"Buy America" Helps Jobs, Economy; Giant Tax Dodgers Want It Gone

On February 27, 2014, Dave Johnson writes on Nation Of Change:

Bloomberg News has a great report on the pressure to ban “Buy America” procurement policies in the trade agreements the United States is currently negotiating. Bloomberg focuses on an Oregon company making streetcars to show the damage that banning Buy America provisions would do to companies that make things here. Meanwhile, many of the giant companies pushing to ban Buy America rules don’t pay their taxes.

Kathleen Miller reports at Bloomberg on the pressure from giant multinational companies to ban Buy America policies in our government procurement in “EU Targets Buy America in Trade as Streetcar Maker Grows.” Miller writes about United Streetcar, part of Oregon Iron Works Inc., writing that the company “is winning work across the country, its market entry helped by laws that favor American business and hamstring overseas competitors.”

But giant multinationals want to ban this practice, thinking it will help them win a few contracts in other countries.

In trade negotiations with the Obama administration, dozens of European Union and Pacific nations are seeking to compete more equally with U.S. suppliers for state, local and federal contracts, a combined market that easily tops $650 billion annually.

American companies such as General Electric Co. (GE) and Caterpillar Inc. (CAT) also support easing provisions that favor U.S. businesses, viewing them as barriers to overseas growth. United Streetcar and Nucor Corp. (NUE), the nation’s largest steel producer by market value, want to keep them.

Why Buy America?

Buy America policies let We the People use our taxpayer dollars to help American workers and American companies, especially when our economy needs a boost. During the 2009 Recovery Act “stimulus,” for example, we needed to focus taxpayer funds on stimulating theAmerican economy, not China’s. But in Congress Republicans tried to block Buy America policies, saying Chinese and other foreign companies should be able to bid on infrastructure projects. As a result, Buy America policies in the stimulus were weakened. Later, of course, Republicans attacked the stimulus for allowing non-U.S. companies to benefit even though they were the ones who had weakened the Buy America provisions.

The Republican National Committee on Tuesday launched a new website charging that Obama “sent taxpayer dollars” to build solar panels in Mexico, windmills in Denmark and batteries in South Korea. The accusation involves money from the 2009 stimulus package that went to foreign-owned companies or to companies relying on foreign suppliers.

There’s another reason for Buy America policies. Some argue that Buy America keeps contracts from being awarded to the lowest bidder, costing taxpayers money. A look at the use of Chinese steel in the new San Francisco Bay Bridge exposes the flaw in that thinking.

Using Chinese steel saved one state agency some money. But when the costs to other state and federal government agencies as well as to the larger economy are added up, the overall costs to taxpayers and our economy are much more than the savings. This outsourcing cost of thousands of American manufacturing jobs (3.5 million man-hours), which meant:

  • loss of state and federal tax revenue from taxes on the wages and taxes of the workers and taxes on the companies that employed them,
  • outgoing cost of unemployment benefits, food stamps and other “safety net” programs,
  • cost of resulting foreclosures,
  • the “ripple effect” economic costs of all these lost jobs — lost sales at stores, restaurants, gas stations, etc.,
  • loss of worker training and in-country manufacturing infrastructure.
  • the resulting downward pressure on everyone else’s wages,/li.

One more thing happened with the Bay Bridge. The contract allowed the Chinese steel company to modernize its plant, and it is now bidding against U.S. companies on other bridge projects.

GE? Caterpillar? Really?

The Bloomberg report identified two of the companies pressuring our trade negotiators for a ban on Buy America procurement policies. These are GE and Caterpillar.

Did they mean this GE? (The New York Times) “G.E.’s Strategies Let It Avoid Taxes Altogether”:

The company reported worldwide profits of $14.2 billion, and said $5.1 billion of the total came from its operations in the United States.

Its American tax bill? None. In fact, G.E. claimed a tax benefit of $3.2 billion.

Caterpillar? Did they mean this Caterpillar? “Abbott, Caterpillar among companies with most offshore tax-haven subsidiaries”:

Abbott Laboratories and Caterpillar Inc. are among the largest publicly traded companies in the nation with the most tax-haven subsidiaries, allowing them to dodge taxes, a new consumer report alleges.

“Caterpillar Accused of Demoting Executive Discovering $2 Billion Tax Dodge”:

Caterpillar Inc. used offshore subsidiaries in Switzerland and Bermuda to avoid about $2 billion in U.S. taxes from 2000 to 2009, boosting its earnings through a “tax and financial statement fraud,” according to a Caterpillar executive’s lawsuit.

The company, the world’s largest construction-equipment maker, sold and shipped spare parts globally from an Illinois warehouse while improperly attributing at least $5.6 billion of profits from those sales to a unit in Geneva, according to the suit filed by Daniel J. Schlicksup. He was a global tax strategy manager for Caterpillar from 2005 to 2008.

Schlicksup, 49, sued in U.S. District Court in Peoria, Illinois, in 2009, claiming he was moved to a job that limits his career opportunities because he complained to superiors that the “Swiss Structure” ran afoul of U.S. tax rules.

“Caterpillar threatens to leave Illinois over taxes”:

Caterpillar Inc., suggesting that it could shift jobs out of Illinois, is prodding its home state to cut government spending and roll back tax increases.

What Do We the People Get?

OK, let’s say we give in and ban Buy America policies, and stop requiring that our tax dollars be used to help companies that hire and make things and pay taxes here. So these companies and American workers they employ lose out.

What do we get from that?

Companies like GE and Caterpillar might get a few contracts in other countries. Of course, it will not match the $456 billion U.S. government contracting market – and the $200 million in state-level contracting on top of that – that companies from other countries would get increased access to here. But, hey, GE and Caterpillar don’t care about that.

Meanwhile, companies that used to make things and hire people and pay taxes here would lose out on a share of that government procurement. We would lose the jobs and the tax revenue. Our government funds would be used to help companies in other countries instead of our country. If this created a one-for-one opportunity for companies like United Streetcar to get contracts in other countries that might be another story.

If we ban Buy American in procurement, GE and Caterpillar will continue to hold their profits outside of the U.S. to avoid paying their U.S. taxes. So for all we lose if we ban Buy American, We the People don’t even get the tax revenue back to pay for good schools, don’t get our roads and bridges maintained (never mind modernized), and face constant pressure to cut “government spending,” which means the things We the People do to make our lives better.

But, hey, GE and Caterpillar want Buy America banned, and they’re the ones with the big bucks. That’s why we’re talking about this at all. All of this is one more problem with our trade negotiating process in general and, in particular, the effort to use a fast-track process to rush the Trans-Pacific Partnership through Congress.

If the United States is ever to restore our once mighty economic power then we need to fully embrace the “machine age” and unleash the full productive power of the non-human factor of production embodied in our business corporations––intelligent machines, super-automation, robotics, digital computerized operations etc––the assets of which are broadly owned privately and individually by ALL American citizens.

One actionable policy should provide that any government contract or loan guarantee be only awarded to American companies who, through the government award, expand their ownership to their employees.

Still another short-term action, to reinvigorate “Make It In America” and “Made In America,” is the government should create financial incentives and tax provisions to reward American companies that bring manufacturing back to the United States from abroad, promote manufacturing investment, and incentivize more investment by foreign companies, all with the condition that the employees will share in the ownership benefits generated by the new capital formation projects. The result will be more broadened employee ownership and in-sourcing of jobs created by the new capital formation projects, and make America self-reliant.

The government should impose robust import levies and tariffs (tax) on particular classes of imports that are determined to be manufactured outside the United States and exported back to the United States that do not qualify as “Fair Trade” and unfairly undercut an American-make equivalent. At present, American business corporations are increasingly abandoning the United States and its communities to invest in productive capital formation outside the United States, particularly in China, Mexico, India, and other parts of Asia. As a result, America is experiencing the deindustrialization of America. This has forced policy makers to adopt a redistributive socialist solution rather than a democratic capitalist one whereby democratic economic growth of the earning power of the citizens would flourish simultaneously with new, broadly-owned productive capital formation investments in the United States. Such overseas operations have the advantage of “sweat-shop” slave labor rates relative to American standards, low or no taxation, supportive infrastructure provisions, currency manipulation, and few if any environmental regulations––which translate to lower-cost production. Thus, producing the same product or service in the United States would be far more expensive. For most people, economic globalization means a growing gap between rich and poor, technological alienation of the labor worker from the means of production, and the phenomenon of global corporations and strategic alliances forcing labor workers in high-cost wage markets, such as the United States, to compete with labor-saving capital tools and lower-paid foreign workers. Unemployment is high and there is an accelerating displacement of labor workers by technology and cheaper foreign labor, resulting in greater economic uncertainty and unstable retirement incomes for the average American citizen––causing the average citizen to become increasingly dependent on government wealth redistribution programs.

We need a policy change, which assures truly “Fair Trade” and that exponentially reduces the exodus of our manufacturing prowess and invigorates America’s entrepreneurial exceptionalism and competitive spirit to create products and services in the spirit of “the best that they can be.” We need policies that will de-incentivize American multinational corporations and others from undercutting “American Made,” while simultaneously competitively lowering the cost of production through expanded capital worker ownership. At present, the various incentives in place do not broaden capital ownership but instead further concentrate ownership.

Inequality Worse Now Than On ‘Downton Abbey’

On February 26, 2014, Brett Arends writes on Market Watch:

Goodbye, “Downton Abbey.” Hello, Downton Yankees.

U.S. fans of the hit British TV series, whose latest season ended last night, may think they are looking through a window at a lost world of privilege and poverty, aristocrats and servants, “upstairs” and “down.”

Also see: 10 ways ‘Downton Abbey’ servants had it better than you

But they should think again. A research paper to be presented this week at the National Bureau of Economic Research, a leading think tank, will confirm that the U.S. today has become as unequal as the England of the Earl of Grantham, Lady Mary, Daisy the kitchen maid and Carson the butler a hundred years ago.

The richest take home a higher share of national income in America today than did the aristocrats and superrich of 1920s England. The poor today take home a smaller share than the butlers, chauffeurs and other working folk did back then.

Peter Lindert, economics professor at the University of California in Davis, and one of the world’s leading experts in measuring income inequality, will be presenting research at the NBER this week, and he shared his thoughts with me by email. “Britain’s Downton Abbey economy of the 1920s,” Lindert says, was slightly “ lessunequal than…the U.S. today” (emphasis added).

For example, he points to the so-called GINI Coefficient, the standard measure of economic inequality used by researchers and organizations around the world, from the Census Bureau to the World Bank. U.S. readings today are about as high as those of 1920s England, says Lindert. They may even be higher.

Former Treasury Secretary Larry Summers commented last week that America may be heading toward a “Downton Abbey” society . He is way behind the news. We’re already there.

Incidentally, other research has found that U.S. readings of the GINI coefficient are higher than those of Czarist Russia as well.

People can always raise questions about individual bits of data from history, so I decided to do a bit more digging.

According to historical data on income inequality tracked by the Paris School of Economics, the richest Americans take home a much higher share of our national income than did the Earl of Grantham and his pals. The richest 0.01% of Americans take home 4% — compared with 3% in 1920s England.

(The richest 0.1% earn 9% of the national income in America today—the same percentage earned by the richest 0.1% in 1920 England.)

Meanwhile the bottom 90% of Americans—i.e., most people—receive just 50% of the national income in aggregate, according to the Paris data. In the England of Downton Abbey they earned 60%.

People can draw their own conclusions—just read the inevitable comments section below this article—but it is at least important that we deal with accurate perceptions.

We can watch period dramas all we like. But we have a huge servant class of our own in this country. According to a study by the Congressional Research Service in 2012, the poorest 50% of Americans own, in aggregate, just 1% of the national wealth.

Half of our country are just like Daisy the kitchen maid or Thomas the scheming footman a hundred years ago. They basically have nothing.

ALSO SEE: 10 things ”House of Cards” gets wrong

While an excellent perspective, the author fails to explain why the inequality. The REAL reason is that the 1 percent, who are the true wealthy ownership class, are rich because they OWN the wealth-creating, income-producing productive capital assets of our nation’s and the world’s global corporations. It is OWNERSHIP that is the key that must be addressed but is consistently ignored by economists, media, and politicians, and which is not taught in our schools.
Why? Why? Why? is capital ownership (always) omitted from the economic equation? Is it because, as one commentator recently posed, “Because that’s the way we maintain control, and to keep up the appearance that we care. Power always follows property, and it’s all about power!” ???

We desperately need to transform the American culture and society into an Ownership Society wherein EVERY child, woman and man has the equal opportunity to accumulate a personal wealth-creating, income-producing capital estate represented by a portfolio of diversified corporations fully paying-out earnings as dividends. Such a transition can be financed using insured, near-zero interest-free capital credit loans repayable with the FUTURE earnings of the corporations.

For REAL solutions to economic inequality, support the Agenda of The Just Third Way Movement at http://foreconomicjustice.org/?p=5797, Monetary Justice at http://capitalhomestead.org/page/monetary-justice, and the Capital Homestead Act at http://www.cesj.org/homestead/index.htm and http://www.cesj.org/homestead/summary-cha.htm.


A Simpler Tax Plan, Not A Better One

On February 26,  2014, the Editorial Board of The New York Times write:

The Republican tax plan unveiled in the House on Wednesday ensures that there will be no tax reform in the near future. It refuses to ask for greater sacrifice from the rich to bring in desperately needed revenue for rebuilding the country and improving education, which Democrats correctly regard as a huge missed opportunity. Hard-line conservatives, on the other hand, insist that changing the tax code should include slashing revenue, which the proposal avoids.

As a result, leaders of both parties have made clear that there will be no vote on the plan, prepared by Representative Dave Camp, chairman of the House Ways and Means Committee. It is a mere conversation starter, and until Republicans realize the tax code is inadequate to meeting the nation’s growing needs, it will remain nothing more.

The plan, intended only to simplify the tax code rather than redistribute the burden, reduces the number of tax brackets from seven to three. Low-income taxpayers would pay a 10 percent rate, those in the middle would pay 25 percent, and families making $450,000 and above would pay 35 percent instead of the current 39.6 percent.

In many cases, that represents a tax cut, and to make up for the loss in revenue — since the plan aims to be revenue-neutral — a large number of deductions and breaks are eliminated. But ending those breaks just to reduce rates means the savings can’t be used for important expenses in the future — which is a Republican goal.

One big break that would be affected is the mortgage-interest deduction. By limiting it to $500,000, the plan would hurt many middle-class families that must borrow more than that to afford a house in expensive markets like New York. Even worse, it would repeal the deduction for state and local taxes, a deliberate attempt to make it more difficult for “blue” states to provide the services and safety-net protections that they have decided are necessary.

Mr. Camp’s plan is open about this intention: “This deduction redistributes wealth to big-government, high-tax states from small-government, low-tax states.” In fact, those states do a much better job of helping their most vulnerable citizens, improving education and mobility in big cities, and benefiting the country as a whole.

The politically driven aim of keeping the amount of overall revenue unchanged undermines virtually every useful idea in the plan. It reduces many of the loopholes and special breaks for corporations, but then uses that revenue to lower the corporate rate from 35 percent to 25 percent. Capital gains would finally be taxed at the same higher level as ordinary income, but 40 percent of those gains would be excluded from taxation, producing an effective cut for those who live on investment income. If anything, the plan is likely to bring in less revenue in later decades, as the corporate cuts mount up.

On Wednesday afternoon, just after Mr. Camp’s announcement, President Obama proposed a much better idea: cutting business tax breaks to pay for $300 billion worth of construction on roads, bridges, rails and tunnels.

The nation’s tax system is full of special giveaways and unnecessary preferences, as Mr. Camp’s plan recognizes. But the goal should not be a system that leaves the wealthy undertaxed, doing nothing to reduce income inequality. The country’s problems are far bigger than a complicated Form 1040.


How TTP Would Harm You At The Drug Store And On The Internet


On February 26, 2014, Dave Johnson writes on Nation Of Change:

A law affecting content on the Internet that was rejected by Congress shows up in a trade agreement designed to bypass and override Congress. Small, innovative companies that manufacture low-cost, generic drugs find their products blocked. Those are examples of what is in store based on provisions in the Trans-Pacific Partnership (TPP), which is now being negotiated by the United States and eleven other nations, that have been leaked to the public. The leaks appear to show that provision after leaked provision will take power away from democracy and countries and hand it to the biggest corporations.

A law affecting content on the Internet that was rejected by Congress shows up in a trade agreement designed to bypass and override Congress. Small, innovative companies that manufacture low-cost, generic drugs find their products blocked.

Those are examples of what is in store based on provisions in the Trans-Pacific Partnership (TPP), which is now being negotiated by the United States and 11 other nations, that have been leaked to the public. The leaks appear to show that provision after leaked provision will take power away from democracy and countries and hand it to the biggest corporations. No wonder these giant, monopolistic corporations want Congress to approve Fast Track before they – and We the People – get a chance to read the agreement.

Because of these leaks we know that the TPP has an intellectual property section that will override government rules that limit the power giant corporations can wield against smaller competitors and the general public. Intellectual property (IP) is a term that covers patents, copyrights, trademarks, trade secrets, industrial designs and similar ‘intangible assets.” (Click here for the IP chapter that was leaked to Wikileaks.)

The rigged process in which only giant corporate interests are represented at the talks of course produces results that are more favorable to those giant corporations than to their smaller, innovative competitors and regular people around the world. The rigged “fast track” process enables these interests to push the agreement through Congress before there is time to organize a public reaction.

TPP And Fast Track

TPP is a “trade” agreement that has little to do with trade and everything to do with giving the giant corporations the power to override what governments and their people want. The agreement follows the pattern of the trade agreements that have forced millions of jobs and tens of thousands of factories out of the United States, placed giant corporations in a dominant-power position that is threatening our democracy and sovereignty, and have dramatically accelerated the transfer of wealth from regular people to a few billionaires worldwide.

TPP is being negotiated in secret with consumer, environmental, labor, health, human rights and other “stakeholder’ groups excluded from the table. But the interests of the giant corporations are at the table, with the negotiators either already well-compensated by the corporate interests or in a position to be well-compensated later after leaving government (which many of them tend to do immediately after ending their role in trade negotiations).

To help push TPP through, the giant corporations are trying to get Congress to give up its constitutional responsibility to initiate and carefully consider the terms of trade agreements. The corporations are pushing for Congress to pass “fast track” trade promotion authority, which brings in a process where Congress gets a very limited amount of time after first seeing the agreement to evaluate it and then vote, limits how much they can debate it and prohibits them from amending it in any way. This gives the corporations the opportunity to set up a huge PR campaign to pressure Congress to pass it, before the public has time to organize a response – never mind even read the agreement.

Intellectual Property and Drug Prices

One example of the way the intellectual property provisions favor giant, multinational corporations over smaller, innovative corporations and regular people around the world is in pharmaceutical prices.

A company with a drug patent is granted a monopoly to sell the drug at any price they choose with no competition. Currently a drug might be patented for a limited number of years in different countries. When the patent runs out other companies are able to manufacture the drug and the competition means the drug will sell at a lower cost.

Leaked documents appear to show that TPP will extend patent terms for drugs. Countries signing the agreement will scrap their own IP rules and instead follow those in TPP. So giant drug companies will have the same patent in all countries, for a longer period, and the patent will prevent competition that lowers drug prices.

Currently smaller, innovative companies can produce “generic” drugs after patents run out. Because of competition these drugs can be very inexpensive. Walmart, for example, sells a month’s supply of many generic drugs for $4, while drugs still under patent protection can cost hundreds or even thousands. This is of particular concern to poor countries that will be under TPP rules.

Please read Expose The TPP’s section The Trans-Pacific Partnership and Public Health, which begins:

The TPP would provide large pharmaceutical firms with new rights and powers to increase medicine prices and limit consumers’ access to cheaper generic drugs. This would include extensions of monopoly drug patents that would allow drug companies to raise prices for more medicines and even allow monopoly rights over surgical procedures. For people in the developing countries involved in TPP, these rules could be deadly – denying consumers access to HIV-AIDS, tuberculosis and cancer drugs.

What You Can See, Do And Say On The Internet

Another area where the IP section of TPP could give corporations tremendous power is in deciding what regular people can see, do or say on the Internet. TPP will override our own rules, even imposing laws like the Stop Online Piracy Act (SOPA) and Protect IP Act (PIPA) that Congress have specifically rejected.

You might remember when many websites on the Internet “went dark” for 24 hours to protest the proposed SOPA and PIPA laws. According to the Electronic Freedom Foundation’s (EFF) SOPA/PIPA: Internet Blacklist Legislation,

The “Stop Online Piracy Act”/”E-PARASITE Act” (SOPA) and “The PROTECT IP Act” (PIPA) are the latest in a series of bills which would create a procedure for creating (and censoring) a blacklist of websites. These bills are updated versions of the “Combating Online Infringements and Counterfeits Act” (COICA), which was previously blocked in the Senate. Although the bills are ostensibly aimed at reaching foreign websites dedicated to providing illegal content, their provisions would allow for removal of enormous amounts of non-infringing content including political and other speech from the Web.

… Had these bills been passed five or ten years ago, even YouTube might not exist today — in other words, the collateral damage from this legislation would be enormous.

Larry Magid explained at the time, in What Are SOPA and PIPA And Why All The Fuss?

The bill would require sites to refrain from linking to any sites “dedicated to the theft of U.S. property.” It would also prevent companies from placing on the sites and block payment companies like Visa, Mastercard and Paypal from transmitting funds to the site. For more, see this blog post on Reddit.

The problem with this is that the entire site would be affected, not just that portion that is promoting the distribution of illegal material. It would be a bit like requiring the manager of a flea market to shut down the entire market because some of the merchants were selling counterfeit goods.

… Opponents say it would create an “internet blacklist.”

… There is also worry that SOPA and PIPA could be abused and lead to censorship for purposes other than intellectual property protection.

Congress decided to reject SOPA and PIPA. But the provisions of SOPA and PIPA are back, this time in the TPP, which would override what Congress wants.

Please read the EFF’s Trans-Pacific Partnership Agreement page.

We’ve seen how this works too many times. The giant corporations promise jobs and prosperity to get their way, but then We the People end up with fewer jobs and a falling standard of living while a few billionaires and executives pocket the difference. Instead of letting the giant corporations push through yet another job-killing agreement that gives them even more wealth and power let’s take control of things and fix the agreements that have hurt us, our economy and our democracy. Fix NAFTA First!

Not surprisingly, it appears that the agreement will promote the interests of giant, multinational corporations over the interests of labor, environmental, consumer, human rights, or other stakeholders in democracy, AND FURTHER CONCENTRATE OWNERSHIP OF THE NON-HUMAN PRODUCTIVE CAPITAL MEANS OF PRODUCTION!

The REAL STORY is a story about the collusion among a globally wealthy ownership class to further concentrate private sector ownership in ALL FUTURE wealth-creating, income-generating productive capital asset creation on a global scale. A sorta FREE TRADE ON STEROIDS!

This is a battle between two property system choices: economies such as China in which the productive capital assets are primarily state-owned or state-sponsored communism or socialism and economies such as the United States, Great Britain, Canada, Mexico, Australia, Japan, etc in which the productive capital assets are primarily privately owned, although also largely concentrated among less than 10 percent of the population so as to require massive earnings redistribution, and thus welfare support open and disguised.

But there is another alternative, a balanced Just Third Way (http://www.cesj.org/thirdway/thirdway-intro.htm), based on an understanding of binary economics, by which over time the economy’s productive capital assets will become almost entirely individually owned by 100 percent of the citizens. Such an economy would produce efficiencies of production fully using ever-advancing technologies of production that will fuel a greater growth of the world economies by eliminating the problematic condition of the exponential disassociation of production and consumption through ordinary citizens gaining access to FUTURE productive capital ownership to improve their economic well-being, without taking anything away from those who already own.

It is critical that private property ownership in productive capital be extended to ALL people because of the increasing power of productive capital to produce more and more of the wealth or products and services needed and wanted by society. Because productive capital––the non-human factor of production––is an independent productive power separate from human labor power, and represents an increasing role in creating wealth, the question to be addressed is: Who has the right to acquire ownership of productive capital?

While people have private property rights in their own labor, due to tectonic shifts in the technologies of production it is not enough for individual survival if people cannot get jobs, or if jobs, in reality are no longer doing a substantial part of the wealth creation. As exponential technology shifts destroy jobs and devalue the worth of labor, people need not only private property rights in their own labor, but also private property rights in the productive capital assets that are doing ever more of the work.

We as a nation, and other nations, can no longer limit people to personal rights while restricting ownership acquisition rights in wealth-creating, income-producing productive capital assets to those already well-capitalized. To be a just society, all individuals MUST have effective property rights not only in their labor and personal use possessions but also in FUTURE productive capital asset creation. Because of this imbalance, the result has been that the consumer populous is not able to get the money to buy the products and services produced increasingly by the non-human factor––physical productive capital––as a result of substituting machines for people. And yet you can’t have mass production without mass human consumption.

Broadened, private sector individual ownership of FUTURE productive capital assets as a societal objective is the ONLY individual private property-rights approach that will provide solutions to income inequality, unemployment, underemployment and anemic GDP growth––all of which is rooted in the tectonic shift in the technologies of production and its concentrated ownership. This reality, as a practical matter, is destroying jobs and devaluing the worth of labor, widening the income gap between the rich and poor and struggling (each resentful and suspicious of the other), and resulting in our inability to achieve double-digit GDP growth in the United States and other countries.

To solve this challenge, several policies must be implemented in the United States:

1. Tax reform is needed to incentivize broadened individual ownership of corporations by their employees. As an incentive, provide a tax deduction to corporations for dividend payouts, which would tighten-up the right of each owner to his or her full share of profits, a basic and historic right of private property. It would eliminate double and triple taxes on corporate profits, shifting the burden of taxation to personal incomes after exempting initial incomes that would allow low and middle class citizens not to pay taxes on incomes needed to cover basic living expenses. It will also encourage corporations to finance their growth through the issuance of new full voting, full dividend payout shares for financing their productive capital growth needs through Employee Stock Ownership Plans (ESOPs) and Capital Homestead Accounts (CHAs). Politically we need to insist that politicians lift barriers to the democratization of future ownership opportunity based on sound principle, rather than redistributive taxation.

2. As increasingly more workers acquire ownership stakes in FUTURE corporate productive capital assets using ESOP financing mechanisms, workers will build second incomes to support their living expenses, which in turn means they will be better “customers with money” to support demand for the products and services that the economy is capable of producing. By reason of the higher marginal spending rate on the part of workers second incomes, more of the additional income earned by the new capitalists (who have many unsatisfied consumer needs and wants) will be spent on consumption than if the income had been earned by those capitalists who now have concentrated the ownership of productive capital exclusively, and who have few, if any, consumer needs and wants. Such broadened incremental consumption will fuel a demand for more consumer products and services, which in turn will provide incentive for greater productive capital investment.

3. For all Americans, the Federal Reverse needs to create an asset-backed currency that can 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. The CHA would process an equal allocation of productive credit to every citizen exclusively for purchasing full-dividend payout shares in companies needing funds for growing the economy and private sector jobs for local, national and global markets. The shares would be purchased using essentially interest-free credit wholly backed by projected “future savings” in the form of new productive capital assets as well as the future marketable products and services produced by the newly added technology, renewable energy systems, plant, rentable space and infrastructure added to the economy. Risk of default on each stock acquisition loan would be covered by private sector capital credit risk insurance and, if necessary, government reinsurance, but would not require citizens to reduce their funds for consumption to purchase shares.

4. Reform the tax code such that the tax rate would be a single rate for all incomes from all sources above an established personal exemption level (for example, an exemption of $100,000 for a family of four to meet their ordinary living needs) so that the budget could be balanced automatically and even allow the government to pay off the growing unsustainable long-term debt. The poor would pay the first dollar over their exemption levels as would the stock fund operator and others now earning billions of dollars from capital gains, dividends, rents and other property incomes.

5. As a substitute for inheritance and gift taxes, a transfer tax should be imposed on the recipients whose holdings exceeded $1 million, thus encouraging the super-rich to spread out their monopoly-sized estates to all members of their family, friends, servants and workers who helped create their fortunes, teachers, health workers, police, other public servants, military veterans, artists, the poor and the disabled.

6. Eliminate all tax loopholes and subsidies.

These polices would result in rapid and substantial economic growth with the GDP rate in double digits. As a result of the stimulus effect, more REAL, decent paying job opportunities and further technological advancement would be created while simultaneously broadening private, individual ownership of FUTURE wealth-creating, income-generating productive capital assets, which would support second and primary incomes for ALL Americans.

In this new FUTURE economy, a citizen would start to benefit financially at the time he or she enters the economic world as a labor worker, to become increasingly a capital owner, whose productive capital assets contribute as a non-human worker earning a second income, and at some point to retire as a labor worker and continue to participate in production and to earn income as a capital owner until the day you die.

As we ALL contribute to the building of a FUTURE economy that can support general affluence for EVERY man, woman and child, at some point as the technologies of production further advance there will be far less need for human workers and productive capital asset ownership will become the primary income source for most people. As general affluence becomes more widespread people will be free and economically secure to pursue their creative desires and pleasures, further contributing to the cultural and societal development of the country.

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

Support Monetary Justice at http://capitalhomestead.org/page/monetary-justice

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

See “Financing Economic Growth With ‘FUTURE SAVINGS’: Solutions To Protect America From Economic Decline” at NationOfChange.org http://www.nationofchange.org/financing-future-economic-growth-future-savings-solutions-protect-america-economic-decline-137450624 and “The Income Solution To Slow Private Sector Job Growth” at http://www.nationofchange.org/income-solution-slow-private-sector-job-growth-1378041490.


Joint Congressional Committee Report 1976: Broaden The Ownership Of New Capital

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In reality, the Congress and society continue to largely ignore the social aspects and the social costs of lack of income, 39 years later!

Below is the introduction to the Joint Committee’s hearings of Thursday, February 26, 1976] The results of the Joint Committee were published on January 1976 and they came up with short title:
January 1976 Economic Report of The President

. . . any questions?


Thursday, February 26, 1975
Chairman Humphrey.
This Joint Economic Committee hearing is one of the many that we have had relating to the annual report. It is one of an annual series to evaluate the President’s economic report.

Today, we are focusing on the social cost of unemployment.
We have had a great deal of discussion on the direct economic costs: The loss of income, the direct economic costs, the loss of production, the loss of revenue.

Congress has devoted much of its debate and committee time to our economy – searching for ways to rapidly achieve full employment and maintain price stability.

We’ve talked about the billions of dollars in lost income due to our recession.

We’ve talked about the $15 billion or more that the Federal Government is paying in higher welfare and unemployment compensation due to the recession.

We’ve talked about the record Federal budget deficit – a deficit due to the combination of higher welfare outlays and a $45 billion shortfall in tax revenues – revenues paid in normal times by plants and workers now idle and unemployed.

We’ve talked about the need for meaningful temporary public works and employment programs to more rapidly spur our recovery.
We’ve talked about the fear, the apprehension, the lack of confidence in present economic policies which many of us believe is holding back economic recovery.

We’ve talked about predictions from administration spokesmen that these same economic policies will leave at least 7 million persons unemployed next Christmas.

But there is a lot more we haven’t talked about enough: The fact revealed in a Roper poll last year, that 38 percent of all families are now affected one way or another by unemployment is extremely important.

We haven’t talked about the very strong relation between soaring imprisonments – prison population – and unemployment. Or, about the frustration and anger – the stress – which unemployment imposes on workers and their families.

We haven’t talked about the relationship – demonstrated by such eminent researchers as Mr. Brenner, at John Hopkins University – between unemployment and mental health disease.

Nor of the terrible, hidden link between the stresses of unemployment and heart disease, stroke, and even kidney disease.
We rarely talk about an entire generation of young adults now who have been denied the opportunity of a full-time steady job. They can scarcely be expected to accept our basic work ethic – when they can’t even find work. Many of them, never having had the chance to experience work.

And we rarely talk about the aggressive behavior – the family squabbles which result in maiming or murder – because of stress caused by unemployment.

In reality, the Congress and society have largely ignored the social aspects the social costs of unemployment.

The Joint Economic Committee is trying to rectify this shortcoming. It has launched a broad investigation of the relationship between social stress due to unemployment and physical and mental illness, and aggressive behavior. There are three studies underway now with assistance from the Library of Congress.

These studies have one major purpose: To assist our national economic policymakers on Capitol Hill and the White House in assessing the full impact and effect of decisions raising or lowering unemployment.

Ever Imagined Robots Replacing Humans?

On January 17, 2014, Tachwaq.com writes:

  • Currently we are in the wave of Automation and Artificial Intelligence where a seed of ‘Robots with Brains’ is already sown, just taking you to a bit of flash back, if you know that before the wave of machines was the era of human’s physical strength where each work was carried out by human force which is today replaced by the Automation.


  • The machines and AI (Artificial Intelligence) products are used excessively in present wave of time, but nevertheless people and their brains are required for the manufacturing and assembly of these products, hence automation has given rise to millions of jobs in entire new fields. In this case I would say “The Technology related to its respective human employment is balanced” which is always needed to be in a balanced form. But the issue arising is “What if Robots replace Humans?”
  • “Can you imagine that no physical strength of human is required to carry any type of work?” ‘What if all the work from sweeping, cleaning up to assembly and manufacturing, whether a machine, AI product or a robot itself is carried out by the Robots’.


  • It would rise a great unemployment and a huge imbalance between technology and human employment giving birth to a new species who could possibly rule on the humans, because humans have a certain limited tendency to do a work after which rest and sleep are essential whereas the brain machines which we are talking about never need a rest and they hold


  • the tendency to work 24/7, and that too in a quick and efficient manner. Ever visualized a general manager of a multinational company as Robot? And if that robot has the ability to think through its brain, which is artificially efficient enough to overcome the efficiency of human brain, then of course he would kill his boss and gain the power of attorney of the company.
  • I would rather consider it as a ‘future fact’ rather than a ‘Possibility’, because as I said the seeds are already sown, through neuro-robotics though at its basis but won’t take too long time.
The author, I believe, is correct in concluding that forms of non-human intelligent and non-intelligent means of producing products and services will eventually replace the need for masses of human labor. This is a steady progression of transition from human-intensive labor to non-human intensive physical capital––tools, machines, super-automation, robotics, digital computerization, etc.

This transition should surprise no one who is conscious and who has even causally observed the constant shift to non-human productive inputs in the manufacturing, distribution, and sale of products, as well as the delivery of services, that has been occurring during their lifetime. The first burst of this phenomena was the Industrial Revolution. But now we are in an age of technology sophistication that is permeating every sector of industry and our day-to-day lives.

There’s nothing new about machines replacing people, but the rate of replacement is exponential and the result is that productivity gains lead to more wealth for the OWNERS of the non-human factor of production, but for others who have always been dependent on jobs as their source of income, there has been a steady decline to poverty-level labor incomes, underemployment and unemployment.

What must be understood (which unfortunately is not understood by conventional economists) is that there are two independent factors of production––human or labor workers and non-human or physical productive capital.

Fundamentally, economic value is created through human and non-human contributions.

Also what needs to be understood is that human productivity has not advanced (our human abilities are limited by physical strength and brain power––and relatively constant), but that the productiveness of the non-human factor of production––productive capital––is the reason that private sector corporations, majority owned by the “1 percent,” are utilizing the non-human factor of production increasingly to create efficiencies and save labor costs. It is the function of technology to save labor from toil and to enable us to do things that otherwise is humanly impossible without non-human input. The critical question becomes who should own productive capital? The issue of OWNERSHIP is unbelievably overlooked by those in academia and politics. Yet we live in country founded upon private property rights.

Today, large streams of data, coupled with statistical analysis and sophisticated algorithms, are rapidly gaining importance in almost every field of science, politics, journalism, and much more. What does this mean for the future of work?

But what about China, the place where all the manufacturing jobs are supposedly going? True, China has added manufacturing jobs over the past 15 years. But now it is beginning its shift to super-robotic automation. Foxconn, which manufactures the iPhone and many other consumer electronics and is China’s largest private employer, has plans to install over a million manufacturing robots within three years. Thus, in reality off-shoring of manufacturing will eventually be replaced by human-intelligent super-robotic automation.

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 (thought presently concentrated), 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.

None of this is new from a macro-economic viewpoint as productive capital is increasingly the source of the world’s economic growth. The role of physical productive capital is to do ever more of the work of producing more products and services, which produces income to its owners. Full employment is not an objective of businesses. Companies strive to keep labor input and other costs at a minimum. 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. Over the past century there has been an ever-accelerating shift to productive capital––which reflects tectonic shifts in the technologies of production. The mixture of labor worker input and capital worker input has been rapidly changing at an exponential rate of increase for over 235 years in step with the Industrial Revolution (starting in 1776) and had even been changing long before that with man’s discovery of the first tools, but at a much slower rate. Up until the close of the nineteenth century, the United States remained a working democracy, with the production of products and services dependent on labor worker input. When the American Industrial Revolution began and subsequent technological advance amplified the productive power of non-human capital, plutocratic finance channeled its ownership into fewer and fewer hands, as we continue to witness today with government by the wealthy evidenced at all levels.

People invented 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 invention. Binary economist Louis Kelso attributed most changes in the productive capacity of the world since the beginning of the Industrial Revolution to technological improvements in our capital assets, and a relatively diminishing proportion to human labor. Capital, in Kelso’s terms, does not “enhance” labor productivity (labor’s ability to produce economic goods). In fact, the opposite is true. It makes many forms of labor unnecessary. Because of this undeniable fact, Kelso asserted that, “free-market forces no longer establish the ‘value’ of labor. Instead, the price of labor is artificially elevated by government through minimum wage legislation, overtime laws, and collective bargaining legislation or by government employment and government subsidization of private employment solely to increase consumer income.”

Furthermore, according to Kelso, 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. Kelso postulated that if both labor and 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. Yet, sadly, the American people and its leaders still pretend to believe that labor is becoming more productive.

A National Right To Capital Ownership Bill that restores the American dream should be advocated by the progressive movement, which addresses the reality of Americans facing job opportunity deterioration and devaluation due to tectonic shifts in the technologies of production.

There is a solution, which will result in double-digit economic growth and simultaneously broaden private, individual ownership so that EVERY American’s income significantly grows, providing the means to support themselves and their families with an affluent lifestyle. The Just Third Way Master Plan for America’s future is published at http://foreconomicjustice.org/?p=5797.

The solution is obvious but our leaders, academia, conventional economist and the media are oblivious to the necessity to broaden ownership in the new capital formation of the future simultaneously with the growth of the economy, which then becomes self-propelled as increasingly more Americans accumulate ownership shares and earn a new source of dividend income derived from their capital ownership in the “machines” that are replacing them or devaluing their labor value.

The solution will require the reform of the Federal Reserve Bank to create new owners of future productive capital investment in businesses simultaneously with the growth of the economy. The solution to broadening private, individual ownership of America’s future capital wealth 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 child, woman and man 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 acquire capital with the earnings of capital and build wealth, and become “customers with money.” The proposed Capital Homestead Act would produce this result.

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

See the article “The Absent Conversation: Who Should Own America?” published by The Huffington Post at http://www.huffingtonpost.com/gary-reber/who-should-own-america_b_2040592.html and by OpEd News at http://www.opednews.com/articles/THE-Absent-Conversation–by-Gary-Reber-130429-498.html

Also see “The Path To Eradicating Poverty In America” at http://www.huffingtonpost.com/gary-reber/the-path-to-eradicating-p_b_3017072.html and “The Path To Sustainable Economic Growth” at http://www.huffingtonpost.com/gary-reber/sustainable-economic-growth_b_3141721.html. And also “Second Income Plan” at http://www.huffingtonpost.com/gary-reber/second-income-plan_b_3625319.html

Also see the article entitled “The Solution To America’s Economic Decline” at http://www.nationofchange.org/solution-america-s-economic-decline-1367588690 and “Education Is Critical To Our Future Societal Development” at http://www.nationofchange.org/education-critical-our-future-societal-development-1373556479. And also “Achieving The Green Economy” at http://www.nationofchange.org/achieving-green-economy-1373980790. Also see it complete with the footnotes at http://foreconomicjustice.org/?p=9082.

Also see “Financing Economic Growth With ‘FUTURE SAVINGS’: Solutions To Protect America From Economic Decline” at NationOfChange.org http://www.nationofchange.org/financing-future-economic-growth-future-savings-solutions-protect-america-economic-decline-137450624 and “The Income Solution To Slow Private Sector Job Growth” at http://www.nationofchange.org/income-solution-slow-private-sector-job-growth-1378041490.

The Shocking Numbers Behind Corporate Welfare

On February 25, 2014, David Cay Johnston writes on Aljazeera America:

Boeing and its stockholders fly high on tax dollars
An Air India Boeing 787 Dreamliner taking off for a display at the 50th Paris Air Show, at Le Bourget Airport near Paris in June 2013. 
Pascal Rossignol/Reuters

State and local governments have awarded at least $110 billion in taxpayer subsidies to business, with 3 of every 4 dollars going to fewer than 1,000 big corporations, the most thorough analysis to date of corporate welfare revealed today.

Boeing ranks first, with 137 subsidies totaling $13.2 billion, followed by Alcoa at $5.6 billion, Intel at $3.9 billion, General Motors at $3.5 billion and Ford Motor at $2.5 billion, the new report by the nonprofit research organization Good Jobs First shows.

Dow Chemical had the most subsidies, 410 totaling $1.4 billion, followed by Warren Buffett’s Berkshire-Hathaway holding company, with 310 valued at $1.1 billion.

The figures were compiled from disclosures made by state and local government agencies that subsidize companies in all sorts of ways, including cash giveaways, building and land transfers, tax abatements and steep discounts on electric and water bills.

In fact, the numbers significantly understate the true value of taxpayer subsidies to businesses, for reasons explained below.

A fight for transparency

On a shoestring budget — roughly $1 million a year — Good Jobs First has for years dug through disclosure statements in all 50 states to compile reports on subsidies. Many of these subsidies existdespite strong provisions in many state constitutions prohibiting corporate welfare. New York state, for example, gets around this because its highest court ruled in 2011 that while the state may not give gifts directly, it can create an agency and let it give the gifts.

Good Jobs First does not oppose all subsidies. Rather, it favors transparency in the hope, executive director Greg LeRoy said, that any subsidies will be used wisely to expand the economy and not just prop up inefficient enterprises.

The data on welfare paid to companies come from Good Jobs First’s Subsidy Tracker 2.0, an improved Web tool that examines subsidies by linking subsidiaries to parent companies. The older version of the tool obscured the benefits to brand name corporate parents such as Apple, Google, Toyota and Walt Disney.

The size and range of the subsidies the tool has uncovered helps explain the burdens taxpayers must bear because so many major corporations rely on welfare for much or all of their profits rather than earning them.

Such burdens are especially hard on the poor. The bottom fifth of households in all but one state pay a larger share of their income in state and local taxes than the top 1 percent of earners. This means that corporate welfare effectively redistributes from the poor to those rich enough to own corporate stock.

Many forms of subsidies to business are excluded from Subsidy Tracker 2.0. For example, Good Jobs First does not count federal subsidies. It also leaves out indirect subsidies like perpetual monopoly rights of way for pipelines as well as rules that limit competition in pharmaceuticals, telecommunications and a host of other industries.

Phil Mattera, the organization’s research director, starts with publicly announced subsidies. With his small staff, he then gathers whatever records state and local governments make public or disclose through various Freedom of Information Act–type laws.

We know far too little about taxpayer support for business because of the ways governments do and do not collect data.

Boeing’s $13.2 billion in state and local subsidies is more than its pretax profits for the last two years. 

Federal, state and local governments publish exhaustively detailed statistical reports on welfare to the poor, disabled, sick, elderly and other individuals who cannot support themselves. The cost of subsidized food, housing and medical care are all documented at government expense, with the statistics posted on government websites.

But corporate welfare is not the subject of any comprehensive reporting at the federal level. Disclosures by state and local governments vary greatly, from substantial to nearly nonexistent.

Good Jobs First has prodded some states to expand disclosures. In many cases, though, the amounts and terms of corporate welfare are unknown because state and local governments assert that the information is confidential.

The best estimate of total state and local subsidies comes from Professor Kenneth Thomas, a political scientist at the University of Missouri at St. Louis. In 2010 he calculated the annual cost at $70 billion. No serious challenge has been made to this conservatively calculated figure, which in 2014 dollars comes to $75 billion. That is about $240 per person — nearly $1,000 annually for a family of four. That amounts to more than a week’s take-home pay for a median-income family with two parents and two children.

Few people realize the cost, however, because it is not represented by a deduction on their paychecks. What appears, rather, are burdens they bear in the form of taxes and Social Security.

Too big to fly on their own

Good Jobs First found that just 965 companies collected 75 percent of the value from 25,000 subsidy deals identified in Subsidy Tracker 2.0.

Boeing’s $13.2 billion is a bit more than its pretax profits for the last two years. It is also equals a stunning 70 percent of the $18.2 billion of equity owned by Boeing shareholders.

Measured against the number of commercial jetliners sold — 648 last year, at an average of nearly $79 million per plane — these subsidies come to more than $20 million per aircraft.

While the subsidies did not go just to commercial jets and were not for one year, those figures give some perspective to the huge amount of money that taxpayers lavish on Boeing.

Boeing declined to comment.

Second on the subsidy list is Alcoa, the old Aluminum Co. of America, which benefits from 91 subsidies totaling $5.6 billion. On the basis of its pretax income for last four years, that amounts to all the pretax profits Alcoa shareholders can expect for the next 189 years.

Alcoa operates in 35 countries, so I also calculated its state and local subsidies against its share of U.S. business for the last three profitable years. Measured this way, the subsidies equal 17 years of pretax U.S. profits.

These facts may surprise Alcoa shareholders, since the company makes virtually no mention of these gifts from taxpayers in its annual 10-K disclosure report. The only mention of subsidy is in terms of how Medicare drug benefits for retirees will lower annual pension costs, explaining about a nickel on each dollar of subsidy that Alcoa collects from American taxpayers.

In response to the findings, Alcoa said that, due to complexities in electricity pricing and to closing part of its New York smelting operation, the value of the subsidy was significantly less than Subsidy Tracker showed.

Taxpayers who want to understand the full dimension of their burdens should demand that Congress require and pay for detailed annual statistical reports showing every federal, state and local subsidy received by corporations, including the value of indirect subsidies like those perpetual rights of way to pipelines and other legal monopolies.

Without that information, we have no idea of the true cost of welfare or the cost of propping up companies that, evidently, cannot make their way on their own.

Ideally, we need to eliminate all tax loopholes and subsidies, and encourage corporations to pay out all their profits 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 citizen ownership.

In the meantime we should implement a policy that requires corporations requesting subsidies be required to demonstrate that they are fully employee-owned companies using Employee Stock Ownership Plan (ESOP) structures.

We desperately need to transform the American culture and society into an Ownership Society wherein EVERY child, woman and man has the equal opportunity to accumulate a personal wealth-creating, income-producing capital estate represented by a portfolio of diversified corporations fully paying-out earnings as dividends. Such a transition can be financed using insured, near-zero interest-free capital credit loans repayable with the FUTURE earnings of the corporations.

For REAL solutions to economic inequality, support the Agenda of The Just Third Way Movement at http://foreconomicjustice.org/?p=5797, Monetary Justice at http://capitalhomestead.org/page/monetary-justice, and the Capital Homestead Act at http://www.cesj.org/homestead/index.htm and http://www.cesj.org/homestead/summary-cha.htm.


How McDonald's And Wal-Mart Became Welfare Queens

On November 13, 2013, Barry Ritholtz writes on Bloomberg News:

It seems that welfare queens are back in the news these days. The old stereotype was an inner-city unwed mother — that’s dog-whistle-speak for black — having multiple babies to get ever bigger welfare checks (throw in a new Cadillac and the myth is complete). Regardless, welfare reform of the 1990s ended that narrative.

No, the new welfare queens are even bigger, richer and less deserving of taxpayer support. The two biggest welfare queens in America today are Wal-Mart and McDonald’s.

This issue has become more known as we learn just how far some companies have gone in putting their employees on public assistance. According to one study, American fast food workers receive more than $7 billion dollars in public assistance. As it turns out, McDonald’s has a “McResource” line that helps employees and their families enroll in various state and local assistance programs. It exploded into the public when a recording of the McResource line advocated that full-time employees sign up for food stamps and welfare.

Wal-Mart, the nation’s largest private sector employer, is also the biggest consumer of taxpayer supported aid. According to Florida Congressman Alan Grayson, in many states, Wal-Mart employees are the largest group of Medicaid recipients. They are also the single biggest group of food stamp recipients. Wal-mart’s “associates” are paid so little, according to Grayson, that they receive $1,000 on average in public assistance. These amount to massive taxpayer subsidies for private companies.

Why are profitable, dividend-paying firms receiving taxpayer subsidies? The short answer is, because they can. The longer answer is more complex and nuanced.

Both McDonald’s and Wal-Mart are engaging in perfectly legal behavior. The system was set up long ago in ways that failed to imagine companies doing this. Yes, they are taking advantage of the taxpayer, but they are also operating within the law.

Which means it is time to change those outdated rules.

The simplest solution is to raise the minimum wage. If full-time employees are living below the poverty level — especially those with children — its no surprise they are going to need public assistance. Raising the minimum wage over a period of time will eliminate much of this corporate welfare. The costs will be slightly higher prices at fast food restaurants and low end retailers.

The next proposal is more severe: Charge back the amount of public assistance any employee receives to the company he or she works for. It would be separate from tax filings, and simply be a direct penalty charged to the firm. I doubt there is much political will for this proposal, but I can see some people — especially on the Left — supporting it.

The most radical idea is bit of pure fantasy: Guarantee every person in America a minimum salary. That is a proposal under discussion today in Switzerland. Its hard to even imagine such a concept gaining traction in the U.S. outside of the Great Depression era.

My politics are pretty middle-of-the-road, and I find myself offended by subsidizing profitable companies this way. As a taxpayer, there are much better things I would like to see my monies go towards. Some rule changes are needed to end this wasteful spending.

We should get corporate welfare queens off of the public teat. Regardless of your politics, it is an issue that politicians on both the Left and the Right can agree upon.