“We Have A Distorted Economy”: Joseph Stiglitz Sounds Off On Inequality, The TPP And 2016

"We have a distorted economy": Joseph Stiglitz sounds off on inequality, the TPP and 2016EnlargeJoseph Stiglitz (Credit: AP/Richard Drew)

On April 29, 2015, Elias Isquith writes on Salon:

During the long run-up to officially announcing her second presidential bid, former Secretary of State Hillary Clinton quietly — but not too quietly — reached out to a number of leading progressive economists. Along with experts from some of the biggest unions in the country, the list of Clinton conferees included some of the biggest names in the (small) world of left-wing economics: former Clinton-era Secretary of Labor Robert Reich, for example. Yet out of all the so-called boldfaced names intended to draw lefty wonks’ attention, none inspired more cautious optimism than that of Columbia University professor and Nobel Prize-winning economist Joseph Stiglitz.

In part, that’s because Stiglitz, like his contemporary and fellow Nobel-winner Paul Krugman, is a brilliant economist who proves that, contrary to what many conservatives say, a firm grasp of the dismal science does not inexorably lead to libertarianism. More important, though, was his association with the problem of inequality — both on political and economic grounds. His 2011 piece on inequality for Vanity Fair made a splash (among the types of people who read Vanity Fair); and his 2012 book “The Price of Inequality: How Today’s Divided Society Endangers Our Future” — which is nowavailable in paperback — was an even bigger hit.

Recently, Salon spoke over the phone with Stiglitz about his new book, “The Great Divide: Unequal Societies and What We Can Do About Them,” the roots of inequality, and what he wants to see from the 2016 presidential candidates to prove they’re taking the issue seriously. Our conversation is below and has been edited for clarity and length.

So this book originally came out in 2012, and now it’s 2015. Are you more optimistic now than you were then? Or less?

I think the good news is the way that, in the opening shots of the 2016 campaign, candidates across the political spectrum have said that inequality is a major issue facing the United States. Sometimes they’re not phrasing it exactly about inequality — some say the struggles of the middle class— but of course they’re talking about inequality and that’s very heartening. Obviously, when I hear reports about the amount of money that this campaign is going to cost, and the projections that it will be well in excess of what the last presidential campaign cost, which is $2 billion, I get depressed. Those campaign contributions, as I’ve said often, are investments, not donations. They’re investments in where the investors expect to get a return and that return is shaping our economy to serve their interests.

Republicans, especially former Gov. Jeb Bush, like to talk about a lack of opportunityrather than inequality. Does the distinction make much of a difference?

When they first began making that argument, Paul Ryan said, We’re not interested in inequality of outcomes, we’re concerned about equality of opportunity. But as I point out in my book “The Great Divide,” the fact is we don’t have equality of opportunity. We are among the countries in the advanced world with the least equality of opportunity. So if they think that’s an answer to the question of inequality of income, wealth, justice, all those other kinds of inequality, it’s obviously not. The fact that there’s a huge literature of both theory and empirical evidence saying that the two are very highly correlated means that they can’t escape talking about equality of outcomes, that is to say counties with more inequality of outcomes, the incomes have greater inequality of opportunity. In a sense, the two issues are inextricably linked.

One of the more middle-of-the-road policy responses to inequality you’ll hear about is improving education. But that point of view also has its critics. What do you think of that approach?

That’s sometimes called part of a minimalist apple pie agenda. I’m very convinced that that won’t go far enough and what’s happened in the last fifteen years, has made it even more clear that that won’t go far enough. Since the beginning of the century, even educated people have not been doing very well. They’re only doing well relative to those without a college education. So those without a college education, have seen their incomes really sink and those with a college education have been treading water. So what is going on is much more fundamental, it’s much deeper than that. It is part of any agenda but it’s just a part and won’t really address the fundamental problems going on.

You make a point in the book of arguing that the 1 percent doesn’t flourish because it’s so much better than the rest of us, but rather because our economic system is in many ways rigged to their benefit. What do you mean by that?

One way of thinking about that is to try to think about the textbook model of economics — thousands of producers, competing with each other, each so small that it has no effect on price. Almost the only industry for which that is true is agriculture and that’s an industry where government presence is very, very strong and where government presence is basically designed as an agricultural program that helps the very big farmers with very little of the money going to the small farmers.

More broadly, there are a huge number of examples of this: in ’93, we recognized the inequities of CEO pay and passed a law that said if the pay was so-called performance-related than it was exempt from the special tax that was put on excessive pay. Well, what that did is just open the floodgates and allow every company to re-label their pay as performance pay. Many of us pointed out that these new stock options— which were so-called performance pay — were very non-transparent. Shareholders didn’t know how the value of their shares were being diluted, and we tried to push for greater transparency, but we ended up maintaining this system that encouraged dishonest creative accounting and allowed these bonuses which have very little to do with actual incentive.

That’s a very dramatic example of a legal tax structure that benefits the one percent. At the other extreme, laws that have been passed that make it more difficult for unions, for workers to get together and unionize, globalization rules that almost encourage firms to invest abroad, allowing firms to threaten to move abroad if workers don’t accept lower wages and worse working conditions. All of that has weakened labor. So these are just a few examples by which our rules and regulations have empowered the top and disempowered everybody else.

You also argue that, ultimately, inequality on this scale is bad for everyone — the 1 percent included. Why do you think it’s not in their best interest, either?

The idea is that a strong theory and empirical evidence that inequality is bad for economic performance, that it leads to lower growth and more instability. Back in 1980, the Reagan team said, Let’s try this new experiment of supply-side economics, where we lower the taxes on the top and they said don’t worry that this is going to lead to more inequality, the people at the bottom are going to benefit, because we’re going to get more growth. There’s no evidence for that, and now thirty-some years later, we have the results of that experiment. The combination of lower growth and a lower share of what growth has occurred–in fact negative shared–meant that the people in the middle and on the bottom have been worse off.

Now, you run that engine in reverse, that reasoning in reverse and you say, well, if it is the case that we actually grow the economy better by having more equality, then it’s at least conceivable that those at the top might get a smaller share than the outrageous share that they’re getting today, but the pie would be bigger and they could actually be better off. But I don’t think the one percent wants to live in gated communities; I’ve visited places where there’s a huge amount of inequality, and the quality of life of the one percent isn’t that great. They live in gated communities, there’s an unpleasantness about the nature of their society. That’s a direction to which we may be moving, if we don’t deal with the inequality we have. So I would say that, would I rather live in a society where there’s sort of a sense of community and a sense of purpose, a sense of fairness, I think it’s a much healthier community to live in. And all of us live in a community; none of us are really that isolated.

What would be some of the policies that the 2016 Democratic candidate could realistically run on to combat inequality that would excite you most?

I think I would be the most excited by a candidate that really takes seriously this issue of equality and equality of opportunity, addresses it in as many dimensions as possible, and goes beyond what I would call the minimalist agenda— more education, minimum wage— and begins to work on the most important things that will ensure that the middle class will have access to the basic ingredients that make for a middle class life. That means beginning to work on the underlying structures that are referred to the institutions that have lead to such inequality in before tax income, in market incomes. That begins to say that when we have a tax system that rewards speculators more than people who work for a living that distorts our economy. We don’t want our most talented people to go into speculation; that can lead to even more instability. We have a distorted economy, and that’s a result of the choices that we’ve made and we ought to be making different choices. We can do that! There’s not reason that capital should be taxed at a lower rate than people who work for a living.

Finally, there’s a whole agenda, I think, that could directly address some of the plight of average Americans— make it easier for people to get to jobs and public transportation, make it easier for a woman to work through support of child care or family-leave policy. Basically trying to help every member of our society participate meaningfully in our society.

Last question: You’ve previously expressed opposition to the Trans-Pacific Partnership trade deal, but that was a few months ago. Have you heard or seen anything in the time since to make you feel more positively toward the proposal?

No, I’ve actually heard several things that have made me more adamant in my opposition. I’ve talked to the health negotiators around the world. I’ve talked to people who’ve been involved in the arbitration process as part of the investment agreements. Even people who are arbitrators say the whole system is corrupt, that it’s a very expensive system, that therefore creates an un-even playing field with big corporations with big, deep pockets can get access to have recourse, whereas smaller firms can’t. That American firms can re-locate or do their investments in the United States as a subsidiary, sue the U.S. government in ways that they could not if we didn’t have that trade agreement. In other words, what we’re doing is changing the legal structure for the United States, not only for foreign firms. Because an American firm can become an American firm overnight. So this is a very big deal.

It’s not just a trade agreement, it’s a really major change in a legal structure. And I don’t think it should be taken lightly. I don’t think it should be adopted on a take-it-or-leave-it basis, that’s associated with fast-track. I think each of these issues themselves need to be debated, voted on separately. The bottom line is, if anything, I’ve been more resolved in my opposition.




Sanders Announces '16 Bid

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On April 30, 2015, Jordain Carney writes on The Hill:

Sen. Bernie Sanders (I-Vt.) announced his long-expected bid for the Democratic presidential nomination Thursday, focusing on economic inequality.

“I am writing to inform you that I will be a candidate for president of the United States. I ask for your support,” he said in a statement to supporters, excerpts of which were released in advance to the media.

Sanders said he’s spent months leading up to his announcement meeting with Americans who are “deeply concerned about the future of our country.”

“For many months I have been traveling from coast to coast across our country, and have had the opportunity to meet with thousands of good, hardworking, and remarkable people,” he said. “Like you and me, they are deeply concerned about the future of our country.”

Sanders’s bid was widely excepted. A source close to Sanders told The Hill earlier this week that he would announce his bid in a statement Thursday. He is also expected to hold a press conference on his “agenda for America” later Thursday.

Sanders suggested that a key narrative of his campaign would be to stand against economic inequality in the country, similar to his focus during his time in the Senate.

“After a year of travel, discussion and dialogue, I have decided to be a candidate for the Democratic nomination for president. But let’s be clear. This campaign is not about Bernie Sanders,” he said. “It’s about a grassroots movement of Americans standing up and saying: ‘Enough is enough. This country and our government belong to all of us, not just a handful of billionaires.’ ”

The Vermont Independent added that he believes the middle class is at a “tipping point.”

“The people at the top are grabbing all the new wealth and income for themselves, and the rest of America is being squeezed and left behind,” he said. “The middle class in America is at a tipping point. It will not last another generation if we don’t boldly change course now.”

Sanders also mentioned what he views as the fallout from the Citizens United Supreme Court case, and called climate change a “central challenge” for the country.

Sanders is expected to make stops in a key early voting state, New Hampshire, after his announcement. He’s scheduled to attend a house party in Manchester, N.H., on Saturday and will speak at the New Hampshire AFL-CIO Convention.

Anna Galland, executive director of MoveOn.org Civic Action, welcomed Sanders to the race, and also called on Sen. Elizabeth Warren (D-Mass.) to run for the party’s nomination.

“MoveOn members have cheered on Sen. Sanders for years as he’s stood up to the Wall Street banks and wealthy interests who have rigged the game in Washington and knee-capped our country’s middle-class and working families,” she said.

Galland added that the Democratic Party “is made stronger” with a contested primary.

“That’s why we and our allies continue to call on Sen. Elizabeth Warren to also bring her tireless advocacy for middle-class and working Americans to the race,” she said. “Our country will be stronger if she runs.”


Our best chance to force the discussion to the national level is to feed the best ideas to Senator Bernie Sanders, the courageous challenger to Hillary Clinton. This would immensely strengthen the Democratic platform and ultimate candidate. Sanders should capture the national media attention when he announces that he will challenge Hillary Clinton in the Democratic primaries and force the national discussion to addressing the issues and solutions to economic inequality, and open the door to a national debate, which would then allow us to get traction for policies that broaden personal OWNERSHIP of wealth-creating, income-producing capital assets formed as part of the FUTURE growth of the economy.


Bernie Sanders Announces He Is Running For President In 2016

On April 29, 2015, Samantha Lachman writes  on The Huffington Post:

Sen. Bernie Sanders (I-Vt.) announced on Wednesday that he’ll run for president of the United States in 2016.

“I am running for president,” Sanders told The Associated Press. “People should not underestimate me… I’ve run outside of the two-party system, defeating Democrats and Republicans, taking on big-money candidates and, you know, I think the message that has resonated in Vermont is a message that can resonate all over this country.”

Sanders will make a more formal announcement about his presidential campaign on Thursday.

Sanders is the first official challenger for the Democratic nomination to Secretary of State Hillary Clinton, who announced her candidacy earlier this month.

Sanders, a self-described “democratic socialist,” has been hinting that he would seek the White House for nearly two years.

The senator, who has been in the upper chamber since 2007, previously served as Vermont’s at-large congressman and as mayor of Burlington. He caucuses with the Democratic Party in the Senate and is categorized as a Democrat for the purpose of committee assignments.

In an interview with The Huffington Post last year, Sanders said that he wouldn’t be dissuaded from entering the presidential race by the prospect of facing former Secretary of State Hillary Clinton in the Democratic primary.

“In terms of Hillary, I respect her. I’ve known her. I like her. So I’m not running to attack Hillary Clinton. I’m running to talk about the issues that impact the working class of this country and the middle class,” he said last year.

Sanders, who has also characterized himself as “an independent Democrat,” has expressed discomfort with the party, saying that it relies too heavily on “big-money interests” and doesn’t adequately distinguish itself from the Republicans. But he has noted the “dilemma” of running for president outside the traditional two-party structure and the challenges of building an independent grassroots movement to do so.

Late last year, he visited Iowa, which will host the first party caucuses in 2016, to test enthusiasm for his candidacy.

Sanders has argued that the country deserves a real debate about policy issues, suggesting that such a conversation won’t happen without a contested nomination process. “There’s so much to be discussed, Ed, and we’re not in this country about anointing anybody for a nomination,” Sanders told MSNBC’s Ed Schultz last year.

In the Senate, Sanders has focused on a range of issues, from reforming health care for veterans to addressing the threat posed by climate change. He has also been a strong advocate for a universal, single-payer health care plan nationwide, though the plan for such a system in his home state was recently dropped.


Our best chance to force the discussion to the national level is to feed the best ideas to Senator Bernie Sanders, the courageous challenger to Hillary Clinton. This would immensely strengthen the Democratic platform and ultimate candidate. Sanders should capture the national media attention when he announces that he will challenge Hillary Clinton in the Democratic primaries and force the national discussion to addressing the issues and solutions to economic inequality, and open the door to a national debate, which would then allow us to get traction for policies that broaden personal OWNERSHIP of wealth-creating, income-producing capital assets formed as part of the FUTURE growth of the economy.

Sanders should advocate for passage of the proposed Capital Homestead Act. See http://www.cesj.org/…/capital-homestead-act-a-plan-for…/ andhttp://www.cesj.org/…/capital-homestead-act-summary/. Seehttp://cesj.org/learn/capital-homesteading/ andhttp://cesj.org/…/uploads/Free/capitalhomesteading-s.pdf.

The Political Roots Of Widening Inequality


The key to understanding the rise in inequality isn’t technology or globalization. It’s the power of the moneyed interests to shape the underlying rules of the market.


This article by Robert Reich appears in the Spring 2015 issue of The American Prospect magazine.

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For the past quarter-century—at least since Bob Kuttner, Paul Starr, and I founded The American Prospect—I’ve offered in articles, books, and lectures an explanation for why average working people in advanced nations like the United States have failed to gain ground and are under increasing economic stress: Put simply, globalization and technological change have made most of us less competitive. The tasks we used to do can now be done more cheaply by lower-paid workers abroad or by computer-driven machines.

My solution—and I’m hardly alone in suggesting this—has been an activist government that raises taxes on the wealthy, invests the proceeds in excellent schools and other means people need to become more productive, and redistributes to the needy. These recommendations have been vigorously opposed by those who believe the economy will function better for everyone if government is smaller and if taxes and redistributions are curtailed.

While the explanation I offered a quarter-century ago for what has happened is still relevant—indeed, it has become the standard, widely accepted explanation—I’ve come to believe it overlooks a critically important phenomenon: the increasing concentration of political power in a corporate and financial elite that has been able to influence the rules by which the economy runs. And the governmental solutions I have propounded, while I believe them still useful, are in some ways beside the point because they take insufficient account of the government’s more basic role in setting the rules of the economic game.

Worse yet, the ensuing debate over the merits of the “free market” versus an activist government has diverted attention from how the market has come to be organized differently from the way it was a half-century ago, why its current organization is failing to deliver the widely shared prosperity it delivered then, and what the basic rules of the market should be. It has allowed America to cling to the meritocratic tautology that individuals are paid what they’re “worth” in the market, without examining the legal and political institutions that define the market. The tautology is easily confused for a moral claim that people deserve what they are paid. Yet this claim has meaning only if the legal and political institutions defining the market are morally justifiable.

Most fundamentally, the standard explanation for what has happened ignores power. As such, it lures the unsuspecting into thinking nothing can or should be done to alter what people are paid because the market has decreed it.

The standard explanation has allowed some to argue, for example, that the median wage of the bottom 90 percent—which for the first 30 years after World War II rose in tandem with productivity—has stagnated for the last 30 years, even as productivity has continued to rise, because middle-income workers are worth less than they were before new software technologies and globalization made many of their old jobs redundant. They therefore have to settle for lower wages and less security. If they want better jobs, they need more education and better skills. So hath the market decreed.

Yet this market view cannot be the whole story because it fails to account for much of what we have experienced. For one thing, it doesn’t clarify why the transformation occurred so suddenly. The divergence between productivity gains and the median wage began in the late 1970s and early 1980s, and then took off. Yet globalization and technological change did not suddenly arrive at America’s doorstep in those years. What else began happening then?

Nor can the standard explanation account for why other advanced economies facing similar forces of globalization and technological change did not succumb to them as readily as the United States. By 2011, the median income in Germany, for example, was rising faster than it was in the United States, and Germany’s richest 1 percent took home about 11 percent of total income, before taxes, while America’s richest 1 percent took home more than 17 percent. Why have globalization and technological change widened inequality in the United States to a much greater degree?

Nor can the standard explanation account for why the compensation packages of the top executives of big companies soared from an average of 20 times that of the typical worker 40 years ago to almost 300 times. Or why the denizens of Wall Street, who in the 1950s and 1960s earned comparatively modest sums, are now paid tens or hundreds of millions annually. Are they really “worth” that much more now than they were worth then?

Finally and perhaps most significantly, the market explanation cannot account for the decline in wages of recent college graduates. If the market explanation were accurate, college graduates would command higher wages in line with their greater productivity. After all, a college education was supposed to boost personal incomes and maintain American prosperity.

To be sure, young people with college degrees have continued to do better than people without them. In 2013, Americans with four-year college degrees earned 98 percent more per hour on average than people without a college degree. That was a bigger advantage than the 89 percent premium that college graduates earned relative to non-graduates five years before, and the 64 percent advantage they held in the early 1980s.

But since 2000, the real average hourly wages of young college graduates have dropped. (See chart below.) The entry-level wages of female college graduates have dropped by more than 8 percent, and male graduates by more than 6.5 percent. To state it another way, while a college education has become a prerequisite for joining the middle class, it is no longer a sure means for gaining ground once admitted to it. That’s largely because the middle class’s share of the total economic pie continues to shrink, while the share going to the top continues to grow.

Chart data source: Economic Policy Institute Analysis of Current Population Survey Outgoing Rotation Group Microdata

Data are for college graduates ages 21-24 who do not have an advanced degree and are not enrolled in further schooling. Shaded areas denote recessions. Data for 2014 represent 12-month average from April 2013-March 2014.

A deeper understanding of what has happened to American incomes over the last 25 years requires an examination of changes in the organization of the market. These changes stem from a dramatic increase in the political power of large corporations and Wall Street to change the rules of the market in ways that have enhanced their profitability, while reducing the share of economic gains going to the majority of Americans.

This transformation has amounted to a redistribution upward, but not as “redistribution” is normally defined. The government did not tax the middle class and poor and transfer a portion of their incomes to the rich. The government undertook the upward redistribution by altering the rules of the game.

Intellectual property rights—patents, trademarks, and copyrights—have been enlarged and extended, for example. This has created windfalls for pharmaceuticals, high tech, biotechnology, and many entertainment companies, which now preserve their monopolies longer than ever. It has also meant high prices for average consumers, including the highest pharmaceutical costs of any advanced nation.

At the same time, antitrust laws have been relaxed for corporations with significant market power. This has meant large profits for Monsanto, which sets the prices for most of the nation’s seed corn; for a handful of companies with significant market power over network portals and platforms (Amazon, Facebook, and Google); for cable companies facing little or no broadband competition (Comcast, Time Warner, AT&T, Verizon); and for the largest Wall Street banks, among others. And as with intellectual property rights, this market power has simultaneously raised prices and reduced services available to average Americans. (Americans have the most expensive and slowest broadband of any industrialized nation, for example.)

Financial laws and regulations instituted in the wake of the Great Crash of 1929 and the consequential Great Depression have been abandoned—restrictions on interstate banking, on the intermingling of investment and commercial banking, and on banks becoming publicly held corporations, for example—thereby allowing the largest Wall Street banks to acquire unprecedented influence over the economy. The growth of the financial sector, in turn, spawned junk-bond financing, unfriendly takeovers, private equity and “activist” investing, and the notion that corporations exist solely to maximize shareholder value.

Chart Data Source: Bureau of Economic Analysis

Bankruptcy laws have been loosened for large corporations—notably airlines and automobile manufacturers—allowing them to abrogate labor contracts, threaten closures unless they receive wage concessions, and leave workers and communities stranded. Notably, bankruptcy has not been extended to homeowners who are burdened by mortgage debt and owe more on their homes than the homes are worth, or to graduates laden with student debt. Meanwhile, the largest banks and auto manufacturers were bailed out in the downturn of 2008–2009. The result has been to shift the risks of economic failure onto the backs of average working people and taxpayers.

Contract laws have been altered to require mandatory arbitration before private judges selected by big corporations. Securities laws have been relaxed to allow insider trading of confidential information. CEOs have used stock buybacks to boost share prices when they cash in their own stock options. Tax laws have created loopholes for the partners of hedge funds and private-equity funds, special favors for the oil and gas industry, lower marginal income-tax rates on the highest incomes, and reduced estate taxes on great wealth.

All these instances represent distributions upward—toward big corporations and financial firms, and their executives and shareholders—and away from average working people.

Meanwhile, corporate executives and Wall Street managers and traders have done everything possible to prevent the wages of most workers from rising in tandem with productivity gains, in order that more of the gains go instead toward corporate profits. Higher corporate profits have meant higher returns for shareholders and, directly and indirectly, for the executives and bankers themselves.

Workers worried about keeping their jobs have been compelled to accept this transformation without fully understanding its political roots. For example, some of their economic insecurity has been the direct consequence of trade agreements that have encouraged American companies to outsource jobs abroad. Since all nations’ markets reflect political decisions about how they are organized, so-called “free trade” agreements entail complex negotiations about how different market systems are to be integrated. The most important aspects of such negotiations concern intellectual property, financial assets, and labor. The first two of these interests have gained stronger protection in such agreements, at the insistence of big U.S. corporations and Wall Street. The latter—the interests of average working Americans in protecting the value of their labor—have gained less protection, because the voices of working people have been muted.

Rising job insecurity can also be traced to high levels of unemployment. Here, too, government policies have played a significant role. The Great Recession, whose proximate causes were the bursting of housing and debt bubbles brought on by the deregulation of Wall Street, hurled millions of Americans out of work. Then, starting in 2010, Congress opted for austerity because it was more interested in reducing budget deficits than in stimulating the economy and reducing unemployment. The resulting joblessness undermined the bargaining power of average workers and translated into stagnant or declining wages.

Some insecurity has been the result of shredded safety nets and disappearing labor protections. Public policies that emerged during the New Deal and World War II had placed most economic risks squarely on large corporations through strong employment contracts, along with Social Security, workers’ compensation, 40-hour workweeks with time-and-a-half for overtime, and employer-provided health benefits (wartime price controls encouraged such tax-free benefits as substitutes for wage increases). But in the wake of the junk-bond and takeover mania of the 1980s, economic risks were shifted to workers. Corporate executives did whatever they could to reduce payrolls—outsource abroad, install labor-replacing technologies, and utilize part-time and contract workers. A new set of laws and regulations facilitated this transformation.

As a result, economic insecurity became baked into employment. Full-time workers who had put in decades with a company often found themselves without a job overnight—with no severance pay, no help finding another job, and no health insurance. Even before the crash of 2008, the Panel Study of Income Dynamics at the University of Michigan found that over any given two-year stretch in the two preceding decades, about half of all families experienced some decline in income.

Today, nearly one out of every five working Americans is in a part-time job. Many are consultants, freelancers,  and independent contractors. Two-thirds are living paycheck to paycheck. And employment benefits have shriveled. The portion of workers with any pension connected to their job has fallen from just over half in 1979 to under 35 percent today. In MetLife’s 2014 survey of employees, 40 percent anticipated that their employers would reduce benefits even further.

The prevailing insecurity is also a consequence of the demise of labor unions. Fifty years ago, when General Motors was the largest employer in America, the typical GM worker earned $35 an hour in today’s dollars. By 2014, America’s largest employer was Walmart, and the typical entry-level Walmart worker earned about $9 an hour.

This does not mean the typical GM employee a half-century ago was “worth” four times what the typical Walmart employee in 2014 was worth. The GM worker was not better educated or motivated than the Walmart worker. The real difference was that GM workers a half-century ago had a strong union behind them that summoned the collective bargaining power of all autoworkers to get a substantial share of company revenues for its members. And because more than a third of workers across America belonged to a labor union, the bargains those unions struck with employers raised the wages and benefits of non-unionized workers as well. Non-union firms knew they would be unionized if they did not come close to matching the union contracts.

Today’s Walmart workers do not have a union to negotiate a better deal. They are on their own. And because less than 7 percent of today’s private-sector workers are unionized, most employers across America do not have to match union contracts. This puts unionized firms at a competitive disadvantage. Public policies have enabled and encouraged this fundamental change. More states have adopted so-called “right-to-work” laws. The National Labor Relations Board, understaffed and overburdened, has barely enforced collective bargaining. When workers have been harassed or fired for seeking to start a union, the board rewards them back pay—a mere slap on the wrist of corporations that have violated the law. The result has been a race to the bottom.

Given these changes in the organization of the market, it is not surprising that corporate profits have increased as a portion of the total economy, while wages have declined. (See charts above.) Those whose income derives directly or indirectly from profits—corporate executives, Wall Street traders, and shareholders—have done exceedingly well. Those dependent primarily on wages have not.

Victor Juhasz

The underlying problem, then, is not that most Americans are “worth” less in the market than they had been, or that they have been living beyond their means. Nor is it that they lack enough education to be sufficiently productive. The more basic problem is that the market itself has become tilted ever more in the direction of moneyed interests that have exerted disproportionate influence over it, while average workers have steadily lost bargaining power—both economic and political—to receive as large a portion of the economy’s gains as they commanded in the first three decades after World War II. As a result, their means have not kept up with what the economy could otherwise provide them. To attribute this to the impersonal workings of the “free market” is to disregard the power of large corporations and the financial sector, which have received a steadily larger share of economic gains as a result of that power. As their gains have continued to accumulate, so has their power to accumulate even more.

Under these circumstances, education is no panacea. Reversing the scourge of widening inequality requires reversing the upward distributions within the rules of the market, and giving workers the bargaining leverage they need to get a larger share of the gains from growth. Yet neither will be possible as long as large corporations and Wall Street have the power to prevent such a restructuring. And as they, and the executives and managers who run them, continue to collect the lion’s share of the income and wealth generated by the economy, their influence over the politicians, administrators, and judges who determine the rules of the game may be expected to grow.

The answer to this conundrum is not found in economics. It is found in politics. The changes in the organization of the economy have been reinforcing and cumulative: As more of the nation’s income flows to large corporations and Wall Street and to those whose earnings and wealth derive directly from them, the greater is their political influence over the rules of the market, which in turn enlarges their share of total income. The more dependent politicians become on their financial favors, the greater is the willingness of such politicians and their appointees to reorganize the market to the benefit of these moneyed interests. The weaker unions and other traditional sources of countervailing power become economically, the less able they are to exert political influence over the rules of the market, which causes the playing field to tilt even further against average workers and the poor.

Ultimately, the trend toward widening inequality in America, as elsewhere, can be reversed only if the vast majority, whose incomes have stagnated and whose wealth has failed to increase, join together to demand fundamental change. The most important political competition over the next decades will not be between the right and left, or between Republicans and Democrats. It will be between a majority of Americans who have been losing ground, and an economic elite that refuses to recognize or respond to its growing distress.



Bernard Sanders To Announce Presidential Bid

Senator Bernard Sanders, independent of Vermont, in Washington last week.

Senator Bernard Sanders, independent of Vermont, in Washington last week.Credit Doug Mills/The New York Times

On April 28, 2015, Alan Rapport writes in The New York Times:

Senator Bernard Sanders, the independent from Vermont, plans to run for president as a Democrat, becoming the only official party challenger so far to Hillary Rodham Clinton.

According to people familiar with the senator’s plans, he will release a statement on Thursday and make a more formal announcement of candidacy later next month in Vermont. That event will likely take place at City Hall in Burlington, where he was mayor.

Mr. Sanders, who considers himself a “Democratic Socialist,” has been traveling recently in early nominating states like Iowa, New Hampshire and South Carolina to gauge interest in his candidacy.

While considered a long-shot for the Democratic nomination, Mr. Sanders could be another voice drawing Mrs. Clinton to the left because of his progressive views on trade, health care and corporate lobbying.

“Are we prepared to take on the enormous economic and political power of the billionaire class, or do we continue to slide into economic and political oligarchy?” Mr. Sanders said on his website.

Mr. Sanders’ plans were first reported by VPR News, Vermont’s public radio station.

According to a Federal Election Commission filing, Mr. Sanders has $4.63 million on hand for his 2018 Senate re-election campaign. That money can be transferred to his coffers for a presidential race.


Senator Bernie Sanders would force the national discussion to addressing the issues and solutions to economic inequality, and open the door to a national debate, which would then allow us to get traction for policies that broaden personal OWNERSHIP of wealth-creating, income-producing capital assets formed as part of the FUTURE growth of the economy.


The Rise Of Turing Robots Leads To A Fall In Wages

On February 25, 2015, Dagobert Brito and Robert Curl write on Newsweek:

A staff member stands next to robots at a Kuka Robotics plant in Shanghai on August 13, 2014. PETE SWEENEY/REUTERS

From 1970 to 2007, the U.S. economy grew at an average rate of about 3 percent a year (2.8 percent for the period from 1970 to 2012). The distribution of labor income was stable until about 1980.

Then something happened. The economy’s real growth rate remained on the same trend, but the distribution of income started to become less equal.

In 1970, the top 10 percent of the population earned about 32 percent of labor income; by 2012, the share of the top 10 percent increased to 47 percent. We explain these phenomena by noting that computer technology in the form of automation is replacing workers who perform tasks that can be reduced to an algorithm.

In order to think about automation in comparison with people, we refer to an automation that displaces a worker as a Turing robot. The machine age replaced muscle power with machines. However, machines still needed humans to operate them. The total number of jobs increased with growing production.

The second machine age is replacing humans in tasks that can be reduced to an algorithm. It will be difficult to replace the jobs lost to computers. It will be very difficult to replace the jobs lost to computers with high-paying jobs.

We assume that the population is heterogeneous in its initial endowments of talents. We believe that the highly paid group has attributes that cannot generally be taught. This assumption seems elitist and thus very controversial, but data from the legal and economics professions suggest that this assumption is true.

However, if the jobs are to be high paying, it must be the case that the skills cannot be taught to other workers. If the skills of the highly paid group could be taught to the other workers, the market would erase the skill premium.

People will argue that technological development has happened in the past and that the growing economy created new jobs to replace the old. This is possible, but the problem is now much more difficult.

Increasing the number of jobs for humans will mitigate the problem of inequality in the distribution of income only if these new jobs have three properties: (1) they must be jobs that a computer cannot perform; (2) they must require skills that are scarce in the human population; and (3) the new jobs must include a substantial fraction of the population. Increasing the number of jobs, such as supermarket checkers, that do not have a scarce skill requirement will not solve the problem.

A large fraction of the population may have skills that a computer cannot perform, but these skills may be common to a large fraction of the population. Wages are set at the margin, and if at the margin humans are competing with robots, the cost of robot labor will be determining the human wage rate.

The argument is slightly more complicated. Computers are replacing humans with skill sets that were relatively well paid, so the competition between human workers and automation is not at bottom-wage levels. These displaced workers are forced to find lower-paying jobs, thereby lowering wages for all workers with whom they compete.

For high-paying jobs to return, enough human jobs must be created to employ the entire labor force so that at the margin humans are not in competition with robots. The Catch-22 of this proposition is that if the jobs are high paying, there are incentives to develop the technology so they can be performed by Turing robots.

The limits of computer technology or human ingenuity have not been found.

The seminal book The Second Machine Age by Erik Brynjolfsson and Andrew McAfee (2014) addresses the implications for the economy and society of the latest developments in computers, connectivity and robots. Their work makes it clear that the full impact of the computer revolution lies ahead.

This second machine age will result in even greater production of material goods. We may well be entering an era where scarcity of material goods ceases to be an issue in the developed world.

The second machine age may eliminate the scarcity of material goods, but it will also increase unemployment and inequality. We believe this, in turn, may result in increased redistribution and a substantial increase in the role of government.

It is not difficult to make the argument for redistribution without calling for altruism from the rich. In an economy where incomes are very unequal, social stability may require either the use of force or substantial redistribution. If goods are not scarce, the elites should favor redistribution because it is cheaper to maintain social order through the transfer of non-scarce goods than by resorting to force to maintain order.

In a democracy, transfer payments may be the cost of maintaining political power. If a substantial fraction of the labor force is unemployed, the result is a “bread and circuses” society, or in the modern context, a “food stamps and television” society, according to Bloomberg View columnist Alice Schroeder.

Objections to such transfer payments will be raised. Most Americans believe in the free market, and factor endowments determine the “legitimate” distribution of income. In a market economy, the marginal product of a factor determines its value.

The intuition behind this belief is powerful. In an economy where factors are paid their marginal product, workers’ wages reflect the value of their labor, and the capitalists’ income reflects the value of time and the return for delayed gratification.

The neoclassical paradigm, shared to some degree by a majority of American economists, gives theoretical support to this argument. It takes a very small leap in logic to argue that this implies that the free market endows individuals with the just fruits of their labor.

Despite these objections, we believe that transfer payments will be necessary for social stability. Although we can find no alternative to transfer payments for avoiding a humanitarian crisis, we believe that a “bread and circuses” society is unhealthy.

We recognize that our judgment of a “bread and circuses” society reflects our background and personal set of values. Saying that learning to read and play the piano, and eating home-cooked meals, is better than watching television and eating junk food is a value judgment.

A motivation for our work is to develop arguments against a “bread and circuses” society that do not depend on value judgments. We summarize them here:

1. The need to maintain competent elites. Successful societies need competent elites for governance, innovation, creativity, the transmission of values and as protection for unforeseen external threats. We believe that such necessary class mobility will be impaired if there exists an underclass that is not part of the recruiting pool for elites. If talent is scarce, it is necessary to recruit from as wide a pool as possible. This requires the education and employment of as large a fraction of the population as possible.

2. The need to avoid loss of social capital. Without the possibility of work, there are few incentives to acquire an education and the other forms of human and social capital needed for employment. These are the same attributes needed to be a functioning member of a civil society and for creating functional families. There are positive externalities to work and education, and without education many elements of a dysfunctional society follow.

3. The need to maintain a civil society. There is evidence that employment is an important factor in the maintenance of a civil society. Employment has positive externalities.

4. Unhealthy shifts in the economic system. In a democracy with a large unemployed population, governmental redistribution is inevitable and the role of government increases. Income is concentrated in the productive elite and the mandarin class. The role of the free market as an institution of decentralized power is diminished.

The aim of the present work is to search for new options that would keep our society healthy and to explore the consequences of choosing among these options.


The first machine age, ushered in by the steam engine, freed mankind’s dependence on muscle power. It started around 1776 when the population of the world was around 800 million people, according to the (U.S. Census Bureau in 2013. By the year 2000, the population of the Earth was over 6 billion people.

The rate of growth of world gross domestic product, if such a concept is meaningful over such a long period, increased by a factor of 10, from .22 percent to 2.2 percent, according to WorldEconomy.org. Per capita consumption went up by a factor of 20. Brynjolfsson and McAfee argue that the second machine age, ushered in by the computer, will do the same thing for mental power. They date the start of the new age at around 1958, according to the U.S. Census Bureau in 2013.

We start in 1978 when the distribution of income starts to diverge. We do not know the ultimate implications of the second machine age. Machines are rapidly progressing in pattern recognition, which was once a human forte. This suggests to us that there is no clear demarcation limiting the abilities of machines.

Here we assume the ability of machines (Turing robots) to be limited to tasks that can be described by algorithms. However, we are not at all sure what the limits are to such tasks.

We use data from Thomas Piketty’s book (Capital in the 21st Century, 2014) and a relatively simple economic model to calculate robot penetration. We find that the implications of robots replacing humans in routine work require serious attention.

Since 1978, the ratio of labor income of the top 10 percent to the bottom 90 percent has increased from .48 to .89. Extrapolating our results in a linear fashion, this ratio will increase to around 1.3 in 2040, which is an income disparity larger than in any previous era. Substantial redistribution will be required.

On a happy note, the demographic problem of too few young workers to support the elderly will be solved by increasing productivity. This brings up the central question of the paper: What is wrong with “bread and circuses”? Our answer is twofold.

First, as we have already discussed, work and education are necessary to maintain social capital. Second, work and education are necessary for the sorting process required to maintain an elite. Institutions will have to be developed to motivate education and employ people in a fashion that may not be economically necessary.

Education may become an important sector because it employs people and is an excellent sorting mechanism. Immigration issues will become even more important.

There are two immigration issues: one at the bottom end of the labor market, the other at the top. A society with substantial transfers will attract immigrants at the bottom end of the labor market where there is already a labor surplus. At the other extreme, the educational sector attracts students from other countries.

Top talent, so far, has tended to stay in the United States, replenishing our supply of elites. This may be good for the United States, but robs other countries of their sorely needed supply of elites. International trade may be reduced.

Comparative advantage is one of the most powerful concepts that have come from economics, but the logic behind the concept of comparative advantage requires scarcity of factors. As robots replace workers, manufacturing is returning to the United States. This is already happening, and if it continues, it could lead to political instability in countries that depend on exports produced by relatively cheap labor.

Political instability in either China or Mexico would be a serious problem for the United States. Is democracy viable without a large middle class? Francis Fukuyama argues that a substantial middle class is essential to democracy.

Our key assumption is that the workforce is divided into two segments: (1) a segment whose skills are scarce and who perform tasks that cannot be performed by automation and (2) a segment of the population whose skills are not scarce. There is strong evidence that this true.

We realize that predicting the future is always risky, and that there might be high-impact developments that we cannot imagine that somehow change the picture. While we have no idea what such high-impact developments might be, we are confident that work and education are essential to maintaining a healthy society, and this will not change.


The authors, after advocating a redistribution approach that admittedly is not the REAL solution, declare: “The aim of the present work is to search for new options that would keep our society healthy and to explore the consequences of choosing among these options.”

What is needed are policies that will universally diffuse OWNERSHIP of the non-human technological “tools” and “machines” that are eliminating the necessity of massive employment. We need to stop focusing on job creation and start focusing on OWNERSHIP creation, empowering EVERY chile, woman, and man to acquire personal ownership shares in the corporations employing these “tools” and “machines” and growing our economy. See the work of Louis O. Kelso, the Center for Economic and Social Justice (www.cesj.org), as well as the educational commentary on the For Economic Justice blog (www.foreconomicjustice.org) for the whys and hows to put our nation on the path to inclusive prosperity, inclusive opportunity, and inclusive economic justice.

Middle Class ‘Should Be Angry’ About Inequality––Sanders

Getty Images
On April 25, 2015, Tim Devaney writes on The Hill:
Sen. Bernie Sanders (I-Vt.) rallied South Carolina voters Saturday morning as he weighs a potential presidential bid to challenge early Democratic frontrunner Hillary Clinton.
Speaking at the South Carolina Democratic Convention, Sanders said he understands middle-class fury about what he calls nationwide inequality.
“They should be angry,” Sanders said, according to the South Carolina’s Post and Courier.
Sanders drew a line between the wealthy and the middle class, which he said is struggling through one of the most difficult economies since the Great Depression.
“They have the money, but we’ve got the people,” Sanders said. “Our job is to educate, to organize and to say enough is enough. America does not belong to the billionaire class it belongs to all of us.”
Hillary Clinton did not attend the convention Saturday.
In February, Sanders attacked Clinton, saying she wouldn’t fight for the middle class against income inequality.
“Is Hillary Clinton — are other candidates — prepared to take on the billionaire class?” Sanders asked at the time. “Based on her record, I don’t [think so].”
Sanders also proposed a so-called “war tax” last month that would rely on millionaires to finance war.
“Wars are enormously expensive, not only in terms of human life and suffering, but in terms of the budget. If the Republicans want another war in the Mideast, they are going to have to tell the American people how much it will cost them and how it will be paid for,” Sanders said.
It’s time good and well-intentioned people woke up and adopted a Just Third Way paradigm (http://cesj.org/learn/just-third-way/) beyond the greed model of monopoly, “hoggist” capitalism and the envy model of the traditional welfare state. This will promote peace, prosperity, and freedom through harmonious justice.
As my colleague Norman Kurland, at the Center for Economic and Social Justice (www.cesj.org) argues, “The haves represent a tiny fraction of humanity. Our ideas will split them between those who see our point and understand that they would benefit everyone without taking anything away from them during their lives, and those who want to keep ownership in an exclusive club. The latter cannot publicly attack the institution of private property without threatening the legal foundation that gives them their monopoly over the money system and the ownership system.”

We need leadership to awaken all American citizens to force the politicians to follow the people and lift all legal barriers to universal capital ownership access by every child, woman, and man as a fundamental right of citizenship and the basis of personal liberty and empowerment. The goal should be to enable every child, woman, and man to become an owner of ever-advancing labor-displacing technologies, new and sustainable energy systems, new rentable space, new enterprises, new infrastructure assets, and productive land and natural resources as a growing and independent source of their future incomes.

On the basic issue of economic empowerment of each individual, the essential goal needs to be economic democracy, which will finally make political democracy a meaningful reality.

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

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

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


Trickle Down Economics Has Failed: Stiglitz

On April 22, 2015, Tom DiChristopher writes on CNBC:

Trickle down economics isn’t working, so the U.S. should reform the tax structure and offer more effective incentives to companies that create jobs for Americans, Nobel-winning economist Joseph Stiglitz said Wednesday.

“Right now we have some perverted incentives, the way our tax structure actually encourages people to invest abroad,” the Columbia University professor said on CNBC’s “Squawk Box.” “If you’re investing in America, yes you should get lower rates.”

The key is not only providing incentives for companies that invest in the United States, but creating a big tax differential between those that contribute to U.S. growth and those that do not, Stiglitz said.

The middle class is worse off after 35 years of the supply-side economics experiment, he said. The policy’s mix of lower taxes at the top and less regulation has failed to deliver on its promise of giving middle- and low-income Americans a bigger piece of the pie as the entire economy grows, he said.

“The results are in. A third of a century, and what do we find? Growth was slower than before we tried that experiment, and the middle … it was right that they were going to get a smaller share, but the slice of their pie … has gone down.”

In his new book, “The Great Divide: Unequal Societies and What We Can Do About Them,” Stiglitz argues that capitalism does not have to produce inequality. Instead, he says inequality is the result of choices capitalist countries make.


Joseph Stiglitz makes some good points about “growing the pie” but his focus is on providing incentives for corporations to create jobs. This is a failure of logic and reasoning as tectonic shifts in the technologies of production will continue to destroy jobs and further eliminate the necessity for labor input in an environment where sophicated “tools” and “machines” substitute for human workers and are able to “manufacturer” products and services at far higher quality and efficiency. Another factor is continuing population growth which will further put pressure on devaluing the worth of labor as American workers will be forced to compete with “cheap” labor globally.

“Job creation” as an end result in-and-of-itself is a dead end. Instead Stieglitz and other conventional economist, who are presently stuck in one factor thinking––namely human labor–should be advocating for incentives that broaden personal ownership of wealth-creating, income-producing capital assets––the non-human factor. They need to realize the significance that fundamentally, economic value is created through human and non-human contributions. And that labor and capital are independent factors of production.

They also need to realize that if non-human technologies of production are eliminating the necessity for masses of labor, and if physical 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 and ignore that concentrated capital ownership is accelerating and benefiting a tiny wealthy ownership class who now OWNS America and will, unless our monetary policies are reformed, will OWN the FUTURE. They ignore the necessity to broaden personal ownership of wealth-creating, income-producing capital assets simultaneously with the growth of the American economy.

What is needed is a concerted effort to implement policies that create new capital owners facilitated by financial mechanisms that empower EVERY child, woman, and man to acquire capital ownership stakes in the corporations growing the economy using insured, interest-free credit repayable out of the FUTURE earnings of the capital investments to grow the economy, without the necessity of “past savings,” equity pledges, or any reduction in wages or employment benefits, if one is also employed.

The Capital Homestead Act is a proposal to free economic growth from the slavery of “past” savings and empower EVERY American citizen to acquire an ownership portfolio of multiple-company diversification in the corporations growing the economy, without taking anything away from those who already own.

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

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

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

The goal into the future is for all Americans to be capital workers (applying the “tools” they OWN to produce) and not be labor workers dependent on labor earnings too much of our lives. We should all be productive and produce products and services in a way in which the current state of technology permits. Not only is our right to life denied if we don’t have effective access to the ownership of capital, our liberty is denied because without economic power our political power is useless. Thus, the national economic policy should be universal participation in the ownership of productive capital, alongside full employment of the labor workforce as a direct result.

At present, there is a brewing power struggle going on in the United States between individual human beings (citizens) and the plutocratic powers who manipulate our government and the would-be plutocratic powers (top corporate executive managers and financial barons). What the 99 percent movement is really all about is returning America to economic democracy. If we do not achieve economic democracy, then plutocracy will lead to fascism—the ownership of productive capital by the rich and by their institutions.

Today’s techniques of finance are designed to make the rich richer. None are designed to make the poor richer. That’s why the poor are poor. The reason they are poor is because they do not have viable capital ownership. Thus, we need to focus on revising today’s techniques of finance to broaden capital ownership.

The question that requires an answer is now timely before us. It was first posed by Kelso in the 1950s but has never been thoroughly discussed on the national stage. Nor has there been the proper education of our citizenry that addresses what economic justice is and what ownership is. Therefore, by ignoring such issues of economic justice and ownership, our leaders are ignoring the concentration of power through ownership of productive capital, with the result of denying the 99 percenters equal opportunity to become capital owners. The question, as posed by Kelso is: “how are all individuals to be adequately productive when a tiny minority (capital owners) produce a major share and the vast majority (labor workers), a minor share of total goods and services,” and thus, “how do we get from a world in which the most productive factor—physical capital—is owned by a handful of people, to a world where the same factor is owned by a majority—and ultimately 100 percent—of the consumers, while respecting all the constitutional rights of present capital owners?”

Obama: Liberal Trade Critics ‘Don't Know What They're Talking About’

President Obama on Thursday took a battering ram to his liberal critics on trade, saying those who claim new trade deals are bad for working families “don’t know what they’re talking about.”

Obama delivered a fiery speech at the Organizing for Action summit in Washington, designed to enlist his base to support the fast-track trade bill his administration says is crucial to finalizing a pair of international agreements at the top of his agenda.
The president told his allies he is pursuing a pair of new trade deals with European and Asia-Pacific nations because they are “the right thing to do,” even if they are unpopular with Democrats and labor unions.
“When people say this trade deal is bad for working families, they don’t know what they’re talking about,” he said. “I take that personally. My entire presidency has been about helping working families.”
Obama said the new agreements contain unprecedented protections for U.S. workers, human rights and the environment.
“We’ve got to compete,” he said. “We’re not going to stop a global economy at our shores.”
Obama is ramping up his sales pitch to Democrats, many of whom oppose trade promotion authority bills because they worry new deals with European and Asian nations would hurt American workers.
They also say the administration has not been transparent in sharing details of the trade proposals.
Obama dismissed those claims, comparing them to talk about “death panels” during the ObamaCare debate, a phrase coined by former Alaska Gov. Sarah Palin.
“Someone coming up with a slogan like ‘death panels’ doesn’t mean it’s true,” he said. “The same thing is true on this. Look at the facts, don’t just throw a bunch of stuff out there.”
The president said Democrats’ concerns about past trade deals, such as NAFTA, should not stop him from pursuing new ones.
“You need to tell me what’s wrong with this trade agreement, not one that was passed 25 years ago.”

Trade deals mostly benefit the wealthy ownership class, not workers.

If the President really wants ensure that the United States succeeds far beyond China, then he would advocate broadening personal productive capital ownership of ALL future productive capacity formed by American corporations, and unleash the productive power of the non-human factor––the “tools” and “machines” that can produce products and services far more efficiently than labor alone.

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!

Why The Trans-Pacific Partnership Agreement Is A Pending Disaster

On January 8, 2015, Robert Reich writes:

It’s no longer free trade versus protectionism. Big corporations and Wall Street want some of both.

Image from Flickr user CHRISTOPHER DOMBRES

By Robert Reich
By arrangement with Robert Reich

Republicans who now run Congress say they want to cooperate with President Obama, and point to the administration’s Trans-Pacific Partnership, or TPP, as themodel. The only problem is the TPP would be a disaster.

If you haven’t heard much about the TPP, that’s part of the problem right there. It would be the largest trade deal in history—involving countries stretching from Chile to Japan, representing 792 million people and accounting for 40 percent of the world economy—yet it’s been devised in secret.

Lobbyists from America’s biggest corporations and Wall Street’s biggest banks have been involved but not the American public. That’s a recipe for fatter profits and bigger paychecks at the top, but not a good deal for most of us, or even for most of the rest of the world.

First some background. We used to think about trade policy as a choice between “free trade” and “protectionism.” Free trade meant opening our borders to products made elsewhere. Protectionism meant putting up tariffs and quotas to keep them out.

For three decades, free trade worked. It was a win-win-win.

In the decades after World War II, America chose free trade. The idea was that each country would specialize in goods it produced best and at least cost. That way, living standards would rise here and abroad. New jobs would be created to take the place of jobs that were lost. And communism would be contained.

For three decades, free trade worked. It was a win-win-win.

But in more recent decades the choice has become far more complicated and the payoff from trade agreements more skewed to those at the top.

Tariffs are already low. Negotiations now involve such things as intellectual property, financial regulations, labor laws, and rules for health, safety, and the environment.

It’s no longer free trade versus protectionism. Big corporations and Wall Street want some of both.

They want more international protection when it comes to their intellectual property and other assets. So they’ve been seeking trade rules that secure and extend their patents, trademarks, and copyrights abroad, and protect their global franchise agreements, securities, and loans.

But they want less protection of consumers, workers, small investors, and the environment, because these interfere with their profits. So they’ve been seeking trade rules that allow them to override these protections.

That will be a good deal for Big Pharma but not necessarily for the inhabitants of developing nations.

Not surprisingly for a deal that’s been drafted mostly by corporate and Wall Street lobbyists, the TPP provides exactly this mix.

What’s been leaked about it so far reveals, for example, that the pharmaceutical industry gets stronger patent protections, delaying cheaper generic versions of drugs. That will be a good deal for Big Pharma but not necessarily for the inhabitants of developing nations who won’t get certain life-saving drugs at a cost they can afford.

The TPP also gives global corporations an international tribunal of private attorneys, outside any nation’s legal system, who can order compensation for any “unjust expropriation” of foreign assets.

Even better for global companies, the tribunal can order compensation for any lost profits found to result from a nation’s regulations. Philip Morris is using a similarprovision against Uruguay (the provision appears in a bilateral trade treaty between Uruguay and Switzerland), claiming that Uruguay’s strong anti-smoking regulations unfairly diminish the company’s profits.

Anyone believing the TPP is good for Americans take note: The foreign subsidiaries of U.S.-based corporations could just as easily challenge any U.S. government regulation they claim unfairly diminishes their profits—say, a regulation protecting American consumers from unsafe products or unhealthy foods, investors from fraudulent securities or predatory lending, workers from unsafe working conditions, taxpayers from another bailout of Wall Street, or the environment from toxic emissions.

In other words, the TPP is a Trojan horse in a global race to the bottom.

The administration says the trade deal will boost U.S. exports in the fast-growing Pacific basin where the United States faces growing economic competition from China. The TPP is part of Obama’s strategy to contain China’s economic and strategic prowess.

Fine. But the deal will also allow American corporations to outsource even more jobs abroad.

In other words, the TPP is a Trojan horse in a global race to the bottom, giving big corporations and Wall Street banks a way to eliminate any and all laws and regulations that get in the way of their profits.

At a time when corporate profits are at record highs and the real median wage is lower than it’s been in four decades, most Americans need protection—not from international trade but from the political power of large corporations and Wall Street.

The Trans Pacific Partnership is the wrong remedy to the wrong problem. Any way you look at it, it’s just plain wrong.


Trade deals mostly benefit the wealthy ownership class, not workers.

If the President really wants to ensure that the United States succeeds far beyond China, then he would advocate broadening personal productive capital ownership of ALL future productive capacity formed by American corporations, and unleash the productive power of the non-human factor––the “tools” and “machines” that can produce products and services far more efficiently than labor alone.

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!