Government Spends More On Corporate Welfare Subsidies Than Social Welfare Programs

The following was posted on ThinkByNumbers.org:

About $59 billion is spent on traditional social welfare programs. $92 billion is spent on corporate subsidies. So, the government spent 50 percent more on corporate welfare than it did on food stamps and housing assistance in 2006.

This is a article that reveals the levels of governmental welfare support for the private sector and for American citizens who cannot support themselves solely through the private sector.

No solutions are offered but there is plenty indignation about the suffering that is being experienced by increasing numbers of Americans.

The argument defends the solution calling for more welfare, open or concealed, in the form of essentially make-work jobs, but with higher pay, while declaring that the wealthy should pay more in taxes to support continued governmental-dependent socialisation. Such thinking is on a collision course with the ever-more productive non-human factor of production––productive capital as embodied in the exponential development of human-level artificial intelligence, advanced automation and robotics.

If we are ever to end corporate subsidies, which thus far have enriched a minority of people by allowing them to concentrate ownership of the non-human productive sector rather than broadening ownership, and spending on social welfare programs we must begin to recognized that there are two-factor of production––human and non-human––and that the latter is the more productive.  Superautomation 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. Superautomation and robotics 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 beyond that provided by human workers, no matter what the level of education attained. Thus, if we do not address the impact of technology on poverty, then millions more Americans in the short term and long term will find themselves at the poverty or below poverty level, unable to be self-suffcient but dependent on “everything from Social Security to Medicare and on through the list.” Edelman says the immediate challenge is keeping the social welfare programs that we already have.

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, and the support energy, transport, and communications systems. With advanced human-level artificial intelligence, computer-controlled machines will be able to learn new knowledge and skills by simply downloading software. 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, superautomation, 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 I and others 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 “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 ignored by the economic establishment 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.

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. That fact is 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.

As for education, everyone will have the opportunity to personally developed their own exceptional innate abilities and unlock their creativity.

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), 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.

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 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.

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 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. Also, please see my article “Democratic Capitalism And Binary Economics: Solutions For A Troubled Nation and Economy” at http://foreconomicjustice.com/11/economic-justice/ or follow me on Facebook at http://www.facebook.com/pages/For-Economic-Justice/347893098576250 and http://www.facebook.com/editorgary

http://thinkbynumbers.org/blog/government-spending/corporate-welfare/corporate-welfare-statistics-vs-social-welfare-statistics/

Poverty In America: Why Can’t We End It?

On July 29, 2012, Peter Edelman writes in The New York Times that Ronald Reagan famously said, “We fought a war on poverty and poverty won.” There are 46 million Americans––15 percent of the population––who now are counted as poor.

The article does not address why poverty was never ended.

The lowest percentage in poverty since we started counting was 11.1 percent in 1973. The rate climbed as high as 15.2 percent in 1983. In 2000, after a spurt of prosperity, it went back down to 11.3 percent, and yet 15 million more people are poor today.

At the same time, we have done a lot that works. From Social Security to food stamps to the earned-income tax credit and on and on, we have enacted programs that now keep 40 million people out of poverty. Poverty would be nearly double what it is now without these measures, according to the Center on Budget and Policy Priorities. To say that “poverty won” is like saying the Clean Air and Clean Water Acts failed because there is still pollution.

With all of that, why have we not achieved more? Four reasons: An astonishing number of people work at low-wage jobs. Plus, many more households are headed now by a single parent, making it difficult for them to earn a living income from the jobs that are typically available. The near disappearance of cash assistance for low-income mothers and children — i.e., welfare — in much of the country plays a contributing role, too. And persistent issues of race and gender mean higher poverty among minorities and families headed by single mothers.

The first thing needed if we’re to get people out of poverty is more jobs that pay decent wages. There aren’t enough of these in our current economy. The need for good jobs extends far beyond the current crisis; we’ll need a full-employment policy and a bigger investment in 21st-century education and skill development strategies if we’re to have any hope of breaking out of the current economic malaise.

This isn’t a problem specific to the current moment. We’ve been drowning in a flood of low-wage jobs for the last 40 years. Most of the income of people in poverty comes from work. According to the most recent data available from the Census Bureau, 104 million people — a third of the population — have annual incomes below twice the poverty line, less than $38,000 for a family of three. They struggle to make ends meet every month.

Half the jobs in the nation pay less than $34,000 a year, according to the Economic Policy Institute. A quarter pay below the poverty line for a family of four, less than $23,000 annually. Families that can send another adult to work have done better, but single mothers (and fathers) don’t have that option. Poverty among families with children headed by single mothers exceeds 40 percent.

Wages for those who work on jobs in the bottom half have been stuck since 1973, increasing just 7 percent.

We know what we need to do — make the rich pay their fair share of running the country, raise the minimum wage, provide health care and a decent safety net, and the like. But realistically, the immediate challenge is keeping what we have. Representative Paul Ryan and his ideological peers would slash everything from Social Security to Medicare and on through the list, and would hand out more tax breaks to the people at the top. Robin Hood would turn over in his grave.

We should not kid ourselves. It isn’t certain that things will stay as good as they are now. The wealth and income of the top 1 percent grows at the expense of everyone else. Money breeds power and power breeds more money. It is a truly vicious circle.

Peter Edelman is a professor of law at Georgetown University and the author, most recently, of So Rich, So Poor: Why It’s So Hard To End Poverty In America. He is a one-factor (labor worker ONLY) thinker with no realistic solution to the persistent and growing problem of poverty in the United States.

His solution is, of course, more welfare, open or concealed, in the form of essentially make-work jobs, but with higher pay. His solution is on a collision course with the ever-more productive non-human factor of production––productive capital as embodied in the exponential development of human-level artificial intelligence, advanced automation and robotics. Superautomation 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. Superautomation and robotics 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 beyond that provided by human workers, no matter what the level of education attained. Thus, if we do not address the impact of technology on poverty, then millions more Americans in the short term and long term will find themselves at the poverty or below poverty level, unable to be self-suffcient but dependent on “everything from Social Security to Medicare and on through the list.” Edelman says the immediate challenge is keeping the social welfare programs that we already have.

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, and the support energy, transport, and communications systems. With advanced human-level artificial intelligence, computer-controlled machines will be able to learn new knowledge and skills by simply downloading software. 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, superautomation, 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 I and others 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 “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 ignored by the economic establishment 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.

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. That fact is 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.

As for education, everyone will have the opportunity to personally developed their own exceptional innate abilities and unlock their creativity.

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), 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.

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 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.

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 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. Also, please see my article “Democratic Capitalism And Binary Economics: Solutions For A Troubled Nation and Economy” at http://foreconomicjustice.com/11/economic-justice/ or follow me on Facebook at http://www.facebook.com/pages/For-Economic-Justice/347893098576250 and http://www.facebook.com/editorgary

http://www.nytimes.com/2012/07/29/opinion/sunday/why-cant-we-end-poverty-in-america.html?_r=1&pagewanted=all

Jobless Generation Puts Brakes On U.S.

On July 30, 2012, Shannon Bond writes on FinancialTimes.com about the growing joblessness in the United States.

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Andrew Grzywacz has a university degree, a job that pays $8.50 an hour, a stack of résumés ready to be mailed – and more than $30,000 in student debt.

“I knew I wouldn’t land the dream job right out of college,” says the 23-year-old, who graduated from Boston’s Emerson College in December with a degree in film and television writing. “The [entertainment] industry is a tough nut to crack, more so than most fields.”

Even so, Mr Grzywacz is luckier than many his age. The share of American 18- to 24-year-olds who were employed fell to 54 per cent last year, the lowest since the labour department began tracking data in 1948, according to the Pew Research Center. The share who are in college has risen, but the researchers say this only partly explains the drop. The jobless rate for Americans age 16 to 24 is above 16 per cent, more than twice the national rate.

Youth unemployment has reached crisis levels around the world, with almost 13 per cent of the global youth labour force out of work this year, according to the International Labour Organisation.

But the problem has a unique flavour in the U.S., where the weak job market has collided with record levels of educational debt – about $25,000 for the average graduate. Together, they pose a threat to the future earning power of young Americans such as Mr Grzywacz – and could have long-lasting effects on U.S. growth.

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. Superautomation 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. Superautomation and robotics 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 beyond that provided by human workers, no matter what the level of education attained.

This transition has been occurring for decades but is now experiencing exponential development. 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, and the support energy, transport, and communications systems. With advanced human-level artificial intelligence, computer-controlled machines will be able to learn new knowledge and skills by simply downloading software. 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 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, superautomation, 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 I and others 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 “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 ignored by the economic establishment 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.

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. That fact is 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.

As for education, everyone will have the opportunity to personally developed their own exceptional innate abilities and unlock their creativity.

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), 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.

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 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.

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 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. Also, please see my article “Democratic Capitalism And Binary Economics: Solutions For A Troubled Nation and Economy” at http://foreconomicjustice.com/11/economic-justice/ or follow me on Facebook at http://www.facebook.com/pages/For-Economic-Justice/347893098576250 and http://www.facebook.com/editorgary

http://www.ft.com/intl/cms/s/2/1f4ddbe4-da42-11e1-902d-00144feab49a.html#axzz22DVPRbO3 

 

Congress 1976: Broaden Capital Ownership

This January 1976 Economic Report followed my unsuccessful run in 1974 for Representative in the United States Congress (see http://foreconomicjustice.org/336/gary-reber-for-congress-democrat-for-economic-justice/). I ran on a platform advocating broadening private, individual ownership of new productive capital formation and to reform labor unions to represent worker/employees dependent on jobs to empower them to acquire ownership stakes in the companies who employed them, paying for their ownership participation out of the future earnings generated by the growth of the companies. This was a period when there were leaders who seemingly understood the critical importance of broaden ownership but failed to propose and implement real policy and program change to accomplish the goal.

This was also the time, 1968-1976, that I partnered with binary economist and corporate tax attorney Louis O. Kelso in the economic justice advocacy firm that I founded, Agenda 2000 Incorporated. Kelso has written several books on this subject including The Capitalist Manifesto, The New Capitalists: A Proposal To Free Economic Growth From The Slavery Of [Past] Savings, Two-Factor Theory: The Economics Of Reality, and Democracy And Economic Power: Extending The ESOP Revolution Through Binary Economics.

“When Congress and the people got it Right.”
Lost in the 70’s,…

Joint Economic Committee
Congress of the United States
on the
January 1976 Economic Report of The President
BROADEN THE OWNERSHIP OF NEW CAPITAL

Wealth in the United States is concentrated in the hands of a relatively small fraction of the population. Unfortunately, the data on wealth are sparse. The last comprehensive attempt by the Federal Government to measure its characteristics and distribution was made by the Federal Reserve Board in 1962. It was estimated that more than three-quarters of the country’s total wealth was owned by less than one-fifth of the people, while more than one-quarter was owned by just the top 0.5 percent. The Federal Government should remedy the lack of up-to-date information on personal wealth through periodic surveys and comprehensive reports on this subject.

The distribution of wealth reflects in large part the pattern of ownership of non-residential capital with corporate shares being one of its principle forms. This category of wealth is much more concentrated than total wealth, with the top percentile of the personal income distribution owning 51 percent of the market value of individually owned corporate stock and receiving 47 percent of the dividends. Meanwhile, the new capital assets generated by businesses, which in recent years have averaged well over $100 billion annually, rebounded largely to the benefit of these persons who already have great wealth.

The number of shareholders, moreover, declined by some 18 percent from 1970 to 1975, and data suggest that young people today are not purchasing stocks in significant volume. Balancing this declining role of the individual investor has been the rise of financial institutions, which since 1950 have more than tripled their share of the market value of stock holdings.

To begin to diffuse the ownership of capital and to provide an opportunity for citizens of moderate income to become owners of capital rather than relying solely on their labor as a source of income and security, the Committee recommends the adoption of a national policy to foster the goal of broadened ownership. The spirit of this goal and what it purports to accomplish was endorsed by many of the witnesses at our regional hearings.
Without getting into specifics, the types of programs which could be established to help meet this goal will be outlined. Such alternative methods of broadening capital ownership are under study by the Committee.

In the individual firm, employee ownership can be encouraged directly through tax incentives to the employees to purchase stock or to firms to place newly issued stock into the hands of their employees. The latter approach, known as Employee Stock Ownership Plans (ESOPs), was examined in recent hearings by the Committee.

An alternative plan involves multiform funds which would receive tax-favored contributions from affiliated firms and issue nonnegotiable fund certificates to the employees. This type of fund, which has been in operation in France and West Germany, may diversify its portfolio, although it may be limited to particular industries and regions.
Providing ownership opportunities not just to employees but to citizens at large could be accomplished through various devices. One example would be the establishment of funds which would accumulate personal savings on a tax-preferred basis and use them to acquire a diversified portfolio of equity shares in corporations. For instance, individuals with earned income not exceeding $20,000 could be allowed to save up to $3,000 a year in one or more funds and to deduct this amount from their taxable incomes.

Whatever the means used, a basic objective should be to distribute newly created capital broadly among the population. Such a policy would redress a major imbalance in our society and has the potential for strengthening future business growth.

To provide a realistic opportunity for more U.S. citizens to become owners of capital, and to provide an expanded source of equity financing for corporations, it should be made national policy to pursue the goal of broadened capital ownership. Congress also should request from the Administration a quadrennial report on the ownership of wealth in this country which would assist in evaluating how successfully the base of wealth was being broadened over time.

*   *   *   *
[The following appeared as a “Letter to the Editor” on July 20, 1976, from Chairman of The Joint Economic Committee, 1976; Hubert H. Humphrey]”Broaden Capital Ownership”In his column on July 4, Hobart Rowen maintained that “Debate Still Needed on Employee Stock Ownership Plans.” I agree wholeheartedly with this. However, I wish to point out that the debate should not be limited to ESOPs alone, for there are many alternatives methods for achieving the ultimate goal, which is to broaden the ownership of capital.I view this as such an important goal that in addition to introducing with Senator Javits the Employee Stock Ownership Fund Act of 1976, which was discussed in Mr. Rowne’s column, I directed the Joint Economic Committee to seriously examine this goal (“Broaden Capital Ownership”) and the best means to achieve it. The committee began its investigation by holding two very informative days of hearings on ESOPs last December at which Louis O. Kelso and other ESOP experts testified. I am pleased to say that the committee fully endorsed this goal by making it a recommendation in its 1976 Annual Report to the President: “to provide a realistic opportunity for more U.S. Citizens to become owners of capital, and to provide and expanded source of equity financing for corporations, it should be made national policy to pursue the goal of broadened capital ownership.”The most recent contribution by the committee to the debate on whether such a goal is needed and is justified and, if so, how it should be met, was a staff study released last month entitled “Broadening the Ownership of New Capital: ESOPs and Other Alternatives.” This study is a valuable input into the debate Mr. Rowen says is needed as it presents the overall context for the debate and analyzes many methods other than ESOPs that would broaden capital ownership in the U.S. The latter point is a critical one, for I feel that the more comprehensive types of plans should be subjected to debate, which they haven’t been up to this point, by Congress and the appropriate Executive Departments.

The main advantages of such plans according to the study were: (1) they stimulated both the issuance of stock and its distribution to new stockholders and (2) the new stockholders would, if so desired, consist entirely of lower and middle income Americans who currently own a very small share of this country’s outstanding stock. It is my intention that the Joint Economic Committee continue its efforts in this area by examining these types of plans over the next year.

The broad framework of my thoughts in this area may be stated quite briefly. Throughout my career as a public servant, I have viewed full employment as a top priority goal for this country. And I continue to do so. But I also recognize that capital, and the question of who owns it and therefore reaps the benefit of its productiveness, is an extremely important issue that is complementary to the issue of full employment. I see these as the twin pillars of our economy: Full employment of our labor resources and widespread ownership of our capital resources. Such twin pillars would go a long way in providing a firm underlying support for future economic growth that would be equitably shared.

HUBERT H. HUMPHREY,
U.S. Senator (D-Minn.)
Washington D.C.

[Note; To date in 2012 there existed over 22,000 ESOPs in America with over 11,000,000 employees participating. The next step in Broaden Capital Ownership, is for 308,000,000 Americans participating in what is know as ‘Capital Homestead Accounts’, a second economy multiplied by 308 million – Citizens. Ronald Reagan and others called it; an ‘Industrial Homestead Act’. ]
* * * *
What’s Troubling America and the World today!

“The society had fallen, much as our society has today, into a tangle wherein the bulk of men were disappointed and angry and seeking for a solution to the whole group of social strains. There was indebtedness everywhere; the power of money and consequent usury. There was slavery everywhere. Society reposed upon it, as ours reposes upon wage slavery today. There was weariness and discontent with theological debate, which, for all its intensity, had grown out of touch with the masses. There lay upon the freemen, already tortured with debt, a heavy burden of imperial taxation; and there was the irritant of existing central government interfering with men’s lives; there was the tyranny of the lawyers and their charges.”
— Hilaire Belloc, The Great Heresies, 1938

* * * *

“The root cause of present injustices is not to be attributed to division of goods, nor the inequalities of the division, but rather to the fact that the mass of people are practically bereft of ownership. Some means must be devised to admit the proletariats within the proprietory system. Widely distributed property makes for social stability. Any alternative offered lacks the moral discipline of responsibility and ownership. Perhaps the best summary argument for private property is the impossibility of finding any better general system to take its place.”
McDonald, The Social Value of Property According to Saint Thomas Aquinas (Washington, D.C.: Catholic University of America Press, 1939) pp. 185 paragraph 8.

* * * *

“In the past, the ownership of business enterprise, the only form of property with which we are here concerned, has always at least in theory, involved two attributes, first the risking of previously collected wealth in profit-seeking enterprise (past savings). But in the modern corporation, these two attributes of ownership no longer attach to the same individual or group. The stockholder has surrendered control over his wealth. He has become a supplier of capital, a risk-taker pure and simple, while ultimate responsibility and authority are exercised by directors and ‘control.’ One traditional attribute of ownership is attached to stock ownership; the other attribute is attached to corporate control. Must we not, therefore, recognize that we are no longer dealing with property in the old sense?”
— Berle and Means, The Modern Corporation and Private Property, 1937, p287

Collapse Of Financial System Will Come In August, Maybe September?: Market-Watchers

On June 29, 2012, Eleazar David Meléndez writes in International Business Times that the world economy has entered a final countdown with three months left, and investors should pencil in a collapse in either August or September.

While this is a doomsday scenario, the fact is that there are no short-term solutions. The long-term solution, which must be acted upon NOW, requires that the Federal Reserve System be reformed  to act as a purveyor of economic growth.

Influencial economists and business leaders, as well as political leaders, should read Harold Moulton’s The Formation Of Capital, in which he argues that it makes no sense to finance new productive capital out of past savings. Instead, economic growth should be financed out of future earnings (savings), and provide that every citizen become an owner. The Federal Reserve, which has been largely responsible for the powerlessness of most American citizens, should set an example for all the central banks in the world. Chairman Benjamin Bernanke and other members of the Federal Reserve need to wake-up and implement Section 13 paragraph 2, which directs the Federal Reserve to create credit for local banks to make loans where there isn’t enough savings in the system to finance economic growth. We should not destroy the Federal Reserve or make it a political extension of the Treasury Department, but instead reform it so that the American citizens in each of the 12 Federal Reserve Regions become the owners. The result will be that money power will flow from the bottom up, not from the top down––not for consumer credit, not for credit that doesn’t pay for itself or non-productive uses of credit, but for credit for productive uses to expand the economy’s rate of growth.

The systemic injustices of monopoly capitalism can only be addressed by comprehensive reforms to the tax, monetary and inheritance policies favoring the top 1 percent at the expense of the 99 percent. The current system perpetuates budget deficits and unsustainable government debt, underutilized workers, a lack of financing for financing advanced energy and green technologies, and outsourcing of U.S. industrial jobs to low-wage countries, trade deficits, shrinking consumption incomes among the poor and middle class, and conventional methods for financing productive growth that increase the ownership and power gaps between the top 1 percent and the 90 percent whose combined ownership accumulations are already less than the elite whose money power is widely known as the source of political corruption and the breakdown of political democracy.

The unworkability of the traditional market economy is evidenced by the diverse and growing deficits––federal budget deficit, trade deficit, city, county and state budget deficits––which are making it increasingly impossible for governments at every level to function. The increasing deficit burden is the result of the growing numbers of people who cannot earn, from legitimate participation in production, enough income to support themselves and their families. Thus government is obliged to “redistribute” to starve off economic collapse. The key means of redistribution is taxation––taking from the legitimate producers and giving to the non- or under-producers––to make up the economy’s ever wider income and purchasing power shortfalls.

The fact is that political democracy is impossible without economic democracy. Those who control money control the laws that foster wage slavery, welfare slavery, debt slavery and charity slavery. These laws can and should be changed by the 99 percent and those among the 1 percent who are committed to a just and economically classless market economy, true equality of opportunity, and a level playing field in the future for 100 percent of Americans. By adopting economic policies and programs that acknowledge every citizen’s right to become a capital worker as well as a labor worker, the result will be an end to perpetual labor servitude and the liberation of people from progressive increments of subsistence toil and compulsive poverty as the 99 percent benefits from the rewards of productive capital-sourced income.

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 capital owners. The question, as posed by Kelso is: “how are all individuals to be adequately productive when a tiny minority (capital workers) 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?”

http://www.ibtimes.com/articles/357971/20120629/economy-collapse-prediction-august-september.htm

 

Romney Takes "You Didn’t Build That" Global

On July 30, 2012, Brian Beutler writes on TalkingPointsMemo.com:

Here I’m not talking about the much larger, phony side of the “you didn’t build that” debacle, where Republicans are pretending Obama said entrepreneurs didn’t build their businesses. That’s run of the mill political hackery. But many conservatives were genuinely offended by the fair reading of Obama’s speech — that successful entrepreneurs should contribute more to public works, because they’ve benefited the most from them — because it clashes with their view of what’s most fundamental to individual and group success.

That is reflective of a very deep-seated American can-do attitude, one we identified not so long ago the “Protestant work ethic.” But it has morphed from a shared recognition that hard work and initiative are inherently good, noble character traits into a sense that financial success is a proxy for them — where a high net worth is in and of itself a testament to one’s good character. See, e.g., prosperity gospel.

Many if not most American liberals disagree with this perspective, both for its misunderstanding of merit, and for its common but false correlate that poverty is a symptom of laziness or moral failure. But it’s become central to modern conservative identity. It’s why they’re so confident that the cartoon version of Obama’s remarks is so politically noxious. And yet when Romney leaves the country and applies the same basic conception to larger groups of peoples in nations — Israelis and Palestinians, Americans and Mexicans, Chileans and Peruvians — it creates a huge row, and the campaign has to step in to clean up the mess.

That’s not altogether surprising. An appeal to Americans’ sense of self-determination and an implicit attack on the values of poor countries are politically very different things. But they spring from the same view of the world, and it’s strange in a way to see Romney running away from that view in one context and charging directly at it in another.

Inconveniently for plutocrats such as Romney, the United State is still a political democracy committed constitutionally to economic democracy. Wealth concentration is repugnant not only to democratic ideals and sensibilities but to several guarantees of the Constitution itself. It is also structurally antagonistic to the private property, free market economy that is the proper economic complement of political democracy. Therefore, the reigning princes of plutocracy–the same interests President Franklin D. Roosevelt called “economic royalists”–find it necessary to repackage for political resale the old myths, which rationalize their virtual monopoly of productive capital ownership.

Plutocrats also have a psychological problem in a political democracy. There is a phenomenon called wealth-guilt, which the German sociologist Hemut Schoeck analyzes most perceptively in “Envy: A Theory Of Social Behavior.” It is not enough to be rich; the possession of wealth must somehow be justified in a social context where the overwhelming majority of people are poor and, as far as the “system” is concerned, destined to perpetual poverty. Riches must somehow be deserved, merited, sanctified. Thus, the apologist for wealth concentration must frame his defense with the sensibilities of the plutocrat mind, as well as those of the larger society.

The rationalization of wealth concentration in a political democracy involves, first, diverting public attention from the phenomenon itself. Just as the apologist for war dislikes photographs of the slaughtered and wounded, the wealth apologist dislikes statistics depicting the distribution of wealth and income. He or she dislikes rigorous distinctions about what wealth is and what it means in the lives of real people, and what its absence is like. He or she is not about to divulge the source of wealth even if known. It is also necessary to maintain the illusion that the road to wealth in the existing order of things is not a footpath as narrow as that leading through the eye of the needle, but a highway broad enough to accommodate all manner of hopeful folk.

True, wealth and income is a taboo subject in polite society–i.e., society inhibited by the wealth–ignorance of the rich. Wealth statistics in the United States today are almost as crude as mortality statistics before Pasteur forced medicine to become a science. Wealth is virtually never defined but left to one’s own perception.

Our political leaders and their conventional economic advisors evidence a “mechanical concern” with wealth and income distribution, an unfortunate “distributionist mentality” which has afflicted conventional economics since Ricardo. This mode of thinking is “forever counting the ranks of rich and poor and assaying the defects of capitalism that keep the poor always with us in such great numbers.” Poverty body counts give the rich a bad image by implying that wealth creates poverty. But most menacing, they impute that the system is unfair, that the deck is stacked. Thus, the distributionist mentality “strikes at the living heart of democratic capitalism (sic).” It challenges “the golden rule of capitalism.”

Conventional economists regret that even the great champions of capitalism such as Friedrich von Hayek, Ludwig von Mises, and even Milton Friedman, have not seen fit to give “capitalism a theology” or even “assign to its results any assurance of justice.” Their praise has been pragmatic and technical. Capitalism is good because it produces more wealth and liberty than its competitors. None of these defenders “cogently refutes the thesis that the greatest of capitalists–the founders of the system–were in some sense ‘robber barons.’ None convincingly demonstrates that the system succeeds and thrives because it gives room for the heroic creativity of entrepreneurs.”

Students of monopoly capitalism have long observed the tendency of this system to confirm one of the Bible’s many double-entry bookkeeping truths, Matthew 25:29, which promises: “Unto everyone that hath shall be given, and he shall have abundance; but from him that hath not shall be given, and he shall be taken away even that which he hath.” This is the golden rule of plutocracy. He who owns the economy’s productive capital today will own even more tomorrow, thanks to conventional business finance. And he or she who does not own productive capital, but who must make his productive input through labor, will be robbed of his or her little labor productiveness by the technological change, which eliminates him or her and makes productive capital owners even more productive. But though it fits the facts, this golden rule is not calculated to vindicate the ways of plutocracy to man. They are eager to portray the rich not only as wealth-bearers, but as wealth-creators and wealth-dispensers. This is the golden rule of capitalism.

The sad and disturbing reality today is that conventional economist continue to be intellectually dishonest and sycophantic as in to propagate stall-tactics on behalf of the plutocracy to suppress the spread of productive capital ownership to the 95 to 99 percent of consumers in the United States economy who do not own it now.

There is little in conventional economists thinking, dialogue and publishing to suggest “How can we eliminate the effects of poverty?,” with the question of the capital-hoarding right, namely: “What can we do to revitalize the productive system?”, much less to answer it. In exposing many of the artful errors of the liberals, conventional economists, perhaps not intentionally, have undertaken to build a fortress around the institutions and policies that support the Divine Right of the Rich to Stay Rich and Get Richer, and to preserve the non-ownership of productive capital by the overwhelming majority.

John D. Rockefeller stated the golden rule of capitalism message far more honestly, and certainly more succinctly, in 1905. To a reporter who asked him how he became rich, he replied:

“I believe the power to make money is a gift from God…to be developed and used to the best of our ability for the good of mankind. Having been endowed with the gift I possess, I believe it is my duty to make money and still more money, and to use the money I make for the good of my fellow man according to the dictates of my conscience.”

http://talkingpointsmemo.com/archives/2012/07/romney_takes_you_didnt_build_that_global.php?ref=fpblg

Renewable Energy Development

 

What is missing form the dialogue about solar and alternative development of energy and the transmission thereof is the ownership structure of advanced renewable energy system development. As is often the case the U.S. Department of Energy is involved in providing loans or loan guarantees, as well as research grants. Should any development of renewable energy systems involve taxpayer monies, the government should require that the utility users/customers share in the private, individual ownership of the development, turning every customer into an owner of the power utility. This can be accomplished by forming a for-profit, professionally managed, citizen-owned “Community Investment Corporation” (CIC) or Citizens Land Bank (CLB) (www.http://cesj.org/homestead/strategies/community/cic-full-nk.html).

While the CLB would create new private sector jobs and entrepreneurial opportunities, its main accent is on widespread participation, particularly in the ownership of land, technology, buildings and infrastructure that must be fabricated upon the community’s land for expanding the local economy. The Citizens Land Bank is designed to serve as a for-profit land planner and private sector developer geared to rational innovation and change at the community level.

Using the most advanced tools of the free enterprise system––especially innovative credit and financing tools-the CLB would create new owners of newly created assets, without taking existing property away from present owners.

The CLB strategy and its institutional structure for mobilizing citizen action are easily adaptable to areas of virtually any size, such as land surrounding nodes of a mass transit system, a downtown renewal area, or an inner-city neighborhood. The CLB can even be adopted for an entire city, metropolitan area or natural region of the country.

The CLB would create new opportunities for corporate executives, real estate professionals and the best advisors that money can buy, but they would be accountable to the CLB’s lenders and shareholders through the CLB’s broadly representative board of directors. Local enterprises could then compete more dynamically in the global marketplace without special protections or subsidies.

The Rich Keep Capital-Less––Capital-Less

The following is abridged from the writings of my mentor and partner, Louis Kelso, in Agenda 2000 Incorporated, an economic justice advocacy firm founded in the late 1960s. Both Kelso and his writing partner Patricia Hetter Kelso have been an inspiration to me throughout my entire life.

First, it is critical and significantly relevant to distinguish between wealth and income. That wealth consists of “large possessions; abundance of things that are objects of human desire; abundance of worldly estate; affluence; riches; abundant supply; large accumulations; all property that has a money value or an exchangeable value; all material objects that have economic utility.” Just as in physics it is necessary to study matter in order to arrive at an understanding of antimatter, in economics one can only understand poverty by considering what wealth is an where it comes from.

Most people have the puzzling view that:

• Work, indeed, is the root of wealth, even of the genius that mostly resides in sweat.

• The only dependable route from poverty is always work, family and faith…in order to move up, the poor must not only work; they must work harder than the classes above them.

• Indeed, after work the second principle of upward mobility is the maintenance of monogamous marriage and family.

• An analysis of poverty that begins and ends with family structure and marital status would explain far more about the problem than most of the distributions of income, inequality, unemployment, education, IQ, race, sex, home ownership, location, discrimination, and all the other items usually multiply regressed and correlated on academic computers. But even an analysis of work and family would miss what is perhaps the most important of the principles of upward mobility under capitalism–namely, faith.

Why is productive capital ownership omitted from this list? Surely, the most effective cure for poverty is to be born or marry into one of the less than five percent of American families, which own virtually all of the economy’s productive assets. The next most effective cure would be to acquire one’s own viable capital estate in the same way that the rich have always done. The rich do not get or stay that way primarily through hard work, monogamy, procreation, and gullibility but through access to capital credit, which enables them to buy and pay for productive capital out of its earnings.

Unbelievably, political leaders and their conventional economist advisors appear to know nothing of business, corporate finance, or property law. They show no awareness of how virtually all new productive capital is financed in the American economy, and are entirely oblivious to the effects and implications of a system of finance which relentlessly makes existing significant stockholders and productive capital owners richer, while effectively barring all new entrants other than geniuses or extraordinarily lucky people into the productive capital-owning class.

Instead, they are fixated on the old Puritan savings myths, or what economist John Maynard Keynes called “the principle of accumulation based on inequality.” Its central argument is that the savings of the rich, and hence the rich as a class, are essential to the operation of a “capitalist” economy. By “sacrificing” present consumption to acquire savings, and then by putting them “at risk” to finance new enterprise and technological innovation, the rich perform a service bordering on the heroic.

Their concept of “supply” is nothing but an extended metaphor for rule by the few who own virtually all of the economy’s productive capital today, and who will own even more of it tomorrow no matter which economic faction gains control of national economic policy or which political party is in power. Business finance is designed to make the rich richer, and it does just that.

Inconveniently for plutocrats, however, the United State is still a political democracy committed constitutionally to economic democracy. Wealth concentration is repugnant not only to democratic ideals and sensibilities but to several guarantees of the Constitution itself. It is also structurally antagonistic to the private property, free market economy that is the proper economic complement of political democracy. Therefore, the reigning princes of plutocracy–the same interests President Franklin D. Roosevelt called “economic royalists”–find it necessary to repackage for political resale the old myths, which rationalize their virtual monopoly of productive capital ownership.

Plutocrats also have a psychological problem in a political democracy. There is a phenomenon called wealth-guilt, which the German sociologist Hemut Schoeck analyzes most perceptively in “Envy: A Theory Of Social Behavior.” It is not enough to be rich; the possession of wealth must somehow be justified in a social context where the overwhelming majority of people are poor and, as far as the “system” is concerned, destined to perpetual poverty. Riches must somehow be deserved, merited, sanctified. Thus, the apologist for wealth concentration must frame his defense with the sensibilities of the plutocrat mind, as well as those of the larger society.

The rationalization of wealth concentration in a political democracy involves, first, diverting public attention from the phenomenon itself. Just as the apologist for war dislikes photographs of the slaughtered and wounded, the wealth apologist dislikes statistics depicting the distribution of wealth and income. He or she dislikes rigorous distinctions about what wealth is and what it means in the lives of real people, and what its absence is like. He or she is not about to divulge the source of wealth even if known. It is also necessary to maintain the illusion that the road to wealth in the existing order of things is not a footpath as narrow as that leading through the eye of the needle, but a highway broad enough to accommodate all manner of hopeful folk.

True, wealth and income is a taboo subject in polite society–i.e., society inhibited by the wealth–ignorance of the rich. Wealth statistics in the United States today are almost as crude as mortality statistics before Pasteur forced medicine to become a science. Wealth is virtually never defined but left to one’s own perception. However, enlightening statistics may be had. In 1977, Senator Russell Long, in an introduction to a symposium on Employee Stock Ownership Plan (ESOP) financing, stated:

“Despite all the fine, populist oratory and good intentions of great men like Franklin Roosevelt, Harry Truman, Dwight Eisenhower, John Kennedy, Lyndon Johnson–the distribution of the net worth among Americans today, in relative terms, is about the same as it was when Herbert Hoover succeeded Calvin Coolidge. The distribution for adult population is as follows: .001 percent of the population have a net worth of $1,000,000 or more; .002 percent have $500,000-$1,000,000; 2.4 percent have $100,000-$500,000; 1.7 percent have $60,000-$100,000; 3.1 percent have $40,000-$60,000; 6.5 percent have $20,000-$40,000; 10 percent have $10,000-$20,000; 13 percent have $5,000-$10,000; 13 percent have $3,000-$5,000; 50.2 percent have less than $3,000.”

Our political leaders and their conventional economic advisors evidence a “mechanical concern” with wealth and income distribution, an unfortunate “distributionist mentality” which has afflicted conventional economics since Ricardo. This mode of thinking is “forever counting the ranks of rich and poor and assaying the defects of capitalism that keep the poor always with us in such great numbers.” Poverty body counts give the rich a bad image by implying that wealth creates poverty. But most menacing, they impute that the system is unfair, that the deck is stacked. Thus, the distributionist mentality “strikes at the living heart of democratic capitalism (sic).” It challenges “the golden rule of capitalism.”

Conventional economists regret that even the great champions of capitalism such as Friedrich von Hayek, Ludwig von Mises, and even Milton Friedman, have not seen fit to give “capitalism a theology” or even “assign to its results any assurance of justice.” Their praise has been pragmatic and technical. Capitalism is good because it produces more wealth and liberty than its competitors. None of these defenders “cogently refutes the thesis that the greatest of capitalists–the founders of the system–were in some sense ‘robber barons.’ None convincingly demonstrates that the system succeeds and thrives because it gives room for the heroic creativity of entrepreneurs.”

Students of monopoly capitalism have long observed the tendency of this system to confirm one of the Bible’s many double-entry bookkeeping truths, Matthew 25:29, which promises: “Unto everyone that hath shall be given, and he shall have abundance; but from him that hath not shall be given, and he shall be taken away even that which he hath.” This is the golden rule of plutocracy. He who owns the economy’s productive capital today will own even more tomorrow, thanks to conventional business finance. And he or she who does not own productive capital, but who must make his productive input through labor, will be robbed of his or her little labor productiveness by the technological change, which eliminates him or her and makes productive capital owners even more productive. But though it fits the facts, this golden rule is not calculated to vindicate the ways of plutocracy to man. They are eager to portray the rich not only as wealth-bearers, but as wealth-creators and wealth-dispensers. This is the golden rule of capitalism.

They claim to derive the golden rule of capitalism rule from the few valid truths in conventional economics–Say’s Law. If the economics profession did understand Say’s Law we would have been spared from lopsided economics. But ever since Jean-Baptiste Say discovered the truth that bears his name, economists have circled it blindly, like moths around a flame. They intuit its importance without being able to decipher its meaning.

Say’s Law, compressed into an aphorism–“Supply creates its own demand”– is, as everyone knows by now, the battle cry of the Supply Lopsiders, who have fabricated a rebellion against the Demand Lopsiders, representing the opposite side of Say’s equation. The goal of each is simply power over national economic policy, which neither can hold for long unless the public is persuaded that there is some ideological or practical difference between the two impostures, which there is not.

Both sides invoke the authority of Say’s Law, which holds that in a market economy, if government will refrain from interference with market forces, the purchasing power generated by production will be sufficient, over a given time period, to enable the purchase of all that is produced. In effect therefore, Say’s Law states that if government does not interfere with the operation of the free market forces, depressions cannot occur. But depressions do occur, and they have been occurring ever since the burden of production began to be transferred to productive capital–machinery, land, and structures–at an accelerated rate in the opening stages of the Industrial Revolution.

Conventional economists, as a whole, fail to understand the workings of a market economy, and of Say’s Law as an interpretation of the relationship between production and consumption in a market economy, Their lack of understanding is grossly defective, including the Demand Lopsiders.

In the first place, Say’s Law does not relate to production, use, financing, acquisition, or disposition of producer goods or products, i.e., productive capital goods or products, in any way. Nor does it relate to the production, use, financing, or acquisition of military goods and products which are not “consumed” in any sense contemplated by Jean-Baptiste Say. The production, use, financing, and acquisition of productive capital goods or products are governed by capital theory, as Kelso and Adler pointed out in (1958) “The Capitalist Manifesto,” and again in (1961) “The New Capitalists––A Proposal To Free Economic Growth From The Slavery Of (Past) Savings.” (Both can be downloaded at no charge at http://www.cesj.org/cesjsitemap.html)

Economist Adam Smith, whose words Jean-Baptiste Say was interpreting when he announced his famous law, made this clear:

“Consumption is the sole end and purpose of production: and the interest of the producer ought to be attended to only so far as it may be necessary for promoting that of the consumer. The maxim is so perfectly self-evident that it would be absurd to attempt to prove it.” (Adam Smith, GBWW, Vol. 39. p.287.)

Furthermore, Say’s Law, by its own terms, is inapplicable to any modern industrial economy, for in every such economy, the price of one of the two factors of production–labor–is usually distorted beyond recognition. Government, by authorizing and encouraging unions coercively and repeatedly to adjust upward the price of labor, and business, by acquiescing in such an adjustment as long as the costs can be passed on to the consumers, have simply made useless the most basic law of market economies.

This observation should not be interpreted as an anti-labor remark. It is merely anti-economist. The economist’s face-saving liturgy that treats labor workers as the only true producers of products and services, and productive capital as a mere mystical catalytic agent that makes labor more productive, is simply a “big lie” in the Hitlerian sense. The result of it has been that labor workers, along with the unemployed, underemployed and the unemployable, have been prevented from becoming productive capital owners as productive capital input grew to its overwhelming predominance through technological change–that is to say, they have been prevented from sharing in the production of products and services as productive capital owners and from legitimately (i.e., through production) sharing in the consumption of such capital-produced consumer products.

In light of this, the sad and disturbing reality today is that conventional economist continue to be intellectually dishonest and sycophantic as in to propagate stall-tactics on behalf of the plutocracy to suppress the spread of productive capital ownership to the 95 to 99 percent of consumers in the United States economy who do not own it now.

In his own day, Adam Smith observed that the productive capital owners (the “mercantile class”) were already beginning to exploit the capital-less consumers–that, in the “mercantile,” i.e., capitalist system:

“…the interest of the consumer is almost constantly sacrificed to that of the producer; and it seems to consider production, and not consumption, as the ultimate end and object of all industry and commerce.” (Smith, op. cit., p.287.)

Thus the Supply Lopsiders carry on an old, though hardly honorable, tradition.

For many years, the supporters and advocates for the Just Third Way (see http://www.cesj.org/thirdway/thirdway-intro.htm) believed that society’s steadfast refusal to perceive that productive capital owners are themselves a factor of production and a creator of “value,” in the identical sense that labor workers are, was an unconscious anachronism whose corrective was a higher level of consciousness. We still assert this to be true in the case of the general public. But the owners of concentrated wealth, we have belatedly come to understand, have a vested interest in keeping the capital factor un-comprehended by the capital-less many. Their allies and confederates in this endeavor are the professional economists. Once it is admitted that productive capital owners make productive input in exactly the same ways–functional, moral, political and economic–that labor workers do, the macroeconomic game of productive capital monopoly will be over, and methods of finance that make the rich ever richer and keep the capital-less––capital-less, will end.

Then the question of who owns the productive capital plant will be understood as crucial and vital to the capitalist economy’s health, as well as to economic justice and opportunity. In a private-property economy, the income which a labor worker or a capital owner (worker) produces belongs to him or her. Thus the principle of distribution of a capitalist economy to be deduced from Say’s Law is: “From each according to his production, to each according to his production.” But this rule, applied to the concentrated owners of his or hers productive capital instruments, means that the few can produce everything required by the many, and therefore, because of Say’s Law, the many will be rendered underproductive or nonproductive, and thus forced to live partially or completely as wards of redistribution, boondoggled, welfare, or charity, supported by taxation, debt, and inflation.

All this means is that the American Economics Establishment is in dire need of a new apologetics. Between 1929 and 1932, the private property economy of the United States broke down because, as Kelso and Adler pointed out in “The Capitalist Manifesto” and “The New Capitalist,” the enormous productive power of the tiny minority (less than five percent) of the population who owned its productive capital could not provide adequate incomes to support the consumption of the labor workers, the unemployed, underemployed and the unemployable. As this became clear to the American people, they elected Franklin D. Roosevelt in the hopes that he would solve the problem. Relying on the demand lopside economics of John Maynard Keynes, they set to work to answer the question: “What can we do to alleviate the effects of poverty?” The result was the elaborate network of welfare and boondoggle channels that redistributed income from the middle-class labor workers and upper-class productive capital owners to the lower-paid workers and non-workers. Conservatives rail against such redistribution by the liberal demand lopside economists and their followers.

“When government gives welfare, unemployment payments, and public-service jobs in quantities that deter productive work, and when it raises taxes on profitable enterprise to pay for them, demand declines. In fact, nearly all programs that are advocated by economists to promote equality and combat poverty…reduce demand by undermining the production from which all demand derives…[demand] originates with productive work at any level. This is the simple and homely first truth about wealth and poverty. ‘Give and you will be given unto.’ This is the secret not only of the riches, but also of growth.” (Prosperity Gospel)

This “Essential insight of supply-side economics” happens to be false. The case for Supply Lopside economics cannot be built on the case against Demand Lopside economics. Without understanding that there are two factors of production that are in competition; that each individual needs to be productive through the ownership of both; that technological change, which continues day after day, has made production through productive capital ownership far more potent than production through labor; and that the individual freedom from toil which technology makes possible can be enjoyed only by productive capital owners, supply-side economics is as senseless as its demand-side counterpart. The Demand Lopsiders and the Supply Lopsiders are simply seesaw misinterpretations of the Jean-Baptiste Say equation.

Economists will continue to be baffled by Say’s Law until they realize that under it, distribution is a function of production by each consumer. Only after that insight does it become obvious that true capitalism must be a capitalism of the many, not of the few. Conventional economists do not know what capitalism is. Those of the Supply Lopside persuasion have made the Supply Lopside hoax credible. The concept of Social Capitalism or Democratic Capitalism or perhaps Personalism, a system which distributes purchasing power to all consumers as individuals as a result of their direct participation in production–either as labor workers or as productive capital owners–or both–is beyond their theoretical comprehension, as long as they cling to the obsolete doctrines that were, and still are, the subject of their doctoral dissertations.

Meanwhile, the propertyless many must somehow be provided with purchasing power. That was the only lesson the Great Depression taught. No conventional economist knows how to bring about this consumer demand except in the way which the Keynesians so thoroughly exploited: income redistribution (and debt). But the reality is that without capitalist tools like the Employee Stock Ownership Plan (ESOP) (see http://www.cesj.org/homestead/creditvehicles/cha-esop.htm) and those proposed in the Capital Homestead Act (see http://www.cesj.org/homestead/index.htm), government redistribution and ever-expanding debt will continue because it must. Such capitalists financing methods can substitute capital-produced incomes for welfare, social security, and boondoggle.

The Supply Lopsiders believe that to arrive at a truth, they need but invert a lie, and that the antidote to one wrong question is a different wrong question. They counter the question of the redistributive left, “How can we eliminate the effects of poverty?,” with the question of the capital-hoarding right, namely: “What can we do to revitalize the productive system?”

There is little in conventional economists thinking, dialogue and publishing to suggest this question, much less to answer it. In exposing many of the artful errors of the liberals, conventional economists, perhaps not intentionally, have undertaken to build a fortress around the institutions and policies that support the Divine Right of the Rich to Stay Rich and Get Richer, and to preserve the non-ownership of productive capital by the overwhelming majority.

John D. Rockefeller stated the golden rule of capitalism message far more honestly, and certainly more succinctly, in 1905. To a reporter who asked him how he became rich, he replied:

“I believe the power to make money is a gift from God…to be developed and used to the best of our ability for the good of mankind. Having been endowed with the gift I possess, I believe it is my duty to make money and still more money, and to use the money I make for the good of my fellow man according to the dictates of my conscience.”

 

 

 

 

 

 

39 Facts About Poverty That Will Blow Your Mind

On July 26, 2012, TrueActivist.com reported:

Every single day more Americans fall into poverty. This should deeply alarm you no matter what political party you belong to and no matter what your personal economic philosophy is. Right now, approximately 100 million Americans are either “poor” or “near poor”. For a lot of people “poverty” can be a nebulous concept, so let’s define it.  The poverty level as defined by the federal government in 2010 was $11,139 for an individual and $22,314 for a family of four.  Could you take care of a family of four on less than $2000 a month?  Millions upon millions of families are experiencing a tremendous amount of pain in this economy, and no matter what “solutions” we think are correct, the reality is that we all should have compassion on them. Sadly, things are about to get even worse. The next major economic downturn is rapidly approaching, and when it hits the statistics posted below are going to look even more horrendous.

When it comes to poverty, most Americans immediately want to get into debates about tax rates and wealth redistribution and things like that.

But the truth is that they are missing the main point.

The way we slice up the pie is not going to solve our problems, because the pie is constantly getting smaller.

Our economic infrastructure is being absolutely gutted, the U.S. dollar is slowly losing its status as the reserve currency of the world and we are steadily getting poorer as a nation.

Don’t be fooled by the government statistics that show a very small amount of “economic growth”. Those figures do not account for inflation.

After accounting for inflation, our economic growth has actually been negative all the way back into the middle of the last decade.

According to numbers compiled by John Williams of shadowstats.com, our “real GDP” has continually been negative since 2005.

So that means we are getting poorer as a nation.

Meanwhile, we have been piling up astounding amounts of debt.

40 years ago the total amount of debt in the United States (government, business and consumer) was less than 2 trillion dollars.

Today it is nearly 55 trillion dollars.

So we have a massive problem.

Our economic pie is shrinking and millions of Americans have been falling out of the middle class. Meanwhile, we have been piling up staggering amounts of debt in order to maintain our vastly inflated standard of living. As our economic problems get even worse, those trends are going to accelerate even more.

So don’t look down on the poor. You might be joining them a lot sooner than you might think.

The following are 40 facts about poverty in America that will blow your mind….

#1 In the United States today, somewhere around 100 million Americans are considered to be either “poor” or “near poor”.

#2 It is being projected that when the final numbers come out later this year that the U.S. poverty rate will be the highest that it has been in almost 50 years.

#3 Approximately 57 percent of all children in the United States are living in homes that are either considered to be either “low income” or impoverished.

#4 Today, one out of every four workers in the United States brings home wages that are at or below the poverty level.

#5 According to the Wall Street Journal, 49.1 percent of all Americans live in a home where at least one person receives financial benefits from the government. Back in 1983, that number was below 30 percent.

#6 It is projected that about half of all American adults will spend at least some time living below the poverty line before they turn 65.

#7 Today, there are approximately 20.2 million Americans that spend more than half of their incomes on housing. That represents a 46 percent increase from 2001.

#8 During 2010, 2.6 million more Americans fell into poverty. That was the largest increase that we have seen since the U.S. government began keeping statistics on this back in 1959.

#9 According to the U.S. Census Bureau, the percentage of “very poor” rose in 300 out of the 360 largest metropolitan areas during 2010.

#10 Since Barack Obama became president, the number of Americans living in poverty has risen by 6 million and the number of Americans on food stamps has risen by 14 million.

#11 Right now, one out of every seven Americans is on food stamps and one out of every fourAmerican children is on food stamps.

#12 It is projected that half of all American children will be on food stamps at least once before they turn 18 years of age.

#13 The poverty rate for children living in the United States is 22 percent, although when the new numbers are released in the fall that number is expected to go even higher.

#14 One university study estimates that child poverty costs the U.S. economy 500 billion dollars a year.

#15 Households that are led by a single mother have a 31.6%poverty rate.

#16 In 2010, 42 percent of all single mothers in the United States were on food stamps.

#17 According to the National Center for Children in Poverty,36.4 percent of all children that live in Philadelphia are living in poverty, 40.1 percent of all children that live in Atlanta are living in poverty, 52.6 percent of all children that live in Cleveland are living in poverty and 53.6 percent of all children that live in Detroit are living in poverty.

#18 Since 2007, the number of children living in poverty in the state of California has increased by 30 percent.

#19 Child homelessness in the United States has risen by 33 percent since 2007.

#20 There are 314 counties in the United States where at least 30% of the children are facing food insecurity.

#21 More than 20 million U.S. children rely on school meal programs to keep from going hungry.

#22 A higher percentage of Americans is living in extreme poverty (6.7 percent) than has ever been measured before.

#23 If you can believe it, 37 percent of all U.S. households that are led by someone under the age of 35 have a net worth of zero or less than zero.

#24 A lot of younger Americans have found that they cannot make it on their own in this economy. Today, approximately 25 million American adults are living with their parents.

#25 Today, one out of every six elderly Americans lives below the federal poverty line.

#26 Amazingly, the wealthiest 1 percent of all Americans own more wealth than the bottom 95 percent combined.

#27 The six heirs of Wal-Mart founder Sam Walton have a net worth that is roughly equal to thebottom 30 percent of all Americans combined.

#28 At this point, the poorest 50% of all Americans now control just 2.5% of all of the wealth in this country.

#29 Back in 1980, less than 30% of all jobs in the United States were low income jobs. Today,more than 40% of all jobs in the United States are low income jobs.

#30 Right now, the United States actually has a higher percentage of workers doing low wage work than any other major industrialized nation does.

#31 Half of all American workers earn $505 or less per week.

#32 In 1970, 65 percent of all Americans lived in “middle class neighborhoods”. By 2007, only 44 percent of all Americans lived in “middle class neighborhoods”.

#33 Federal housing assistance outlays increased by a whopping 42 percent between 2006 and 2010.

#34 Approximately 50 million Americans do not have any health insurance at all right now.

#35 Back in 1965, only one out of every 50 Americans was on Medicaid. Today, approximately one out of every 6 Americans is on Medicaid.

#36 It is being projected that Obamacare will add 16 million more Americans to the Medicaid rolls.

#37 Back in 1990, the federal government accounted for 32 percent of all health care spending in America. Today, that figure is up to 45 percent and it is projected to surpass 50 percent very shortly.

#38 Overall, the amount of money that the federal government gives directly to the American people has risenby 32 percent since Barack Obama entered the White House.

#39 It was recently reported that 1.5 million American families live on less than two dollars a day(before counting government benefits).

#40 The unemployment rate in the U.S. has been above 8 percent for 40 months in a row, and 42 percent of all unemployed Americans have been out of work for at least half a year.

Recently, I wrote a long article about why there will never be enough jobs in the United States ever again.

That means that a whole lot of Americans are not going to be able to take care of themselves.

 

http://www.trueactivist.com/39-facts-about-poverty-that-will-blow-your-mind/

Why Capitalism Has An Image Problem

On July 27, 2012, Charles Murray in The Wall Street Journal examines the cloud now hanging over American business––and what today’s capitalists can do about it.

Mitt Romney’s résumé at Bain should be a slam dunk. He has been a successful capitalist, and capitalism is the best thing that has ever happened to the material condition of the human race. From the dawn of history until the 18th century, every society in the world was impoverished, with only the thinnest film of wealth on top. Then came capitalism and the Industrial Revolution. Everywhere that capitalism subsequently took hold, national wealth began to increase and poverty began to fall. Everywhere that capitalism didn’t take hold, people remained impoverished. Everywhere that capitalism has been rejected since then, poverty has increased.

Capitalism has lifted the world out of poverty because it gives people a chance to get rich by creating value and reaping the rewards. Who better to be president of the greatest of all capitalist nations than a man who got rich by being a brilliant capitalist?

Yet it hasn’t worked out that way for Mr. Romney. “Capitalist” has become an accusation. The creative destruction that is at the heart of a growing economy is now seen as evil. Americans increasingly appear to accept the mind-set that kept the world in poverty for millennia: If you’ve gotten rich, it is because you made someone else poorer.

What happened to turn the mood of the country so far from our historic celebration of economic success?

Two important changes in objective conditions have contributed to this change in mood. One is the rise of collusive capitalism. Part of that phenomenon involves crony capitalism, whereby the people on top take care of each other at shareholder expense (search on “golden parachutes”).

Another change in objective conditions has been the emergence of great fortunes made quickly in the financial markets. It has always been easy for Americans to applaud people who get rich by creating products and services that people want to buy. That is why Thomas Edison and Henry Ford were American heroes a century ago, and Steve Jobs was one when he died last year.

When great wealth is generated instead by making smart buy and sell decisions in the markets, it smacks of inside knowledge, arcane financial instruments, opportunities that aren’t accessible to ordinary people, and hocus-pocus. The good that these rich people have done in the process of getting rich is obscure. The benefits of more efficient allocation of capital are huge, but they are really, really hard to explain simply and persuasively. It looks to a large proportion of the public as if we’ve got some fabulously wealthy people who haven’t done anything to deserve their wealth.

The objective changes in capitalism as it is practiced plausibly account for much of the hostility toward capitalism. But they don’t account for the unwillingness of capitalists who are getting rich the old-fashioned way—earning it—to defend themselves.

Another factor is the segregation of capitalism from virtue. Historically, the merits of free enterprise and the obligations of success were intertwined in the national catechism. McGuffey’s Readers, the books on which generations of American children were raised, have plenty of stories treating initiative, hard work and entrepreneurialism as virtues, but just as many stories praising the virtues of self-restraint, personal integrity and concern for those who depend on you. The freedom to act and a stern moral obligation to act in certain ways were seen as two sides of the same American coin. Little of that has survived.

The U.S. was created to foster human flourishing. The means to that end was the exercise of liberty in the pursuit of happiness. Capitalism is the economic expression of liberty. The pursuit of happiness, with happiness defined in the classic sense of justified and lasting satisfaction with life as a whole, depends on economic liberty every bit as much as it depends on other kinds of freedom.

Earning a living for yourself and your family through your own efforts is the most elemental form of earned success. Successfully starting a business, no matter how small, is an act of creating something out of nothing that carries satisfactions far beyond those of the money it brings in. Finding work that not only pays the bills but that you enjoy is a crucially important resource for earned success.

Making a living, starting a business and finding work that you enjoy all depend on freedom to act in the economic realm. What government can do to help is establish the rule of law so that informed and voluntary trades can take place. More formally, government can vigorously enforce laws against the use of force, fraud and criminal collusion, and use tort law to hold people liable for harm they cause others.

Everything else the government does inherently restricts economic freedom to act in pursuit of earned success.

To put it another way, it should be possible to revive a national consensus affirming that capitalism embraces the best and most essential things about American life; that freeing capitalism to do what it does best won’t just create national wealth and reduce poverty, but expand the ability of Americans to achieve earned success—to pursue happiness.

 

http://online.wsj.com/article/SB10000872396390443931404577549223178294822.html