Trump And Team Officially Withdraw From TPP

  • Trump and Team Officially Withdraw From TPP
Published by TelesurTV on 22 January 2017:
Trump has also given an indirect ultimatum to its NAFTA partners: renegotiate or he will also pull out of that neo-liberal trade deal.

In yet another bold move in their initial days in office, U.S. President Donald Trump and team have announced their withdrawal from the controversial Trans-Pacific Partnership free trade agreement.

Claiming that Trump “understands how critical it is to put American workers and businesses first when it comes to trade,” the statement on the White House’s website promises to bring jobs and economic prosperity by “rejecting and reworking failed trade deals.” Earlier this month, his team also announced they would instead be focusing on more bilateral trade deals.

“This strategy starts by withdrawing from the Trans-Pacific Partnership and making certain that any new trade deals are in the interests of American workers,” the statement reads, then delivers an ultimatum regarding its commitment to the 1994 North American Free Trade Agreement, the neo-liberal wedge used to open up the Mexican market to trade by promising, and failing to deliver, economic prosperity.

“If our partners refuse a renegotiation that gives American workers a fair deal, then the President will give notice of the United States’ intent to withdraw from NAFTA.”

The statement, titled Trade Deals Working For All Americans, emphasizes Trump’s “lifetime of negotiating experience” as a selling point for withdrawing from the 12-nation agreement, which former President Barack Obama adamantly pushed.

It plays into Trump’s populist working-class rhetoric, promising to “put American workers and businesses first when it comes to trade” and cracking down on “those nations that violate trade agreements and harm American workers in the process.”

What the statement doesn’t make mention of is Trump’s disastrous business record, which includes dozens of failed and corrupt businesses and labor disputes over unpaid wages, to name a couple.

Except for the U.S., all other countries have signed the controversial TPP, which promises to open up markets by removing trade barriers, though it has yet to be ratified by any single one.

The deal purports to bring economic prosperity to all by equally opening borders and market opportunities.

But critics argue that less developed countries, such as the three commodity-dependent Latin American members, are at an obvious disadvantage when competing against developed countries that export more costly value-added goods.

Environmentalists have also blasted the agreement for allowing member-governments to be sued by corporations claiming profit-loss due to environmental and labor regulations.

Thousands of protesters have come out against the deal in Peru and Chile over the months.

While not specifying exactly what types of regulation regarding trade agreements, during the campaign, Trump, the business-tycoon-turned-45th-president on Friday, advocated a one step forward, two steps back approach.

“For every one new regulation, two old regulations must be eliminated,” he said in November of last year.

The TPP’s member countries include Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam.

http://www.telesurtv.net/english/news/Trump-and-Team-Officially-Withdraw-From-TPP-20170122-0002.html

The Trans Pacific Partnership (TPP) agreement would have promoted 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!

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!

With or without such trade agreements, the wealthy ownership class has institutionalized greed (creating concentrated capital ownership, monopolies, and special privileges). “Hoggish,” the term I have given this practice, is about the ability of greedy rich people to manipulate the lives of people who struggle with declining labor worker earnings and job opportunities, and then accumulate the bulk of the wealth through monopolized productive capital ownership. Our scientists, engineers, and executive managers who are not owners themselves, except for those in the highest employed positions, are encouraged to work to destroy employment by making the capital “worker” owner more productive. How much employment can be destroyed by substituting machines for people is a measure of their success – always focused on producing at the lowest cost. Only the people who already own productive capital are the beneficiaries of their work, as they systematically concentrate more and more capital ownership in their stationary 1 percent ranks. Yet the 1 percent are not the people who do the overwhelming consuming. The result is the consumer populous is not able to earn the money to buy the products and services produced as a result of substituting machines for people. And yet you can’t have mass production without mass human consumption made possible by “customers with money.” It is the exponential disassociation of production and consumption that is the problem in the United States economy, and the reason that ordinary citizens must gain access to productive capital ownership to improve their economic well-being.

There is another alternative, a balanced JUST Third Way, 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, as individuals. 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 birth and continue as 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=5797http://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 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 http://www.foreconomicjustice.org/9206/financing-future…economic-decline and “The Income Solution To Slow Private Sector Job Growth” at http://www.foreconomicjustice.org/9872/the-income-solut…ector-job-growth.

The Long-Term Jobs Killer Is Not China. It’s Automation.

A worker at a steel minimill in California. Minimill technology has enabled steel plants to cut 75 percent of employees over five decades, while keeping production the same. CreditDavid McNew/Getty Images

On December 21, 2016, Claire Cain Miller writes in The New York Times:

The first job that Sherry Johnson, 56, lost to automation was at the local newspaper in Marietta, Ga., where she fed paper into the printing machines and laid out pages. Later, she watched machines learn to do her jobs on a factory floor making breathing machines, and in inventory and filing.

“It actually kind of ticked me off because it’s like, How are we supposed to make a living?” she said. She took a computer class at Goodwill, but it was too little too late. “The 20- and 30-year-olds are more up to date on that stuff than we are because we didn’t have that when we were growing up,” said Ms. Johnson, who is now on disability and lives in a housing project in Jefferson City, Tenn.

Donald J. Trump told workers like Ms. Johnson that he would bring back their jobs by clamping down on trade, offshoring and immigration. But economists say the bigger threat to their jobs has been something else: automation.

“Over the long haul, clearly automation’s been much more important — it’s not even close,” said Lawrence Katz, an economics professor at Harvard who studies labor and technological change.

No candidate talked much about automation on the campaign trail. Technology is not as convenient a villain as China or Mexico, there is no clear way to stop it, and many of the technology companies are in the United States and benefit the country in many ways.

Mr. Trump told a group of tech company leaders last Wednesday: “We want you to keep going with the incredible innovation. Anything we can do to help this go along, we’re going to be there for you.”

Andrew F. Puzder, Mr. Trump’s pick for labor secretary and chief executive of CKE Restaurants, extolled the virtues of robot employees over the human kind in an interview with Business Insider in March. “They’re always polite, they always upsell, they never take a vacation, they never show up late, there’s never a slip-and-fall, or an age, sex or race discrimination case,” he said.

Photo

At Eatsa, an automated restaurant chain, customers never interact with a human.CreditJason Henry for The New York Times

Globalization is clearly responsible for some of the job losses, particularly trade with China during the 2000s, which led to the rapid loss of 2 million to 2.4 million net jobs, according to research by economists including Daron Acemoglu and David Autor of M.I.T.

People who work in parts of the country most affected by imports generally have greater unemployment and reduced income for the rest of their lives, Mr. Autor found in a paper published in January. Still, over time, automation has had a far bigger effect than globalization, and would have eventually eliminated those jobs anyway, he said in an interview. “Some of it is globalization, but a lot of it is we require many fewer workers to do the same amount of work,” he said. “Workers are basically supervisors of machines.”

When Greg Hayes, the chief executive of United Technologies, agreed to invest $16 million in one of its Carrier factories as part of a Trump deal to keep some jobs in Indiana instead of moving them to Mexico, he said the money would go toward automation.

“What that ultimately means is there will be fewer jobs,” he said on CNBC.

Take the steel industry. It lost 400,000 people, 75 percent of its work force, between 1962 and 2005. But its shipments did not decline, according to a study published in the American Economic Review last year. The reason was a new technology called the minimill. Its effect remained strong even after controlling for management practices; job losses in the Midwest; international trade; and unionization rates, found the authors of the study, Allan Collard-Wexler of Duke and Jan De Loecker of Princeton.

Another analysis, from Ball State University, attributed roughly 13 percent of manufacturing job losses to trade and the rest to enhanced productivity because of automation. Apparel making was hit hardest by trade, it said, and computer and electronics manufacturing was hit hardest by technological advances.

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A vacant factory parking lot in Luzerne County, Pa., which flipped from blue to red. Donald J. Trump railed against trade and offshoring, but automation has killed more jobs. CreditMark Makela for The New York Times

Over time, automation has generally had a happy ending: As it has displaced jobs, it has created new ones. But some experts are beginning to worry that this time could be different. Even as the economy has improved, jobs and wages for a large segment of workers — particularly men without college degrees doing manual labor — have not recovered.

Even in the best case, automation leaves the first generation of workers it displaces in a lurch because they usually don’t have the skills to do new and more complex tasks, Mr. Acemoglu found in a paper published in May.

Robert Stilwell, 35, of Evansville, Ind., is one of them. He did not graduate from high school and worked in factories building parts for tools and cars, wrapping them up and loading them onto trucks. After he was laid off, he got a job as a convenience store cashier, which pays a lot less.

“I used to have a really good job, and I liked the people I worked with — until it got overtaken by a machine, and then I was let go,” he said.

Dennis Kriebel’s last job was as a supervisor at an aluminum extrusion factory, where he had spent a decade punching out parts for cars and tractors. Then, about five years ago, he lost it to a robot.

“Everything we did, you could program a robot to do it,” said Mr. Kriebel, who is 55 and lives in Youngstown, Ohio, the town about which Bruce Springsteen sang, “Seven hundred tons of metal a day/Now sir you tell me the world’s changed.”

Since then, Mr. Kriebel has barely been scraping by doing odd jobs. Many of the new jobs at factories require technical skills, but he doesn’t own a computer and doesn’t want to.

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The Skechers distribution center in Moreno Valley, Calif., is fully automated. CreditMonica Almeida/The New York Times

Labor economists say there are ways to ease the transition for workers whose jobs have been displaced by robots. They include retraining programs, stronger unions, more public-sector jobs, a higher minimum wage, a bigger earned-income tax credit and, for the next generation of workers, more college degrees. The White House on Tuesday released a report on automation and the economy that called for better education from early childhood through adult job transitions and for updating the social safety net with tools like wage insurance. Few are policies that Mr. Trump has said he will pursue.

“Just allowing the private market to automate without any support is a recipe for blaming immigrants and trade and other things, even when it’s the long impact of technology,” said Mr. Katz, who was the Labor Department’s chief economist under President Clinton.

The changes are not just affecting manual labor: Computers are rapidly learning to do some white-collar and service-sector work, too. Existing technology could automate 45 percent of activities people are paid to do, according to a July report by McKinsey. Work that requires creativity, management of people or caregiving is least at risk.

Ms. Johnson in Tennessee said both her favorite and highest-paying job, at $8.65 an hour, was at an animal shelter, caring for puppies.

It was also the least likely to be done by a machine, she said: “I would hope a computer couldn’t do that, unless they like changing dirty papers and giving them love and attention.”

This article is about REALITY! While numerous authors envision a dire result as the technological revolution advances and less and less human labor is required to produce and distribute the products and services needed and wanted by society, with just a tiny few reaping ALL of the financial rewards, virtually every solution to counter the tectonic shifts in the technologies of production poses the same old redistribution approach that results in socialism, instead of making EVERY citizen individually productive through their personal ownership stakes in the wealth-creating, income-producing capital assets resulting from technological invention and innovation. They never address the issue of concentrated ownership, nor use the therm OWNERSHIP. Instead, the ONLY solution is a redistribution of income and wealth from the rich owners of breakthrough technologies to the rest of us.

What is direly needed are honest leaders with the communication talent to advocate for making EVERY person a productive contributor to societal development through their personal ownership stakes in the productive capacity of our future. This can be accomplished without the requirement of past savings or a reduction in wages (if one is employed) or benefits using insured, interest-free capital credit to finance technological invention and innovation with the credit extended paid off out of the future earnings generated by the investments. In this way, we can build a future economy to support general affluence for EVERY child, woman and man, while at the same time generating, over the short-term (say a generation), virtual full employment and simultaneously creating new private property sector capital owners, who will benefit from growing purchasing power and financial security, and not dependent on a job that is being replaced by “machines” or a welfare State of elites determining who gets what.

The problem is that technological invention and innovation––change––makes the non-human means of producing––tools, machines, structures, and computerized processes––ever more productive while leaving human productiveness largely unchanged (our human abilities are limited by physical strength and brain power––and relatively constant). This means that fewer and fewer people are necessary to produce the products and services needed and wanted by society. But when a job is one’s ONLY way to be productive and earn an income and when jobs are disappearing and the worth of labor is being devalued, we have a problem.  The problem is magnified by the fact that upward of 95 percent of the products and services are produced by physical productive capital––the non-human factor––which is owned by less than 10 percent of the population and highly concentrated among less than 1 percent of the population. The result is that primary distribution through the free market economy, whose distributive principle is “to each according to his production,” delivers progressively more market-sourced income to capital owners and progressively less to workers who make their contribution through labor.

Unfortunately, ever since the 1946 passage of the Full Employment Act, economists and politicians formulating national economic policy have beguiled us into believing that economic power is democratically distributed if we have full employment––thus the political focus on job creation and redistribution of wealth rather than on equal opportunity to produce, full production and broader capital ownership accumulation. This is manifested in the myth that labor work is the ONLY way to participate in production and earn income. Long ago that was once true because labor provided 95 percent of the input into the production of products and services. But today that is not true. Physical capital provides not less than 90 to 95 percent of the input. Full employment as the means to distribute income is not achievable. When the “tools” of capital owners replace labor workers (non-capital owners) as the principal suppliers of products and services, labor employment alone becomes inadequate. Thus, we are left with government policies that redistribute income in one form or another, such as a proposed universal basic income.

The capitalism practiced today is what, for a long time, I have termed “Hoggism,” propelled by greed and the sheer love of power over others. “Hoggism” institutionalizes greed (creating concentrated capital ownership, monopolies, and special privileges). “Hoggism” is about the ability of greedy rich people to manipulate the lives of people who struggle with declining labor worker earnings and job opportunities, and then accumulate the bulk of the money through monopolized productive capital ownership. Our scientists, engineers, and executive managers who are not owners themselves, except for those in the highest employed positions, are encouraged to work to destroy employment by making the capital “worker” owner more productive. How much employment can be destroyed by substituting machines for people is a measure of their success––always focused on producing at the lowest cost. Only the people who already own productive capital are the beneficiaries of their work, as they systematically concentrate more and more capital ownership in their stationary 1 percent ranks. Yet the 1 percent are not the people who do the overwhelming consuming. The result is the consumer populous is not able to get the money to buy the products and services produced as a result of substituting machines for people. And yet you can’t have mass production without mass human consumption made possible by “customers with money.” It is the exponential disassociation of production and consumption that is the problem in the United States economy, and the reason that ordinary citizens must gain access to productive capital ownership to improve their economic well-being, not to a hand-out derived from government coercion that takes from those who make productive contributions as workers and capital owners and gives to those who are unable to earn a minimum sustainable income.

Binary economist Louis Kelso postulated: “When consumer earning power is systematically acquired in the course of the normal operations of the economy by people who need and want more consumer goods and services, the production of goods and services should rise to unprecedented levels; the quality and craftsmanship of goods and services, freed of the corner-cutting imposed by the chronic shortage of consumer purchasing power, should return to their former high levels; competition should be brisk; and the purchasing power of money should remain stable year after year.”

Without this necessary balance hopeless poverty, social alienation, and economic breakdown will persist, even though the American economy is ripe with the physical, technical, managerial, and engineering prerequisites for improving the lives of the 99 percent majority. Why? Because there is a crippling organizational malfunction that prevents making full use of the technological prowess that we have developed. The system does not fully facilitate connecting the majority of citizens, who have unsatisfied needs and wants, to the productive capital assets enabling productive efficiency and economic growth.

America has tried the Republican “cut spending, cut taxes, and cut ‘entitlements,’ eliminate government dependency and shift to private individual responsibility” and the Democrat “protect ‘entitlements,’ provide tax-payer supported stimulus, lower middle and working class taxes, tax the rich and redistribute” through government brands of economic policy, as well as a mixture of both. Republican ideology aims to revive hard-nosed laissez-faire appeals to hard-core conservatives but ignores the relevancy of healing the economy and halting the steady disintegration of the middle class and working poor.

Some conservative thinkers have acknowledged the damaging results of a laissez-faire ideology, which furthers the concentration of productive capital ownership. They are floundering in search of alternative thinking as they acknowledge the negative economic and social realities resulting from greed capitalism. This acknowledgment encompasses the realization that the troubling economic and social trends (global capitalism, free-trade doctrine, tectonic shifts in the technologies of production and the steady off-loading of American manufacturing and jobs) caused by continued concentrated ownership of productive capital will threaten the stability of contemporary liberal democracies and dethrone democratic ideology as it is now understood.

Without a policy shift to broaden productive capital ownership simultaneously with economic growth, further development of technology and globalization will undermine the American middle class and make it impossible for more than a minority of citizens to achieve middle-class status.

We are absent a national discussion of where consumers earn the money to buy products and services and the nature of capital ownership, and instead argue about policies to redistribute income or not to redistribute income. If Americans do not demand that the contenders for the office of the presidency of the United States, the Senate, and the Congress address these issues, we will have wasted the opportunity to steer the American economy in a direction that will broaden affluence. We have adequate resources, adequate knowhow, and adequate manpower to produce general affluence, but we need as a society to properly and efficiently manage these resources while protecting and enhancing the environment so that our productive capital capability is sustainable and renewable. Such issues are the proper concern of government because of the human damage inflicted on our social fabric as well as to economic growth in which every citizen is fairly included in the American dream.

Our current system is rigged to continually concentrate the ownership of capital in the 1 to 5 percent of the population. The current system is presently propelled by greed in our society, which creates dire moral implications. A new system that would ensure equal opportunity for every child, woman, and man to acquire productive capital with the earnings of capital and broaden its ownership universally does not require people to be any better than they presently are, but it does enable our society to leverage both greed and generosity in a way that honestly recognizes and harnesses productive capital as the factor that exponentially produces the wealth in a technologically advanced society.

The resulting impact of our current approaches has been plutocratic government and concentration of capital ownership, which denies every citizen his or her pursuit of economic happiness (property). Market-sourced income (through concentrated capital ownership) has concentrated in individuals and families who will not recycle it back through the market as payment for consumer products and services. They already have most of what they want and need so they invest their excess in new productive power, making them richer and richer through greater capital ownership. This is the source of the distributional bottleneck that makes the private property, market economy ever more dysfunctional. The symptoms of dysfunction are capital ownership concentration and inadequate consumer demand, the effects of which translate into poverty and economic insecurity for the 99 percent majority of people who depend entirely on wages from their labor or welfare and cannot survive more than a week or two without a paycheck. The production side of the economy is under-nourished and hobbled as a result.

While Americans believe in political democracy, political democracy will not work without a property-based free market system of economic democracy. The system is the problem, but it can and must be overhauled. The two prerequisites are political power, which is the power to make, interpret, administer, and enforce laws, and economic power, the power to produce products and services, whether through labor power or productive capital.

Kelso wrote: “In the distribution of social power, whether it be political power or economic power, all things are relative. The essence of economic democracy lies in the elimination of differences of earning power resulting from denial of equality of economic opportunity, particularly equal access to capital credit. Differences of economic status resulting from differences in advantages taken and uses made of differences based on inequality of economic opportunity, particularly those that give access to capital credit to the already capitalized and deny it to the non- or -undercapitalized, are flagrant violations of the constitutional rights of citizens in a democracy.”

We need a recognition in America that we should deliberately begin to broaden the capital ownership base in a way that is consistent with the laws of property and the Constitutional safeguards of the rights of men and women to own property and be productive.

What needs to be adjusted is the opportunity to produce, not the redistribution of income after it is produced.

The government should acknowledge its obligation to make productive capital ownership economically purchasable by capital-less Americans using insured, interest-free capital credit, and, as Kelso stated, “substantially assume financial responsibility for the economy through establishing and supervising the implementation of an economic, labor and business policy of democratized economic power.” Historically, capital has been the primary engine of industrialization. But as used, as Kelso has argued, has, as well, “been the chief cause of the institutional deformities that have created and maintained two incompatible classes: the overcapitalized and the undercapitalized.”

We cannot balance the budget without cutting out coerced taxpayer-dependent redistribution of the earnings of capital workers, which if we did at this juncture would collapse the economy and ruin lives, resulting in social strife, personal suffering and degradation, the erosion of freedom, and ultimately anarchy, which will bring on totalitarian government. While welfare, private charity, boondoggle employment and other redistribution measures are now seen as necessary, they do not have to be sustained indefinitely. There are policies that can be adopted and executed to reverse the ultimate direction of collapse of the American market economy system. Such policies are based on the recognition that as the production of products and services changes from labor intensive to capital intensive, the way in which every human being––not just a few, but every person––earns his or her income must change in the same way. At the core of this quiet revolution is the understanding and commitment to broadening the ownership of productive capital.

We need new justice-committed leaders, especially those who want to end the corruption built into our exclusionary system of monopoly capitalism––the main source of corruption of any political system, democratic or otherwise. We need to advocate the need to radically overhaul the Federal tax system and monetary policies and institute proposals to get money power to the 99 percent of American citizens who now only rely on their labor worker earnings. Under the Just Third Way’s (http://foreconomicjustice.org/?p=5797) 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 leaders and activists will be inclusive prosperity, inclusive opportunity, and inclusive economic justice.

The proposed Capital Homestead Act would achieve this objective. 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.

Rothschild Family Wealth Is Five Times That Of World’s Top 8 Billionaires Combined

On January 20, 2017, Isaac Davis writes in Activist Post:

A recent report by Oxfam International highlights the dramatic rise in income equality by noting that the combined wealth of the world’s top 8 individual billionaires is more than the lower half of the world’s population, some 3.6 billion people. The intention of the report was to bring awareness to the unfairness and injustice inherent in our global economic system.

“It calls for a fundamental change in the way we manage our economies so that they work for all people, and not just a fortunate few.” [Oxfam]

Listed below are the 8 billionaires along with their estimated wealth, which combined equals $426.2 billion.

Bill Gates – $75 b
Amancio Ortega – $67 b
Warren Buffett – $60.8 b
Carlos Slim Helu – $50 b
Jeff Bezos – $45.2 b
Mark Zuckerberg – $44.6 b
Larry Ellison – $43.6 b
Michael Bloomberg – $40 b

Oxfam’s assertion is that world economies are mismanaged in favor of the wealthy, which is largely true; however, the report failed to hit the mark on this serious issue by not acknowledging the greatest problem with the world’s economy, which is the global central banking model of privately owned debt-based fiat currencies.

The current banking model is the product of hundreds of years of planned development, structuring, manipulation, force and trickery which began in earnest with Mayer Amschel Rothschild, who first established banking and finance houses in Germany in the 18th century.

The careful cultivation of his wealth with the assistance of his five sons allowed Rothschild to profit immensely during the French Revolution by providing financing and war materials to Austria, which in turn allowed the budding family empire to evolve into a multi-national organization, henceforth becoming a major financier of industry and war.

“Around that time, Rothschild sent his five sons to live in the capital cities of various European countries. His goal was to have each of his children establish a banking business in Frankfurt, Naples, Vienna, Paris, and London, and throughout the 1800s, they did. With Mayer Rothschild’s children spread across Europe, the Rothschilds became the first bank to transcend borders. Lending to governments to finance war operations for the past several centuries provided ample opportunity to accumulate bonds and shore up additional wealth in a range of different industries.” (Investopedia | September 26, 2016)

Fast forward to 2016, the Rothschild family is a dynasty of unimaginable wealth which manages to somehow conceal it for the most part, never quite being publicly credited as the richest and most influential family in the world. By dividing up their capital and holdings amongst the many members of the family, including numerous descendants and heirs, occasionally a single member of the family will appear on a list of the world’s top individuals; however, the family as a whole represents the largest fortune ever known.

“Traditionally, the Rothschild fortune is invested in closely held corporations. Most family members are employed by these corporations directly or invested in operations that generate family wealth. The remarkable success of the family has largely been due to a strong interest in cooperation, being entrepreneurs and the practice of shrewd business principles.” (Investopedia | September 26, 2016)

Investopedia estimates the family’s total wealth at over $2 trillion in assets and holdings, including some of the world’s oldest living corporations:

“…their holdings span a number of diverse industries, including financial services, real estate, mining, energy and even charitable work.There are a few Rothschild-owned financial institutions still operating in Europe, including N M Rothschild & Sons Ltd in the United Kingdom, and Edmond de Rothschild Group in Switzerland. The family also owns more than a dozen wineries in North America, Europe, South America, South Africa and Australia.”

At $2 trillion plus, the family’s reported wealth is closing in on five times as much as the combined wealth of the world’s top 8 individual billionaires, meaning that the Rothschild family alone controls more wealth than perhaps three-fourths or more of the world’s total population.

Rothschild Family Wealth Is Five Times That Of World’s Top 8 Billionaires Combined

Gary Reber Comments: The Rothschilds historically figured out that to become wealthy you must become an OWNER of wealth-creating, income-producing capital assets. Yet all you will hear from politicians and economists are discussions that ultimately boil down to the presumed need to create jobs and train workers to fill them . . . which isn’t really all that helpful in a world in which technology, owned by the world’s 1 percent, is taking over more and more of the burden of producing marketable goods and services.

What people need is to be empowered to own wealth-creating, income-producing capital without the requirement of past savings pledged to acquire the self-liquidating capital.

It all boils down to either the 99 percent OWN the FUTURE ECONOMY or they continue to BE OWNED.

“Conventional wisdom says there is only one way to earn a living, and that’s to work. Conventional wisdom effectively treats capital (land, structures, machines, and the like) as though it were a kind of holy water that, sprinkled on or about labor, makes it more productive. Thus, if you have a thousand people working in a factory and you increase the design and power of the machinery so that one hundred men can now do what a thousand did before, conventional wisdom says, ‘Voila! The productivity of the labor has gone up 900 percent!’ I say ‘hogwash.’ All you’ve done is wipe out 90 percent of the jobs, and even the remaining ten percent are probably sitting around pushing buttons. What the economy needs is a way of legitimately getting capital ownership into the hands of the people who now don’t have it.” ~Louis O. Kelso, Journal Asset Based Finance, 1982.

Trump’s First Move As President: Screwing Over Homeowners

The administrative order will end Obama’s efforts to cut premiums on FHA-insured home loans.

On January 20, 2017, Hannah Levintova writes on Mother Jones:

Earlier this month, then-President Barack Obama issued an executive action requiring the Federal Housing Administration to decrease insurance premiums on FHA mortgages, a change that could have potentially saved low-income homeowners as much as $900 per year. In his first administrative order as president, President Donald Trump suspended this Obama order, which was slated to go into effect on January 27. In practice, this means that low-income homeowners will be stuck paying higher insurance premiums on their FHA-insured mortgages.

FHA loans enable homebuyers—often those with lower incomes and who have fewer assets or bad credit—to bypass conventional lenders who would likely deny them loans by taking out a mortgage that’s insured by the federal government. The borrowers have to pay FHA mortgage insurance, to protect the mortgage lender from a loss should the borrower default on their home loan. In his announcement of the change, Obama said the drop in premiums would help stabilize the housing market and spur growth in housing markets still recovering from the financial crisis.  …the article continues.

This is a really excellent explanation of how the Federal Housing Administration (FHA) mortgage insurance program is designed to provide loan insurance to lenders making mortgage loans for Americans to purchase homes.

We can more effectively implement the principle of loan insurance to the financing of new, non-human productive capital asset formation, that is expected to generate future earnings, first pledged to repay interest-free capital credit loan advances. Feasible capital asset formation projects are inherently more insurable because, unlike a home, such project investments generate their own earnings to pay for their own formation.

Using insured, interest-free capital credit to finance FUTURE productive asset formation and thus the growth of the American economy can empower EVERY chile, woman and man to acquire, over time, significant financial assets that are wealth-creating and income-producing. This is solution to tectonic shifts in the technologies of production and slave labor globalization that is destroying jobs and devaluing the worth of labor.

As Michael D. Greaney, my colleague at the Center for Economic and Social Justice (www.cesj.org) argues:

Any insurance company can offer capital credit insurance and reinsurance (assuming it doesn’t go against what they were set up to do in the first place), and they could be federally chartered instead of by the states to give better and more effective oversight, but as a principle, if something can be done outside government, it probably should be.

Strictly speaking, existing savings are not essential to the process of money creation for productive projects that are expected to generate earnings. You do need savings, of course, but they can be future savings: the present value of future increases in production that have been monetized and can thus be used to finance new capital formation. You’re not necessarily trapped by past savings, that is, decreases in consumption in the past.

Still, any lender (a category that includes people and institutions that create money) wants to be reasonably certain that he, she, or it is going to get the money that was created back so it can be cancelled once it has done its job. If the repayment doesn’t come out of profits that are made in the future, then it can only come out of past savings. A prudent lender will always insist — and sometimes is required by law to insist — that a borrower have the ability to repay the money the lender created for him or her even (or especially) if the borrower’s capital project turns out to be a dud and doesn’t generate enough profits to repay the loan.

What if the person seeking the capital credit loan doesn’t have collateral, that is, other wealth that she or he can use to pay off the loan just in case her/his capital project doesn’t make the money she/he expects to make?

The wealth she/he needs to “secure the loan” (i.e., make it safe for the bank to put its reputation and credit rating on the line for her/his’s benefit) doesn’t have to be in the traditional form of collateral, i.e., existing wealth that she/he owns.

Instead, she/he can replace traditional collateral with capital credit insurance and reinsurance. This does exactly the same thing as traditional collateral, only better and cheaper. She/he in a sense “rents” the insurance pool for a premium that can be relatively small because it’s based on the risk that her/his particular loan will go bad — which would be pretty low for something that the bank looks over with sufficient care (bankers tend to know their own business).

This is, in fact, how insurance has always worked. Everyone knows that somebody, somewhere, is likely to lose something, e.g., out of a hundred ships that set sail for trading ventures in a year, five of them will be sunk, attacked by pirates, or something. The overall risk of loss is therefore 5 percent for that year.

What the guys down at Lloyd’s Coffee House (a sort of seventeenth century Starbucks, but without Internet) decided was that all the merchant ship owners could chip in 5 percent of the value of their vessels and cargos, and build up a pool. For example, if the total value of the merchant shipping for that year for the gang was £100 million, they would have an insurance pool of £5 million after everyone paid his or her premiums.

If one guy’s ship made it back to port safely, his 5 percent insurance premium was counted as just another cost of business, and deducted from his revenues. If, however, his ship was one of the unlucky ones captured by pirates, he got paid for the value of his vessel and cargo, and could start over again without going bankrupt. His 5 percent insurance premium still counted as a cost of doing business and was deducted from his revenues, but instead of writing off the cost of his ship and cargo as a loss and checking into debtors’ prison, he paid his bills and bought another ship . . . and hopefully avoided pirates in the future.

Any person can do the same thing. If everybody who doesn’t have traditional collateral chips in the “risk premium” (i.e., the chance that their loans will go bad) and puts the money into a general pool, the money will be there to make good on any bad loans without either the bank or the borrower being forced into bankruptcy.

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

Support the Capital Homestead Act (aka Economic Democracy Act) at http://www.cesj.org/learn/capital-homesteading/, http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-a-plan-for-getting-ownership-income-and-power-to-every-citizen/, http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-summary/ and http://www.cesj.org/learn/capital-homesteading/ch-vehicles/.

Donald Trump Preaches Angry Nationalism, While Practicing Goldman Sachs Capitalism

On January 20, 2017, Zaid Milani writes on The Intercept:

PRESIDENT DONALD TRUMP’S INAUGURAL address was fiery and nationalistic, a considerable departure from the traditional Republican Party embrace of the free market and an activist foreign policy. Trump talked of an “America First” policy and vowed that “January 20th 2017, will be remembered as the day the people became the rulers of this nation again.”

But Trump’s words on the steps of the Capitol bore little resemblance to the reality of the administration he is building.

It’s hard to argue with Trump’s assessment that “the establishment protected itself, but not the citizens of our country. Their victories have not been your victories; their triumphs have not been your triumphs.”

But that establishment will be in full force in the Trump administration. The megabank Goldman Sachs, famously close to Trump’s opponents in the Democratic Party, has six alumni posed for key posts in his administration, including his treasury secretary nominee Steve Mnuchin.

Trump spoke of “mothers and children trapped in poverty in our inner cities; rusted-out factories scattered like tombstones across the landscape of our nation,” but Mnuchin built a fortune off of helming banks that misled borrowers and foreclosed on their homes.

One of Trump and Mnuchin’s few explicit policy priorities is to slash taxes for corporations that have stashed money overseas, so that they will repatriate their profits to the United States. On the surface, this is to encourage businesses to invest in American jobs. But corporations are already telling their investors that they’d rather use this windfall to increase dividends and mergers, not hire more Americans.

People protest during the inauguration of President-elect Donald Trump on January 20, 2017 in Washington, DC. Donald Trump was sworn in as the 45th president of the United States Friday -- capping his improbable journey to the White House and beginning a four-year term that promises to shake up Washington and the world. / AFP / ZACH GIBSON (Photo credit should read ZACH GIBSON/AFP/Getty Images)

People protest during the inauguration of President-elect Donald Trump on Jan. 20, 2017 in Washington.

Photo: Zach Gibson/AFP/Getty Images

The president also complained that the United States has “subsidized the armies of other countries,” but his nominee for Secretary of State, former Exxon CEO Rex Tillerson, wants to continue to help Saudi Arabia bomb the impoverished nation of Yemen.

“When you open your heart to patriotism, there is no room for prejudice,” the president told the millions who tuned into his remarks. But that isn’t the point of view of his CIA nominee, Mike Pompeo, who has depicted the war on terror as a struggle between Islam and Christianity, or his national security adviser Mike Flynn, who has referred to Islamism as a “cancer” in the body of the world’s Muslims.

Americans do in fact want “great schools for their children,” as Trump advised, but his nominee to lead the Department of Education, Betsy DeVos, hasn’t spent a day working in a public school. Instead, she’s an heiress who inherited billions through marriage and inheritance while waiving away Bernie Sanders’s plan for tuition-free public college for all by invoking the proverb that “nothing in life is free.”

Trump was correct when he said that “for too long, a small group in our Nation’s Capital has reaped the rewards of government while the people have borne the cost. Washington flourished – but the people did not share in its wealth.”

But he cannot ameliorate that problem while tapping Washington’s elite for jobs. His nominee for secretary of transportation, Elaine Chao, is the wife of Senate Majority Leader Mitch McConnell — and as a former Wells Fargo board member, she will receive a golden parachute of up to $5 million from the bank if she is confirmed.

The president used his concluding words to promise to listen to all Americans:

“So to all Americans, in every city near and far, small and large, from mountain to mountain, and from ocean to ocean, hear these words: You will never be ignored again. Your voice, your hopes, and your dreams, will define our American destiny. And your courage and goodness and love will forever guide us along the way.”

But with a cabinet whose combined net worth is greater than that of a third of America combined, it’s likely that many, many Americans will continue to be ignored.

Top photo: President Donald Trump celebrates after his speech during the Presidential Inauguration at the U.S. Capitol in Washington on Jan. 20, 2017.

https://theintercept.com/2017/01/20/donald-trump-preaches-angry-nationalism-while-practicing-goldman-sachs-capitalism/#comment-341519

The best advice I can give to President Donald Trump is to advocate and lead the Congress to introduce and enact the Capital Homestead Act.  Now. That is, if he truly wants to “make America great again” and empower the people to”become the rulers of this nation again.” If he can achieve monetary reform and enact the Capital Homestead Act, our nation will be set on a course to build a future affluent economy in which EVERY child, woman and man becomes a significant personal owner of the exponential growth of America’s non-human productive power.

Abraham Lincoln’s 1862 Homestead Act, in its time empowered the settlement of the West, but it had three flaws: 1) the land ran out, 2) the financial system was inadequate, and 3) the tax system was inadequate. Fortunately, today we can open up the industrial and commercial frontier (to all intents and purposes without practical limit), have an adequate (if grossly misused) financial system that has the potential to do what is needed, and have a tax system that, although junked up with so much garbage that it is virtually unworkable, can easily be fixed by applying the proper, Just Third Way principles.

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

Support the Capital Homestead Act (aka Economic Democracy Act) at http://www.cesj.org/learn/capital-homesteading/, http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-a-plan-for-getting-ownership-income-and-power-to-every-citizen/, http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-summary/ and http://www.cesj.org/learn/capital-homesteading/ch-vehicles/.

Otherwise, today’s wealthy ownership class and their heirs will continue to monopolize the ownership of America’s future non-human productive assets, with the vast majority of Americans economically slipping due to the increasing lack of job opportunities and job security, and increasingly more dependent on taxpayer and government debt-financed welfare. Essentially, if we do not reverse course and reform the system, the masses will be OWNED and dependent on an oligarchy.

Chinese Billionaire Jack Ma Says The US Wasted Trillions On Warfare Instead Of Investing In Infrastructure

Jack Ma, Chairman of Alibaba Group at the World Economic Forum in Davos, Switzerland.

Alibaba’s Jack Ma: Today technology can empower small businesses  

Alibaba founder Jack Ma fired a shot at the United States in an interview at the World Economic Forum in Davos, Switzerland.

Ma was asked by CNBC’s Andrew Ross Sorkin about the U.S. economy in relation to China, since President-elect Donald Trump has been talking about imposing new tariffs on Chinese imports.

Ma says blaming China for any economic issues in the U.S. is misguided. If America is looking to blame anyone, Ma said, it should blame itself.

“It’s not that other countries steal jobs from you guys,” Ma said. “It’s your strategy. Distribute the money and things in a proper way.”

He said the U.S. has wasted over $14 trillion in fighting wars over the past 30 years rather than investing in infrastructure at home.

To be sure, Ma is not the only critic of the costly U.S. policies of waging war against terrorism and other enemies outside the homeland. Still, Ma said this was the reason America’s economic growth had weakened, not China’s supposed theft of jobs.

In fact, Ma called outsourcing a “wonderful” and “perfect” strategy.

“The American multinational companies made millions and millions of dollars from globalization,” Ma said. “The past 30 years, IBM, Cisco, Microsoft, they’ve made tens of millions — the profits they’ve made are much more than the four Chinese banks put together. … But where did the money go?”

He said the U.S. is not distributing, or investing, its money properly, and that’s why many people in the country feel wracked with economic anxiety. He said too much money flows to Wall Street and Silicon Valley. Instead, the country should be helping the Midwest, and Americans “not good in schooling,” too.

“You’re supposed to spend money on your own people,” Ma said. “Not everybody can pass Harvard, like me.” In a previous interview, Ma said he had been rejected by Harvard 10 times.

Along those lines, Ma stressed that globalization is a good thing, but it, too, “should be inclusive,” with the spoils not just going to the wealthy few.

“The world needs new leadership, but the new leadership is about working together,” Ma said. “As a business person, I want the world to share the prosperity together.”

http://www.cnbc.com/2017/01/18/chinese-billionaire-jack-ma-says-the-us-wasted-trillions-on-warfare-instead-of-investing-in-infrastructure.html

Own the Future Economy or Be Owned!
 
All future investments in the productive power of the future should be financed in ways that create new individual citizen ownership, using insured, capital credit financing, repayable out of the future earnings of the investments, without the requirement of past savings.
 
Support Monetary Justice at http://capitalhomestead.org/page/monetary-justice.
 

Just Eight Men Own Same Wealth As Half Of Humanity: Report

Oxfam interviewed garment workers in Vietnam who are struggling survive on wages of $1/hour, working 12-hour days six days a week for the world’s wealthiest clothing conglomerates. (Photo: ILO in Asia and the Pacific/flickr/cc)

As the super-rich descend on Davos, report reveals how these billionaires are fueling the global inequality crisis

On January 16, 2017, Nika Knight writes on Common Dreams:

The private jets of the world’s wealthiest men and women are swarming the Swiss Alps for the annual World Economic Forum (WEF), which begins Monday in Davos, Switzerland, in the midst of an ongoing global inequality crisis.

“Across the world, people are being left behind[…] their voices are ignored as governments sing to the tune of big business and a wealthy elite.”
—Winnie Byanyima, Oxfam International

And that crisis is accelerating, according to a new Oxfam report released Monday: today, only eight men own the same amount of wealth as the 3.6 billion people who comprise the poorest half of humanity. Those eight men are Bill Gates, Amancio Ortega, Warren Buffett, Carlos Slim Helu, Jeff Bezos, Mark Zuckerberg, Larry Ellison, and Michael Bloomberg.

The report, An Economy for the 99% (pdf), observes that “[f]ar from trickling down, income and wealth are being sucked upwards at an alarming rate.”

It goes on to describe how super-rich individuals and the massive corporations they run are fueling the inequality crisis by offshoring taxes, driving down wages, and influencing government to their advantage, and argues that the “very design of our economies and the principles of our economics have taken us to this extreme, unsustainable, and unjust point.”

“It is obscene for so much wealth to be held in the hands of so few when one in 10 people survive on less than $2 a day,” said Oxfam International director Winnie Byanyima in a statement. “Inequality is trapping hundreds of millions in poverty; it is fracturing our societies and undermining democracy.”

Indeed, the report links rapidly rising inequality with the vote for Brexit and the election of President-elect Donald Trump, a frightening rise in xenophobia, and widespread frustration with mainstream politics.

“There are increasing signs that more and more people in rich countries are no longer willing to tolerate the status quo,” the report notes. “Why would they, when experience suggests that what it delivers is wage stagnation, insecure jobs, and a widening gap between the haves and the have-nots?”

The report’s research also highlights how rising inequality in poorer nations fuels profits to the world’s wealthiest.

“Oxfam interviewed women working in a garment factory in Vietnam who work 12 hours a day, six days a week and still struggle to get by on the $1 an hour they earn producing clothes for some of the world’s biggest fashion brands,” the organization wrote. “The CEOs of these companies are some of the highest paid people in the world. Corporate tax dodging costs poor countries at least $100 billion every year. This is enough money to provide an education for the 124 million children who aren’t in school and fund healthcare interventions that could prevent the deaths of at least six million children every year.”

“Across the world, people are being left behind,” Byanyima said. “Their wages are stagnating yet corporate bosses take home million dollar bonuses; their health and education services are cut while corporations and the super-rich dodge their taxes; their voices are ignored as governments sing to the tune of big business and a wealthy elite.”

The report also outlines a plan for a “human economy” that would work to combat the exponential rise of global inequality.

“Together we need to create a new common sense, and turn things on their head to design an economy whose primary purpose is to benefit the 99 percent, not the one percent,” the report reads. “The group that should benefit disproportionately from our economies are people in poverty, regardless of whether they are in Uganda or the United States. Humanity has incredible talent, huge wealth and infinite imagination. We need to put this to work to create a more human economy that benefits everyone, not just the privileged few.”

It is hard to imagine Davos as the place to create this economy: while the WEF is purportedly focusing anew on inequality this year, the super-rich and leaders of multinational corporations who attend the forum continue to offshore trillions of dollars worth of taxes.

“We have a situation where billionaires are paying less tax often than their cleaner or their secretary,” Max Lawson, Oxfam’s policy advisor, told the Associated Press. “That’s crazy.”

http://www.commondreams.org/news/2017/01/16/just-eight-men-own-same-wealth-half-humanity-report?utm_campaign=shareaholic&utm_medium=facebook&utm_source=socialnetwork

Gary Reber Comments: Yet all you will hear from politicians and economists are discussions that ultimately boil down to the presumed need to create jobs and train workers to fill them . . . which isn’t really all that helpful in a world in which technology, owned by the world’s 1 percent, is taking over more and more of the burden of producing marketable goods and services. What people need is to be empowered to own wealth-creating, income-producing capital without the requirement of past savings pledged to acquire the self-liquidating capital.

It all boils down to either the 99 percent OWN the FUTURE ECONOMY or they continue to BE OWNED.

Trump Drops ‘No New Deals’ Pledge

On January 11, 2017, Josh Dawsey and Darren Samuelson write on Politico:

Donald Trump will not sell his business nor place his assets in a blind trust while serving as president, the president-elect and lawyers involved in the negotiations said Wednesday during his long-awaited news conference.

Instead, Trump’s company will not enter into new foreign deals and will appoint an ethics adviser who must approve any new domestic deals in writing, according to the ethics arrangement the president-elect laid out Wednesday.

Donald Trump will not sell his business nor place his assets in a blind trust while serving as president, the president-elect and lawyers involved in the negotiations said Wednesday during his long-awaited news conference.

Instead, Trump’s company will not enter into new foreign deals and will appoint an ethics adviser who must approve any new domestic deals in writing, according to the ethics arrangement the president-elect laid out Wednesday.

The lawyers also promised that Trump’s businesses and assets will be put into a trust for the duration of the presidency and added he will have “no involvement whatsoever” in the businesses.

Trump had terminated “all pending deals” and would impose “severe new restrictions” on new deals in the United States. As previously said, his two oldest adult sons will manage the company, with the help of a longtime executive of the Trump Organization. The lawyers said Trump will have “limited information rights” regarding what’s happening at the company he built over decades.

Under the new ethics plan, Trump, his children and his longtime business associates will be barred from discussing company operations and the inner workings of the U.S. government. Trump’s team did not provide any details on how that ban would be enforced or verified.

The head of the nonpartisan Office of Government Ethics said Donald Trump’s conflicts of interest plan is “meaningless” and sets up the incoming administration for constant controversy.

“I need to talk about ethics today because the plan the president has announced doesn’t meet the standards that the best of his nominees are meeting and that every president in the past four decades has met,” OGE chief Walter Shaub said during an afternoon press conference hosted by the Brookings Institution.

Shaub initially praised Trump in November for his ethics moves but said the arrangement the president-elect just announced Wednesday doesn’t address “the perception that government leaders would use their official positions for personal profit.”

“Stepping back from running his positions is meaningless from a conflict of interest perspective,” Shaub said. “The presidency is a full-time job and he would have had to step back anyway.”

Trump’s team defended the arrangement during Trump’s morning appearance, saying that divesting or taking the company public was not feasible, and that the current approach would eliminate the possibility of conflicts of interest without causing him “unnecessary” losses.

“President-elect Trump should not be expected to destroy the company he built,” said Trump attorney Sheri Dillon.

Trump himself said he was doing more than what it required. “I don’t have to do this,” he said during the nationally-televised press conference at Trump Tower in New York.

Dillon said Trump’s company had terminated 30 business deals ahead of him entering the White House, saying it had cost Trump and his children money.

The organization is interviewing candidates for the job of ethics adviser, a person who must approve new deals in writing, according to the lawyers handling the separation. The lawyers said the adviser’s standards for determining new deals would include “the appropriateness of a counterparty,” whether the transaction reflects the market value and other ethical concerns a deal could raise.

Separately, the Trump Organization is also creating a new position — chief compliance counsel — that makes sure the company is “operating at the highest level of integrity and not taking any actions that could be perceived as exploiting the office of the presidency,” Dillon said.

Trump himself, Dillon said, won’t be apprised of any incremental changes to his portfolio and will only have access to reports on profit and loss for his company as a whole. “He will only know of a deal if he reads it in the paper or sees it on TV,” she said.

Remaining debt will stay in place and will be paid down in the ordinary course of business, the lawyer said.

Ivanka Trump will be completely separated from the business empire, the lawyers said.

“President-elect Trump should not be expected to destroy the company he built,” said Trump attorney Sheri Dillon.

Trump himself said he was doing more than what it required. “I don’t have to do this,” he said during the nationally-televised press conference at Trump Tower in New York.

Dillon said Trump’s company had terminated 30 business deals ahead of him entering the White House, saying it had cost Trump and his children money.

The organization is interviewing candidates for the job of ethics adviser, a person who must approve new deals in writing, according to the lawyers handling the separation. The lawyers said the adviser’s standards for determining new deals would include “the appropriateness of a counterparty,” whether the transaction reflects the market value and other ethical concerns a deal could raise.

Separately, the Trump Organization is also creating a new position — chief compliance counsel — that makes sure the company is “operating at the highest level of integrity and not taking any actions that could be perceived as exploiting the office of the presidency,” Dillon said.

Trump himself, Dillon said, won’t be apprised of any incremental changes to his portfolio and will only have access to reports on profit and loss for his company as a whole. “He will only know of a deal if he reads it in the paper or sees it on TV,” she said.

Remaining debt will stay in place and will be paid down in the ordinary course of business, the lawyer said.

Ivanka Trump will be completely separated from the business empire, the lawyers said.

Trump also has prohibited his company from making any references in public, including on social media, to his role as president. His attorneys had previously told POLITICO that the company would not be using images of Trump in advertisements and that it also wouldn’t sell any presidential memorabilia inside his hotels or golf course pro shops.

The arrangement isn’t satisfying Trump’s critics, who say that maintaining any ties to his business poses a cascading series of conflict of interest as he governs.

“Tragically, the Trump plan to deal with his business conflicts announced today falls short in every respect,” said Norm Eisen, a former top White House ethics lawyer for President Barack Obama who has been among the most outspoken voices calling for a complete divestment. “Mr. Trump’s ill-advised course will precipitate scandal and corruption.”

“President-elect Donald Trump has failed his ethics test. Now, America will suffer the consequences,” added Robert Weissman, president of Public Citizen.

Trump had previously said he wouldn’t enter into any new deals, and new domestic deals could still entangle his financial interests with the presidency. Dillon during the press conference explained that the licensing arrangements that are central to Trump’s business — much of his profit comes from selling his name for branding, and he has publicly said his brand is “hotter than ever” — would remain in the hands of the company. She explained that if Trump had sold his brand outside the company, he’d then be entitled to royalties that would only open him up to greater criticism.

“This would result in the trust retaining an interest in the brand without the ability to assure it does not exploit the office of the president,” Dillon said. “Whatever price was paid would be subject to criticism and scrutiny. Was it too high? Is there pay for play? Was too much paid to curry favor with the president-elect?”

His company also plans to keep ownership of a new high-end hotel in downtown Washington, which is leased by the federal government.

Critics and even some of Trump’s friends and longtime business associates expect him to continue talking to his sons about the businesses, and ethics experts have said that he will inherently know how the business is doing — because he knows where his properties are (they are often emblazoned with his name.) And Trump knows what assets he holds, meaning he will inherently understand how new laws will benefit or hurt the trust and his sons.

The Trump lawyers also said a blind trust, selling his business or divesting didn’t make sense. “You cannot have a totally blind trust with an operating business,” Dillon said. “President Trump can’t un-know he owns Trump Tower, and the press will make sure than any new development at the Trump Organization are well publicized.”

As details emerged of Trump’s plan, critics raised questions about whether the president-elect’s new financial arrangement was extensive enough to prevent Constitutional challenges under the emoluments clause, which restricts U.S. officials from accepting gifts or payments from foreign governments. Trump’s lawyers say the arcane provision doesn’t apply to Trump’s situation but the president-elect would nonetheless voluntarily give all profits from foreign governments to his hotels to the U.S. treasury.

Inside Trump’s government will be several potential conflict-of-interest landmines because he’ll be appointing agency leaders who have jurisdiction over issues directly relevant to their boss’s private affairs. The General Services Administration, for example, is expected to continue to lease the building that houses Trump’s new Washington hotel. The Labor and Homeland Security departments are charged with handling foreign worker visa applications and illegal immigration enforcement central issues for the hotels and golf courses affiliated with the Trump brand.

And Trump’s organization still owes hundreds of millions in debt to foreign countries, raising additional questions about whether he would be beholden to them.

“Without a full and complete divestment of financial conflicts of interests, the American people will not be able to tell where the Trump Organization ends and where the Trump administration begins,” Democratic Sens. Elizabeth Warren, Bob Casey and Tammy Baldwin said in a joint statement issued ahead of the Trump press conference.

Democrats in the minority have little power to force hearings or pass legislation aimed at fighting Trump’s conflicts, though that hasn’t stopped them from demanding oversight investigations and threatening to block confirmation of Cabinet nominees. They’re also threatening more dire consequences if Trump pushes the limits of the Constitution and accepts gifts or payments from foreign governments.

In a statement, Democratic Congressional Campaign Committee spokesman Tyler Law said the House GOP was “being naive if they don’t recognize that Donald Trump’s staggering web of conflicts and lack of ethical standards will remain, and ultimately hurt their ability to govern.”

Lawyers for Trump maintained that conflict of interest rules do not apply to the presidency, and that Trump was committed to the American people now – not the pursuit of personal profit.

Trump attorneys emphasized the “massive” nature of the Trump business empire and likened it to former Vice President Nelson Rockefeller, the heir to an industrial fortune whose finances were placed under intense public scrutiny during congressional hearings upon his 1974 confirmation.

Trump’s team has been scrambling since the election to address its conflicts, relying on a team of lawyers that includes incoming White House general counsel Don McGahn, former Ronald Reagan and George W. Bush counsel Fred Fielding, as well as attorneys from Morgan, Lewis & Bockius.

Since the election, the lines have often been murky. Trump has said publicly it is not difficult to separate his business empire from the presidency, but aides and advisers have noted the process has taken so long because it is so difficult.

His sons have traveled across the country and world to analyze the new properties. “I think they will largely be just holding the fort down,” one person close to Trump said.

Eric Trump is expected to have particular power in the businesses, two people close to the transition say.

The Trump Organization also has dropped pending or in-progress projects in Argentina, Azerbaijan, Brazil, Georgia, India and Saudi Arabia. Trump aides last month said the president-elect had sold as much as $40 million in stock holdings during the campaign. He also settled lawsuits alleging fraud at Trump University and backed off plans to build a controversial sea wall to protect his Ireland golf course.

The Trump Organization also settled two labor agreements involving more than 500 workers at its Las Vegas and Washington hotels, agreeing to four-year contracts that give food, beverage and housekeeping employees annual raises and pensions and healthcare benefits.

A New York source involved in the negotiations said Trump was personally involved in the labor talks and suggested the president-elect may still be having a hard time letting go from the business dealings he’s built his career around.

“It’s remarkable,” the source said. “In terms of separation or whatever, I think there’s zero chance that he’s not going to have his fingers in his business.”

http://www.politico.com/story/2017/01/trump-business-ties-conflicts-233468

Gary Reber Comments:

Donald Trump is an OWNER of wealth-creating, income-producing capital assets, unlike Barack Obama, who entered the presidency having not been an OWNER of productive capital assets. Obama was a wage earner, not a dividend owner. President Obama was an exception to the those previously elected to the presidency in recent times. Trump, as were the Bushes and Carter, members of the wealthy capital ownership class. Both Bill Clinton and Barack Obama became members of this wealthy capital ownership while serving as president and in post-presidency.

Obviously, if you are an owner of wealth-creating, income-producing capital assets you do not want to dilute or lose your wealth that you have accumulated. That is what this issue is really all about and why Donald Trump will not sell his businesses nor place his assets in a blind trust while serving as president. Instead he will now become privy to insider opportunities to further his wealth accumulations while president, as have all presidents done.

The point here is it is OWNING productive capital assets that is the reason people are wealthy. Those in political power know this, yet you do not experience anyone advocating policies that would lift all legal barriers to universal capital ownership access by EVERY child, woman ,and man as a fundamental right of citizenship and the basis of personal liberty and empowerment. The goal should be to enable EVERY child, woman, and man to become an owners of ever-advancing labor-displacing technologies, new and sustainable energy systems, new rentable space, new enterprises, new infrastructure assets, and productive land and natural resources as a growing and independent source of their future incomes.

We need to change direction and systematically build earning power into consumers, we have the opportunity to reverse the depression perpetrated by systematically limiting the 99 percent to labor wages alone and through technology eliminating their jobs. We need solutions to grow the economy in ways that create productive jobs and widespread equity sharing. We need to systematically make insured, interest-free capital credit to purchase capital accessible to economically underpowered people (the 99 percent) in which the income from the capital investment is isolated until it pays for itself, and then begins to produce a stream of dividend income to the new capitalists. This can only be accomplished by enabling every person to have access to capital ownership and purchase the capital, and pay for it out of what the capital produces. It’s time good and well-intentioned people woke up and adopted a Just Third Way paradigm (http://cesj.org/learn/just-third-way/) beyond the greed model of monopoly, “hoggist” capitalism and the envy model of the traditional welfare state. This will promote peace, prosperity, and freedom through harmonious justice.

Will President Tump become the leader to create an OWNERSHIP society?

 

 

 

 

It’s A Retail Apocalypse: Sears, Macy’s And The Limited Are All Closing Stores

On January 8, 2017, Michael Snyder writes on The Economic Collapse:

It has only been two weeks since Christmas, and already we are witnessing a stunning bloodbath of store closings.  Macy’s shocked the retail industry by announcing that they will be closing about 100 stores.  The downward spiral of Sears hit another landmark when it was announced that another 150 Sears and Kmart stores would be shutting down.  And we have just learned that The Limited is immediately closing all stores nationwide.  If the U.S. economy is doing just fine, then why are we experiencing such a retail apocalypse?  All over America, vast shopping malls that were once buzzing with eager consumers now resemble mausoleums.  We have never seen anything quite like this in our entire history, and nobody is quite sure what is going to happen next.

Not too long ago I walked into a Macy’s, and it was eerily quiet.  I stumbled around the men’s department looking for something to buy, but I was deeply disappointed in what was being offered.  After some time had passed, an employee finally noticed me and came over to help, but they didn’t have anything that I was looking for.

And it is a sad thing, because over the past several years when I have gone into Macy’s looking to spend money, most of the time I have come out of there without spending a penny.  Macy’s has made some very bad decisions recently, and I am hoping that they can still turn things around.  But for the moment, they are closing stores and cutting jobs.  The following comes from the New York Times

“Struggling with sagging sales over another crucial holiday shopping season, Macy’s announced on Wednesday that it was eliminating more than 10,000 jobs as part of a continuing plan to cut costs and close 100 stores.

“Macy’s, the country’s largest department store chain, said sales at its stores had fallen 2.1 percent in November and December compared with the same period in 2015. Terry J. Lundgren, the company’s chairman and chief executive, said in a statement that while the trend was ‘consistent with the lower end of our guidance, we had anticipated sales would be stronger.’”

Another legendary retailer that really does not have any hope left is Sears.  Every year they just keep closing even more stores, and because they are losing so much money they don’t have anything to invest in the stores that remain.  As a result, the state of many Sears locations is downright embarrassing at this point

“But the retailer, famous for selling everything from shoes to vacuum cleaners to whole houses, is facing its biggest crisis ever. It’s closing hundreds of stores. Others are in shambles, with leaking ceilings and broken escalators. In some, employees hang bedsheets to shield shoppers from sections that stand empty.”

Since the early portion of 2013, sales are down an astounding 37 percent for the company.  Sears is currently more than 1.6 billion dollars in debt, and they are losing more than a billion dollars a year.

They keep closing stores in a desperate attempt to stop the bleeding, but it hasn’t worked.

In 2010, Sears had 3,555 stores.

Last year, Sears had 1,503 stores, and now a whole bunch more are being shut down.

But everyone can see where this is going.  As I have stated repeatedly, Sears is going to zero, and many of the experts completely agree with me

“’They are going out of business,’ said Van Conway, an expert in bankruptcy and debt restructuring and CEO of Van Conway & Partners. ‘This snowball is 90% of the way to the bottom of the hill.’”

Of course Sears is still surviving for the moment, and that is more than can be said for The Limited.

Back in the old days, it seemed like every mall had one of their stores.  I remember passing it on my way to Orange Julius and Herman’s World of Sporting Goods.

But now they are shutting down every single location and will be online only

“American malls just got emptier.

“The Limited, a once-popular women’s clothing brand that offers casual attire and workwear, no longer has any storefronts.

“On Saturday, a message on the store’s website read, ‘We’re sad to say that all The Limited stores nationwide have officially closed their doors. But this isn’t goodbye.’ The website will still be up and running and will continue to ship nationwide, the company said.”

In addition to Macy’s, Sears and The Limited, other huge names in the retail industry have also fallen on hard times and have had to shut stores over the past 12 months.  The following comes from the Washington Post

“The retail environment has proved challenging for a variety of stores: Sports Authority went out of business in 2016, shuttering more than 460 locations in U.S. malls and strip malls. PacSun, Aeropostale and American Apparel each have filed for bankruptcy protection in the past year and are aiming to reorganize and revive their businesses.”

So why is this happening?

Without a doubt, our shopping habits have changed.  And in the online world, many of these retailers are being absolutely crushed by competition from Amazon and other tech companies that developed online infrastructure before they did.  I know that my wife and I actually prefer to shop online for many things when possible, and I anticipate that the share of retailing done online will only continue to grow in this country.

But let us also not underestimate the impact that the stagnating economy is having on ordinary consumers.  Thanks to the last eight years, approximately two-thirds of all Americans are living paycheck to paycheck.  More than a third of all Americans have a debt that is at least 180 days past due, and the rate of homeownership has been hovering near the lowest level that we have seen in about 50 years.  As you read this article, more than 95 million Americans are not in the labor force, and that number has grown by 18 percent under Barack Obama.  Homelessness in New York City and other major cities is at a record high, and as a nation we have accumulated the largest mountain of debt in the history of the world.

Let us hope that things can be turned around, but if current trends continue the retail apocalypse is just going to go from bad to worse, and we will continue to see lots of headlines about more stores closing down.

http://theeconomiccollapseblog.com/archives/its-a-retail-apocalypse-sears-macys-and-the-limited-are-all-closing-stores

The problem is the vast majority of Americans are losing or under the threat of losing income to support themselves and their families, because of tectonic shifts in the technologies of production and globalization, which destroys jobs that enable people to live comfortably and not constantly having to seek out the lowest possible price on products and services. Because consumers will always seek the lowest cost/quality/performance alternative, for-profit companies are constantly competing with each other (on a local, national and global scale) for attracting “customers with money” to purchase their products or services.
 
The problem is technological change 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). The technology industry is always changing, evolving and innovating. The result is that primary distribution through the free market economy, whose distributive principle is “to each according to his production,” delivers progressively more market-sourced income to capital owners and progressively less to workers who make their contribution through labor. Thus, when the “tools” of capital owners replace labor workers (non-capital owners) as the principal suppliers of products and services, labor employment alone becomes inadequate.
 
“Hoggism” is about the ability of greedy rich people to manipulate the lives of people who struggle with declining labor worker earnings and job opportunities, and then accumulate the bulk of the wealth through monopolized productive capital ownership. Our scientists, engineers, and executive managers who are not owners themselves, except for those in the highest employed positions, are encouraged to work to destroy employment by making the capital “worker” owner more productive. How much employment can be destroyed by substituting machines for people is a measure of their success––always focused on producing at the lowest cost. Only the people who already own productive capital are the beneficiaries of their work, as they systematically concentrate more and more capital ownership in their stationary 1 percent ranks. Yet the 1 percent are not the people who do the overwhelming consuming. The result is the consumer populous is not able to earn the money to buy the products and services produced as a result of substituting machines for people. And yet you can’t have mass production without mass human consumption made possible by “customers with money.” It is the exponential disassociation of production and consumption that is the problem in the United States economy, and the reason that ordinary citizens must gain access to productive capital ownership to improve their economic well-being.
 
In a democratic growth economy, based on binary economics (human and non-human productive inputs), the ownership of productive capital assets would be spread more broadly as the economy grows, without taking anything away from the 1 to 10 percent who now own 50 to 90 percent of the corporate wealth. Instead, the ownership pie would desirably get much bigger and their percentage of the total ownership would decrease, as ownership gets broader and broader, benefiting EVERY citizen, including the traditionally disenfranchised poor and working and middle class. Thus, productive capital income, from full earnings dividend payouts, would be distributed more broadly and the demand for products and services would be distributed more broadly from the earnings of capital and result in the sustentation of consumer demand, which will promote environmentally responsible economic growth and more profitable enterprise. That also means that society can profitably employ unused productive capacity and invest in more productive capacity to service the demands of a growth economy. As a result, our business corporations would be enabled to operate more efficiency and competitively, while broadening wealth-creating ownership participation, creating new capital owners and “customers with money” to support the products and services being produced.

How Do Americans Get Rich? (And Stay Rich?)

On January 2, 2017, Steve Roth writes on Economics:

It’s the American dream. A third of Americans think they’ll be rich someday. More than half of 18–29 year olds think they will be.

Less than 5% actually make it.* And many of those do it the old-fashioned way: they inherit it. About 60% of U.S. household wealth is inheritedBetween a quarter and a third of Forbes 400 billionaires got rich that way. It may not be the most common way to get there, but it’s widespread, and it’s surely the easiest way.

That aspiration to wealth is deeply understandable. Getting high income from a good job is all well and good, but because wealth begets more wealth — people are compensated simply for owning things — wealth is, potentially, forever. It persists, and spreads through families and dynasties. Wealth can, and often does, endure for generations.

So it’s worth asking: how do Americans accumulate wealth? And how does that vary across income and wealth classes? How do the bottom 50% accumulate wealth, for instance, compared to the top 1%?

The Distributional National Accounts

A huge aid to answering that question arrived last month. Gabriel Zucman, Emmanuel Saez, and Thomas Piketty (PSZ) released one of the most important pieces of economic research in the last century. Their Distributional National Accounts (DINAs) reveal the distribution of national income to different income classes, wealth classes, age groups, and genders (and potentially different races, etc. etc.). This has been unavailable in the national accounts, and as a result it’s absent in most macroeconomic empirical work.

Here’s one poster exhibit:

Collect the whole set.

Zucman and company explicitly hope this distributional data “will be adopted by government agencies down the road” (see Conclusion slide). Here’s to it. The DINAs are a magisterial achievement, a treasure trove for empirical economists that merits easy access and prominent, front-and-center presentation in each release of the national accounts.

Income versus Wealth Accrual

But impressive as they are, the DINAs don’t fully answer the question of how Americans accumulate wealth. Because the DINAs only tally income, and income doesn’t include households’ holding (or “capital”) gains on stock portfolios, real estate, etc. Income does include much “property income” — dividends, interest, etc. That’s income from owning things. But it’s not everything that households receive from ownership. Holding gains figure large in that picture.

Any investor will tell you: cap gains are a big part of their wealth accumulation. Total return — dividends plus capital gains — is the measure that most savvy stock-market investors care about, long-term (and that fund managers like to tout, loudly). And much of Americans’ retirement saving — especially middle-class Americans — is accrued through capital gains on their homes.

The DINAs’ central goal is to match income as presented in the national accounts, and to reveal a multidimensional pyramid of distributional data underneath that income measure. A deeply worthy goal. But as a result, the DINAs can’t and don’t reveal the whole picture of household wealth accumulation (change in assets and net worth), or its distribution.

Here’s a rough picture of that disparity, showing a wealth-accrual measure compared to the PSZ income share, for the top one percent:**

Clearly, holding gains are much more volatile that income. But this kind of graph can still tell a long-term, secular story — and even give important insights into shorter-term trends and business cycles.

To get a feel for this: Of $22 trillion in contributions to household wealth in 2013 (income plus holding gains), the top 1% captured $8 trillion, or 35%, compared to 21% of income. That measure has exceeded 30% in eight of the last seventeen years; in the three and a half decades before 1997, it never went above 26%. (2008 is an arithmetic anomaly here, by the way. Household wealth accrual was negative that year, but one-percenters’ wealth accrual, the numerator, was even more negative.)

Concentration of total wealth accrual is almost always far higher, and has been rising faster, than concentration of income alone. The rich are getting richer, faster. It’s an inequality picture more dire even than that depicted in the DINAs. And because wealth begets more wealth, it’s a self-perpetuating picture.

We pay people for doing things, and we pay people for owning things. Increasingly, the latter.

Before expanding and detailing this picture, it’s important to say that Zucman, Piketty, and Saez are deeply aware of this reality — have discussed it many times — even though footnote 10 in their DINA working paper serves rather to obscure than reveal that understanding:

“In the long-run, a large fraction of capital gains arises from the fact that corporations retain part of their earning, which leads to share price appreciation. Since retained earnings are part of national income, these capital gains are in effect included in our series on an accrual basis. In the short run, however, most capital gains are pure asset price effects. These short-term capital gains are excluded from national income and from our series.”

Gabriel Zucman has given me permission to share his understanding of the issue, sent in private correspondence:

“You are correct that there can be pure asset valuation effects in the long run (i.e., capital gains in excess of those mechanically caused by retained earnings). These pure valuation effects are not part of national income, hence not included in our measure of income and our distributional series. However, they could be included down the road by computing income as delta wealth + consumption (i.e., Haig-Simon income). We have wealth in our database so we’re not far from being able to do this.”

Such an effort would be very welcome. (Doing so properly would require producing a reconstructed, alternate version of the DINAs calculated based on wealth accrual rather than income, from the ground up — far beyond the rough and ready estimate of one measure provided above.)

That effort would be welcome because: capital gains/losses are not just short-term fluctuations in household wealth, oscillating around some ideal book value determined by income and saving. Wealth accumulation greatly exceeds saving from income, pretty much always and everywhere, over very long periods. And holding gains are not a small part of wealth accumulation, especially for already-wealthy households.

Building the Wealth of a Nation

Below are some more pictures to get a feel for that disparity, based on the Integrated Macroeconomics Accounts (IMAs). They just show contributions to household wealth — additions to the asset side of household balance sheets. They don’t show outflows, deductions from the asset side (the primary one being consumption). Likewise, they only show “market” income — in IMA terms, “balance of primary incomes.” They don’t show nonmarket in- and outflows (mostly government taxes and transfers) that are outside of primary income.*** Holding gains are depicting the IMAs’ accrual-based, mark-to-market accounting for asset values.

2013 is is a recent anomaly here that may surprise people, worth pointing out. Households saw nominal holding gains of $8 trillion that year — equivalent to 60% of income — mostly from gains on equity shares ($3.8 trillion) and real estate ($2.2 trillion).

The share of accumulated, accrued wealth contributions attributable to previous years’ holding gains hit a high of 20% on the eve of The Great Whatever, after creeping up for decades. It dropped precipitously to 15%, and has started slowly climbing since. Absent a far more complete accounting, it’s not clear how that percentage has changed for different income and wealth classes.

Here’s the previous graph with income removed, zooming in on the proportion of holding gains received from different asset classes:

Holding gains from equities deserve some special discussion, because they’re something of a hybrid:

When firms retain earnings (profits) rather than distributing them to shareholders, the firms’ book value goes up. That increase is the firms’ net saving — think of it as firms saving on behalf of their shareholders. Stock markets certainly consider that increased book value when bidding up shares, so some portion of households’ gains on equities is arguably attributable to firms’ saving. But that portion isn’t delivered as income; households receive it as holding gains. The retained-earnings portion is hidden in those gains.

So is that portion saving from income (by firms), or holding gains (by households)? The answer is yes. It’s a floor wax and a dessert topping.

The key point here is that household holding gains on corporate equities far outstrip corporate saving, and not just over the short term. Over the last several decades those gains have delivered 31 trillion (2015) dollars onto the asset side of household balance sheets — $13 trillion more than corporations saved on households’ behalf.

So What Does it All Mean?

What’s the end result of all this wealth accumulation? I’ll point you to a somewhat outdated picture that puts across today’s massive scale of wealth inequality — far, far exceeding income inequality. Here. Be prepared to scroll.

Looking at all these pictures, you might be tempted to ask: are we just seeing a huge, many-decade, asset-price bubble? (Starting, if the nominal-dollar picture holds any meaning, with the demise of Bretton-Woods in ’71?) It’s possible that this will all revert, rather catastrophically. But I’d suggest otherwise: that we’ve actually been underestimating GDP for decades.

Coming back to our question, how Americans get and stay rich: holding gains are only one way that they get rich. But they may be the primary way that households, families, and dynasties stay rich. Because the wealthier a household is, the more it’s compensated for simply…being wealthy — for owning things, “holding” assets. (Maybe that’s why they call them households.)

That’s the kind of issue that might be well-explored with a DINA-style accounting based on wealth accrual, that includes holding gains. Here’s hoping that messieurs Piketty, Saez, and Zucman think it would be a useful effort.

On that subject, returning to one line of Gabriel Zucman’s:

“[Holding gains] could be included down the road by computing income as delta wealth + consumption (i.e., Haig-Simon income).”

I’ll just offer one piece of advice based on years proposing and presenting exactly that: think twice about calling it “income” — even with the Haig-Simons tag attachedI’ve received almost-universal pushback on the “comprehensive income” label, even from the most enlightened (and progressive) accounting-based economists, even the proudly heterodox. (Including some at extraordinary length, and occasionally even borderline hysterical in their negativity.) PSZ may have the professional moxie to bruit the label and make it stick. But for whatever reasons — maybe just tradition and convention, but maybe the vested interests of incumbent wealthholders — people are deeply averse to any definition of “income” that includes holding gains.

Instead, call it wealth (or asset, or net worth) accumulation, or accrual, or similar. Those are arguably better labels anyway, easier for most people to understand at a glance.

———————————

* If you were in the top 5% of wealthholders in 2013, you had north of $1.9 million in net worth — not terribly rich, though you could lead a comfortable middle-class life without working (or even better than that, if you don’t have many years left to live and spend).

** This is based on 65% of capital gains going to the top 1% of income recipients — a somewhat conservative estimate according to a 2013 study (Figure 14) based on IRS data, which estimated that measure for 2010 at 85%. This percentage undoubtedly changes over time, but an authoritative time series is not available. It’s also possible, though, that 65% percent is a big overestimate. According to Edward Wolff (in private correspondence), who has studied wealth and asset shares for decades, in 2013 the top 1% of income recipients owned about 24% of household assets. If they only receive 24% of capital gains, in proportion to those holdings (a pretty big assumption), you can stop reading this article entirely; income and wealth accumulation (and change in those measures) are roughly the same. Note that the “% of assets held by” measure seems to be completely unavailable — much less a time series. Professor Wolff was only able to provide that one-year spot estimate for total assets, and PSZ have no such measure — only percent of wealth (net worth).

Bottom line: the distribution of household assets, and especially the distribution of holding gains (relative to the IMAs’ annual mark-to-market revaluation estimates), are in need of further study.

A personal note on that “big assumption” — that households’ capital gains shares are equivalent to their asset shares: I’m an investor in a private, family-held commercial property firm. Actually: in one of the firms’ SPVs or “special-purpose vehicle” LLCs, which owns two other SPV LLCs, each of which owns a middlebrow hotel. The firm quite reliably returns about 8% a year to its investors in income. But over even quite short 5- to 10-year periods, investors’ total returns (including properties’ valuation increases) run more like 16%. All to say: only a minuscule portion of the population has access to returns even vaguely in that ballpark, much less reliable returns at that level. Wondering how Donald Trump got rich(er)?

*** The calculation from household income to net saving isn’t just “income minus outflows equals saving”; there are inflows as well.

If that confuses you, join the party. It’s because (primary) income is supposed to represent market income. (And even that is reported after first deducting a significant “use” of household funds: interest payments.) Nonmarket outflows and inflows are jumbled together to derive disposable income, and consumption spending is subtracted from that to yield net saving. You could instead add the nonmarket inflows to market income, then subtract both market and nonmarket outflows, but that’s not how it’s done. Try here to see household sources and uses, inflows and outflows, tallied separately.

How Do Americans Get Rich? (And Stay Rich?)