The Pope Says Greed Is Not Good

On September 26, 2015, Thom Hartmann writes on The Thom Hartman Program:

In 1987 the film “Wall Street” summed up the general feeling in Reagan’s America with Gordon Gecko’s legendary speech that hinged on one phrase.

“Greed is Good.”

That became the private mantra for vulture capitalists and hedgefund managers through to today – and it made a catchy case for “trickledown” Reaganomics.

But that film didn’t invent the idea – it just spelled it out.

Seven years before that film came out – from the very beginning of the Reagan era – that idea was applied to every aspect of our society.

Public programs were privatized – and common resources handed over to private corporations.

Reaganomics – the idea that greed is good and profits naturally lead to justice and equality for all – has had a number of dramatic effects on American society.

It’s led to the rise of charter schools and for-profit colleges and the decline of public education while student debt has exploded.

It’s given us a healthcare system that promotes profits over people – a system where pharmaceutical companies spend more on advertising prescription drugs than on research and development of new and more affordable treatments.

It’s lead to the rise of for-profit prisons that create profits out of human misery.

But what Reaganomics didn’t create is any shared prosperity.

It has created an unholy amount of wealth – but that wealth is concentrated in the hands of very few – while the vast majority of Americans since the Reagan presidency have seen their standard of living decline.

In 1980 – the richest families only owned about 10% of American wealth – whereas the bottom 90% of families possessed about one third of all the wealth in America.

But now – the families in top one hundredth of one percent own nearly as much as the bottom 90% of families.

At the beginning of the Reagan era – homelessness and poverty exploded – and it didn’t decline in any significant way for another 20 years.

And during that whole time, America became more and more infatuated with the lives of the rich and famous than with the plight of the growing throngs of poor and needy.

Most Americans could tell you a lot about the personal lives and even the sex lives of rich people like Kanye West and Madonna – Paris Hilton and Michael Jackson – we became fascinated and obsessed with their mansions – their demons – and every aspect of their lavish lifestyles.

Just look at Donald Trump – who announced he was running for president and saw a huge surge in the polls after saying that he’s really rich and that’s what the country needs.

In other words – “Greed is Good” and our country needs greedy leaders.

And we’ve come to see unholy wealth as a sign of, essentially, God’s blessing – of “Good”.

Even many of our country’s religious leaders have cultivated followings on that idea – turn on the TV and take a look at any megachurch’s multimillionaire pastor begging for donations to buy another private jet.

But there’s one world leader who is speaking – and acting – out against the thinking that greed can lead to justice – that greed is good.

Pope Francis.

This Pope is reminding the world how to live simply through his words and his actions.

One of his first decisions as the head of the Catholic Church was to live in the Vatican guesthouse instead of the papal apartments.

And then there’s the humble 1984 Renault that he received as a donation and drives around the Vatican.

And as the leader of the Catholic Church – he’s pushed his flock of Bishops to lead by example and live simply as well.

Just last year he removed the so called “bishop of bling” – from his diocese after the bishop spent 43 million dollars on his personal residence.

And earlier today the Pope declined a lunch with Congress in order to feed and eat with the homeless in our nation’s capital.

When this Pope spoke to grassroots organizers in Bolivia earlier this summer he bluntly called the “unfettered pursuit of money” the “dung of the devil”.

In other words – greed is NOT good – greed’s the “dung of the devil”.

The Pope is reminding America and the world – that multiple mansions – the Olympic-sized swimming pools – the yachts and the private planes – these are not what we should be paying attention to – and the people who own those things aren’t idols.

He’s reminding us that the endless pursuit of profit and the monetization of everything are not ways to achieve justice and equality for all.

That we cannot worship Mammon – the almighty dollar – if we want to help our fellow man and make a more prosperous society for everyone.

And he’s right – it’s time to go back to our society’s founding principles – to orient our principles in a way that uplifts the poorest among us – to start putting people before profits – and to foster a truly just and equal society.

http://www.thomhartmann.com/blog/2015/09/pope-says-greed-not-good

Some conservative and progresssive thinkers have acknowledged the damaging results of a laissez-faire ideology, which furthers the concentration of productive capital ownership. They are floundering in search of alternative thinking as they acknowledge the negative economic and social realities resulting from greed capitalism. This acknowledgment encompasses the realization that the troubling economic and social trends (global capitalism, free-trade doctrine, tectonic shifts in the technologies of production and the steady off-loading of American manufacturing and jobs) caused by continued concentrated ownership of productive capital will threaten the stability of contemporary liberal democracies and dethrone democratic ideology as it is now understood.

Without a policy shift to broaden productive capital ownership simultaneously with economic growth, further development of technology and globalization will undermine the American middle class and make it impossible for more than a minority of citizens to achieve middle-class status.

Binary economics, whose originator was political economist Louis O. Kelso, and the various credit mechanisms derived from its understanding are not “socialist” or “communist” solutions but are based on the principles and dynamics of a free market economy. When understood, the current system is exposed as a system rigged to continually concentrate the ownership of capital in the 1 to 5 percent of the population. Also exposed are the dire moral implications of the current system, which is presently propelled by greed in our society. A new system that would ensure equal opportunity for every child, woman, and man to acquire productive capital with the earnings of capital and broaden its ownership universally does not require people to be any better than they presently are, but it does enable our society to leverage both greed and generosity in a way that honestly recognizes and harnesses productive capital as the factor that exponentially produces the wealth in a technologically advanced society.

The resulting impact of our current approaches has been plutocratic government and concentration of capital ownership, which denies every citizen his or her pursuit of economic happiness (property). Market-sourced income (through concentrated capital ownership) has concentrated in individuals and families who will not recycle it back through the market as payment for consumer products and services. They already have most of what they want and need so they invest their excess in new productive power, making them richer and richer through greater capital ownership. This is the source of the distributional bottleneck that makes the private property, market economy ever more dysfunctional. The symptoms of dysfunction are capital ownership concentration and inadequate consumer demand, the effects of which translate into poverty and economic insecurity for the 99 percent majority of people who depend entirely on wages from their labor or welfare and cannot survive more than a week or two without a paycheck. The production side of the economy is under-nourished and hobbled as a result.

We need to reevaluate our tax and central banking institutions, as well as, labor and welfare laws. We need to innovate in such ways that we lower the barriers to equal economic opportunity and create a level playing field based on anti-monopoly and anti-greed fairness and balance between production and consumption. In so doing, every citizen can begin to accumulate a viable capital estate without having to take away from those who now own by using the tax system to redistribute the income of capital workers. What the “haves” do lose is the productive capital ownership monopoly they enjoy under the present unjust system. A key descriptor of such innovation is to find the ways in which “have nots” can become “haves” without taking from the “haves.” Thus, the reform of the “system,” as Kelso postulated, “must be structured so that eventually all citizens produce an expanding proportion of their income through their privately owned productive capital and simultaneously generate enough purchasing power to consume the economy’s output.”

Implementing this agenda will effectively meet the challenge set by Pope Francis. It’s time good and well-intentioned people woke up and adopted a Just Third Way paradigm (http://cesj.org/learn/just-third-way/) beyond the greed model of monopoly, “hoggist” capitalism and the envy model of the traditional welfare state. This will promote peace, prosperity, and freedom through harmonious justice.

Hillary Clinton Advocacy For The Trans Pacific Partnership Discredits Her On Every Issue

 

On September 22, 2015, the Sane Progressive broadcasts:

Hillary Clinton does not get to help craft and internationally sell a treaty that helps corporations enact everything she says she opposes on the campaign trail and expect the American people to hold her in any credibility. It is long past time Hillary Clinton’s record on the Transpacific Partnership be brought to the center of the 2016 Presidential debate. Enough IS Enough.

Links: These first few are all videos I have done on the TPP and the sourced information is in the video descriptions:

Oppose TPP, Petition by Bernie Sanders:
https://www.youtube.com/watch?v=ktQPg…

Hillary Clinton’s Direct Record of Involvement with TPP
https://www.youtube.com/watch?v=2eF5i…

Video on Democratic Party Betrayal as a Whole on TPP
https://www.youtube.com/watch?v=9FSny…

http://www.exposethetpp.org/

Robert Reich, former Bill Clinton Secretary of Labor on TPP:
https://www.youtube.com/watch?v=3O_Sb…

http://americablog.com/2013/11/bill-m…

http://billmoyers.com/2014/01/16/tpp-…

http://www.msnbc.com/the-ed-show/watc…

How the TPP effects Wall St Regulations:
http://www.exposethetpp.org/TPPImpact…

TPP, Public Health:
http://www.exposethetpp.org/TPPImpact…

Hillary Clinton’s State Department Deeply Involved in TPP:
http://ftmdaily.com/global-issues/201…

http://readersupportednews.org/opinion2/277-75/30875-focus-hillary-clintons-betrayal-of-american-workers

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

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

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

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

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

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

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

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

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

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

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

3. For all Americans, the Federal Reverse needs to create an asset-backed currency that can enable every man, woman and child to establish a Capital Homestead Account or “CHA” (a super-IRA or asset tax-shelter for citizens) at their local bank to acquire a growing dividend-bearing stock portfolio to supplement their incomes from work and all other sources of income. The CHA would process an equal allocation of productive credit to every citizen exclusively for purchasing full-dividend payout shares in companies needing funds for growing the economy and private sector jobs for local, national and global markets. The shares would be purchased using essentially interest-free credit wholly backed by projected “future savings” in the form of new productive capital assets as well as the future marketable products and services produced by the newly added technology, renewable energy systems, plant, rentable space and infrastructure added to the economy. Risk of default on each stock acquisition loan would be covered by private sector capital credit risk insurance and, if necessary, government reinsurance, but would not require citizens to reduce their funds for consumption to purchase shares.

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

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

6. Eliminate all tax loopholes and subsidies.

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

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

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

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

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

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

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

Bernie Sanders On Cutting Deficit: "Every Major Defense Contractor Has Been Convicted Of Fraud"

 

On September 18, 2015, Bloomberg’s Mark Halperin interviews Senator Bernie Sanders:

In an interview with Bloomberg’s “With All Due Respect,” Vermont Senator Bernie Sanders said he would look to the defense budget for spending cuts and try to “make it a much more efficient budget than it is.”

First, Sanders tackles unemployment and macroeconomics.

MARK HALPERIN: Would the DOW go up under a Bernie Sanders administration? Does that matter to you?

BERNIE SANDERS: We have — yeah, it matters. When you have a productive economy with small and medium sized businesses doing well, the DOW will do just fine…

I think what we need — you can’t put a number to it. But what I beleive is if we invest in rebuilding our crumbling infrastructure. I’ve got a $1 trillion dollar bill that would offer 13 million jobs…

If we have a financial system that makes loans available to small and medium sized businesses, we can substantially reduce unemployment today.

We must also focus on youth unemployment, which is just off of the charts…

Next, Halperin asks for specifics about cutting the budget deficit…

BERNIE SANDERS: I find it interesting that the only federal agency which has never been audited is the Dept. of Defense. It hasn’t been able to audit itself or have an independent audit.

What I can tell you is virtually every major defense contractor has either reached a settlement with the U.S. government because of allegations of fraud or have been convicted of fraud.

You have massive cost overrun. One area we could take a hard look at is the defense budget.

http://www.realclearpolitics.com/video/2015/09/18/bernie_sanders_addresses_specifics_to_cut_the_us_deficit_defense__efficiency.html

 

 

Bernie Sanders: In-Depth Explanation Of Income Inequality

Bernie Sanders talks about the one issue the billionaire class wants us to avoid discussing.

Own the Future Economy or Be Owned!

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

Support the Capital Homestead 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/ and http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-summary/. See http://www.cesj.org/learn/capital-homesteading/ch-vehicles/.

Pope Francis Is About To Blow Elizabeth Warren Out Of The Water

On September 15, 2015, AJ Vicens writes on Mother Jones:

Pope Francis will arrive in the United States next week, with stops planned in Washington, New York City, and Philadelphia. In the nation’s capital, he will become the first pope to address a joint session of Congress. When House SpeakerJohn Boehner extended the invitation, he said Francis’ teachings “have prompted careful reflection and vigorous dialogue among people of all ideologies and religious views.” He may not have appreciated just how radical the Pope’s teachings are.

In a sharp departure from his predecessors in the Vatican, Francis’ statements on such issues as climate change, divorce, homosexuality, and abortion have rankled conservatives around the world. The pushback on some of his more progressive interpretations of Catholic teachings has also angered many Catholics, triggering what the Washington Post described as a “conservative rebellion” within the church.

But from the very beginning of his papacy in 2013, he has been especially outspoken on the issue of income inequality. Serving the poor is one of the pope’s main priorities; when he chose his name in honor of St. Francis of Assisi, he said he wanted a church that was both poor and “for the poor.” In November 2013, he wrote his blueprint for where he wanted to lead the church, a document known as the Evangelii Gaudium or the apostolic exhortation, in which he focused on this issue. Here are six of the pope’s most critical comments from the document on one of the biggest problems facing the United States:

On income inequality: “While the earnings of a minority are growing exponentially, so too is the gap separating the majority from the prosperity enjoyed by those happy few. This imbalance is the result of ideologies which defend the absolute autonomy of the marketplace and financial speculation. Consequently, they reject the right of states, charged with vigilance for the common good, to exercise any form of control. A new tyranny is thus born, invisible and often virtual, which unilaterally and relentlessly imposes its own laws and rules.”

On “trickle-down” economics: “Some people continue to defend trickle-down theories which assume that economic growth, encouraged by a free market, will inevitably succeed in bringing about greater justice and inclusiveness in the world. This opinion, which has never been confirmed by the facts, expresses a crude and naive trust in the goodness of those wielding economic power and in the sacra­lized workings of the prevailing economic system.”

On the “idolatry of money” leading to a “new tyranny”: “The current financial crisis can make us overlook the fact that it originated in a profound human crisis: the denial of the primacy of the human person! We have created new idols. The worship of the ancient golden calf (cf. Ex 32:1-35) has returned in a new and ruthless guise in the idolatry of money and the dictatorship of an impersonal economy lacking a truly human purpose. The worldwide crisis affecting finance and the economy lays bare their imbalances and, above all, their lack of real concern for human beings; man is reduced to one of his needs alone: consumption.”

On the role of money: “Money has to serve, not to rule! The Pope loves everyone, rich and poor alike, but the Pope has the duty, in Christ’s name, to remind the rich to help the poor, to respect them, to promote them. The Pope appeals for disinterested solidarity and for a return to person-centred ethics in the world of finance and economics.”

On the ways income inequality leads to violence: “But until exclusion and inequality in society and between peoples are reversed, it will be impossible to eliminate violence…When a society—whether local, national or global—is willing to leave a part of itself on the fringes, no political programmes or resources spent on law enforcement or surveillance systems can indefinitely guarantee tranquility. This is not the case simply because inequality provokes a violent reaction from those excluded from the system, but because the socioeconomic system is unjust at its root.”

On the ways income inequality “kills”: “Just as the commandment ‘Thou shalt not kill’ sets a clear limit in order to safeguard the value of human life, today we also have to say “thou shalt not” to an economy of exclusion and inequality. Such an economy kills…Today everything comes under the laws of competition and the survival of the fittest, where the powerful feed upon the powerless. As a consequence, masses of people find themselves excluded and marginalized: without work, without possibilities, without any means of escape.”

http://www.motherjones.com/politics/2015/09/pope-francis-income-inequality-talk-pisses-conservatives

Thinking back on the wisdom expressed by Abraham Lincoln, who said that the purpose of government is to do for people what they cannot do for themselves, the Pope is essentially saying that government also should serve to keep people from hurting themselves and to restrain man’s greed, which otherwise cannot be self-controlled. Anyone who seeks to own productive power that they cannot or won’t use for consumption are beggaring their neighbor––the equivalency of mass murder––the impact of concentrated capital ownership.

What the Pope is really calling for is a restructuring of the system to create a more just and more productive system, under which private property in the means of production recognizes both labor (the human input) and physical capital (the non-human input) as direct independent and interdependent sources of productive input and mass purchasing power.

Access to capital ownership is as fundamental a human right as the right to the fruits of one’s labor. The key to reform is the democratization of money creation and capital credit, the “social key” to universalizing access to future ownership of productive wealth (particularly in corporate equity). This social key could enable every person, as an owner, eventually to gain income independence through the profits from one’s capital.

Today the Pope, most political and business leaders and academic economists assume that the mass of people can only earn a living through their work, and where that is insufficient, through welfare or charity. They, like most people, remain blind to the reality that accelerating technological progress makes it possible, even necessary, to solve the income distribution problems of our global economy through the widespread ownership of labor-saving technologies, that, otherwise, in combination with globally competitive cheap labor, are destroying jobs and devaluing the worth of labor. Our leaders need to recognize that people can legitimately create economic value through two (thus binary) factors of production:

  • Labor (all human forms of economic work, including manual, intellectual, creative, and entrepreneurial work, one’s ownership in their own labor, and
  • Capital (any non-human input to the production of marketable goods, products and services, including tools, machines, land, structures and infrastructural improvements, management systems, and patents, etc. that can be owned by people).

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. Physical capital does not “enhance” labor productivity, i.e., labor’s ability to produce economic goods. It makes many forms of labor unnecessary. Furthermore, productive capital is increasingly the source of the world’s economic growth and therefore should become the source of added property incomes for all.

With this understanding the Pope, political and business leaders and academic economists should then logically conclude that profit from the work that (non-human) technology does benefits ONLY those owning shares in the companies that use that technology. These people become rich and powerful because they own the things (physical capital) that produce most of our wealth.

In a democratic and just economy everyone should have an equal opportunity and equal access to the means to own shares in companies that use advanced technology. The United States economy, for example, should have programs that lift artificial tax and credit barriers to help every American become an owner of American Industry. Every family could then earn income from jobs and income from capital that every family member would own.

Balanced growth in any market economy depends on incomes distributed through widespread individual ownership of productive capital, all non-human means of production. Without access to and the means to acquire productive capital, people cannot produce enough to purchase the production of others.

What the Pope essentially means, while not clearly defining the scenario accurately, is that most people on the planet have no legitimate ownership claim to, and have insufficient means to purchase, what technology’s phenomenal productive capacity can generate. On the other hand, the small minority of people who own and control most of the productive instruments of society end up producing more than they can humanly consume.

Both socialism and capitalism concentrate economic power at the top. It makes little difference that under capitalism the concentration is in private hands and under socialism the concentration is in the hands of the State. Both systems are excessively materialistic in their basic principles and overall vision. Both, in their own ways, degrade the individual. Both engender economic systems that ignore and hinder the intellectual and spiritual development of every member of society.

What then would be a workable alternative economic model for moving toward a more free, more just and economically classless society?

The solution is a “Just Third Way” that offers a new vision and alternative model of development for the United States and ALL countries of the world in which they can succeed to their fullest potential within the framework of a global marketplace.

The Just Third Way is a free market system that economically empowers all individuals and families through direct and effective ownership of the means of production. From the standpoint of moral philosophy, this new paradigm views healthy self-interest as a virtue (i.e., where individual good is directed toward, or in harmony with, the common good). It views greed and envy, on the other hand, as vices, both destructive of a moral and just society. In contrast to capitalism that institutionalizes greed (creating monopolies and special privileges), or socialism that institutionalizes envy (through coerced leveling and artificial barriers to creative initiatives), the Just Third Way institutionalizes justice, tapping on the full creative potential of every human being.

The Just Third Way aims at restructuring the underlying system, balancing the demands of participative and distributive justice by lifting institutional barriers that have historically separated owners from non-owners. This involves removing the roadblocks preventing people from participating fully in the economic process as both workers and owners.

The Just Third Way offers a just free market system that economically empowers all individuals and families through the democratization of money and credit for new production. Widespread citizen access to money power would create universal access to direct ownership of wealth-creating and income-producing capital.

We desperately need to restructure the system to require that inclusionary self-liquidating capital credit be made accessible to corporate employees and other current non-owners of productive capital in order to turn them into economically independent capital owners. And, in the same way that the currently wealthy use credit to increase their wealth, and thus their incomes, this would be done under a new comprehensive national expanded ownership strategy.

As the logic and techniques of binary finance using insured, interest-free capital credit are extended throughout the economy, all new incremental productive power can automatically be built into individuals who have unsatisfied needs and wants –– without diminishing their take-home pay or past accumulation of savings. This will break the monopoly of capital ownership held by the currently wealthy –– those with functionally excessive productive power in terms of their consumer needs and wants. The savings of the currently wealthy would then flow into the most risky and speculative ventures, or for insuring capital credit for the non-rich, or for supplying consumer credit and other nonproductive forms of credit.

“Pure credit” can be defined as productive credit extended by a commercial bank, other financial institutions or a central bank in a manner independent of past savings, so that the amount borrowed plus all transaction costs are secured and repayable with future earnings from the capital assets acquired with such credit. Limiting the extension of pure credit by the central bank to current non-owners and leaving the pool of past savings open for use by the currently wealthy and for nonproductive government and consumer borrowing would result in a non-inflationary expansion of the ownership of productive capital assets.

Pure credit would free the economy to grow to the full physical limits of its workforce, available resources, technology, and the projected additional buying power of new domestic and foreign consumers.

After each increment of new capital asset formation has paid for itself from the future earnings that it produces, effective demand and effective supply would be synchronized by normal market forces––and this would continue to do so as long as the new capital became a source of an expanded income for the poor and those in the middle-class who today do not have adequate and secure incomes to meet their needs. This would enable them to produce and earn more as owners of procreative or self-liquidating capital in order to meet these needs.

From the standpoint of corporate productiveness, the binary economics approach would build all increases in capital productiveness (i.e., value added by capital assets) into workers and other non-owners. New owners would then be entitled to all the income increases attributable to their growing shares of corporate ownership. Artificial pressures for increases in labor and welfare incomes that add to costs and therefore go into the price of products sold (e.g., more pay for less work or the same work) would tend to diminish. Removing artificial restraints on capital creation would enable output to soar, resulting in unprecedented double-digit economic growth. This would, in turn, generate full employment and universal capital ownership opportunities as we build a future economy that can support general affluence for every citizen.

Wealth-creating, income-producing capital ownership is largely determined by who has access to capital credit. Just as society can structure its laws and institutions to concentrate ownership, society can reform its laws and institutions to decentralize ownership. Similarly, future corporate credit can be used to build more ownership into the same tiny group of present shareholders, as it is today. Or it can be used to create new owners, with a new social contract based on private property in the means of production for EVERY child, woman, and man.

The Pope, political and business leaders, and academic economist, need to advocate access to credit for acquiring productive capital. This needs to be enshrined in law as a fundamental right of citizenship, like the right to vote.

By adopting a national policy that broadens capital ownership simultaneously with the growth of the economy, within a relatively short period of time, each citizen would become a full owner of his or her corporate shares. For the rest of a person’s life, that citizen would receive a decent and regular income from the earnings of the capital assets he or she accumulates over the years. That citizen would have income-producing property to pass on to his or her children.

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

Support the Capital Homestead 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/ and http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-summary/. See http://www.cesj.org/learn/capital-homesteading/ch-vehicles/.

 

In The U.S. 49.7 Million Are Now Poor, And 80% Of The Total Population Is Near Poverty

Man-in-american-poverty1-600x350

On September 17, 2015, Simeon Ari writes on Political Blindspot:

If you live in the United States, there is a good chance that you are now living in poverty or near poverty. Nearly 50 million Americans, (49.7 Million), are living below the poverty line, with 80% of the entire U.S. population living near poverty or below it.

That near poverty statistic is perhaps more startling than the 50 million Americans below the poverty line, because it translates to a full 80% of the population struggling with joblessness, near-poverty or reliance on government assistance to help make ends meet.

In September, the Associated Press pointed to survey data that told of an increasingly widening gap between rich and poor, as well as the loss of good-paying manufacturing jobs that used to provide opportunities for the “Working Class” to explain an increasing trend towards poverty in the U.S.

But the numbers of those below the poverty line does not merely reflect the number of jobless Americans. Instead, according to a revised census measure released Wednesday, the number – 3 million higher than what the official government numbers imagine – are also due to out-of-pocket medical costs and work-related expenses.

The new measure is generally “considered more reliable by social scientists because it factors in living expenses as well as the effects of government aid, such as food stamps and tax credits,” according to Hope Yen reporting for the Associated Press.

Some other findings revealed that food stamps helped 5 million people barely reach above the poverty line. That means that the actual poverty rate is even higher, as without such aid, poverty rate would rise from 16 percent to 17.6 percent.

Latino and Asian Americans saw an increase in poverty, rising to 27.8 percent and 16.7 percent respectively, from 25.8 percent and 11.8 percent under official government numbers. African-Americans, however, saw a very small decrease, from 27.3 percent to 25.8 percent which the study documents is due to government assistance programs. Non-Hispanic whites too rose from 9.8 percent to 10.7 percent in poverty.

“The primary reason that poverty remains so high,” Sheldon Danziger, a University of Michigan economist said, “is that the benefits of a growing economy are no longer being shared by all workers as they were in the quarter-century following the end of World War II.”

“Given current economic conditions,” he continued, “poverty will not be substantially reduced unless government does more to help the working poor.”

Meanwhile, the U.S. government seems to think that the answer is cutting more of those services which are helping to keep 80% of the population just barely above the poverty line, cutting Food Stamps since the beginning of the month. Democrats and Republicans are negotiating about just how much more of these programs should be cut, but neither party is arguing that they should not be touched.

http://politicalblindspot.com/us-poor/

This article is about Americans continuing to loose ground in terms of wage income. And this situation will persist and worsen as the march of technology and tectonic shifts in the technologies of production, compounded by global low-wage competition, continue to destroy jobs and devalue the worth of labor.

The solution is to connect workers and EVERY child, woman, and man to title ownership in the private property means of production. The democratization of money creation and capital credit is the “social key” to universalizing access to future ownership of productive wealth (particularly in corporate equity). This social key could enable every person, as an owner, eventually to gain income independence through the profits from one’s capital.

Today most political and business leaders and academic economists assume that the mass of people can only earn a living through their work, and where that is insufficient, through welfare or charity. They, like most people, remain blind to the reality that accelerating technological progress makes it possible, even necessary, to solve the income distribution problems of our economy through the widespread ownership of labor-saving technologies.

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 does not “enhance” labor productivity, i.e., labor’s ability to produce economic goods. It makes many forms of labor unnecessary. Furthermore, productive capital is increasingly the source of the world’s economic growth and therefore should become the source of added property incomes for all.

In a democratic and just economy everyone should have an equal opportunity and equal access to the means to own shares in companies that use advanced technology. The United States economy, for example, should have programs that lift artificial tax and credit barriers to help every American become an owner of American Industry. Every family could then earn income from jobs and income from capital that every family member would own.

Most people have no legitimate ownership claim to, and have insufficient means to purchase, what technology’s phenomenal productive capacity can generate. On the other hand, the small minority of people who own and control most of the productive instruments of society end up producing more than they can humanly consume.

We desperately need to restructure the underlying system, balancing the demands of participative and distributive justice by lifting institutional barriers that have historically separated owners from non-owners. This involves removing the roadblocks preventing people from participating fully in the economic process as both workers and owners.

The Just Third Way paradigm offers a just free market system that economically empowers all individuals and families through the democratization of money and credit for new production. Widespread citizen access to money power would create universal access to direct ownership of wealth-creating and income-producing capital.

We need to require that inclusionary self-liquidating capital credit be made accessible to corporate employees and other current non-owners of productive capital in order to turn them into economically independent capital owners. And, in the same way that the currently wealthy use credit to increase their wealth, and thus their incomes, this would be done under a new comprehensive national expanded ownership strategy.

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

Poverty Persists But More Have Healthcare

healthcare

On September 17, 2015, Don Lee writes in the Los Angeles Times:

A steadily growing job market and higher minimum-wage laws in pockets of the country failed to reduce the nation’s poverty rate last year or reverse the long-running trend of stagnating incomes for most American households.

The Census Bureau’s annual figures on income and poverty, released Wednesday, came as a disappointing surprise to experts.

Many analysts had expected that the improving economy would reduce the poverty level for a second straight year. But the share of people in the U.S. living in poverty was 14.8% last year, essentially unchanged from 2013.

Most Americans, meanwhile, did not make up incomes lost during the Great Recession, despite an acceleration of job growth last year. The median income — or the point at which half the households make more and half less — was $53,700 last year, not statistically different from the previous year and down 6.5% from 2007 on an inflation-adjusted basis.

More encouraging, however, was a related report from the bureau on another indicator of economic well-being: The number of Americans without health insurance fell sharply last year.

Thanks mostly to the first full-year impact of the Affordable Care Act, also known as Obamacare, the percentage of people without medical coverage fell to 10.4% from 13.3% the previous year. That represents a drop of 8.8 million, to 33 million people who were uninsured for part or all of last year.

A decline was expected. Earlier surveys suggested a big increase in health plan enrollment as states expanded Medicaid and millions of Americans signed up for private insurance through new marketplaces created by Obamacare. Every state, racial group and age of individuals saw a decline in the uninsured rate, the Census Bureau said.

Proponents held up the new report as proof of the health program’s success, despite the bungled launch of the marketplaces and persistent opposition to Obamacare from Republican lawmakers.

The decrease in the uninsured was “historic,” said Ron Pollack, executive director of the consumer group Families USA.

“The numbers show that the greatest gains were among moderate income families, communities of color and young people – the precise groups that most needed help in gaining health insurance,” Pollack said.

Uninsured rates were considerably higher in Texas, Florida and some other states in the South that have resisted Medicaid expansions. California’s uninsured percentage remains higher than the national rate, attributed in part to its large immigrant population, including undocumented immigrants.

Still, analysts expect the nation’s overall share of the uninsured to drop further as more people become familiar with the mandate and the federal and state marketplaces.

“The numbers in 2015 will be better than in 2014, and better still in 2016,” said Henry Aaron, a senior fellow at the Brookings Institution.

The Census Bureau’s tally of the poor showed that 46.7 million people, a record high, were living in poverty last year. The poverty line was $24,008 for a household of two adults and two children, and it was $12,316 for a person under 65 living alone.

The overall 14.8% level was close to a three-decade high of 15.1%. The 30-year low was 11.3% in the year 2000.

The relatively high poverty rate reflects the way companies have turned more to part-time and other arrangements that have reduced labor’s share of the economic fruits, said Sheldon Danziger, president of the Russell Sage Foundation, which supports research on poverty and other social issues.

“There are a lot of practices that have come in — some aided by technologies — that have allowed employers to cut back on their wage costs,” Danziger said.

Poverty levels held steady for most groups, but one exception was the better-educated. The poverty rate for those with at least a college degree rose to 5% last year from 4.4% in 2013, an increase that analysts speculated could stem partly from the employment struggles of recent graduates entering a tough job market.

The Census Bureau’s supplemental measure of poverty, which includes noncash income such as food stamps and income tax credits, showed a 0.5 percentage point decline in the poverty rate from 2013 to 2014.

On incomes, U.S. households on average made no headway last year, despite an increase in the number of year-round full-time workers.

Since record-keeping began in 1967, the real median household income peaked at $57,843 in 1999, and it came close to matching that in 2007 — just before the full-blown economic downturn. But incomes have been essentially flat for the last three years.

A large increase in people living in non-family households may explain the lack of gain in median income last year, said Edward J. Welniak Jr., the Census Bureau’s chief statistician on incomes. Those households, which consist of people living alone, with roommates or in other nontraditional family arrangements, tend to have lower incomes, thus pulling down overall income.

During the slow recovery of recent years, more young adults moved back in or stayed longer than usual in their parents’ house. “Maybe they’re popping out of their parents’ basement,” said William Frey, a Brookings demographer, offering a possible explanation of the growth in the nontraditional household.

So far this year, there’s been little indication of an acceleration in wages for the average worker, though economists expect employers to raise workers’ pay as they find it harder to fill openings with the lower unemployment rate, which fell to 5.1% in August.

The White House Council of Economic Advisers said it was looking for strong growth this year in median household income. Total weekly earnings of private-sector workers have been rising more rapidly than last year, the council said, and these data are a better predictor of median income trends than average wages.

Chris Christopher Jr., an economist at IHS Global Insight, agreed that real median household income should turn up this year, in part, because inflation has been so modest. But he said he didn’t expect household income to pass its 2007 level until 2019.

“The Great Recession was brutal to many middle- and lower-income households,” he said in a commentary on the Census report Wednesday.

“The poor performance of real median household income and elevated poverty rates have caused a bifurcation in consumer spending patterns,” he said. “Discount stores are doing well and luxury is doing great, while the middle-tier retailers are having a hard time gaining traction.”

The Census report showed that incomes for households across economic classes were essentially flat last year.

But the top 10% of households in income reported earnings last year that surpassed 2007 figures. Incomes for households in all other groups were below 2007 levels.

http://www.latimes.com/business/la-fi-census-poverty-20150917-story.html

Correction: An anemic growing job market and economy at a bit better than 2 percent in Gross Domestic Product (GDP) is the REAL reality,.

This article by Don Lee is about Americans continuing to loose ground in terms of wage income. And this situation will persist and worsen as the march of technology and tectonic shifts in the technologies of production, compounded by global low-wage competition, continue to destroy jobs and devalue the worth of labor.

The solution is to connect workers and EVERY child, woman, and man to title ownership in the private property means of production. The democratization of money creation and capital credit is the “social key” to universalizing access to future ownership of productive wealth (particularly in corporate equity). This social key could enable every person, as an owner, eventually to gain income independence through the profits from one’s capital.

Today most political and business leaders and academic economists assume that the mass of people can only earn a living through their work, and where that is insufficient, through welfare or charity. They, like most people, remain blind to the reality that accelerating technological progress makes it possible, even necessary, to solve the income distribution problems of our economy through the widespread ownership of labor-saving technologies.

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 does not “enhance” labor productivity, i.e., labor’s ability to produce economic goods. It makes many forms of labor unnecessary. Furthermore, productive capital is increasingly the source of the world’s economic growth and therefore should become the source of added property incomes for all.

In a democratic and just economy everyone should have an equal opportunity and equal access to the means to own shares in companies that use advanced technology. The United States economy, for example, should have programs that lift artificial tax and credit barriers to help every American become an owner of American Industry. Every family could then earn income from jobs and income from capital that every family member would own.

Most people have no legitimate ownership claim to, and have insufficient means to purchase, what technology’s phenomenal productive capacity can generate. On the other hand, the small minority of people who own and control most of the productive instruments of society end up producing more than they can humanly consume.

We desperately need to restructure the underlying system, balancing the demands of participative and distributive justice by lifting institutional barriers that have historically separated owners from non-owners. This involves removing the roadblocks preventing people from participating fully in the economic process as both workers and owners.

The Just Third Way paradigm offers a just free market system that economically empowers all individuals and families through the democratization of money and credit for new production. Widespread citizen access to money power would create universal access to direct ownership of wealth-creating and income-producing capital.

We need to require that inclusionary self-liquidating capital credit be made accessible to corporate employees and other current non-owners of productive capital in order to turn them into economically independent capital owners. And, in the same way that the currently wealthy use credit to increase their wealth, and thus their incomes, this would be done under a new comprehensive national expanded ownership strategy.

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/.

The Data Is In: Unions Work Very, Very Well For Workers!

On September 16, 2015, Thom Hartmann writes on The Thom Hartman Program:

It’s official, unions are still very, very good for workers. According to not one, but two new reports, collective bargaining is the best way tool we have to raise wages and increase opportunity for workers.

The first report was released by The Center for American Progress on Wednesday, and it focused on economic mobility and “the ability to improve upon the economic situation of one’s birth.”

The authors of that study found, “a strong relationship between union membership and inter-generational mobility.” In other words, children who grew up in union households were more likely to lead a better life than their parents.

The other analysis, which was released Friday by the AFL-CIO’s Center for Strategic Research, draws a clear line between union membership and higher wages.

Separately, and together, these reports show how important it is to protect our collective bargaining rights, and why we should celebrate when workers declare a victory.

According to the AFL-CIO report, in the first half of 2015, workers who bargained for new contracts saw an average wage increase of 4.3%. And, despite the Right’s best efforts, even more employees will fight to form unions in the upcoming year.

Richard Trumka, president of the AFL-CIO, said, “This report provides clear evidence that joining a union and bargaining with your employer is the most effective way to give workers the power to raise their own wages.” He added, “When working people speak with one voice, our economy is stronger, and all workers do better.”

The Republican war on unions hasn’t stopped people from organizing, but we need to fight hard to make sure our collective bargaining rights don’t disappear.

http://www.thomhartmann.com/blog/2015/09/data-unions-work-very-very-well-workers

Labor Unions need to transform into Ownership Unions. This would expand the mission of unions (whose private-sector membership has been steadily shrinking) to reach out to and represent all shareholders, including worker-owners of corporations. An Ownership Union is designed to work collaboratively with management to secure financing of advanced technologies and other new capital investments through Capital Homestead Accounts for all citizens. It is intended to represent a growing constituency of worker- and citizen-owners on governance rights issues as well as to help lower all barriers to accelerated and sustainable rates of growth, particularly green growth, in a more democratically accountable corporate and financial sectors. Ultimately, Ownership Unions will shift the source of worker incomes from inflation-inducing wage and benefit increases, to widespread distribution of growing profit and equity incomes to worker- and citizen-owners. 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.

One of the proven financial mechanisms to transform workers from labor-only income to dividend-earning income is the powerful ownership-expanding technique, known as the Employee Stock Ownership Plan (ESOP). An ESOP provides widespread access to capital credit to each employee in an incorporated company on a systematic basis. Technically, the ESOP uses a legal trust that is “qualified” under specific U.S. tax laws encouraging employee ownership. Fortunately, these laws are extremely flexible, so that each plan can be tailored to fit the circumstances and needs of each enterprise, and deficiencies in the design of an ESOP can easily be corrected.

Over twenty U.S. laws have passed Congress since late 1973 to make ESOPs more attractive to workers and owners. More are on their way. While less than a dozen ESOPs existed in the United States in 1965, today over 10,000 companies, mostly highly profitable small and medium-size firms, have already adopted the ESOP in one form or another, creating over 11 million employee-owners. A number of Fortune 500 companies have adopted ESOPs, including Proctor & Gamble, Texaco, General Mills, Hallmark Cards, and American Standard, thus planting the seed for significant expansion of worker ownership within the giant multinationals.

Overcoming the initial skepticism of organized labor toward employee ownership, the United Steelworkers, the Air Line Pilots Association and the Amalgamated Clothing Workers have strongly endorsed the ESOP concept, and have initiated several model ESOP buyouts.

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.

An ESOP combines many elements into a single package. It is an employee benefit program. It is an incentive and productivity program for all employees. It is a retirement program. It is a reward system, working best when a modest base salary is supplemented with cash bonuses and equity shares, linked to the proceeds of the operation. It is a two-way accountability and communications system between management and non-management employees. It is a means for workers to participate both as workers and as stockholders in corporate direction. It is an in-house tax-exempt stock exchange, for both new equity issuances and repurchase of outstanding shares. It is a tax-deferred means for workers to accumulate equity. It can offer workers a source of current dividend incomes. An ESOP is all of these and more; but one of its most unique features is that it is a basic innovation in corporate finance.

An ESOP is so far the only tool in the world of investment finance that can generate new sources of capital credit for corporate growth or transfers of ownership, insulate its eventual owners from direct personal risk in the event of default, and allow repayment of its entire debt in pre-tax corporate dollars.

How The ESOP Works

The leveraged ESOP channels capital credit through a trust representing employees, from the same sources and subject to the same feasibility standards and corporate guarantees as direct loans to the corporation. The loan funds are used to buy stock for the workers, either from present owners (a leveraged buyout) or for financing expansion or modernization of the corporation. The ESOP can be used to purchase existing shares from present owners using credit, which is wholly secured by and repaid from future profits.

Normally, the workers make no cash outlay from payroll deductions or their savings, and none of their present savings is at risk. Shares of stock are allocated to the individual accounts of workers only as blocks of shares are “earned,” i.e., the company contributes cash out of future pre-tax profits to the trust. The cash, which is treated as a tax-deductible employee benefit, is used to repay the stock acquisition loan. Whereas traditional uses of leveraged corporate credit work only for present owners, the ESOP uses corporate credit to convert its workers into stockholders. Thus, the magic of self-liquidating capital credit can be used to lift more individuals into an expanding ownership system.

A well-designed ESOP clarifies subtle distinctions between “ownership,” “management,” and “worker participation.” Operationally under an ESOP, day-to-day control would remain in the hands of professional managers who, under a carefully designed system of checks and balances, would simply become accountable to a broader shareholder base, including other workers, and a more broadly representative board of directors. Employee stock ownership, therefore, would involve balancing continuity and efficiency of the firm with justice and accountability for the workers.

Are "Self-Service" Checkouts Putting Us Out Of Work?

On September 14, 2015, Thom Hartmann writes on The Thom Hartmann Show:

It’s no longer far-fetched to say that soon we will be able to shop, work, travel, and commute, all without interacting with a single person. And, while that may sound appealing to the introverts out there, it’s also the reason that we need a basic minimum income.

All of that automation and self-service means fewer jobs available for American workers, and that means more people will find themselves unemployed.

According to a recent article by Paul Buchheit over at CommonDreams.org, “Today’s tech and telecom companies build products that require less American workers, less middle-income workers, and less workers overall.”

He explained that before long, we may find ourselves competing with robots that don’t complain or ask for higher wages. And, that may leave us, the actual human beings, in need of a steady paycheck.

A basic minimum income is the perfect solution for this dilemma, and it could be paid for with a few simple, corporate reforms.

By instituting a carbon tax on our biggest polluters and a transaction tax on Wall Street, we could cover much of the cost of guaranteeing that everyone has enough money to meet their basic needs. The difference could be covered by making it harder for corporations to skip out on their taxes, and putting more reasonable limitations on corporate patents.

With a few reforms like these we could once again be a nation that values people over profit, and we could prepare ourselves for the future economy. If we don’t, we’re likely to spend the money anyway on the various social programs that we’ll need when more and more Americans find themselves out of work.

A basic minimum income would guarantee that all of our fellow Americans have a basic standard of living, and it would leave us the time to design even better robots.

http://www.thomhartmann.com/blog/2015/09/are-self-service-checkouts-putting-us-out-work

Thom Hartmann and Paul Buchheit both are dumbfounded by what to do about the reality that tectonic shifts in the technologies of production and global downward pressure on wages is destroying jobs and devaluing the worth of labor. There solution: the State should step in a provide EVERY citizen a Minimum Guaranteed Income. This effectively means tax extract the production of those actually who are productive, whether through their labor or through their productive capital assets, which they OWN.

Wealth distribution assumes wealth creation, and productive capital (i.e., tools, machines, robotics, computerization, technological and systems advances and improved land uses), according to recent studies, accounts for almost 90 percent of productivity growth in the modern world. Thus, balanced growth in a market economy depends on incomes distributed through widespread individual ownership of productive capital, all non-human means of production. Without access to and the means to acquire productive capital, people cannot produce enough to purchase the production of others.

Most people on the planet have no legitimate ownership claim to, and have insufficient means to purchase, what technology’s phenomenal productive capacity can generate. On the other hand, the small minority of people who own and control most of the productive instruments of society end up producing more than they can humanly consume.

Both socialism and capitalism concentrate economic power at the top. It makes little difference that under capitalism the concentration is in private hands and under socialism the concentration is in the hands of the State.

What then would be a workable alternative economic model for moving toward a more free, more just and economically classless society?

The REAL solution is to restructure the underlying system, balancing the demands of participative and distributive justice by lifting institutional barriers that have historically separated owners from non-owners. This involves removing the roadblocks preventing people from participating fully in the economic process as both workers and owners.

The Just Third Way offers a just free market system that economically empowers all individuals and families through the democratization of money and credit for new production. Widespread citizen access to money power would create universal access to direct ownership of wealth-creating and income-producing capital.

Hartmann and Buchheit should 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/.

Conceptualizing Capitalism

On May 5, 2015, Geoffrey Hodgson writes on Books & Ideas about his new book, Conceptualizing Capitalism in which he advocates for Employee Stock Ownership Plan (ESOP) structures for corporate America:

Something happened in the eighteenth century to stimulate an unprecedented explosion in economic productivity. Around 1800, GDP per capita began to take off in Europe, and accelerated further upwards. In 2003 Western European GDP per capita was about twenty times larger than it was in 1700. World GDP per capita in 2003 was about eleven times larger than it was in 1700. In less than half the time, US GDP per capita in 2003 was about twelve times greater than it was in 1870. [1]

As a result of technological developments in medicine and the improved average standard of living, between 1800 and 2000 life expectancy at birth rose from a global average of about thirty years to sixty-seven years, and to more than seventy-five years in several developed countries. At the same time, global growth since 1700 has seen a widening gap between rich and poor nations.

What name do we give to the economic system that became prominent in the eighteenth century and led to such huge rises in productivity? We have no better term than ‘capitalism’ especially as the new system was driven by developments in finance and the borrowing and investment of money capital.

What changes led to an unprecedented explosion in production, innovation, and human longevity? Many argue that technology explains the take-off in output. To be sure, technology was a necessary condition of much progress, and many increases in productivity have resulted from new technologies – from steam engines to modern electronics. But technological change also requires explanation. What were the necessary conditions for the development and diffusion of these new technologies?
Property rights were necessary to provide incentives, and finance was required to purchase materials and labour power. There had to be networked communities of scientists and engineers, to scrutinize, share, and develop ideas. These communities required political conditions allowing relatively free and open enquiry, with the uncensored publication of much scientific information. Addressing these necessary conditions, we are brought back to the role of institutions. Both technology and institutions must be part of the explanation of the growth explosion, along with the ideas that were developed and fostered in the changing circumstances.
A key task then is to identify the key institutions that developed in the eighteenth century and led to a huge increase in productivity. If we call the new era ‘capitalism’, then what definition of capitalism does this imply?

Re-assessing traditional definitions of capitalism

Several dictionaries define capitalism simply as a system involving markets and private property. But these institutions have existed for thousands of years. Trade between tribes has existed for tens of thousands of years. Private property developed fully when legal systems in early civilizations codified rights of individual ownership and contract. If markets are defined more narrowly than trade or exchange, involving a public space where goods or services are recurrently exchanged, then we have evidence of markets (from the Bible and from Herodotus) located in Greece and the Middle East, dated to the sixth century BC. A Chinese former student of mine (Xueqi Zhang) found documentary evidence of organized markets in China about 3000 years BC.
Consequently, if we define capitalism simply as private property and markets – and even if we define those terms sharply, to mean property buttressed by a legal system (and not mere possession) and markets as organized forums of exchange (and not mere trade in general) – then capitalism has existed for up to five thousand years and was well established in ancient Greece, Rome and China. Some things must be added to the definition of capitalism to make it correspond more closely to the system that emerged in the eighteenth century.

But before we discuss these additions we can already detect the terminological problems that confound our understanding of capitalism. We need to be careful when using basic terms such as ‘property’ and ‘market’. Many economists – including the anti-capitalist Karl Marx and the pro-market Ludwig von Mises – have defined property simply in terms of use or control of an asset, neglecting the question of legally-sanctioned ownership rights. Other economists, such as the Nobel laureates Ronald Coase and Douglass North, wrote of ‘markets for ideas’ or ‘political markets’, overlooking that in these so-called ‘markets’ there is no property being traded. The widespread misuse and over-extension of basic terms impedes our understanding. More careful definitions are required.

What additional institutional criteria are needed to define capitalism? Marx argued that the employment contract was part of its essence. In the first volume of Capital, Marx dated the rise of wage labour and employment to England in the sixteenth century. But agricultural wage labour was well established in England two centuries earlier. Neither date locates in the seventeenth century, just before the take-off of capitalism. While widespread wage-labour is a distinctive and familiar feature of capitalism, its diffusion was too early to explain the great burst of productivity that accompanied the Industrial Revolution.

Daron Acemoglu, Douglass North, Mancur Olson, Barry Weingast and other contemporary institutional economists have claimed that capitalism depends upon ‘secure property rights’ and allegedly it took off historically when they were established in the political settlement following the British Glorious Revolution of 1688. The problem here is that property rights were relatively secure in England as early as the twelfth century, when a sophisticated legal system emerged following the reforms of Henry II. While some English kings infamously seized property or defaulted on debts or contracts, these were relatively isolated events.

Prior to 1688, a key impediment to the rise of capitalism in England was not the ‘lack of property rights’ as such, but the feudal nature of an extensive system of well-established ownership rights, enjoying the support of powerful interest groups. Complex feudal obligations impeded the commodification of land and other property. The removal of these feudal restrictions was a long process, beginning before 1688 and continuing long afterwards, with the most extensive reforming activity after 1750. The 1688-focused argument concerning property rights falls down on matters of historical detail.

Joseph Schumpeter promoted a different argument. In a footnote to his History of Economic Analysis he wrote: ‘Owing to the importance of the financial complement of capitalist production and trade, the development of the law and the practice of negotiable paper and of “created” deposits afford perhaps the best indication we have for dating the rise of capitalism.’ Hence Schumpeter identified the development of a financial system as a key feature in the birth of the capitalist system proper. In particular he identified the emergence of a banking system involving negotiable instruments and the buying and selling of debt.

The neglected British economist Henry Dunning MacLeod wrote in his Principles of Economic Philosophy (1872): ‘If we were asked – Who made the discovery which has most deeply affected the fortunes of the human race? We think, after full consideration, we might safely answer – The man who first discovered that a Debt is a Saleable Commodity.’

This prompts us to search for the key institutional changes that enabled the buying and selling of debt. The idea of selling debt was originally an anathema: debt is not a good or service but a promise. Exchanges of promissory notes involve the purchase of a promise, and originally this was not recognized as a valid contract in law: the selling of debt was not sanctioned by legal recognition of the transfer of the obligation to its purchaser. Major legislative changes were necessary to make this possible.

In the seventeenth century, the failure of common law courts to deal adequately with the negotiability of debt led businessmen to press Parliament for robust legislation. In 1704, during the reign of Queen Anne, Parliament passed ‘An Act for giving like Remedy upon Promissory Notes, as is now used upon Bills of Exchange, and for the better Payment of Inland Bills of Exchange.’ Significant further legislation, including another Act as late as 1758, was required to consolidate negotiability. Once negotiability was established, the capitalist financial genie was out of the bottle.
These changes in the eighteenth century were part of what historians such as Peter Dickson Stephen Epstein, Henry Roseveare, Carl Wennerlind and others have described as the ‘Financial Revolution’. This took place in the decades after the new political settlement after 1688. It was in part prompted by the state and its dependence on the private banking system to help finance the Nine Years’ War (1688-97) and the War of Spanish Succession (1701-13). During this period the state administration was reformed, mainly to meet the needs of war. Financial reforms continued well into the eighteenth century, preparing the ground for the Industrial Revolution.

Re-affirming the role of financial institutions

In my book Conceptualizing Capitalism I propose a definition of capitalism that includes private property, widespread markets, widespread employment contracts and developed financial institutions. The latter item is included for the reasons given above – capitalism is above all a system based on finance. The development of financial institutions was crucial to its birth and take-off.

Widespread employment contracts are included in the definition not because they mark the beginning of capitalism – as Marx wrongly suggested – but because their possible future replacement by widespread self-employment or worker cooperatives would change the system into something quite different.

My claim that the rise of sophisticated financial institutions marks the dawn of capitalism is not original, but why have so many economists and historians (including Marx) downplayed these vital developments?

A major part of the answer lies in the metaphors that economists and others have used to frame their basic concepts and understandings of key elements in the system. These problems were evident in Adam Smith’s classic book on The Wealth of Nations (1776). Inspired by developments in astronomy and physics, Smith made extensive use of mechanical and physical metaphors. In business usage, then and now, the term ‘capital’ means money held or invested, or the money value of other assets on the balance sheet of an individual or firm. But Smith changed the meaning of ‘capital’ from money or money value, to the assets themselves. Capital became a physical force or thing – including machines and labour – rather than a monetary asset. This change of meaning has pervaded economics ever since and has spread into sociology with mutated terms such as ‘social capital’. But ‘social capital’ cannot be readily owned, valued, sold or used as collateral. It is thus highly remote from the still-prevailing business meaning of capital as money or the money-value of owned assets.

In all the discussion of Thomas Piketty’s celebrated book on Capital in the Twenty-First Century it has been rarely noted that he abandoned all these perversions of the term ‘capital’ and reverted to its proper meaning of money or monetizable assets. On this basis we can see that the concentrated distribution of collateralizable assets is a major generator of further inequality within capitalism.

Economists and other social scientists often think of property as a thing, rather than a legally-sanctioned right to a thing. Marx was reluctant to emphasise the crucial role of the legal system because her saw it as part of the ‘superstructure’ rather than of ‘the economic structure … the real foundation’. But he never defined these terms clearly. His relegation of law was partly inspired by an architectural and physical metaphor.

Other social scientists downplay the role of state law because they want categories such as property and exchange to apply to all human existence since the birth of our species. Accordingly, custom is misleadingly identified as law, even in the absence of an institutionalised judiciary or legislature. Property is treated as primarily a matter or possession or control. The economic analysis of these miss-labelled ‘property rights’ may bring insights on how people control assets in the absence of a developed legal system, but it is inadequate to deal with the mechanisms of authority, legitimation and legal control in modern, large-scale, complex economies.

Consequently, the understanding of the modern system that we describe as ‘capitalism’ requires a new approach to analysis that differs from much found in economics, sociology and Marxist theory. The underlying physical metaphors of things and forces are replaced by the notion of an economy as an evolving, information-processing system. This system entails the generation, allocation and exchange of recognised legal rights over many kinds of asset. Because of its focus on historically specific institutions such as law, property and finance, this analysis is not intended to cover all types of economic system. Far from being a weakness, such a historical focus can strengthen such a theory and give it greater analytical power.

Marx’s analysis of capitalism was historically specific but flawed in its reliance on physical metaphors and its neglect of its legal foundations. Much of mainstream economics and mainstream sociology also downplays the role of law, and furthermore attempts to be universal rather than historically specific.

“Legal institutionalism” and the rise of modern economy

The proposed new approach to the analysis of capitalism can be described as ‘legal institutionalism’. It puts legal institutions and relations at the centre, seeing them as a major source of power in modern society. Among others, this approach is influenced by Marx on the question of historical specificity, by Schumpeter in regard to the central role of finance, by Friedrich Hayek on the understanding of markets as information-processing systems, and by the American institutionalist John R. Commons with respect to the foundational and constitutive role of law.

The approach of legal institutionalism is primarily analytic rather than normative, but it does illuminate some particular policy perspectives. First, because information is dispersed and hugely varied in large-scale complex economies, markets are unavoidable and the classical socialist vision of wholesale collective planning is ruled out. But post-capitalist possibilities exist through the supersession of the employment relationship by self-employment or worker cooperatives.

Second, the emphasis on the legal foundation of basic capitalist institutions, in regard to property, contract, firms and finance, suggests that the construction of effective and relatively incorrupt legal institutions is important for developing countries. While all laws depend on customary support and on acknowledgement of authority, it is unrealistic to expect that these arrangements will evolve spontaneously, apart from the intervention of the state apparatus. Historically this has never happened in large-scale, complex, modern economies.

Third, because complete futures markets for labour power are ruled out by the abolition of slavery and the adoption of employment contracts, capitalism always has missing markets. The theory of general equilibrium with missing markets tells us that in such a system a market equilibrium may be Pareto suboptimal. Furthermore, when markets are incomplete, opening new markets may make things worse rather than better.

Fourth, the primary mechanism for the extension of inequalities in income and wealth is identified as the concentration of ownership of collateralisable assets in the hands of a minority of the population. Unlike the owners of labour power, the owners of capital goods and monetary assets can use their property to borrow more money, and make still more. This puts policies to alleviate inequality at the top of the agenda.

Among both opponents and critics, few appreciate that capitalism cannot in principle be a 100 percent market system, no matter how far it tries to move in that direction. By pushing back slavery and widening wage-labor, capitalism limited markets at its core: it disallowed complete futures markets for labor power. Capitalism inescapably implies limits to the scope of markets and commodity exchange.

The birth of capitalism was stimulated by Enlightenment ideas of individual liberty and equality under the law. But rightly we lack the liberties to enslave others, trade in slaves, or enslave ourselves. We have equal legal rights to use property to produce more wealth. But the owner of labor power is placed at two indelible disadvantages, compared with the owner of non-labor assets. Because of the ban on slavery, the individual cannot be used as collateral for obtaining loans, and cannot separate himself or herself from the deployment of his or her labor in production. These are systemic limitations to the Enlightenment principles of liberty and equality that are embedded in capitalism at its core.

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