Robots Are Coming For Your Job

Robot-staffed store in Tokyo

http://www.latimes.com/opinion/op-ed/la-oe-wright-robots-jobs-data-mining-20160328-story.html

This is another recent article that looks at a future where there will be hordes of citizens of zero economic value.  That is, unless the system can be reformed to empower EVERY citizen to acquire OWNERSHIP in the wealth-creating, income-producing capital assets resulting from technological invention and innovation.

Because productive capital is increasingly the source of the world’s economic growth it should become the source of added property ownership incomes for all. The reality is if both labor and capital are independent factors of production, and if capital’s proportionate contributions are increasing relative to that of labor, then equality of opportunity and economic justice demands that the right to property (and access to the means of acquiring and possessing property) must in justice be extended to all.

Rather than focus on Job Creation, Job Retraining, and a redistributed Minimum Guaranteed Income that holds back technological invention and innovation, our economic policies should focus on wealth-creating, income-producing capital Ownership Creation.

Given that there is no question that robotic technology will continue to expand the productivity and in large measure destroy jobs and devalue the value of human labor, the question that SHOULD be urgently addressed is WHO SHOULD OWN THE FUTURE TECHNOLOGY ECONOMY? Will ownership continue to concentrate among the 1 percent wealthy ownership class who now OWNS America, or will we reform the system to provide equal opportunity for EVERY child, woman, and man to acquire personal OWNERSHIP in FUTURE non-human capital assets paid for with the FUTURE earnings of the investments in our technological future?

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

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

What must be understood (which unfortunately is not understood by conventional economists) is that there are two independent factors of production––human or labor workers and non-human or physical productive capital––productive land, structures, machines, super-automation, robotics, digital computerized operations, etc.

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

Also what needs to be understood is that human productivity has not advanced (our human abilities are limited by physical strength and brain power––and relatively constant), but that the productiveness of the non-human factor of production––productive capital––is the reason that private sector corporations, majority owned by the “1 percent,” are utilizing the non-human factor of production increasingly to create efficiencies and save labor costs. It is the function of technology to save labor from toil and to enable us to do things that otherwise is humanly impossible without non-human input.

The critical question becomes who should OWN productive capital? The issue of OWNERSHIP is unbelievably overlooked by those in academia and politics, as well as by the author of the MIT Technology Review article. Yet we live in country founded upon private property rights.

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

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

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

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

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

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

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

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

People invented tools to reduce toil, enable otherwise impossible production, create new highly automated industries, and significantly change the way in which products and services are produced from labor intensive to capital intensive––the core function of technological invention. Binary economist Louis Kelso attributed most changes in the productive capacity of the world since the beginning of the Industrial Revolution to technological improvements in our capital assets, and a relatively diminishing proportion to human labor. Capital, in Kelso’s terms, does not “enhance” labor productivity (labor’s ability to produce economic goods). In fact, the opposite is true. It makes many forms of labor unnecessary. Because of this undeniable fact, Kelso asserted that, “free-market forces no longer establish the ‘value’ of labor. Instead, the price of labor is artificially elevated by government through minimum wage legislation, overtime laws, and collective bargaining legislation or by government employment and government subsidization of private employment solely to increase consumer income.”

Furthermore, according to Kelso, productive capital is increasingly the source of the world’s economic growth and, therefore, should become the source of added property ownership incomes for all. Kelso postulated that if both labor and capital are interdependent factors of production, and if capital’s proportionate contributions are increasing relative to that of labor, then equality of opportunity and economic justice demands that the right to property (and access to the means of acquiring and possessing property) must in justice be extended to all. Yet, sadly, the American people and its leaders still pretend to believe that labor is becoming more productive.

The 400 wealthiest Americans and the other 1 to 10 percent richest Americans are rich because they OWN wealth-creating, income-generating productive capital assets. The disenfranchised poor and working and middle class are propertyless in terms of OWNING productive capital assets.

Because productive capital is increasingly the source of the world’s economic growth, shouldn’t we be asking the question why is not productive capital the source of added property OWNERSHIP incomes for all? Why are we not addressing how the system facilitates greed capitalism and envy while concentrating productive capital OWNERSHIP among the 1 to 10 percent of the population?

The change that is necessary is to reform the system to provide equal opportunity for EVERY American to acquire wealth-creating, income-generating productive capital assets on the basis that the investments will pay for themselves––and on the same terms that the wealthy OWNERSHIP class now utilizes. They are able to use the investment’s earnings to pay off the capital credit loans used to finance their investments, without having to use their own money or deny themselves consumption.

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

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

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

The solution will require the reform of the Federal Reserve Bank to create new OWNERS of FUTURE productive capital investment in businesses simultaneously with the growth of the economy. The solution to broadening private, individual OWNERSHIP of America’s FUTURE capital wealth requires that the Federal Reserve stop monetizing unproductive debt, including bailouts of banks “too big to fail” and Wall Street derivatives speculators, and begin creating an asset-backed currency that could enable every child, woman, and man to establish a Capital Homestead Account or “CHA” (a super-IRA or asset tax-shelter for citizens) at their local bank to acquire a growing dividend-bearing stock portfolio to supplement their incomes from work and all other sources of income. Policies need to insert American citizens into the low or no-interest investment money loop to enable non- and undercapitalized Americans, including the working class and poor, to build wealth and become “customers with money.” The proposed Capital Homestead Act would produce this result.

Through Just Third Way reforms, economic growth would be freed from the slavery of past savings (“old money”), while creating a domestic source of new asset-backed, interest-free (but not cost free) money and expanded bank credit to finance new capital repayable out of future savings (earnings). To ensure that OWNERSHIP of future private sector growth and newly created wealth is universally accessible to every citizen, such newly created money and credit would only be available through economic democratization vehicles, administered through the competitive member banks of a well-regulated Federal Reserve central banking system.

Under the first tier, future increases in the money supply (“new money”) would be linked to actual growth of the economy’s productive assets, creating new OWNERS of new capital asset wealth through widespread access to interest-free capital credit repayable with future profits. The Federal Reserve would create (i.e., “monetize”) interest-free credit, with lenders adding their normal markup as service fees above the cost of money. This would establish an unsubsidized minimal rate for financing technological growth. This would provide the public with a currency backed by increasingly more efficient instruments of production, real wealth-producing capital assets, rather than unsustainable government debt.The creation of new money and credit would be non-inflationary and would simultaneously broaden purchasing power throughout the economy. To accomplish this, a key reform is a two-tiered interest policy by the Federal Reserve that would distinguish between productive and non-productive uses of credit.

The second tier would allow substantially higher, market-determined interest rates for non-productive purposes, for which “past savings” would remain available. The Federal Reserve would be restrained from future monetization of national deficits or encouraging other forms of non-productive uses of credit, causing upper-tier credit to seek out already accumulated savings at market rates.

Capital Homesteading would also provide through capital credit insurance a rational way to deal with risk, as well as an additional check on the quality of loans being supported by the Federal Reserve. Capital credit insurance and reinsurance policies would offset the risk that the enterprises issuing new shares on credit might fail to repay the loans. Such capital credit default insurance would substitute for collateral demanded by most lenders to cover the risk of non-payment, thus enabling the poor and others with few assets to overcome the collateralization barrier that excludes poor people from access to productive credit.

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

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

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

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

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

Only One Budget Proposal Makes Any Sense

On March 28, 2016, John Nichols writes in The Nation:

Any honest discussion of balancing budgets has to begin with an acknowledgement that it is necessary to audit Pentagon spending and address the bloated budgeting of the Department of Defense. As Senator Rand Paul explained back when he was Time magazine’s “most-interesting man in politics”: A serious plan for balancing the federal budget must feature a plan for the “draw-down and restructuring of the Department of Defense.”

When he entered the Republican Party’s bloated 2016 presidential race, Paul became less interesting. But he still asked some of the best questions. For instance, in Paul’s finest GOP debate performances, he demanded to know, “How is it conservative to add a trillion dollars in military expenditures?” As the only serious candidate in the Republican race, Paul informed his opponents: “You cannot be a conservative if you’re going to keep promoting new programs that you’re not going to pay for.”

A recognition of the need to address the Pentagon’s excessive and irresponsible spending should be at the center of the politics of both major parties. Unfortunately, despite some attempts by Paul on the Republican side andBernie Sanders (and, while he was still in the race, Lincoln Chafee) on the Democratic side, the 2016 presidential competition has not featured sufficient discussion of the pathologies that develop when Pentagon excess is encouraged.

But the Congressional Progressive Caucus has steered the discussion in a sensible direction with its 2017 “People’s Budget,” which proposes a “Prosperity, Not Austerity; Invest in America” agenda. At the heart of the CPC proposal is a commitment to a $1 trillion infrastructure investment program that includes $765 million to address the infrastructure crisis in Flint, Michigan, which has evolved into a humanitarian crisis. There are also proposals for necessary investments in healthcare, education, and programs to address hunger. And, as usual with the most fiscally and socially responsible caucus in the Congress, there is a plan to pay for it all.

The CPC retains its commitment to a financial-transactions tax on Wall Street speculation, as well as proposals to close loopholes and end practices that allow corporations and CEOs to avoid paying taxes. By combining smart policies and smart economics, says Congressman Mark Pocan, the Wisconsin Democrat who serves as the first vice chair of the CPC, which now has more than 70 members. The People’s Budget “reverses harmful austerity cuts and fixes a system that for far too long has only benefited those at the top. The Progressive Caucus Budget rebuilds our crumbling roads and bridges, creates good paying jobs, and increases educational opportunities from pre-kindergarten to college. Our budget invests in the American people and gives working families the best opportunity to get ahead.”

But what may be most striking about the CPC budget is the determination of the caucus to address the excessive Pentagon spending that eats up so much of the hard-earned tax money Americans send to Washington.

“Pentagon spending has doubled over the last decade at the expense of investments in working families,” explains the CPC document. “But as the war in Afghanistan draws to a close, we need a leaner, more agile force to combat realistic twenty-first-century threats. The People’s Budget responsibly ends operations in Afghanistan, brings our troops home, focuses Pentagon spending on modern security threats instead of Cold War-era weapons and contracts, and invests in a massive job creation program that will help workers transition into civilian jobs. The People’s Budget also increases investments in diplomacy, sustainable development, and humanitarian assistance to address the ongoing crises in Syria and Iraq.”

The CPC plan features a proposal that progressives, responsible moderates, and thinking conservatives have embraced: auditing the Pentagon. “As the only federal agency that cannot be audited, the Pentagon loses tens of billions of dollars annually to waste, fraud, and abuse,” argues the CPC. “It is past time to check the wasteful practices with little oversight that weaken our financial outlook and ultimately, our national security.

With real information about current defense spending, and about the sort of spending cuts that might realistically and responsibly be made as part of a shift in priorities, the CPC outlines an approach there steers the United States toward a better balance when it comes to budgeting.

http://www.thenation.com/article/only-one-budget-proposal-makes-any-sense/

The New Truth About Free Trade

On March 19, 2016, Robert Reich writes on Nation Of Change:

The fact is, recent trade deals are less about trade and more about global investment.

I used to believe in trade agreements. That was before the wages of most Americans stagnated and a relative few at the top captured just about all the economic gains.

The old-style trade agreements of the 1960s and 1970s increased worldwide demand for products made by American workers, and thereby helped push up American wages.

The new-style agreements increase worldwide demand for products made by American corporations all over the world, enhancing corporate and financial profits but keeping American wages down.

The fact is, recent trade deals are less about trade and more about global investment.

Big American corporations no longer make many products in the United States for export abroad. Most of what they sell abroad they make abroad.

The biggest things they “export” are ideas, designs, franchises, brands, engineering solutions, instructions, and software, coming from a relatively small group of managers, designers, and researchers in the U.S.

The Apple iPhone is assembled in China from components made in Japan, Singapore, and a half-dozen other locales. The only things coming from the U.S. are designs and instructions from a handful of engineers and managers in California.

Apple even stows most of its profits outside the U.S. so it doesn’t have to pay American taxes on them.

Recent “trade” deals have been wins for big corporations and Wall Street, along with their executives and major shareholders, because they get better direct access to foreign markets and billions of consumers.

They also get better protection for their intellectual property – patents, trademarks, and copyrights – and for their overseas factories, equipment, and financial assets.

That’s why big corporations and Wall Street are so enthusiastic about the Trans Pacific Partnership – the giant deal among countries responsible for 40 percent of the global economy.

That deal would give giant corporations even more patent protection overseas. And it would allow them to challenge any nation’s health, safety, and environmental laws that stand in the way of their profits – including our own.
But recent trade deals haven’t been wins for most Americans.

By making it easier for American corporations to make things abroad, the deals have reduced the bargaining power of American workers to get better wages here.

The Trans Pacific Trade Partnership’s investor protections will make it safer for firms to relocate abroad – the Cato Institute describes such protections as “lowering the risk premium” on offshoring – thereby further reducing corporate incentives to make and do things in the United States, using and upgrading the skills of Americans.

Proponents say giant deals like the TPP are good for the growth of the United States economy. But that argument begs the question of whose growth they’re talking about.

Almost all the growth goes to the richest 1 percent. The rest of us can buy some products cheaper than before, but most of those gains would are offset by wage losses.

In theory, the winners could fully compensate the losers and still come out ahead. But the winners don’t compensate the losers.

For example, it’s ironic that the Administration is teaming up with congressional Republicans to enact the TPP, when congressional Republicans have done just about everything they can to keep down the wages of most Americans.

They’ve refused to raise the minimum wage (whose inflation-adjusted value is now almost 25 percent lower than it was in 1968), expand unemployment benefits, invest in job training, enlarge the Earned Income Tax Credit, improve the nation’s infrastructure, or expand access to public higher education.

They’ve embraced budget austerity that has slowed job and wage growth. And they’ve continued to push “trickle-down” economics – keeping tax rates low for America’s richest, protecting their tax loopholes, and fighting off any attempt to raise taxes on wealthy inheritances to their level before 2000.

I’ve seen first-hand how effective Wall Street and big corporations are at wielding influence – using lobbyists, campaign donations, and subtle promises of future jobs to get the global deals they want.

Global deals like the Trans Pacific Partnership will boost the profits of Wall Street and big corporations, and make the richest 1 percent even richer. But they’ll contribute the to steady shrinkage of the American middle class.

http://www.nationofchange.org/news/2016/03/19/new-truth-free-trade/

Robert Reich is absolutely correct when he states: “The fact is, recent trade deals are less about trade and more about global investment.

“Big American corporations no longer make many products in the United States for export abroad. Most of what they sell abroad they make abroad.

“The biggest things they “export” are ideas, designs, franchises, brands, engineering solutions, instructions, and software, coming from a relatively small group of managers, designers, and researchers in the U.S.

“Global deals like the Trans Pacific Partnership will boost the profits of Wall Street and big corporations, and make the richest 1 percent even richer.”

And they will contribute to steady shrinkage of the American middle class, essentially reducing the vast majority of Americans  to slave wages, under-employment or unemployment.

Americans Fear A Life Of 'Dead-End Crap Jobs With Crap Wages'

Jo-Ann was a child Jo-Ann was a child prodigy who went to college at age 14. She graduated and landed a coveted job at Citigroup.

Soon she was flying around the world leading meetings. Then she jumped to a management role at a financial printer. She was middle class, maybe even on her way to the upper middle class … until the tech bubble burst. And September 11th hit.

The U.S. fell into a recession and companies cut back. In 2002, Jo-Ann was forced to train the Indian workers that would replace her.

After she was laid off, she struggled to find a good paying job. She melted down her savings and 401k. She got into the trap of working “dead-end crap jobs with crap wages,” including a stint at Walmart.

Her life went from American Dream to Bust. Today she’s in her mid-40s and makes $11 an hour processing payments at a financial firm despite being college educated.

Her story is exactly what so many Americans fear — that they are one step away from financial ruin. It’s why they are drawn to Donald Trump and Bernie Sanders in the 2016 election.

The anger is boiling over

“The anger is boiling over. Enough of the American people have got it through their heads that the American Dream is dead for us,” says Jo-Ann, who lives in Pennsylvania. She requested that her last name be withheld for this article so it wouldn’t impact her ongoing search for a better job.

The economy is the No. 1 issue on voters’ minds even though America is growing, unemployment is incredibly low (4.9%) and gas is cheap.

“I thank God I don’t have a kid. I don’t know what I would tell them,” she says. Her advice to young people is to skip college and learn a trade like plumbing that probably won’t be shipped overseas. She supports Sanders. She agrees with him (and Trump) that trade deals like NAFTA are part of the problem.

Great Recession fears linger

Americans are on edge. Many CNN readers responded to a recent survey about their economic worries. Over and over, people said they were fearful of losing a job, of a health problem that would drain their savings, of wages that aren’t growing and of diminished prospects for their children.

Billionaire investor Warren Buffett argues people are way too pessimistic about the economy. He says babies born in America today are “the luckiest crop in history.”

But Americans fear life could derail quickly, much as it did for many during the Great Recession.

“The job market is tough. People are scared. They aren’t leaving their jobs,” says Ashley Brinkman, 28, of Anchorage, Alaska. She and her husband have jobs they enjoy, but they look around and see mass layoffs in Alaska’s energy sector and cuts to education.

“We are living the middle class dream. We vacation once a year and own a camper,” says Brinkman, who recently received an $11,000 raise as she moved up the ranks from being a bank teller to a management job. But life hinges on staying employed.

Brinkman grew up in a small South Dakota town. She says people there describe this presidential race as akin to “picking the cleanest turd out of the bunch.”

ashley brinkman quote

Americans worry for their kids

People are especially concerned about the future for their children.

In a CNNMoney/E*Trade survey this year, 56% of people said they think their kids will be worse off financially than they are.

Ricardo Bustamente has worked for years as a technician at Verizon. He’s often told “do more with less.” He’s learned that means more work for him as others get laid off, but no extra pay.

“My biggest fear is that this country is going to become a nation of have and have nots. People at my level are slowing dying out,” says Bustamente, who is about to turn 43 and has three kids.

He hasn’t gotten a raise in almost 8 years, but his expenses keep going up. He drives a 10-year old car and his wife diligently clips coupons and buys items on sale.

“I’m literally making less money every year,” he says. If he loses his job, his family might lose their house.

Related: ‘Gordon Gekko’ wants Bernie Sanders to be president

Bustamente likes a lot of what Sanders is saying, especially on making college and health care more affordable, but he doesn’t think Congress would ever enact Sanders’ policies. Still, he is glad Sanders entered the race and has influenced Hillary Clinton.

“Slowly but surely I see myself and others around me eroding. We’re definitely not moving up. We’re moving backward,” he says.

ricardo bustamente

 

http://money.cnn.com/2016/03/16/news/economy/donald-trump-bernie-sanders-us-election/index.html

 

 

 

Are Trade Deals Good For America?

On March 15, 2016, Robert Reich writes on Nation Of Change:

Both Bernie Sanders and Donald Trump are blaming free-trade deals for the decline of working-class jobs and incomes. Are they right?

Clearly, America has lost a significant number of factory jobs over the last three decades. In 1980, 1 in 5 Americans worked in manufacturing. Now it’s 1 in 12.

Today Ohio has a third fewer manufacturing jobs than it had in 2000. Michigan is down 32 percent.

Trade isn’t the only culprit. Technological change has also played a part.

When I visit one of America’s remaining factories, I rarely see assembly-line workers. I don’t see many workers at all. Instead, I find a handful of technicians sitting behind computer screens. They’re linked to fleets of robots and computerized machine tools who do the physical work.

There’s a lively debate among researchers as to whether trade or technology is more responsible for the decline in factory jobs. In reality, the two can’t be separated.

Were it not for technological breakthroughs we wouldn’t have the huge cargo containers, massive container ports and cranes, and satellite and Internet communications systems that have created highly-efficiently worldwide manufacturing systems.

These systems have relocated factory jobs from the United States to Asia, especially to China. Researchers find the biggest losses in American manufacturing started in 2001 when China joined the World Trade Organization, requiring the U.S. to lower tariffs on Chinese goods.

MIT economist David Autor and two co-authors estimate that between 2000 and 2007 the United States lost close to a million manufacturing jobs to China – about a quarter of the total decline in those years. Robert Scott of the Economic Policy Institute puts the loss since then at about 3 million.

This doesn’t mean free trade has been entirely bad for Americans. It’s given us access to cheaper goods, saving the typical American thousands of dollars a year.

A recent study by economists at UCLA and Columbia University found that trade has increased the real incomes of the U.S. middle class by 29 percent, and even more for those with lower incomes.

But trade has widened inequality and imposed a particular burden on America’s blue-collar workers.

If you’re well educated, free trade has given you better access worldwide markets for your skills and insights – resulting directly or indirectly in higher pay.

On the other hand, if you’re not well educated, the trade deals of the last quarter century have very likely taken away the factory job you (or your parents or grandparents) once relied on for steady work with good pay and generous benefits.

These jobs were the backbone of the old American middle class. Now they’re almost all gone, replaced by lower-paying service jobs in places like retail stores, restaurants, hotels, and hospitals.

The change has been dramatic. A half century ago America’s largest private-sector employer was General Motors, whose full-time workers earned an average hourly income (including health and pension benefits) of around $50, in today’s dollars.

Today America’s largest employer is Walmart, whose typical employee earns just over $9 an hour. A third of Walmart’s employees work less than 28 hours per week and don’t even qualify for benefits.

The core problem isn’t really free trade, or even the loss of factory jobs per se. It’s the demise of an entire economic system in which people with only high-school degrees, or less, could count on good and secure jobs.

That old system included strong unions, CEOs with responsibilities to their employees and communities and not just to shareholders, and a financial sector that didn’t demand the highest possible returns every quarter.

Trade has contributed to the loss of this old system, but that doesn’t necessarily mean we should give up on free trade. We should create a new system, in which a greater share of Americans can be winners.

But will we? The underlying political question is whether the winners from America’s current economic system – people with college degrees, the right connections, and good jobs that put them on the winning side of the divide – will support new rules that widen the circle of prosperity to include those who have been on the losing side.

Those new rules might include, for example, a much larger Earned Income Tax Credit (effectively, a wage subsidy for lower-income workers), stronger unions in the service sector, world-class education for all (including free public higher education), a single-payer healthcare plan, more generous Social Security, and higher taxes on the wealthy to pay for all this.

If the winners refuse to budge, America could turn its back on free trade – and much else. Indeed, there’s no telling where the anger we’ve seen this primary might lead.

If the winners refuse to budge, America could turn its back on free trade – and much else. Indeed, there’s no telling where the anger we’ve seen this primary might lead.

http://www.nationofchange.org/news/2016/03/15/are-trade-deals-good-for-america/

 

“It’s Shameless Financial Strip-Mining”: Les Leopold Explains How The 1 Percent Killed The Middle Class

JPMorgan Chase & Co CEO Jamie Dimon testifies before the House Financial Services hearing on "Examining Bank Supervision and Risk Management in Light of JPMorgan Chase's Trading Loss" on Capitol Hill in Washington June 19, 2012. REUTERS/Yuri Gripas (UNITED STATES - Tags: POLITICS BUSINESS) - RTR33VG7
JPMorgan Chase & Co CEO Jamie Dimon testifies before the House Financial Services hearing on “Examining Bank Supervision and Risk Management in Light of JPMorgan Chase’s Trading Loss” on Capitol Hill in Washington June 19, 2012. REUTERS/Yuri Gripas (UNITED STATES – Tags: POLITICS BUSINESS) – RTR33VG7

On March 6, 2016, Elias Isquith writes on Salon:

While the fate of the presidential campaign that talks about the issue more than any other remains uncertain, this much is clear: Despite the general public’s mounting anxiety and awareness, the economic inequality that’s done so much to change American society over the past 40 years has not abated. It may, in fact, be getting worse.

For this reason alone, “Runaway Inequality: An Activist’s Guide to Economic Justice,” the new book from Labor Institute executive director and president Les Leopold, would be worth reading. Thankfully, however, the book has many virtues besides its timeliness. And more than most of the other high-profile books on inequality in recent years, “Runaway Inequality” doesn’t just explain where the U.S. economy went wrong; it also explains how American citizens can organize to get it back on track.

Recently, Salon spoke with Leopold over the phone about the book and economic inequality in general. Our conversation has been edited for clarity and length.

There are a lot of books about inequality out there now, especially in the past five or so years. What does your book bring to the conversation that was otherwise lacking?

I think there were three things that I thought would differ from the ongoing conversation. The first one was that runaway inequality was accelerating. It isn’t just there, it’s growing. The fact that 95 percent of all the new income in the current so-called recovery is going to the top 1 percent is indicative of what’s happening. I don’t think that’s ever happened before in American economic history that I can find. There’s no recovery at the bottom, it just keeps going to the top.

The second one, which I think is even more important, was that I saw runaway inequality as a core issue that linked so many diverse issues. I think it’s kind of funny when someone says, “Well, Bernie Sanders is just interested in inequality or Wall Street. It’s just one issue.” I see it quite differently. I see it as the issue that connects so many other issues, and therefore that leads to the third reason.

I thought that connective tissue could be the basis for building an analysis that could help foster a broad-based progressive-populist movement. That if people could see that their issue silos were actually connected to inequality, it could build bridges amongst various progressive groups that have gotten siloed. Much of the last generation’s worth of progressive action has been within an issue category, be it identity politics or education or housing or environment or so on. There has been a fracturing of what could be a more coherent movement, and I thought “Runaway Inequality,” with its focus on Wall Street and the financialization of the economy, could provide that connective tissue. I didn’t see that anywhere else.

How does your analysis differ from some of the other recent work on inequality?

The slant on Runaway Inequality was different from Piketty and others. There tends to be a story that goes something like this: “American workers kind of got lost in the global shuffle. They don’t have the skills that the more elite people have and we don’t need the manual labor, et cetera. It’s kind of a skill problem, a mismatch between skills and jobs.” I just don’t think that’s true. I think, in fact, the deregulation of the financial system is the driving force of runaway inequality.

I think the way to build a coherent, broad-based populist movement is to focus on runway inequality and Wall Street. That’s what I’m hoping to contribute to.

Why is it that so much of the recovery has gone to those at the top?

That’s the question that takes us to the core analysis. In the late ’70s, roughly, a new economic philosophy really caught hold in both political parties. It originally came from the right, from Milton Friedman and the free marketeers. Academics call it neoliberalism; in the book, we call it the “Better Business Climate.”

It basically was kind of a simple model. Cut taxes, cut regulations, cut back social spending so people will be more eager to find work and be less dependent on the government, and basically undermine the power of labor unions so the economy would run more on market principles and have less inefficiencies in it. There would be more investment and profits, and therefore, all boats would rise. It would lead to kind of a boom economy. That was the theory. I was in graduate school when that was going on, and it was pretty strong, even more liberal economists were sort of giving up on Keynesianism and going in this direction.

What they didn’t teach us and what they never discussed is that it’s one thing to deregulate trucking or airlines or telecommunications, but it’s quite another thing to deregulate the financial sector. When they started deregulating the financial sector, it put in motion something that we refer to as “financial strip mining.” It’s an incredible, insidious process. It started with a lot of corporate raids – we know call them hedge funds, takeovers, private equity companies – financiers who use a little bit of their own money, borrow a huge amount of money, and start buying up companies. In the deregulated atmosphere they bought up thousands of them over time. The debt that was accumulated to do that was basically put on the company. It’s a little bit like if you went out and bought a car with a loan, instead of you paying back the loan the car pays back the loan. That’s what they were doing.

How did this practice change the way those companies were run?

They changed the way the CEOs were paid, so that the CEO acted in behalf of the Wall Street investors. This was really powerful. In 1980, 95 percent of the CEOs’ pay was salary and bonuses, and five percent was stock incentives. Today, it’s virtually reversed. About 85 to 95 percent is stock incentives, and only five percent is salaries and bonuses. So that means the price of the stock is all that matters to the CEO, and of course that’s all that matters to the investors – the hedge funds, the private equity companies. They want to see the stock go up.

It’s a huge change in corporate culture. Now the CEO cares only about raising the stock. What’s the best way to do that? In workshops, we ask working people and community activists this question, and they start talking about, “Well, you’ve got to create a better product, you want to get more market share,” all of the things you would think would lead in that direction. In fact, they did something else.

There was a rule change in 1982, under Reagan. A guy who was the former Head of E.F. Hutton became head of the Securities and Exchange Commission, and he changed the rule about companies buying back their own shares. Before 1982, it was virtually illegal to do that because it was considered stock manipulation. When a company buys back its own shares, it reduces the number of share owners, and therefore every share is worth a little bit more. If you do this, all things being equal, you’re going to boost the share and manipulate the price. The free market’s not doing it, you’re doing it. This guy thought, “Well that’s very efficient. Anyway, competition will even all of that out.”

CEOs and their corporate raider Wall Street partners are thinking, “Oh, this is fantastic. Let’s use the company’s money to raise the price of the share, and then we can cash in on our stock incentives. The outside investors can cash in and leave, ‘pump and dump.’ This is great.”

How prevalent have stock buybacks become, and what are the implications of that?

In 1980, about two percent of a company’s profits were used for stock buybacks. By 2007, 75 percent of all corporate profits were used to buy back their own shares. Forget about R&D, forget about workers’ wages, forget about all that kind of stuff. All that matters to a CEO today is raising the prices of the shares through stock buybacks.

Yesterday, I was at a United Steelworkers meeting and they were very concerned about Carrier moving to Mexico. They’re negotiating and they’ve been making concessions and they still can’t get a deal. It’s a really bad situation. Donald Trump has actually been talking about it as well.

The difference between the negotiations, things are $10 million, $20 million, $30 million dollars. So I quickly go to Google and look up United Technologies, which owns Carrier. In October, United Technologies bought back $9 billion of their own shares. So they’re strip mining the company, and they’re using the worker contracts and the moving to Mexico as a way to generate more cash flow so that they can buy back their own shares. This financial strip mining is phenomenal. The net result is, in 1970 the ratio between a top-100 CEO’s pay and an average worker was 45-to-1. Which is a lot if you think about it this way: if an average worker could afford one car, the CEO could afford 45 cars. Or one home versus 45 homes, or one home that’s 45 times the size of an average worker’s home. We just crunched the numbers again for 2014: it’s 844-to-1. You can’t even conceive of how big that gap is, and it’s a direct result of financial strip mining.

That’s what leads to that acceleration. There’s nothing to stop it now. This is just what they do. When they run out of cash flow to buy back their own shares, they go deeper into debt. They’ll go to the debt market and try to get more money and then turn around and buy back their own shares. This has an incredible effect on virtually every other issue.

How so?

I can just give you one example that really galls me, but it says a lot and shows how many different issues are connected. The Obama administration bailed out the auto industry, and it’s great that they did. The industry was going under due to the Wall Street crash and there was no other reason at all at the time. It was a financial crunch that was taking General Motors under. The guy who negotiated that deal, one of the key negotiators for the Obama administration, left and went to a hedge fund. GM built up a cash cushion because it’s doing better now. I think all of the American people, at the very least, hoped that when GM built up its cash reserves it would do what needed to be done, which is build the best, highest quality, most efficient cars they possibly could for the future generations. This is what we all needed. I think that was the hope.

Well, this guy goes to a hedge fund and takes a position, buys a bunch of shares of GM. And what does it do? It demands that instead of that cash going to R&D, that it goes to the investors through stock buybacks. And about three weeks ago, GM also announced a $9 billion stock buyback plan. It’s shameless financial strip-mining. It does nothing whatsoever for society, but it undermines other goals.

What the book then does is show how this process has huge impact on the public sector. This whole Better Business Climate has a direct connection to the rise of the prison population. So we show how issue after issue is deeply connected to this process of financial strip mining and runaway inequality.

Capitalism has never been particularly warm and fuzzy towards workers, but there was a time before this Better Business Climate concept when businesses were seen as part of communities and were perceived as having obligations to society. They weren’t just doing financial strip mining — even if it made economic sense, hypothetically. 

That’s a very good point. Our story kind of starts there. I personally think that this is a transformation of capitalism. Capitalism was still capitalism from World War II to the late 1970s, but the productivity, which is output per worker hour, basically has risen every year except five from 1947 to today. The line just goes up on a 45-degree angle. Average worker wages, taking into account inflation, also grows from 1947 to around 1977. Rose every single year. When we were in grad school, they taught us this was the iron law – that corporations needed to do this. In other words, being more community minded was part of what made a corporation a corporation, and supply and demand led them, if they wanted to keep that productivity going, to pay their workers reasonably well.

The philosophy at that point was basically “retain and reinvest.” CEOs viewed stakeholders as labor, community and their shareholders. It wasn’t that shareholders were somehow in there for the share price over everything else. Once this Better Business Climate model hit, you look at these same two lines and they just split apart. Worker wages actually go down in terms of real buying power. The gap between the two lines today is so large that if worker wages stayed on that productivity line that they taught us was an iron law, which of course they then repealed as soon as I graduated, if the two lines kept going up together the average weekly wage would be double what it is today. That’s how big a gap took place. Something really big changed.

Where else can we see evidence of that change?

You can see the change most clearly if you look at financial sector wages and non-financial sector wages. From 1947 to 1980, the two lines go up together. There was no premium for working on Wall Street. You could work for Chase Manhattan Bank or Manufacturers Hanover or whatever, or General Motors or Ford, and given your general level of skill, education, experience and so on, you’d earn about the same. There was no premium. And then basically the lines split apart again. Financial sector wages go through the roof after deregulation takes hold, so you get a different kind of capitalism.

Piketty, I think, doesn’t really emphasize that. I think very few people have really stressed what a huge change that is – to have the financial sector draw so much money to itself. By 2006, 40 percent of all corporate profits were going to the financial sector. They only have five percent of the workforce, but they’ve got 40 percent of the profits. The strip mining of wealth was being collected there, going from everybody else to them. I think that’s different than the Robber Baron era, where the industrialists were getting a lot of money, but there was a rising standard of living for everybody else. That has stopped.

The average American worker knows about inequality, but they may also wonder why it should matter to them so long as their own standard of living is improving. How do you reach people who think inequality is more of a problem in the abstract than in their daily lives?

Basically there are two competing narratives. “Who cares about inequality if everybody is doing better in America?” and the narrative that’s in the book, which is, “It’s happening at your expense.” We have a couple of chapters that do nothing else but compare the United States to other countries around the world, indicator after indicator after indicator, and just show how far we’ve fallen. We do lead the world in inequality, military spending and number and percent of prisoners. Of all the developed countries, we are second-to-last in child poverty. Romania is the only country behind us.

They did a nice study of seven countries, according to upward mobility, what are the odds that you would be in an income bracket higher than your parents’, and it turned out in the United States it was about 50-50. We were at the bottom of the list. Number one was Denmark, where the odds were seven-to-one that you would do better than your parents. So even upward mobility, our most cherished dream. It goes on and on. Education – in terms of what we pay our teachers, it’s low. The amount of money we invest in 3-year-old and 4-year-old education, we’re near the bottom of the list. An indicator like longevity, we actually showed a decline in comparison to other countries.

So there’s something really going on. Of course, if you were in the top one-percent, this is the greatest country on earth, I’m sure, because you live in your own world. You have your gated community, your private schools, virtually a private healthcare system. You pay very little tax because your money is offshore, and so on. So there’s this breaking apart of America. American exceptionalism, the American dream is sort of collapsing.

How does this financial strip mining impact the public sector?

Two things are very important to realize about this financialization of corporations. The first is that the interest payment on debt is not taxable, just like the interest payment on the mortgage on someone’s home is tax deductible. There was virtually no corporate debt up until about 1980; corporations used their own resources to fund what they needed. Then, through this corporate raiding process debt became the rage and now there’s like $12 trillion in corporate debt. And as corporate debt goes up, tax payments go down.

For example, corporate tax contributions to state and local government have virtually fallen in half since 1980, which puts more pressure on individual tax receipts. But the wealthy have moved so much money offshore that their taxes have also gone down. So we now have, when it comes to state and local government, a perfectly regressive tax system. The top one percent pay about half the tax rate as the bottom 20 percent. As you go down the brackets, the tax rate actually goes up and up –  the actual percentage that people pay gets higher and higher.

And that decline in overall revenue leads to deficits and calls to cut safety net programs.

That leads to a fiscal crisis. You have this great squeeze on the public sector, because you’ve got workers who haven’t had a raise in a generation in terms of real buying power and you’ve got the wealthy not paying their share. We estimate there’s something like $21 trillion offshore, and we’re losing at least $150 billion in tax revenues on money that should be taxed but isn’t. Now you have corporate inversions, which are putting more downward pressure on corporate taxes.

So the people in the middle that are paying most of the taxes are tapped out. They’re easy prey to a politician who says, “We want to cut the public sector. Teachers are getting paid too much, we can’t afford their pensions.”

Why are programs like education such an easy target for spending cuts?

We’ve got a new philosophy that comes with the Better Business Climate, and it’s total individual responsibility — the idea of a Great Society or a New Deal taking care of people goes out the window. If you want a job, go find it. If you’re poor, it’s your fault. If you want to go to school, take out a loan. The idea of the government providing anything is greatly diminished.

Ask yourself when was the last time a politician said, “I want to create more public sector jobs so we can create jobs for inner-city youth, where unemployment is high.” I don’t think there’s a politician in the country that directly would say that anymore, yet that was common in the ’60s and early ’70s because we knew there was a crisis of employment in rural places and inner cities. There were lots of experiments to figure out how to get employment in those areas, and the public sector grew. It was the track of upward mobility for African Americans, especially African American women, that was their ticket into the middle class: public employment.

Since then, the number of government jobs as a percentage of the U.S. population has gone down as the Better Business Climate model took hold. As runaway inequality accelerated, it put more and more pressure on the public sector, and we basically gave up on the idea of a poverty program.

http://www.salon.com/2016/03/06/its_shameless_financial_strip_mining_les_leopold_explains_how_the_1_percent_killed_the_middle_class/

The problem is rooted in the  money system, which MUST change if we are to achieve equal opportunity and economic justice. I address the core problem which has resulted in the subject of this article in my latest article published by The Huffington Post entitled “Bernie Sanders Can Win By Empowering Every Child, Woman, And Man To Become A Productive Capital Asset Owner at http://www.huffingtonpost.com/gary-reber/bernie-sanders-can-win-by_1_b_9441438.html. This article addresses the wealth divide. I believe this article to be significantly timely in light than NONE of the candidates for president are raising the issue of broadening wealth-creating, income-producing capital asset wealth OWNERSHIP in speeches, interviews, press conferences, debates or political ads. This is the issue that can bolster massive support Bernie Sanders during the primaries and the general election.

Generation Y – The Hidden Wealth Divide

On March 11, 2016, Thom Hartmann writs on The Thom Hartmann Program:

Young Americans are now poorer than retired people. That’s the stunning take away from a new study by The Guardian Newspaper, and they say that the problem not unique to the United States.

According to the data, unemployment, debt, and rising home prices have cut Generation Y out of nearly all the new wealth generated in western societies. In other words, in the United States and Europe, people born between 1980 and the mid ’90s are earning about 20% less than the national average.

These are young individuals and families who were already lagging behind before the crash of 2008, and their low wages haven’t allowed them to catch up during the recovery.

That’s why the secretary general of the OECD said, “Current working-age, middle-class groups are increasingly concerned with their and their children’s job prospects.” He added, “An increasing number of people think children in their country will be worse off financially than their parents.” And, that type of intergenerational inequality only makes the overall wealth divide even worse.

As Paul Johnson of the Institute of Fiscal Studies explained, that means that young people with rich parents will have an unfair advantage over their peers in the early years of their adult life. Mr. Johnson said, “I think the real unfairness issue comes in the sense that it’s become more and more important whether your parents happen to have a house.”

And, he shared the sentiment of many economists who said that policymakers must do more to close the wealth divide between young and old.

If we fail to do so, we are telling an entire generation that they don’t deserve the American Dream that their parents enjoyed. And, we are damning ourselves to the economic stagnation that results when too many people are too broke to spend money in their economy.

This problem may be hitting young people the hardest, but it isn’t just young people who will feel the effects. It’s time to bridge the generational wealth gap and make sure that the American Dream doesn’t simply disappear.

https://www.thomhartmann.com/blog/2016/03/generation-y-hidden-wealth-divide#comment-352270

The Huffington Post has published my latest article entitled “Bernie Sanders Can Win By Empowering Every Child, Woman, And Man To Become A Productive Capital Asset Owner at http://www.huffingtonpost.com/gary-reber/bernie-sanders-can-win-by_1_b_9441438.html. This article addresses the wealth divide. I believe this article to be significantly timely in light than NONE of the candidates for president are raising the issue of broadening wealth-creating, income-producing capital asset wealth OWNERSHIP in speeches, interviews, press conferences, debates or political ads. This is the issue that can bolster massive support Bernie Sanders during the primaries and the general election.

 

"This Trade Deal Is Not About Trade"

On March 4, 2016, Thom Hartmann writes on  his blog:

We’ve known for some time that the “investor-state dispute settlement” process is a threat to our national sovereignty. But, now we know that those international trade courts are also a huge benefit to billionaires and massive corporations.

According to a new study published by York University in Toronto, “the beneficiaries of [the] ISDS… have overwhelmingly been companies with more than $1 billion per year in annual revenue – especially extra-large companies with more than $10 billion – and individuals with more than $100 million in net wealth.”

In other words, massive trade agreements like the TPP aren’t about expanding trade or opening markets – they’re about making rich people and corporations even richer. And, that’s exactly why we must keep push Congress to say no to the Trans Pacific Partnership.

That study addresses how these ISDS courts have been given the appearance of “legitimacy” by allowing people to believe that these systems would also benefit individuals and small businesses, but that’s not how they work in practice.

The authors explained that challenges are not brought to these courts through normal, public processes that could be utilized by the little guy. Instead, cases are only heard by these private panels of arbitrators, who often represent the same massive corporations likely involved in the case in question.

Is it any wonder that nearly all of the money – as in 95% – that was awarded through ISDS challenges went straight to the super wealthy and giant corporations?

As a trade campaigner for Greenpeace explained, “This trade deal is not about trade. It’s about the transfer of power from people to big business.” As if they need another way to cheat us or rig the system.

The reasons to reject the TPP keep adding up, and it’s time to let Congress know that they will vote down this trade deal, or we will vote them out of office.

http://www.thomhartmann.com/blog/2016/03/trade-deal-not-about-trade

No, it is about monopolizing the OWNERSHIP of all FUTURE productive capital wealth among the already wealthy capital OWNERSHIP class, who wield political power throughout the world.

The Trans Pacific Partnership 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.

Rally At The Fed

Know what you can do to effectively reform our corrupt system that surprises equal economic opportunity. Please READ IN ENTIRETY.

Posted March 2, 2016

Michael D. Greaney & Norman Kurland, Center for Economic and Social Justice (www.cesj.org):

The Crisis That Need Not Be, IV: Rally at the Fed

Yesterday we concluded the posting with a promise to tell you what you might do to advance the effort to implement Capital Homesteading . . . aside from being independently wealthy, running for president, and persuading Congress to pass the necessary enabling legislation, that is. . . .

Fortunately, there’s a lot you can do, starting with (but not limited to) visiting the CESJ website and spending a few moments viewing the slide show on the home page, then browsing around a bit and looking over the basic material on Capital Homesteading.

Then you’ll want to gather with students, grassroots leaders and concerned citizens on Friday, April 22, 2016 (two days before the centenary of the Easter Rising in Dublin in 1916), in Washington, DC, for the 12th annual demonstration at the Federal Reserve in Washington, D.C.  Co-hosted by the Coalition for Capital Homesteading and the Center for Economic and Social Justice, the rally will run from 11:00 AM to 1:30 PM, starting at the Federal Reserve Building (between 20th and 21st Streets, NW).

Why We’re Rallying at the Federal Reserve

·     To present how the Federal Reserve, without taxpayer money or adding to federal debt, could create asset-backed money and interest-free, productive credit, as part of a new national strategy for building a “green growth” economy, eliminating government deficits, and creating a nation of capital owners.

·      To show how artificial barriers in our tax and monetary systems could be lifted to create equal ownership opportunities to future capital assets for every citizen.

·      To chart a step-by-step strategy for creating Capital Homesteading models at the community level, passing national legislation (the Capital Homestead Act) and developing global applications to provide every citizen of the world the means to become an owner of income-producing wealth.

The end goal is an economically classless society, which — through the proper use of modern financial technologies by means of which new capital can be funded without the use of existing savings — will establish and maintain equal economic opportunity (and means) for all. And that means all, not just the rich, not just the poor, not just any select special interest group: every child, woman, and man.

Through the proper use of the banking system (commercial banks backed up by the Federal Reserve), “We, the People” can organize and demand the democratization of future ownership opportunities, without taking away any property rights from today’s owners of today’s assets. That’s right: the rich are in this world along with the rest of us. Why not, then, unite to build an economically classless society? Why not end class warfare? Why not finance faster rates of sustainable growth, a healthier environment, new jobs, and transfers of existing assets in ways that close the wealth and income gap? Why not reduce the need for taxpayer supported redistributions and government deficits?

What we should demand is equal access to the means of becoming owners of capital, with everyone on the same footing. We won’t all end up the same way, but we can all start out with the same chance.

It’s not that we don’t need the rich. Of course we “need” them, just as we need every other human being. What we don’t need is their money. We want our own money — and we can get it by reforming the Federal Reserve and managing the financial system in ways that creates new owners . . . and not by making non-owners out of owners.

Background

America and the world community face a continuing collapse of the money and credit system not seen since the Great Depression. Flawed policies of central banks like the Federal Reserve, which supported speculation in the stock market over production of real goods and services, were a root cause of this crisis.

The effects of the global financial crisis are evidenced by inadequate capital credit for businesses of all sizes, and growing unemployment, poverty, and hopelessness among potentially productive Americans and citizens of other countries. Students are graduating with mountainous debt and shrinking prospects for a decent job to repay their loans. Meanwhile, the Fed continues to ignore the obvious differences between productive uses of credit and non-productive uses of credit, pouring money into mounting government deficits and crippling future generations with debt.

America can wait no longer. Now is the time for a comprehensive policy framework that would reform the financial system, democratize governance of the Fed, unify the nation and light a new path for the world.

Taking inspiration from President Abraham Lincoln, the great Unifier and Emancipator, the coalition will call on the White House and Congress to introduce a new direction for Federal Reserve policy — a 21st century counterpart to Lincoln’s Homestead Act. Along with tax and other reforms, the proposed “Capital Homestead Act” would channel the Federal Reserve’s money creation powers to grow our private sector economy, and economically emancipate every man, woman and child in America through a direct and growing capital ownership stake in the new technologies and advanced alternate energy systems that America will need to compete in the global economy.

The Federal Reserve Holds the Key

The key to growing the economy and creating new owners of new income-producing wealth is the democratization of access to productive capital credit. The Capital Homestead Act would employ the Federal Reserve’s existing powers under Section 13 of the Federal Reserve Act and make the Federal Reserve’s money power accessible directly to every American.

By reorganizing the Federal Reserve System and its twelve regional banks into a “fourth branch of government,” every citizen can become a shareholder of this basic institution of money creation. Why “End the Fed,” as some are calling for, when we as citizens should “Own the Fed”?

No longer should the Federal Reserve and our tax system merely serve the special interests of a financial elite or become the tool of the Federal government for financing war and deficit spending. “We the People” must be empowered to hold the Fed accountable and to return it to its true social purpose. With changes in our tax and monetary policies, as embodied in the comprehensive economic plan called “the Capital Homestead Act,” we could create sound, asset-backed money for sustainable private sector growth, and liberate every man, woman and child as a direct owner of new productive wealth.

What You Can Do to Carry This Forward

·      Join us at the “Green Growth, Green Money” Rally on Friday, April 22, 2016, 11:00 a.m. to 1:30 p.m.

·      Invite others to the Rally.

·      Read the “Declaration of Monetary Justice”, sign it and send a copy to your Congressional representatives. Encourage others to do the same.

·      Get organizations and individuals to become members of the Coalition for Capital Homesteading. Go to www.CapitalHomestead.org to add your name to those who join with others supporting the Declaration of Monetary Justice and the Core Principles of the Coalition for Capital Homesteading.

·      Spread the word through Twitter and Facebook.

·      Work with the Coalition for Capital Homesteading to make every citizen an owner and pass the Capital Homestead Act!

We are demanding that the Fed use its existing powers (Section 13, para. 2) to lift barriers to equal access and opportunities for the 99% to become direct owners of productive, income-generating capital. We are sending the politicians a new message:  Pass the Capital Homestead Act to build justice into our money and tax systems, and to grow a vibrant, sustainable economy. We are calling for students and young people to join with us to free all our citizens from wage slavery, welfare slavery, consumer debt slavery, and tax slavery, and to build a future that empowers every person.  It is time to launch a new national objective: “Every Citizen an Owner.

Now you know what you can do to help.  Don’t say we never told you.

The Choice: Rage And Fear, Or Envy And Resentment

On February 29, 2016, Dr. Norman Bailey writes on Globes:

The US presidential election reflects forces that will tear Western society apart unless capital ownership expands beyond the elite.

There is a bitter joke in the US that every two years the American people are asked to choose between the stupid party and the evil party, which is which depending on whether you are a Democrat or a Republican.

This year is different. The Trump/Cruz/Sanders phenomenon indicates that the electoral contest is now between the party of rage and fear (Republican) and the party of envy and resentment (Democrat).

What is behind this transformation of the political scene, not only in the US but in Europe as well, when as recently as the turn of the century things looked so optimistic?

In short, social entropy in the Western World, triggered by the rapidly-increasing concentration of wealth (defined as productive assets), as meticulously traced in the 2014 tome “Capital in the 21st Century” by the French economist Thomas Piketty. The ever-increasing role of capital as a factor of production and the concomitant reduction of the role of labor, as a result of modern technologies such as advanced robotization and three-dimensional manufacturing, is set forth in the 2015 book by Jerry Kaplan, “Humans Need Not Apply”.

The owners of capital are now coming ever-closer to monopolizing wealth, which they share with the scientific, technological and managerial elite–the one percent and the ten percent.

The rest of society finds its standard of living in constant decline, as it becomes increasingly dependent on dead-end jobs and government transfers, now approaching fifty percent of the US population and even more in some of the European countries.

Rage over increasing powerlessness and fear of the immigrant and the terrorist is coupled with envy and resentment of the ten percent on the part of the ninety percent, the result being ever-greater social entropy, as the fabric of society shreds.

In the meantime, the “great recession” created by over-lending on the part of the owners of capital, matched by over-borrowing on the part of the owners of labor, with the resulting and inevitable financial crisis, was met by massive lending by the central banks to rescue the institutions of private capital. This resulted in a huge increase in liquidity to try to address a problem that was essentially a lack of solvency. Coupled with low, zero or negative interest rates, which penalized small and medium-sized savers, stagnation and chronic un- and under-employment resulted.

Economic stagnation and massive over-indebtedness has resulted in a lack of legal investment opportunities for this tsunami of liquidity, and that in turn has led to an ever-increasing level of profits in the criminal economy, with the criminal syndicates providing financial assistance to terrorist organizations, all facilitated by traditional financial and commercial institutions trying to take advantage of the opportunities offered. Banks, other financial institutions, commodities traders and corporations of all types have entered into a negative feedback dance of money-laundering resulting from the exponential increase in drug trafficking, arms- and people-smuggling and terrorist financing, along with a rainbow-spectrum of other anti-social but profitable activities.

Massive corruption has inevitably flowed from all of this.

In the meantime a growing population of under-educated and unemployed young men provide the cannon-fodder for the criminal syndicates and the terrorists.

In short, the rage, fear, envy and resentment are entirely understandable and to a large extent justified. If no steps are taken, and soon, to encourage the expansion of capital ownership in the population as a whole in the Western World (including Israel), through such mechanisms as cooperatives, employee stock ownership plans and community investment trusts, social entropy and its resulting political manifestations will continue to increase, until the fabric of civilized society is torn beyond repair.

http://www.globes.co.il/en/article-the-choice-rage-and-fear-or-envy-and-resentment-1001107002

This is an astute analysis. And yes, the solution is to broaden productive capital OWNERSHIP so that EVERY child, woman, and man is empowered to acquire personal OWNERSHIP shares in the FUTURE capital asset formation of the economy and abate the further concentration of capital OWNERSHIP by the greed of the dominating wealthy capital OWNERSHIP class, whose power dictates the policy direction of both the Democratic and Republican parties.

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/, http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-summary/ and http://www.cesj.org/learn/capital-homesteading/ch-vehicles/.