Obama Blocks Chinese Firm's Oregon Wind Farm Projects

On Septpember 29, 2012, Neela Banerjee and Don Lee write in the Los Angeles Times that President Obama issued a rare presidential order instructing Ralls Corp. to divest itself of four Oregon wind farm projects next to a military base, citing a national security threat.

The decision comes against the backdrop of a presidential race in which Obama and Republican opponent Mitt Romney have traded jabs over who would be more effective in answering the challenges the ascendant Chinese economy poses. The U.S. and China filed international trade complaints against each other this month, boosting tensions over economic issues.

The presidential order, the first of its kind since 1990, instructs Ralls Corp., whose owners are Chinese, to divest itself of four wind farm projects on Oregon land that it acquired this year. Ralls is affiliated with the Sany Group, a Chinese maker of wind turbines.

This is another example of an OPPORTUNITY TO CREATE NEW CAPITALIST OWNERS, and yet NO ONE is addressing the issue of WHO WILL OWN the the future of wind farms.

Here we have an OPPORTUNITY, with a taxpayer-supported loan guarantee, to create NEW OWNERS among the actual users of the energy to be produced.

WAKE UP PEOPLE. If this is a profitable venture for the Chinese, then it is a profitable venture for Americans, and should be vested with the rate payers of the energy to be produced.

If there was a consciousness in America today that addresses the issue of CONCENTRATED OWNERSHIP, perhaps the Obama administration would explore other financial mechanisms to empower the capital-less and under-capitalized Americans. Their acquisition would be paid from out of the millions of dollars of income generated by the investment, and once paid for, generate a viable capital estate source of income for those Americans.

Today we accept as normal public ownership of gigantic capital instruments like mass rail, subways, government office buildings, universities, water systems, and power systems. These government-owned enterprises and services could be transformed into competitive private sector companies managed by Private Facilities Corporations with the use of the asset or facility leased to the normal using body. The wages of the Private Facilities Corporation(s) are passed through to the leasing body. This would allow us to build the ownership of what is now public capital into individuals and reduce the cost of government, including public pension systems. Thus, when you build the ownership into the employees of the Private Facilities Corporation(s), who now have a vested interest in its quality of operation and maintenance, the contracted lease rental fee committed by the government entity will give the employee stockholders a reasonable return and lesson or replace the need for supplemental redistribution programs.

Consumer Stock Ownership Plan financing can simultaneously build the ownership into the consumers of monopolies such as telecommunications, water and power companies, mass-transit, and even cable and satellite television, who are the source of all their funding, and dividends paid out to the consumer owners would become an offset to their utility bills.

See The Citizens Land Bank: A Just Third Way For Financing Urban Development at http://foreconomicjustice.org/4535/the-citizens-land-bank-a-just-third-way-for-financing-urban-development/

http://www.latimes.com/news/custom/la-na-china-wind-farms-20120929,0,5616624.story

 

L.A. City Council Clears Path For Downtown Stadium

On September 29, 2012, David Zahniser and Kate Linthicum write in the Los Angeles Times that the Los Angeles City Council has cleared the path for the $1.2-billion 72,000-seat Farmers Field Stadium.

This is a perfect example of an OPPORTUNITY TO CREATE NEW CAPITALIST OWNERS, and yet NO ONE is addressing the issue of WHO WILL OWN the Farmers Field Stadium.

As the article stated:

…it is unclear who will own the company seeking to build the $1.2-billion facility.

City Council members unanimously approved an array of documents that will clear the path for 72,000-seat Farmers Field, billed as the most environmentally friendly stadium in NFL history, to rise on the southwest edge of downtown.

Additional language was inserted to give the council more power to torpedo the deal if AEG’s new owner lacks the required money, sports management experience or character.

But unfortunately, the support by the community is limited to the JOBS CREATION result, rather than to the more lucrative long-term earnings generated for the new OWNERS. That would be billionaire and prospective AEG buyer Patrick Soon-Shiong (see http://www.latimes.com/business/money/la-fi-mo-patrick-soon-shiong-aeg-20120919,0,5314243.story), the founder of Abraxis BioScience Inc. who, as of Wednesday, was the 47th-richest person in America and the wealthiest in Los Angeles.

“Taxpayers have a stake in AEG’s future for reasons that go beyond football. The company is the financial backstop if stadium proceeds fail to cover debt payments on up to $268 million in borrowing for construction of the new convention center wing. The debt is guaranteed by the city’s general fund, which pays for police officers, firefighters and other nuts and bolts services.”

So here we have an OPPORTUNITY, with a taxpayer-supported loan guarantee to create NEW OWNERS among the people who are being forced out of their neighborhood, the fans that would purchase the tickets to the sporting events, and to the policemen, firefighters and employees of the stadium to acquire the stadium.

If no deal is reached next year, AEG will try again in 2014 — a move that would push the opening of the downtown stadium back to 2018. But after Friday’s vote, Leiweke said the council had given him “a lot of ammunition” to attract one or even two teams.

“We are done on the political front. We are done on the environmental front. And we’re done on the community front,” he said. “And now it’s time to get this stadium built.”

WAKE UP PEOPLE. If this is a profitable venture for the richest Americans, then it is a profitable venture for the poorest Americans, who are capital-less.

This is another example of government power, backed by taxpayer funding, to displace ordinary Americans from their neighborhoods in the name of JOB CREATION. Anschutz Entertainment Group (AEG) or the new OWNERS will benefit from government legislation and taxpayer-supported eminent domain to become the OWNER of valuable real estate upon which to build a $1.2 billion 72,000-seat sports stadium. If there was a consciousness in America today that addresses the issue of CONCENTRATED OWNERSHIP, perhaps the Los Angeles City Council would explore other financial mechanisms to empower the poverty-stricken residents in the impacted neighborhoods to acquire the property and develop the stadium, thus broadening private, individual ownership in the future income-producing stadium assets. Their acquisition would be paid from out of the millions of dollars of income generated by the investment, and once paid for, generate a viable capital estate source of income for the displaced neighbor residents.

Today we accept as normal public ownership of gigantic capital instruments like mass rail, subways, government office buildings, universities, water systems, and power systems. These government-owned enterprises and services could be transformed into competitive private sector companies managed by Private Facilities Corporations with the use of the asset or facility leased to the normal using body. The wages of the Private Facilities Corporation(s) are passed through to the leasing body. This would allow us to build the ownership of what is now public capital into individuals and reduce the cost of government, including public pension systems. Thus, when you build the ownership into the employees of the Private Facilities Corporation(s), who now have a vested interest in its quality of operation and maintenance, the contracted lease rental fee committed by the government entity will give the employee stockholders a reasonable return and lesson or replace the need for supplemental redistribution programs.

Consumer Stock Ownership Plan financing can simultaneously build the ownership into the consumers of monopolies such as telecommunications, water and power companies, mass-transit, and even cable and satellite television, who are the source of all their funding, and dividends paid out to the consumer owners would become an offset to their utility bills.

See The Citizens Land Bank: A Just Third Way For Financing Urban Development at http://foreconomicjustice.org/4535/the-citizens-land-bank-a-just-third-way-for-financing-urban-development/

http://www.latimes.com/news/local/la-me-stadium-20120929,0,4992069.story

http://www.latimes.com/news/local/la-me-0914-stadium-20120914,0,4319446.story

The Conscience Of A Liberal

In The New Your Times on September 27, 2012, the Nobel Prize-winning Op-Ed columnist Paul Krugman comments on economics and politics.

Once again, a Nobel economist fails to discuss the term “OWNRSHIP” and the concentration thereof as the real cause of inequality.

Influential 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?”

How Can Politicians Bring Back Jobs From China?

On September 27, 2012, Jason Margolis writes on BBC News:

Presidential candidates Barack Obama and Mitt Romney pledge to create jobs, and that will involve bringing home manufacturing jobs from China. But do politicians even offer American businesses what they need to bring jobs back?

For decades employment opportunity in the United States was such that the majority of people could obtain a job that could support their livelihood, though in most cases related to a family, it required the father and mother to both work, if they aspired to live a “middle class” lifestyle. With “Free Trade” those opportunities began to disintegrate as corporations sought to seek lower cost production taking advantage of global cheap labor rates and non-regulation, as well as lower tax rates abroad. This resulted in a chain reaction forcing more and more companies to out-source in order to stay competitive (thus the rise of China, Indiana Mexico, and other third-world nations economies).

At the same time. tectonic shifts in the technologies of production were exponentially occurring (and continue to do so), which resulted in less job opportunities as production was shifted from people making things to “machines” of technology making things, The combination of cheap global labor costs and lower long-term invested “machine” costs has forced the value of labor downward and this will continue to be the reality.

Our only way to far greater prosperity, opportunity, and economic justice is to embrace technological innovation and invention and the resulting human-intelligent machines, superautomation, robotics, digital computerized operations, etc as the primary economic engine of growth.

But significantly, unless we reform our system to empower EVERY American to acquire, via insured capital loans, viable full-ownership holdings (and thus entitlement to full-dividend earnings) in the companies growing the economy with the future earnings of the investments paying for the initial loan debt to acquire ownership, then the concentration of ownership of ALL future productive capital will continue to be amassed by a wealthy minority.

Companies will continue to globalized in search of “customers” with money or simply fail as exponentially there will be fewer and fewer customers to support their businesses worldwide. Why, because the majority will be disconnected from the income derived from the non-human means of production that is replacing the need for labor workers.

Education is not the solution, though it is critical for our future societal development. But except for a relative few, the majority of the population, no matter how well educated, will not be able to find a job that pays sufficient wages or salaries to support a family or to prevent a lifestyle which is gradually being crippled by near poverty or poverty earnings.

Already, GDP growth is at a near standstill. Lowering taxes on the wealthy ownership class will not much impact this reality because they will not invest unless their are customers to create demand. This will continue to be the reality unless we reform the system to connect the majority of people to the property rights of the non-human production of products and services while simultaneously spurring economic growth, and entitle them to the earnings of capital (dividends, interest and rent) as a second income source to supplement their earnings from their labor in the short-term, with the long-term lifetime goal of earnings from capital ownership being the primary source of their income. This is the ONLY way to strengthen individuals and empower them to become personally responsible for their lives and not depended on taxpayer redistribution and national debt to sustain welfare support, open or concealed.

Americans need to reassess just what the impact of tectonic shifts in the technologies of production is having on destroying and degrading jobs. No matter how “hard” one works to earn a livelihood, they will be impacted by the troubling economic and social trends (global capitalism, free-trade doctrine, tectonic shifts in the technologies of production and the steady off-loading of American manufacturing and jobs) caused by continued concentrated ownership of productive capital.

The ONLY way to REAL JOB CREATION is to embark on purposeful economic growth, while simultaneously strengthening EVERY American by empowering them to acquire private, individual ownership in future income-producing productive capital assets and pay for their acquisition out of future capital earnings, simultaneously with the growth of the economy. Over time as individual American enrich themselves by benefiting from the full-dividend earnings of their capital estates, the overall tax base will be significantly improved and the debt can be retired, all the while reducing peoples’ dependency on taxpayer-supported government welfare, open and concealed. Thus, the emphasis and focus needs to be on OWNERSHIP CREATION, which in turn will propel economic growth and result in real JOB CREATION, providing opportunities for every American to earn income though both capital ownership and their labor.

Our leadership at ALL levels needs to address the institutions of economic injustice and address the reasons and cures for concentrated capital ownership and for unemployment and underemployment of the citizenry, especially people in their 20s and those older who have worked their entire lives and are now disillusioned. Such issues are the issues that have concerned intellectuals not only in America but now universally in the age of globalization. This is why the newer-generation leaders, who see that economic justice is a precondition for and not merely a result of political justice, are searching for a more successful global awakening.

Economic Growth with Ownership Creation is the engine for Real Job Creation.

Join the OWN Team to advocate OWNERSHIP CREATION at http://capitalhomestead.org/group/the-own-team The only commitment is to participate in the Weekly Action Point, which is usually just a Facebook post. Other activities are strictly voluntary!

http://www.bbc.co.uk/news/world-us-canada-19736039

Workers Protest

On September 27, 2012, the Los Angeles Times reported on FIVE stories of labor unrest and global economic trade wars.

The world is at the boiling point with workers seeing their working conditions and earnings assulted and the pitting of country against country as economies struggle to be competitive.

And yet NO ONE is addressing and acknowledging the reality that tectonic shifts in the technologies of production are destroying jobs and degrading job earning levels, putting people who only have their labor to sell in a difficult position of survival.

Leaders need to think much bigger than the failed JOBS CREATION pitches to their people and put the emphasis on OWNERSHIP CREATION, which will result in REAL JOB CREATION and create a balance between production and consumption.

The proposed reforms that I and others are advocating would grow a truly just and free enterprise economy, creating millions of private sector jobs and turning countries into nations where every child, woman and man could become a capital owner, without redistributing property from current owners. See Louis Kelso and Mortimer Adler’s 1958 book The Capitalist Manifesto and their 1961 book The New Capitalists: A Proposal For Freeing Economic Growth From The Slavery Of (Past) Savings (download free at http://www.cesj.org/cesjsitemap.html).

For America, our proposed systemic reforms to the tax, monetary, finance, inheritance, labor and welfare systems are based on the sound moral, political and economic principles espoused by Kelso and Adler and supported by the great thinkers of the past. This new vision would offer a truly genuine “Second American Revolution” of radically centrist “bottom-up” ideas based on the inherent dignity of every human person. It took a civil war to eliminate the institution of human slavery, the original sin of this great nation. Our challenge today is to eliminate wage slavery, welfare slavery and debt slavery, while minimizing charity slavery.

Such a new strategic goal would be guided by universal principles of economic and social justice that would lift American political debates from the politics of greed (the right) or those of envy (the left). Such a new goal would restore America’s moral leadership in the world. How? By uniting all Americans across today’s ideological spectrum, from far right to far left, behind a “solution” that would systematically create a truly new constituency working together to build a more economically just, high tech, sustainable growth economy. Uniquely such a just free market economy could be achieved without depriving current capitalists of property rights over their existing assets and would radically reduce and eventually eliminate government redistribution of income.

If we fail in America, then prepare for similar upheaval and an unraveling of our democratic principles resulting in a  plutocratic government with productive capital  ownership channeled into fewer and fewer hands, as we continue to witness today with government by the wealthy evidenced at all levels.

Join the OWN Team to advocate OWNERSHIP CREATION at http://capitalhomestead.org/group/the-own-team The only commitment is to participate in the Weekly Action Point, which is usually just a Facebook post. Other activities are strictly voluntary!

Chinese Worker Clash Scars Foxconn Factory http://www.latimes.com/business/la-fi-foxconn-workers-20120927,0,6045480.story

Violence Breaks Out During Protest Over Greek Austerity http://latimesblogs.latimes.com/world_now/2012/09/anti-austerity-protesters-clash-with-police-in-athens.html

http://www.youtube.com/watch?v=AX73RU6TatA&feature=share

Riot Video Upsets Chinese http://www.latimes.com/news/nationworld/world/la-fg-china-japan-cars-20120927,0,489874.story

South Africa ‘Strike Season’ Takes Toll http://www.latimes.com/news/nationworld/world/la-fg-south-africa-strikes-20120927,0,7065288.story

Mexico Workers Protest Labor Overhaul Proposal http://www.latimes.com/news/nationworld/world/la-fg-mexico-labor-reform-20120927,0,5099195.story

In 2-Minute Ad, Obama Touts 'Economic Patriotism'

On September 27, 2012, Ken Thomas and Matthew Daly of the Associated Press wrote:

President Barack Obamais pitching a broad economic argument to voters ahead of next week’s debate with Republican opponent Mitt Romney, buying TV time in seven battleground states to promote what he calls a “new economic patriotism.”

President Obama needs to think much bigger than the goals he espouses for his “new economic patriotism” approach and put the emphasis on OWNERSHIP CREATION, which will result in REAL JOB CREATION and create a balance between production and consumption.

The proposed reforms that I and others are advocating would grow a truly just and free enterprise economy, creating millions of private sector jobs and turning this country into a nation where every child, woman and man could become a capital owner, without redistributing property from current owners. See Louis Kelso and Mortimer Adler’s 1958 book The Capitalist Manifesto and their 1961 book The New Capitalists: A Proposal For Freeing Economic Growth From The Slavery Of (Past) Savings (download free at http://www.cesj.org/cesjsitemap.html).

Our proposed systemic reforms to the tax, monetary, finance, inheritance, labor and welfare systems are based on the sound moral, political and economic principles espoused by Kelso and Adler and supported by the great thinkers of the past. This new vision would offer a truly genuine “Second American Revolution” of radically centrist “bottom-up” ideas based on the inherent dignity of every human person. It took a civil war to eliminate the institution of human slavery, the original sin of this great nation. Our challenge today is to eliminate wage slavery, welfare slavery and debt slavery, while minimizing charity slavery.

Such a new strategic goal would be guided by universal principles of economic and social justice that would lift American political debates from the politics of greed (the right) or those of envy (the left). Such a new goal would restore America’s moral leadership in the world. How? By uniting all Americans across today’s ideological spectrum, from far right to far left, behind a “solution” that would systematically create a truly new constituency working together to build a more economically just, high tech, sustainable growth economy. Uniquely such a just free market economy could be achieved without depriving current capitalists of property rights over their existing assets and would radically reduce and eventually eliminate government redistribution of income.

Join the OWN Team to advocate OWNERSHIP CREATION at http://capitalhomestead.org/group/the-own-team The only commitment is to participate in the Weekly Action Point, which is usually just a Facebook post. Other activities are strictly voluntary!

http://news.yahoo.com/2-minute-ad-obama-touts-economic-patriotism-070804791–election.html

The Fallacy Of Redistribution

On September 20, 2012, Thomas Sowell writes on Townhall.com:

In theory, confiscating the wealth of the more successful people ought to make the rest of the society more prosperous. But when the Soviet Union confiscated the wealth of successful farmers, food became scarce. As many people died of starvation under Stalin in the 1930s as died in Hitler’s Holocaust in the 1940s.

How can that be? It is not complicated. You can only confiscate the wealth that exists at a given moment. You cannot confiscate future wealth — and that future wealth is less likely to be produced when people see that it is going to be confiscated.

 

http://townhall.com/columnists/thomassowell/2012/09/20/the_fallacy_of_redistribution

Redistributing Wealth Upward

On September 25, 2012, Harold Meyerson, an opinion writer for The Washington Post wrote:

Which is the more redistributionist of our two parties? In recent decades, as Republicans have devoted themselves with laser-like intensity to redistributing America’s wealth and income upward, the evidence suggests the answer is the GOP.

This article is drawing negative comments from business owners. As an example Jack Simons writes:

So let me say first that I strongly disagree with this article. Could it be that the housing market collapsed because the banks were forced (really) to make loans to people who could not pass the most basic credit muster? Read Lewis’s “The Big Short” to see what happened. I am an engineer by training with advanced degrees from two state universities. I worked my way through school running a printing press in my dad’s small town newspaper/printshop. I worked for years for several companies and in the early 90’s lost my job and then started my own company which I grew to the point where today it employs 158 high tech workers. To get to the point where the company was worth a significant amount of money it took countless hours of effort, weekends, 18 hours days, time away from family for myself and several other employee/equity holders. But I have no regrets as it was a labor of love in the sense that I have always enjoyed the benefit

s of hard work. In 2008, with the election of the current administration, I determined that it was time to get out as the incoming administration advertised its antibusiness policies and indeed they have been realized in the form of an impending huge tax increase and a plethora of regulations that the entrepreneur has to jump over in getting to the goal of making a profit. I should say that entrepreneurs (typically) manage their companies toward growth, thereby avoiding taxes which are asessed on profits. Remember that each employee that is added as the company grows pays income tax, FICA, gets healthcare, etc. So now I am a member of the <1% and have grown bored with having a boss and I am frustrated with the impediments to growing and managing the business I founded in the current environment. I have the financial resources and intellectual energy and thus I am contemplating starting a new company. As I contemplate this, what do I see on the horizon? A looming large tax increase for both the long term capital gains tax as well as maybe an effective 50% tax rate on personal income. The reason the Cap Gains tax was made low was to incentivize investment . Starting a business is an investment , and a risky one at that.
So here is the bottom line which the liberal media and approximately half of the voting public do not apparently understand. People like me create jobs and we do it with the expectation of reaping financial rewards. Do you really think that is a bad proposition? I built my company using my life savings and retained earnings and now I dont have to worry about money. Am I a bad person? Have I exploited the 158 people who draw a paycheck from the company I created? The bottom line is that I am waiting for the election results to make the determination about starting a new company and its your guess as to who I am supporting.
As Jack Simons states “People like me create jobs and we do it with the expectation of reaping financial rewards.”

But the reality is that Simons, as a good businessman, would acknowledge that full employment is not an objective of businesses. Companies always strive to keep labor input and other costs at a minimum to maximize profits. 

Simons says that he built my company using his life savings and retained earnings. The problem with the system is that economic growth is limited to “past” savings (retained earnings are savings not taken as personal income) and the result is that a minority representing the richest Americans continue to accumulate productive capital ownership through stock ownership in business corporations. The majority of Americans are effectively shut out of this process because they do not have the income sufficient to muster the “savings” necessary to create viable capital ownership holdings and are left to jobs and welfare as their only means of a livelihood. Simons is proud that he employs 158 people who draw a paycheck from the company he created, and he should be. But are those 158 people also owners with him in the business?

I advocate for reforming the system so that EVERY American is empowered to acquire ownership in future income-producing productive capital assets embodied in business corporations and pay for their acquisition out of the future earnings of the investments. I advocate paying out fully the earnings of capital ownership and not using retained earnings as a means to finance future growth. Instead future growth would be financed by issuing and selling new stock.

Under this proposal systemic reforms would be made to the tax, monetary, finance, inheritance, labor and welfare systems based on the sound moral, political and economic principles espoused by binary economist louis Kelso and Mortimer Adler and supported by the great thinkers of the past. This new vision would offer a truly genuine “Second American Revolution” of radically centrist “bottom-up” ideas based on the inherent dignity of every human person. It took a civil war to eliminate the institution of human slavery, the original sin of this great nation. Our challenge today is to eliminate wage slavery, welfare slavery and debt slavery, while minimizing charity slavery.

Such a new strategic goal would be guided by universal principles of economic and social justice that would lift American political debates from the politics of greed (the right) or those of envy (the left). Such a new goal would restore America’s moral leadership in the world. How? By uniting all Americans across today’s ideological spectrum, from far right to far left, behind a “solution” that would systematically create a truly new constituency working together to build a more economically just, high tech, sustainable growth economy. Uniquely such a just free market economy could be achieved without depriving current capitalists of property rights over their existing assets and would radically reduce and eventually eliminate government redistribution of income.

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

Also follow the Center for Economic and Social Justice atwww.cesj.org and http://capitalhomestead.org/ Join the OWN Team at http://capitalhomestead.org/group/the-on-team

Also see The Kelso Institute at http://www.kelsoinstitute.org/

Join the OWN Team to advocate OWNERSHIP CREATION athttp://capitalhomestead.org/group/the-own-team The only commitment is to participate in the Weekly Action Point, which is usually just a Facebook post. Other activities are strictly voluntary!

http://www.washingtonpost.com/opinions/harold-meyerson-the-party-that-truly-believes-in-redistribution/2012/09/25/c5877b7a-0740-11e2-afff-d6c7f20a83bf_story.html?tid=pm_pop

http://townhall.com/columnists/thomassowell/2012/09/20/the_fallacy_of_redistribution

Let Go Of 'Government Motors'

On September 21, 2012, the Los Angeles Times published an editorial saying that it was time the Treasure sell its shares in GM and leave the auto industry to private investors.

The taxpayer bailouts of General Motors and Chrysler kept the companies afloat while they went through bankruptcy, averting liquidations that would have caused catastrophic job losses across the U.S. auto industry at the height of the recession. One consequence of the intervention, however, is that the government is still holding on to more than a fourth of GM’s stock. The Treasury Department argues that the time isn’t right to sell and that GM’s shares are undervalued by the market. Maybe so, and maybe the ultimate cost to the taxpayers would be lower if Washington held on to the shares longer. But there’s a more important principle at stake, namely that the government shouldn’t have an ownership interest in private companies.

That said, I advocate that the employees of General Motors and Chrysler purchase the stock now held by the federal government (taxpayers) using an Employee Stock Ownership Plan (ESOP) trust.

We need to arrive at a new market economy structure in which on one level the employees of a corporation could walk into management and demand, in collective bargaining, the use of an ESOP—not just to trade a single block of stock for wage concessions, but to redesign the future of the company and its employees. We need, as a society, the assurance that as a corporate employer grows, it builds ownership into its employees. All of them! When people are in a position to earn the wages of their capital as well as the wages of their labor, their company is in a position to be more competitive through lower labor costs and increased technological innovation, while achieving higher employee incomes through the employee’ capital.

Binary economist Louis Kelso was the architect and pioneer of the Employee Stock Ownership Plan (ESOP), which Kelso invented to enable working people without savings to buy stock in their employer company and pay for it out of its future dividend yield––on the promise of the capital investment’s future income.

The ESOP provides access by employees to capital credit to buy company stock and pay for it in pre-tax dollars out of what the assets underneath that stock yield. Bank loans are made to the ESOP trust that represents employees, instead of to the company (current owners). The trust gives the lender a note and with the borrowed monies makes the investment in the company stock. The company then issues stock to the ESOP trust. The company now has the money, which otherwise could have been borrowed directly without the ESOP (benefiting current owners), to make the planned investment and repay the loan from pre-tax forecasted future capital earnings. The company promises the bank to make pre-tax full-dividend payments to the ESOP trust to enable the trust to replay the lender. Assuming that it would take five years for that capital investment to pay for itself, at the end of five years the employees now own the full stock value in the expanded company.

Companies can use the ESOP as the credit mechanism to create employee ownership in ratios up to a 100 percent leverage buyout. Nothing has been taken away from the existing owners. However, using the ESOP, the existing owners will surrender the exclusive right to acquire more ownership in the company and have a smaller percentage of ownership in the total company, but they have not been prevented from making a fair rate of return on their thus-far accumulated ownership shares because the company earns a rate of return throughout the process. After the loan has been paid off with pre-tax earnings, the employees will have more earnings from capital and they will have more consumer power to purchase products and services. Multiply this by tens of thousands of employee-owned companies and the economy revs up to grow dramatically.

There are now over 11,000 profitable ESOP companies, of which 1,500 of those companies are worker majority owned, with workers paying for their stock shares out of future corporate profits, not by reducing their take-home labor worker incomes.

ESOPs work as designed when the workers receive the full property rights as owners, including full voting rights, not simply treated as beneficial owners with power concentrated at the top of the company, without any accountability or transparency. Unfortunately, some ESOPs have been structured so that the rights, powers, and benefits of ownership remain concentrated in a small non-accountable elite controlling corporate and financial governance. When the employees are owners, dependent on their income from the company’s bottom line rather than through ordinary labor wages and benefits, the workers’ economic interests are more invested to see that their company succeeds. In this way, each person in the company is empowered as a labor worker and as a capital worker (owner) and inspired to work together as a team to make better operational decisions to serve and maximize value to their customers.

Under our current financial system, the security (collateral) necessary to secure an ESOP loan must come from the company, and therein the current owners are providing the security to broaden employee capital ownership with the benefit that expanded capital ownership drives expanded consumer power to purchase products and services.

Under this scenario the company owners are “insuring” the risk without a benefit, which can be recompensated by paying the employees less labor wages, reduced pension benefits, and receiving government tax forgiveness benefits, which are written into the Internal Revenue Code.

With the ESOP, employees can acquire capital ownership with the earnings of capital. ESOPs have thus far only provided part of the solution, and the stock acquisition is limited to the employer company.

Robert Ashford, Professor of Law at the Syracuse University College of Law (New York) and a former lawyer in Kelso’s San Francisco law firm, specializes in the teaching of binary economics. He has expanded the ESOP trust into what he terms the “Super ESOP,” which includes multiple company diversification facilitated with private capital credit insurance or a government reinsurance agency (ala the Federal Housing Administration concept). Under Ashford’s plan, the promissory note can be offset to the government’s central Federal Reserve Bank in return for the cash equivalent of the amount of the loan, less an administrative fee. The only cost to the direct lending bank in making a loan to the corporation would be the administrative fee, or about 2 percent of the loan’s principal and then another 2 percent for capital credit insurance, with an additional quarter of a percent paid to the Federal Reserve Bank to monetize the loan and give the lender the same cash as it would have had if it had actually loaned money to the corporation. The lender’s cash loaned to the ESOP trust is replenished with the Federal Reserve Bank cash. When the company pays the ESOP trust enough money to enable the trust to repay the lender, the lender has to retrieve the note and pay back the Federal Reserve Bank. Thus, the loan cost would be essentially not more than 5 percent to allow ownership broadening financial capital to be in­vested in ownership broadening ESOP trusts to create new capitalists. Thus, national capital credit insurance replaces the requirement for the current corporate owners to pledge security.

ESOPs and other Kelsonian plans avoid the gambling trade and Wall Street firms that play with your money. The ESOP circumvents that. According to Kelso: “In a single transaction, you finance tools for the employer and ownership for the employees. The pre-tax yield of corporate assets of prosperous companies varies from 25 to 60 percent. The yield on secondhand securities is around five or six percent. Sure, with capital gains, you can get a little more, but don’t forget, that’s a zero-sum game; for every gainer, there’s a loser. Wall Street doesn’t fly any airplanes or raise any corn or do anything else in the way of producing products and services. It just plays games with your dough. And when you take it out in pensions, you’re going to get less than the company put in for you. You have to; that’s the dynamics of it.”

Other Kelsonian innovations include the Consumer Stock Ownership Plan (CSOP) and the General Stock Ownership Plan (GTOP), a plan designed to build capital ownership into politically designated classes of consumers within the jurisdiction of the authorizing government––state, local or federal. The ESOP, CSOP and GSOP are credit mechanisms that give corporate employees and others (non-corporate employees) access to stock ownership in future capital formation growth.

Capital credit is restricted to the purchase of assets that are expected to pay for themselves out of the revenue generated from the capital investment, which it financed, and therefore these assets are expected to earn a continuing flow of profit for whoever owns the assets. Consumer credit, on the other hand, does not generate its own repayment, and in order for the user to repay they must rely on other resources––for most Americans that means their labor worker earnings and personal savings.

Capital formation investments are made by companies annually based on projections a number of years out (at least 5 to 10 years) with the expectation that the investment will pay for itself as a result of sustainable growth and consumer demand. Thus, the concept embraces the idea that capital formation is self-financing. The question is who pledges the security and takes the risk of failure to return the expected yield from which to repay the loan.

Conventionally, most people do not have the right to acquire productive capital with the self-financing earnings of capital; they are left to acquire, as best as they can, with their earnings as labor workers. This is fundamentally hard to do and limiting. Thus, the most important economic right Americans need and should demand is the effective right to acquire capital with the earnings of capital. Note, though, millions of Americans own diluted stock value through the “stock market exchanges,” purchased with their earnings as labor workers, their stock holdings are relatively miniscule, as are their dividend payments compared to the top 10 percent of capital owners.

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

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

Kelso created the ESOP as a credit mechanism, which, with the support of Senator Russell Long (Democrat, Louisiana), was included in the employee benefits sections of the Internal Revenue Code (Employee Retirement Income Security Act of 1974 [ERISA], also known as the Pension Reform Act) as legislation not to look like something new and different.

http://www.latimes.com/news/opinion/editorials/la-ed-gm-government-shares-20120921,0,5687871.story

The Sun's Midas Touch

On September 21, 2012, Evan Halper, Ralph Vartabedian and Julie Cart write in the Los Angeles Times that corporate prospectors are receiving billions in subsidies and decades of higher energy rates.

Driven by the Obama administration’s vision of clean power and energy independence, the rush to build large-scale solar plants across the Southwest has created an investors’ dream in the desert.

Taxpayers have poured tens of billions of dollars into solar projects — some of which will have all their construction and development costs financed by the government by the time they start producing power.

Banks, insurers and utility companies have jumped in, taking advantage of complex state and federal tax incentives to reap outsized returns. Among the solar prospectors in the Mojave are investor Warren Buffett’s Berkshire Hathaway Inc., General Electric, JPMorgan Chase & Co., Morgan Stanley and technology giant Google Inc.

The cost for decades to come will also be borne by ratepayers. Confidential agreements between solar developers and utilities lock in power prices two to four times the cost of conventional electricity. The power generated by the mega-plants will be among the most expensive renewable energy in the country.

AND NO ONE is asking the question? Who should be the beneficiaries of the ownership of this massive productive capital investment funded by taxpayers and utility ratepayers?

Although the U.S. pioneered photovoltaic solar cells decades ago, it has fallen increasingly behind lower-cost manufacturers of the technology in countries that offer low-cost labor and few environmental restrictions, including China, South Korea and Malaysia. The cheap panels have been fueling a fast-growing solar consumer market in the U.S. and have opened vast opportunities for service-sector jobs in the sunlight-extraction business.

Although American scientists are still at the forefront of emerging solar research, the challenge is how can we make traditional solar panels at the lowest cost and continue to innovate with new technology that delivers greater performance at less cost?

Part of the problem is that the U.S. government has held back with a lack of government initiatives to support the unleashing of the full technological power of computerized robotic superautomated manufacturing, which would significantly lower costs but employ far less people. What consistently is missed is the necessity to unlock job-destroying technology with the empowerment for ordinary citizens––working people, the middle class and the poor––to benefit from insured capital credit to become individual owners of new productive capital that will bolster our manufacturing capabilities and at the same time significantly improve quality and performance and lower costs of products and service as investment in the American economy grows. This will result in “real” job creation with more and more people earning two incomes, one from their labor worker input and a second income from their capital worker input, which over time will become their dominant source of economic security.

What is needed is a massive loan guarantee economic growth plan with aims to balance production and consumption by empowering EVERY American to acquire private, individual ownership in future income-producing productive capital investments and pay for their loans out of the earnings of the investments.

The government, through the stimulus program, has been giving taxpayer grants to companies with the goal of generating “employment.” For the most part these are not loans or loan guarantees, thus there is no provision for a first-position recoupment position. There is no employee ownership stipulation. The government should always require broadened ownership, in companies the financial assist, of the productive capital assets among the employees, who would pay back their acquisition of ownership out of the earnings of the investment.

Today we accept as normal public ownership of gigantic capital instruments like mass rail, subways, government office buildings, universities, water systems, and power systems. These government-owned enterprises and services could be transformed into competitive private sector companies managed by Private Facilities Corporations with the use of the asset or facility leased to the normal using body. The wages of the Private Facilities Corporation(s) are passed through to the leasing body. This would allow us to build the ownership of what is now public capital into individuals and reduce the cost of government, including public pension systems. Thus, when you build the ownership into the employees of the Private Facilities Corporation(s), who now have a vested interest in its quality of operation and maintenance, the contracted lease rental fee committed by the government entity will give the employee stockholders a reasonable return and lesson or replace the need for supplemental redistribution programs. Consumer Stock Ownership Plan financing can simultaneously build the ownership into the consumers of monopolies such as telecommunications, water and power companies, mass-transit, and even cable and satellite television, who are the source of all their funding, and dividends paid out to the consumer owners would become an offset to their utility bills.
While financial support from the government is the purpose of the stimulus program, the structure of the support should be in the form of insured loans as restructuring and investment capital. Such a financial mechanism should be put in place that will guarantee loan risks provided by banks and lending institutions. Otherwise, the system will continue to limit access to capital acquisition to those who already own capital—the rich.

Criteria must be created to qualify the corporations subject to this policy and those corporations that qualify overseen so as to insure that their executives exercise prudent fiduciary responsibility to generate loan payback. Once the guaranteed loans are paid back, the new capital formation will continue to produce income for existing and future owners.

The companies receiving such financial support should always qualify as succeeding companies within a major industry with long-term productivity growth potential with the resulting benefit of promoting the diffusion of advanced technology into civilian industries. The loans should be used to modernize and build new superautomated and computerized robotic assemblies. Where necessary the monies should be used for supplemental retraining of labor workers to qualify them for the new jobs created. Most important, the profits from the investments should be fully paid out to new capitalists owners––the corporate employees. This should be a condition to receive the capital investment loans. The goal would be to create new capitalist owners simultaneously with the growth of the economy financed with government loan support. The profits would represent wealth created by public capital invested in such companies and industries.

The desired result would be to decrease, rather than increase, the existing concentration of productive capital ownership and thus economic power in the hands of a minority. The credit mechanisms supported by the government would not involve the expenditure of any tax money and would support profit-making operations for the primary purpose of earning dividends for the companies’ stockholders, including the newly created capitalist owners. Businesses supported by such credit mechanisms would have a profit motive and operate with the requirement for efficiency imposed by a market economy.

The goal would be to broaden the ownership of private corporations so as to make the interests of private industry more synonymous with the public interest and vice versa––while broadening private enterprise capitalism to include everyone in the society. Such policies and programs aimed at broadening productive capital ownership would foster extensive utilization of the most modern and efficient technological innovations and result in the revitalization of American free-enterprise capitalism mirrored in a strong growth-projected economy.

http://www.latimes.com/news/local/la-me-bigsolar-20120921,0,7995250.story