On February 14, 2018, Truthdig’s Chris Hedges writes on Alternate:
Oligarchic rule, as Aristotle pointed out, is a deviant form of government. Oligarchs care nothing for competency, intelligence, honesty, rationality, self-sacrifice or the common good. They pervert, deform and dismantle systems of power to serve their immediate interests, squandering the future for short-term personal gain. “The true forms of government, therefore, are those in which the one, or the few, or the many, govern with a view to the common interest; but governments that rule with a view to the private interest, whether of the one, of the few or of the many, are perversions,” Aristotle wrote. The classicist Peter L.P. Simpson calls these perversions the “sophistry of oligarchs,” meaning that once oligarchs take power, rational, prudent and thoughtful responses to social, economic and political problems are ignored to feed insatiable greed. The late stage of every civilization is characterized by the sophistry of oligarchs, who ravage the decaying carcass of the state.
These deviant forms of government are defined by common characteristics, most of which Aristotle understood. Oligarchs use power and ruling structures solely for personal advancement.
Oligarchs, though they speak of deconstructing the administrative state, actually increase deficits and the size and power of law enforcement and the military to protect their global business interests and ensure domestic social control. The parts of the state that serve the common good wither in the name of deregulation and austerity. The parts that promote the oligarchs’ power expand in the name of national security, economic growth and law and order.
For example, the oligarchs educate their children in private schools and buy them admissions into elite universities (this is how a mediocre student like Jared Kushner went to Harvard and Donald Trump went to the University of Pennsylvania), so they see no need to fund good public education for the wider population. Oligarchs can pay teams of high-priced lawyers to bail them and their families out of legal trouble. There is no need, in their eyes, to provide funds for legal representation for the poor. When oligarchs do not fly on private jets, they fly in first class, so they permit airlines to fleece and abuse “economy” passengers. They do not use subways, buses or trains, and they slash funds for the maintenance and improvement of these services. Oligarchs have private clinics and private doctors, so they do not want to pay for public health or Medicare. Oligarchs detest the press, which when it works shines a light on their corruption and mendacity, so they buy up and control systems of information and push their critics to the margins of society, something they will accelerate with the abolition of net neutrality.Oligarchs do not vacation on public beaches or in public parks. They own their own land and estates, where we are not allowed. They see no reason to maintain or fund public parks or protect public land. They hand such land over to other oligarchs to exploit for profit. Oligarchs cynically view laws as mechanisms to legalize their fraud and plunder. They use their lobbyists in the legislative branch of government to author bills that increase and protect their wealth, through the avoidance of taxes and other means. Oligarchs do not allow free and fair elections. They use gerrymandering and campaign contributions to make sure other oligarchs are elected over and over to office. Many run unopposed.
Oligarchs look at regulations to protect the environment or the safety of workers as impediments to profit and abolish them. Oligarchs move industries to Mexico or China to increase their wealth while impoverishing American workers and leaving U.S. cities in ruins. Oligarchs are philistines. They are deaf, dumb and blind to great works of art, reveling in tawdry spectacles, patriotic kitsch and mindless entertainment. They despise artists and intellectuals who promote virtues and self-criticism that conflict with the lust for power, celebrity and wealth. Oligarchs always unleash wars on culture, attacking it as elitist, irrelevant and immoral and cutting its funding. All social services and institutions, such as public housing programs, public parks, meals for the elderly, infrastructure projects, welfare and Social Security, are viewed by oligarchs as a waste of money. These services are gutted or turned over to fellow oligarchs, who harvest them for profit until they are destroyed.
Oligarchs, who do not serve in the military and who ensure their children do not serve in the military, pretend to be great patriots. They attack those who oppose them as anti-American, traitors or agents for a foreign power. They use the language of patriotism to stoke hatred against their critics and to justify their crimes. They see the world in black and white—those who are loyal to them and those who are the enemy. They extent this stunted belief system to foreign affairs. Diplomacy is abandoned for the crude threats and indiscriminate use of force that are the preferred forms of communication of all despots.
There is little dispute that we live in an oligarchic state. The wealthiest 1 percent of America’s families control 40 percent of the nation’s wealth, a statistic similar to what is seen globally: The wealthiest 1 percent of the world’s population owns more than half of the world’s wealth. This wealth translates into political power. The political scientists Martin Gilens of Princeton and Benjamin Page of Northwestern, after examining differences in public opinion across income groups on a wide variety of issues, concluded, “In the United States, our findings indicate, the majority does not rule—at least not in the causal sense of actually determining policy outcomes. When a majority of citizens disagrees with economic elites and/or with organized interests, they generally lose. Moreover … even when fairly large majorities of Americans favor policy change, they generally do not get it.”
Oligarchs accelerate social, political, cultural and economic collapse. The unchecked plunder leads to systems breakdown. The refusal to protect natural resources, or the economic engines that sustain the state, means that poverty becomes the norm and the natural world becomes a toxic wasteland. Basic institutions no longer work. Infrastructure is no longer reliable. Water, air and soil are poisoned. The population is left uneducated, untrained, impoverished, oppressed by organs of internal security and beset by despair. The state eventually goes bankrupt. Oligarchs respond to this steady deterioration by forcing workers to do more for less and launching self-destructive wars in the vain attempt to restore a lost golden age. They also insist, no matter how bad it gets, on maintaining their opulent and hedonistic lifestyles. They further tax the resources of the state, the ecosystem and the population with suicidal demands. They flee from the looming chaos into their gated compounds, modern versions of Versailles or the Forbidden City. They lose touch with reality. In the end, they are overthrown or destroy the state itself. There is no institution left in America that can be called democratic, and thus there is no internal mechanism to prevent a descent into barbarity.
“The political role of corporate power, the corruption of the political and representative processes by the lobbying industry, the expansion of executive power at the expense of constitutional limitations, and the degradation of political dialogue promoted by the media are the basics of the system, not excrescences upon it,” the political philosopher Sheldon Wolin wrote in “Democracy Incorporated: Managed Democracy and the Specter of Inverted Totalitarianism.” “The system would remain in place even if the Democratic Party attained a majority; and should that circumstance arise, the system will set tight limits to unwelcome changes, as if foreshadowed in the timidity of the current Democratic proposals for reform. In the last analysis, the much-lauded stability and conservatism of the American system owe nothing to lofty ideals, and everything to the irrefutable fact that it is shot through with corruption and awash in contributions primarily from wealthy and corporate donors. When a minimum of a million dollars is required of House candidates and elected judges, and when patriotism is for the draft-free to extol and for the ordinary citizen to serve, in such times it is a simple act of bad faith to claim that politics-as-we-now-know-it can miraculously cure the evils which are essential to its very existence.”
The longer we are ruled by oligarchs, the deadlier our predicament becomes, especially since the oligarchs refuse to address climate change, the greatest existential crisis to humankind. The oligarchs have many mechanisms, including wholesale surveillance, to keep us in check. They will stop at nothing to maintain the sophistry of their rule. History may not repeat itself, but it echoes. And if we don’t recognize these echoes and then revolt, we will be herded into the abattoirs that tyrannies set up at the end of their existence.
The reality is, and always has been throughout history, economic power has to be universally distributed amongst individual citizens and never allowed to concentrate among a few. OR you have oligarchical dominance and control over the people of a nation. It means that the ownership of all FUTURE development and formation of productive capital (the non-human factor), which as a means of production has the purpose of producing at lower costs with the elimination of labor as a consequence, will be OWNED by an elite wealthy ownership class. Concentrated capital wealth works for them as long as they can find markets with “customers with money” or “customers willing to incur debt” to purchase the goods, products, and services their narrowly-owned business corporations can produce.
The wealthy capital ownership class knows that productive capital is increasingly the source of the world’s economic growth and, they want to be sure that they OWN it all.
What our leaders, if you can call them that, should be doing is setting as a goal and developing policies and programs to reforming the system so that FUTURE productive capital becomes the source of added property ownership incomes for all. After all, fundamentally, economic value is created through human and non-human contributions. This means that both labor and capital are independent factors of production. As such, if capital’s proportionate contributions are increasing relative to that of labor, then equality of opportunity and economic justice demands that the right to property (and access to the means of acquiring and possessing property) must in justice be extended to all. Yet, sadly, the American people and its leaders still pretend to believe that labor is becoming more productive and couch all policy directions in the name of job creation (disguising the unspoken real reason, which is to own).
We need to ask ourselves, why do Americans ignore the necessity to broaden personal ownership of wealth-creating, income-producing capital assets simultaneously with the growth of the economy? By doing so we are making a HUGE mistake and allowing our society to become an oligarchy owned and controlled by a tiny wealthy capital ownership class.
On February 13, 2018, Arjun Kharpal writes on CNBC:
Artificial intelligence could be “billions of times smarter” than humans and people may need to merge with computers to survive, a futurist told CNBC on Tuesday.
Ian Pearson, a futurist at Futurizon, said there will need to be a link between AI and a human brain.
Elon Musk said last year that humans must merge with machines to not be irrelevant in the age of AI.
Artificial intelligence could be “billions of times smarter” than humans and people may need to merge with computers to survive, a futurist told CNBC on Tuesday.
Speaking on a panel hosted by CNBC at the World Government Summit in Dubai, Futurizon’s Ian Pearson’s comments mirrored ideas put forward by Tesla CEO Elon Musk.
“The fact is that AI can go further than humans, it could be billions of times smarter than humans at this point,” Pearson said. “So we really do need to make sure that we have some means of keeping up.
The way to protect against that is to link that AI to your brain so you have the same IQ… as the computer. I don’t actually think it’s safe, just like Elon Musk… to develop these superhuman computers until we have a direct link to the human brain… and then don’t get way ahead.”
At the World Government Summit in 2017, Musk, who has warned about the power of AI in the future, said humans and machines must merge to still be relevant with the advent of more powerful technology.
“Over time, I think we will probably see a closer merger of biological intelligence and digital intelligence,” Musk said in February 2017.
“It’s mostly about the bandwidth, the speed of the connection between your brain and the digital version of yourself, particularly output.”
Musk has founded a start-up called Neuralink that is aimed at just that.
Pearson said Tuesday that some jobs that don’t require humans will disappear. AI and the impact on jobs has been a big theme at the World Government Summit this year.
On Monday, Sebastian Thrun, the CEO of education start-up Udacity, and one of the pioneers of Google’s driverless car project, told CNBCthat AI will turn us into “superhuman workers.”
From the article at https://www.huffingtonpost.com/entry/nancy-pelosi-is-right-about-workers-getting-crumbs-from-the-tax-bill_us_5a7dc5cbe4b0c6726e12ce62
“The tax bill slashed the corporate tax rate from 35 to 21 percent, a windfall Democrats said companies would waste on share buybacks instead of more productive investment. After Trump signed the bill into law, Republicans seized on news that dozens of companies announced they would give their workers bonuses specifically because of the law.
“Pelosi was not impressed. ‘In terms of the bonus that corporate america received versus the crumbs that they are giving to workers to kind of put the schmooze on is so pathetic,’ she said last month.
“The thing is, Pelosi’s crumbs comment is fair and accurate. By Republicans’ tally, more than 250 businesses have doled out some $3 billion worth of bonuses so far. The Joint Committee on Taxation expects the corporate tax cut by itself to lose $101 billion worth of revenue this year alone.
Crumb (n) — a very small amount of something.
“The bonuses are also a small amount of money compared to what firms are throwing at their shareholders. Since Trump signed the tax bill into law on Dec. 22, companies have announced $88 billion worth of stock buybacks, according to an analysis by the stock market research firm Birinyi Associates. That’s more than twice the amount of share repurchases firms announced during the same period last year.
“An analysis by Americans for Tax Fairness, a group that opposed the tax bill, put the stock buyback total at $100 billion since the Senate passed the bill in early December. Senate Democrats arrived at a similar tally for just this year.
“’Even as corporations plough tens of billions of dollars into share buybacks and stock repurchasing programs instead of raising wages or hiring more workers, President Trump and Congressional Republicans are doing their best to portray their $1.5 trillion corporate giveaway as a boost to working Americans,” Senate Minority Leader Chuck Schumer (D-N.Y.) said on the Senate floor this week.
“Stock buybacks inflate the value of a company’s shares by reducing the amount of stock available to the public. Cash devoted to repurchasing shares isn’t invested in research or development, and goosing share values lines executives’ pockets, since they are often paid with stock and receive bonuses according to its value.
Before the tax bill became law, the official Republican argument was that workers would benefit from corporate tax cuts in the long run. Companies would use their newfound extra cash for capital investments that would enhance worker productivity and make employees more valuable. That might still happen someday, though Republicans have apparently set the argument aside.
“Separate from the issue of bonuses, the tax law will result in slightly larger paychecks for most workers, since firms are withholding less income tax due to the new law’s lower rates.
“The Tax Policy Center estimated that American households, on average, would have 2.2 percent more after-tax income this year, though the richest 5 percent would see the biggest benefit.”
Gary Reber Comments:
The Republican tax bill is noting more than a scheme to further concentrate wealth-creating, income-producing capital asset ownership in the present-day tiny wealthy capital ownership class, and will not significantly result in better wages for the vast majority of workers, nor stimulate significant investment in economic growth. Whatever economic growth does result will, of course, be owned by the present-day wealthy capital ownership class, with effectively no new capital owners created.
Of course, as with every bill that is introduced that further concentrates capital wealth, the bill is sold on the basis that the result will be more jobs and better wages. But the reality is that corporations continue to seek investing in foreign countries with lower wage levels and far less regulation, seeking to produce at the lowest cost. To do this they use public-private partnerships with foreign nationals, retained earnings financing (withholding earnings from the owners of the corporation), and corporate debt financing, none of which creates any new capital owners, but instead further enriches those who are already significant capital owners.
Both actions will strengthen our private property principles that our nation was founded upon and result in inclusive prosperity, inclusive opportunity, and inclusive economic justice, without stepping on the private property already owned by the wealthy ownership class. This is about financing our FUTURE economy that can support general affluence for EVERY child, woman, and man, wherein individual citizens universally are the owners of our productive economy.
To find out, Futurism’s Alex Klokus spoke at the World Government Summit with Daniela Rus, the Director of the Computer Science and Artificial Intelligence Laboratory (CSAIL) at MIT, about automation and the world that AIs are already creating.
Rus attended the Dubai summit to speak about the next great revolution: the autonomous revolution. Just as the agricultural, industrial, and cyber revolutions led to fundamental shifts in how we live and work, so is the age of autonomy reshaping the very fabric of our society.
Soon, Rus says, AI will be woven into every aspect of our existence. Yet she does not see this future as one of despondency and despair. Far from the economic upheaval and mass job loss portended by some, Rus envisions a future in which humans benefit from the fruits of AI labor.
When the topic of AI comes up, Rus noted that people frequently jump to the downsides: “Some people get very anxious and start asking about Skynet and when robots will start taking over their jobs. Well, I believe that everyone stands to benefit from AI,” Rus proclaimed.
When asked how she thinks governments can ensure that AI advances do, in fact, benefit humans, Rus stated that such guarantees will require grandiose shifts in how we think about education. Currently, Rus explained, we think that education has an end point, a point at which it doesn’t make sense to go any further. This needs to change.
“In the future, we will have a very parallel approach to working and learning,” Rus said. “We study, and study, and study, and then we say, ‘okay you learned enough, you can start working now.’ In the future, we will have to blend studying and working.”
This parallel approach is something that, Rus believes, governments and companies will need to figure out soon. Will companies be responsible for constantly training and retraining their workers so that they can keep pace with new facets of their work? Or will governments be responsible for this lifelong learning?
At the present juncture, there are no clear answers. This work hasn’t yet been carried out— or really even begun.
A Better Way of Seeing
As the world works to prepare itself for the age of automation, Rus says it must also prepare its citizens to have a different outlook on developments in AI and autonomy. Instead of jumping to killer robots and job loss, we need to provide alternative ways of thinking that allow people to understand the benefits of AI.
One such benefit can already be seen in the autonomous driving industry. Though level 5 autonomy is not quite here yet, and autonomous cars are not yet ready for public roads, Rus pointed out that driverless cars are already capable of driving people around places that have less congestion and hazards, such as parks and retirement homes. To whit, in her presentation Rus showed a short video of a golf cart-like car picking up an elderly passenger and driving her from her retirement home to meet her friend for lunch on the boardwalk nearby. This, Rus notes, is an example of a benefit of AI, and of how autonomous features can restore freedom and mobility to those who are confined to their apartments and houses.
“Notice that this car does not have a driver, but we should not see this is displacing work because this is a service that does not exist,” Rus said optimistically. (This incited a quiet laugh from philosopher Nick Bostrom, beside me, at her vision of a world where autonomous cars don’t replace human drivers.)
Rus also noted in her talk that health and medicine AI systems make a number of errors when analyzing medical images for signs of cancer — in 7.5 percent of cases, to be exact. Humans? They hovered around 3.5 percent. Yet together, humans working with AI machine systems lowered the error rate to just 0.5 percent. “Doctors will be able to offer the most advanced treatments by working in tandem with machines,” Rus said. She continued by noting that this is just one example which proves that AI will not replace human workers, but augment the work that they do. Some in the audience looked skeptical.
Rus reinforced her argument by noting that, when talking about job loss, lawyers are often right at the top of the list. However, she asserts these stories are hype and highly exaggerated. “Natural language systems can read entire libraries of books and provide information at just the right time, right when it is needed,” she said. “This doesn’t mean that machines are becoming lawyers. Machines are just changing the work that lawyers do.”
There is some truth to these claims. Take, for example, the legal technology company LawGeex, which created an AI algorithm that automatically reviews contracts. Automating such processes that are little more than paper-pushing has saved law firms a lot of money; however, the true advantage of these autonomous systems is saving attorneys’ time. Indeed, as one participant noted in an earlier round table talk on AI, “No one went to law school to cut and paste parts of a regulatory document.”
Overall, Rus says, she has two concerns: “One is about the quality of the job, and the other is about wages,” she said. “I am not concerned about whether we will have enough jobs, I am concerned about whether we will have enough good jobs.” For example, Rus described how GPS made it possible to become a taxi driver without knowing the maps and road systems. This lowered the entry point for work, but it also lowered wages.
In truth, the concerns don’t end there. Initially, robots will augment our work; yet if autonomous systems continue to progress, becoming faster and smarter, what is the guarantee that humans will truly have a place? Of course, there is none. Yet our social, political, and economic systems can evolve. And so can we.
Machines have the power to support us or to hurt humanity; it is up to us to decide how we interact with them, how we govern them, and how we set the rules for machines — as well as the necessary legislation to govern humanity — to ensure that all of these advances are for the greater good.
This is yet another article whose subject matter should surprise no one who is conscious and who has even causally observed the constant shift to non-human productive inputs in the manufacturing, distribution, and sales of products, as well as the delivery of services, that has been occurring during their lifetime. The first burst of this phenomena was the Industrial Revolution. But now we are in an age of technology sophistication that is permeating every sector of industry and our day-to-day lives.
There’s nothing new about machines replacing people, but the rate of replacement is exponential and the result is that productivity gains lead to more wealth for the OWNERS of the non-human factor of production, but for others who have always been dependent on jobs as their source of income, there has been a steady decline to poverty-level labor incomes as private sector job creation in numbers that match the pool of people willing and able to work is constantly being eroded by physical productive capital’s ever increasing role.
Thus, we can no longer ignore the necessity to broaden personal ownership of wealth-creating, income-producing capital assets simultaneously with the growth of the economy.
Given the current invisible structure of the economy, except for a relative few, the majority of the population, no matter how well educated, will not be able to find a job that pays sufficient wages or salaries to support a family or prevent a lifestyle which is gradually being crippled by near poverty or poverty earnings. Thus, education is not the panacea, though it is critical for our future societal development. And younger, as well as older people, will increasingly find it harder and harder to secure a well-paying job – for most, their ONLY source of income – and will find themselves dependent on taxpayer-supported government welfare, open and disguised or concealed.
For decades employment opportunity in the United States was such that the majority of people could obtain a job that could support their livelihood, though, in most cases related to a family, it eventually required the father and mother to both work, if they aspired to live a “middle-class” lifestyle. With “Free Trade” those opportunities began to disintegrate as corporations sought to seek lower-cost production, taking advantage of global cheap labor rates and non-regulation, as well as lower tax rates abroad. This resulted in a chain reaction forcing more and more companies to outsource in order to stay competitive (thus the rise of China, India, Mexico, and other third-world nation economies).
At the same time, tectonic shifts in the technologies of production were exponentially occurring (and continue to do so), which resulted (and continues to result) in less job opportunities as production was shifted from people making things to “machines” (the non-human factor) making things. The combination of cheap global labor costs and lower, long-term-invested “machine” costs has forced the worth of labor downward, and this will continue to be the reality. Our only way to far greater inclusive prosperity, inclusive opportunity, and inclusive economic justice is to embrace technological innovation and invention and the resulting human-intelligent machines, super-automation, robotics, digital computerized operations, etc. as the primary economic engine of growth.
But significantly, unless we reform our system to empower EVERY American to acquire, via pure, interest-free insured capital credit loans, viable full-ownership holdings (and thus entitlement to full-dividend earnings) in the companies growing the economy, with the future earnings of the investments paying for the initial loan debt to acquire ownership, the concentration of ownership of ALL future productive capital will continue to be amassed by a wealthy minority capital ownership class. Companies will continue to globalize in search of “customers with money” or simply fail, as exponentially there will be fewer and fewer customers to support their businesses worldwide. Why, because the majority will be disconnected from the dividend income derived from the non-human means of production that is replacing the need for labor workers who earn wages and salaries, which are then used to purchase products and services.
Soon, industrial monopoly capitalism will reach its twin goals: concentration of productive capital ownership among the elite ownership class and work performed with as few labor workers and the lowest possible wages and salaries. The question to be answered is “What then?”
The transition to the non-human factor of production has been occurring for decades but is now experiencing exponential development – the result of tectonic shifts in the technologies of production. As costs for computer-controlled machines become less than the cost of human workers, and the skills and productivity of the machines exceed those of human workers, then robot worker numbers will rapidly increase and enable our society to build architectural wonders, revitalize and redevelop our cities and build new cities of wonder and amazement, along with support energy, transport, and communications systems. Super-automation and robotics is transforming the world of manufacturing as robots become lighter, more mobile, and more flexible with better sensing, perception, decision-making, and planning and control capabilities due to advanced digital computerization. Super-automation and robotics operated by human-intelligent computerization will dramatically improve productivity and provide skills and abilities previously unique to human workers. This will effectively increase the size of the labor work force globally beyond that provided by human workers, no matter what the level of education attained. With advanced human-level artificial intelligence, computer-controlled machines will be able to learn new knowledge and skills by simply downloading software programs and apps. This means that the years of training that apply to personal human development will no longer apply to the further sophistication and operation of the machines. The result will be that productivity will soar while the need and demand for human labor will further decline.Unfortunately, in the long term, unless the vast majority of people have a substantial and viable source of income other than wages and salaries, the impact of technological innovation and invention as embodied in human-level artificial intelligence, machines, super-automation, robotics, digital computerized operations, etc. will be devastating.
There are ONLY two options: either “Own or Be Owned.” The “Owned” model is what our society practices today and is expressed as monopoly capitalism (concentrated ownership) or socialism (taxpayer-supported redistributed social benefits). The “Own” model, or what my colleagues and I term the Just Third Way, has yet to be implemented on the scale necessary to empower every man, woman, and child to acquire private, individual ownership stakes in the future income-producing productive capital assets of the “intelligent automated machine age” – facilitated by the future earnings of their investments in the companies developing and employing this unprecedented economic power.
Unfortunately, the disruptive nature of exponential growth in technology and its impact on productivity – tectonically shifting production of products and services from human workers to non-human means – is not understood and ignored by the economic establishment, academia, and our political leaders.While the rate of technological progress is directly proportional to the number and quality of the people engaged in the fields of science and engineering, economic policy is the mechanism that fuels investment and development of technological innovation and invention. This is where education is critical to our future societal development.
Education should be encouraged and expanded. Everyone should have the opportunity to personally develop their own exceptional innate abilities and unlock their creativity.
But except for the personal development benefit to advancing one’s education, the reality is that far less “educated” people will be necessary in the long term to produce the products and services necessary and valued by society. This is due to the exponential development of human-level artificial intelligence, which is embodied in advanced automation and robotics.
Those college graduates who do succeed within the fields of science and engineering are hired workers to do what? Our scientists, engineers, and executive managers, who are not owners themselves of the companies they work for, except for those in the highest employed positions, are encouraged to work to destroy employment by making the capital owners’ assets 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.
We need to realize that full employment is not a function of businesses. Companies strive to keep labor input and other costs at a minimum. Private sector job creation in numbers that match the pool of people willing and able to work is constantly being eroded by physical productive capital’s ever-increasing role.
We need to reform and restructure our economy and set as the GOAL broadened private, individual ownership of future wealth-creating, income-generating productive capital assets among ALL Americans, with capital estates ever building as the economy grows. 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. By changing course, over time and within a few decades, our “machined-powered” growth economy would produce greater wealth, and widespread private, individual ownership would assure prosperity, opportunity, and general affluence for every citizen. Broadened productive capital ownership would strengthen our democracy and individuals and families would be less or non-dependent on government welfare, whether disguised or not.
This prosperous society is achievable because, fortunately, in the near term, we can begin to grow our way out of the swelling unemployment and underemployment by increasing our investment significantly as a ratio of Gross Domestic Product (GDP) resulting in double-digit growth, while simultaneously broadening private, individual ownership of future income-producing productive capital investments, thus initiating the process of empowering every man, woman, and child to build over time a viable capital estate and reap the income generated. The key operative is BROADEN OWNERSHIP. Such investment would, in the short term, generate millions of new “real” productive jobs. The result would not only be that the GDP would dramatically grow but tax revenues from the high rate of economic growth would enable us to balance the federal budget, fully fund Social Security, Medicare, and Medicaid, provide Universal Health Care, Universal University Education, lower tax rates, and maintain a strong military, all simultaneously.
We have the opportunity to free economic growth from the “enslavement” of human labor and from the financial mechanisms that are based on the slavery of past savings. Technological progress, though, is no longer dependent on the number and quality of human workers. This fact will become obvious eventually to anyone who can think and analyze as they realize the reality that human labor will cease to be the primary source of wealth production in the future. As a result we can expect over the long term that unemployment and underemployment will remain high indefinitely. But the difference will be that people will drop out of the labor force voluntarily because they will be able to live off their dividend earnings via their ownership portfolios. This will create swelling demand for human workers who want to continue working. And with both dividend and wage and salary incomes for everyone there will be more customers to purchase the products and services produced, which in turn will create further dividends and earnings, which will create more customers, etc.
While the future holds less promise for universal job employment due to the ever-progressing contribution of technological-driven production using human-intelligent machines, super-automation, robotics and digital computerized operations, the jobs that will be in demand will require some mastery of technology, math, and science. As long as working people are limited by earning income solely through their labor worker wages, they will be left behind by the continued gravitation of economic bounty toward the top 1 percent of the people that the system is rigged to benefit. If we don’t re-chart our economic policies to broaden private, individual ownership of new productive capital formation, then more troubling is that the continued stagnation of the American economy will further dim the economic hopes of America’s youth, no matter what their education level. The result will have profound long-term consequences for the nation’s economic health and further limit equal earning opportunity and spread income inequality. As the need for labor decreases and the power and leverage of productive capital increases, the gap between labor workers and productive capital asset owners will increase, and the conditions will become very frightening and very chaotic.
Sadly, our leaders are not prepared and are not preparing the American people for the coming economic collapse and the next Great Depression, due to their lack of wisdom and foresight to understand that full employment is not an objective of businesses and private sector job creation opportunities are constantly being eroded by physical productive capital’s ever increasing role – as the use of human-intelligent machines, super-automation, robotics, digital computerized operations, etc. replaces labor workers to produce products and services.
The question that requires an answer is now timely before us. It was first posed by binary economist Louis Kelso in the 1950s but has never been thoroughly discussed on the national stage. Nor has there been the proper education of our citizenry that addresses what economic justice is and what ownership is. Therefore, by ignoring such issues of economic justice and ownership, our leaders are ignoring the concentration of power through ownership of productive capital, with the result of denying the 99 percenters equal opportunity to become productive capital owners. The question, as posed by Kelso is: “how are all individuals to be adequately productive when a tiny minority (capital owners) produce a major share and the vast majority (labor workers), a minor share of total goods and service,” and thus, “how do we get from a world in which the most productive factor – physical capital – is owned by a handful of people, to a world where the same factor is owned by a majority – and ultimately 100 percent – of the consumers, while respecting all the constitutional rights of present capital owners?”
On February 13, 2018, CNBC reports on the World Government Summit:
At the World Government Summit in Dubai, Sebastian Thurn said that AI will make humans into “superhuman workers.” According to the Google X co-founder, AI will get rid of repetitive jobs, but it will also open up more creative ones.
AN AI COWORKER
For many, artificial intelligence (AI) and the human workforce are at odds. These people are concerned that intelligent machines powered by increasingly sophisticated AI will take over human jobs, leaving some people with no source of income. Even more frightening is the prospect of a complete AI labor takeover if/when we reach the technological singularity.
According to Sebastian Thurn, co-founder of Google’s secret X laboratory, they may be worrying over nothing. During a talk at the ongoing World Government Summit in Dubai, Thurn said he believes AI will make humans into “superhuman workers” capable of doing more with the help of technology than without it, reported CNBC.
“AI is a tool and what AI can do really, really well is getting rid of repetitive work,” said Thurn. “So, if you are a worker, say a medical doctor or a lawyer who spends day in and day out doing the same thing, then having AI look over your shoulder and learn those skills from you will make you a superhuman, a more powerful person.”
“Now, that means that some jobs will go away, very repetitive work, of course,” Thurn continued. “But it will be replaced by created work, so we have to move from a repetitive working society into a creative society where we invent new things.” Think Altered Carbon, Netflix’s futuristic science fiction flick in which a hotel’s only employee is an AI manager that looks and talks like Edgar Allan Poe.
Thurn isn’t the first to put forth this idea that AI will make us “superhuman.” Famous futurist Ray Kurzweil, who is currently Google’s top engineer, once said that AI will not displace humans, but instead will enhance them.
Combine that with the technological singularity, which some predict will arrive in the 2040s, and a human-AI labor meld could happen sooner than we might expect.
At the very least, finding ways to use AI as a tool rather than a replacement will keep human workers relevant. Between a future in which AIs do everything and one in which AIs make humans into “superhuman workers,” the latter is probably preferable for most.
The 2007 I-35 bridge collapse in Minnesota shows we need an infrastructure upgrade—but there are right ways and wrong ways to take action. (Koldark / Flickr)
On April 5, 2017, Thomas M. Hanna writes on In These Times:
Trump’s investor-friendly plan and other conventional approaches are likely to fail—it’s time to try something new.
In their 2017 infrastructure report card, the American Society of Civil Engineers (ASCE) gave the United States a dismal D+—and for good reason. ASCE notes, for instance, that each day 188 million trips are made across the nation’s 56,007 structurally deficient bridges. Another catastrophe like the 2007 collapse of the I-35 bridge in Minneapolis (which killed 13 people and injured 145) seems only a matter of time. In fact, just this past week an elevated section of I-85 collapsed in Atlanta after a fire. A recent state inspection had found numerous cracks and spalling (concrete deterioration) in the structure.
Beyond the visibly decaying bridges, dams and railroads, various hidden issues also plague the country. The people of Flint, Mich., are still without clean, safe drinking water nearly three years after state emergency managers switched the city’s water source to the Flint River. The highly polluted river water was treated with high levels of chlorine, making it around 19 times more corrosive than the previous supply from Lake Huron, causing aging pipes to leach iron and lead into people’s water. Across the country, deteriorating infrastructure—including poorly designed or maintained roads, railroads that don’t use the latest available track technology, and pipelines that leak and explode—is responsible for thousands of deaths, injuries and illnesses every year, to say nothing of tens of billions of dollars in economic costs.
Clearly, America’s infrastructure is in desperate need of repair and modernization. But there are right and wrong ways to take action.
On the campaign trail, and in his February address to Congress, President Donald Trump promised a $1 trillion infrastructure plan that would create jobs and “rebuild” the country. In January, labor leaders from several building and construction unions met with Trump at the White House and affirmed their support for such a program. On the surface, this may seem like a bright spot in the Trump policy agenda—but the plan appears seriously flawed.
As Sean McGarvey, president of North America’s Building Trades Unions, confirmedafter the meeting, the administration’s approach to infrastructure involves substantial private sector investment and so-called “public-private partnerships” (PPPs). Once considered an innovative and novel way to finance infrastructure, PPPs have lost their appeal to many experts and policymakers amidst high-profile bankruptcies, extortionary contracts, and spiraling fees, tolls, and rate increases for users. Just last year, the private operator of parts of State Highway 130 in Texas declared bankruptcy. This follows on the heels of the 2014 bankruptcy of the company running the Indiana Toll Road (once considered the country’s marquee PPP project) and similar failures in California, Virginia and South Carolina.
There’s a reason PPPs are a risky, costly bet. In a recently released policy brief for the Next System Project, Ellen Brown (president emeritus of the Public Banking Institute and former Green Party candidate for California Treasurer) explains that one of the problems with private-sector approaches is that the investor (often a large financial corporation) requires a considerable rate of return on its investment to pay off its debt and turn a healthy profit. (Full disclosure: I am director of research at the Democracy Collaborative, where Ellen Brown is a fellow, and which hosts the Next System Project.) This return is generated on the back of higher user fees and rates, subsidies and guarantees from governments, and contractual restrictions on competition.
The traditional alternative of financing infrastructure involves state or local governments issuing bonds to be bought by investors and paid off over time. However, this isn’t ideal either—paying off interest on the bonds can sometimes as much as double the cost of a project. According to Brown, there’s a much better way: The federal government can finance infrastructure by simply issuing new money.
There are at least two ways to go about this. In one, the Federal Reserve would create money just as it did through its post-financial crisis “quantitative easing” (QE) program, when trillions in new money was pumped into the financial system through the purchase of securities from banks. These funds could then capitalize a national infrastructure bank or a network of state-level infrastructure banks. She calls this “qualitative easing,” because the money would be injected into the real economyrather than into the balance sheets of the major Wall Street banks.
The other approach would be for the Treasury, Federal Reserve or Congress to create the money and just directly invest it in infrastructure projects. Whether funneled through a public bank or banks, or invested directly, the funds could be provided at no or very low interest, allowing states and localities to pursue a host of pressing infrastructure projects without levying or raising taxes, tolls and user fees.This isn’t so radical as it sounds: As president, Abraham Lincoln printed $450 million (almost $11 billion in today’s dollars) in “Greenbacks” to help pay for the Civil War, and even Milton Friedman proposed “helicopter money”—a metaphor for “dropping” newly printed money directly into communities—as a way to combat deflation.
Critics will, of course, scream “hyperinflation” and conjure up images of wheelbarrows full of money in Weimar Germany or last decade’s worthless Zimbabwean bank notes. But Brown has a different take. Neither QE (despite the dire predictions of many in the economics profession) nor Lincoln’s Civil War money-printing caused hyperinflation. Given the persistence of relatively low inflation (as well as other factors) there is good reason to believe that in the current economic climate, investing new money into the real economy through infrastructure projects would merely provide a much-needed boost.
While Brown’s proposal may seem outside the mainstream of contemporary U.S. political discourse, it is exactly what is being proposed by major economic figures and politicians in Europe, ranging from Yanis Varoufakis, the leftist former finance minister of Greece, to Rick Rieder, the Global Chief Investment Officer of BlackRock, the world’s largest investment management corporation.
A large-scale commitment to rebuilding America’s decaying infrastructure is long overdue. A smart infrastructure policy could directly and indirectly create between 10 and 15 million jobs over the next decade, including good-paying union jobs in some states. It would benefit the economy: Alleviating traffic jams and improving public transit could work wonders for productivity. It would also save people’s lives and keep them healthy, and keep the country competitive with others that already are actively and energetically upgrading their infrastructure.
The Trump approach, however, would likely increase the already heavy burden on local taxpayers, infrastructure users, workers, and public budgets by allowing private financial interests to syphon off substantial resources, driving worsening inequality and economic hardship. It’s time to reject such failed conventional approaches, and mobilize around new ideas and possibilities.
Infrastructure upgrades and development are necessary to the quality of societal development and life. This is a necessary expenditure by government funded with taxpayer extraction and debt. What has been missing throughout America’s societal development is there has been no stipulation that the contracts issued to the private sector companies performing the upgrades and development demonstrate that they are broadly owned by their worker employees. Thus, the greatest immediate economic benefit resulting from taxpayer payment obligations accrues to the company owners and not the workers who are paid in wages and salaries.
There is no question that rebuilding and expanding our infrastructure is an effective way to both create jobs and address the rampant infrastructure problems that are accumulating in our country.
But the “create jobs” justification does not position working people where they need to be in our future economy. There is MORE INCOME to be earned by workers through OWNING the companies (corporations) who are awarded the taxpayer-supported contracts to do the work. As a major component of an infrastructure initiative, there must be included the stipulation that the companies bidding and ultimately awarded the contract work be EMPLOYEE OWNED. These companies can transform to employee-owned companies by structuring themselves using an Employee Stock Ownership Plan (ESOP). Already there are over 7,000 companies who are structured using an ESOP.
With ALL the subsidizing of business interests, never questioned is WHO OWNS the resulting productive capital asset investments financed with taxpayer extractions and national debt. The rich get richer, while the subsidizing is defended on the basis of CREATING JOBS! This just keeps America’s propertyless serfs for the wealthy ownership class to exploit.
A policy to ensure that future infrastructure added to the economy creates new owners as well as jobs is necessary to put the nation on a path to inclusive prosperity, inclusive opportunity, and inclusive economic justice. As owners, the workers would benefit additionally from a second income and the capital gain value of the private sector companies they share in the ownership of. And this can be accomplished without reliance on “past” savings and without reduction in worker wages and salaries.
On the larger scale there is a better way to finance infrastructure revitalization efforts, public works projects and environmental cleanup that is an alternative to traditional “public-private partnership (PPP)” financing that produces the result that an already wealthy ownership class of “investors” will end up owning the redevelopment improvements and new developments on which they will either sell off at a profit or lease the use thereof at a profit, or charge user fees and road tolls, etc.
A national infrastructure revitalization and expansion plan will necessarily include, to a degree, using eminent domain powers of the State. The taxpayers will pay for an billions of dollars, if not a trillion worth of improvements to revitalize and create new infrastructure projects, including widening bridges, restoring wetlands, cleaning up industrial waste and acquiring privately held parcels.
As usual, the question of “Who will own the properties, once improved, is NEVER addressed, but smart people know that it will be wealthy investors who will end up with the prized income-producing capital assets.
As an alternative we should use a Citizens Land Bank (CLB), a for-profit, professionally-managed, citizen-owned-and-governed community land planning and development enterprise, designed to enable every citizen of a community of any size to acquire a direct ownership stake in local land, natural resources and basic infrastructure.
A Citizens Land Bank is a social vehicle for every man, woman and child to gain, as a fundamental right of citizenship, a single lifetime, non-transferable ownership interest in all the Bank’s assets, share equally in property incomes from rentals and user fees from leases or use of the Bank’s assets, accumulate appreciated equity values from enhanced land values, and gain an owner’s voice in the governance of future land development.
The Bank is an innovative legal and financing tool empowered to borrow on behalf of all citizen-shareholders and service the debt with pre-tax dollars to meet the land acquisition, capitalization and operational needs of the Bank. The CLB shelters from taxation the equity accumulations of citizen-shareholders and protects the outside assets of the citizens in the event of loan default or if the enterprise fails.
A Citizen Land Bank is a social tool designed to encourage a just, free and non-monopolistic market economy. It applies the democratic principles of equal opportunity and equal access to the means to participate as an owner as well as a worker. It demonstrates that anything that can be owned by government can and should be owned, individually and jointly, by the citizens.
The provisions and unique aspects of the Citizens Land Bank are:
Make debt service on a leveraged CLB (a special kind of REIT) established within an eligible Super Empowerment Zone a tax-deductible business expense (as with an ESOP), so that area voters without savings can purchase a major block (up to 100 percent) of a CLB’s voting, full-dividend-payout common stock on borrowed funds repayable out of pre-tax CLB corporate profits and dividends. To the area voter, the principal payment on their stock acquisition loans would be treated as deferred income until CLB benefits are distributed as consumption incomes.
Give the CLB tax-free status (as with an ESOP trust or an REIT) so that shares of CLB stock acquired by area voters and CLB earnings can be accumulated within individual CLB accounts free of taxes until the benefits are distributed to participants, generally on leaving the area. When distributed, the CLB benefits would be taxed the same as distributions from an ESOP or IRA.
To create an in-house market for CLB shares, require the CLB to plan for the repurchase of distributed shares through a tax-free liquidity fund within the CLB, thus adding to the shares of remaining participants.
Encourage the CLB to pay out dividends to area voters as supplementary incomes from their growing equity stakes in local real estate development by allowing CLB dividends (as with dividends on ESOP shares) to be taxable at the personal level but deductible at the corporate level. Together with the incentives of #1 and #2 above, this feature, by eliminating the discriminatory double tax on corporate profits, helps to restore private property in corporate equity.
Defer personal income taxes on CLB-sheltered stock accumulations of area voters until the stock is distributed, sold and converted into spendable income. Allow the CLB participant a tax-free “roll-over” into a tax-exempt “Individual Retirement Account.” i.e., to further delay paying personal income taxes if the cash proceeds are re-invested into securities of other private sector equity investments. The objective here is to encourage savings and investment and to provide new sources for financing new ventures.
Similar to #5 above, provide a tax deferral to the seller of stock to a CLB (e.g., joint venture partners and other CLB investors) from any proceeds on the sale, provided that the seller re-invests the cash proceeds in securities of other productive enterprises within the Super Empowerment Zone. This simultaneously reinforces both the goal of expanded share ownership opportunities and of providing new sources for financing development within the zone.
Require an annual independent professional appraisal of the fair market value of CLB shares and provide regulatory oversight of CLBs to minimize abuses, promote understanding, disseminate reliable information on the CLB among area voters, and generally protect the property rights of CLB participants.
Monetize private sector productive credit by making “eligible” CLB and ESOP loans (as determined and allocated by local banks) within Super Empowerment Zones eligible for discounting under Section 13 of the Federal Reserve Act. New money issuances would be subject to 100 percent reserve requirement and made at a discount rate limited to a low Fed “servicing fee.” This reform would radically reduce capital credit costs, accelerate private sector growth rates and increase the competitiveness of enterprises within Super Empowerment Zones, reduce dependency on tax subsidies, and broaden citizen participation in capital ownership and profits.
Providing a way of legitimately getting productive capital ownership into the hands of the people who now don’t have it is the solution to America’s economic decline in wealth and income inequality, which will result in double-digit economic growth and cause EVERY American’s income to significantly grow, providing the means to support themselves and their families with an affluent lifestyle, and provide the necessary tax base to gradually pay off American debts. The Just Third Way Master Plan for America’s future is published at http://foreconomicjustice.org/?p=5797.
On February 12, 2018, Andrew Taylor and Martin Crutsinger write on Associated Press )AP):
President Donald Trump unveiled a $4.4 trillion budget for next year that heralds an era of $1 trillion-plus federal deficits and — unlike the plan he released last year — never comes close to promising a balanced ledger even after 10 years.
The budget submitted Monday shows the growing deficits despite major cuts for domestic programs, largely because of last year’s tax overhaul, which is projected to cause federal tax revenue to drop. This budget does not yet reflect last week’s two-year bipartisan $300 billion pact that wholly rejects Trump’s plans to slash domestic agencies.
The president’s budget proposes dramatic cuts to a wide range of domestic agencies from the Departments of Labor and Interior to the Environmental Protection Agency and the National Science Foundation. Unlike last year’s submission, the 2019 Trump plan would cut Medicare by $554 billion over the next 10 years, a 6 percent reduction from projected spending, including cuts in Medicare payments going to hospitals and rehabilitation centers.
Presidential budgets are often declared dead-on-arrival in Congress where lawmakers have their own ideas about spending priorities. But the documents do represent the most detailed elaboration of an administration’s priorities.
President Donald Trump rolls out his infrastructure plan Monday, which envisions $1.5 trillion in spending over a decade to rebuild roads and highways. The plan relies heavily on state and local government budgets to become a reality. (Feb. 12)
Tax revenue would plummet by $3.7 trillion over the 2018-27 decade relative to last year’s “baseline” estimates, the budget projects. Trump is requesting a record $686 billion for the Pentagon, a 13 percent increase from the 2017 budget enacted last May.
In remarks Monday, Trump focused on the spending increases he favors rather than the deficits he and other Republicans have pledged to reduce.
“We’re going to have the strongest military we’ve ever had, by far,” Trump said. “In this budget we took care of the military like it’s never been taken care of before.”
Also getting a boost would be border security. Trump’s budget includes money to start building 65 miles of border wall in south Texas as well as money to bring immigration jails up to a capacity of 47,000 and add 2,000 Immigration and Customs Enforcement employees and 750 Border Patrol agents.
The spending spree, along with last year’s tax cuts, has the deficit moving sharply higher with Republicans in control of Washington. Trump’s plan sees a 2019 deficit of $984 billion, though $1.2 trillion is more plausible after last week’s budget pact and $90 billion worth of disaster aid is tacked on. That’s more than double the 2019 deficit the administration promised last year.
All told, the new budget sees accumulating deficits of $7.2 trillion over the coming decade; Trump’s plan last year projected a 10-year shortfall of $3.2 trillion.
“In one year of working together, we have laid the foundation for a new era of American greatness,” Trump said in the budget message accompanying his spending document. “America is back to winning again. A great spirit of optimism continues to sweep across our nation.”
The 2019 budget was originally designed to double down on last year’s proposals to slash foreign aid, the Environmental Protection Agency, home heating assistance and other nondefense programs funded by Congress each year.
“A lot of presidents’ budgets are ignored. But I would expect this one to be completely irrelevant and totally ignored,” said Jason Furman, a top economic adviser to President Barack Obama. “In fact, Congress passed a law last week that basically undid the budget before it was even submitted.”
In a preview of Monday’s release, the White House on Sunday focused on Trump’s $1.5 trillion plan for the nation’s crumbling infrastructure. He also is asking for a $13 billion increase over two years for opioid prevention, treatment and long-term recovery. A request for $23 billion for border security, including $18 billion for a wall along the U.S.-Mexico border and money for more detention beds for detained immigrants, is part of the budget, too.
Trump would again spare Social Security retirement benefits as he promised during the 2016 campaign, though his plan would reprise last year’s attempt to scuttle the “Obamacare” health law and sharply cut back the Medicaid program for the elderly, poor and disabled.
The plan also reprises proposals from last year’s Trump budget to curb crop insurance costs, cut student loan subsidies, reduce pension benefits for federal workers and cut food stamps, among other proposals.
Mick Mulvaney, the former tea party congressman who runs the White House budget office, said Sunday that Trump’s new budget, if implemented, would tame the deficit over time.
“The budget does bend the trajectory down, it does move us back toward balance. It does get us away from trillion-dollar deficits,” Mulvaney said on “Fox News Sunday.”
Last year, Trump’s budget projected a slight surplus after a decade, but critics said it relied on an enormous accounting gimmick — double counting a 10-year, $2 trillion surge in revenues from the economic benefits of “tax reform.” Now that tax reform has passed, the math trick can’t be used, and the Trump plan doesn’t come close to balancing.
Trump plan also promises 3 percent growth, continuing low inflation, and low interest yields on U.S. Treasury bills despite a flood of new borrowing, underestimates the mounting cost of financing the government’s $20 trillion-plus debt. Many economists are likely to find the prospects for such a rosy scenario implausible.
The White House is putting focus this year on Trump’s long-overdue plan to boost spending on the nation’s crumbling infrastructure. The plan would put up $200 billion in federal money over the next 10 years to leverage $1.5 trillion in infrastructure spending, relying on state and local governments and the private sector to contribute the bulk of the funding.
Critics contend the infrastructure plan will fail to reach its goals without more federal support. Proposals to streamline the permitting process as a way to reduce the cost of projects have already generated opposition from environmental groups.
Trump’s proposals for military expansion and building a boarder wall are wasteful spending and are unproductive, all financed with debt to be paid off sometime in the future by future citizens through taxation.
What we should be doing is financing new capital wealth asset formation which energizes of productive capability to produce quality and environmentally responsible goods, products and services. And at the same time ensure that new capital owners will be created with the goal of making EVERY child, woman, and man a capital owner so that citizens would become empowered as owners to meet their own consumption needs and government would become more dependent on economically independent citizens, thus reversing current global trends where all citizens will eventually become dependent for their economic well-being on the State and whatever elites control the coercive powers of government, e.g., the police, the law courts, the prisons, the tax system, and so on.
To achieve this goal will require debt financing.
There is good debt and there is bad debt. The debt that is bogging down our economy is bad debt; it is unproductive and essentially redistributive based on future taxpayer promises to pay off the debt. But of course, this an unsustainable position.
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. Using debt mechanisms, namely pure, interest-free capital credit loans to finance the formation of wealth-creating, income-producing capital assets is what is needed, so long as the ownership of future productive capital assets are broadly and individually OWNED, and not allowed to become concentrated, as are capital assets today, among a tiny minority of the citizenry.
Capital acquisition takes place on the logic of self-financing and asset-backed credit for productive uses. People invest in capital ownership on the basis that the investment will pay for itself. The basis for the commitment of loan guarantees is the fact that nobody who knows what he or she is doing buys a physical capital asset or an interest in one unless he or she is first assured, on the basis of the best advice one can get, that the asset in operation will pay for itself within a reasonable period of time — 5 to 7 or, in a worst case scenario, 10 years (given the current depressive state of the economy). And after it pays for itself within a reasonable capital cost recovery period, it is expected to go on producing income indefinitely with proper maintenance and with restoration in the technical sense through research and development.
Still, there is at least a theoretical chance, and sometimes a very real chance, that the investment might not pay for itself, or it might not pay for itself in the projected time period. So, there is a business risk. This is why there needs to be security against default.
In order to ensure widespread, and desirably universal individual ownership participation, capital credit, to be effective, will require commercially-provided loan insurance and re-insurance.
To solve the security issue, the risk can be absorbed by capital credit insurance or commercial risk insurance. Thus, in order to achieve national economic democracy, we need a way to handle risk management in finance by broadly insuring the risks. Such capital credit insurance would substitute for the security demanded by lenders to cover the risk of non-payment, thus enabling the poor and others with few assets (the 99 percenters) to overcome the collateralization barrier that excludes the non-halves from access to productive capital.
One feasible way is to lift ownership-concentrating Federal Reserve System credit barriers and other institutional barriers that have historically separated owners from non-owners and link tax and monetary reforms to the goal of expanded capital ownership. This can be done under the existing legal powers of each of the 12 Federal Reserve regional banks, and will not add to the already unsustainable debt of the Federal Government or raise taxes on ordinary taxpayers. We need to free the system of dependency on Wall Street or the accumulated savings and money power of the rich and super-rich who control Wall Street. The Federal Reserve System has stifled the growth of America’s productive capacity through its monetary policy by monetizing public-sector growth and mounting Federal deficits and “Wall Street” bailouts; by favoring speculation over investment; by shortchanging the capital credit needs of entrepreneurs, inventors, farmers, and workers; by increasing the dependency of with usurious consumer credit; and by perpetuating unjust capital credit and ownership barriers between rich Americans and those without savings. The Federal Reserve Bank should be used to provide interest-free capital credit (including only transaction and risk premiums) and monetize each capital formation transaction, determined by the same expertise that determines it today — management and banks — that each transaction is viably feasible so that there is virtually no risk in the Federal Reserve. The first layer of risk would be taken by the commercial credit insurers, backed by a new government corporation, the Capital Diffusion Reinsurance Corporation, through which the loans could be guaranteed. This entity would fulfill the government’s responsibility for the health and prosperity of the American economy.
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. These 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.
Starting with the business corporation, a legal entity created and sanctioned by state and federal government and judicial law, the government should provide tax incentives for full-dividend payouts to its stockholders, or alternatively dictate that from now on 100 percent of all profits be paid out fully as dividend payments to stockholders (thus, eliminating the corporate income tax), and be subject to progressive individual taxation rates during the short term. This would effectively prohibit retained earnings financing of new productive capital formation (reinvesting the corporate earnings already earned). The government could also limit debt financing by imposing some ratio formula to annual revenue under which a corporation could debt finance new productive capital formation with borrowed monies. Both retained earnings and debt financing only enhance the ownership holding value of the existing corporate ownership class and do nothing to create new owners. Thus, the rich get richer systematically and capital ownership concentration is furthered, facilitated by financing further productive capital acquisition out of the earnings of existing productive capital.
In place of retained earnings and debt financing, the government should require business corporations to issue and sell full-voting, full-dividend payout stock to more people to underwrite new productive capital formation, with the purpose of providing opportunity for new owners, both employees of corporations and non-employees, to participate in a growing economy. Of course, there needs to be a financial mechanism put in place that will guarantee loan risks; otherwise banks and lending institutions will not make the loans, and the system will continue to limit access to capital acquisition to those who already own capital — the rich. This is because “poor” people have no security or collateral, or sufficient income to pledge against the loan as security, and/or are disqualified on the grounds of either unproven unreliability or proven unreliability.
Criteria must be created to qualify the corporations subject to this policy and those corporations that qualify overseen so as to insure that their executives exercise prudent fiduciary responsibility to generate loan payback. Once the guaranteed loans are paid back, the new capital formation will continue to produce income for existing and future owners.
While tax and investment stimulus incentives are excellent tools to strengthen economic growth, without the requirement that productive capital ownership is broadened simultaneously, the result will continue to further concentrate productive capital ownership among those who already own, and further create dependency on redistribution policies and programs to sustain purchasing power on the part of the 99 percent of the population who are dependent on their labor worker earnings or welfare to sustain their livelihood. By stimulating economic growth tied to broadened productive capital ownership the benefits are two-fold: one is that over time the 99 percenters will be enabled to acquire productive capital assets that are paid for out of the future earnings of the investments and gain greater access to job opportunities that a growth economy generates.
In this way, we can ensure inclusive prosperity, inclusive opportunity, and inclusive economic justice.
Picture by Khalil Hamra AP/Press Association Images
On August 8, 2016, this article was published on Futerfield:
Basic Income is often promoted as an idea that will solve inequality and make people less dependent on capitalist employment. However, it will instead aggravate inequality and reduce social programs that benefit the majority of people.
At its Winnipeg 2016 Biennial Convention, the Canadian Liberal Party passed a resolution in support of “Basic Income.” The resolution, called “Poverty Reduction: Minimum Income,” contains the following rationale: “The ever growing gap between the wealthy and the poor in Canada will lead to social unrest, increased crime rates and violence… Savings in health, justice, education and social welfare as well as the building of self-reliant, taxpaying citizens more than offset the investment.”
The reason many people on the left are excited about proposals such as universal basic income is that they acknowledge economic inequality and its social consequences. However, a closer look at how UBI is expected to work reveals that it is intended to provide political cover for the elimination of social programs and the privatization of social services. The Liberal Party’s resolution is no exception. Calling for “Savings in health, justice, education and social welfare as well as the building of self-reliant, taxpaying citizen,” clearly means social cuts and privatization.
UBI has been endorsed by neoliberal economists for a long time. One of its early champions was the patron saint of neoliberalism, Milton Friedman. In his book Capitalism and Freedom, Friedman argues for a “negative income tax” as a means to deliver a basic income. After arguing that private charity is the best way to alleviate poverty, and praising the “private … organizations and institutions” that delivered charity for the poor in the capitalist heyday of the nineteenth century, Friedman blames social programs for the disappearance of private charities: “One of the major costs of the extension of governmental welfare activities has been the corresponding decline in private charitable activities.”
To Friedman and his many powerful followers, the cause of poverty is not enough capitalism. Thus, their solution is to provide a “basic income” as a means to eliminate social programs and replace them with private organizations. Friedman specifically argues that “if enacted as a substitute for the present rag bag of measures directed at the same end, the total administrative burden would surely be reduced.”
Friedman goes on to list some the “rag bag” of measures he would hope to eliminate: direct welfare payments and programs of all kinds, old age assistance, social security, aid to dependent children, public housing, veterans’ benefits, minimum-wage laws, and public health programs, hospitals and mental institutions.
Friedman also spends a few paragraphs worrying whether people who depend on “Basic Income” should have the right to vote, since politically enfranchised dependents could vote for more money and services at the expense of those who do not depend on these. Using the example of pension recipients in the United Kingdom, he concludes that they “have not destroyed, at least as yet, Britain’s liberties or its predominantly capitalistic system.”
Charles Murray, another prominent libertarian promoter of UBI, shares Friedman’s views. In an interview with PBS, he said: “America’s always been very good at providing help to people in need. It hasn’t been perfect, but they’ve been very good at it. Those relationships have been undercut in recent years by a welfare state that has, in my view, denuded the civic culture.” Like Friedman, Murray blames the welfare state for the loss of apparently effective private charity.
Murray adds: “The first rule is that the basic guaranteed income has to replace everything else — it’s not an add-on. So there’s no more food stamps; there’s no more Medicaid; you just go down the whole list. None of that’s left. The government gives money; other human needs are dealt with by other human beings in the neighborhood, in the community, in the organizations. I think that’s great.”
To the Cato Institute, the elimination of social programs is a part of the meaning of Universal Income. In an article about the Finish pilot project, the Institute defines UBI as “scrapping the existing welfare system and distributing the same cash benefit to every adult citizen without additional strings or eligibility criteria”. And in fact, the options being considered by Finland are constrained to limiting the amount of the basic income to the savings from the programs it would replace.
“Basic Income” won’t alleviate poverty.
From a social welfare point of view, the substitution of social programs with market-based and charitable provision of everything from health to housing, from child support to old-age assistance, clearly creates a multi-tier system in which the poorest may be able to afford some housing and health care, but clearly much less than the rich — most importantly, with no guarantee that the income will be sufficient for their actual need for health care, child care, education, housing, and other needs, which would be available only by way of for-profit markets and private charities.
Looking specifically at the question of whether Friedman’s proposal would actually improve the conditions of the poor, Hyman A. Minsky, himself a renowned and highly regarded economist, wrote the “The Macroeconomics of a Negative Income Tax.” Minsky looks at the outcome of a “social dividend,” which “transfers to every person alive, rich or poor, working or unemployed, young or old, a designated money income by right.” Minsky conclusively shows that such a program would “be inflationary even if budgets are balanced” and that the “rise in prices will erode the real value of benefits to the poor … and may impose unintended real costs upon families with modest incomes.” This means that any improved spending power afforded to citizens through an instrument such as UBI will be completely absorbed by higher prices for necessities.
Rather than alleviating poverty, UBI will most likely exacerbate it. The core reasoning is quite simple: the prices that people pay for housing and other necessities are derived from how much they can afford to pay in the first place. If you imagine they way housing is distributed in a modern capitalist society, the poorest get the worst housing, and the richest get the best. Giving everyone in the community, rich and poor alike, more money, would not allow the poorest to get better housing, it would just raise the price of housing.
If UBI came at the expense of other social programs, such as health care or child care, as Friedman intended, then the rising cost of housing would draw money away from other previously socially provisioned services, forcing families with modest incomes to improve their substandard housing by accepting worse or less childcare or healthcare, or vice versa. A disabled person whose mobility needs requires additional expenditure on accessible housing may not have enough of the basic income left for any additional health care they also require. Yet replacing means testing and special programs that address specific needs is the big idea of UBI.
The notion that we can solve inequality within capitalism by indiscriminately giving people money and leaving the provisioning of all social needs to corporations is extremely dubious. While this view is to be expected among those, like Murray and Friedman, who promote capitalism, it is not compatible with anticapitalism. UBI will end up in the hands of capitalists. We will be dependent on these same capitalists for everything we need. But to truly alleviate poverty, productive capacity must be directed toward creating real value for society and not toward “maximizing shareholder value” of profit-seeking investors.
There is no possibility of another kind of ‘Basic Income’.
Many people don’t dispute the fact that establishment promoters of UBI are only doing it in order to eliminate social programs, but they imagine that another kind of basic income is possible. They call for a basic income that disregards the “deal” that Charles Murray advocates, but want UBI in addition to other social program, including means-tested benefits, protections for housing, guarantees of education and child care, and so on. This view ignores the political dimension of the question. Proposing UBI in addition to existing program mistakes, a general consensus for replacing social programs with a guaranteed income for a broad base of support for increasing social programs. But, no such broad base exists.
Writing in 1943, with the wartime policies of “full employment” enjoying wide support, Michal Kalecki wrote a remarkable essay entitled “The Political Aspects of Full Employment.” Kalecki opens by writing, “a solid majority of economists is now of the opinion that, even in a capitalist system, full employment may be secured by a government spending programme.” Though he is talking about full employment, which means an “adequate plan to employ all existing labour power,” the same is true of UBI. The majority of economists would agree that a plan to guarantee an income for all is possible.
However, Kalecki ultimately argues that full employment policies will be abandoned: “The maintenance of full employment would cause social and political changes which would give a new impetus to the opposition of the business leaders. Indeed, under a regime of permanent full employment, ‘the sack’ would cease to play its role as a disciplinary measure. The social position of the boss would be undermined, and the self-assurance and class-consciousness of the working class would grow.”
The conflict between the worker and the capitalist, or between the rich and the poor, can not be sidestepped simply by giving people money, if capitalists are allowed to continue to monopolize the supply of goods. Such a notion ignores the political struggle between the workers to maintain (or extend) the “basic income” and the capitalists to lower or eliminate it in order to strengthen their social position over the worker and to protect the power of “the sack.”
Business leaders fight tooth and nail against any increase of social benefits for workers. Under their dominion, only one kind of UBI is possible: the one supported by Friedman and Murray, the Canadian Liberal Party, and all others who want to subject workers to bosses. The UBI will be under constant attack, and unlike established social programs with planned outcomes that are socially entrenched and difficult to eliminate, UBI is just a number, one that can be reduced, eliminated, or simply allowed to fall behind inflation.
UBI does not alleviate poverty and turns social necessities into products for profit. To truly address inequality we need adequate social provisioning. If we want to reduce means testing and dependency on capitalist employment, we can do so with capacity planning. Our political demands should mandate sufficient housing, healthcare, education, childcare and all basic human necessities for all. Rather than a basic income, we need to demand and fight for a basic outcome — for the right to life and justice, not just the right to spend.
This article fails to get to the root of economic inequality, which is concentrated ownership of productive capital asset wealth. The article states that Chicago School Milton Friedman states “the cause of poverty is not enough capitalism.” Yet capitalism, as it has evolved, is a private property-based system in which a tiny minority OWNS the means of production and the productive capital asset wealth it is comprised of and produces. If there “is not enough capitalism,” then shouldn’t the argument be to create more capital owners and link tax and monetary reforms to the goal of expanded capital ownership?
Removing barriers that inhibit or prevent ordinary people from purchasing capital that pays for itself out of its own future earnings is paramount as an actionable policy. This can be done under the existing legal powers of each of the 12 Federal Reserve regional banks, and will not add to the already unsustainable debt of the federal government or raise taxes on ordinary taxpayers. We need to free the system of dependency on Wall Street and the accumulated savings and money power of the rich and super-rich who control Wall Street. The Federal Reserve System has stifled the growth of America’s productive capacity through its monetary policy by monetizing public-sector growth and mounting federal deficits and “Wall Street” bailouts; by favoring speculation over investment; by shortchanging the capital credit needs of entrepreneurs, inventors, farmers, and workers; by increasing the dependency with usurious consumer credit; and by perpetuating unjust capital credit and ownership barriers between rich Americans and those without savings. The Federal Reserve Bank should be used to provide interest-free capital credit (including only transaction and risk premiums) and monetize each capital formation transaction, determined by the same expertise that determines it today — management and banks — that each transaction is viably feasible so that there is virtually no risk in the Federal Reserve. The first layer of risk would be taken by the commercial credit insurers, backed by a new government corporation –– the Capital Diffusion Reinsurance Corporation (CDRC) –– through which the loans could be guaranteed. The CDRC would reinsure any portion of any financing risk assessed as reasonable and insurable but not already insured by the commercial capital credit insurance underwriters. In establishing the CDRC, the federal government would not be undertaking a new responsibility but merely simplifying and rationalizing an existing one. This entity would fulfill the government’s responsibility for the health and prosperity of the American economy.
The Capital Diffusion Reinsurance Corporation would function similar to the Federal Housing Administration, generally known as “FHA”, which provides mortgage insurance on loans made by FHA-approved lenders throughout the United States and its territories. The FHA insures mortgages on single family and multifamily homes including manufactured homes. While pay-downs on home mortgages require a separate source of income, capital credit for productive capital formation is self-liquidating, with the earnings from the investment the source of the pay-down.
On February 2, 2018, Emily Sullivan writes on National Public Radio, Inc.:
A new NPR/Marist poll finds that 1 in 5 jobs in America is held by a worker under contract. Within a decade, contractors and freelancers could make up half of the American workforce. In a series, NPR explores many aspects of this change.
After working full time at a museum, Emily Doherty does something millions of Americans do each day: head to a second job. In her case, it means donning a petticoat to portray a Colonial-era woman at living-history museums or national parks, where she sings and play-acts.
The 28-year-old needs the extra work so she can make ends meet, plus pay her $500-per-month student loan payment. Doherty is among the 30 percent of Americans who do something else for pay in addition to their full-time jobs, according to a recent NPR/Marist poll.
“I’d like to own a house someday,” says Doherty, who lives in Virginia. “The only way I’m going to be able to do that is if I work two jobs.”
Doherty’s second job means she barely has any time for herself or her friends on weeknights or even weekends. But it lets her chip away at her debt.
The emotional cost is high. Each day, she gets off from her day job around 5 p.m. and rushes home to heat up dinner and change into her costume. Then, she works as many as four hours. She hits bed around 11, and does it again the next day. And on weekends, her performances can last another eight hours.
All that extra work has meant missing weddings or sharing an evening beer with a friend, she says. “You start losing your support system, which is one of the most incredibly important things you can have if you’re working this much,” she says.
That can affect people’s personal well-being and also their family life, says Susan Lambert, an associate professor at the University of Chicago’s School of Social Service Administration.
“Often, they are faced with that very hard decision of whether they take on another job, or they spend time at home having dinner with their children,” she says.
Straddling that delicate balance can be a challenge for people like Jon Jacobs, 31, who has two small children and works full-time as a substance addiction therapist in Milwaukee. He also has student loans, for graduate school. Jacobs had a second job as a bartender for years, but he switched to driving for Lyft a year agobecause of the flexibility it offered.
“I just decided eventually it just really wasn’t worth it,” he says. “It didn’t line up with our life goals, and who I wanted to be as a parent. I can see the difference, especially with my son who’s almost two (and says), ‘Daddy’s home at night.’ “
Jacobs makes less money than he did bartending, but he says the small financial sacrifice is worth it so he can spend more time with his kids.
But earning less is not a choice for Doherty, the museum worker: She faces that student loan payment every month. “I fully expect my federal loans to not be paid back before I die,” she says.
Like many moonlighters NPR spoke to, Doherty says she’s working toward financial peace of mind.
“I hope that in the future, I am able to come to a place where I am financially stable enough to do just what drives me, and what makes me happy,” she says.
And what would make her really happy is seeing her family back in Maine. She hasn’t seen them in three years. She’s saving up — bit by bit — for a plane ticket home this summer to watch her younger sister perform in a local play.
On February 5, 2018, Gallup.com reports on Basic Income through Futurism.com:
What will we do in a future where a huge percentage of occupations are made obsolete by technology? According to a 2018 Gallup poll, 48 percent of Americans see promise in UBI.
RESPONDING TO DISPLACEMENT
Americans are concerned about how growing automation will affect their jobs. There seems to be no limit to what tasks sophisticated robots can perform equal to or better than us, yet experts and the public alike disagree on how to respond to this displacement. In a 2018 Gallup and Northeastern University poll, 48 percent of Americans agreed that a universal income program is a positive solution.
Does this poll mean that Americans are on board? Well, not exactly. While just below half are in favor, the majority disagreed about the use of UBI. More so, while an overwhelming 65 percent of Democrats support the concept of a universal income, only 28 percent of Republicans do, according to this poll.
In fact, according to the poll, 81 percent of those who identify as “very liberal” voiced support for UBI while only 27 percent of those who identify as “very conservative” said the same. If any type of universal income system is considered in the U.S., will it further divide the country’s parties?
Beyond the disparity in agreement over whether to implement a UBI, not everyone agrees on how we might pay for such a program. Only 45 percent of those polled would be willing to pay higher taxes to fund such a program. Interestingly enough, however, 80 percent of those who are in favor of a universal income also expect that business who benefit from artificial intelligence (AI) and autonomous technologies should pay for it.
This line of thinking aligns with the concept of a “robot tax,”something that Bill Gates overwhelmingly supports. The thinking behind this is that, because a human worker pays taxes, automation could lead to both job loss and a severe blow to government finances.
Because the workers they are replacing would pay taxes, this idea argues that it would only be right if taxes were paid on behalf of the robot — by the company that built it. There are those who say that this de-incentivizes innovation, but others agree that it could be a feasible solution to the cost of such a program.
Technology will unquestionably continue to advance, and innovation continue to streamline our lives, improve medical care, and push forward progress across fields and occupations. Among those polled by Gallup either, 76% either agreed or strongly agreed that AI will “fundamentally change the way people work and live in the next ten years.” Presently, 77% are “mostly positive” or “very positive” about AI’s impact, yet it’s clear that automation will lead to job losses at rates we have never experienced before. While not everyone agrees on the prospect of UBI, solutions must be found.
Yes, automation and technology, what is the non-human means of producing goods, products and services is exponentially growing and making many forms of human labor unnecessary. If productive capital, the non-human factor, is increasingly the source of the world’s economic growth, shouldn’t IT become the source of added property ownership incomes for all. If both labor and capital are independent factors of production, each own by humans, and if capital’s proportionate contributions are increasing relative to that of labor, then doesn’t equality of opportunity and economic justice demand that the right to property (and access to the means of acquiring and possessing property) must in justice be extended to all? Sadly, the American people and its leaders couch all policy directions in the name of job creation or redistribution through taxation. Americans ignore the necessity to broaden personal ownership of wealth-creating, income-producing capital assets simultaneously with the growth of the economy. Instead, they are wanting hand-out in the form of a Guaranteed Basic Income, and further deepening their dependency on those who are productive and enslaving themselves to those in economic and political power.
Wouldn’t be far better to enable EVERY child, woman and man to become productive though broadening individual ownership stakes simultaneously with the future capital asset growth of the corporations growing the economy? If we did so, the end result would be that citizens would become empowered as owners to meet their own consumption needs and government would become more dependent on economically independent citizens, thus reversing current global trends where all citizens will eventually become dependent for their economic well-being on the State and whatever elites control the coercive powers of government, e.g., the police, the law courts, the prisons, the tax system, and so on.