Can The Federal Reserve Help Prevent A Second Recession?

On November 7, 2012, William Greider writes in The Nation:

At least nine of the economies in Western Europe are already contracting. Their euro debt crisis threatens to pull down others. The anemic American recovery remains stalled by its blocked housing sector—there are still too many homeowners drowning in mortgage debt to trigger normal home sales and construction. Private investment is sagging, corporate profits softening too. Even China’s growth is slowing at an alarming rate.

If Congress fails to defuse the threat of the post-election “fiscal cliff,” austerity will be in the saddle for sure. The International Monetary Fund, not usually known for dire forecasts, predicts increased risk of worldwide stagnation, and has warned specifically against the “excessive fiscal consolidation” of austerity measures. Why haven’t the presidential candidates talked about this? Maybe for the same reason they didn’t talk about global warming: they saw no votes in either.

Federal Reserve chair Ben Bernanke, almost alone among influential officials, has been sounding the alarm in his understated, scholarly manner.

 

http://www.thenation.com/article/171126/can-federal-reserve-help-prevent-second-recession

Skills Don’t Pay The Bills

On November 20, 2012, Adam Davidson writes in The New York Times:

Nearly six million factory jobs, almost a third of the entire manufacturing industry, have disappeared since 2000. And while many of these jobs were lost to competition with low-wage countries, even more vanished because of computer-driven machinery that can do the work of 10, or in some cases, 100 workers. Those jobs are not coming back, but many believe that the industry’s future (and, to some extent, the future of the American economy) lies in training a new generation for highly skilled manufacturing jobs — the ones that require people who know how to run the computer that runs the machine.

The National Association of Manufacturers estimates that there are roughly 600,000 jobs available for whoever has the right set of advanced skills. But still this is a drop in the budget in terms of JOBS CREATION. What is critical, at this juncture, is to address the reality that tectonic shifts in the technologies of production will continue to exponentially destroy and degrade jobs as the production of products and services is less and less dependent on labor (skilled or unskilled) and more and more on the non-human factor––productive capital embodied in human-intelligent machines, superautomation, robotics, digital computer operations, etc.

As the “machine age” matures to levels of sophistication never before witnessed, those jobs in demand to support the new sophistication will need to be filled. Today, there are many places where manufacturing wages are going up but employers still cannot find enough workers because the wage levels are still competitively low and do not attract workers to factory jobs. As a result, many skilled workers are choosing to apply their skills elsewhere rather than work for less, and few young people choose to invest in training for jobs that pay fast-food wages.

As full employment is not an objective of businesses, and companies strive to keep labor input and other costs at a minimum, the result has been that private sector job creation in numbers that match the pool of people willing and able to work is constantly being eroded by physical productive capital’s ever increasing role. Industry is and has been moving jobs to China and other low-wage, low-cost operation countries, where even there companies are increasingly replacing workers with machines. If companies do not find ways to further reduce costs in America, they can’t compete on a global level.

Manufacturers, who face increasing competition from low-wage/low operational cost countries, can’t afford to pay higher wages. This effectively is causing potential workers to choose more promising career paths. No longer do we live in the 1950s or 1960s or even the 70s or 80s where the job destroying and degrading impact of productive capital had not so completely threatened good-paying jobs, and manufacturing workers could expect decent-paying jobs that would last a long time. But since the Free Trade movement and the subsequent weakening of unions, along with the confluence of human-inteligent machines, superautomation, robotics, digitalization and computers, the social contract has collapsed and employer owner “producers” no longer can compete in a global economy if they are saddled with high-cost labor.

As Davidson concludes workers and manufacturers now “need to recreate a system” — a new social contract — in which their incentives are aligned. But Davidson offers no platform of policies and programs to create that “new system.”

The solution is to significantly increase the number of producer interests in the non-human factor by broadening private, individual ownership of FUTURE productive capital economic growth whereby individuals have the opportunity to be productive as capital owners, as are the wealthiest producers/owners of business corporations, and as labor workers in jobs that are not make-work or contrived to sustain and prop up the economy by confiscating earned income through taxation and redistribution and by incurring unsustainable national debt.

Has Grover Norquist And His Anti-Tax Pledge Reached The End Of The Road?

On November 23, 2012, Rick Unger writes an Op-Ed in Forbes stating:

Judging from the 2012 election results, there is reason to believe that Grover Norquist’s days of bullying candidates into doing his bidding may be a thing of the past.

Going into the elections, 279 Congressional incumbents—along with 286 challengers—had signed the anti-tax pledge. However, at a time when the polls point to an overwhelming number of Americans favoring a rise in the tax ratesfor the nation’s very wealthiest, some 57 Republican House incumbents or challengers who signed the pledge went down to defeat while 24 GOP sitting Senators or those seeking a seat lost in their race.

http://www.forbes.com/sites/rickungar/2012/11/23/has-grover-norquist-and-his-anti-tax-pledge-reached-the-end-of-the-road/

Unions, Buoyed By Election Results, Are Taking A Stand

On November 22, 2012, Alana Semuels writes in the Los Angeles Times that thousands of workers across the U.S, are striking and walking out of jobs rather than accept pay and benefit changes. Victories of pro-labor candidates give them hope.

Urgently, union workers throughout the United States should seize on an opportunity to acquire a viable full-voting, full-dividend pay-out ownership stake or when possible buy-out their companies and retain not only their jobs but gain added dividend income over time, instead of allowing their companies to degrade their pay and benefits and sell off to other ownership interests. Worker/owners need to straighten their companies’ undeniable value and capital plant assets to their own financial benefit.

Why not the employees of America’s vast corporate business structure organize to secure loans to invest in future growth or when possible buy-out the companies on their behalf using an Employee Stock Ownership Plan (ESOP) trust financial mechanism? Using an ESOP, they would have the advantage of investing in or buying their companies with pre-tax monies. The ESOP can give employees access to credit so that they can purchase the employer’s stock, pay for it in pre-tax dollars out of the assets that underlie that stock, and after the stock is paid for earn and collect the capital worker/owner income from it, and accumulate it in a tax haven until they retire, whereby they continue to be capital owners receiving income from their capital ownership stakes.

Unions representing workers across the nation should take the lead in the investment of future growth or acquisition of their companies on behalf of the employees.

The recent Hostess Brand Inc. debacle and the current Wallmart situation, and countless others, would not have happened had we, as a nation, long ago adopted an OWNERSHIP CULTURE, whereby EVERY American is enabled to acquire individual ownership in the productive capital assets of the companies they are employed by or not employed and pay for their acquisition out of the future earnings of the productive capital investments.

The net worth of ordinary Americans, and that is inclusive of the so-called 99 percenters, is anemic when compared to the CONCENTRATED OWNERSHIP of productive capital wealth controlled by the wealthiest 1 to 10 percent of the population The wealthiest Americans have essentially rigged the system to ensure that all FUTURE economic growth of newly formed income-producing productive capital assets will be owned by them, while the majority of Americans remain dependent on jobs and welfare––the modern-day equivalent of serfdom.

If we, as a nation, want to build an affluent economy whereby EVERY American can as President Obama stated “earn enough to raise a family, build a modest savings, own a home, and secure their retirement,” then we need to create an OWNERSHIP CULTURE which consciously and purposely strives to broaden the private, individual ownership of the FUTURE productive capital assets of the America’s growth economy.

As long as working people are limited by earning income solely through their labor worker wages, they will be left behind by the continued gravitation of economic bounty toward the top 1 percent of the people that the system is rigged to benefit. Working people and the middle class will continue to stagnate, resulting in a stagnated consumer economy. More troubling is that this continued stagnation will further dim the economic hopes of America’s youth, no matter what their education level. The result will have profound long-term consequences for the nation’s economic health and further limit equal earning opportunity and spread income inequality. As the need for labor decreases and the power and leverage of productive capital increases, the gap between labor workers and capital owners will increase, which will result in upheaval.

The labor union movement should transform to a producers’ownership union movement and embrace and fight for this new democratic capitalism. They should play the part that they have always aspired to––that is, a better and easier life through participation in the nation’s economic growth and progress. As a result, labor unions will be able to broaden their functions, revitalize their constituency, and reverse their decline.

Unfortunately, at the present time the movement is built on one-factor economics––the labor worker. The insufficiency of labor worker earnings to purchase increasingly capital-produced products and services gave rise to labor laws and labor unions designed to coerce higher and higher prices for the same or reduced labor input. With government assistance, unions have gradually converted productive enterprises in the private and public sectors into welfare institutions. Binary economist Louis Kelso stated: “The myth of the ‘rising productivity’ of labor is used to conceal the increasing productiveness of capital and the decreasing productiveness of labor, and to disguise income redistribution by making it seem morally acceptable.”

Kelso argued that unions “must adopt a sound strategy that conforms to the economic facts of life. If under free-market conditions, 90 percent of the goods and services are produced by capital input, then 90 percent of the earnings of working people must flow to them as wages of their capital and the remainder as wages of their labor work…If there are in reality two ways for people to participate in production and earn income, then tomorrow’s producers’ union must take cognizance of both…The question is only whether the labor union will help lead this movement or, refusing to learn, to change, and to innovate, become irrelevant.”

Unions are the only group of people in the whole world who can demand a real Kelso-designed ESOP, who can demand the right to participate in the expansion of their employer by asserting their constitutional preferential rights to become capital owners, be productive, and succeed. The ESOP can give employees access to credit so that they can purchase the employer’s stock, pay for it in pre-tax dollars out of the assets that underlie that stock, and after the stock is paid for earn and collect the capital worker income from it, and accumulate it in a tax haven until they retire, whereby they continue to be capital workers receiving income from their capital ownership stakes. This is a viable route to individual self-sufficiency needing significantly less or no government redistributive assistance.

The unions should reassess their role of bargaining for more and more income for the same work or less and less work, and embrace a cooperative approach to survival, whereby they redefine “more” income for their workers in terms of the combined wages of labor and capital on the part of the workforce. They should continue to represent the workers as labor workers in all the aspects that are represented today––wages, hours, and working conditions––and, in addition, represent workers as full voting stockowners as capital ownership is built into the workforce. What is needed is leadership to define “more” as two ways to earn income.

If we continue with the past’s unworkable trickle-down economic policies,
governments will have to continue to use the coercive power of taxation to
redistribute income that is made by people who earn it and give it to those who need it. This results in ever deepening massive debt on local, state, and national government levels, which leads to the citizenry becoming parasites instead of enabling people to become productive in the way that products and services are actually produced.

When labor unions transform to producers’ ownership unions, opportunity will be created for the unions to reach out to all shareholders (stock owners) who are not adequately represented on corporate boards, and eventually all labor workers will want to join an ownership union in order to be effectively represented as an aspiring capital owner. The overall strategy should assure that the labor compensation of the union’s members does not exceed the labor costs of the employer’s competitors, and that capital earnings of its members are built up to a level that optimizes their combined labor-capital worker earnings. A producers’ ownership union would work collaboratively with management to secure financing of advanced technologies and other new capital investments and broaden ownership. This will enable American companies to become more cost-competitive in global markets and to reduce the outsourcing of jobs to workers willing or forced to take lower wages.

Kelso stated, “Working conditions for the labor force have, of course, improved over the years. But the economic quality of life for the majority of Americans has trailed far behind the technical capabilities of the economy to produce creature comforts, and even further behind the desires of consumers to live economically better lives. The missing link is that most of those unproduced goods and services can be produced only through capital, and the people who need them have no opportunity to earn income from capital ownership.”

Walter Reuther, President of the United Auto Workers, expressed his open-mindedness to the goal of democratic worker ownership in his 1967 testimony to the Joint Economic Committee of Congress as a strategy for saving manufacturing jobs in America from being outcompeted by Japan and eventual outsourcing to other Asian countries with far lower wage costs: “Profit sharing in the form of stock distributions to workers would help to democratize the ownership of America’s vast corporate wealth, which is today appallingly undemocratic and unhealthy.

“If workers had definite assurance of equitable shares in the profits of the corporations that employ them, they would see less need to seek an equitable balance between their gains and soaring profits through augmented increases in basic wage rates. This would be a desirable result from the standpoint of stabilization policy because profit sharing does not increase costs. Since profits are a residual, after all costs have been met, and since their size is not determinable until after customers have paid the prices charged for the firm’s products, profit sharing [through wider share ownership] cannot be said to have any inflationary impact on costs and prices.”

Unfortunately for democratic unionism, the United Auto Workers, American manufacturing workers, and American citizens generally, Reuther was killed in an airplane crash in 1970 before his idea was implemented. Leonard Woodcock, his successor, never followed through. The modern-day labor movement needs another leader like Walter Reuther.

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

Sign the Petition at http://signon.org/sign/reform-the-federal-reserve.fb23?source=c.fb&r_by=3904687

Sign the WhiteHouse.gov petition at https://petitions.whitehouse.gov/petition/reform-federal-reserve/PhY3Jswk

http://www.latimes.com/business/la-fi-union-revival-20121122,0,1877531.story

Raising Taxes On The Rich: The Right Policy, But Not A Solution

Mohamed A. El-Erian writes in The Atlantic:

This is similar to the current argument between Democrats and Republicans over the tax rates for top earners. It has emerged as the dominating issue in a much larger debate on how to deal with America’s debt and deficit challenges. But by obsessing on this one single issue, important insights are being crowded out. Indeed, if current trends continue, whoever wins the argument could feel they won a battle at the expense of losing the war. In this eventuality the victims would be average Americans who are yet to recover properly from the Great Recession.

When placed into the larger context of America’s challenges, the Democratic view prevails. But before they celebrate what is likely to end up going their way, they should realize that this would prove a shallow victory if it is not followed up by a more holistic approach to re-invigorating the U.S. economy.

Republicans’ dis-incentive arguments about taxing the rich would apply if the country was starting from much higher tax rates. It is not. Similarly for the rate on dividend income and for how carried interest is treated. Moreover, most in the party have already yielded on the need to raise additional tax revenue from the richest Americans by signaling that they would agree to limits on deductions (that, currently, disproportionately benefit this fortunate group).

Our challenge as a society is to re-orient government activities rather than shrink them – away from supporting the few to acting as a proper enabler for the many, and as an efficient provider of better safety nets for the most vulnerable segments of society. And this medium-term priority needs to be implemented in the context of measured and sustained deficit reduction.

I would like to see the Democrats address tax reform structured to provide lower tax incentives to companies who advance financing mechanisms that result in new economic growth whereby broadened private, individual ownership is the result. While tax and investment stimulus incentives are excellent tools to strengthen economic growth, without the requirement that productive capital ownership is broadened simultaneously, the result will continue to further concentrate productive capital ownership among those who already own, and further create dependency on redistribution policies and programs to sustain purchasing power on the part of the 99 percent of the population who are dependent on their labor worker earnings or welfare to sustain their livelihood. By stimulating economic growth tied to broadened productive capital ownership the benefits are two-fold: one is that over time the 99 percenters will be enabled to acquire productive capital assets that are paid for out of the future earnings of the investments and gain greater access to job opportunities that a growth economy generates. Simply reducing tax rates in the name of JOB CREATION or increasing tax rates in the name of REVENUE GENERATION is not enough. We need to create a conscious OWNERSHIP CULTURE whereby we finance FUTURE economic growth with EVERY American an owner-participant in the companies producing our products and services. That is how we will be able to sustain an affluent growth economy that benefits all Americans.

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

http://www.theatlantic.com/business/print/2012/11/raising-taxes-on-the-rich-the-right-policy-but-not-a-solution/265394/

Vulture Capitalism Ate Your Twinkies

On November 18, 2012, John Nichols writes in The Nation:

What happens when vulture capitalism ruins a great American company?

The vultures blame the workers.

The vultures blame the union.

And vapid media outlets report the lie as “news.”

That’s what’s happening with the meltdown of Hostess Brands Inc.

Americans are being told that they won’t get their Twinkies, Ding Dongs and Ho Hos because the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union ran the company into the ground.

But the union and the 5,600 Hostess workers represented by the union did not create the crisis that led the company’s incompetent managers to announce plans to shutter it.

The BCTGM workers did not ask for more pay.

The BCTGM workers did not ask for more benefits.

The BCTGM workers did not ask for better pensions.

The union and its members had a long history of working with the company to try to keep it viable. They had made wage and benefit concessions to keep the company viable. They adjusted to new technologies, new demands.

They took deep layoffs—20 percent of the workforce—and kept showing up for work even as plants were closed.

They kept working even as the company stopped making payment to their pension fund more than a year ago.

The workers did not squeeze the filling out of Hostess.

Hostess was smashed by vulture capitalists—“a management team that,” in the words of economist Dean Baker, “shows little competence and is rapidly stuffing its pockets at the company’s expense.”

This situation, and countless others, would not have happened had we, as a nation, long ago adopted an OWNERSHIP CULTURE, whereby EVERY American is enabled to acquire individual ownership in the productive capital assets of the companies they are employed by or not employed and pay for their acquisition out of the future earnings of the productive capital investments.

The net worth of ordinary Americans, and that is inclusive of the so-called 99 percenters, is anemic when compared to the CONCENTRATED OWNERSHIP of productive capital wealth controlled by the wealthiest 1 to 10 percent of the population The wealthiest Americans have essentially rigged the system to ensure that all FUTURE economic growth of newly formed income-producing productive capital assets will be owned by them, while the majority of Americans remain dependent on jobs and welfare––the modern-day equivalent of serfdom.

If we, as a nation, want to build an affluent economy whereby EVERY American can as President Obama stated “earn enough to raise a family, build a modest savings, own a home, and secure their retirement,” then we need to create an OWNERSHIP CULTURE which consciously and purposely strives to broaden the private, individual ownership of the FUTURE productive capital assets of the America’s growth economy.

As long as working people are limited by earning income solely through their labor worker wages, they will be left behind by the continued gravitation of economic bounty toward the top 1 percent of the people that the system is rigged to benefit. Working people and the middle class will continue to stagnate, resulting in a stagnated consumer economy. More troubling is that this continued stagnation will further dim the economic hopes of America’s youth, no matter what their education level. The result will have profound long-term consequences for the nation’s economic health and further limit equal earning opportunity and spread income inequality. As the need for labor decreases and the power and leverage of productive capital increases, the gap between labor workers and capital owners will increase, which will result in upheaval.

The labor union movement should transform to a producers’
ownership union movement and embrace and fight for this new democratic
capitalism. They should play the part that they have always aspired to––that
is, a better and easier life through participation in the nation’s economic
growth and progress. As a result, labor unions will be able to broaden their
functions, revitalize their constituency, and reverse their decline.

Unfortunately, at the present time the movement is built on
one-factor economics––the labor worker. The insufficiency of labor worker
earnings to purchase increasingly capital-produced products and services gave
rise to labor laws and labor unions designed to coerce higher and higher prices
for the same or reduced labor input. With government assistance, unions have
gradually converted productive enterprises in the private and public sectors
into welfare institutions. Binary economist Louis Kelso stated: “The myth of the ‘rising productivity’ of labor is used to conceal the increasing productiveness of capital and the
decreasing productiveness of labor, and to disguise income redistribution by
making it seem morally acceptable.”

Kelso argued that unions “must adopt a sound strategy that conforms to the economic facts of life. If under free-market conditions, 90 percent of the goods and services are produced by capital input, then 90 percent of the earnings of working people must flow to them as wages of their capital and the remainder as wages of their labor work…If there are in reality two ways for people to participate in production and earn income, then tomorrow’s
producers’ union must take cognizance of both…The question is only whether
the labor union will help lead this movement or, refusing to learn, to change,
and to innovate, become irrelevant.”

Unions are the only group of people in the whole world who can demand a real Kelso-designed ESOP, who can demand the right to participate in the expansion of their
employer by asserting their constitutional preferential rights to become
capital owners, be productive, and succeed. The ESOP can give employees access
to credit so that they can purchase the employer’s stock, pay for it in pre-tax
dollars out of the assets that underlie that stock, and after the stock is paid
for earn and collect the capital worker income from it, and accumulate it in a
tax haven until they retire, whereby they continue to be capital workers
receiving income from their capital ownership stakes. This is a viable route to
individual self-sufficiency needing significantly less or no government
redistributive assistance.

The unions should reassess their role of bargaining for more and more income for
the same work or less and less work, and embrace a cooperative approach to
survival, whereby they redefine “more” income for their workers in terms of the
combined wages of labor and capital on the part of the workforce. They should
continue to represent the workers as labor workers in all the aspects that are
represented today––wages, hours, and working conditions––and, in addition,
represent workers as full voting stockowners as capital ownership is built into
the workforce. What is needed is leadership to define “more” as two ways to
earn income.

If we continue with the past’s unworkable trickle-down economic policies,
governments will have to continue to use the coercive power of taxation to
redistribute income that is made by people who earn it and give it to those who
need it. This results in ever deepening massive debt on local, state, and
national government levels, which leads to the citizenry becoming parasites
instead of enabling people to become productive in the way that products and
services are actually produced.

When labor unions transform to producers’ ownership unions, opportunity will be
created for the unions to reach out to all shareholders (stock owners) who are
not adequately represented on corporate boards, and eventually all labor
workers will want to join an ownership union in order to be effectively
represented as an aspiring capital owner. The overall strategy should assure
that the labor compensation of the union’s members does not exceed the labor
costs of the employer’s competitors, and that capital earnings of its members
are built up to a level that optimizes their combined labor-capital worker
earnings. A producers’ ownership union would work collaboratively with
management to secure financing of advanced technologies and other new capital
investments and broaden ownership. This will enable American companies to
become more cost-competitive in global markets and to reduce the outsourcing of
jobs to workers willing or forced to take lower wages.

Kelso stated, “Working conditions for the labor force have, of course, improved over
the years. But the economic quality of life for the majority of Americans has
trailed far behind the technical capabilities of the economy to produce creature
comforts, and even further behind the desires of consumers to live economically
better lives. The missing link is that most of those unproduced goods and
services can be produced only through capital, and the people who need them
have no opportunity to earn income from capital ownership.”

Walter Reuther, President of the United Auto Workers, expressed his open-mindedness to
the goal of democratic worker ownership in his 1967 testimony to the Joint
Economic Committee of Congress as a strategy for saving manufacturing jobs in
America from being outcompeted by Japan and eventual outsourcing to other Asian
countries with far lower wage costs: “Profit sharing in the form of stock
distributions to workers would help to democratize the ownership of America’s vast
corporate wealth, which is today appallingly undemocratic and unhealthy.

“If workers had definite assurance of equitable shares in the profits of the
corporations that employ them, they would see less need to seek an equitable
balance between their gains and soaring profits through augmented increases in
basic wage rates. This would be a desirable result from the standpoint of
stabilization policy because profit sharing does not increase costs. Since
profits are a residual, after all costs have been met, and since their size is
not determinable until after customers have paid the prices charged for the
firm’s products, profit sharing [through wider share ownership] cannot be said
to have any inflationary impact on costs and prices.”

Unfortunately for democratic unionism, the United Auto Workers, American manufacturing workers, and American citizens generally, Reuther was killed in an airplane crash in 1970 before his idea was implemented. Leonard Woodcock, his successor, never followed through. The modern-day labor movement needs another leader like Walker Reuther.

http://www.thenation.com/blog/171331/vulture-capitalism-ate-your-twinkies

American Manufacturing Is Coming Back. Manufacturing Jobs Aren’t.

On November 19, 2012, Neil Irwin posts on Erza Klein’s Wonkblog in The Washington Post:

A new study from the McKinsey Global Institute published Monday morning adds some welcome clarity. In 184 pages, the in-house think tank of the global consulting giant presents a picture of manufacturing as among the most dynamic sectors of the U.S. and global economies, driving higher productivity and standards of living. But it also shows that what we usually think of as a traditional manufacturing job isn’t coming back.

Gee-whiz, I wonder why? Could be that the tectonic shifts in the technologies of manufacturing and production are destroying jobs? That full employment is not an objective of businesses? That companies strive to keep labor input and other costs at a minimum? That private sector job creation in numbers that match the pool of people willing and able to work is constantly being eroded by physical productive capital’s ever increasing role?For solutions support the Capital Homestead Act at http://www.cesj.org/homestead/index.htm andhttp://www.cesj.org/homestead/summary-cha.htm

Sign the Petition at http://signon.org/sign/reform-the-federal-reserve….

Sign the WhiteHouse.gov petition at https://petitions.whitehouse.gov/petition/reform-federal-reserve/PhY3Jswk

http://www.washingtonpost.com/blogs/wonkblog/wp/2012/11/19/american-manufacturing-is-coming-back-manufacturing-jobs-arent/

Five Ways Most Americans Are Blind To How Their Country Is Stacked For The Wealthy

Paul Bucheit writes on AlterNet.org:

We’ve got to abandon our winner-take-all philosophy, to provide job opportunities for people who what to contribute to society.

The greatest misconception: The rich are being soaked. 

Redistribution has not spread the wealth, it has concentrated the wealth. Conservative estimates say the richest 1% have doubled their share of America’s income in 30 years. It’s worse. From 1980 to 2006, the richest 1% actually tripled their share of after-tax income.

The real problem is tax avoidance: lost revenue from tax expenditures (deferrals and deductions), corporate tax avoidance, and tax haven losses could pay off the entire deficit. But the very rich refuse to pay. They have their own safety net in the House of Representatives.

This article represents the one-factor thinking that JOB CREATION and thus performing a job is the ONLY way to contribute to society. Bucheit chastises the wealthy but fails to define why people are wealthy and how they become wealthy. The answer is the wealthy are rich because they are OWNERS of the productive capital assets of business corporations, and have devised financial mechanisms that assure them that ALL future growth will be financed in ways that further CONCENTRATE OWNERSHIP among their tiny minority. As a nation, we must demand that our political leadership, academia and the national media address the issue of CONCENTRATED OWNERSHIP and Who Should Own America. The solutions to broadening private, individual ownership are numerous and have been developing since the 1950’s, but we have not had justice-committed leaders, especially those who want to end the corruption built into our exclusionary system of monopoly capitalism––the main source of corruption of any political system, democratic or otherwise.

For those seeking solutions, support the Capital Homestead Act at http://www.cesj.org/homestead/index.htm and http://www.cesj.org/homestead/summary-cha.htm

We need to focus on thinking in terms of WHO OWNS and how do we transform a monopolistic, greed system of capitalism into an economic democracy where EVERY American can acquire ownership of FUTURE productive capital assets and build over time a viable income-producing capital estate that will provide wealth and income to support an affluent livelihood.

It is imperative that leaders seeking new solutions cease the opportunity presented by the 2012 post-presidential election to implement effective programs for expanded ownership of productive capital, and address the problem of education on this subject.

http://www.alternet.org/economy/5-ways-most-americans-are-blind-how-their-country-stacked-wealthy?akid=9696.225147.KSWL9p&rd=1&src=newsletter746598&t=3

A Case Study Of How Government Handouts Undermine Human Decency And Social Capital

On April 3, 2012, Dan Mitchell writes in International Liberty:

Why is big government bad for an economy? The easy answer is that big government usually means high tax rates, and this penalizes work, saving, investment, and entrepreneurship. And perhaps some of the spending is financed by borrowing, and this diverts money from private investment.

That’s a correct answer, but it’s only part of the story. In most cases, there is added damage because politicians spend money in ways that further undermine incentives to produce.

 

https://danieljmitchell.wordpress.com/2012/04/03/a-case-study-of-how-government-handouts-undermine-human-decency-and-social-capital/

Distributivism? Human Nature And Systems Design

This a transcript of conversations with Norman Kurland of the Center for Economic and Social Justice (CESJ.org)
Norman Kurland
10:50 PM (12 hours ago)

to transcendentlaw, steve
 On 11/13/12 6:47 AM, transcendentlaw@aol.com wrote:
Norm and Steve,
    We need not only new vision but new missions to actualize the vision.
    For the sake of argument, let us assume universal acceptance that increasing broadly-owned production would provide a proportionally even greater increase in broad consumption and thereby require more production in an unending cycle.  This is Say’s law and is ignored by Keynesian economics.
    Let us further assume universal agreement that investment in production can come from money loaned from banks based on rational expectation of profits from future production, rather than only from the collateral of already accumulated wealth.
    What good are these assumptions if: 1) the GNP of a country and its official wealth are not measured by increase or decrease in production of real goods, and 2) those who can invest for long-term production would rather invest in the short-term profits from buying and selling stock and debt instruments totally unrelated to production.  
    The Carey Center for Democratic Capitalism has just issued a report showing that trillions of dollars of investment funds, including “workers’ 401k property”, are sitting idle because the money managers are waiting for prospects of making a quick buck.    
    The question becomes how one can assure that in a capital intensive economy money from whatever source is directed toward real production in accordance with the “real bills” doctrine.  How could one assure that under Capital Homesteading the three hundred million investors in America would not merely throw their money into the present system of vicarious investment by the professionals who have no interest in economic growth.
    From an economic perpective the banking system and its manipulators are immoral because they operate in an imaginary world where money is the ultimate value not merely a measure of value.  One can distribute and redistribute this imaginary value but in the end it seems to be a giant ponzi scheme, in which derivitives are merely the most extreme example. 
    Moral people may claim to be moral by making everything more transparent, but their effective morality is limited because they operate within a bankrupt system that survives, and only temporarily, by increasing the concentrated ownership of both economic and political power.
    Keynesians answer that the government can avoid revolution by printing money directly for consumption and by redistributing wealth through taxation of those who own wealth, which eventually must result in inflation and have even a negative impact on production.
    In my view, the challenge to developing acceptance of a new paradigm based on binary economics and the Just Third Way is the assumption that there is no alternative to the current system even if in theory there is.  The counter-argument is Capital Homesteading, but a counter-counter argument might be that this could result in 300,000,000 Americans following investment counselors advice to invest in more of the same.
    President Reagan said that the answer to Communism is to turn every American into a little capitalist, but that is just the first step in developing something beyond socialism based on envy and capitalism based on greed.  You both think there is reason for hope, one based on the goodness of human nature and the other on the goodness of systems design.  Surely both are essential.
Peace, prosperity, and freedom
through the interfaith harmony
of compassionate justice,
Bob
—–Original Message—–
From: Norman Kurland <thirdway@cesj.org>
To: Steve Young <steve@cauxroundtable.net>
Cc: transcendentlaw@aol.com <Transcendentlaw@aol.com>
Sent: Tue, Nov 13, 2012 8:07 am
Subject: Re: Distributivism?

Steve,I hope you’re right that the Republican Party realizes it “needs a new socio-economic vision and [our] time may be at hand.”

How do we feel about joining forces with today’s Distributists?  We agree with the founding fathers of Distributism — Chesterton and Belloc — that the institution of private property in land, natural resources and ever-advancing technologies is essential to a just and democratic market economy.  Kelso and Adler in their first book acknowledged the sound criticisms of the injustices and inequities of “capitalism” by Belloc, as well as by Popes Leo XIII and Pius XI.  But neither Belloc nor Chesterton offered a non-conflictive strategy and non-coercive means for achieving the worthy goal of democratizing future access to capital ownership of the means of production as a fundamental human right.  And none of the modern-day intellectuals who call themselves Distributists, as far as we can see, do any better.  Not only did Kelso and Adler offer practical reforms to our basic economic institutions to lift financial, tax and inheritance law barriers to greater equality of opportunity for every citizen to become an owner.  More important they did so in a systematic manner that protects the property rights of current owners, as you can see from our summary of the proposed Capital Homestead Act at http://www.cesj.org/homestead/summary-cha.htm.

Many of today’s Distributists advocate redistributist methods that threaten to violate traditional rights of private property.  Under Capital Homesteading, all the reforms proposed would instead (a) restore and protect traditional rights of private property, especially in corporate equity, for future as well as current capital owners, (b) restore free, competitive and non-monopolistic markets for determining just prices, just wages and just profits, (c) limit the economic powers of the State, and (d) lift all barriers to equality of opportunity for every citizen to become an empowered and participating owner of productive capital assets, making the State increasing dependent economically on its citizens and reversing currently dangerous trends toward increasing citizen economic dependency on income redistribution by the State.  If today’s Distributists can agree to these four essential pillars for growing a more just, free and democratic economic system, we would be delighted to join forces with them to promote passage of the Capital Homestead Act.  Lincoln would have loved that.  So would Ronald Reagan.  And I’m sure the same can be said of Chesterton and Belloc.

Here below is one of 39 Just Third Way blogs by Michael Greaney mentioning our position on Distributism as advocated by Chesterton and Belloc, and the difficulty he has had in carrying on rational discussions with modern Distributists:

Warm regards,
Norm

A Blog of the Global Justice Movement

Monday, December 20, 2010

The Problem With Distributism

No horse is so dead that you can’t continue to beat it. (Mmmmmm. Dead horse.) Anyway, for years, even before starting this blog, we’ve gone into great detail and explained at great length exactly where classic distributism and the Just Third Way differ, and where they agree. It doesn’t seem to help. The silence remains deafening — or nearly so.As a whole, Latter Day Distributists (at least those who don’t run away chanting the “I’m not an economist” mantra/copout) may agree that both distributism and the Just Third Way share substantially the same goals: an economically and politically just society characterized by widespread ownership of the means of production. On the whole, however, the LDDs and those sympathetic to their position, such as a determinant number of supporters of Major Douglas’s “social credit” and Henry George’s program, agree that those who support the Just Third Way “just don’t get it.” Where we aren’t already beyond hope, we’re just being stubborn by refusing to abandon our position in the face of repeated assertions, contradictory definitions, and lack of argument from the LDDs & Friends.

That being the case, we are clearly being Deliberately Evil by not coming over to the Light Side and agreeing completely with everything someone else says, with or (more usually) without proof or argument. Of course, the human sacrifices we carry out as the high point of every quarterly board meeting may have something to do with that, too, as well as the ritual cannibalism and the high cholesterol Béarnaise Sauce. (Mmmmmmm. Have a friend for lunch.)

That’s why when, over the weekend, we received a question about distributism, we made our response the core of today’s posting. Of course, there is that little matter about not wanting to work any harder than we have to, plus the fact that (believe it or not) we have other things to do. So, to cut to the chase, our correspondent asked (slightly paraphrased to protect both the innocent and the outstandingly mistaken),

A quick glance over The Distributist Review blog revealed a number of things that caused me concern, e.g., links to some questionable sites, a number of ads and links that don’t seem completely consistent with the natural moral law, and a set of “progressive” goals that appear to have the potential to lead people away from the natural moral law based on God’s Essence which is self-evident in His Intellect, not His Will, that is the basis for the Christian, Jewish, and Islamic understanding of social justice from an Aristotelian perspective. I found this both disconcerting and mystifying, given the many references to Catholic social teaching, which is based on Thomism, or a “Christianized” Aristotelianism, just as orthodox Jewish and Islamic social teaching are based on the Aristotelian analyses of Maimonides and Ibn Khaldûn, respectively. This demonstrates to me just how easy it is to get good Catholics — or sincere believers in any religion — going off in the wrong direction. My question is, how did Chesterton a) define distributism (without all the add-ons that seem to have come later), b) get economics so wrong, and c) how did he get hijacked to something so far off the range?

(BTW — despite the “cowboy talk” about getting far off the range, our correspondent is not from Texas, nor are we confirming that “he” is really a “he.” There’s no sense in opening him up to the sort of “arguments” we typically get.)

Okay, here goes (and that’s really three questions . . . but we don’t charge by the word, so that’s all right). “Distributism” is easily defined, all the more because Chesterton and Belloc insisted that there is no specific program involved, only general guidelines: A policy of widely distributed ownership of the means of production, with a preference for small landholdings and enterprises. When enterprises must be large, the ownership should be broadly distributed.

This is simple, and very close to the Just Third Way. The problem comes in when Latter Day Distributists start insisting that the small landholdings and enterprises are a mandate, not apreference . . . and then the fun starts.

The problem is that Chesterton and Belloc made a fundamental error with respect to finance. This is understandable, for neither one was an economist, financial expert, lawyer, or accountant. Had it been explained to either of them, we are convinced that either one would instantly have seen the problem and corrected it. It was one of those small errors that lead to big problems in the end. Regular readers of this blog can probably guess what it is already: the fixed belief that new capital formation cannot be financed except by cutting consumption, accumulating money savings, then investing. (Vide Dr. Harold G. Moulton, The Formation of Capital, 1935).

This can go in one of two ways. If we shift our understanding of the natural moral law from the Intellect to the Will, we simply redefine private property, money and credit, banking, and so on, in order to get what we want. The substantial nature of private property changes from a right inherent in every human being by nature with socially determined exercise of that right, to a grant from the State. This allows redistribution of “ownership,” which ceases to mean anything. As John Locke pointed out a number of times in his Second Treatise on Government, you can’t really be said to own anything if someone else (the State or a State substitute) can take it away at will.

A distributist who goes this route may end up with widely distributed ownership (although that is doubtful, as the necessary increase in State power will usually prevent this from happening), but the “ownership” won’t mean anything. As Keynes quite accurately pointed out, within the past savings paradigm, ownership must be concentrated in order to accumulate money savings, and the small owner eliminated (General Theory, VI.24.ii). This is the antithesis of distributism. Within the past savings paradigm, if ownership is widespread, then people will use their ownership income for consumption, which presumably dries up the pool of loanable funds, bringing economic growth to a halt.

The solution within the past savings paradigm for anyone who has any concern whatsoever for his fellow man is to redefine the natural law, especially regarding private property. As the reasoning inevitably goes, private property may be a right, but (contradicting explicit papal teachings, e.g., Rerum Novarum, §§ 5-6) it is not an “absolute right.” The State (or some State-substitute) has the duty to redistribute wealth by some means (usually manipulation of the currency or outright confiscation and redistribution) when people are in need. “The rich” therefore have no right to the income from what they own, except for what is necessary for reinvestment and what some authority has decided is a just return. (Of course, “enjoyment of the fruits,” i.e., income, is the essence of private property . . . except that they’ve redefined private property!)

This is shoddy reasoning, and leads to the economic situation we see today, an economy that, ostensibly arranged for the benefit of everyone, with entitlements, family allowances, welfare, high fixed wage and benefits packages, etc., etc., etc., in reality functions exclusively for the benefit of the wealthy. It is no coincidence that the U.S. just experienced its most profitable quarter in history . . . with the vast bulk of profits in the financial services industry — those whom Pope Pius XI called the despotic economic dictators, who, while they don’t, as a rule, own, control money and credit, so that none may breathe against their will. (Quadragesimo Anno, §§ 105-106)

The stock market is booming. Unemployment is near 10% . . . officially; near 20% “unofficially.” To a mind that believes the State can do anything just by re-defining truth (John Maynard Keynes, A Treatise on Money, Volume I: The Pure Theory of Money. New York: Harcourt Brace, 1930, 4), this is not happening because it cannot be happening. There must be a hidden conspiracy somewhere preventing the economy from working for the benefit of all: the rich, whose greed prevents others from enjoying the income and standard of living that God decreed for them.

The other way this can go is to insist that the rights of private property are sacred and must not be infringed upon — which is absolutely correct. Unfortunately, those who take this position also do a “little” unconscious re-editing of the dictionary, as Keynes called it, and make three fundamental errors. 1) They continue to insist that existing accumulations of savings are essential to finance new capital formation. 2) The right to property — that which comes under the natural law and thus is absolutely part of human nature — is redefined as effectively inhering only in an elite. 3) The rights of property — the socially determined exercise of property (but always without prejudice to the underlying natural right to be an owner) — are redefined as absolute. That is, 2 & 3 reverse the natural order, and effectively negate the natural law as surely as those who redefine it in the other direction.

Those people in the first group, i.e., those who redefine natural rights explicitly (which includes most Latter Day Distributists), necessarily view those in the second group (those who reverse the natural order) as heartless fiends who selfishly insist on their rights of property to the detriment of others‘ right to life. Those in the second group necessarily view those in the first group as idealistic blockheads who would sacrifice the common sense of the natural law (including private property) to a disastrous social theory that can only lead to economic disaster.

The two sides could easily be reconciled if they could be brought to understand that 1) money is anything that can be used in settlement of a debt, 2) existing accumulations of savings are not essential to the financing of new capital formation, and 3) widespread direct ownership of the means of production is essential to the functioning of Say’s Law of Markets and its application in the real bills doctrine to finance widespread acquisition and possession of private property in the means of production.

We have tried on a number of occasions to make this clear to people on both sides of the aisle, but have typically gotten one of several (non)responses:

1) A polite dismissal for questioning the principal tenet of the religion of past savings,

2) No response whatsoever,

3) A pitying shake of the head and a statement to the effect that we could be refuted on every point . . . but that they aren’t going to take the time to do so. (Vide Milton Friedman’s refusal to debate the Kelso ideas in response to an invitation from Norman Kurland),

4) An outraged attack claiming that we are anti-distributists, anti-social crediters, anti-Catholic, anti-histamine, or whatever else comes to hand.

What we don’t get is honest debate, or even argument. A leader in the distributist movement once exacted a promise from this writer not to judge distributists too harshly. That was approximately two and a half years ago, and a number of efforts have been made to reach out to the distributist movement, as well as other movements that consider themselves affiliated with distributism in some fashion.

There has been no response. In consequence, our opinion of distributism is as high as it ever was,i.e., that except for being enslaved to past savings, it is about as close to the Just Third Way as it is possible to get within the current system. Our opinion of distributists, however, is lower than ever before.

#30#

Posted by Michael D. Greaney at 1:15 PM 

Bob,

The Carey Center is committed to the “past saving” paradigm for financing what Ray calls “democratic capitalism.”  As you know, we share Ray Carey’s goal of moving toward a free enterprise version of economic democracy.  But we think Louis Kelso and Harold Moulton’s advocacy of “pure credit” for financing faster rates of non-inflationary growth through credit repayable with “future savings” is more dynamic way of providing a truly equal opportunity for every child, woman and man in any country to become an empowered and independent capital owner.  What drives growth are customers with money. With new jobs and dividend incomes flowing to the 99% from “pure credit” financing of a nation’s growth assets and the 1% being encouraged to spend more on comsumer goods and services, that added consumption power will attract Capital Homesteading entrepreneurs and citizens generally to turn to “pure credit” to expand their productive capacity through shared ownership. Production and consumption — the two sides of the economic equation — would be in greater balance.  And today’s propertyless and unemployed would obviously over time become less dependent on those who control money and most of the capital accumulations today, as well on those who run government trickle-down “entitlement” programs.

We should not ignore the words attributed to Mayer Anselm Rothschild: “Let me control the issuance of a nation’s money and I care not who makes the laws.”  This is the trap that Ray Carey has to face in trying to reverse the injustices inherent in the highly concentrated power of the tiny ownership elite who today control global capitalism.  The global strategy of the Just Third Way alternative is based on justice and truth and does not depend on the approval of those who today control money power.  The 99% is beginning to wake up and, when they do, they will reject both capitalism and socialism in all its forms, including the flawed Welfare State concoction conceived by Keynes.

As you know, I don’t consider the rich, the greedy and the power-hungry as the enemy.  The injustices under both the capitalist and the socialist systems encourage greed, the hunger to dominate others, class warfare, mass powerlessness and poverty, terrorism and war.  But those systems were not created by God.  Humans created those systems and once humans see themselves as “architects of the future”, humans can and will create a new model based on the Just Third Way that will make the old models obsolete.  As Victor Hugo said, “All the armies of the world cannot defeat an idea whose time has come.”
Will the new system operate perfectly?  Of course not.  Under the proposed Capital Homestead Act (CHA) and any refinements to its features, however, the system itself will encourage and empower every player to be acting in his or her self-interest.  It will also surface new justice-oriented leaders, educators and activists willing to serve the interests of all those affected by the process of making every citizen an owner.These include the decision-makers, entrepreneurs and their advisors in expanding corporations that issue new full-dividend payout shares; the new justice-based investment banks that will be born to serve the new ownership opportunities of the 99%; the lenders and administrators of personal CH accounts at local banks; the 99% of citizens who will become empowered to purchase newly-issued Capital Homesteading shares; the advisors to those citizens; the capital credit insurers and reinsurers that provide a substitute for collateral to set risk premiums to cover the risk of default on CHA credit; the lawyers and financial advisors who become engaged at all steps of the process; the professionals involved in the rediscounting operations of the 12 regional Federal Reserve Banks; the citizen-owners of each of the regional Feds; newly formed ownership unions organized to advise and represent the new CHA shareholders as well as today’s disgruntled shareholders; the Fed itself; and whatever minimalist regulators the Federal Government deems necessary for oversight and policing of the overall CHA process.  Keep in mind that the CHA investment process would sever the financing of all new capital formation from historic dependency on the past accumulations of the rich and super-rich.  The CHA would also protect the property rights of existing owners while avoid engaging in the speculation game of Wall Street, leaving those risks to those who can afford to gamble.

Attached is the script prepared for a top illustrator to help the public understand the process for implementing Capital Homesteading once the comprehensive legislative package is enacted to lift America from FDR’s New Deal, Truman’s Fair Deal and Lyndon Johnson’s War on Poverty, to what some will call “The Just Deal”, our 21st century updating of Lincoln’s homesteading of America’s inherently limited land frontier.  Available for generating widespread citizen, media and academic understanding of the Capital Homestead Act we have made available at http://www.cesj.org (1) a CHA flyer, (2) freely downloadable books by Kelso and Adler as well as our books Capital Homesteading for Every Citizen and Curing World Poverty: The New Role of Property and our republication of The Formation of Capital (1935) by Harold Moulton, former president of Brookings Institution before it became a hotbed of flawed Keynesian thinking and (3) the Summary of the comprehensive reforms to the tax system, the central bank, commercial banks, capital credit insurance and reinsurance, inheritance and gift tax laws, and all other institutions affecting the nation’s future capability to grow a free, competitive and just economy.

In Peace, Prosperity and Freedom, only through Compassionate Justice and Truth,
Norm