Top 5 Reasons ‘Labor Day’ Isn’t For Laborers Anymore

On September 2, 2014, Juan Cole writes on Nation Of Change:

Calling the bottom of a river a “bed” is a metaphor.  Imagine the river restlessly sleeping on its muddy mattress.  But when we’ve so internalized a metaphor that we forget it is a figure of speech, as with the phrase “river bed,” it is called a “dead metaphor.”

Labor Day is, alas, akin to a dead metaphor in contemporary America.  There was a time when, as in 1936, the unionized auto workers could make effective demands from their employers, for higher wages and better working conditions.  Workers no longer get better off in today’s U.S.A.  They are often summarily dismissed if they try to unionize.  They are badly paid.  Good jobs have been switched out for bad jobs.  Tax policy has been manipulated by the wealthy and corporations, who have bought Congress and state legislatures, so as to ensure that the rich get richer, and richer and richer.

The U.S. has one of the worst records on wealth and income inequality in the advanced industrialized world.  This situation is bad for everyone.  Rich people still only need one or two refrigerators.  Many poor people can’t afford any.  Having a small number of super-rich and a large number of poor means that refrigerator manufacturers can’t sell as many refrigerators as they could in a more equal society, which means that they can’t hire many workers, which reduces the number of jobs in the manufacturing sector.

So as we burn dead meat and play frisbee in a warming climate, we could stop to consider the lives of the laborers we are theoretically honoring:

1.  There has been a decade of stubborn wage stagnation.  The Economic Policy Institute notes:

“According to every major data source, the vast majority of U.S. workers—including white-collar and blue-collar workers and those with and without a college degree—have endured more than a decade of wage stagnation. Wage growth has significantly underperformed productivity growth regardless of occupation, gender, race/ethnicity, or education level. ”

In contrast, the wealthy have been getting a larger share of any income growth:  “The top 20 percent of the highest income households in the U.S. experienced 60.6 percent of total wage gains between 2005 and 2012…”  The top 5% alone took home over a quarter of all the wage gains in those years.

2.  EPI observes that the lost decade comes on top of previous decades of wage stagnation, going back to about 1970, which reversed the era of wage growth after World War II:

“This lost decade for wages comes on the heels of decades of inadequate wage growth. For virtually the entire period since 1979 (with the one exception being the strong wage growth of the late 1990s), wage growth for most workers has been weak. The median worker saw an increase of just 5.0 percent between 1979 and 2012, despite productivity growth of 74.5 percent—while the 20th percentile worker saw wage erosion of 0.4 percent and the 80th percentile worker saw wage growth of just 17.5 percent.”

3.  Only 11.3% of wage and salary workers belong to unions in 2014.  This is down from about 35% at the peak of the movement in 1954, and down from 20% in 1983.  This vast decline in unionization is not because workers don’t want the protections of union organization.  It is because state legislatures have deliberately passed laws aimed at weakening unionization rights and because large corporations have systematically fired workers who tried to unionize, despite this practice being supposedly illegal.

4.  Income inequality is greater than at any time since 1928.  Workers are taking home a smaller slice of the overall pie, while the wealthy and superwealthy are walking away with the lion’s share.  It is not in fact clear that most financiers are more important to you than your plumber, but the former make hundreds of times what the latter does. Pew Research Center remarks,

“U.S. income inequality is the highest it’s been since 1928. In 1982, the highest-earning 1% of families received 10.8% of all pretax income, while the bottom 90% received 64.7%, according to research by UC-Berkeley professor Emmanuel Saez. Three decades later, according to Saez’ preliminary estimates for 2012, the top 1% received 22.5% of pretax income, while the bottom 90%’s share had fallen to 49.6%.”

Wealth ownership inequality is even greater than income inequality:  “the highest-earning fifth of U.S. families earned 59.1% of all income, the richest fifth held 88.9% of all wealth…”

5.  Although there are signs of a halting recovery from the massive job losses that began in 2008 as a result of Wall Street corruption and reckless business practices, the new jobs added pay substantially less than the ones that were lost.  USA Today observes,drawing from a report by the U.S. Conference of Mayors and IHS Global Insight,

“The jobs regained since the recession have, as a whole, been lower paying than the ones lost. According to the IHS report, the average annual income of jobs lost between 2008 and 2009 was $61,637, while the average for those gained through the second quarter of 2014 was $47,171. This amounts to a wage gap of 23 percent and $93 billion in lower wage income . . .  Jobs in low-income fields such as hospitality, which pay around $21,000 a year, replaced jobs lost in high-paid sectors such as manufacturing, which pay $63,000, the report found. ”

And, you guessed it, the top 5 percent in contrast have made out like bandits in the same period.

Another writer who ONLY focuses on JOBS as if hypnotized to not recognize  that the effect of advancing technology is to replace human labor in the production process. After all, why else would businesses use a machine instead of human labor if there were no benefit to doing so?

What is absent in such writings is a discussion of Who Should Own America?

It is evident that no one in a leadership position speaks of a vision for a future system of economic democracy based on equality of opportunity for every person to become an owner of wealth-creating, income-generating productive capital.

Why the focus on “productive capital?” Physical capital is non-human “things” owned by people used to produce products and services (productive land, resources, structures, infrastructure, tools, machines, superautomation, robotics, digital computerized processing and operations, etc. and certain intangibles that have the characteristics of property such as patents and trade names). Real physical capital isn’t money; it is measured in money (financial capital), but it is really producing power and earning power through ownership of the non-human factor of production. In the law, property is the bundle of rights that determines one’s relationship to things.

The reality, which is ignored in our political discussions and even by conventional economists and the media, is that productive capital is increasingly the source of the world’s economic growth and, therefore, should become the source of added property ownership incomes for all. The ownership of productive capital is the source of wealth and income for the richest Americans––not a job.

Businesses, whether small or large, or sole proprietors, partnerships, or business corporations are formed to provide products and services at a profit. Their success or failure is dependent on whether or not there are “customers with money.”

Unfortunately, politicians, economists and the media focus on JOB CREATION as the ONLY way to create “customers with money” and provide a source of income for peoples’ livelihood. Yet the demand for people (labor workers who contribute manual, intellectual, creative and entrepreneurial work) is being made less necessary as productive capital is increasingly the source of the world’s economic growth. What should we conclude from this assessment of reality? Well, simply that if both labor and productive capital are interdependent factors of production, and 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.

The role of physical capital is to do ever more of the work, which produces income to the business owners. Full employment is not an objective of businesses. Companies strive to keep labor input and other costs at a minimum in order to maximize profit. Private sector job creation in numbers that match the pool of people willing and able to work is constantly being eroded by physical capital’s ever-increasing role.

The function of research and technology is to invent tools to reduce toil, enable otherwise impossible production, create new highly automated industries, and significantly change the way in which products and services are produced from labor intensive to capital intensive––the core function of technological innovation and invention. Technological change makes tools, machines, structures, and processes ever more productive while leaving human productiveness largely unchanged (our human abilities are limited by physical strength and brain power––and relatively constant).

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.

What we really need in America today is a national discussion on the topic of the importance of productive capital ownership and how we can expand the base of private productive capital ownership simultaneously with the creation of new productive capital formation, with the aim of building long-term financial security for all Americans through accumulating a viable income-producing capital estate.

If we are to significantly expand the population of “customers with money” and significantly grow the economy, then the ownership of productive capital must be spread more broadly and simultaneously with the growth, without taking anything away from the 1 to 10 percent of the people who now own 50 to 90 percent of the wealth controlled by businesses. Thus, productive capital income would be distributed more broadly and the demand for products and services would be distributed more broadly from the earnings of capital and result in the sustentation of consumer demand, which will promote economic growth. That also means that society can profitably employ unused productive capacity and invest in more productive capacity to service the demands of a growth economy.

Unfortunately, ever since the 1946 passage of the Full Employment Act, economists and politicians formulating national economic policy have beguiled us into believing that economic power is democratically distributed if we have full employment––thus the political focus on JOB CREATION and redistribution of wealth rather than on full production and broader productive capital ownership accumulation resulting from OWNERSHIP CREATION. This is manifested in the misguided belief that labor work is the ONLY way to participate in production and earn income.

Thus, when politicians advocate taxpayer money spending to stimulate industry development, there needs to be a conscious policy to broaden private, individual ownership in the companies benefiting from the stimulus––not just argue the justification for taxation redistribution and further national debt based on how many jobs would result. We also need to incentivize business corporations to pay out all their profits as taxable personal incomes to avoid paying corporate income taxes and to finance their growth by issuing new full dividend payout shares for broad-based citizen ownership.

To accomplish this we must ensure that FUTURE economic growth be financed to create new owners of expanding existing and future businesses to ensure that the consumer populous is able to get the money to buy the products and services produced as a result of substituting “machines” for people.

But how can we accomplish this goal of creating new owners of FUTURE productive capital investment simultaneously with the growth of the economy?

The solution requires that the Federal Reserve stop monetizing unproductive debt, including bailouts of banks “too big to fail” and Wall Street derivatives speculators, and begin creating an asset-backed currency that could enable every man, woman and child to establish a Capital Homestead Account or “CHA” (a super-IRA or asset tax-shelter for citizens) at their local bank to acquire a growing dividend-bearing stock portfolio to supplement their incomes from work and all other sources of income. Policies need to insert American citizens into the low or no-interest investment money loop to enable non- and undercapitalized Americans, including the working class and poor, to build wealth and become “customers with money.” That’s what the Capital Homestead Act addresses.

The “Capital Homesteading” concept is the direction America needs to take to build an OWNERSHIP CULTURE and ensure a balance between production and consumption.

For specifics please visit the Capital Homestead Act at http://www.cesj.org/homestead/index.htm and http://www.cesj.org/homestead/summary-cha.htm

http://www.nationofchange.org/top-5-reasons-labor-day-isn-t-laborers-anymore-1409674570

Robert Reich: College Is A Waste For Millions Of Kids — There’s A Better Way

On September 2, 2014, Robert Reich writes on AlterNet:

This week, millions of young people head to college and universities, aiming for a four-year liberal arts degree. They assume that degree is the only gateway to the American middle class.

It shouldn’t be.

For one thing, a four-year liberal arts degree is hugely expensive. Too many young people graduate laden with debts that take years if not decades to pay off.

And too many of them can’t find good jobs when they graduate, in any event. So they have to settle for jobs that don’t require four years of college. They end up overqualified for the work they do, and underwhelmed by it.

Others drop out of college because they’re either unprepared or unsuited for a four-year liberal arts curriculum. When they leave, they feel like failures.

We need to open other gateways to the middle class.

Consider, for example, technician jobs. They don’t require a four-year degree. But they do require mastery over a domain of technical knowledge, which can usually be obtained in two years.

Technician jobs are growing in importance. As digital equipment replaces the jobs of routine workers and lower-level professionals, technicians are needed to install, monitor, repair, test, and upgrade all the equipment.

Hospital technicians are needed to monitor ever more complex equipment that now fills medical centers; office technicians, to fix the hardware and software responsible for much of the work that used to be done by secretaries and clerks.

Automobile technicians are in demand to repair the software that now powers our cars; manufacturing technicians, to upgrade the numerically controlled machines and 3-D printers that have replaced assembly lines; laboratory technicians, to install and test complex equipment for measuring results; telecommunications technicians, to install, upgrade and repair the digital systems linking us to one another.

Technology is changing so fast that knowledge about specifics can quickly become obsolete. That’s why so much of what technicians learn is on the job.

But to be an effective on-the-job learner, technicians need basic knowledge of software and engineering, along the domain where the technology is applied – hospitals, offices, automobiles, manufacturing, laboratories, telecommunications, and so forth.

Yet America isn’t educating the technicians we need. As our aspirations increasingly focus on four-year college degrees, we’ve allowed vocational and technical education to be downgraded and denigrated.

Still, we have a foundation to build on. Community colleges offering two-year degree programs today enroll more than half of all college and university undergraduates. Many students are in full-time jobs, taking courses at night and on weekends. Many are adults.

Community colleges are great bargains. They avoid the fancy amenities four-year liberal arts colleges need in order to lure the children of the middle class.

Even so, community colleges are being systematically starved of funds. On a per-student basis, state legislatures direct most higher-education funding to four-year colleges and universities because that’s what their middle-class constituents want for their kids.

American businesses, for their part, aren’t sufficiently involved in designing community college curricula and hiring their graduates, because their executives are usually the products of four-year liberal arts institutions and don’t know the value of community colleges.

By contrast, Germany provides its students the alternative of a world-class technical education that’s kept the German economy at the forefront of precision manufacturing and applied technology.

The skills taught are based on industry standards, and courses are designed by businesses that need the graduates. So when young Germans get their degrees, jobs are waiting for them.

We shouldn’t replicate the German system in full. It usually requires students and their families to choose a technical track by age 14. “Late bloomers” can’t get back on an academic track.

But we can do far better than we’re doing now. One option: Combine the last year of high school with the first year of community college into a curriculum to train technicians for the new economy.

Affected industries would help design the courses and promise jobs to students who finish successfully. Late bloomers can go on to get their associate degrees and even transfer to four-year liberal arts universities.

This way we’d provide many young people who cannot or don’t want to pursue a four-year degree with the fundamentals they need to succeed, creating another gateway to the middle class.

Too often in modern America, we equate “equal opportunity” with an opportunity to get a four-year liberal arts degree. It should mean an opportunity to learn what’s necessary to get a good job.

Robert Reich is ever persistent in his advocacy for job creation and education to learn what’s necessary to get a good job. It’s all about the JOB and not the EDUCATION for personal development and fulfilment.

A recent study from researchers at Georgetown University projects that there will be 55 million new jobs by 2020 for which there will be a growing call for more educated workers with the necessary education and training to meet the demand.

This is a report that is out-of-sync with the economics of reality.

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) of technology 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 prosperity, opportunity, and 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 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 (see http://www.cesj.org/thirdway/thirdway-intro.htm), 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?”

The path to prosperity, opportunity, and economic justice can be found in the writings about the Capital Homestead Act at http://www.cesj.org/homestead/index.htm. For more overviews related to this topic see my article “The Absent Conversation: Who Should Own America?” published by The Huffington Post at http://www.huffingtonpost.com/gary-reber/who-should-own-america_b_2040592.html and by OpEd News at http://www.opednews.com/articles/THE-Absent-Conversation–by-Gary-Reber-130429-498.html

Also see “The Path To Eradicating Poverty In America” at http://www.huffingtonpost.com/gary-reber/the-path-to-eradicating-p_b_3017072.html and “The Path To Sustainable Economic Growth” at http://www.huffingtonpost.com/gary-reber/sustainable-economic-growth_b_3141721.html, and the article entitled “The Solution To America’s Economic Decline” at http://www.nationofchange.org/solution-america-s-economic-decline-1367588690

http://www.alternet.org/robert-reich-college-waste-millions-kids-theres-better-way

Why the Robots Might Not Take Our Jobs After All: They Lack Common Sense

On August 22, 2014, Neil Irwin writes in The New York Times:

It’s easy to look at the amazing advances in information technology and robotics over the last century and be fearful about the future of the American worker. From factory floors to your grocery store checkout, countless jobs once done by humans have been handed over to computers. Budding technologies like driverless cars promise that more of us will lose our jobs to a computer in the generation ahead.

But David Autor, a leading scholar of labor markets at M.I.T., offers a somewhat more sunny way of looking at things. In a paper presented at the annual gathering of central bankers in Jackson Hole, Wyo., on Friday, Mr. Autor argues that even as computers have gotten better at rote tasks, they have progressed far less in applying common sense.

Try to teach a computer how to tell that a picture of a chair is a chair, for example, and it will be befuddled. “Both a toilet and a traffic cone look somewhat like a chair,” Mr. Autor writes, “but a bit of reasoning about their shapes vis-à-vis the human anatomy suggests that a traffic cone is unlikely to make a comfortable seat. Drawing this inference, however, requires reasoning about what an object is ‘for,’ not simply what it looks like,” a skill computers generally still lack.

Photo

The American actor Jonathan Harris as Dr. Zachary Smith with The Robot in a promotional portrait for the American science-fiction TV series “Lost In Space,” circa 1965.CreditSilver Screen Collection/Getty Images

Machine learning, such as Google Translate or Netflix movie recommendations, is deeply inconsistent, he argues, “uncannily accurate at times, typically, only so-so; and occasionally, unfathomable.”

So what does that mean for workers over the years and decades ahead? Mr. Autor says that this weakness leaves plenty of opportunities for humans to serve as intermediaries of sorts between increasingly intelligent computers that nonetheless lack that common sense.

He invokes the idea of “Polanyi’s Paradox,” named for the Hungarian thinker Michael Polanyi, who observed that “we know more than we can tell,” meaning humans can do immensely complicated things like drive a car or tell one species of bird from another without fully understanding the technical details.

“Following Polanyi’s observation,” Mr. Autor writes, “the tasks that have proved most vexing to automate are those demanding flexibility, judgment, and common sense — skills that we understand only tacitly.”

So what does that mean for the jobs that will exist in the future, even as technology gets better and better at accomplishing many of the things that humans do now?

“Many of the middle-skill jobs that persist in the future will combine routine technical tasks with the set of non-routine tasks in which workers hold comparative advantage — interpersonal interaction, flexibility, adaptability and problem-solving,” Mr. Autor writes. He specifically mentions medical support jobs, building trades and some clerical jobs that require decision-making rather than typing and filing.

In the paper, Mr. Autor presents data showing that these middle-skill jobs have indeed been under pressure over the last few decades, with much stronger growth in the number of both very basic low-paying jobs and the most advanced jobs for skilled professionals. It is a hollowing-out of the American work force, in effect, with fewer jobs for technicians and factory workers and the middle-class wages that come with them.

But while acknowledging the trend in the past, Mr. Autor argues there’s not much reason to expect it to continue in the future.

“I expect that a significant stratum of middle-skill, non-college jobs combining specific vocational skills with foundational middle skills — literacy, numeracy, adaptability, problem-solving and common sense — will persist in the coming decades.” He argues that it is hard to blame computerization for jobs that have disappeared over the last decade in that much of the shift happened after capital investment in information technology fell following the collapse of the dot-com bubble.

Undergirding Mr. Autor’s optimism is the fact that mankind has consistently feared that technology will replace its jobs, and consistently been wrong. At the dawn of the 20th century, he notes, 41 percent of the American work force worked in agriculture, a number that fell to 2 percent by 2000. Farmers of that era could scarcely imagine that so few of their descendants would work in agriculture, or that so many would work in health care, finance, electronics, leisure and entertainment and so on.

“One can find fresh examples daily in which technology substitutes for human labor in an expanding — though still circumscribed — set of tasks,” Mr. Autor writes. “The complementarities are always harder to identify.”

In other words, it is a lot easier to see the jobs that are endangered by emerging technologies than it is the opportunities for new jobs those technologies will create.

No one is suggesting that “robots” will completely replace labor as an input to production and of course there will be opportunities for new jobs created by technological innovation. But certainly one would be blind if they did not realize that the greater impact of technological innovation is that 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.

The role of physical productive capital is to do ever more of the work, which produces wealth and thus income to those who own productive capital assets. Full employment is not an objective of businesses. Companies strive to keep labor input and other costs at a minimum in order to maximize profits for the owners. They strive to minimize marginal cost, the cost of producing an additional unit of a good, product or service once a business has its fixed costs in place in order to stay competitive with other companies racing to stay competitive through technological innovation. Reducing marginal costs enables businesses to increase profits, offer goods, products and services at a lower price, or both. Increasingly, new technologies are enabling companies to achieve near-zero cost growth without having to hire people.

Over the past century there has been an ever-accelerating shift to productive capital––which reflects tectonic shifts in the technologies of production. The mixture of labor worker input and capital worker input has been rapidly changing at an exponential rate of increase for over 235 years in step with the Industrial Revolution (starting in 1776) and had even been changing long before that with man’s discovery of the first tools, but at a much slower rate. Up until the close of the nineteenth century, the United States remained a working democracy, with the production of products and services dependent on labor worker input. When the American Industrial Revolution began and subsequent technological advance amplified the productive power of non-human capital, plutocratic finance channeled its ownership into fewer and fewer hands, as we continue to witness today with government by the wealthy evidenced at all levels.

People invented tools to reduce toil, enable otherwise impossible production, create new highly automated industries, and significantly change the way in which products and services are produced from labor intensive to capital intensive––the core function of technological invention. Most changes in the productive capacity of the world since the beginning of the Industrial Revolution can be attributed to technological improvements in our capital assets, and a relatively diminishing proportion to human labor. Capital, in binary economics terms, does not “enhance” labor productivity (labor’s ability to produce economic goods). In fact, the opposite is true. It makes many forms of labor unnecessary.

Furthermore, productive capital is increasingly the source of the world’s economic growth and, therefore, should become the source of added property ownership incomes for all. If both labor and capital are independent factors of production, and 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 while labor scholar David Autor further argues that technological innovation will create new job opportunities, the problem is there won’t be enough positions created that will pay the wage level necessary to affluently sustain oneself and a family.

What we need is to reform the system to create a democratic growth economy, based on binary economics, wherein the ownership of capital would be spread more broadly as the economy grows, without taking anything away from the 1 to 10 percent who now own 50 to 90 percent of the corporate wealth (capital assets). Instead, the ownership pie would desirably get much bigger and their percentage of the total ownership would decrease, as ownership gets broader and broader, benefiting EVERY citizen, including the traditionally disenfranchised poor and working and middle class. Thus, productive capital income would be distributed more broadly and the demand for products and services would be distributed more broadly from the earnings of capital and result in the sustentation of consumer demand, which will promote economic growth. That also means that society can profitably employ unused productive capacity and invest in more productive capacity to service the demands of a growth economy.

The Center For Economic and Social Justice (www.cesj.org) advocates new justice-committed leaders, especially those who want to end the corruption built into our exclusionary system of monopoly capitalism––the main source of corruption of any political system, democratic or otherwise. They advocate the need to radically overhaul the Federal tax system and monetary policies and institute proposals to get money power to the 99 percent of American citizens who now only rely on their labor worker earnings. Under The Just Third Way more just and simple tax system, access would by provided to ownership of the means of production in the future to every child, woman and man by requiring the government to lift all existing legal and institutional barriers to private property stakes as a fundamental human right.

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

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

Support the Unite America Party Platform, published by The Huffington Post at http://www.huffingtonpost.com/gary-reber/platform-of-the-unite-ame_b_5474077.html as well as Nation Of Change at http://www.nationofchange.org/platform-unite-america-party-1402409962 and OpEd News at http://www.opednews.com/articles/Platform-of-the-Unite-Amer-by-Gary-Reber-Party-Leadership_Party-Platforms-DNC_Party-Platforms-GOP-RNC_Party-Politics-Democratic-140630-60.html.

See “President Obama Pushing Support For Technology Industry” at http://www.nationofchange.org/president-obama-pushing-support-technology-industry-1390143610.

http://www.nytimes.com/2014/08/23/upshot/why-the-robots-might-not-take-our-jobs-after-all-they-lack-common-sense.html?comments&_r=0&abt=0002&abg=0#permid=12664692

Q&A Labor Secretary Perez On How To Produce Better-Paying Jobs

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Secretary of Labor Thomas Perez speaks to business and community leaders at a Los Angeles Area Chamber of Commerce event in Los Angeles on Monday. (Nick Ut / Associated Press)

On August 19, 2014, Tifany Hsu and Chris Kirkham write in the Los Angeles Times:

At the Los Angeles Area Chamber of Commerce this week, U.S. Labor Secretary Thomas Perez kicked off a cross-country, pre-Labor Day tour to champion higher minimum wages, higher-wage jobs and other causes in talks with employers, workers and local leaders.

Perez told the chamber audience at a luncheon Monday that the nation faced two major challenges — a stagnation in wage growth and the increase in long-term unemployed workers. He also noted the decline in the unemployment rate and improving prospects for skilled manufacturing.

Before taking his post a year ago, Perez was the assistant attorney general for the Justice Department’s civil rights division, where he led investigations into the death of unarmed Florida teenager Trayvon Martin and alleged police misconduct in the wake of Hurricane Katrina in New Orleans.

He also spoke with Times reporters and editors. Here is an edited version of that interview:

Why is there so much attention on pay for entry-level jobs as opposed to moving workers into better jobs?

All of the billion dollars we’ve been giving out is designed to strengthen the ladders of opportunity to the middle class. The CareerConnect grant is all about training people in STEM [science, technology, engineering and mathematics] fields so people don’t graduate from high school and go right to fast food.

They go out of high school with the skills that enable them to maybe go to work at Siemens and move up the ladder there or maybe get their four-year degree or associate’s degree. It’s all about building well-paying jobs.

At the same time, I’m proud of the work we’re doing on minimum wage. You can’t live on $7.25 an hour, and that’s a fact.

So what’s next on that front?

The best approach is to have a federal floor and have that floor be a floor of decency — $7.25 is not a floor of decency. And then state and local governments should have the authority to do what they think is most responsive to local needs.

You look at Washington state, which has had the highest minimum wage in the country for 15 years, and their tipped workers are on par, just like California.

If the opponents of an increase in the minimum wage were correct, then every time you fly to Seattle, you’ve got to bring a bagged lunch because there shouldn’t be any restaurants because they should have all have gone out of business as a result of raising the minimum wage.

But if you look at their numbers on job creation, they have been well above the national average consistently over the years.

Where are the jobs going, who’s creating them and where are the needs?

Let’s take the manufacturing sector, for instance. The difference between Buffalo, N.Y., in the ’70s and ’80s is that you had the 20,000-person Bethlehem Steel, Republic Steel [plants], and a 10th-grade education bought you a ticket to the middle class.

The growth we’re seeing in manufacturing today is real and it’s sustainable, and it will be here for decades to come. The difference now is that a 10th-grade education isn’t going to be sufficient. You go to the assembly line at Siemens in North Carolina, and you see people walking around with iPads. You go to the assembly line in Louisville, Ky., at the Ford plant, and every person on that assembly line has the ability to shut the line down.

In today’s advanced manufacturing, you’re not going to get the 20,000-person plant, so we’ve got to be really smart about clustering and understanding what the needs are. You don’t need a college degree to work at Siemens, but you need proficiency with a computer, you need high school plus.

Many economists in Southern California, though, say that manufacturing jobs are gone and they’re not coming back.

I tend to disagree with that. I heard that in Youngstown; I heard that in Detroit. And then I see what’s happening now. I see a rebirth. It’s not a rebirth of the scale that we saw in the early 20th century. But the world of advanced manufacturing is a world of great potential for U.S.-based manufacturers — and I see no reason why Los Angeles can’t grow.

In almost every other respect, when I look at the numbers and I break down the numbers in L.A., it pretty much mirrors what I see nationally. For instance, business and professional services are the biggest job growth in the last year, and that’s one of the biggest growth areas in Los Angeles. Hospitality has been a big growth area, and similarly in Los Angeles.

I don’t know the answer [about why L.A.’s manufacturing isn’t growing]. It would be rank speculation as to why L.A. hasn’t seen the same benefits that I see elsewhere.  I just have every reason to believe that this is something that can be turned around.

On efforts to employ those coming out of prison, are the Labor and the Justice departments spending money on training programs or funding employers’ efforts to hire ex-offenders?

It goes to entities that have a demonstrated expertise in the placement of ex-offenders, in developing effective programs.

For instance, when I was with the [U.S.] attorney general, we were at the county jail in Montgomery County, Md. We put an American jobs center in the jail because the county jails are where the majority of people actually come out of prison across the country.

We’re going to award grants in a competitive process to 10 city or county jails over the next year to replicate that.

It’s a smart business decision. People in the skilled trades, where there are major shortages, they don’t care if you have a record. They care if you’re going to show up and be good, and if you have the talent.

Does the administration have a position on the effort to remove questions about past convictions from job applications?

I don’t know if we’ve articulated a formal position. I support ban-the-box movements. Baltimore city has a ban the box. I know [Los Angeles] Mayor [Eric] Garcetti supports it as well.

I think they’ve been proven to be very effective. And I think opponents sometimes mischaracterize those provisions and say, ‘Oh, well, the child care center has to hire a pedophile.’ Of course it doesn’t require that to happen. But what does happen is people can get through the process and be considered.

Baltimore city has it, and [Johns] Hopkins [University] is the most prolific employer in Maryland, not to mention Baltimore city. And it has not gotten in the way at all. What it has done, is it has opened up opportunities for folks who might not have otherwise been considered. I think it’s a common-sense measure that doesn’t unduly tie the hands of employers.

Vocational or technical education is being raised more regularly as an alternative to college. Still, high schools have pushed college prep curricula. Is there a disconnect between the Department of Labor and the Department of Education?

The thing I always tell parents and school superintendents when we talk about career and technical education is that it gets you on the higher education superhighway.

So when that mom says, ‘My kid isn’t going to go into one of these programs; he’s going to get a college degree,’ well, when you complete an apprenticeship program, you are 75% of your way to an associate’s degree and it’s a stackable credential.

There are really good jobs out there, folks making on average something like $25 an hour. That’s pretty good money for someone who’s 21, 22 years old and coming out of a program.

We’ve got to understand as we prepare today and tomorrow’s workforce that we’ve got to start at pre-kindergarten, but we’ve also got to recognize that there are millions of people for whom the K-12 system is way in the rear-view mirror.

For some people, college is the answer, and for other people, there are other answers that are equally rewarding.

The “billions of dollars” given out is not strengthening the “ladders of opportunity to the middle class.” The problem is that our leadership and the American people ONLY focus on job creation and training, but are blind to the reality that tectonic shifts in the technologies of production are constantly destroying jobs and devaluing the worth of labor. As such, even if EVERY citizen obtained a doctorate’s degree, there would not be enough job opportunities available to employ every person who was willing and able to work.

Increasing wages for the same or less amount of labor input is non-sustainable and inflationary.

The solution is to focus on OWNERSHIP creation of wealth-creating, income-producing non-human capital assets––the product of technological innovation in the form of tools, machines, structures, super-automation, robotics, digital computerized operations, etc.

It should alarm all Americans that the traditional full-time job is fast disappearing along with the absence of pensions and the inadequacy of 401(k) retirement portfolios, while the expense of healthcare continues to skyrocket. As  job insecurity and unemployment continue to be destroyed by tectonic shifts in the technologies of production, which replaces humans with “machines” as the primary factor or means of producing products and services, life for millions of America has become and is rapidly becoming a game of survival.

The reality is that the vast majority of people not fully employed, but underemployed, are struggling day-to-day, week-to-week, month-to-month to sustain a minimulous life, while the wealthy ownership class continues to amass more productive capital assets that further replace the necessity for labor as an input of production. Thus, the wealthy earn their livelihood by owning wealth-creating, income-producting capital assets while the vast majority are hoping they can hold on to a  full-time, benefits-enriched job so that they are not forced to into a survival mode of job insecurity.
All this means that “retirement” is increasingly becoming a misnomer. The plain truth is that more than four in five older Americans expect to keep working during their latter years, a sign that traditional retirement is out of reach for vast swaths of society. Furthermore, it is an indicator that the traditional reliance on a good job is no longer the reality for the masses of American citizens in the decades ahead. For those who have been dependent on employment and/or welfare, the problem is that financially sustainable retirement is and will no longer be a reality.
This perspective should serve as the “reality” from which to explore prospects for effectively dealing with eroding job opportunities and retirement security.

While the deterioration of job opportunities continues, the American consumer is being put into an impossible situation of being asked to consume more to drive the economy and reduce saving, and at the same time are being told they must reduce consumption dramatically in order to accumulate sufficient savings for retirement.

Of course, the whole problem would go away if we financed both retirement and wealth-creating, income-producing physical productive capital needs out of “future savings,” thereby increasing the capacity to consume and support the economy while simultaneously building financial security for every American citizen.

“Future savings” means financing future investment in capital asset formation on a self-financing, self-liquidation basis in which the investment generates dividend earnings enough to pay off insured, interest-free capital credit loans and once paid off, continues to produce income for the new owners.

This far better and productive approach would create a new way for working and non-working Americans to start their own retirement savings: MyCHA. CHA stands for Capital Homestead Account. It would be a super-IRA or asset tax shelter for citizens. The Treasury should start creating an asset-backed currency that will enable every child, woman and man to establish a CHA at their local bank to acquire a growing dividend-bearing stock portfolio comprised of newly-issued stock representative of viable American growth corporations to supplement their incomes from work and all other sources of income.

We can create new asset-backed money for investment through the existing but dormant Section 13(2) rediscount mechanism of each of the 12 regional Federal Reserve banks that would be backed by “future savings” (that is, future profits from higher levels of marketable goods, products, and services).

The CHA would function as a savings and income account that effectively would build a nest egg over time, using interest-free, insured capital credit loans. A CHA would be offered to EVERY American, whether employed or not. Of course, those employed may also have additional opportunities to acquire personal ownership in their companies using an Employee Stock Ownership Plan (ESOP) trust financial mechanism.

The CHA would process an equal allocation of productive credit to EVERY citizen exclusively for purchasing full-dividend payout shares in companies needing funds for growing the economy and private sector jobs for local, national and global markets. The shares would be purchased on credit wholly backed by projected “future savings” in the form of new productive capital assets as well as the future marketable products and services produced by the newly added technology, renewable energy systems, plant, rentable space and infrastructure added to the economy. Risk of default on each stock acquisition interest-free loan would be covered by private sector capital credit risk insurance and reinsurance, but would not require citizens to reduce their funds for consumption to purchase shares. There would be no prerequisite requirement to qualify for an annual set capital credit loan other than American citizenship.

The idea is to stimulate economic growth to build a future economy that can support general affluence for EVERY citizen and provide retirement security for EVERY American.

The solution is based on the premise that what is needed is for the system to facilitate spreading the ownership of productive capital more broadly as the economy grows with full payout of dividend earnings, without taking anything away from the 1 to 10 percent who now own 50 to 90 percent of the corporate productive capital wealth assets. In doing so, the ownership pie would desirably get much bigger and their percentage of the total ownership would decrease, as ownership gets broader and broader.

This would benefit the traditionally disenfranchised poor and working and middle class, who are propertyless in terms of owning productive capital assets. It would also result is tremendous economic growth, which would benefit everyone including the already wealthy ownership class, and create opportunities for real jobs, not make-work as an expanded economy is built that can support general affluence for EVERY American citizen. Thus, as productive capital income is distributed more broadly and the demand for products and services is distributed more broadly from the earnings of capital, the result would be the sustentation of consumer demand, which will promote economic growth. That also means that over time, EVERY child, woman and man could accumulate a diversified portfolio of wealth-creating, income-producing productive capital assets to provide economic security in retirement and not be dependent on having to work during retirement or rely on government-assisted welfare.

One might ask how we failed to grasp the significance of productive capital’s input and the necessity for broad private sector individual ownership? Unfortunately, ever since the 1946 passage of the Full Employment Act, economists and politicians formulating national economic policy have beguiled us into believing that economic power is democratically distributed if we have full employment––thus the political focus on job creation and redistribution of wealth rather than on full production and broader productive capital ownership accumulation. This is manifested in the belief that labor work is the ONLY way to participate in production and earn income. Yet, the wealthy ownership class knows that this notion is idiotic.

In real productive terms, productivity gains are the result of tectonic shifts in the technologies of production, which consequently eliminates the need for human labor, destroys jobs, and devalues the worth of labor.

One should ask what form would the structural reforms take. Employment in this new enlightened age would start at the time one enters the economic world as a labor worker, to become increasingly a productive capital owner, and at some point to retire as a labor worker and continue to participate in production and to earn income as a productive capital asset owner until the day you die. As a substitute for inheritance and gift taxes, a transfer tax would be imposed on the recipients whose asset holdings exceeded $1 million. This would encourage those owning concentrations of productive capital assets (effectively the 1 to 10 percent) to spread out their monopoly-sized estates to all members of their family, friends, servants and workers who helped create their fortunes, teachers, health workers, police, other public servants, military veterans, artists, the poor and the disabled.

Other stipulations for the structural reform would entail tax policy reform to incentivize corporations to pay out all profits to their owners as taxable personal incomes to avoid paying stiff corporate income taxes and to finance their growth by issuing new full-dividend payout shares for broad-based individualized employee and citizen ownership with full-voting rights.

We need to encourage the insurance industry to expand their product lines to market Capital Credit Insurance to cover the risk of default for banks making loans to Capital Homesteaders under the proposed Capital Homestead Act. Under the provisions of the Act, risk of default on each stock acquisition loan would be covered by private sector capital credit risk insurance and reinsurance issued by a new government agency (ala the Federal Housing Administration concept), but would not require citizens to reduce their funds for consumption to purchase shares.

The end result is that ALL American citizens would become empowered as owners to meet their own consumption needs and government would become more dependent on economically independent citizens, thus reversing our country’s trend where all citizens are becoming more dependent for their economic well-being on the “state,” our only legitimate social monopoly.

Implementing the Capital Homestead Act would significantly empower ALL Americans to accumulate over time a viable, diversified ownership portfolio in our nation’s growth companies and create a truly unique, global-leading just and environmentally responsible Ownership Society that fosters personalism, creativity and innovation. Embarking on a new path to prosperity, opportunity and economic justice will expand growth of our market economy in ways that democratize future ownership opportunities, while building a future economy that can support general affluence for EVERY American.

For more on how to accomplish such structural reform, see  ”Financing Economic Growth With ‘FUTURE SAVINGS’: Solutions To Protect America From Economic Decline” at NationOfChange.org http://www.nationofchange.org/financing-future-economic-growth-future-savings-solutions-protect-america-economic-decline-137450624 and ”The Income Solution To Slow Private Sector Job Growth” at http://www.nationofchange.org/income-solution-slow-private-sector-job-growth-1378041490.

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

Support the Unite America Party Platform, published by The Huffington Post at http://www.huffingtonpost.com/gary-reber/platform-of-the-unite-ame_b_5474077.html as well as Nation Of Change at http://www.nationofchange.org/platform-unite-america-party-1402409962 and OpEd News at http://www.opednews.com/articles/Platform-of-the-Unite-Amer-by-Gary-Reber-Party-Leadership_Party-Platforms-DNC_Party-Platforms-GOP-RNC_Party-Politics-Democratic-140630-60.html.

http://www.latimes.com/business/money/la-fi-labor-perez-career-training-minimum-wage-manufacturing-20140818-story.html#page=1

 

Burger King, Warren Buffett Under Fire For Canadian Inversion Deal

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Warren Buffett, shown in 2012, is defending the $3-billion investment his Berkshire Hathaway is making in Burger King’s acquisition of Tim Hortons and move to Canada. (Nicholas Kamm / AFP/Getty Images)

On August 27, 2014, Jim Puzzanghera and Shan Li write in the Los Angeles Times:

Burger King’s $11.4-billion deal for Canadian coffee-and-doughnut chain Tim Hortons Inc. — with a new headquarters in Canada — sparked calls for a boycott and criticism of billionaire Warren Buffett, who is helping to finance the merger.

The latest in a series of corporate offshore tax-reducing moves, known as inversions, also puts the Obama administration in a difficult spot as it tries to stem the flow of U.S. companies moving to countries such as Canada with lower tax rates.

“I’ve eaten my last Whopper,” Oscar G. Echeverría of Irvine vowed Tuesday in one of dozens of negative comments about the deal on Burger King’s Facebook page.

Alejandra Aguilar, 35, of East Los Angeles said she planned to stop going to Burger King, where she eats once or twice a month.

“If that goes through, especially if it means the loss of money and jobs in the U.S., I would definitely boycott them,” said Aguilar, who works as a distributor for a beauty company. “I would, even though I love the little burgers.”

Burger King Worldwide Inc. executives said the move to create a corporate holding company in Canada was not a tax dodge. Instead, they said, it was justified because Canada would be the new company’s largest market. They noted that Burger King would remain a stand-alone brand with its headquarters still in Miami.

The outrage over another corporation moving out of the U.S. normally would fuel President Obama’s recent efforts to tighten restrictions on inversions. But the role of Obama ally Buffett, whose firm is investing $3 billion to finance the deal, muddled the message for the administration.

Buffett has been a staunch advocate of companies and citizens paying their fair share of taxes — so much so that the administration’s proposal to force millionaires to pay the same share of their income in taxes as middle-class families is known as the Buffett Rule.

But on Tuesday, Buffett was criticized as a hypocrite even though he echoed Burger King’s comments that the move was not done to avoid paying U.S. taxes.

“It has to be twisting the White House in messaging and political knots,” said Chris Krueger, a Washington policy analyst with Guggenheim Securities.

“How can you hammer a deal for tax policies when the very person your signature tax policy — the Buffett Rule — is named after is involved and argues that [the deal] is not tax-motivated?” Krueger said.

“The White House cannot paint this as a black-and-white issue, and Buffett’s involvement shows that it is more like 50 shades of gray,” he said.

Burger King’s purchase of Tim Hortons, creating the world’s third-largest fast-food company, is one of the highest-profile tax inversions so far.

In such a maneuver, which is legal, a U.S. company buys a foreign competitor in a nation with a lower corporate tax rate and shifts its headquarters to that country. As inversions have gained in popularity in recent years, the Obama administration and some congressional Democrats have been pushing for new restrictions.

Even so, proposed curbs probably wouldn’t apply to the Burger King-Tim Hortons deal. A House bill has an exception when a company has “substantial business activities,” such as 25% of its employees or assets, in the country where it plans to place its headquarters.

Burger King Executive Chairman Alex Behring, who would hold the same role for the combined company, insisted that the deal was “not driven by tax rates.”

Burger King, which is controlled by Brazilian investment firm 3G Capital, saw an opportunity to expand Tim Hortons globally, he said.

The headquarters for the new firm will be in Canada, which would be its “natural home,” Behring said. Two-thirds of the new company’s revenue will come from Canada, with 20% from the U.S. and 13% from the rest of the world.

The combined federal, provincial and local corporate tax rate in Canada is 26.3%, according to the Organisation for Economic Cooperation and Development. The combined U.S. corporate rate is 39.1%.

Burger King’s overall effective tax rate last year was 27.5%, according to its annual report. Tim Hortons’ effective tax rate for the same year was 26.8%.

“We don’t expect there to be meaningful tax savings, nor do we expect there to be a meaningful change in our tax rate,” Burger King Chief Executive Daniel Schwartz told reporters.

Buffett said it made sense for the combined company’s headquarters to be in Canada. The companies are roughly equal in market value, and Tim Hortons had sales of $3.2 billion last year, compared with $1.1 billion for Burger King.

“Tim Hortons earns more money than Burger King does,” Buffett told the Financial Times. “I just don’t know how the Canadians would feel about Tim Hortons moving to Florida. The main thing here is to make the Canadians happy.”

Tim Hortons is an iconic Canadian brand, and regulators there might not allow a purchase if the headquarters would be outside the country, said Robert Willens, a tax professor at Columbia Business School.

“Normally with an inversion, you wouldn’t be inverting to Canada. That’s not exactly a tax haven,” he said. “So I definitely got that impression that in order to pass muster under the review process … the holding company had to be incorporated and resident in Canada.”

But Marvin G. Ryder, an assistant professor of marketing and entrepreneurship at McMaster University in Ontario, said Canada’s conservative government probably would approve the deal even if the corporate headquarters were in the U.S.

Canadians have taken news of the fast-food deal better than Americans, he said.

“There’s the initial shock value of here’s another Canadian company being purchased,” Ryder said. “But it’s being purchased by an American company that wants to become a Canadian company, so it’s not so bad.”

Under the deal, 3G Capital, which owns 70% of Burger King, would own 51% of the holding company, and shareholders of both firms would hold the rest. Tim Hortons shareholders can opt for cash and stock, all cash or all stock.

The combined company would have more than 18,000 restaurants in 100 countries and about $4.3 billion in annual sales.

Some advocacy groups are already organizing boycotts and petition drives against Burger King. Sen. Sherrod Brown (D-Ohio) urged people to buy their burgers elsewhere because of “Burger King’s decision to abandon the United States.”

Roger Hickey, co-director of Campaign for America’s Future, a progressive group advocating for economic issues, launched a petition titled “A Whopper of a Scam.”

“They are seen rightly as unpatriotic and turncoats,” he said of Burger King. “People have a lot of choices. Burger King is going to feel the pressure from U.S. consumers, from politicians, from activist citizen groups.”

Americans for Tax Fairness, an umbrella group for other organizations, quickly put together an advertisement featuring Burger King’s mascot dressed in a black business suit and running away. The tagline: “Hey BK: You can’t have it your way.”

Industry experts said Burger King is especially vulnerable to a backlash because it is a popular consumer brand, unlike some of the pharmaceutical companies that have undertaken other recent high-profile inversions.

But Kevin Scott, co-founder of branding consultancy ADDO Worldwide, predicted that customer outrage won’t have a big effect on Burger King’s bottom line. Many customers who eat at fast-food chains prioritize speed and food quality over political considerations.

“They are going to have a backlash that is loud, but will be short-lived,” Scott said. “Most people will not be thinking about their patriotism when they are pulling through the drive-through at Burger King.”

To deal with the inversion trend, we need to require that all corporations doing business in the United States pay corporate taxes where the profits are generated, not where the corporation is “domiciled.” In the long term, the solution to tax inversion is to make it possible to eliminate corporate taxation altogether, while raise the tax rate significantly. The policy should be to make it possible for a corporation to eliminate corporate income taxes by making dividend earnings tax deductible. This will encourage full payout of stock dividends to avoid taxes. If a corporation needs to expand, then it should issue new shares of stock that pay out ALL earnings. If EVERY citizen can purchase newly issued shares on credit (interest-free capital credit or pure credit), and pay for the shares with the dividend earnings paid in the future, everyone can own corporate capital assets without taking from those who already own capital. The “how” is the essence of the proposal known as “Capital Homesteading.” It would completely eliminate the tax inversion problem.

As for the specific Burger King/Warren Buffett controversy that is brewing, at the heart lies the issue of OWNERSHIP of Burger King and the company that it is pursuing, Tim Hortons. Burger King is OWNED and controlled by 3G Capital, a Brazil-based investment firm, that Warren BUffett is investing $3 billion to provide the financing for the merger. What is amazing is that these companies are owned by sophisticated individuals (investors) who know the significance of OWNERSHIP. Warren Buffett’s entire wealth is due to his OWNERSHIP interests in numerous corporations representing billions of dollars in capital assets. Yet Buffett (nor for that matter any other RICH PERSON) is never heard advocating broadened OWNERSHIP as the key to America’s success in the future, which would include the employees and customers of corporations. This is where Capital Homesteading will play a crucial role in facilitating the growth of American corporations and the economy.

Where is the leadership to reform our system to transcend the reliance on past savings (“you gotta have money to make money”), whereby the money supply is presumably limited by what has been withheld from past consumption. Switching to the present value of future increases in production as the source of financing means that what you produce and sell is limited only by what you CAN produce and sell in the future, not by what you have not consumed in the past.

For more on how to accomplish such structural reform, see “Financing Economic Growth With ‘FUTURE SAVINGS’: Solutions To Protect America From Economic Decline” at NationOfChange.org http://www.nationofchange.org/financing-future-economic-growth-future-savings-solutions-protect-america-economic-decline-137450624 and “The Income Solution To Slow Private Sector Job Growth” at http://www.nationofchange.org/income-solution-slow-private-sector-job-growth-1378041490.

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

 

 

America, Say Goodbye To The Era Of Big Work

la-oe-horowitz-work-freelancers-20140826-001

On August 26, Sara Horowitz writes in the Los Angeles Times:

For much of the past century, the Era of Big Work — the 40-hour workweek and its employer-provided benefits — were the foundation of our economy. That was then. Now, independent work is the new normal.

Freelancers, independent contractors and temp workers are on their way to making up the majority of the U.S. labor force. They number 42 million, or one-third of all workers in the nation. That figure is expected to rise to 40% — some 60 million people — by the end of the decade.

A number of factors both economic and cultural are causing the independent workforce to swell. Technological advances and globalization have greatly contributed to the erosion of traditional work arrangements. The private sector’s need for speed and adaptability is increasingly incompatible with maintaining a large, full-time workforce. And of course, the Great Recession has put to rest the notion that there is such a thing as a stable full-time job.

It’s true that many have been forced into this brave new world of freelance work by external factors. But many are getting into it by choice because independent work aligns with a paradigm shift in values that is happening both at work and in the marketplace.

Nearly 9 in 10 workers affiliated with Freelancers Union, a 250,000-member nonprofit, say they wouldn’t return to traditional work if they had the choice. This sentiment is especially true for millennials, who will make up 75% of the workforce by 2025 — and who work and consume differently than generations before them.

Success during the Era of Big Work meant promotions, benefits packages and pensions. Americans went to work at 9 a.m. and left at 5 p.m. — OK, let’s be honest, 6 or 7 p.m. — primarily for the material rewards that flowed from such employment: a new car, robust benefits, a three-bedroom house and two weeks of paid vacation. For the past century, in other words, remuneration defined success. For many workers, it still does.

However, among the growing ranks of independent workers, labor itself is increasingly its own reward, as is the opportunity to establish a work-life balance that was unthinkable during the Era of Big Work. Millions of freelancers are working when they want and how they want. They’re building gratifying careers but also happy lives. And they’re helping build a support system so they can live the lives they want.

Yes, the comfort of a regular paycheck is gone, but it’s replaced by other, arguably greater comforts: a flexible schedule, the sense of ownership and pride that comes with being one’s own boss, the ability to prioritize health and wellness in ways that are incompatible with traditional employment structures.

A recent survey from the freelancer hiring hub Elance-oDesk found an overwhelming 89% of freelancers prefer work flexibility to a traditional corporate career. Almost half of millennials prioritize job flexibility over pay, according to a national survey conducted last year by Millennial Branding, a research and consulting firm, and Beyond.com, a career advisory website.

As a result, the way Americans think about work is changing, and so is the way they spend money. Millennials in particular have reimagined the very idea of ownership and fueled the rise of conscious capitalism. Four out of five are more likely to put their purchasing power toward companies that support a cause they care about, according to a 2011 study by Participant Media.

Some argue that millennials don’t buy big-ticket items because they can’t afford them — for instance, the number of cars purchased by the 18-to-34 demographic fell almost 30% between 2007 and 2011. But that’s only one factor in a much larger equation.

In reality, millennials tend to value experiences more than things. Their consumption habits are driven less by what kind of job they have and more by their pursuit of ever-evolving technology, brands that align with their ideals and sustainable and social purpose purchasing.

From what we buy to how we work — and why we do either — the American economy is undergoing a change every bit as epic as the shift a century ago from an agrarian society to an industrial one. When workers left the farm for the factory, there were, undoubtedly, plenty who mourned the loss of the old way of life, while others eagerly looked to the next era with vision and enthusiasm. The same is true today.

Some view freelancing as a short-term path to return to the well-worn avenue of Big Work. Meanwhile, others are eagerly embracing collaborative consumption and various digital platforms — such as Etsy and Airbnb — that have enabled the freelance economy to proliferate.

Despite the tremendous changes in our economic landscape, Washington is all but ignoring the broader economic implications, as evidenced by the failure of the Bureau of Labor Statistics to even track independent workers, much less adapt to their economic needs.

Freelancers, on the other hand, aren’t just learning to adapt. Many are thriving in this new marketplace, creating powerful new platforms for working and living — co-ops, credit unions, community health and wellness centers — tailor-made for millennial technology and the 21st century economy.

The Era of Big Work is indeed over, and good riddance. Welcome to the Era of Meaningful Independence.

It should alarm all Americans that the traditional full-time job is fast disappearing along with the absence of pensions and the inadequacy of 401(k) retirement portfolios, while the expense of healthcare continues to skyrocket. As  job insecurity and unemployment continue to be destroyed by tectonic shifts in the technologies of production, which replaces humans with “machines” as the primary factor or means of producing products and services, life for millions of America has become and is rapidly becoming a game of survival.
While Sara Horowitz tries to paint a picture of freedom from 9-to-5 (6-to-7) and entrepreneurial opportunity, the reality is that the vast majority of people not fully employed, but underemployed, are struggling day-to-day, week-to-week, month-to-month to sustain a minimulous life, while the wealthy ownership class continues to amass more productive capital assets that further replace the necessity for labor as an input of production. Thus, the wealthy earn their livelihood by owning wealth-creating, income-producting capital assets while the vast majority are hoping they can hold on to a  full-time, benefits-enriched job so that they are not forced to into a survival mode of job insecurity.
All this means that “retirement” is increasingly becoming a misnomer. The plain truth is that more than four in five older Americans expect to keep working during their latter years, a sign that traditional retirement is out of reach for vast swaths of society. Furthermore, it is an indicator that the traditional reliance on a good job is no longer the reality for the masses of American citizens in the decades ahead. For those who have been dependent on employment and/or welfare, the problem is that financially sustainable retirement is and will no longer be a reality.
This perspective should serve as the “reality” from which to explore prospects for effectively dealing with eroding job opportunities and retirement security.

While the deterioration of job opportunities continues, the American consumer is being put into an impossible situation of being asked to consume more to drive the economy and reduce saving, and at the same time are being told they must reduce consumption dramatically in order to accumulate sufficient savings for retirement.

Of course, the whole problem would go away if we financed both retirement and wealth-creating, income-producing physical productive capital needs out of “future savings,” thereby increasing the capacity to consume and support the economy while simultaneously building financial security for every American citizen.

“Future savings” means financing future investment in capital asset formation on a self-financing, self-liquidation basis in which the investment generates dividend earnings enough to pay off insured, interest-free capital credit loans and once paid off, continues to produce income for the new owners.

This far better and productive approach would create a new way for working and non-working Americans to start their own retirement savings: MyCHA. CHA stands for Capital Homestead Account. It would be a super-IRA or asset tax shelter for citizens. The Treasury should start creating an asset-backed currency that will enable every child, woman and man to establish a CHA at their local bank to acquire a growing dividend-bearing stock portfolio comprised of newly-issued stock representative of viable American growth corporations to supplement their incomes from work and all other sources of income.

We can create new asset-backed money for investment through the existing but dormant Section 13(2) rediscount mechanism of each of the 12 regional Federal Reserve banks that would be backed by “future savings” (that is, future profits from higher levels of marketable goods, products, and services).

The CHA would function as a savings and income account that effectively would build a nest egg over time, using interest-free, insured capital credit loans. A CHA would be offered to EVERY American, whether employed or not. Of course, those employed may also have additional opportunities to acquire personal ownership in their companies using an Employee Stock Ownership Plan (ESOP) trust financial mechanism.

The CHA would process an equal allocation of productive credit to EVERY citizen exclusively for purchasing full-dividend payout shares in companies needing funds for growing the economy and private sector jobs for local, national and global markets. The shares would be purchased on credit wholly backed by projected “future savings” in the form of new productive capital assets as well as the future marketable products and services produced by the newly added technology, renewable energy systems, plant, rentable space and infrastructure added to the economy. Risk of default on each stock acquisition interest-free loan would be covered by private sector capital credit risk insurance and reinsurance, but would not require citizens to reduce their funds for consumption to purchase shares. There would be no prerequisite requirement to qualify for an annual set capital credit loan other than American citizenship.

The idea is to stimulate economic growth to build a future economy that can support general affluence for EVERY citizen and provide retirement security for EVERY American.

The solution is based on the premise that what is needed is for the system to facilitate spreading the ownership of productive capital more broadly as the economy grows with full payout of dividend earnings, without taking anything away from the 1 to 10 percent who now own 50 to 90 percent of the corporate productive capital wealth assets. In doing so, the ownership pie would desirably get much bigger and their percentage of the total ownership would decrease, as ownership gets broader and broader.

This would benefit the traditionally disenfranchised poor and working and middle class, who are propertyless in terms of owning productive capital assets. It would also result is tremendous economic growth, which would benefit everyone including the already wealthy ownership class, and create opportunities for real jobs, not make-work as an expanded economy is built that can support general affluence for EVERY American citizen. Thus, as productive capital income is distributed more broadly and the demand for products and services is distributed more broadly from the earnings of capital, the result would be the sustentation of consumer demand, which will promote economic growth. That also means that over time, EVERY child, woman and man could accumulate a diversified portfolio of wealth-creating, income-producing productive capital assets to provide economic security in retirement and not be dependent on having to work during retirement or rely on government-assisted welfare.

One might ask how we failed to grasp the significance of productive capital’s input and the necessity for broad private sector individual ownership? Unfortunately, ever since the 1946 passage of the Full Employment Act, economists and politicians formulating national economic policy have beguiled us into believing that economic power is democratically distributed if we have full employment––thus the political focus on job creation and redistribution of wealth rather than on full production and broader productive capital ownership accumulation. This is manifested in the belief that labor work is the ONLY way to participate in production and earn income. Yet, the wealthy ownership class knows that this notion is idiotic.

In real productive terms, productivity gains are the result of tectonic shifts in the technologies of production, which consequently eliminates the need for human labor, destroys jobs, and devalues the worth of labor.

One should ask what form would the structural reforms take. Employment in this new enlightened age would start at the time one enters the economic world as a labor worker, to become increasingly a productive capital owner, and at some point to retire as a labor worker and continue to participate in production and to earn income as a productive capital asset owner until the day you die. As a substitute for inheritance and gift taxes, a transfer tax would be imposed on the recipients whose asset holdings exceeded $1 million. This would encourage those owning concentrations of productive capital assets (effectively the 1 to 10 percent) to spread out their monopoly-sized estates to all members of their family, friends, servants and workers who helped create their fortunes, teachers, health workers, police, other public servants, military veterans, artists, the poor and the disabled.

Other stipulations for the structural reform would entail tax policy reform to incentivize corporations to pay out all profits to their owners as taxable personal incomes to avoid paying stiff corporate income taxes and to finance their growth by issuing new full-dividend payout shares for broad-based individualized employee and citizen ownership with full-voting rights.

We need to encourage the insurance industry to expand their product lines to market Capital Credit Insurance to cover the risk of default for banks making loans to Capital Homesteaders under the proposed Capital Homestead Act. Under the provisions of the Act, risk of default on each stock acquisition loan would be covered by private sector capital credit risk insurance and reinsurance issued by a new government agency (ala the Federal Housing Administration concept), but would not require citizens to reduce their funds for consumption to purchase shares.

The end result is that ALL American citizens would become empowered as owners to meet their own consumption needs and government would become more dependent on economically independent citizens, thus reversing our country’s trend where all citizens are becoming more dependent for their economic well-being on the “state,” our only legitimate social monopoly.

Implementing the Capital Homestead Act would significantly empower ALL Americans to accumulate over time a viable, diversified ownership portfolio in our nation’s growth companies and create a truly unique, global-leading just and environmentally responsible Ownership Society that fosters personalism, creativity and innovation. Embarking on a new path to prosperity, opportunity and economic justice will expand growth of our market economy in ways that democratize future ownership opportunities, while building a future economy that can support general affluence for EVERY American.

For more on how to accomplish such structural reform, see  ”Financing Economic Growth With ‘FUTURE SAVINGS’: Solutions To Protect America From Economic Decline” at NationOfChange.org http://www.nationofchange.org/financing-future-economic-growth-future-savings-solutions-protect-america-economic-decline-137450624 and ”The Income Solution To Slow Private Sector Job Growth” at http://www.nationofchange.org/income-solution-slow-private-sector-job-growth-1378041490.

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

Support the Unite America Party Platform, published by The Huffington Post at http://www.huffingtonpost.com/gary-reber/platform-of-the-unite-ame_b_5474077.html as well as Nation Of Change at http://www.nationofchange.org/platform-unite-america-party-1402409962 and OpEd News at http://www.opednews.com/articles/Platform-of-the-Unite-Amer-by-Gary-Reber-Party-Leadership_Party-Platforms-DNC_Party-Platforms-GOP-RNC_Party-Politics-Democratic-140630-60.html.

Also see “Shocking Picture Of What Life Will Look Like When You Can’t Afford To Retire at http://www.alternet.org/economy/shocking-picture-what-life-will-look-when-you-cant-afford-retire

http://www.latimes.com/business/la-fi-contract-economy-20140803-story.html#page=1

https://www.freelancersunion.org/blog/dispatches/2014/08/01/americans-are-overworked-arent-taking-time-what-gives/

http://harpers.org/archive/2014/08/the-end-of-retirement/

Poverty Is Not Inevitable: What We Can Do Now To Turn Things Around

On August 22, 2014, Dean Paton of Yes Magazine writes:

Inequality and poverty are suddenly hot topics, not only in the United States but also across the globe. Since the early 1980s, there has been a growing underclass in America. At the same time a much smaller class, now called the superrich, built its wealth to levels of opulence not seen since France’s Louis XVI. Despite this, the resulting inequality went mostly unnoticed. When the Great Recession of 2008 hit, and the division between the very wealthy and the rest of us came starkly into focus, various people and groups, including the Occupy movement, began insisting more publicly that we tax wealth. But still, helping the poor has been mostly a discussion on the fringes. At last, the terms of public debate have changed, because inequality and poverty now are debated regularly in the mainstream media and across the political spectrum, not solely by labor, by the left, and by others imagining a new economy.

Inserting such a controversial topic into mainstream discourse is French economist Thomas Piketty. His 700-page tome, Capital in the Twenty-First Century, shocked everyone this year when it made The New York Timesbestseller list and bookstores found themselves backordering an economicsbook for legions of eager readers. Piketty did exhaustive searches of tax records from Great Britain, France, and the United States, going as far back as the late 18th century in France. Using sophisticated computer modeling and analyses, the professor from the Paris School of Economics debunks a long-held assumption—that income from wages will tend to grow at roughly the same rate as wealth—and instead makes a compelling case that, over time, the apparatus of capitalism grows wealth faster than wages. Result: Inequality between the wealthy and everyone else will widen faster and faster; and, without progressive taxation, his data show we’ll return to levels of inequality not seen since America’s Gilded Age.

Piketty, no Marxist, says a solution lies in a “confiscatory” tax on wealth: Tax salaries over $500,000 at 80 percent worldwide, and tax wealth at 15 percent worldwide. Every year.

Unless we can reverse the inequality trends of the past 35 years, Piketty says, the ensuing social chaos will eventually destroy democracy. Unfortunately, not even Piketty sees much chance of all nations on Earth simultaneously enacting his tax plans.

But at least he sparked a widespread discussion. And fortunately, others have been digging deeply, thoughtfully into the same questions, and they have some practical as well as achievable ideas for reversing poverty and inequality trends.

Investigation

Pulitizer Prize-winner Hedrick Smith authored a pageturner called Who Stole the American Dream? Despite his whodunnit title, Smith reveals the perps long before you finish the book. The former New York Timesreporter uses data and real-life stories to build a case against American CEOs and the politicians who do their bidding.

Gar Alperovitz is a professor of political economy at the University of Maryland. Like Smith, Alperovitz asks a question with his book’s title: What Then Must We Do? To be more accurate, he might have called it “Here’s What We’re Already Doing”—to create fresh models that can inspire a new economy.Between 1945 and 1973, Smith notes, U.S. workers’ productivity grew by 96 percent, and they were rewarded with a 94 percent increase in their wages. Between 1973 and 2011, years that parallel a collapse of the middle class, U.S. workers’ productivity grew by 80 percent, yet those evermore-productive employees saw only a 10 percent increase in their wages. Millions who created that wealth were thus pushed into poverty or to its precipice, while those who fancy a neomedieval economic system transferred billions in profits, generated by that labor, upward to themselves.

What makes Alperovitz’s ideas valuable is that he not only lays out an array of alternatives already keeping people from poverty, but solutions we also can build upon to create strategies that, over time, might replace corporate capitalism.

And replacing capitalism no longer is farfetched. In 2013, Alperovitz was invited to address the Academy of Management, a group mostly of corporate advisers and business school professors with 20,000 members worldwide, “and the entire focus of the meeting was: Is capitalism over?—and, if so, where are we going?” Alperovitz pointed out during an extended conversation. “Even these people are now open to new ideas.”

Smith makes a similar point. The American system is now so obviously broken that even some corporate leaders are calling for a “domestic Marshall Plan” to repair our economy. From their thinking and others, he puts forward a proposal to reclaim the American Dream.

Start, he says, by creating a public-private partnership to generate 5 million new jobs rebuilding infrastructure—bridges, highways, and rail corridors. Increase government investment in science and high-technology research to bolster U.S. innovation and spur a manufacturing renaissance.

Make income tax fairer, which will decrease inequality, then fix the corporate tax structure so it promotes American jobs and curtails outsourcing. At the same time, force China to live up to ethical trading principles because that would generate up to 4 million U.S. jobs.

We can cut the Pentagon budget by $1 trillion—not much more than 10 percent of annual military spending—over the next decade, Smith says, and pump the money into this domestic Marshall Plan. We should also refinance millions of homes now “underwater” and strengthen safety-net programs such as Social Security and Medicare.

The bad news: Much of this new Marshall Plan depends on congressional action, where such ideas have little chance as long as the current gridlock prevails.

“Changing America’s direction will not be easy,” Smith says. “It will happen only if there is a populist, grassroots surge demanding it, like the mass movements of the 1960s and 1970s.”

Our political system is as broken as our economic system. But Americans could mobilize to reform electoral politics and reduce the influence of money in elections. And for those who are disenchanted with government, Smith recommends that they take a look at how well it’s working for the mobilized and active financial superclass.

In the meantime

While we’re working on mobilizing to take back our democracy, we can start from the bottom up to “democratize wealth,” as both Piketty and Alperovitz say we must. Alperovitz puts less faith in top-down institutions than does Smith (the subtitle of What Then Shall We Do? isStraight Talk About the Next American Revolution ). He lays out bottom-up solutions already in practice across America that offer superior alternatives to the status quo. Here’s a sampling:

 

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Worker ownership.

 

It’s not just little startups and co-ops. Alperovitz points to the company ranked 48th on the Forbes list of the largest U.S. private companies: Hy-Vee, a Midwestern supermarket chain that currently has more than 69,000 employees and more than $8 billion in sales, is owned by employees through a profit-sharing program. W.L. Gore & Associates, makers of Gore-Tex, has been owned since 1974 by its workers—currently more than 10,000 in 30 countries generating annual revenues of about $3 billion.

Already, some 11,000 companies employing 10.3 million people operate under such employee stock-ownership plans, with more forming regularly.

Social enterprises.

Pioneer Human Services, in Seattle, is a textbook example of this model, a form of democratized ownership that uses the money it earns as well as the enterprises it creates to achieve broader social purposes. According to Alperovitz, a large portion of Pioneer’s $67 million annual budget comes from businesses it created. The organization produces thousands of machined parts for Boeing, caters more then 1,500 meals a day for hospitals and other facilities, and employs almost 1,000 people usually classified as impaired or unemployable. Pioneer is but one of many such social enterprises doing good and democratizing wealth.

Traditional co-ops.

Alperovitz says that more than 130 million Americans—more than 40 percent of the population—belong to one or more co-ops. Not just food co-ops but also agricultural co-ops, electric co-ops, insurance co-ops, retail co-ops (such as REI) and retailer-owned co-ops (such as ACE Hardware), health care co-ops, high-technology industry co-ops, artist co-ops, and credit unions. The Alliance to Develop Power, in Western Massachusetts, has developed what Alperovitz calls an $80 million “community economy” of housing co-ops and other cooperatively controlled businesses.

Community development corporations.

Almost 5,000 such organizations now operate in larger U.S. cities. These primarily incubate small businesses and develop low-income housing. In Newark, Alperovitz says, the New Community Corporation employs about 600 neighborhood residents, manages 2,000 housing units, and has built up $500 million in assets. Profits from its businesses, which include a shopping center, help support day-care and afterschool programs and a nursing home.

Land trusts.

Hundreds of these exist today, both urban and rural. By taking land out of the speculative market and democratizing ownership, such nonprofits prevent gentrification and support low- and moderate-income housing with development profits. By 2012, Alperovitz says, 255 land trusts were operating in 45 states and the District of Columbia.

Government-owned and operated businesses.

Today, more than 50 percent of cities larger than 100,000 are making municipal equity investments in local business. Now is the time, Alperovitz says, to expand these investments to co-ops, employee-owned businesses, social enterprises, and nonprofit land development. “If you’re going to get serious about systemic change—not just ‘projects’—you’re ultimately going to have to consider what government does,” he says, “and how it can be used to further the vision and the model you affirm.”

Already forms of this are happening from Cleveland to San Diego. One of the first was Boston, which in 1976 renovated historic Fanueil Hall, transforming it into Faneuil Hall Marketplace, a downtown retail center with 49 shops, 18 restaurants and pubs, and 44 pushcarts. Instead of turning things over to its joint-venture partner, Rouse Company, the city kept the property under municipal ownership and took profits in lieu of property taxes from Rouse. The strategy earned the city 40 percent more revenue that it would have collected in taxes.

Another example: More and more cities are building—and owning—hotels and using the profits to shore up their emaciated budgets. Dallas, Texas, not known for left-wing collectivism, opened the city-owned $500 million, 23-story, 1001-room Omni Dallas Hotel in 2011.

Transform too-big-to-fail-banks,

“Every industry should be either effectively competitive or socialized,” wrote Harry C. Simon, one of the school’s revered thinkers. Simon and seven of his conservative colleagues proposed a “Chicago Plan” that called for public ownership of Federal Reserve Banks, nationalizing the creation of money, and turning private banks into highly restricted savings-and-loan associations.and other private corporations that teeter on insolvency, into public utilities. The next time Bank of America’s risky scams threaten to implode the world’s economy, Alperovitz says we should bail out the bank—and assume public ownership of the corporation. If that idea seems radical, it arose from the militantly conservative economists of the Chicago School of Economics during the Great Depression.

Or, in Alperovitz’s 21st century version, “Take them over; turn them into public utilities.”

Need for strategy

Plenty of other ideas for democratizing wealth exist now, all of which can start small and scale up to large, even national enterprises that provide wellpaying jobs. But, Alperovitz cautions, “What hasn’t happened yet is that people haven’t seen this change strategically; they’re mainly developing ‘projects’—and I think the next level will be when people begin to realize that this could be a powerful strategy, not just for building a movement, but actually for building political power.”

At the moment corporations “certainly have the power. But I’m a historian; I think in decades,” he says, “not months. Power comes and goes. It could take 20, even 50 years,” adding that in the face of so much money and corporate power “it might not be possible to change the system.

“Or,” he adds, after a perfectly timed pause, “as in the case of ending apartheid; as in the case of the American Revolution; as in the case of the French Revolution; as in the case of the women’s revolution; as in the case of the fall of communism—building from the bottom up, over time, is actually how you transform systems.”

What we should focus on is expanding the economy’s wealth-creating, income-producing capital assets while simultaneously broadening individual ownership and preventing monopolizations of capital ownership.

Support the Unite America Party Platform, published by The Huffington Post at http://www.huffingtonpost.com/gary-reber/platform-of-the-unite-ame_b_5474077.html as well as Nation Of Change at http://www.nationofchange.org/platform-unite-america-party-1402409962 and OpEd News at http://www.opednews.com/articles/Platform-of-the-Unite-Amer-by-Gary-Reber-Party-Leadership_Party-Platforms-DNC_Party-Platforms-GOP-RNC_Party-Politics-Democratic-140630-60.html.

http://www.nationofchange.org/poverty-not-inevitable-what-we-can-do-now-turn-things-around-1408712009

Princeton Study: U.S. No Longer An Actual Democracy

Michael Bloomberg, Martin O'Malley

On April 18, 2014, Brendan James writes on Talking Points Memo:

A new study from Princeton spells bad news for American democracy—namely, that it no longer exists.

Asking “[w]ho really rules?” researchers Martin Gilens and Benjamin I. Page argue that over the past few decades America’s political system has slowly transformed from a democracy into an oligarchy, where wealthy elites wield most power.

Using data drawn from over 1,800 different policy initiatives from 1981 to 2002, the two conclude that rich, well-connected individuals on the political scene now steer the direction of the country, regardless of or even against the will of the majority of voters.

“The central point that emerges from our research is that economic elites and organized groups representing business interests have substantial independent impacts on U.S. government policy,” they write, “while mass-based interest groups and average citizens have little or no independent influence.”

As one illustration, Gilens and Page compare the political preferences of Americans at the 50th income percentile to preferences of Americans at the 90th percentile as well as major lobbying or business groups. They find that the government—whether Republican or Democratic—more often follows the preferences of the latter group rather than the first.

The researches note that this is not a new development caused by, say, recent Supreme Court decisions allowing more money in politics, such as Citizens United or this month’s ruling onMcCutcheon v. FEC. As the data stretching back to the 1980s suggests, this has been a long term trend, and is therefore harder for most people to perceive, let alone reverse.

“Ordinary citizens,” they write, “might often be observed to ‘win’ (that is, to get their preferred policy outcomes) even if they had no independent effect whatsoever on policy making, if elites (with whom they often agree) actually prevail.”

Americans still have the vote, but they will become completely powerless if they do not find and support leaders who will fight for their right to acquire and own wealth-creating, income-producing capital assets (the wealth of businesses) simultaneously with the growth of the economy. Power ALWAYS follows property and the reality is that the majority of Americans are propertyless in the sense of owning productive capital assets. There is a political solution. Is is presented in the platform of the Unite America Party, and open platform for EVERY political party to adopt. Support the Unite America Party Platform, published by The Huffington Post at http://www.huffingtonpost.com/gary-reber/platform-of-the-unite-ame_b_5474077.html as well as Nation Of Change at http://www.nationofchange.org/platform-unite-america-party-1402409962 and OpEd News at http://www.opednews.com/articles/Platform-of-the-Unite-Amer-by-Gary-Reber-Party-Leadership_Party-Platforms-DNC_Party-Platforms-GOP-RNC_Party-Politics-Democratic-140630-60.html.

http://talkingpointsmemo.com/livewire/princeton-experts-say-us-no-longer-democracy

Many Americans Are Still Struggling Financially

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The recession forced substantial shares of the population to put off big purchases or delay major decisions such as moving to a new city or getting married. (Joe Raedle, Getty Images)

On August 7, 2014, Don Lee writes in the Los Angeles Times:

Four in 10 U.S. households are straining financially five years after the Great Recession — many struggling with tight credit, soaring education debt and profound issues related to savings and retirement, according to a new Federal Reserve survey.

The wide-ranging Fed study assessing the economic well-being of Americans shows that the economy has made progress to the point where most households said they were “living comfortably” or doing OK financially.

But almost 40% reported last fall that their families were “just getting by” or struggling to do so, and more people said their financial situation was worse rather than better off compared with five years earlier.

The survey, conducted in September and reported Thursday, found that the recession had forced substantial shares of the population to put off big purchases or delay major decisions such as moving to a new city or getting married. And many people leaned on others to get through the hard times.

“The survey indicates that many households have been providing assistance to one another during periods of financial distress,” the 100-page Fed report said, noting that 34% helped friends or family with money.

Overall, the Fed’s findings are consistent with many other studies and data depicting the deep and lingering effects of the 2007-09 recession. They provide fresh evidence that the recovery has been slow and uneven, generally skewed to the wealthy, and flesh out with numbers some commonly held assumptions.

The survey found, for example, that 15% of those who had retired since 2008 had done so earlier than planned because of the downturn. Only 4% said they had retired later than expected. Based on demographics, that translates into roughly 2 million more people retiring since 2008 than if the recession had not occurred.

“This suggests that some of the folks who dropped out of the labor force during the recession will not be returning,” said Scott Hoyt, an economist at Moody’s Analytics.

That could factor in to the current debate inside the Fed and among academics about the extent of labor market slack, that is, the number of people who are not in the workforce but willing and capable of filling a job.

Fed Chairwoman Janet L. Yellen has argued in favor of easy-money policies largely on the basis of her belief that there is significant slack in the economy, but others have maintained that there are far fewer such workers who are waiting in the wings.

The Fed’s report, however, captured a snapshot of households last fall, so there is no comparable data from prior years to assess changes over time. Since then, the recovery stalled in the winter, bounced back in the spring and produced six straight months of job growth surpassing 200,000 each.

The central bank conducts a far more extensive survey of consumer finances every three years, but the results of the most recent one, for 2013, won’t be released until early next year.

Even so, this latest snapshot, which the Fed said was aimed at monitoring the recovery and risks to financial stability, adds to the understanding of the severity of the Great Recession’s effect on households and individuals. The report suggested that Americans had a fairly positive outlook about their finances. More than 60% said they expected their income to stay the same in the next 12 months, with 21% looking for it to increase. Only 16% expected it to decline.

Similarly, a plurality of homeowners — 60% of respondents said they own homes — said they expected their houses to rise in value over the next year.

The recession has turned more Americans into renters, yet the survey suggests that’s not because they aren’t interested in being homeowners. The most common reasons people gave for renting were because they couldn’t afford a down payment or couldn’t qualify for a mortgage.

On loans in general, about one-third of consumers were turned down or given less credit than they had sought. An additional 19% reported putting off applying because they figured they would be rejected.

More recently, however, there are indications that lenders are loosening up. Separately, the Fed reported Thursday that consumer borrowing rose in June at a solid 6.5% annual pace, mostly the result of gains in auto and student loans.

About one-fourth of households have education debt of some kind, according to the survey. The average amount was $27,840 — a hefty sum that left nearly one-fifth of the borrowers behind in payments or facing collections.

Financial strains also were evident in health spending: About one-third of respondents said they had put off medical care in the prior 12 months because they could not afford it.

Also, fewer than 40% of households had a rainy-day fund to cover expenses for three months.

36% Of Adults Lack Retirement Savings, Including Many 65 Or Older

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The Social Security Administration’s main campus in Woodlawn, Md. (Patrick Semansky / Associated Press)

On August 19, 2014, Jim Puzzanghera writes in the Los Angeles Times:

More than a third of American adults have no retirement savings, and 14% of those ages 65 and older also haven’t put money away yet, according to a new study.

The low savings rate for people at or approaching retirement age is alarming, said Greg McBride, chief financial analyst for Bankrate.com, which conducted the survey. The results were released Monday.

About a quarter — 26% — of those ages 50 to 64 haven’t started saving for retirement, the survey said; the figure was 33% of people 30 to 49 years old.

Overall, 36% of those 18 years or older have not started saving for retirement, according to the survey of 1,003 adults.

“They still have time to start, but they still have to save so much as a percentage of their income to make up for the years they weren’t saving that it puts them in a tough spot,” McBride said.

Savers have been hurt in recent years by historically low interest rates caused by the Federal Reserve’s attempts to stimulate the economy after the Great Recession.

Fed policymakers have kept the central bank’s benchmark short-term rate near zero since late 2008 and have bought billions of dollars’ worth of bonds to push down mortgage and other long-term interest rates.

The moves have kept rates on savings accounts and certificates of deposit low, with both paying about 1% or less, according to Bankrate.com.

But stock prices have soared during the last five years, helping increase the value of many 401(k) plans that were hit hard by the financial crisis.

The survey’s findings were not all bad, McBride said. It indicated that younger people are starting to save earlier than in past generations.

Twice as many adults who are 30 to 49 years old started saving when they were in their 20s instead of waiting until their 30s, the survey said. Seniors were just as likely to have waited until they were in their 40s to start saving as they were to have started in their 20s, McBride said.

Greater awareness of the financial problems of Social Security is a main reason younger people have started earlier on their retirement plans, he said. Automatic enrollment in 401(k) plans also has helped people to start saving earlier.

“The burden for retirement savings is increasingly upon us as individuals, and people are aware of that,” McBride said.

Still, 69% of those 18 to 29 years old have no retirement savings, according to the survey.

Adults who haven’t begun saving should start now, even if it involves putting away just a small amount of money each week, McBride said.

“There’s no better time than the present to start saving for retirement,” he said. “This isn’t money that’s gone. You’ve just put it aside for your future self instead of spending it on your present self.”

 

http://www.latimes.com/business/la-fi-retirement-savings-bankrate-20140818-story.html