The Economic Elephant With Robert Reich

Robert Reich should be advocating binary economics, whose basic principle is to make access to productive capital asset investments available to people who would not otherwise have the means to do so. A policy aimed at significantly broadening the base of private, individual ownership of FUTURE productive capital assets would be of greater proportional benefit to those at the lower end of the income distribution, which is composed of households without significant wealth assets and whose “wealth” may consist of some equity in a house if they are fortunate. Underwriting access to individual productive capital acquisition would allow persons in low-wage employment to build up significant income-producing assets over time, and serve as a countervailing force against the declining real value of income they derive from employment. It would represent a positive step toward reversing a trend toward ever more severe income inequality and significantly multiply the potential for build wealth among the middle class and poor. The result would be to reduce economic inequality and ease growing demands on public taxpayer-supported welfare support (open and disguised), including the growing demands on public social security retirement systems.

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

What Is Justice-Based Management?

Published on September 30, 2012

What is Corporate Social Responsibility (CSR)? This video clip tries to give competent but also entertaining answers to this question. The video is part of series “in a little green bag” at the University of St.Gallen, Switzerland.

What Is Justice Based Management?

Justice-Based ManagementSM (JBMSM) is a leadership philosophy and management system that applies universal principles of economic and social justice within business organizations. The ultimate purpose of JBMSM is to create and sustain ownership cultures that enhance the dignity and development of every member of the company, and to economically empower each person as an owner and worker.

JBMSM promotes a company’s long-term profitability within the global marketplace by enabling all worker-owners to serve and provide higher value to the customer. JBMSM connects every worker’s self-interest to the bottom-line and long-term success of the company.

The JBMSM process builds upon a written articulation of the philosophy and principles of the company’s leader (typically the CEO or chairman of the board) and leadership core group, in terms of universal principles and core values of the company. JBMSM proceeds in stages to build a consensus upon these fundamental shared values and vision of the company within each work area of the company.

These articulated values provide the foundation for enhancing the productiveness of workers and company profitability, and include such structures as employee-monitored economic incentive programs, participation and governance structures, two-way communications and accountability systems, conflict management systems and future planning and renewal programs.


The ESOP and Justice-Based ManagementSM

One of the main components of JBMSM is the “empowerment ESOP .” While the employee stock ownership plan (ESOP) was originally invented as a means for providing working people with access to capital credit to become owners of corporate equity, most ESOPs are set up as just another employee benefit plan or tax gimmick, or as an employee share accumulation plan (“ESAP”). Most ESOPs today are not designed to treat worker-owners as first-class shareholders. The “empowerment ESOP,” on the other hand, is designed to encourage workers to assume the responsibilities and risks, as well as the full rights, rewards and powers, of co-ownership.

Furthermore, all academic and government studies to date have concluded that ESOPs alone are not enough to affect individual and corporate performance. Within a JBMSM system, in combination with a regular gainsharing program tied to bottom-line profits, and structured systems of participatory management, the empowerment ESOP stimulates everyone in the company to think and act like entrepreneurs and owners.


Balancing Moral Values and Material Value

Justice-Based ManagementSM offers an ethical framework for succeeding in business. JBM balances moral values (treating people with fairness and dignity) with material value (increasing a company’s productiveness and profits while enriching all members of a productive enterprise). JBM’s three basic operating principles are:

1. Build the organization on shared ethical values—starting with respect for the dignity and worth of each person (employee, customer and supplier)—that promote the development and empowerment of every member of the group.

2. Succeed in the marketplace by delivering maximum value (higher quality at lower prices) to the customer.

3. Reward people commensurate with the value they contribute to the company—as individuals and as a team.

Justice-Based ManagementSM is guided by the concept of social justice, as articulated by the late social philosopher William Ferree, SM. Social justice involves the structuring of social organizations or institutions (including business corporations) to promote and develop the full potential of every member.

JBM also embeds within an ownership culture the three principles of economic justice defined by the late lawyer-economist Louis Kelso and philosopher Mortimer Adler: (1) “participative justice,” or the right to the means and opportunity to participate in the economic process as an owner as well as a worker; (2) “distributive justice,” or the right to the full, market-determined stream of income from one’s labor and capital contributions; and (3) “harmony” (or social justice), or the right and responsibility of each person to work in an organized way with others to correct the “social order” or institution when the principles of participative or distributive justice are being violated or blocked.

Within JBMSM the principles of social and economic justice provide a logical framework for defining “fairness” and structuring the diffusion of power within the corporation.


Structuring Ownership Participation

JBM is designed to systematize and institutionalize shared rights, responsibilities, risks and rewards within all company operational and governance structures involving:

  • Corporate values and vision
  • Leadership development and succession
  • Corporate governance and future planning
  • Operations (policies and procedures) and hardship sharing policies
  • Communications and information sharing
  • Training and education
  • Pay and rewards
  • Grievances and adjudication

A well-designed Justice-Based ManagementSM system sharpens and crystallizes the leader’s philosophy around “universal” principles, providing a solid foundation for a corporate culture that enables people to internalize these guiding principles. JBMSM generates organizational synergy by connecting each worker-owner to the financial tools of ownership (i.e. ESOP and profit sharing), participative management systems, and a defined share of power in the governance of the organization. This in turn enables people to make better decisions, discipline their own behavior, and work together more effectively and cooperatively—because it is truly in their self-interest to do so.

What Are The Financing Tools Of Binary Economics?

kelso-homephoto

The following are the financial tools of binary economics developed by binary economist Louis Kelso.

ESOP: Employee Stock Ownership Plan. The ESOP is designed to build capital ownership into employees of a business in the course of efficiently financing its growth or other worthwhile corporate objectives, without touching employee paychecks or savings. As to employees, the ESOP is that constitutionally-mandated missing link that gives them access to credit to buy the employer’s capital stock and, without personal risk or liability, to pay for it from the pre-tax earnings of the assets underlying that stock. In other words, equalizing their access to capital credit with that of the already rich.

MUCOP: Mutual Capital Ownership Plan. This financing method is intended to provide pooled ESOP financing for a number of corporations while building diversified portfolios of their stocks individually for their employees.

CSOP: Consumer Stock Ownership Plan. This technique is intended for use by public utilities, banks, insurance companies, and other businesses where long-term relationships between the producer and its customers are the rule. Through the intelligent use of credit, it builds capital ownership for customers while providing unlimited low-cost financing for growth of the corporation, thus raising the power of the consumers to pay for their purchases of goods and services while raising the power of the corporation to produce goods and services. It would normally be used in conjunction with an ESOP for employees.

GSOP: General Stock Ownership Plan. The GSOP is designed to build capital ownership into politically designated classes of consumers within the jurisdiction of the authorizing government – state, local or federal.

ICOP: Individual Capital Ownership Plan. A financing device intended to create viable capital estates for selected categories of individuals while opening broad markets for equity financing by corporations.

RECOP: Residential Capital Ownership Plan. This financing plan, in combination with commercially insured credit financing, would enable home buyers to purchase homes at less than 25 percent of the out-of-pocket principal and interest cost of similar transactions today, by having their acquisitions treated by tax and other relevant laws as capital assets, rather than as consumer items as at present

COMCOP: Commercial Capital Ownership Plan. Ownership of rental structures, such as office and apartment buildings, factories, mines, railroads, hotels, resorts, etc., is a major source of capital cash income. Today such structures and real estate generally are owned by the excessively wealthy (whose resulting income is thereby sterilized for purposes of the consumer economy and denied to those who could use it if the financing had been COMCOP structured), who use such acquisitions not only to satisfy their antisocial greed, but to wipe out their income taxes. COMCOP would enable commercial structure ownership legitimately to be spread over large numbers of people where it can raise their power to produce the incomes they need to make them powerful and self-supporting consumers, maintain their lifestyles, and to diversify their holdings in businesses in which they become employed as capital workers.

PUBCOP: Public Capital Ownership Plan. This plan is designed to provide low-cost financing for capital instruments used by public bodies of all types – office buildings, streets and sidewalks, parks, street lighting, schools, universities, subways, waterworks, harbors, etc. It permits broad individual ownership, through facilities corporations, by great numbers of people, while providing low-cost capital facilities to be leased at market rates to cities and other municipal corporations, states, the federal government, and other public bodies. PUBCOP is another tool in the arsenal of binary economics to assure that each individual can become employed as a capital worker and that governments do not acquire economic power that should be diffused throughout the citizenry. PUBCOP financing would employ the dual functions of binary financing devices. It would be a major means of eliminating the cost of wasteful, inefficient, and inadequate public employee pensions while providing much greater economic security and incomes, both before and after retirement, to public employees and others.

All of these plans are discussed and diagramed in more detail in Democracy and Economic Power: Extending the ESOP Revolution through Binary Economics.

http://www.kelsoinstitute.org/

 

Economic Growth Rises To 2.5 Percent Pace But Falls Below Expectations

Consumer Spending Aids In First Quarter Economic Growth In U.S.

On April 27, 2013, Don Lee writes in the Los Angeles Times that Federal spending cuts and a slowdown in business investments thwart hopes for stronger economic growth.

The U.S. economy expanded at an annual rate of 2.5 percent in the first three months of the year, the Commerce Department reported Friday.

That was a big improvement from the measly 0.4 percent increase in the fourth quarter, when deep defense cuts and smaller stockpiling by companies slashed growth. But the latest measure of the nation’s gross domestic product was still middling and fell short of most analysts’ forecast of about 3 percent.

This is pitiful growth especially since there is much unused output capacity. The problems is a lack of “customers with money” to create demand for the products and services the economy is capable of producing. The other is the reality that increasingly the non-human factor of production––productive capital embodied in all the physical assets of companies––is increasingly responsible for producing the product and services wanted and needed by society. As tectonic shifts continue in the technologies of production, good-paying jobs will be destroy and devalued in worth, leaving people to struggle with less and less income, or no income at along and dependent on taxpayer monies extracted from those who are producing and redistributed through open and disguised measures and welfare.

At the core of understanding America’s economic disintegration and seemingly intractable economic problems is the need to learn a new way of thinking that explains why the operation of our modern industrial economy is simply not working. Although tectonic shifts and advances in the technologies of production promise the increasing abundance of exponential growth in the economy’s capacity to produce products and services with much less human effort, there is widespread poverty and a disintegration of middle class status. Even when the economy has experienced some degree of growth, too many people remain poor or are excluded from the resulting limited economic abundance. The notion that the economic benefits flowing to a wealthy class will “trickle-down” is a non-sensible theory and only results in “trickle” menial, low-pay jobs, private charity, and public taxpayer-supported welfare, in plain view and disguised.

What has and continues to escape the focus of conventional economists, and the politics of progressives, centralists and conservatives, is that the wealthy are rich because they own productive capital––non-human wealth-creating assets used to produce products and services. The reality is that in most economic tasks and in the overall economy, productive capital (not human labor) is independently doing evermore of the work that results in the products and services produced for consumption. It is productive capital’s increasing productiveness and evolution, rather than human effort (productivity conventionally considered) that is the productive means most responsible for economic growth. Effectively, technological innovation and invention limits new higher productivity jobs to relatively fewer workers, leaving most other people willing and able to work with lower paying job opportunities or no jobs at all. This increasing majority is finding it more and more difficult to afford the products and services that are increasingly produced by productive capital.

It is essential that people focus their thinking on the understanding of who and what creates wealth, in order to fully understand how to solve growing income inequality and the disintegration of the nation wherein the majority of citizens are regulated to low-pay job serfdom and public welfare.

The required new thinking must respect property rights, and the right of all citizens to acquire private and individual ownership of wealth-creating productive capital assets. This is the path to prosperity, opportunity, and economic justice––the ONLY path that will assure democratic and free market conditions.

The reality is that while increasingly productive capital growth is the means to achieving general affluence for all citizens, the practical opportunity to acquire productive capital is not accessible to everyone. The vast majority of citizens are unnecessarily excluded from effective participation in the property rights and earnings of productive capital assets. This is not to say that the opportunity to acquire productive capital does not exist, but that the opportunity is unnecessarily denied to the middle class and poor (the savings-poor capital-less and under-capitalized) and effectively limited to the few who are already well-capitalized and thereby wealthy. Even though the wealthy ownership class represents less than 10 percent of the population with the very rich representing 1 percent or less of the population, they all use the potent financial mechanism of capital credit to acquire productive capital assets, with virtually all assets acquired using the earnings of the productive capital to pay for their acquisition. Through this financial mechanism the rich effectively acquire more riches through the process of acquiring capital productiveness with the earnings of production.

In the meantime, while the economy’s technical prowess is capable of producing the products and services needed and wanted by ALL people, the poor and middle class are unable to realize their needs and wants no matter how hard they work, because they cannot earn enough through a job to consume what the economy can produce.

While ALL citizens have the right to earn an income through participating in production, ONLY a few are privileged to effectively participate in production beyond their own labor to include their wealth-creating productive capital assets.

When the right to participate in production through productive capital ownership is effectively denied, especially when tectonic shifts in the technologies of production destroy and degrade the worth of jobs, then the people affected become increasingly insecure in satisfying their and their family’s basic survival. Such conditions force them to seek low-pay, low-security jobs, or either charity or welfare, or desperately engage in illegitimate means. Such disintegration tears at society’s sense of fairness and justice, and spreads resentment, alienation and despair.

The solution should be obvious––that is to eliminate what amounts to an effective monopoly on productive capital acquisition. This will unleash the economy’s full potential to harness and employ wealth-producing productive capital assets broadly owned by ALL Americans, while respecting the full property rights of all and without taking anything from the wealthy who now OWN America. The effect would be to democratize both political power and economic power.

The solution is to employ capital credit mechanisms to facilitate the productive capital acquisition by EVERY citizen, whether poor or in the middle class, to fuel a larger and more affluent economy. This can be facilitated on the basis of self-finance, whereby the productive capital assets, after returning its acquisition costs, begin to pay a fully-distributed capital earnings dividend to its new owners, thus initially supplementing their labor income and reducing their taxpayer-supported welfare dependence, and over time building income to replace their dependency on job earnings and secure their retirement as they age.

Significantly, by facilitating the acquisition of FUTURE wealth-creating productive capital assets by ALL Americans, everyone will increasingly be able to afford to purchase with their productive capital earnings (dividend income) what is increasingly produced by productive capital. This in turn will create the market conditions for sustainable economic growth, and as private, individual ownership spreads, the larger the economy will grow as people’s incomes increasingly grow and they purchase more products and services to satisfy their needs and wants. Thus, the effect created would be a self-propelling economic engine of growth capable of producing general affluence for every American, and not limited to those few who now OWN America’s productive power and whose consumption needs are satisfactorily, if not overly met.

To reform the system and make universal productive capital ownership America’s future reality requires limited government action. Traditionally, government programs for investment have produced jobs, but relatively few capitalist owners. Until the structural defects of the system are reformed to achieve effective individual ownership of FUTURE productive capital assets for ALL, the system will continue to perpetually benefit the well-capitalized wealthy, while everyone else is regulated to scarcer jobs and welfare dependency. The action that is required is to eliminate the financial mechanism barriers that effectively concentrate the ownership of productive capital assets, and establish an infrastructure necessary to protect the productive capital acquisition rights of ALL citizens.

Furthermore, ALL government incentives supported by taxpayer dollars and debt, to stimulate the economy with the object of providing more growth and jobs, need to have the stipulation that the corporations receiving the financial benefit demonstrate the creation of new owners, both employees and non-employees. Today, such stimulus does not effectively create new productive capital owners but benefits those who already OWN, in the name of job creation. But the jobs and corresponding wages, which actually result, are often short-lived and always insufficient to effectively assure financial security. The proposition that taxpayer dollars and debt stimulus be used to create new owners in FUTURE productive capital creation, acquired by using the earnings of productive capital, will enable people to harness for themselves the productive power of wealth-creating capital assets to pay for its own acquisition and restoration and thereafter to earn income indefinitely.

The wealthy ownership class understands and employs the strategy of investing in opportunities expected to pay for themselves in a reasonable period of time, typically 5 to 7 years, perhaps 10 in some circumstances. This is the fundamental logic of corporate finance couched in “return on investment” terms. This same logic is the personal investment strategy steadfastly followed by successful capitalized and under-capitalized investors. The rich further understand that once the acquisition cost is paid for out of the FUTURE earnings of the productive capital investment, the asset then continues to earn income indefinitely, or in perpetuity. This is precisely the process used by the rich to get richer.

Thus, rather than preach austerity and redistribution, Americans should seek prosperity through economic growth financed through capital credit and paid for out of the earnings of productive capital while simultaneously creating new capital owners. This new earnings source will enable ALL Americans to earn sufficient income to live well, and not rely solely on a job. This will also strengthen individualism, personal responsibility and respect for equal rights and empower individuals to more fully realize their inherent potentials.

The end result will be to forge a true free market economy in which EVERY American privately and individually participates in the increasing utilization of productive capital to create wealth, and in turn uses this viable dividend income source to satisfy their consumer needs and wants. Collectively, this will fuel affluence and sustainable economic growth.

This new paradigm is the subject of the Agenda of The Just Third Way Movement at http://foreconomicjustice.org/?p=5797 and is founded on the concept of Monetary Justice (http://capitalhomestead.org/page/monetary-justice).

A Petition to reform the Federal Reserve to provide capital credit to ALL Americans can be supported at http://signon.org/sign/amend-the-federal-reserve.fb27?source=c.fb&r_by=3904687. The proposed Capital Homestead Act (http://www.cesj.org/homestead/index.htm and http://www.cesj.org/homestead/summary-cha.htm) would accomplish the necessary reforms.

http://www.latimes.com/business/la-fi-economy-growth-gdp-20130427,0,6714658.story

http://www.latimes.com/business/money/la-fi-mo-economy-gdp-20130426,0,1253325.story

 

Zuckerberg’s Manifesto: We Need Talented Immigrants

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On April 29, 2013, Josh Boak writes in The Fiscal Times:

Immigration reform is the top priority for Facebook founder Mark Zuckerberg and much of Silicon Valley—where start-ups and tech giants alike are hampered by their inability to keep talented foreigners in the United States.

This is a problem of a lack of high-tech education opportunities in the United States or an affordable opportunity to master high-tech engineering, scientific and other disciplines necessary to technological innovation and invention––the driving force of societal development.

America should be focused on providing such opportunities to Americans, not foreigners. If America is to create leading-edge leadership in the exponential shift in the technologies of production, then it will need to bolster the level of quality education and affordable opportunity for Americans to be educated in high-tech fields.

As technological progress continues at a rapid pace, the requirement will be for our nation to produce team of people and machines to create the technologies of the future. This will require high levels of education and a significant, but relatively small, educated workforce.

In the final analysis, 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.

While America needs and will continue to need educated and skilled workers who can make and fix software and machines, still private sector job creation in numbers that match the pool of people willing and able to work will continue to be eroded by physical productive capital’s ever increasing role. As for jobs, they will be limited to the highly-skilled and technical variety, which is far too limited to solve the reality that by the year 2020, more than 50 percent of the jobs available will be minimum wage jobs!

The pursuit for lower and lower cost production that relies on slave wage labor will eventually run out of places to chase. Eventually, “rich” countries, whose productive capital capability is owned by its citizens, will be forced to “re-shore” manufacturing capacity, and result in every-cheaper robotic manufacturing.

“The era we’re in is one in which the scope of tasks that can be automated is increasing rapidly, and in areas where we used to think those were our best skills, things that require thinking,” says David Autor, a labor economist at Massachusetts Institute of Technology.

Businesses are spending more on technology now because they spent so little during the recession. Yet total capital expenditures are still barely running ahead of replacement costs. “Most of the investment we’re seeing is simply replacing worn-out stuff,” says economist Paul Ashworth of Capital Economics.

Yet, while the problem is one that no one can no longer ignore, the solution also is one starring them in the face but they just can’t see the simplicity of it.

The fundamental challenge to be solved is how do we reinvent and redesign our economic institutions to keep pace with job destroying and devaluing technological innovation and invention so not all of the benefits of owning FUTURE productive capacity accrues to today’s wealthy 1 percent ownership class, and ownership is broadened so that EVERY American earns income through stock ownership dividends so they can afford to purchase the products and services produced by the economy.

Providing a way of legitimately getting productive capital ownership into the hands of the people who now don’t have it is the solution to America’s economic decline in wealth and income inequality, which will result in double-digit economic growth and cause EVERY American’s income to significantly grow, providing the means to support themselves and their families with an affluent lifestyle, and provide the necessary tax base to gradually pay off American debts. The Just Third Way Master Plan for America’s future is published at http://foreconomicjustice.org/?p=5797.

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

http://www.businessinsider.com/silicon-valley-on-immigration-2013-4?utm_source=dlvr.it&utm_medium=social&utm_campaign=politics

http://www.thefiscaltimes.com/Articles/2013/04/29/Zuckerbergs-Manifesto-We-Need-Talented-Immigrants.aspx#page1

Peter Schiff: We're Building Too Many Houses We Need To Be Building Factories

Yes, we should be building FUTURE wealth-creating productive capital embodied in “factories.” But at the same time it is essential that we finance this growth in ways to create new capitalist owners. If we not, then the insufficiency of labor worker earnings will inhibit growth because people will not be able to purchase increasingly capital-produced products and services, and  result in further long-term unemployment and despair for increasing majorities of people.

Such a new paradigm is the subject of the Agenda of The Just Third Way Movement at http://foreconomicjustice.org/?p=5797 and is founded on the concept of Monetary Justice (http://capitalhomestead.org/page/monetary-justice).

A Petition to reform the Federal Reserve to provide capital credit to ALL Americans can be supported at http://signon.org/sign/amend-the-federal-reserve.fb27?source=c.fb&r_by=3904687. The proposed Capital Homestead Act (http://www.cesj.org/homestead/index.htm and http://www.cesj.org/homestead/summary-cha.htm) would accomplish the necessary reforms.

 

 

The Story Of Our Time

On April 28, 2013, Paul Krugman writes in The New York Times:

Those of us who have spent years arguing against premature fiscal austerity have just had a good two weeks. Academic studies that supposedly justified austerity have lost credibility; hard-liners in the European Commission and elsewhere have softened their rhetoric. The tone of the conversation has definitely changed.

Let’s start with what may be the most crucial thing to understand: the economy is not like an individual family.

Families earn what they can, and spend as much as they think prudent; spending and earning opportunities are two different things. In the economy as a whole, however, income and spending are interdependent: my spending is your income, and your spending is my income. If both of us slash spending at the same time, both of our incomes will fall too.

And that’s what happened after the financial crisis of 2008. Many people suddenly cut spending, either because they chose to or because their creditors forced them to; meanwhile, not many people were able or willing to spend more. The result was a plunge in incomes that also caused a plunge in employment, creating the depression that persists to this day.

Why did spending plunge? Mainly because of a burst housing bubble and an overhang of private-sector debt — but if you ask me, people talk too much about what went wrong during the boom years and not enough about what we should be doing now. For no matter how lurid the excesses of the past, there’s no good reason that we should pay for them with year after year of mass unemployment.

So what could we do to reduce unemployment? The answer is, this is a time for above-normal government spending, to sustain the economy until the private sector is willing to spend again. The crucial point is that under current conditions, the government is not, repeat not, in competition with the private sector. Government spending doesn’t divert resources away from private uses; it puts unemployed resources to work. Government borrowing doesn’t crowd out private investment; it mobilizes funds that would otherwise go unused.

Paul Krugman continues to be stuck in his belief that unlimited spending is always the answer without explaining what happens to the flow of the tax extracted and debt-derived monies. In the name of “job creation” Krugman fails to see that the real wealth-creating benefits flow to the OWNERS of the companies receiving the stimulus monies. As increasingly the non-human factor of production––productive capital––is responsible for producing (the physical and processed work) the products and services needed and wanted by society, there will be less and less good-paying jobs that can be sustained as necessary to production. The 1 percent will continue to seek out “customers with money” globally but increasingly will face the reality of no growth to support their ability to output products and services through their productive capital asset ownership.

At the core of understanding America’s economic disintegration and seemingly intractable economic problems is the need to learn a new way of thinking that explains why the operation of our modern industrial economy is simply not working. Although tectonic shifts and advances in the technologies of production promise the increasing abundance of exponential growth in the economy’s capacity to produce products and services with much less human effort, there is widespread poverty and a disintegration of middle class status. Even when the economy has experienced some degree of growth, too many people remain poor or are excluded from the resulting limited economic abundance. The notion that the economic benefits flowing to a wealthy class will “trickle-down” is a non-sensible theory and only results in “trickle” menial, low-pay jobs, private charity, and public taxpayer-supported welfare, in plain view and disguised.

What has and continues to escape the focus of conventional economists, and the politics of progressives, centralists and conservatives, is that the wealthy are rich because they own productive capital––non-human wealth-creating assets used to produce products and services. The reality is that in most economic tasks and in the overall economy, productive capital (not human labor) is independently doing evermore of the work that results in the products and services produced for consumption. It is productive capital’s increasing productiveness and evolution, rather than human effort (productivity conventionally considered) that is the productive means most responsible for economic growth. Effectively, technological innovation and invention limits new higher productivity jobs to relatively fewer workers, leaving most other people willing and able to work with lower paying job opportunities or no jobs at all. This increasing majority is finding it more and more difficult to afford the products and services that are increasingly produced by productive capital.

It is essential that people focus their thinking on the understanding of who and what creates wealth, in order to fully understand how to solve growing income inequality and the disintegration of the nation wherein the majority of citizens are regulated to low-pay job serfdom and public welfare.

The required new thinking must respect property rights, and the right of all citizens to acquire private and individual ownership of wealth-creating productive capital assets. This is the path to prosperity, opportunity, and economic justice––the ONLY path that will assure democratic and free market conditions.

This new paradigm is the subject of the Agenda of The Just Third Way Movement at http://foreconomicjustice.org/?p=5797 and is founded on the concept of Monetary Justice (http://capitalhomestead.org/page/monetary-justice).

A Petition to reform the Federal Reserve to provide capital credit to ALL Americans can be supported at http://signon.org/sign/amend-the-federal-reserve.fb27?source=c.fb&r_by=3904687. The proposed Capital Homestead Act (http://www.cesj.org/homestead/index.htm and http://www.cesj.org/homestead/summary-cha.htm) would accomplish the necessary reforms.

http://www.nytimes.com/2013/04/29/opinion/krugman-the-story-of-our-time.html?_r=0

THE Absent Conversation––Who Should Own America?

Our President, Senate and Congressional representatives in the United States are failing the American people. It is evident that none are speaking of a vision for a future system of economic democracy based on equality of opportunity for every person to become an owner of wealth-creating productive capital. This is particularly of importance for the President of the United States who has the national stage at his disposal to espouse targeted leadership. As you read this article, the intent is to query “Who should own America?” going forward.

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

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

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

Unfortunately, politicians, economists and the media focus on JOB CREATION as the ONLY way to create “customers with money” and provide a source of income for peoples’ livelihood. Yet the demand for people (labor workers who contribute manual, intellectual, creative and entrepreneurial work) is being made less necessary as productive capital is increasingly the source of the world’s economic growth. What should we conclude from this assessment of reality? Well, simply that if both labor and productive capital are interdependent factors of production, and if capital’s proportionate contributions are increasing relative to that of labor, then equality of opportunity and economic justice demands that the right to property (and access to the means of acquiring and possessing property) must in justice be extended to all.

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

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

It is the exponential disassociation of production and consumption that is the problem in the United States economy, and the reason that ordinary citizens must gain access to productive capital ownership to improve their economic well-being.

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

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

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

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

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

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

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

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

This new paradigm is the subject of the Agenda of The Just Third Way Movement at http://foreconomicjustice.org/?p=5797 and is founded on the concept of Monetary Justice (http://capitalhomestead.org/page/monetary-justice).

A Petition to reform the Federal Reserve to provide capital credit to ALL Americans can be supported at http://signon.org/sign/amend-the-federal-reserve.fb27?source=c.fb&r_by=3904687. The proposed Capital Homestead Act (http://www.cesj.org/homestead/index.htm and http://www.cesj.org/homestead/summary-cha.htm) would accomplish the necessary reform.

http://www.opednews.com/articles/THE-Absent-Conversation–by-Gary-Reber-130429-498.html

New Belgium Brewing Becomes A 100 Percent Employee-Owned Company

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New Belgium Brewing is excited to announce that the company’s Employee Stock Ownership Program (ESOP) has purchased the balance of company shares, making it 100% employee-owned. New Belgium, brewer of a wide variety of award-winning beers including Fat Tire Amber Ale, has been a partial ESOP since 2000 with a controlling interest held by co-founder Kim Jordan and her family. This transition will put the company on a path to control their destiny into the foreseeable future.

“There are few times in life where you get to make choices that will have multi-generational impact – this is one of those times. We have an opportunity to write the next chapter of this incredible story and we’re really excited about that,” said New Belgium CEO and co-founder, Kim Jordan. “We have always had a high involvement ownership culture and this allows us to take that to the next logical level. It will provide an elegant succession framework that keeps the executive team in tact ensuring our vision stays true going forward.”

Jordan plans to remain CEO for the long-term and the executive team at New Belgium will continue in its current form. The Fort Collins brewer is currently building a second facility in Asheville, North Carolina that will begin beer production in 2015. More than 150 additional hires are expected by full build out in Asheville.

New Belgium was advised by Eureka Capital Markets, a middle market investment-banking firm with expertise in both the food & beverage sector and ESOP transactions, which assisted in structuring and completing the second stage ESOP buyout transaction.

“It was an honor to work with a craft brewing leader like New Belgium and help them transition the ownership of the business to its tight culture of employee owners,” said Michael Harden, Managing Director. “Given all of the consolidation occurring in the craft brew sector, we expect that many other craft brewers will investigate how using an ESOP might help them achieve their transition goals while enabling them to remain independent companies.”

The Fort Collins brewer is currently building a second facility in Asheville, North Carolina that will begin beer production in 2015. The transition to 100% ownership will enable New Belgium to include their future co-workers in Asheville, NC in the plan and will drive an even deeper commitment to progressive business practices for the company. More than 150 additional hires are expected by full build out in Asheville.

The deal was completed on the 28th of December with a companywide announcement made during New Belgium’s annual winter retreat on the 14th of January. All 456 employee-owners were present for the celebration. Prior to this deal, New Belgium co-workers held 41% of the company’s shares.

About New Belgium Brewing Company
New Belgium Brewing Company, makers of Fat Tire Amber Ale and a host of Belgian-inspired beers, began operations in a tiny Fort Collins basement in 1991. Today, the third largest craft brewer in the U.S., New Belgium produces nine year-round beers; Fat Tire Amber Ale, Sunshine Wheat, Blue Paddle Pilsner, 1554 Black Ale, Abbey, Ranger, Belgo IPA, Shift Pale Lager and Trippel, as well as a host of seasonal releases. In addition to producing world-class beers, New Belgium takes pride in being a responsible corporate role model with progressive programs such as employee ownership, open book management and a commitment to environmental stewardship. For more information, visit www.newbelgium.com.

New Belgium Brewing employees now OWN. Do you think it would be a good idea for you and your fellow employees to own a stake in the company you are employed by?

Support the Agenda of The Just Third Way Movement at http://foreconomicjustice.org/?p=5797

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

http://beerpulse.com/2013/01/new-belgium-brewing-becomes-a-100-employee-owned-company/

How To Build A Second American Century

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On April 26, 2013, Richard A. Haass writed in The Washington Post:

There is nothing inevitable, however, about American sway over this young century. The advantages this country enjoys are neither permanent nor sufficient to ensure continued primacy.

So, what needs doing? A partial list includes fixing broken public schools, repairing or replacing aged infrastructure, modernizing immigration policy, reforming health care, negotiating new trade accords, lowering corporate taxes, reining in spending on entitlements, and reducing debt as a share of GDP. Abroad, it includes resisting wars of choice where the interests at stake are less than vital and where there are alternatives to the use of force. This would also mean accepting that we cannot remake other societies in our image.

What stands in the way of the next American century is American politics. To paraphrase Walter Kelly’s Pogo, we have met the problem, and we are it. Special interests often crowd out the general national interest. Partisanship can be healthy, but not when it leads to an inability to govern and to make difficult choices.

In order to build a prosperous “Second American Century,” it is essential that people focus their thinking on the understanding of who and what creates wealth, in order to fully understand how to solve growing income inequality and the disintegration of the nation wherein the majority of citizens are regulated to low-pay job serfdom and public welfare.

The required new thinking must respect property rights, and the right of all citizens to acquire private and individual ownership of wealth-creating productive capital assets. This is the path to prosperity, opportunity, and economic justice––the ONLY path that will assure democratic and free market conditions.

The reality is that while increasingly productive capital growth is the means to achieving general affluence for all citizens, the practical opportunity to acquire productive capital is not accessible to everyone. The vast majority of citizens are unnecessarily excluded from effective participation in the property rights and earnings of productive capital assets. This is not to say that the opportunity to acquire productive capital does not exist, but that the opportunity is unnecessarily denied to the middle class and poor (the savings-poor capital-less and under-capitalized) and effectively limited to the few who are already well-capitalized and thereby wealthy. Even though the wealthy ownership class represents less than 10 percent of the population with the very rich representing 1 percent or less of the population, they all use the potent financial mechanism of capital credit to acquire productive capital assets, with virtually all assets acquired using the earnings of the productive capital to pay for their acquisition. Through this financial mechanism the rich effectively acquire more riches through the process of acquiring capital productiveness with the earnings of production.

In the meantime, while the economy’s technical prowess is capable of producing the products and services needed and wanted by ALL people, the poor and middle class are unable to realize their needs and wants no matter how hard they work, because they cannot earn enough through a job to consume what the economy can produce.

While ALL citizens have the right to earn an income through participating in production, ONLY a few are privileged to effectively participate in production beyond their own labor to include their wealth-creating productive capital assets.

When the right to participate in production through productive capital ownership is effectively denied, especially when tectonic shifts in the technologies of production destroy and degrade the worth of jobs, then the people affected become increasingly insecure in satisfying their and their family’s basic survival. Such conditions force them to seek low-pay, low-security jobs, or either charity or welfare, or desperately engage in illegitimate means. Such disintegration tears at society’s sense of fairness and justice, and spreads resentment, alienation and despair.

The solution should be obvious––that is to eliminate what amounts to an effective monopoly on productive capital acquisition. This will unleash the economy’s full potential to harness and employ wealth-producing productive capital assets broadly owned by ALL Americans, while respecting the full property rights of all and without taking anything from the wealthy who now OWN America. The effect would be to democratize both political power and economic power.

The solution is to employ capital credit mechanisms to facilitate the productive capital acquisition by EVERY citizen, whether poor or in the middle class, to fuel a larger and more affluent economy. This can be facilitated on the basis of self-finance, whereby the productive capital assets, after returning its acquisition costs, begin to pay a fully-distributed capital earnings dividend to its new owners, thus initially supplementing their labor income and reducing their taxpayer-supported welfare dependence, and over time building income to replace their dependency on job earnings and secure their retirement as they age.

This new paradigm is the subject of the Agenda of The Just Third Way Movement at http://foreconomicjustice.org/?p=5797 and is founded on the concept of Monetary Justice (http://capitalhomestead.org/page/monetary-justice).

A Petition to reform the Federal Reserve to provide capital credit to ALL Americans can be supported at http://signon.org/sign/amend-the-federal-reserve.fb27?source=c.fb&r_by=3904687. The proposed Capital Homestead Act (http://www.cesj.org/homestead/index.htm and http://www.cesj.org/homestead/summary-cha.htm) would accomplish the necessary reforms.

http://www.washingtonpost.com/opinions/how-to-build-a-second-american-century/2013/04/26/f197a786-ad25-11e2-a198-99893f10d6dd_story.html