Elon Musk——$4.9 Billion Crony Capitalist Mooch –– Elon Musk’s Growing Empire Is Fueled By $4.9 Billion In Government Subsidies

Elon Musk's companies fueled by government subsidies

On May 31, 2015, Jerry Hirsch writes in the Los Angeles Times:

Los Angeles entrepreneur Elon Musk has built a multibillion-dollar fortune running companies that make electric cars, sell solar panels and launch rockets into space.

And he’s built those companies with the help of billions in government subsidies.

Tesla Motors Inc., SolarCity Corp. and Space Exploration Technologies Corp., known as SpaceX, together have benefited from an estimated $4.9 billion in government support, according to data compiled by The Times. The figure underscores a common theme running through his emerging empire: a public-private financing model underpinning long-shot start-ups.

“He definitely goes where there is government money,” said Dan Dolev, an analyst at Jefferies Equity Research. “That’s a great strategy, but the government will cut you off one day.”

The figure compiled by The Times comprises a variety of government incentives, including grants, tax breaks, factory construction, discounted loans and environmental credits that Tesla can sell. It also includes tax credits and rebates to buyers of solar panels and electric cars.

A looming question is whether the companies are moving toward self-sufficiency — as Dolev believes — and whether they can slash development costs before the public largesse ends.

Tesla and SolarCity continue to report net losses after a decade in business, but the stocks of both companies have soared on their potential; Musk’s stake in the firms alone is worth about $10 billion. (SpaceX, a private company, does not publicly report financial performance.)

Musk and his companies’ investors enjoy most of the financial upside of the government support, while taxpayers shoulder the cost.

The payoff for the public would come in the form of major pollution reductions, but only if solar panels and electric cars break through as viable mass-market products. For now, both remain niche products for mostly well-heeled customers.

Musk declined repeated requests for an interview through Tesla spokespeople, and officials at all three companies declined to comment.

The subsidies have generally been disclosed in public records and company filings. But the full scope of the public assistance hasn’t been tallied because it has been granted over time from different levels of government.

New York state is spending $750 million to build a solar panel factory in Buffalo for SolarCity. The San Mateo, Calif.-based company will lease the plant for $1 a year. It will not pay property taxes for a decade, which would otherwise total an estimated $260 million.

The federal government also provides grants or tax credits to cover 30% of the cost of solar installations. SolarCity reported receiving $497.5 million in direct grants from the Treasury Department.

That figure, however, doesn’t capture the full value of the government’s support.

Since 2006, SolarCity has installed systems for 217,595 customers, according to a corporate filing. If each paid the current average price for a residential system — about $23,000, according to the Union of Concerned Scientists — the cost to the government would total about $1.5 billion, which would include the Treasury grants paid to SolarCity.

Nevada has agreed to provide Tesla with $1.3 billion in incentives to help build a massive battery factory near Reno.

The Palo Alto company has also collected more than $517 million from competing automakers by selling environmental credits. In a regulatory system pioneered by California and adopted by nine other states, automakers must buy the credits if they fail to sell enough zero-emissions cars to meet mandates. The tally also includes some federal environmental credits.

On a smaller scale, SpaceX, Musk’s rocket company, cut a deal for about $20 million in economic development subsidies from Texas to construct a launch facility there. (Separate from incentives, SpaceX has won more than $5.5 billion in government contracts from NASA and the U.S. Air Force.)

Subsidies are handed out in all kinds of industries, with U.S. corporations collecting tens of billions of dollars each year, according to Good Jobs First, a nonprofit that tracks government subsidies. And the incentives for solar panels and electric cars are available to all companies that sell them.

Musk and his investors have also put large sums of private capital into the companies.

But public subsidies for Musk’s companies stand out both for the amount, relative to the size of the companies, and for their dependence on them.

Before his current ventures, he made a substantial sum from EBay Inc.’s $1.5-billion purchase of PayPal, the electronic payment system in which Musk held an 11% stake.

Soon after, he founded SpaceX in 2002 with money from that sale, and he made major investments and took leadership posts at Tesla and Solar City.

Musk is now the chief executive of both Tesla and SpaceX and the chairman of SolarCity, and holds big stakes in all three, including 27% of Tesla and 23% of SolarCity, according to recent regulatory filings. The ventures employ about 23,000 people nationwide, and they operate or are building factories and facilities in California, Michigan, New York, Nevada and Texas.

Tense talks

The $1.3 billion in benefits for Tesla’s Nevada battery factory resulted from a year of hardball negotiations.

Late in 2013, Tesla summoned economic development officials from seven states to its auto factory in Fremont, Calif. After a tour, they gathered in a conference room, where Tesla executives explained their plan to build the biggest lithium-ion battery factory in the world — then asked the states to bid for the project.

Nevada at first offered its standard package of incentives, in this case worth $600 million to $700 million, said Steve Hill, Nevada’s executive director of the Governor’s Office of Economic Development.

Tesla negotiators wanted far more. The automaker at first sought a $500-million upfront payment, among other enticements, Hill said. Nevada pushed back, in sometimes tense talks punctuated by raised voices.

“It would have amounted to Nevada writing a series of checks during the first couple of years,” said Hill, calling it an unacceptable risk.

With the deal imperiled, Hill flew to Palo Alto in August to meet with Tesla’s business development chief, Diarmuid O’Connell, a former State Department official who is the automaker’s lead negotiator.

They shored up the deal with an agreement to give Tesla $195 million in transferable tax credits, which the automaker could sell for upfront cash. To make room in its budget, Nevada reduced incentives for filming in the state and killed a tax break.

Nevada Gov. Brian Sandoval and Musk sealed the agreement in a Labor Day phone conversation. Hill said it was worth it, pointing to the 6,000 jobs he expects the factory to eventually create.

The state commissioned an analysis estimating the economic impact from the project at $100 billion over two decades, but some economists called that figure deeply flawed. It counted every Tesla employee as if they would otherwise have been unemployed, for instance, and it made no allowance for increased government spending to serve the influx of thousands of local residents.

Musk has similar success with getting subsidies for a SolarCity plant in Buffalo, N.Y. The company currently buys many of its solar panels from China, but it will soon become its own supplier with a new and heavily subsidized factory.

An affiliate of New York’s College of Nanoscale Science and Engineering in Albany will spend $750 million to build a solar panel factory on state land. SolarCity estimated in a corporate filing that it will spend an additional $150 million to get the factory operating.

When finished in 2017, the 1.2-million-square-foot facility will be the largest solar panel factory in the Western Hemisphere. New York officials see the subsidy as a worthy investment because they expect that it will create 3,000 jobs. The plant will replace a long-closed steel factory.

“The SolarCity facility will bring extensive benefits and value to this formerly dormant brownfield that provided zero benefit to the city and region,” said Peter Cutler, spokesman for Empire State Development, New York’s economic development agency.

SpaceX, though it depends far more on government contracts than subsidies, received an incentive package in Texas for a commercial rocket launch facility. The state put up more than $15 million in subsidies and infrastructure spending to help SpaceX build a launch pad in rural Cameron County at the southern tip of Texas. Local governments contributed an additional $5 million.

Included in the local subsidies is a 15-year property tax break from the local school district worth $3.1 million to SpaceX. Officials say the development still will bring in about $5 million more over that period than the local school district otherwise would have collected.

“That’s $5 million more than we have ever seen from that property,” said Dr. Lisa Garcia, superintendent of the Point Isabel Independent School District. “It is remote…. It is just sand dunes.”

The public money for Tesla and SolarCity factories is crucial to both companies’ efforts to lower development and manufacturing costs.

The task is made more urgent by the impending expiration of some of their biggest subsidies. The federal government’s 30% tax credit for solar installations gets slashed to 10% in 2017 for commercial customers and ends completely for homeowners.

Tesla buyers also get a $7,500 federal income tax credit and a $2,500 rebate from the state of California. The federal government has capped the $7,500 credit at a total of 200,000 vehicles per manufacturer; Tesla is about a quarter of the way to that limit. In all, Tesla buyers have qualified for an estimated $284 million in federal tax incentives and collected more than $38 million in California rebates.

California legislators recently passed a law, which has not yet taken effect, calling for income limits on electric car buyers seeking the state’s $2,500 subsidy. Tesla owners have an average household income of about $320,000, according to Strategic Visions, an auto industry research firm.

Competition could also eat into Tesla’s public support. If major automakers build more zero-emission cars, they won’t have to buy as many government-awarded environmental credits from Tesla.

In the big picture, the government supports electric cars and solar panels in the hope of promoting widespread adoption and, ultimately, slashing carbon emissions. In the early days at Tesla — when the company first produced an expensive electric sports car, which it no longer sells — Musk promised more rapid development of electric cars for the masses.

In a 2008 blog post, Musk laid out a plan: After the sports car, Tesla would produce a sedan costing “half the $89k price point of the Tesla Roadster and the third model will be even more affordable.”

In fact, the second model now typically sells for $100,000, and the much-delayed third model, the Model X sport utility, is expected to sell for a similar price. Timing on a less expensive model — maybe $35,000 or $40,000, after subsidies — remains uncertain.

In a 2008 blog post, Musk laid out a plan: After the sports car, Tesla would produce a sedan costing “half the $89k price point of the Tesla Roadster and the third model will be even more affordable.”

In fact, the second model now typically sells for $100,000, and the much-delayed third model, the Model X sport utility, is expected to sell for a similar price. Timing on a less expensive model — maybe $35,000 or $40,000, after subsidies — remains uncertain.

“Some may question whether this actually does any good for the world,” Musk wrote in 2008. “Are we really in need of another high-performance sports car? Will it actually make a difference to global carbon emissions? Well, the answers are no and not much…. When someone buys the Tesla Roadster sports car, they are actually helping to pay for the development of the low-cost family car.”

Next: Battery subsidies

Now Musk is moving into a new industry: energy storage. Last month, he starred in a typically dramatic announcement of Tesla Energy-branded batteries for homes and businesses. On a concert-like stage, backed by pulsating music, Musk declared that the batteries would someday render the world’s energy grid obsolete.

“We are talking about trying to change the fundamental energy infrastructure of the world,” he said.

Musk laid out a vision of affordable clean energy in the remote villages of underdeveloped countries and homeowners in industrial nations severing themselves from utility grids. The Nevada factory will churn out the batteries alongside those for Tesla cars.

What he didn’t say: Tesla has already secured a commitment of $126 million in California subsidies to companies developing energy storage technology.

http://www.latimes.com/business/la-fi-hy-musk-subsidies-20150531-story.html#page=1

This is Elon Musk’s reply:

Elon Musk

http://www.latimes.com/business/autos/la-fi-hy-musk-subsidies-20150602-story.html#page=2

http://www.latimes.com/business/autos/la-fi-hy-tesla-grabs-california-subsidy-20150609-story.html

Such huge taxpayer-funded incentives are just the beginning as Elon Musk and his executive team have forecast growth to be in the several billions of dollars over the course of the next seven years, further enriching the stock ownership portfolios of Musk corporations’ monopoly ownership. Yet the workers just get to have jobs, but no ownership such as could be provided using an Employee Stock Ownership Plan (ESOP) with new shares issues and paid for our of future earnings without reducing worker wages or other benefits, and at the same incentivizing workers as true owner-partners in the enterprises.

Elon Musk represents one of the perfect examples of crony-end game capitalism disguised to the taxpaying citizens as necessary to create jobs and advance solutions to environmental enhancement. In this case, the game is played in the name of alternative transportation, planetary colonization and the environment. NO WHERE is there a stipulation that the subsidies, tax exemptions, loans and grants be conditioned on 100 percent worker owned companies, not as a collective but in individual worker titles, or that the financing is structured so that the workers will end up owning a significant share of the new capital assets and the benefits of the future wealth-creation and income generated. While supposedly more than 6,500 jobs will be created, subsidized by taxpayer incentives, in large measure the new factories will be technologically infused with advanced “robotics,” digitalized operations, and super-automation capital assets, that will be OWNED by Elon Musk and a select narrow group of wealthy capital owners who get to cash in our taxpayer incentives and subsidies as the worth of the corporations accelerate.

Once again, taxpayer supported government welfare is extended to the private sector without the stipulation of broadening private, individual ownership of NEW productive capital investment related to technological innovation and invention. This is in the form of government subsidies, loan guarantees and tax incentives that are issued in the name of JOB CREATION, while oblivious to the CONCENTRATED CAPITAL OWNERSHIP CREATION resulting from bolstering the financial ownership interests of the awarded companies’ ownership class.

What is needed is a massive loan guarantee economic growth plan with the aim to balance production and consumption by empowering EVERY American to acquire private, individual ownership in FUTURE wealth-creating, income-producing productive capital asset investments and pay for their loans out of the earnings of the investments. This approach embraces the logic of corporate finance, that is, that the investments will over time, typically within 3 to 7 years, produce income to pay for the capital credit extended and to continue to produce income for the new corporate owners over the course of numerous years in the future.

Unfortunately, with Elon Musk’s corporate enterprises and others, the subsidies, tax incentives, direct loans and loan guarantees do not stipulate the demonstration of broadened private, individual ownership among the employees of the companies receiving taxpayer financial support. Instead the direct loans and loan guarantees are pitched as JOB CREATION measures while completely hiding the fact that a privilege capital ownership class benefits as the owners of investment assets.

In the short-term FUTURE ALL direct loans and loan guarantees should stipulate that corporations demonstrate broadened ownership of their corporations by their employees and other Americans. We should quickly reform the system to eliminate ALL tax loopholes and subsidies and provide equal opportunity to insured, interest-free capital credit to finance the FUTURE building of an economy that can support general affluence for ALL Americans.

The REAL issue regarding the structural problem with the economy, which is rigged to further the CONCENTRATED CAPITAL OWNERSHIP interests of the wealthiest Americans at the expense of the American majority who are exponentially facing job losses and labor worth devaluation as tectonic shifts in the technologies of production require less and less labor workers to produce the products and services needed and wanted by our society, is ignored. This issue is NEVER addressed, which is the crux of the problem causing our declining economy.

What we need is for the Federal Reserve to stop monetizing unproductive debt 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. 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 on credit wholly backed by projected “future savings” in the form of new productive capital assets as well as the future marketable goods 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 reinsurance back  by the government, but would not require citizens to reduce their funds for consumption to purchase shares. ALL subsidized loan guarantees would have the stipulation that the companies benefiting from the loan infusion demonstrate NEW owners be created among their employees and others in which ownership shares are purchased on credit wholly backed by projected “future savings” in the form of new productive capital assets.

We need to lift ownership-concentrating Federal Reserve System credit barriers and other institutional barriers that have historically separated owners from non-owners and link tax and monetary reforms to the goal of expanded capital ownership. This can be done under the existing legal powers of each of the 12 Federal Reserve regional banks, and will not add to the already unsustainable debt of the Federal Government or raise taxes on ordinary taxpayers. We need to free the system of dependency on Wall Street or the accumulated savings and money power of the rich and super-rich who control Wall Street. The Federal Reserve System has stifled the growth of America’s productive capacity through its monetary policy by monetizing public-sector growth and mounting Federal deficits and “Wall Street” bailouts; by favoring speculation over investment; by shortchanging the capital credit needs of entrepreneurs, inventors, farmers, and workers; by increasing the dependency of with usurious consumer credit; and by perpetuating unjust capital credit and ownership barriers between rich Americans and those without savings. The Federal Reserve Bank should be used to provide interest-free capital credit (including only transaction and risk premiums) and monetize each capital formation transaction, determined by the same expertise that determines it today––management and banks––that each transaction is viably feasible so that there is virtually no risk in the Federal Reserve. The first layer of risk would be taken by the commercial credit insurers, backed by a new government corporation, the Capital Diffusion Reinsurance Corporation, through which the loans could be guaranteed. This entity would serve to seed the new policy direction and would fulfill the government’s responsibility for the health and prosperity of the American economy.

Our political leaders, academia, and the media fail to understand that our financial system has resulted in a fundamental imbalance between production and consumption. We have ignored the systematic income inequalities that persist and grow exponentially due to the steady progress of tectonic shifts in the technologies of production, shifting productive input from labor to the non-human factor of production––productive capital, as generally defined as land, structures, human-intelligent machines, superautomation, robotics, digital computerized automation, etc. Productive capital assets are OWNED by individuals and, respecting private property principles, those individuals are entitled to the earnings generated by such assets.

The significant problem has been the systematic denial of participation as capital owners on the part of the majority of consumers. While the wealthy ownership class has essentially rigged the financial system to their benefit, and by that is meant to continually concentrate ownership of productive capital among the richest Americans, the majority of Americans have been and are dependent on JOB CREATION. Yet, none of our political leaders, academia or the media addresses this inbalance with the richest Americans entitled to income growth associated with productive capital ownership and the majority facing further job losses and degradation due to technological advancement.

Ordinary Americans of so-called “middle-class position” have used consumer debt financing as a means of bettering their life with an abundance of consumer products and services. The government has used income redistribution via taxation and national debt to prop up the economy with monies spent on supporting a massive military-industrial complex comprised of a small group of owners and millions of “employed,” and various social programs to uplift the American majority’s life and prevent their decline into poverty––supported by government dependency.

The ONLY way out of this mess, if we are to not become a complete socialist or communist communal state governed by an elite class, is to embrace growth managed in such a way that EVERY American is empowered to acquire over time a viable wealth-creating, income-producing capital estate and pay for their acquisition out of the FUTURE earnings of the investments. Such is the precise means that the richest Americans continually advance their wealth and thus, income.

We need leaders who will put this issue before the national debate stage, and we need the media to put forth the questions whose answers will provide the financial mechanism specifics to reverse the ever dominant OWNERSHIP CONCENTRATION. Such concentration and the economic power that result is taking control of our representative government, with productive capital ownership channeled through plutocratic finance into fewer and fewer hands, as we continue to witness today with government by the wealthy evidenced at all levels.

We are absent a national discussion of where consumers earn the money to buy products and services and the nature of capital ownership, and instead argue about policies to redistribute income or not to redistribute income. If Americans do not demand that the holders of the office of the presidency of the United States, the Senate, and the Congress address these issues, we will have wasted the opportunity to steer the American economy in a direction that will broaden affluence. We have adequate resources, adequate knowhow, and adequate manpower to produce general affluence, but we need as a society to properly and efficiently manage these resources while protecting and enhancing the environment so that our productive capital capability is sustainable and renewable. Such issues are the proper concern of government because of the human damage inflicted on our social fabric as well as to economic growth in which every citizen is fairly included in the American dream.

Support the Capital Homestead Act (aka Economic Democracy Act) at http://www.cesj.org/learn/capital-homesteading/, http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-a-plan-for-getting-ownership-income-and-power-to-every-citizen/, http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-summary/ and http://www.cesj.org/learn/capital-homesteading/ch-vehicles/.

http://www.latimes.com/business/autos/la-fi-hy-tesla-nevada-20140905-story.html

http://www.latimes.com/business/hiltzik/la-fi-0914-hiltzik-20140914-column.html#page=1

http://www.latimes.com/business/autos/la-fi-tesla-nevada-20140906-story.html#page=1

 

This is an example of crony-end game capitalism disguised to the taxpaying citizens as a necessary to create jobs. NO WHERE is there a stipulation that the battery plant be financed so that the workers will end up owning a significant share of the new capital assets and the benefits of the wealth-creation and income generated. While supposedly 6,500 jobs will be created, subsidized by taxpayer incentives, in large measure the new factory will be technologically infused with advanced “robotics.” digitalized operations, and super-automation capital assets, that will be OWNED by Elon Musk and a select narrow group of wealthy owners who get to cash in our taxpayer incentives and subsidies.

Nevada should have insisted on the Tesla forming an Employee Stock Ownership Plan (ESOP) so that the new factory would be financed with the workers acquiring significant ownership shares with capital credit loans paid off within a three to seven year period with pre-tax earnings from the investment.

 

Will Your Job Be Done By A Machine?

human-4

On May 21, 2015, Quoctrung Bui writs on Planet Money:

Machines can do some surprising things. But what you really want to know is this: Will your job be around in the future?

We have the “definitive” guide.

Bookkeepers have a

97.6%

chance of being automated.

How do we know this? Some aspects of a job are easier to automate than others. It all depends on the tasks. Look at the orange bars to see how Bookkeepers compare with other professions…

Do you need to come up with clever solutions?

Are you required to personally help others?

Does your job require you to squeeze into small spaces?

Does your job require negotiation?

Notes

This is a selection of jobs from the paper. Some jobs were renamed for clarity. Researchers scored jobs on 9 possible traits. Included are the four traits they found to be most important.

http://www.npr.org/sections/money/2015/05/21/408234543/will-your-job-be-done-by-a-machine?utm_source=npr_newsletter&utm_medium=email&utm_content=20150531&utm_campaign=mostemailed&utm_term=nprnews

 

This Comic Will Forever Change The Way You Look At Privilege

On May 28, 2015, Shaman Yasmin writes on Vagabomd:

Toby Morris describes himself as “an Auckland-based illustrator, art director, comic artist and recently the author of Don’t Puke On Your Dad: A Year in the Life of a New Father.”

His recent comic, The Pencilsword‘s “On a Plate” illustrates the concept of privilege, and delivers the truth with a punchline that literally hits you in the gut.

He places two individuals side by side, showing how financial security and benefits, or the lack of it, affects them even if they come from households that love and support them, leading to two completely different outcomes.

Source: Thewireless

Let’s hope this comic changed your mind about privilege, the way it did ours.

http://www.vagabomb.com/This-Comic-Will-Forever-Change-the-Way-You-Look-at-Privilege/

I hope people are waking up and realizing that the wealthy ownership class––the top 10 percent of the nation––NEVER come forth and educate regular people who are dependent on a job as their ONLT source of income, how they use the logic of corporate finance to continually concentrate wealth-creating, income-producing capital asset OWNERSHIP among themselves, while rigging the system to prevent regular people from sharing in the affluence of a growth economy.

Bernie Sanders Is The 1 Percent’s Worst Nightmare: How He Promises To Upend America’s oOligarchy

Bernie Sanders is the 1 percent's worst nightmare: How he promises to upend America's oligarchyEnlargeBernie Sanders (Credit: AP/John Locher)

On May 28, 2015, Jim Newell writes on Salon:

Most news articles about Bernie Sanders in the mainstream media include the phrase “avowed socialist” or “avowed democratic socialist.” The phrase has become hackneyed to the point that one struggles to remember when “avowed” was used to describe anything other than Bernie Sanders’ left-wing politics. If nothing else, Sanders’ campaign for president, which he (re)announced in Burlington, Vermont, on Tuesday, will forever link the word “avowed” with the words “democratic) socialist Bernie Sanders” in the minds of political junkies, much like fans of “The Simpsons” can no longer hear the words “dental plan” without immediately thinking “Lisa needs braces!”

The use of “avowed” connotes a taboo. That Sanders would avow his belief in socialism, or democratic socialism, or anything containing the term “socialism,” is a sly way for reporters to imply that he has zero chance of appealing to red-blooded Americans. It is equal to, if not worse than, being an avowed worshipper of Satan or the New York Yankees.

Labels are fun. But what things does Bernie Sanders believe? Are they things that some other Americans might believe? And where do they fit within the confines of the Democratic Party, of which Sanders is not a member but will be competing for its presidential nomination?

Ahead of his campaign launch, Sanders gave an interview with the underground left-wing pamphlet CNBC, outlining one of the basic premises of his campaign: that he’ll advocate for the very things that mainstream Democrats for decades have been insisting they don’t believe, like so-called redistribution of wealth.

SANDERS: “What is my dream? My dream is, do we live in a country where 70 percent, 80 percent, 90 percent of the people vote? Where we have serious discourse on media rather than political gossip, by the way? Where we’re debating trade policy, we’re debating foreign policy, we’re debating economic policy, where the American people actually know what’s going on in Congress? Ninety-nine percent of all new income generated today goes to the top 1 percent. Top one-tenth of 1 percent owns as much as wealth as the bottom 90 percent. Does anybody think that that is the kind of economy this country should have? Do we think it’s moral? So to my mind, if you have seen a massive transfer of wealth from the middle class to the top one-tenth of 1 percent, you know what, we’ve got to transfer that back if we’re going to have a vibrant middle class. And you do that in a lot of ways. Certainly one way is tax policy.”

Sanders’ language is important here. You’ll note that he does not actually use the term “redistribution” of wealth. That’s because the term “redistribution” implies that the status quo, in which wealth is stacked at the top, is the natural order of things. The status quo is simply one of various possible distributions of wealth as determined by the current set of laws governing the country. Prior to Reagan, there was a different set of policies that led to a different distribution of wealth — strong labor rights, higher, more prohibitive marginal tax rates on the very wealthy, and so forth. As Sanders says, it’s not about “redistributing” wealth — it’s about recalibrating the distribution to one that was better. His challenge in appealing to voters will be decades of free-market agitprop that’s conditioned lower- and middle-income people to believe that policy directly challenging the super-wealthy’s right to be super-wealthy would mark the end of human civilization, and the death of God.

The Washington Post’s Greg Sargent puts it nicely in his loose breakdown of economic differences within the Democratic Party:

“As I’ve noted before, at risk of oversimplifying, there are two poles that define the economic debate among Democrats. There’s the agenda that tends to focus more on boosting wages and economic mobility and opportunity: Family-friendly workplace policies designed to remove barriers to work, such as paid sick leave and universal child care; more investments in education, job training and infrastructure; a minimum wage hike; and so on. These policies are embraced by most mainstream Democrats.

“Then there’s the agenda embraced by Sanders, Elizabeth Warren, economist Joseph Stiglitz, and others. This agenda is more focused on diagnosing inequality as the result of an economy and political system that is broadly rigged (as they like to put it) in favor of the very top. The main culprits are, among other things, insufficient financial rules and oversight; lopsided influence over the political process enjoyed by the wealthy and corporations; and a tax code that is not only not progressive enough, but is unfairly gamed to protect certain types of wealth.”

Another way of making the distinction: between those who are more oriented toward increasing equality of opportunity, and those who are motivated toward increasing equality of outcome. Liberals deviated from “equality of outcome” because they did not want to be perceived as Communists. And so the Democratic Party for the past few decades has been about indirectly helping the lower and middle classes by improving education and job training and all those other things that Sargent mentions.

What Sanders recognizes — and what many more lefties have come to recognize since the financial crisis — is that equality of opportunity doesn’t work if you first don’t move toward greater equality of outcome. No, this doesn’t mean total equality of outcome. There still will be tiers — everyone can breathe! But the idea would be to make sure that the people at the bottom first aren’t starving to death. Our culture is filled with a few inspirational stories of people who came from absolutely nothing but managed to break the cycle of poverty and make something of themselves. That’s wonderful. What the vapid culture doesn’t tell you, though, is that they are rare exceptions in an economy that mostly keeps people born into the top at the top, and people born at the bottom in the bottom. And that bottom is getting bigger while the top gets smaller.

Bernie Sanders wants to narrow the gap with direct downward transfers of wealth in order to make life less shitty for most people. Why, he’s even avowed these positions. Scary stuff.

http://www.salon.com/2015/05/27/bernie_sanders_is_the_1_percents_worst_nightmare_how_he_promises_to_upend_americas_oligarchy/?utm_source=facebook&utm_medium=socialflow

Bernie Sanders advocates wealth redistribution through aggressive progress tax extraction on the wealthy ownership class. Unfortunately, what is not recognized is that the rich are rich not because of job status, but because they are serious OWNERS of wealth-creating, income-producing capital assets. Redistribution directly undermines the principles of private property ownership, a core American value. While redistribution of excessive wealth at death is arguably appropriate, redistribution during life takes from those who are “productive,” both in terms of their labor and the “tools” they OWN. On the other hand, arguably those who earn more should pay progressive more in taxes to support societal development in ways beneficial to EVERY child, woman, and man.

Bernie Sanders, under his Economic Platform, needs expand his thinking beyond the redistribution of existing accumulated wealth and focus his leadership in an  effort to create simultaneously with economic growth new capital owners by empowering EVERY citizen to acquire FUTURE wealth-creating, income-producing capital assets on the basis that the investments will generate their own earnings and pay for themselves without the requirement of past savings.

In this way, opportunity to acquire personal OWNERSHIP of future capital asset formation will ensure that the already wealthy 1 percent do not OWN America’s future.

Without this core, fundamental foundation of universal personal OWNERSHIP sharing the corporations growing the economy, it will be impossible to achieve the other aspects of his platform and stop America’s shift to an oligarchy.

Read Bernie Sanders’s Populist, Policy-Heavy Speech Kicking Off His Campaign

WASHINGTON, DC – APRIL 30: U.S. Sen. Bernard Sanders (I-VT) speaks on his agenda for America during a news conference on Capitol HillAlex Wong/Getty Images

On May 26, 2015, Ezra Klein writes on VOX:

On Tuesday afternoon, Sen. Bernie Sanders gave a rousing speech kicking off his campaign in his home state of Vermont.

“This campaign,” Sanders said, “is not about Bernie Sanders. It is not about Hillary Clinton. It is not about Jeb Bush or anyone else. This campaign is about the needs of the American people, and the ideas and proposals that effectively address those needs.” Sanders went on to deliver a surprisingly policy-heavy speech. Here are his prepared remarks, minus the thank-yous and glad-to-be-heres at the beginning.

Today, here in our small state — a state that has led the nation in so many ways — I am proud to announce my candidacy for president of the United States of America.

Today, with your support and the support of millions of people throughout this country, we begin a political revolution to transform our country economically, politically, socially and environmentally.

Today, we stand here and say loudly and clearly that; “Enough is enough. This great nation and its government belong to all of the people, and not to a handful of billionaires, their Super-PACs and their lobbyists.”

Brothers and sisters: Now is not the time for thinking small. Now is not the time for the same old — same old establishment politics and stale inside-the-beltway ideas.

Now is the time for millions of working families to come together, to revitalize American democracy, to end the collapse of the American middle class and to make certain that our children and grandchildren are able to enjoy a quality of life that brings them health, prosperity, security and joy – and that once again makes the United States the leader in the world in the fight for economic and social justice, for environmental sanity and for a world of peace.

My fellow Americans: This country faces more serious problems today than at any time since the Great Depression and, if you include the planetary crisis of climate change, it may well be that the challenges we face now are direr than any time in our modern history.

Here is my promise to you for this campaign. Not only will I fight to protect the working families of this country, but we’re going to build a movement of millions of Americans who are prepared to stand up and fight back. We’re going to take this campaign directly to the people – in town meetings, door to door conversations, on street corners and in social media — and that’s BernieSanders.com by the way. This week we will be in New Hampshire, Iowa and Minnesota — and that’s just the start of a vigorous grassroots campaign.

Let’s be clear. This campaign is not about Bernie Sanders. It is not about Hillary Clinton. It is not about Jeb Bush or anyone else. This campaign is about the needs of the American people, and the ideas and proposals that effectively address those needs. As someone who has never run a negative political ad in his life, my campaign will be driven by issues and serious debate; not political gossip, not reckless personal attacks or character assassination. This is what I believe the American people want and deserve. I hope other candidates agree, and I hope the media allows that to happen. Politics in a democratic society should not be treated like a baseball game, a game show or a soap opera. The times are too serious for that.

Let me take a minute to touch on some of the issues that I will be focusing on in the coming months, and then give you an outline of an Agenda for America which will, in fact, deal with these problems and lead us to a better future.

Income and Wealth Inequality: Today, we live in the wealthiest nation in the history of the world but that reality means very little for most of us because almost all of that wealth is owned and controlled by a tiny handful of individuals. In America we now have more income and wealth inequality than any other major country on earth, and the gap between the very rich and everyone is wider than at any time since the 1920s. The issue of wealth and income inequality is the great moral issue of our time, it is the great economic issue of our time and it is the great political issue of our time. And we will address it.

Let me be very clear. There is something profoundly wrong when the top one-tenth of 1 percent owns almost as much wealth as the bottom 90 percent, and when 99 percent of all new income goes to the top 1 percent. There is something profoundly wrong when, in recent years, we have seen a proliferation of millionaires and billionaires at the same time as millions of Americans work longer hours for lower wages and we have the highest rate of childhood poverty of any major country on earth. There is something profoundly wrong when one family owns more wealth than the bottom 130 million Americans. This grotesque level of inequality is immoral. It is bad economics. It is unsustainable. This type of rigged economy is not what America is supposed to be about. This has got to change and, as your president, together we will change it.

Economics: But it is not just income and wealth inequality. It is the tragic reality that for the last 40 years the great middle class of our country —once the envy of the world — has been disappearing. Despite exploding technology and increased worker productivity, median family income is almost $5,000 less than it was in 1999. In Vermont and throughout this country it is not uncommon for people to be working two or three jobs just to cobble together enough income to survive on and some health care benefits.

The truth is that real unemployment is not the 5.4 percent you read in newspapers. It is close to 11 percent if you include those workers who have given up looking for jobs or who are working part time when they want to work full time. Youth unemployment is over 17 percent and African-American youth unemployment is much higher than that. Today, shamefully, we have 45 million people living in poverty, many of whom are working at low-wage jobs. These are the people who struggle every day to find the money to feed their kids, to pay their electric bills and to put gas in the car to get to work. This campaign is about those people and our struggling middle class. It is about creating an economy that works for all, and not just the one percent.

Citizens United: My fellow Americans: Let me be as blunt as I can and tell you what you already know. As a result of the disastrous Supreme Court decision on Citizens United, the American political system has been totally corrupted, and the foundations of American democracy are being undermined. What the Supreme Court essentially said was that it was not good enough for the billionaire class to own much of our economy. They could now own the U.S. government as well. And that is precisely what they are trying to do.

American democracy is not about billionaires being able to buy candidates and elections. It is not about the Koch brothers, Sheldon Adelson and other incredibly wealthy individuals spending billions of dollars to elect candidates who will make the rich richer and everyone else poorer. According to media reports the Koch brothers alone, one family, will spend more money in this election cycle than either the Democratic or Republican parties. This is not democracy. This is oligarchy. In Vermont and at our town meetings we know what American democracy is supposed to be about. It is one person, one vote — with every citizen having an equal say — and no voter suppression. And that’s the kind of American political system we have to fight for and will fight for in this campaign.

Climate Change: When we talk about our responsibilities as human beings and as parents, there is nothing more important than leaving this country and the entire planet in a way that is habitable for our kids and grandchildren. The debate is over. The scientific community has spoken in a virtually unanimous voice. Climate change is real. It is caused by human activity and it is already causing devastating problems in the United States and around the world.

The scientists are telling us that if we do not boldly transform our energy system away from fossil fuels and into energy efficiency and sustainable energies, this planet could be five to ten degrees Fahrenheit warmer by the end of this century. This is catastrophic. It will mean more drought, more famine, more rising sea level, more floods, more ocean acidification, more extreme weather disturbances, more disease and more human suffering. We must not, we cannot, and we will not allow that to happen.

It is no secret that there is massive discontent with politics in America today. In the mid-term election in November, 63 percent of Americans did not vote, including 80 percent of young people. Poll after poll tells us that our citizens no longer have confidence in our political institutions and, given the power of Big Money in the political process, they have serious doubts about how much their vote actually matters and whether politicians have any clue as to what is going on in their lives.

Combatting this political alienation, this cynicism and this legitimate anger will not be easy. That’s for sure. But that is exactly what, together, we have to do if we are going to turn this country around — and that is what this campaign is all about.

And to bring people together we need a simple and straight-forward progressive agenda which speaks to the needs of our people, and which provides us with a vision of a very different America. And what is that agenda?

Jobs, Jobs, Jobs: It begins with jobs. If we are truly serious about reversing the decline of the middle class we need a major federal jobs program which puts millions of Americans back to work at decent paying jobs. At a time when our roads, bridges, water systems, rail and airports are decaying, the most effective way to rapidly create meaningful jobs is to rebuild our crumbling infrastructure. That’s why I’ve introduced legislation which would invest $1 trillion over 5 years to modernize our country’s physical infrastructure. This legislation would create and maintain at least 13 million good-paying jobs, while making our country more productive, efficient and safe. And I promise you as president I will lead that legislation into law.

I will also continue to oppose our current trade policies. For decades, presidents from both parties have supported trade agreements which have cost us millions of decent paying jobs as corporate America shuts down plants here and moves to low-wage countries. As president, my trade policies will break that cycle of agreements which enrich at the expense of the working people of this country.

Raising Wages: Let us be honest and acknowledge that millions of Americans are now working for totally inadequate wages. The current federal minimum wage of $7.25 an hour is a starvation wage and must be raised. The minimum wage must become a living wage — which means raising it to $15 an hour over the next few years — which is exactly what Los Angeles recently did — and I applaud them for doing that. Our goal as a nation must be to ensure that no full-time worker lives in poverty. Further, we must establish pay equity for women workers. It’s unconscionable that women earn 78 cents on the dollar compared to men who perform the same work. We must also end the scandal in which millions of American employees, often earning less than $30,000 a year, work 50 or 60 hours a week — and earn no overtime. And we need paid sick leave and guaranteed vacation time for all.

Addressing Wealth and Income Inequality: This campaign is going to send a message to the billionaire class. And that is: you can’t have it all. You can’t get huge tax breaks while children in this country go hungry. You can’t continue sending our jobs to China while millions are looking for work. You can’t hide your profits in the Cayman Islands and other tax havens, while there are massive unmet needs on every corner of this nation. Your greed has got to end. You cannot take advantage of all the benefits of America, if you refuse to accept your responsibilities.

That is why we need a tax system which is fair and progressive, which makes wealthy individuals and profitable corporations begin to pay their fair share of taxes.

Reforming Wall Street: It is time to break up the largest financial institutions in the country. Wall Street cannot continue to be an island unto itself, gambling trillions in risky financial instruments while expecting the public to bail it out. If a bank is too big to fail it is too big to exist. We need a banking system which is part of the job creating productive economy, not a handful of huge banks on Wall Street which engage in reckless and illegal activities.

Campaign Finance Reform: If we are serious about creating jobs, about climate change and the needs of our children and the elderly, we must be deadly serious about campaign finance reform and the need for a constitutional amendment to overturn Citizens United. I have said it before and I’ll say it again. I will not nominate any justice to the Supreme Court who has not made it clear that he or she will move to overturn that disastrous decision which is undermining our democracy. Long term, we need to go further and establish public funding of elections.

Reversing Climate Change: The United States must lead the world in reversing climate change. We can do that if we transform our energy system away from fossil fuels, toward energy efficiency and such sustainable energies such as wind, solar, geo-thermal and bio-mass. Millions of homes and buildings need to be weatherized, our transportation system needs to be energy efficient, and we need a tax on carbon to accelerate the transition away from fossil fuel.

Health Care for All: The United States remains the only major country on earth that does not guarantee health care for all as a right. Despite the modest gains of the Affordable Care Act, 35 million Americans continue to lack health insurance and many more are under-insured. Yet, we continue paying far more per capita for health care than any other nation. The United States must join the rest of the industrialized world and guarantee health care to all as a right by moving toward a Medicare-for-All single-payer system.

Protecting Our Most Vulnerable: At a time when millions of Americans are struggling to keep their heads above water economically, at a time when senior poverty is increasing, at a time when millions of kids are living in dire poverty, my Republican colleagues, as part of their recently-passed budget, are trying to make a terrible situation even worse. If you can believe it, the Republican budget throws 27 million Americans off health insurance, makes drastic cuts in Medicare, throws millions of low-income Americans, including pregnant women off of nutrition programs, and makes it harder for working-class families to afford college or put their kids in the Head Start program. And then, to add insult to injury, they provide huge tax breaks for the very wealthiest families in this country while they raise taxes on working families.

Well, let me tell my Republican colleagues that I respectfully disagree with their approach. Instead of cutting Social Security, we’re going to expand Social Security benefits. Instead of cutting Head Start and child care, we are going to move to a universal pre-K system for all the children of this country. As Franklin Delano Roosevelt reminded us, a nation’s greatness is judged not by what it provides to the most well-off, but how it treats the people most in need. And that’s the kind of nation we must become.

College for All: And when we talk about education, let me be very clear. In a highly competitive global economy, we need the best educated workforce we can create. It is insane and counter-productive to the best interests of our country, that hundreds of thousands of bright young people cannot afford to go to college, and that millions of others leave school with a mountain of debt that burdens them for decades. That must end. That is why, as president, I will fight to make tuition in public colleges and universities free, as well as substantially lower interest rates on student loans.

War and Peace: As everybody knows, we live in a difficult and dangerous world, and there are people out there who want to do us harm. As president, I will defend this nation — but I will do it responsibly. As a member of Congress I voted against the war in Iraq, and that was the right vote. I am vigorously opposed to an endless war in the Middle East — a war which is unwise and unnecessary. We must be vigorous in combatting terrorism and defeating ISIS, but we should not have to bear that burden alone. We must be part of an international coalition, led by Muslim nations, that can not only defeat ISIS but begin the process of creating conditions for a lasting peace.

As some of you know, I was born in a far-away land called Brooklyn, New York. My father came to this country from Poland without a penny in his pocket and without much of an education. My mother graduated high school in New York City. My father worked for almost his entire life as a paint salesman and we were solidly lower-middle class. My parents, brother and I lived in a small rent-controlled apartment. My mother’s dream was to move out of that small apartment into a home of our own. She died young and her dream was never fulfilled. As a kid I learned, in many, many ways, what lack of money means to a family. That’s a lesson I have never forgotten.

I have seen the promise of America in my own life. My parents would have never dreamed that their son would be a U.S. Senator, let alone run for president. But for too many of our fellow Americans, the dream of progress and opportunity is being denied by the grind of an economy that funnels all the wealth to the top.

And to those who say we cannot restore the dream, I say just look where we are standing. This beautiful place was once an unsightly rail yard that served no public purpose and was an eyesore. As mayor, I worked with the people of Burlington to help turn this waterfront into the beautiful people-oriented public space it is today. We took the fight to the courts, to the legislature and to the people. And we won.

The lesson to be learned is that when people stand together, and are prepared to fight back, there is nothing that can’t be accomplished.

We can live in a country:

Where every person has health care as a right, not a privilege;
Where every parent can have quality and affordable childcare and where all of our qualified young people, regardless of income, can go to college;
Where every senior can live in dignity and security, and not be forced to choose between their medicine or their food;
Where every veteran who defends this nation gets the quality health care and benefits they have earned and receives the respect they deserve;
Where every person, no matter their race, their religion, their disability or their sexual orientation realizes the full promise of equality that is our birthright as Americans.
That is the nation we can build together, and I ask you to join me in this campaign to build a future that works for all of us, and not just the few on top.

Thank you, and on this beautiful day on the shore of Lake Champlain, I welcome you aboard.

http://www.vox.com/2015/5/26/8662903/bernie-sanders-full-text-speech-presidential-campaign

Bernie Sanders, under his Economic Platform, needs to ensure that he will lead  the effort to create simultaneously with economic growth new capital owners by empowering EVERY citizen to acquire FUTURE wealth-creating, income-producing capital assets on the basis that the investments will generate their own earnings and pay for themselves without the requirement of past savings.

Without this core, fundamental foundation of universal personal OWNERSHIP sharing the corporations growing the economy, it will be impossible to achieve the other aspects of his platform and stop America’s shift to an oligarchy.

You've Met Hillarynomics. Now Meet Left-Of-Hillarynomics.

Joe Stiglitz unveils “Rewriting the Rules” in DC on May 12, 2015.Win McNamee/Getty Images

On May 27, 2015, Dylan Matthews writes on VOX:

Hillary Clinton has yet to lay out a detailed economic platform, but knowing the people she listens to on the matter, and judging from her 2008 campaign, it’s not too hard to guess what it’ll be. She’ll call for a bigger safety net for working parents: more child care subsidies, paid leave for new mothers and fathers. She might call for a slight increase in taxes for the rich. But she’s always been a fan of markets. Her agenda — like President Obama’s, like former President Clinton’s — has been defined by a faith that markets are creating wealth reasonably effectively, and that their major flaw is they don’t distribute income as evenly as they should. Let businesses do their thing, redistribute a bit, and you’re basically set.

But a recent report — authored by Nobel laureate economist Joseph Stiglitz along with Roosevelt Institute fellows Nell Abernathy, Adam Hersh, Susan Holmberg, and Mike Konczal — suggests this basic assumption is badly mistaken. The problem isn’t just one of distribution, the report argues. The problem is that the economy is fundamentally broken, shot through with opportunities for the rich to get richer not by building wealth but through exploitation and taking. We’ll need redistribution, yes. But first the whole system needs to be rethought.

The mystery of rising wealth and stagnant income

Rich peopleTim Graham/Getty Images

The report, titled “Rewriting the Rules of the American Economy: An Agenda for Shared Prosperity” and released on May 12, is a far-reaching indictment of economic policy as it’s been conducted in recent decades, which have resulted in sluggish growth and booming inequality, with wealth growing considerably faster than incomes. One central question, according to the report, is why is this even possible. Conventional thinking holds that wealth should be invested and, through investment, put to productive use, with those investments creating job opportunities and higher wages.

Alternatively, if few productive investment opportunities are available, the return on invested wealth should start falling. It ought to be a self-correcting cycle in which wealth cannot outpace incomes for long. But the return from capital remains high, and wages are stagnating. Something’s gone wrong.

Investing in rents rather than production

The Beatles, a few days after they met Elvis.Getty Images
Buying these guys’ back catalog: good for you, not good for growth.

The problem, Stiglitz and his co-authors write, is that the rise in wealth isn’t coming from productive investments.

It’s coming from what economists call rents — a metaphorical extension of the 18th-century practice of small farmers paying rent to landlords for the right to use the total inert asset of land.

Stiglitz and his co-authors extend the idea to include a wider and more modern array of rents. A patent or a copyright, for example, can be a valuable financial commodity to own, even without being productive in the way a factory or tractor is. To see the distinction, imagine you have $300 million and can either invest it in a startup or use it to buy the rights to the Beatles’ songs. In the former case, you’re providing money that a company can then use to hire people, produce goods, and generally create wealth in the world.

In the latter, you’re producing nothing; you’re just grabbing something that someone else produced and claiming the proceeds from it.

“Rent-seeking,” as economists call it, is generally viewed as economically counterproductive. It’s especially counterproductive when it becomes so lucrative as to provide a more attractive outlet for people’s money than real investments.

The report’s authors argue that’s exactly what’s happening with Wall Street. Its growth has fueled a big rise in credit — credit that tends to go to those who already have wealth, often in the form of rents, exacerbating existing rent-based problems. Financiers have also identified novel ways to rent-seek.

“Too big to fail” status, for example, can count as a rent. It increases the value of firms like Goldman Sachs or JPMorgan Chase not by making them more productive, but by providing an implicit government subsidy. Trading mortgage-backed securities for profit, similarly, does little to actually increase wealth but a lot to redirect it. That makes it attractive as a business activity for banks and hedge funds, redirecting their energies from profitable activities that create wealth.

How the government helps

Ronald Reagan outlines his tax cut planReagan Library
Ronald Reagan outlines his tax cut plan in July 1981; the cuts could have hurt growth by encouraging rich people to rent seek.

Many of these rents are explicitly created by government policies. “Too big to fail” is an obvious example, but financial deregulation more broadly has made speculation vastly more profitable in recent decades, encouraging rent-seeking on the part of financial firms.

Stiglitz and his co-authors also finger tax cuts for the wealthy as a culprit. They cite research by Thomas Piketty, Emmanuel Saez, and Stefanie Stantcheva finding that countries that slashed their top marginal tax rates the most in recent decades also saw the biggest increases in inequality before taxes. That might make sense if the tax cuts boosted growth, but that wasn’t really what happened. What happened instead, Piketty, Saez, and Stantcheva argued, was that the tax cuts gave top earners bigger incentive to extract rents for themselves, to bargain hard to increase their share of the company’s wages. In the 1950s, when the top marginal tax rate in the US was 91 percent, getting an extra $1 in income through rents only yielded $0.09 after taxes. Today, it means getting $0.60. That’s a sixfold increase — a huge increase in the incentive to find rents for oneself.

Protections for intellectual property also make rent-seeking more attractive, often at the expense of the public interest.

There’s little empirical evidence, Stiglitz et al. argue, that intellectual property is a significant incentive for innovators. Plenty of major technological advances with enormous economic implications — from Alan Turing’s outlining of the “Turing machine” model of computation to the discovery of the structure of DNA to Tim Berners-Lee’s creation of the World Wide Web — were never patented or otherwise protected by the intellectual property regime. But IP rules do serve to increase the cost of goods like prescription drugs and create a barrier to entry for firms trying to compete against companies with large IP holdings.

How to stop rent-seeking

houseShutterstock
This house brought to you by a loan from the government.

The agenda that Stiglitz, Abernathy, Hersh, Holmberg, and Konczal arrive at for reducing financial rent-seeking should look pretty familiar. It’s a straightforward left-of-the-Democrats economic platform. They want to raise taxes on the wealthy by hiking rates and converting deductions (which are most valuable for the rich) into credits (which are worth the same to everybody). They want tougher enforcement on Wall Street. They want to end “too big to fail” by imposing a capital surcharge on large, risky firms, and to create a financial transactions tax to discourage short-term trading. They want subsidized child care, smaller prison populations, immigration reform, and Medicare for all.

Not all of this can be explained through the prism of reducing rent-seeking. Subsidized child care, for example, doesn’t really do a whole lot to curb bank speculation.

But all the same, limiting banks’ opportunities to profit without actually creating wealth is a major throughline. It motivates the report’s most striking proposal, a plan to replace the current housing finance system, in which government and quasi-governmental agencies like Fannie Mae/Freddie Mac and the Federal Housing Administration back up private loans from banks to ensure mortgages remain affordable, with a “public option” for mortgages, in which the federal government just loans money for houses directly. That would largely eliminate banks’ involvement in consumer housing finance, depriving them of an arena rich in rent-seeking opportunities.

There are subtler ways in which the agenda would grow the economy by undermining rent-seeking, as well. The report calls for expanding subsidies for higher education, such as by making community college free (as Obama has proposed) and making income-based repayment of student loans universal, as it is in Australia, to minimize the burden of paying them back while in one’s 20s and at the nadir of one’s earning potential. That doesn’t directly relate to the financial sector; most student loans in the US are already issued directly by the federal government.

But it’d make it easier for students from elite universities with loan burdens to avoid going to work on Wall Street, and, as economists Benjamin Lockwood, Charles Nathanson, and Glen Weyl have argued, directing young people into productive careers instead of finance could grow the economy.

In other words, Stiglitz, Abernathy, Hersh, Holmberg, and Konczal have found a way to rearticulate left-of-center economic policies as more than just attempts to even out the income distribution or expand the safety net for its own sake. Those are worthy goals, but so is boosting economic growth. The report challenge the idea that growth requires getting out of the way of the market, and embraces the notion that it requires constant, active government intervention. It’s a necessary and bracing challenge to years of conventional wisdom, in which being “pro-growth” and “pro-market” were seen as basically equivalent. Markets fail, Stiglitz and his co-authors remind us, and when they do the government is needed to set them right.

http://www.vox.com/2015/5/27/8670749/stiglitz-report-rent-seeking

 

Here Are 7 Things People Who Say They’re ‘Fiscally Conservative But Socially Liberal’ Don’t Understand

A handsome big moustached hipster man smoking cigarette in the city (Shutterstock)

On May 22, 2015, Greta Christina writes on Raw Story:

“Well, I’m conservative, but I’m not one of those racist, homophobic, dripping-with-hate Tea Party bigots! I’m pro-choice! I’m pro-same-sex-marriage! I’m not a racist! I just want lower taxes, and smaller government, and less government regulation of business. I’m fiscally conservative, and socially liberal.”

How many liberals and progressives have heard this? It’s ridiculously common. Hell, even David Koch of the Koch brothers has said, “I’m a conservative on economic matters and I’m a social liberal.”

And it’s wrong. W-R-O-N-G Wrong.

You can’t separate fiscal issues from social issues. They’re deeply intertwined. They affect each other. Economic issues often are social issues. And conservative fiscal policies do enormous social harm. That’s true even for the mildest, most generous version of “fiscal conservatism” — low taxes, small government, reduced regulation, a free market. These policies perpetuate human rights abuses. They make life harder for people who already have hard lives. Even if the people supporting these policies don’t intend this, the policies are racist, sexist, classist (obviously), ableist, homophobic, transphobic, and otherwise socially retrograde. In many ways, they do more harm than so-called “social policies” that are supposedly separate from economic ones. Here are seven reasons that “fiscally conservative, socially liberal” is nonsense.

1: Poverty, and the cycle of poverty. This is the big one. Poverty is a social issue. The cycle of poverty — the ways that poverty itself makes it harder to get out of poverty, the ways that poverty can be a permanent trap lasting for generations — is a social issue, and a human rights issue.

If you’re poor, there’s about a two in three chance that you’re going to stay poor for at least a year, about a two in three chance that if you do pull out of poverty you’ll be poor again within five years — and about a two in three chance that your children are going to be poor. Among other things: Being poor makes it much harder to get education or job training that would help you get higher-paying work. Even if you can afford job training or it’s available for free — if you have more than one job, or if your work is menial and exhausting, or if both of those are true (often the case if you’re poor), there’s a good chance you won’t have the time or energy to get that training, or to look for higher-paying work. Being poor typically means you can’t afford to lose your job — which means you can’t afford to unionize, or otherwise push back against your wages and working conditions. It means that a temporary crisis — sickness or injury, job loss, death in the family — can destroy your life: you have no cushion, nobody you know has a cushion, a month or two without income and you’re totally screwed. If you do lose your job, or if you’re disabled, the labyrinthine bureaucracy of unemployment and disability benefits is exhausting: if you do manage to navigate it, it can deplete your ability to do much of anything else to improve your life — and if you can’t navigate it, that’s very likely going to tank your life.

Also, ironically, being poor is expensive. You can’t buy high-quality items that last longer and are a bargain in the long run. You can’t buy in bulk. You sure as hell can’t buy a house: depending on where you live, monthly mortgage payments might be lower than the rent you’re paying, but you can’t afford a down payment, and chances are a bank won’t give you a mortgage anyway. You can’t afford the time or money to take care of your health — which means you’re more likely to get sick, which is expensive. If you don’t have a bank account (which many poor people don’t), you have to pay high fees at check-cashing joints. If you run into a temporary cash crisis, you have to borrow from price-gouging payday-advance joints. If your car breaks down and you can’t afford to repair or replace it, it can mean unemployment. If you can’t afford a car at all, you’re severely limited in what jobs you can take in the first place — a limitation that’s even more severe when public transportation is wildly inadequate. If you’re poor, you may have to move a lot — and that’s expensive. These aren’t universally true for all poor people — but way too many of them are true, for way too many people.

Second chances, once considered a hallmark of American culture and identity, have become a luxury. One small mistake — or no mistake at all, simply the mistake of being born poor — can trap you there forever.

Plus, being poor doesn’t just mean you’re likely to stay poor. It means that if you have children, they’re more likely to stay poor. It means you’re less able to give your children the things they need to flourish — both in easily-measurable tangibles like good nutrition, and less-easily-measurable qualities like a sense of stability. The effect of poverty on children — literally on their brains, on their ability to literally function — is not subtle, and it lasts into adulthood. Poverty’s effect on adults is appalling enough. Its effect on children is an outrage.

And in case you hadn’t noticed, poverty — including the cycle of poverty and the effect of poverty on children — disproportionately affects African Americans, Hispanics, other people of color, women, trans people, disabled people, and other marginalized groups.

So what does this have to do with fiscal policy? Well, duh. Poverty is perpetuated or alleviated, worsened or improved, by fiscal policy. That’s not the only thing affecting poverty, but it’s one of the biggest things. To list just a few of the most obvious examples of very direct influence: Tax policy. Minimum wage. Funding of public schools and universities. Unionization rights. Banking and lending laws. Labor laws. Funding of public transportation. Public health care. Unemployment benefits. Disability benefits. Welfare policy. Public assistance that doesn’t penalize people for having savings. Child care. Having a functioning infrastructure, having economic policies that support labor, having a tax system that doesn’t steal from the poor to give to the rich, having a social safety net — a real safety net, not one that just barely keeps people from starving to death but one that actually lets people get on their feet and function — makes a difference. When these systems are working, and are working well, it’s easier for people to get out of poverty. When they’re not, it’s difficult to impossible. And I haven’t even gotten into the fiscal policy of so-called “free” trade, and all the ways it feeds poverty both in the U.S. and around the world. (I’ll get to that in a bit.)

Fiscal policy affects poverty. And in the United States, “fiscally conservative” means supporting fiscal policies that perpetuate poverty. “Fiscally conservative” means slashing support systems that help the poor, lowering taxes for the rich, cutting corners for big business, and screwing labor — policies that both worsen poverty and make it even more of an inescapable trap.

2: Domestic violence, workplace harassment, and other abuse. See above, re: cycle of poverty. If someone is being beaten by their partner, harassed or assaulted at work, abused by their parents — and if they’re poor, and if there’s fuck-all for a social safety net — it’s a hell of a lot harder for them to leave. What’s more, the stress of poverty itself — especially inescapable, entrapped poverty — contributes to violence and abuse.

And you know who gets disproportionately targeted with domestic violence and workplace harassment? Women. Especially women of color. And LGBT folks — especially trans women of color, and LGBT kids and teenagers. Do you care about racist, homophobic, transphobic, misogynist violence? Then quit undercutting the social safety net. A solid safety net — a safety net that isn’t made of tissue paper, and that doesn’t require the people in it to constantly scramble just to stay there, much less to climb out — isn’t going to magically eliminate this violence and harassment. But it sure makes it easier for people to escape it.

3: Disenfranchisement. There’s a cycle that in some ways is even uglier than the cycle of poverty — because it blocks people from changing the policies that keep the cycle of poverty going. I’m talking about the cycle of disenfranchisement.

I’m talking about the myriad ways that the super-rich control the political process — and in controlling the political process, both make themselves richer and give themselves even more control over the political process. Purging voter rolls. Cutting polling place hours. Cutting back on early voting — especially in poor districts. Voter ID laws. Roadblocks to voter registration — noticeably aimed at people likely to vote progressive. Questionable-at-best voter fraud detection software, which — by some wild coincidence — tends to flag names that are common among minorities. Eliminating Election Day registration. Restricting voter registration drives. Gerrymandering — creating voting districts with the purpose of skewing elections in your favor.

Voter suppression is a real thing in the United States. And these policies are set in place by the super-rich — or, to be more precise, by the government officials who are buddies with the super-rich and are beholden to them. These policies are not set in place to reduce voter fraud: voter fraud is extremely rare in the U.S., to the point of being almost non-existent. The policies are set in place to make voting harder for people who would vote conservative plutocrats out of office. If you’re skeptical about whether this is actually that deliberate, whether these policies really are written by plutocratic villains cackling over how they took even more power from the already disempowered — remember Pennsylvania Republican House Leader Mike Turzai, who actually said, in words, “Voter ID, which is gonna allow Governor Romney to win the state of Pennsylvania, done.”

Remember former Florida Republican chairman Jim Greer, who actually said, in words, “We’ve got to cut down on early voting because early voting is not good for us.” Remember the now-former North Carolina Republican official Don Yelton, whoactually said, in words, that voter restrictions including voter ID were “going to kick Democrats in the butt.” Remember the Texas Republican attorney general and candidate for governor Greg Abbott, who actually said, in words, that “their redistricting decisions were designed to increase the Republican Party’s electoral prospects at the expense of the Democrats.” Remember Doug Preisse, Republican chair of Franklin County (Ohio’s second-largest county) who actually said (well, wrote), in words, that Ohio Republicans were pushing hard to limit early voting because “I guess I really actually feel we shouldn’t contort the voting process to accommodate the urban — read African-American — voter-turnout machine.” (And no, the “read African-American” clarification isn’t mine — it’s his.) Remember… oh, you get the idea. Disenfranchisement is not some accidental side effect of Republican-sponsored voting restrictions. Disenfranchisement is the entirely intentional point.

And on top of that, you’ve got campaign finance laws saying that corporations are people, too — “people” with just as much right as you or I to donate millions of dollars to candidates who’ll write laws helping them out. When you’ve got fiscal policies that enrich the already rich — such as regressive tax policies, deregulation of businesses, deregulation of the financial industry — and you combine them with campaign finance laws that have essentially legalized bribery, you get a recipe for a cycle of disenfranchisement. The more that rich people control the political process, the richer they get — and the richer they get, the more they control the political process.

4: Racist policing. There’s a whole lot going on with racist policing in the United States. Obviously. But a non-trivial chunk of it is fiscal policy. Ferguson shone a spotlight on this, but it isn’t just in Ferguson — it’s all over the country. In cities and counties and towns across the United States, the government is funded, in large part, by tickets and fines for municipal violations — and by the meta-system of interest, penalties, surcharges, and fees on those tickets and fines, which commonly turn into a never-ending debt amounting to many, many times the original fine itself.

This is, for all intents and purposes, a tax. It’s a tax on poor people. It’s a tax on poor people for being poor, for not having a hundred dollars in their bank account that they can drop at a moment’s notice on a traffic ticket. And it’s a tax that disproportionately targets black and brown people. When combined with the deeply ingrained culture ofracism in many many many police forces — a police culture that hammers black and brown people for the crime of existing — it is a tax on black and brown people, purely for being black or brown. But Loki forbid we raise actual taxes. Remember the fiscal conservative mantra: “Low taxes good! High taxes bad!” High taxes are bad — unless we don’t call them a tax. If we call it a penalty or a fine, that’s just peachy. And if it’s disproportionately levied by a racist police force on poor black people, who have little visibility or power and are being systematically disenfranchised — that’s even better. What are they going to do about it? And who’s going to care? It’s not as if black lives matter. What’s more: You know some of the programs that have been proposed to reduce racist policing? Programs like automatic video monitoring of police encounters? An independent federal agency to investigate and discipline local policing, to supplement or replace ineffective, corrupt, or non-existent self-policing? Those take money. Money that comes from taxes. Money that makes government a little bit bigger. Fiscal conservatism — the reflexive cry of “Lower taxes! Smaller government!” — contributes to racist policing. Even if you, personally, oppose racist policing, supporting fiscal conservatism makes you part of the problem.

5: Drug policy and prison policy. Four words: The new Jim Crow. Drug war policies in the United States — including sentencing policies, probation policies, which drugs are criminalized and how severely, laws banning felons convicted on drug charges from voting, and more — have pretty much zero effect on reducing the harm that can be done by drug abuse. They don’t reduce drug use, they don’t reduce drug addiction, they don’t reduce overdoses, they don’t reduce accidents or violence that can be triggered by drug abuse. If anything, these policies make all of this worse.

But they do have one powerful effect: Current drug policies in the United States are very, very good at creating and perpetuating a permanent black and brown underclass. They are very good at creating a permanent class of underpaid, disenfranchised, disempowered servants, sentenced to do shit work at low wages for white people, for the rest of their lives.

This is not a bug. This is a feature.

You don’t have to be a wild-eyed conspiracy theorist to see how current U.S. drug policy benefits the super-rich and super-powerful. It is a perfect example of a “social issue” with powerful ripple effects into the economy. And that’s not even getting into the issue of how the wealthy might benefit from super-cheap prison labor, labor that borders so closely on slavery it’s hard to distinguish it. So people who are well-served by the current economy are strongly motivated to keep drug policy firmly in place.

Plus, two more words: Privatized prisons. Privatized prisons mean prisons run by people who have no interest in reducing the prison population — people who actually benefit from a high crime rate, a high recidivism rate, severe sentencing policies, severe probation policies, and other treats that keep the prison population high. It’s as if we had privatized fire departments, who got paid more the more fires they put out — and thus had every incentive, not to improve fire prevention techniques and policies and education, but to gut them.

Privatization of prisons is a conservative fiscal policy. It’s a policy based on the conservative ideal of low taxes, small government, and the supposedly miraculous power of the free market to make any system more efficient. And it’s a policy with a powerful social effect — the effect of doing tremendous harm.

It’s true that there are some conservatives advocating for criminal justice reform, including drug policy reform, on the grounds that the current system isn’t cost-effective. The problem with this, as Drug Policy Alliance Deputy State Director Laura Thomas points out: When you base policy decisions entirely on whether they’re cost-effective, the bottom line will always take priority. Injustice, racism, corruption, abuse — all of these can stay firmly in place. Human rights, and the human cost of these policies? Meh. Who cares — as long as we can cut government spending?

6: Deregulation. This one is really straightforward. Deregulation of business is a conservative fiscal policy. And it has a devastating effect on marginalized people. Do I need to remind anyone of what happened when the banking and financial industries were deregulated?

Do I need to remind anyone of who was most hurt by those disasters? Overwhelminglypoor people, working-class people, and people of color.

But this isn’t just about banking and finance. Deregulation of environmental standards, workplace safety standards, utilities, transportation, media — all of these have the entirely unsurprising effect of making things better for the people who own the businesses, and worse for the people who patronize them and work for them. Contrary to the fiscal conservative myth, an unregulated free market does not result in exceptional businesses fiercely competing for the best workers and lavishly serving the public. It results in monopoly. It results in businesses with the unofficial slogan,“We Don’t Care — We Don’t Have To.” It results in 500-pound gorillas, sleeping anywhere they want.

7: “Free” trade. This one is really straightforward. So-called “free” trade policies have a horrible effect on human rights, both in the United States and overseas. They letcorporations hire labor in countries where labor laws — laws about minimum wage, workplace safety, working hours, child labor — are weak to nonexistent. They let corporations hire labor in countries where they can pay children as young as five years old less than a dollar a day, to work 12 or even 16 hours a day, in grossly unsafe workplaces and grueling working conditions that make Dickensian London look like a socialist Utopia.

And again — this is not a bug. This is a feature. This is the whole damn point of “free” trade: by reducing labor costs to practically nothing, it provides cheap consumer products to American consumers, and it funnels huge profits to already obscenely rich corporations. It also decimates blue-collar employment in the United States — and it feeds human rights abuses around the world. Thank you, fiscal conservatism!

***

This list is far from complete. But I think you get the idea.

Now. There are conservatives who will insist that this isn’t what “fiscally conservative” means. They’re not inherently opposed to government spending, they say. They’re just opposed to ineffective and wasteful government spending.

Bullshit. Do they really think progressives are in favor of wasteful and ineffective government? Do they think we’re saying, “Thumbs up to ineffective government spending! Let’s pour our government’s resources down a rat hole! Let’s spend our tax money giving every citizen a solid-gold tuba and a lifetime subscription to Cigar Aficionado!” This is an idealized, self-serving definition of “fiscally conservative,” defined by conservatives to make their position seem reasonable. It does not describe fiscal conservatism as it actually plays out in the United States. The reality of fiscal conservatism in the United States is not cautious, evidence-based attention to which government programs do and don’t work. If that were ever true in some misty nostalgic past, it hasn’t been true for a long, long time. The reality of fiscal conservatism in the United States means slashing government programs, even when they’ve been shown to work. The reality means decimating government regulations, even when they’ve been shown to improve people’s lives. The reality means cutting the safety net to ribbons, and letting big businesses do pretty much whatever they want.

You can say all you want that modern conservatism in the United States isn’t what you, personally, mean by conservatism. But hanging on to some ideal of “conservatism” as a model of sensible-but-compassionate frugality that’s being betrayed by the Koch Brothers and the Tea Party — it’s like hanging onto some ideal of Republicanism as the party of abolition and Lincoln. And it lends credibility to the idea that conservatism is reasonable, if only people would do it right.

If you care about marginalized people — if you care about the oppression of women, LGBT people, disabled people, African Americans and Hispanics and other people of color — you need to do more than go to same-sex weddings and listen to hip-hop. You need to support economic policies that make marginalized people’s lives better. You need to oppose economic policies that perpetuate human rights abuses and make marginalized people’s lives suck.

And that means not being a fiscal conservative.

http://www.rawstory.com/2015/05/here-are-7-things-people-who-say-theyre-fiscally-conservative-but-socially-liberal-dont-understand/

 

Walter Reuther On The UAW & Collective Bargaining (1958)

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

Germany Shows The Way On Labor


Worker Michael Keil checks a Golf VII during a 2012 press tour of Volkswagen’s plant in Zwickau, Germany. (Jens Meyer/Associated Press)

On April 29, 2015, Harold Meyerson writes in The Washington Post:

“Policy,” says David Rolf, the Seattle union official chiefly responsible for the first successful campaigns for a $15 minimum wage, “is just frozen power.” By which measure, the problem with U.S. trade policy for the past quarter-century is that it reflects the growing imbalance of power between investors, able to profit from global markets, and workers, who have lost the institutions that once enabled them to improve or at least maintain their jobs and incomes.

Beyond question, the entry of China, India and the former Soviet bloc into the world labor market has exerted downward pressure on jobs and wages throughout the advanced industrial world. In the United States, that pressure has been particularly intense and widespread. As one paper published last year in the Review of Economics and Statistics concluded, U.S. workers forced out of their jobs by globalization between 1984 and 2002 saw their wages decline by between 12 percent and 17 percent. And that was before the full weight of Chinese competition descended on American manufacturing and an additional 55,000-plus U.S. factories shuttered their gates.

But globalization has not had so grim an aspect in every advanced economy. Like the United States, Germany is home to a large number of iconic manufacturers — Volkswagen, Daimler, Siemens, to name a few — that have factories all over the world. Yet Germany frequently has the world’s largest trade surplus while the United States perennially runs the world’s largest trade deficit. More remarkably, German manufacturing workers make a good deal more than their American peers: Their hourly compensation averaged $46 in 2012, $10 more than the U.S. average, according to a Labor Department survey.

To be sure, Germany’s advantage is partly due to the euro’s undervaluation of German goods. But the fundamental difference between Germany’s experience of globalization and our own is the result of a vastly different balance of power between capital and labor. German worker organizations wield power in ways that would astound their U.S. counterparts — above all, by virtue of the legal requirement that the boards of all sizable corporations be equally divided between workers and management.

On Tuesday, I met with eight leaders of IG Metall — the union of Germany’s manufacturing workers, and by most measures the most powerful union on the planet. Like workers throughout the advanced industrial world, they’ve not been able to stop the decline of some of their older industries. “We’ve lost jobs every day in steel and shipbuilding,” said Horst Mund, the union’s international director.

But in auto, aerospace, electronics, high-speed rail and defense technology, their experience has deviated completely what we’ve seen in the United States.

The strategy of the German unions has been to allow, often reluctantly, their globe-trotting corporations to perform the less skilled, lower-value work in lower-paying nations but to insist on keeping the most highly skilled and compensated work in Germany. With world-class worker training, the union and the companies “continually upgrade our productivity,” said Reinhard Hahn, a union leader who also is a member of Siemens’s board. Workers in China do the final assembling of the Airbus A320, but that constitutes just 3 percent to 5 percent of the plane’s total value: The precision parts are made in Germany, many by small firms linked to the global production chain through the union’s own efforts, Hahn said.

With Airbus soon to open a similar assembly plant in Alabama, U.S. workers now compete not with Germans but with Chinese for low-end jobs. As predicted some years ago by the Boston Consulting Group, low-wage Southern labor has begun to erode the Chinese advantage in low-cost production, and foreign firms are flocking there. The role of the South in the global production chain increasingly resembles that of the pre-Civil War era, when it provided the cheapest labor in a chain that created the millionaire clothing manufacturers of Manchester, England.

Congress is poised to vote on a measure that would ease the passage of a massive trade deal, the Trans-Pacific Partnership. My Post colleague Dana Milbank has written that any such deal should be linked to major increases in infrastructure projects, to compensate for the lost jobs, and in worker training programs. I’d go Dana one further:

When we set the standards for globalization, we need to ensure benefits flow to workers as well as investors, and that won’t happen absent the kind of fundamental shift in power from shareholders and management to labor that the German system embodies. Like earlier trade deals, the Pacific pact offers no such rebalancing. It freezes policy — and the rewards of globalization — to reflect our massive imbalances of power and income.

http://www.washingtonpost.com/opinions/germany-shows-the-way-on-labor/2015/04/29/b9bc811c-ee9e-11e4-8666-a1d756d0218e_story.html

This article is yet another in a continuous stream of articles focused on “jobs as the ONLY means to be productive and earn an income.” In particular, this article is about the balance of management (representing the ownership class) and labor (the non-owner worker contingent of a corporation). The workers are represented by unions (where they still exist), always focused on contract negotiations that will result in higher and higher wages and better benefits, without a corresponding increase in worker productivity. It is technological change that makes tools, machines, structures, and processes ever more productive while leaving human productiveness largely unchanged (our human abilities are limited by physical strength and brain power––and relatively constant). Most changes in the productive capacity of the world since the beginning of the Industrial Revolution can be attributed to technological improvements in our capital assets, and a relatively diminishing proportion to human labor. Capital, in binary economist Louis 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 union bargaining legislation or by government employment and government subsidization of private employment solely to increase consumer income.”

The union movement, even in Germany, is entirely focused on wage-related protections and increased compensation, as this article attests. The labor union movement really should transform to a producers’ ownership union movement and embrace and use its collective bargaining advantage for represented workers to become capital owners in the growth of the corporations they are employed by. Unions should play the part that they have always aspired to––that is, a better and easier life through participation in the nation’s economic growth and progress. As a result, labor unions will be able to broaden their functions, revitalize their constituency, and reverse their decline.

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

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

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

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

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

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

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

Unfortunately for democratic unionism, the United Auto Workers, American manufacturing workers, and American citizens generally, Reuther was killed in an airplane crash in 1970 before his idea was implemented. Leonard Woodcock, his successor, nor any subsequent union leader never followed through.

But ESOPs are designed for those who are employed. What about the majority of the population who are not represented by unions where they are employed and those who are not employed at all?

The answer is in the law of contracts. Under “modern” methods of finance it is possible — even preferable — to form new capital using the present value of the anticipated future stream of income embodied in a contract. This contract (called a “bill of exchange”) enables corporations with “feasible capital projects” (meaning they pay for themselves out of their own profits) to grow without having to retain earnings (and reinvest) — earnings can be paid out to the people to whom they belong: the shareholders. People have financed capital projects this way from the dawn of civilization.

New capital asset formation should not rely on “past savings,” that is, on past reductions in consumption held in the form of money. As Dr. Harold Glenn Moulton pointed out in his 1935 classic, “The Formation Of Capital,” however, past savings are actually the least efficient to finance new capital formation.

Why? Because reducing consumption cuts demand for consumer goods (obviously), and the demand for new capital goods relies on there being an increase, not a decrease, in the demand for consumer goods, or no rational person would finance new capital — if it’s not going to pay for itself out of future profits (which won’t materialize if people aren’t consuming the increased goods and services), you’d just be throwing your money away.

What’s the solution?  Finance using “future savings” –– not past reductions in consumption turned into money, but future increases in production turned into money. World leaders need to know that, given the right tax and monetary reforms, every family, and every child, woman, and man can become an owner of capital without taking anything from anybody else — and everybody can be better off.

To use the “future earnings” method of finance on a universal scale that will empower EVERY child, woman, and man to acquire capital ownership shares representing the growth assets of American corporations, the Federal Reserve will need to perform what they were invented to do: 1) provide adequate liquidity to the private sector 2) in the form of an elastic, asset-backed currency with a stable and uniform value for 3) qualified capital projects. Regulating clearinghouse operations also legitimately comes under a central bank.

Louis Kelso’s breakthrough was to tie the money creation powers of a commercial and central banking system to the need for expanded capital ownership, thereby emancipating humanity from “the slavery of savings” that presumably dictated either that only the rich could as a rule own new capital, or that “ownership” must become meaningless in a State-controlled economy that redistributes earnings.

Using the function of the Federal Reserve we would be able to give to EVERY child, woman, and man an opportunity to individually share in the growth of the economy. By adopting expanded expanded ownership proposals with a reformed Federal Reserve system, we can make it possible for people without existing savings to purchase capital and secure the wellbeing and independence of the American family.

Because the Federal Reserve was hijacked by the very people it was intended to keep in check, the money power became even more concentrated under the Federal Reserve Act of 1913 than under the National Banking Act of 1863, and State control of the economy — and élite control of the State — became the orthodox political and economic position within a generation.

With the Just Third Way and Capital Homesteading platforms of the Center for Economic and Social Justice (www.cesj.org), however, we have the opportunity to turn things around through a new vision of an economically just future for all that restores the sovereignty of the human person and the family as the fundamental unit of society.

Universal capital ownership will also defuse political power. “Power,” as Daniel Webster pointed out nearly two centuries ago in 1820, “naturally and necessarily follows property.”

The institutional barriers preventing people from becoming owners are not necessarily specific laws (those can be changed almost at will), but a tax system that discourages widespread ownership, and a monetary system that is not open to use by all qualified people. It’s access to money and credit that determines who owns, not a specific law. We need to reform institutions to make it possible for ordinary people to own capital. The key is capital ownership, not more government or private sector control of ordinary people.

Under the Just Third Way’s more just and simple tax system, access to ownership of the means of production in the future would by provided to every child, woman and man by requiring the government to lift all existing legal and institutional barriers to private property stakes as a fundamental human right. The system was made by people and can be changed by people. Guided by the right principles of economic justice, “we the people” can organize and demand that the system be reorganized to make true economic democracy the new foundation for true political democracy. The result of this movement of new justice-committed leaders and activists will be inclusive prosperity, inclusive opportunity, and inclusive economic justice.

Support the Agenda of The Just Third Way Movement at http://foreconomicjustice.org/?p=5797, http://www.cesj.org/resources/articles-index/the-just-third-way-basic-principles-of-economic-and-social-justice-by-norman-g-kurland/, http://www.cesj.org/wp-content/uploads/2014/02/jtw-graphicoverview-2013.pdf and http://www.cesj.org/resources/articles-index/the-just-third-way-a-new-vision-for-providing-hope-justice-and-economic-empowerment/.

Support the Capital Homestead Act at http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-a-plan-for-getting-ownership-income-and-power-to-every-citizen/ and http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-summary/. See http://cesj.org/learn/capital-homesteading/ and http://cesj.org/…/uploads/Free/capitalhomesteading-s.pdf.

U.S. Senate Sells Out American Workers By Passing Fast Track Trade Bill 62-37

US-Senate-Building

On May 23, 2015, Keith Brekhus writs on Politicus USA:

A Trade Promotion Authority bill passed the U.S. Senate 62-37 Friday night, with 48 Republicans and 14 Democrats voting for the measure. The bill now heads to the U.S. House where it faces an uncertain future. The measure gives Congress the ability to vote up and down major international trade agreements negotiated by the White House but strips Congress of the ability to amend or filibuster such agreements. Fast track authority is designed to make it easier to push through trade agreements, and the bill was seen as a necessary step towards approving the controversial twelve nation Trans-Pacific Partnership (TPP) trade agreement.

President Obama favors the agreement, as do a majority of Senate Republicans. However, liberal pro-labor Senators likeSherrod Brown (D-OH), Elizabeth Warren (D-MA) and Bernie Sanders (I-VT) have argued that the bill will make it easier for corporations to avoid worker protections and to lower wages by moving jobs overseas.

Organized labor has argued that fast track authority undermines American workers. The AFL-CIO issued a recent statement, that read:

We’ve seen the devastating cost of bad trade deals over the years, so we know that fast track trade promotion authority is not the way to ensure that the American public receives the full and thorough debate on the vast implications of the Trans-Pacific Partnership.

In stark contrast to the AFL-CIO’s assessment, President Obama described the agreement in glowing terms, stating:

Today’s bipartisan Senate vote is an important step toward ensuring the United States can negotiate and enforce strong, high-standards trade agreements. If done right, these agreements are vital to expanding opportunities for the middle class, leveling the playing field for American workers, and establishing rules for the global economy that help our businesses grow and hire by selling goods made in America to the rest of the world.

President Obama’s rosy optimism sounded hauntingly similar to Bill Clinton’s positive appraisals for the North American Free Trade Agreement (NAFTA) before he pushed it through Congress with bi-partisan support in the 1990s. However, a briefing paper by Robert E. Scott at the Economic Policy Institute noted that the optimistic predictions of President Clinton and pro-NAFTA economists never came to pass.

In his publication, “Heading South: U.S.-Mexico trade and job displacement after NAFTA“, Scott estimated that by the year 2010, U.S. trade deficits with Mexico totaled over 97 billion dollars and he estimated that the negative effects of NAFTA had displaced over 680,000 U.S. jobs. Trade agreements that encourage more imports and fewer exports tend to displace domestic workers and tighten an already tough job market while pushing manufacturing jobs out of the country where employers can exploit cheaper labor.

Unfortunately, President Obama seems to be following the path taken by former President Clinton, by aligning with multinational corporations and “free trade” Republicans rather than with organized labor. Multinational corporations who exploit cheap labor overseas, such as the Nike shoe company, will benefit from the agreement. Meanwhile, American manufacturing jobs could continue to shrink, as domestic plants find themselves unable to compete with companies who pay lower wages overseas.

The U.S. House has an opportunity to reject the bill, but given the bill’s popularity with Republican Senators, it is difficult to envision the GOP-controlled House defeating the bill. That difficulty is compounded because some Democrats are also likely to back the President in supporting the bill.

Still, the individual votes could be unpredictable. In the Senate,48 of 54 Republican Senators voted YES. Mike Enzi of Wyoming did not vote. Of the five Republicans who voted no, Susan Collinsof Maine is traditionally regarded as a moderate, but the other four are hard-line conservatives, which means the more conservative GOP House could also offer up some surprise votes. Republican Senators Rand Paul (KY), Mike Lee (UT), Jeff Sessions (AL) and Richard Shelby (AL) were the four conservatives who voted against fast track trade authority.

30 Democrats opposed the measure, along with the two Independent Senators who caucus with the Democrats, Angus King of Maine and Bernie Sanders of Vermont. 14 Democrats backed the proposal. Those 14 Democrats were Michael Bennet(CO), Maria Cantwell (WA), Ben Cardin (MD), Tom Carper (DE),Chris Coons (DE), Dianne Feinstein (CA), Heidi Heitkamp (ND),Tim Kaine (VA), Claire McCaskill (MO), Patty Murray (WA), Bill Nelson (FL), Jeanne Shaheen (NH), Mark Warner (VA) and Ron Wyden (OR).

While the fast track agreement appears to be a raw deal for American workers, there is the possibility that even if it passes, President Obama will negotiate good faith agreements with other nations, that safeguard worker protections and do not undermine American workers. Some of the more liberal Senators who voted to permit fast track authority may be operating under that assumption. However, that authority will likely be extended to future presidents as well, and there is no guarantee that fast track authority, once passed, will not empower the next Republican president to negotiate a terrible deal for American workers.

The Senators should have voted this bill down. Now the responsibility for protecting American jobs from future bad trade deals has been passed into the hands of the U.S. House. Sadly, it is hard to feel optimistic about the fate of the American worker, if he or she is now depending upon John Boehner’s Republican-controlled House to do the right thing.

http://www.politicususa.com/2015/05/23/u-s-senate-sells-american-workers-passing-fast-track-trade-bill-62-37.html

This 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! It will export production and jobs to countries with far lower labor wages and standards while enriching the OWNERSHIP interests of the already wealthy ownership class.

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.