, in fact every child from birth to death.  Each citizen, from the poorest to the richest, would begin receiving growing independent incomes and retirement accumulations from conservatively estimated $7,000 in each future year’s new ownership stakes at today’s slow capital growth rates, as well as labor earnings from new jobs needed to finance and build assets and infrastructure for a sustainable and environmentally sound growth economy.  This would make the State, our only legitimate social monopoly, economically dependent on the citizens, as America’s Founders intended, reversing today’s dangerous socialistic trends to a few holding concentrated power in all existing national economies.

Under the Just Third Way all families would have their own independent incomes and freedom and private property rights to choose and pay for their own education, health, housing and other subsistence needs, reducing their increasing dependency over time from State welfare redistribution, charity, and high-interest consumer credit.  Government deficits could be eliminated by a simpler single-rate tax system on all non-exempt personal incomes. $16 trillion in existing debt and over $56 trillion in hidden debt from entitlement programs could be gradually reduced as all citizens begin to accumulate their own assets for retirement.

All these reforms are described for casual readers at http://www.cesj.org/learn/ and in more detail in articles, videos and free downloadable books athttp://www.cesj.org/resources/

Consider writing a short note to Gar at garalper@gmail.com and the New York Times at http://www.nytimes.com/2015/07/23/opinion/socialism-american-style.html?_r=0

In Peace through Justice,
Norm

Gary Reber Comments:

In the case of the Alaska Permanent Fund, the Texas Permanent School Fund, the Permanent Wyoming Mineral Trust Fund and the Tennessee Valley Authority, a better structure would be to create a Citizens Land Bank (CLB) entity, owned by EVERY individual citizen with the state or territory.

A CLB is a for-profit, professionally-managed, citizen-owned-and-governed community land planning and development enterprise, designed to enable every citizen of a community of any size to acquire a direct ownership stake in local land, natural resources and basic infrastructure.

A CLB is a social vehicle for every man, woman and child to gain, as a fundamental right of citizenship, a single lifetime, non-transferable ownership interest in all the Bank’s assets, share equally in property incomes from rentals and user fees from leases or use of the Bank’s assets, accumulate appreciated equity values from enhanced land values, and gain an owner’s voice in the governance of future land development.

A CLB is an innovative legal and financing tool empowered to borrow on behalf of all citizen-shareholders and service the debt with pre-tax dollars to meet the land acquisition, capitalization and operational needs of the Bank. The CLB shelters from taxation the equity accumulations of citizen-shareholders and protects the outside assets of the citizens in the event of loan default or if the enterprise fails.

A CLB is a social tool designed to encourage a just, free and non-monopolistic market economy. It applies the democratic principles of equal opportunity and equal access to the means to participate as an owner as well as a worker. It demonstrates that anything that can be owned by government can and should be owned, individually and jointly, by the citizens.

A CLB is a major feature in a proposed national economic agenda known as “Capital Homesteading for Every Citizen,” which is designed to reform existing monetary, credit and tax barriers to provide every American an equal opportunity to share in the governing powers and profits from new entrepreneurial ventures, new technologies, new structures, and new rentable space built upon the land. Capital Homesteading offers a “Just Third Way” of reversing unsustainable federal deficits and debt, and revitalizing and growing the American free enterprise system in a sustainable and environmentally sound way.

State forms of public ownership and cooperatives, while intended to benefit local communities, such as publicly owned electric utilities, do not provide DIRECT individual OWNERSHIP  sharing by the citizens they are intended to benefit. Again, a better structure would be a Citizens Land Bank, wherein EVERY citizen is an individual OWNER. By vesting power and control directly among the citizens, not an elite “State” governing body, there would be far greater accountability and transparency in their operations.

Now with respect to some specific so-called “democratic socialist” policies, while I have been a strong advocate for over 40 years for practicing binary economics and policies that broaden individual OWNERSHIP of wealth-creating, income-producing capital assets simultaneously with the growth of the economy, in the case of public education at the college and university level, I believe this is a viable policy, as long as the cost is offset by reducing the military-industrial complex budget. Implementing the proposed Capital Homestead Act, whose ultimate result is to create financial independence and security for EVERY child, woman, and man, will not create an instant result, but realistically will develop over the course of the next generation, if enacted in 2016. Thus, we should invest in the higher education of our children and make public colleges and universities tuition-free in order to have our youth become educated and thereby develop more fully as persons.

Likewise, with respect to health care and medical costs, there should be a public option to compete with the private insurance corporations.

As for infrastructure, there needs to be public spending on building new and improving old infrastructure, with the stipulation that EVERY  corporation competing for the government contracts be fully employed-owned. This should be the stipulation no matter what the taxpayer expenditure is for.

Such policies should be enacted and pursued while the “big picture” policies and programs of the Just Third Way take effect and eventually  result in a citizenry in which all families would have their own independent incomes and freedom and private property rights to choose and pay for their own education, health, housing and other subsistence needs, reducing their increasing dependency over time from State welfare redistribution, charity, and high-interest consumer credit.

Who Does Our Economy Serve?

On July 28,2015, Thom Hartmann writes on the Thom Hartmann Program:

During a speech at New York University Friday, Hillary Clinton took aim at “quarterly capitalism,” her name for corporate America’s endless – and senseless – pursuit of profits.

Now, Clinton isn’t exactly Elizabeth Warren and sometimes it sounds like she’s reading a script written by an economics professor, but she’s spot-on when it comes to so-called “quarterly capitalism.” That’s because, to paraphrase Shakespeare, something is rotten in the state of American capitalism.

Instead of using their record profits to invest in innovation or pay their workers more, America’s biggest companies are now using those profits just to buy back their own stock.

As Edward Luce pointed out in a recent piece for The Financial Times,

“The level of US investment is at its lowest since 1947. Last year, according to Goldman Sachs, S&P 500 companies spent more than $500bn on share buybacks. This year it is expected to hit $600bn…. For every dollar the top US public companies spend on investment, they are returning eight or nine dollars to shareholders.”

This is the sign of an economy that’s gone insane.

Stock buybacks don’t grow the economy as a whole; they just make giant rich corporations – and their CEOS – even richer. They’re the perfect symbol of a system that puts profits before people, progress, and, well, pretty much everything else.

It’s hard to imagine given the state of American capitalism these days, but things weren’t always this way.

Between the 1930s and the 1980s, corporate America actually behaved – or was made to behave as a result of smart regulations – in ways that benefited everyone, not just their shareholders or CEOs. Back then, the saying “what’s good for GM is good for America and what’s good for America is good for GM” wasn’t just a saying – it was a statement of fact.

But then Reagan came to town and everything changed.

As part of his big push to “reform” the economy, Reagan changed the compensation laws for CEOs so that they could be paid in stock options. Their income now depended on the value of their company’s stock.

Theoretically, this was supposed to give executives an incentive to make good business decisions, but what it actually did was give them an incentive to skim their bit off the top and screw everyone else. Instead of long-term success, the focus was now on boosting stocks as quickly as possible and therefore making as much money as quickly possible.

This is why big corporations are now spending billions and billions of dollars to buy back their own stock — they’re just trying to keep their CEOS rich and happy.

And who do you think suffers as a result of all this? The American worker, of course! Who else?

The money that’s now going towards stock buybacks and CEO compensation packages has to come from somewhere, and it’s coming straight off the backs of everyday working Americans.

Even though workers are now more productive than ever, wages have stagnated since the Reagan era. CEOs are quite literally sucking up the profits that used to be shared more equally between management and workers.

This is the “quarterly capitalism” problem Hillary Clinton has been talking about, and it’s the most glaring example of how the Reagan Revolution fundamentally transformed our country, and transformed it for the worse.

Before Reagan, there was an informal agreement among all Americans that the economy served us, not the other way around, and we had things like tariffs, taxes, and unions to make sure things stayed this way.

But then Reagan flipped the cards. He smashed unions, slashed taxes, and gutted regulations, and, as a result, we now serve the economy and the people who run it.

This isn’t democracy; it’s feudalism, and it’s just the latest example of why need to undo the Reagan Revolution once and for all.

http://www.thomhartmann.com/blog/2015/07/who-does-our-economy-serve

 

I Retired At 30. The Best Part Isn’t Leisure — It’s Freedom.

On July 27, 2015, Mr. Money Mustache writes on VOX:

When somebody finds out that I retired 10 years ago at age 30, the first question that comes up is usually, “How?!”

This leads to a series of skeptical questions about how anybody could possibly save enough in 10 years of work to live off for the remaining 70, or how I handle raising kids, health insurance, college tuition, emergencies, groceries, and luxuries.

But that’s all just the nuts-and-bolts stuff. For anyone familiar with the principles of personal finance and investing, my trick was unimpressive and easily reproducible: Just spend much less than you earn and pour the difference into efficient index funds. When your collection of investments reaches 25 times your annual spending, you’re done.

Much more interesting is the debate over whyanybody would want to retire at 30

Occasionally an angry heckler with credit card balances and car loans will insist that my impossible tale is all fabricated, which is sort of like a person who has trouble climbing 10 flights of stairs insisting that a 200th-place marathon runner must have cheated his way across the finish line because nobody could possibly run that far. Like running 26 miles, accumulating enough money for early retirement is not really easy, but it’s pretty simple.

Much more interesting is the debate over why anybody would want to do this. After all, if you look at the accomplishments of humankind over the last few thousand years, you can see that at the core, we really love to work. We don’t just stop at food and shelter like every other species — we go on and on to create cathedrals, concerts, spaceships, and genetic maps. Meanwhile, with so many of us still starving and/or killing each other, you could argue that there is plenty of work left to do.

On the other hand, not every job is quite as rewarding as creating art or saving the world. Here in the US, around two-thirds of us are dissatisfied with our workplace and would probably quit if we really had the option. Most of the remaining people would at least welcome a longer weekend every now and then, or the chance to take a month or two off in the summer if the paychecks would remain uninterrupted. It is these smaller enticements that I usually try to plant as seeds when sharing the idea of what early retirement is really like.

Initially, my own reason for early retirement was the desire to be a good dad. My long-time girlfriend and I knew that marriage was coming up on the horizon, and we planned to start a family. But when we looked around at our engineering colleagues, we could see that the demands of young children did not work well with the all-encompassing nature of a career in high tech. How could we both be dedicated to these jobs, working late and answering emails on the weekends, while also supplying the 12 to 16 hours a day of attention that a toddler sucks up? Leveraging our frugal 1970s upbringings in a less wealthy country and our new above-average incomes, we decided to live below our means and save for financial independence before becoming parents ourselves.

All that turned out to be just the start of a much bigger experiment. Ten years ago, I realized I was onto something good when my baby son was born and I didn’t have to fight for a few weeks of paternity leave. I had no desire to return to the office during those first months of sleepless “hit by a freight train” baby care. But as the seasons and years wore on and free time started shining down from the sky again with increasing frequency, I came to realize that work is a far more essential part of life than I had ever guessed.

What if work were something that you did only when it worked for you? If you could go at it with gusto on certain days, or even certain seasons or years, but then shift to other things for a while when your priorities changed? You might spend most of your 20s burning up the corporate ladder or being the workhorse that keeps a startup company in the black. But then your 30s might be mostly consumed by bringing up young children, your 40s might see you starting more companies or reclaiming your youth as a touring rocker, and your 50s and 60s are yet to be charted. Now that I’ve met a large number people who have actually followed this path, I can see that financial independence isn’t so much about freedom from work. It is more about freedom to do your best work, without money getting in the way.

This is what I’m really describing when I talk about early retirement. It’s not really retirement at all, but that’s because I don’t think anybody should truly retire in the old sense of the word — swearing off all forms of paid activity in favor of a dramatic increase in television watching and golf playing. Creation of new ideas, new enterprises, or new things is the biggest joy of being alive. Learning more about life, the world, and yourself and then trying to mix the ingredients together to the best of your ability is the happiest path you can take as a human. We’re uniquely lucky to even have such an option available to us these days.

Financial independence isn’t so much about freedom from work. It is more about freedom to do your best work, without money getting in the way.

So in my own case I started just with the goal of being a parent, but then ended up starting a house-building company to pursue my lifelong love of building things. Then I learned that the daily stress and schedule of big, multi-person projects was still too much for me at the time, so it evolved into a boutique carpentry operation that still does local projects to this day.  Other ventures have come and gone, but none of them were done because we needed the money. That is my definition of a modern retirement: the activities you pursue once you are done searching for money.

Like an old-time homesteader, I enjoy learning new skills as the opportunity comes up, because I find it’s more satisfying to learn something than to outsource it to others, even if you can afford it. Housekeeping and haircutting, cooking and gardening, but also welding and plumbing, framing and roofing, heating and cooling, auto repair and strength training, drum playing and electronic dance music composition and beer brewing are just a few of the things I have had the joy of working on in this first decade of retirement.

Somewhere in there I also started a blog with the goal of reducing the rich world’s resource consumption while suggesting that we could all have a lot more fun in the process. It was done mostly on a whim and only possible due to the free time available in the absence of a real job. But even this side gig has blown up into something much more fun than my original work career and is in fact what has brought you and me together at this very moment.

Even though some of these activities may look like “work,”  the word “retirement” is still a very good one to describe all of this freedom, because it does require you to make a pretty big escape from social norms. Our society is built upon a series of assumptions that you need to examine and then throw away if you want to get here before everyone else. For example, would a Mercedes ML550 with leather seats provide you with a happier life than a Toyota Corolla with a manual transmission? Would a Harvard doctorate give your child a happier life than a bachelor’s degree from a lesser university? And while we’re at it, what are the happiest choices in fashion, convenience, travel, dining, shopping, and lawn care? Most of us consistently get the answers to these questions wrong.

In general, we’ve been trained to always seek the highest level of luxury and the minimum level of personal effort, except in the area of work, where maximum exertion from age 25 through 67 is the only moral choice.

Taken to the extreme, a few of us would be permanently floating in an infinity pool while servants delivered gourmet meals and opened the boxes of an incoming stream of high-end products for our amusement. The only possible improvement would be the addition of a bedpan and a catheter.

The rest of us would be straining and struggling, out of shape and deep in debt, short on time and wondering why life is so difficult and yet so unsatisfying. When I look at the life of the middle class today, it seems we creep a little closer to this extreme every year. The standard practice of newspaper articles is to blame a system that prevents the middle class from getting ahead, but I think it’s a much bigger problem: a middle class that is permanently caught up chasing the idea of “more,” which of course you can never catch.

The solution is to duck out the side door of this suffocating circus tent and seek out a completely different and better life. Instead of shopping for the easiest life you can afford, look for the most challenging one you can handle with your current level of ability. Instead of the closest elevator, find the highest staircase. Forgo the longest drive in the fanciest car for the most consistent walk in the most varied weather. As you produce more value for the world and increase your income, simultaneously increase your efficiency and decrease your material needs. As you buy fewer treats for yourself, your level of satisfaction and happiness with life will increase.

This is both the recipe for financial independence, and the reason you’ll never want to sit around and do nothing once you get there. Because work becomes better once you have the freedom to choose how and when you do it. And better work is worth working harder at.

It’s all a giant circle. I just wish everyone were allowed to see this happy secret.

 

http://www.vox.com/2015/7/27/9023415/mr-money-mustache-retirement