House Approves Radical GOP Budget Plan

“This is a budget plan that ends Medicare’s guaranteed benefit, takes health care coverage from millions of Americans, radically redistributes wealth in the wrong direction, slashes taxes on the very wealthy, and would “take food from poor children, make it harder for low-income students to get a college degree, and squeeze funding for research, education, and infrastructure.

“And despite what you heard on the House floor if you watched the debate, the Ryan plan does not reduce the debt, either. It simply punishes the poor severely, in order to finance lavish tax breaks for the wealthy.”

Once again, this defines the Republican Party as a privileged citizens group who continue to promote policies and programs that “save” their constituents taxes necessitated through redistribution in order to prop up an economy that is failing the vast majority of Americans because they are shut out of a system employing capital credit to finance future productive capital ownership. Instead the system works for those who have accumulated significant “savings,” which are continually reinvested and multiplied through the use of retained earnings and debt financing to further concentrate ownership in new productive capital growth.

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

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

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

See http://foreconomicjustice.com/11/economic-justice/

http://maddowblog.msnbc.msn.com/_news/2012/03/29/10925721-house-approves-radical-gop-budget-plan?threadId=3382230&commentId=64010286#c64010286

 

 

Are The "Less Fortunate" Less Fortunate?

Of course they are relative to the 1 percent who own America. In concentrated capital ownership terms, roughly 1 percent own 50 percent of the corporate wealth with 10 percent owning 90 percent. This leaves 90 percent of the people scrambling for the last 10 percent, with them dependent on their labor worker wages to purchase capital. Thus, we have the great bulk of the people providing a mere 10 percent or less of the productive input. Contrast that to the less than 5 percent who own all the productive capital providing 90 percent or more of the productive input, and who initiate and oversee most of the technological advances that replace labor work with capital work. As a result, the trend has been to diminish the importance of employment with productive capital ownership concentrating faster than ever, while technological change makes capital ever more productive. But because this is not well understood, what we as a society have been doing is to continually shift the work burden from people labor to real capital while distributing the earning capacity of capital workers (via capital ownership of stock in corporations) to non-owners through jobs and welfare. Such policies do not function effectively.

The problem is that fewer and fewer people, regardless of shrinking or expanding population growth, are participating in the industrial-technological shift to non-human means of producing products and services. Without private, individual ownership property rights in productive capital formation, the vast majority or 99 percent are left with securing a job to earn money. And the jobs are exponentially becoming scarcer and scarcer, particularly good paying jobs, which are generally skilled or specialized. “The United States got rich off of young workers” is a falicy. The rich got rich off of owning productive capital. Since the Industrial Revolution there has been an ever-accelerating shift to productive capital––which reflects tectonic shifts in the technologies of production. 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.

The price of labor is artificially elevated by government through minimum wage legislation, overtime laws, and collective bargaining legislation or by government employment and government subsidization of private employment solely to increase consumer income.

Binary economist Louis Kelso asserted: “The government continues to discharge its responsibility for the health and prosperity of the economy through coerced trickle-down; in other words, through redistribution achieved by the rigging of labor prices, by taxation to support redistribution and job “creation,” or subsidization by inflation and by all kinds of welfare, open and concealed.”

Such transfers from capital worker owners through coerced means to the non-working, under-employed, old and sick does not have to be “the necessary price of a wealthy modern society.”

In a democratic growth economy, based on Kelso’s binary economics, 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. Instead, the ownership pie would desirably get much bigger and their percentage of the total ownership would decrease, as ownership gets broader and broader, also benefiting 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.

The problem is with the “system.” The system does not fully facilitate connecting the majority of citizens, who have unsatisfied needs and wants, to the productive capital assets enabling productive efficiency and economic growth. 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, or continue to face growing dependency on “welfare” in one form or another.

The problem is that fewer and fewer people, regardless of shrinking or expanding population growth, are participating in the industrial-technological shift to non-human means of producing products and services. Without private, individual ownership property rights in productive capital formation, the vast majority or 99 percent are left with securing a job to earn money. And the jobs are exponentially becoming scarcer and scarcer, particularly good paying jobs, which are generally skilled or specialized. “The United States got rich off of young workers” is a falicy. The rich got rich off of owning productive capital. Since the Industrial Revolution there has been an ever-accelerating shift to productive capital––which reflects tectonic shifts in the technologies of production. 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.

The price of labor is artificially elevated by government through minimum wage legislation, overtime laws, and collective bargaining legislation or by government employment and government subsidization of private employment solely to increase consumer income.

Binary economist Louis Kelso asserted: “The government continues to discharge its responsibility for the health and prosperity of the economy through coerced trickle-down; in other words, through redistribution achieved by the rigging of labor prices, by taxation to support redistribution and job “creation,” or subsidization by inflation and by all kinds of welfare, open and concealed.”

Such transfers from capital worker owners through coerced means to the non-working, under-employed, old and sick does not have to be “the necessary price of a wealthy modern society.”

In a democratic growth economy, based on Kelso’s binary economics, 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. Instead, the ownership pie would desirably get much bigger and their percentage of the total ownership would decrease, as ownership gets broader and broader, also benefiting 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.

The problem is with the “system.” The system does not fully facilitate connecting the majority of citizens, who have unsatisfied needs and wants, to the productive capital assets enabling productive efficiency and economic growth. 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, or continue to face growing dependency on “welfare” in one form or another.

http://townhall.com/columnists/dennisprager/2012/03/27/creators_oped

The Economic Dangers Of An Aging America

“Two economists envision a scary — and scarily realistic — future where the working population expands slower and slower, and jobless recoveries are the only recoveries we know”

The problem is that fewer and fewer people, regardless of shrinking or expanding population growth, are participating in the industrial-technological shift to non-human means of producing products and services. Without private, individual ownership property rights in productive capital formation, the vast majority or 99 percent are left with securing a job to earn money. And the jobs are exponentially becoming scarcer and scarcer, particularly good paying jobs, which are generally skilled or specialized. “The United States got rich off of young workers” is a falicy. The rich got rich off of owning productive capital. Since the Industrial Revolution there has been an ever-accelerating shift to productive capital––which reflects tectonic shifts in the technologies of production. 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.

The price of labor is artificially elevated by government through minimum wage legislation, overtime laws, and collective bargaining legislation or by government employment and government subsidization of private employment solely to increase consumer income.

Binary economist Louis Kelso asserted: “The government continues to discharge its responsibility for the health and prosperity of the economy through coerced trickle-down; in other words, through redistribution achieved by the rigging of labor prices, by taxation to support redistribution and job “creation,” or subsidization by inflation and by all kinds of welfare, open and concealed.”

Such transfers from capital worker owners through coerced means to the non-working, under-employed, old and sick does not have to be “the necessary price of a wealthy modern society.”

In a democratic growth economy, based on Kelso’s binary economics, 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. Instead, the ownership pie would desirably get much bigger and their percentage of the total ownership would decrease, as ownership gets broader and broader, also benefiting 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.

The problem is with the “system.” The system does not fully facilitate connecting the majority of citizens, who have unsatisfied needs and wants, to the productive capital assets enabling productive efficiency and economic growth. 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, or continue to face growing dependency on “welfare” in one form or another.

Stacy 3 Reply: “The problem? Actually the “system” enables everyone who wants to gain access to productive capital ownership.  It’s called the New York Stock Exchange or the NASDAQ.  While progressives of both parties have enabled their cronies to make big bucks at the expense of taxpayers,  the VAST majority of rich people (1) worked really hard at something people were willing to pay for, and (2) voraciously saved and invested.  Either/Or will not work…it has to be both.  If you follow this formula over many years, you will probably be rich when you get old.

But hardly anyone does that.  Most people who make a little dough want to spend twice as much as soon as they get it.  Progressives of both parties get their votes by demonizing the the most productive citizens.  And worse, they offer all kinds of incentives for people to engage in the most self-destructive behavior you can think of.  So yes, over time compounding does lead to concentration of wealth.  But the problem is not the “system”, but that so many decline to participate in it.”

What historically empowered America’s original capitalists was conventional savings-based finance and the pledging or mortgaging of assets, with access to further ownership of new productive capital available only to those who were already well capitalized. As has been the case, credit to purchase capital is made available by financial institutions ONLY to people who already own capital and other forms of equity, such as the equity in their home that can be pledged as loan security––those who meet the universal requirement for collateral. Lenders will only extend credit to people who already have assets. Thus, the rich are made ever richer, while the poor (people without a viable capital estate) remain poor and dependent on their labor to produce income. Thus, the system is restrictive and capital ownership is clinically denied to those who need it.

Thus, as binary economist Louis Kelso asserted: “The problem with conventional financing techniques is that they address only the productive power of enterprise and the enhancement of the earning power of the rich minority. Sustaining or increasing the earning power of the majority of consumers who are dependent entirely upon the earnings of their labor, or upon welfare, is left to government or governmentally assisted redistribution of income and to chance.”

Unfortunately, pursuing democratic capitalism has been frustrated by the systemic concentration of economic power and exclusionary access to future capital credit to the advantage of the wealthiest Americans. The so-called 1 percent rulers of corporations have rigged the financial system to enable this already rich ownership class to systematically further enrich themselves as capital formation occurs and technological industrialization spreads throughout the world, leaving behind the 99 percent to depend on income redistribution through make work “full employment” policies, government boondoggles, excessive military build-up and dependence on arms production and sales, and social welfare programs due to the lack of an alternative to full employment and the growing economic helplessness and dependency. The unsatisfied needs and wants of society are not in that 1 percent or for that matter the 5 percent; those people are not the ones who are hurting.

Once the national economic policy bases policy decisions on two-factor binary economics, productive capital acquisition would take place through commercially insured capital credit, resulting in a quiet revolution in which economic plutocracy will transform to economic democracy.

Stacy3 Reply: “I don’t get how people still embrace Kelso’s thesis with all its inconsistencies and omissions.  ESOPs were a pretty good idea, but how could so many of his other ideas be proven more wrong?  Although his notion that asset-based financing favored the rich was somewhat accurate from the post-FDR period through the 1970s, it certainly did not describe previous periods in American history.  And since his death in 1991,  debt securitization, private equity, and venture capital have reduced traditional bank financing to a small and marginally profitable source of investment capital.  But innovation can absolutely get financed, and the evidence abounds in industries as diverse as technology, retail, manufacturing…the list goes on.

Yet his notion that inequality is a systemic problem independent of behavior has inspired some of the most destructive policies anyone could dream of.  The housing debacle resulted primarily from government policies and bank regulations which promoted low-cost home financing for the very folks Kelso wanted to empower.  And rather than enrich them, these ill-conceived policies have condemned millions to povery!

With regard to the “1% rulers of corporations”, you should consider that many of today’s leading corporations had not even been started when Kelso wrote his seminal work.  Similarly, almost none of the richest Americans were even rich when I was a kid in the ’70s.  Rigged?  Sure progressives of both parties have enriched their cronies at the expense of taxpayers.  But the vast majority of the rich earned their money by innovation, hard work, and saving and investing their gains.  These are behavioral characteristics which harness the power of compound returns over time.  Progressive policies which discourage these characteristics or worse, incentivize less productive behavior simply exacerbate inequality and erode general prosperity.”

New capital formation financing is “savings-based,” and that will not broaden ownership to the degree necessary to connect the 99 percent majority to the earning power of fully-paid out dividends, which would provide the consumer engine of today and tomorrow. Both retained earnings and debt financing, used to finance virtually 98 percent of new capital formation growth, only enhance the ownership holding value of the existing corporate ownership class and do nothing to create new owners. Thus, the rich get richer systematically and capital ownership concentration is furthered, facilitated by financing further productive capital acquisition out of the earnings of existing productive capital.

In place of retained earnings and debt financing, the government should require business corporations to issue and sell full-voting, full-dividend payout stock to more people to underwrite new productive capital formation, with the purpose of providing opportunity for new owners, both employees of corporations and non-employees, to participate in a growing economy. Of course, there needs to be a financial mechanism put in place that will guarantee loan risks; otherwise banks and lending institutions will not make the loans, and the system will continue to limit access to capital acquisition to those who already own capital—the rich. This is because “poor” people have no security or collateral, or sufficient income to pledge against the loan as security, and/or are disqualified on the grounds of either unproven unreliability or proven unreliability.

Housing for households is a consumer-based, not a productive capital-based asset that requires a source of income to pay for, unless used to rent to people, in which the housing unit generates income. Louis Kelso advocates capital credit used to finance new productive capital investment and growth. No one is knocking the idea of earning money “by innovation, hard work, and saving and investing their gains.” The reality is economic asceticism based on “savings” will not work for the 99 percent who struggle from pay check to pay check to survive, that is if they are fortunate to still have a job. Our leaders and financial institutions need to be purged of the savings mystique, which prevents thinking about the economy in physical terms as a system. Understanding  Kelso’s two-factor financing techniques and commercially insured capital credit would be important first steps in that direction.

As Kelso has acknowledged: “Of course, some financial geniuses are able to parlay modest savings squeezed from labor income into large capital fortunes. This has been possible in every age. But rules that work for geniuses do not work for consumers in general, nor the economy as a whole. Geniuses are, and always have been in very short supply. Behind the phenomenon of the ‘self-made man’ is a less obvious and more significant fact. The business genius tightens his belt only in the first stage of his quest for real capital riches. Not thrift but his ability to finance capital acquition out of the wages of his capital is the secret of almost all of his impressive fortune.

“The logic of democratic commercially insured capital credit financing eliminates institutional limits on the availability of capital credit, which mythical except when based upon shortages of the physical ingredients necessary to production and consumption of goods and services. As costs are minimized through more efficient methods of finance, financing itself becomes increasingly more feasible. Rising incomes in the pockets of consumers who have the need and desire to improve their material standard of living expands market demand for goods and services and thereby triggers increased production.”

http://www.theatlantic.com/business/archive/2012/03/gray-nation-the-very-real-economic-dangers-of-an-aging-america/254937/

 

 

Research Evidence On Prevalence And Effects Of Employee Ownership

The National Center or Employee Ownership (NCEO) published an article on their Web site entitled “Research Evidence On Prevalence And Effects Of Employee Ownership: 2002 Report by  Douglas Kruse, Rutgers University.”

This is an excellent article the impact employee ownership has on the economy and society.

The Employee Stock Ownership Plan (ESOP) was the first tool designed by binary economist Louis O. Kelso and used to broaden ownership of productive capital among the employees of a corporation.

http://www.nceo.org/main/article.php/id/26/

Key Studies On Employee Ownership And Corporate Performance

The National Center or Employee Ownership (NCEO) published an article on their Web site entitled “Key Studies On Employee Ownership And Corporate Performance.”

This is an excellent look at employee ownership companies compared to similar non-employee ownership or all non-employee ownership companies. Company performance studies compare pre-ESOP to post-ESOP performance relative to the competition. The studies selected represent the most recent studies that have the largest and most representative samples. There has been no attempt to include only positive studies.

The Employee Stock Ownership Plan (ESOP) was the first tool designed by binary economist Louis O. Kelso and used to broaden ownership of productive capital among the employees of a corporation.

http://www.nceo.org/main/article.php/id/54/

A Comprehensive Overview Of Employee Ownership

The National Center or Employee Ownership (NCEO) published an article on their Web site entitled “A Comprehensive Overview Of Employee Ownership.”

This is an excellent introduction to understanding how employee ownership through the ESOP serves to motivate employees and improve corporate performance. The Employee Stock Ownership Plan (ESOP) was the first tool designed by binary economist Louis O. Kelso and used to broaden ownership of productive capital among the employees of a corporation.

http://www.nceo.org/main/article.php/id/6/

A Brief Overview Of Employee Ownership In The U.S.

The National Center or Employee Ownership (NCEO) published an article on their Web site entitled “A Brief Overview Of Employee Ownership In The United States.”

“As of 2010, we at the National Center for Employee Ownership (NCEO) estimate that, among companies that have stock, about 36% of the work force own stock in their employers through one kind of plan or another. Those roughly 28 million employee owners represent an astonishing growth over the last 40 years, when probably not more than one million employees owned stock in their employers. This ownership comes in several forms, ranging from stock purchase plans in public companies, broadly granted stock options and similar kinds of equity awards, and employee stock ownership plans (ESOPs), a company sponsored ownership plan that holds stock in the employer for employees. The table below shows our current (2009) estimate of the extent of employee ownership in the U.S. (note that some employees may be in more than one plan, especially option and stock purchase plans).”

This is an excellent introduction to understanding the extent of employee ownership in the United States. The Employee Stock Ownership Plan (ESOP) was the first tool designed by binary economist Louis O. Kelso and used to broaden ownership of productive capital among the employees of a corporation.

http://www.nceo.org/main/article.php/id/52/

Using An Employee Stock Ownership Plan (ESOP) For Business Continuity In A Closely Held Company

The National Center or Employee Ownership (NCEO) published an article on their Web site on the topic of “Using An Employee Stock Ownership Plan (ESOP) For Business Continuity In A Closely Held Company.”

“One of the most difficult problems for owners of closely held businesses is finding a way to turn their equity in a business into cash for retirement or other purposes. The decision to sell is more than an economic one, however. After putting years into a business, an owner develops a strong feeling of identity with the company. At the same time, the owner often has a sense of loyalty to the employees and would like to see them have a continuing role in the company.”

This is an excellent introduction to using an ESOP to transfer ownership of a closely held company to its family members and employees. The Employee Stock Ownership Plan (ESOP) was the first tool designed by binary economist Louis O. Kelso and used to broaden ownership of productive capital among the employees of a corporation.

http://www.nceo.org/main/article.php/id/9/

Ownership Transitions: ESOPs Compared to Other Strategies

The National Center or Employee Ownership (NCEO) published an article on their Web site on the topic of “Ownership Transitions: ESOPs Compared To Other Strategies,” authored by Kelly Finnell, Executive Financial Services.

“There are three traditional ownership succession strategies: sell to an insider, sell to an outsider, and “till death do us part.” In this article I discuss each of these traditional options and compare each of them to an ESOP.”

This is an excellent introduction to using an ESOP as an alternative to traditional ownership succession strategies. The Employee Stock Ownership Plan (ESOP) was the first tool designed by binary economist Louis O. Kelso and used to broaden ownership of productive capital among the employees of a corporation.

http://www.nceo.org/main/article.php/id/57/

How An Employee Stock Ownership Plan (ESOP) Works

The National Center or Employee Ownership (NCEO) published an article on their Web site on the topic of “How An Employee Stock Ownership Plan (ESOP) Works.”

“Employee ownership can be accomplished in a variety of ways. Employees can buy stock directly, be given it as a bonus, can receive stock options, or obtain stock through a profit sharing plan. Some employees become owners through worker cooperatives where everyone has an equal vote. But by far the most common form of employee ownership in the U.S. is the ESOP, or employee stock ownership plan. Almost unknown until 1974, about 11,000 companies now have these plans, covering over 13 million employees.”

This is an excellent introduction to the workings of an ESOP, which was the first tool designed by binary economist Louis O. Kelso and used to broaden ownership of productive capital among the employees of a corporation.

http://www.nceo.org/main/article.php/id/8/