The 5 Jobs Robots Will Take First

On February 26, 2017, Shelly Palmer writes on Secure:

Oxford University researchers have estimated that 47 percent of U.S. jobs could be automated within the next two decades. But which white-collar jobs will robots take first?

First, we should define “robots” (for this article only) as technologies, such as machine learning algorithms running on purpose-built computer platforms, that have been trained to perform tasks that currently require humans to perform. With this in mind, let’s think about what you’ll do after white-collar work. Oh, and I do have a solution for the short term that will make you the last to lose your job to a robot, but I’m saving it for the end of the article.

1 – Middle Management

If your main job function is taking a number from one box in Excel and putting it in another box in Excel and writing a narrative about how the number got from place to place, robots are knocking at your door. Any job where your “special and unique” knowledge of the industry is applied to divine a causal relationship between numbers in a matrix is going to be replaced first. Be ready.

2 – Commodity Salespeople (Ad Sales, Supplies, etc.)

Unless you sell dreams or magic or negotiate using special perks, bribes or other valuable add-ons that have nothing to do with specifications, price and availability, start thinking about your next gig. Machines can take so much cost out of any sales process (request for proposal, quotation, order and fulfillment system), it is the fiduciary responsibility of your CEO and the board to hire robots. You’re fighting gravity … get out!

3 – Report Writers, Journalists, Authors & Announcers

Writing is tough. But not report writing. Machines can be taught to read data, pattern match images or video, or analyze almost any kind of research materials and create a very readable (or announceable) writing. Text-to-speech systems are evolving so quickly and sound so realistic, I expect both play-by-play and color commentators to be put out of work relatively soon – to say nothing about the numbered days of sports or financial writers. You know that great American novel you’ve been planning to write? Start now, before the machines take a creative writing class.

4 – Accountants & Bookkeepers

Data processing probably created more jobs than it eliminated, but machine learning–based accountants and bookkeepers will be so much better than their human counterparts, you’re going to want to use the machines. Robo-accounting is in its infancy, but it’s awesome at dealing with accounts payable and receivable, inventory control, auditing and several other accounting functions that humans used to be needed to do. Big Four auditing is in for a big shake-up, very soon.

5 – Doctors

This may be one of the only guaranteed positive outcomes of robots’ taking human jobs. The current world population of 7.3 billion is expected to reach 8.5 billion by 2030, 9.7 billion in 2050 and 11.2 billion in 2100, according to a new UN DESA (United Nations Department of Economic and Social Affairs) report. In practice, if everyone who ever wanted to be a doctor became one, we still would not have enough doctors.

The good news is that robots make amazing doctors, diagnosticians and surgeons. According to Memorial Sloan Kettering Cancer Center, IBM’s Watson is teaming up with a dozen US hospitals to offer advice on the best treatments for a range of cancer, and also helping to spot early-stage skin cancers. And ultra-precise robo-surgeons are currently used for everything from knee replacement surgery to vision correction. This trend is continuing at an incredible pace. I’m not sure how robodoc bedside manner will be, but you could program a “Be warm and fuzzy” algorithm and the robodoc would act warm and fuzzy. (Maybe I can get someone to program my human doctors with a warm and fuzzy algorithm?)

But Very Few Jobs Are Safe

During the Obama administration, a report of the president was published (it is no longer available at whitehouse.gov, but here’s the original link) that included a very dire prediction: “There is an 83% chance that workers who earn $20 an hour or less could have their jobs replaced by robots in the next five years. Those in the $40 an hour pay range face a 31% chance of having their jobs taken over by the machines.” Clearly, the robots are coming.

What to Do About It

In What Will You Do After White-Collar Work?, I propose, “First, technological progress is neither good nor bad; it just is. There’s no point in worrying about it, and there is certainly no point trying to add some narrative about the “good ol’ days.” It won’t help anyone. The good news is that we know what’s coming. All we have to do is adapt.

Adapting to this change is going to require us to understand how man-machine partnerships are going to evolve. This is tricky, but not impossible. We know that machine learning is going to be used to automate many, if not most, low-level cognitive tasks. Our goal is to use our high-level cognitive ability to anticipate what parts of our work will be fully automated and what parts of our work will be so hard for machines to do that man-machine partnership is the most practical approach.

With that strategy, we can work on adapting our skills to become better than our peers at leveraging man-machine partnerships. We’ve always been tool-users; now we will become tool-partners.”

Becoming a great man-machine partner team will not save every job, but it is a clear pathway to prolonging your current career while you figure out what your job must evolve into in order to continue to transfer the value of your personal intellectual property into wealth.

https://www.linkedin.com/pulse/5-jobs-robots-take-first-shelly-palmer?trk=eml-email_feed_ecosystem_digest_01-hero-0-null&midToken=AQGiRe1jz01n1A&fromEmail=fromEmail&ut=3Io7m7JTR5vDE1

This is a MUST READ article that pings us to look 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 that holds back technological invention and innovation, our economic policies should focus on wealth-creating, income-producing capital Ownership Creation. If the “machines” are going to take our jobs, then it is imperative that we OWN the “machines.”

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?

Bill Gates Is Clueless On The Economy

Bill Gates speaks at the University of Waterloo on October 12. 2005. (Photo: Mohammad Jangda)

On February 27, 2017, Dean Baker writes on Truthout:

Last week Bill Gates called for taxing robots. He argued that we should impose a tax on companies replacing workers with robots and that the money should be used to retrain the displaced workers. As much as I appreciate the world’s richest person proposing a measure that would redistribute money from people like him to the rest of us, this idea doesn’t make any sense.

Let’s skip over the fact of who would define what a robot is and how, and think about the logic of what Gates is proposing. In effect, Gates wants to put a tax on productivity growth. This is what robots are all about. They allow us to produce more goods and services with the same amount of human labor. Gates is worried that productivity growth is moving along too rapidly and that it will lead to large scale unemployment.

There are two problems with this story. First productivity growth has actually been very slow in recent years. The second problem is that if it were faster, there is no reason it should lead to mass unemployment. Rather, it should lead to rapid growth and increases in living standards.

Starting with the recent history, productivity growth has averaged less than 0.6 percent annually over the last six years. This compares to a rate of 3.0 percent from 1995 to 2005 and also in the quarter century from 1947 to 1973. Gates’ tax would slow productivity growth even further.

It is difficult to see why we would want to do this. Most of the economic problems we face are implicitly a problem of productivity growth being too slow. The argument that budget deficits are a problem is an argument that we can’t produce enough goods and services to accommodate the demand generated by large budget deficits.

The often told tale of a demographic nightmare with too few workers to support a growing population of retirees is also a story of inadequate productivity growth. If we had rapid productivity growth then we would have all the workers we need.

In these and other areas, the conventional view of economists is that productivity growth is too slow. From this perspective, if Bill Gates gets his way then he will be making our main economic problems worse, not better.

Gates’ notion that rapid productivity growth will lead to large-scale unemployment is contradicted by both history and theory. The quarter century from 1947 to 1973 was a period of mostly low unemployment and rapid wage growth. The same was true in the period of rapid productivity growth in the late 1990s.

The theoretical story that would support a high employment economy even with rapid productivity growth is that the Federal Reserve Board should be pushing down interest rates to try to boost demand, as growing productivity increases the ability of the economy to produce more goods and services. In this respect, it is worth noting that the Fed has recently moved to raise interest rates to slow the rate of job growth.

We can also look to boost demand by running large budget deficits. We can spend money on long neglected needs, like providing quality child care, education, or modernizing our infrastructure. Remember, if we have more output potential because of productivity growth, the deficits are not problem.

We can also look to take advantage of increases in productivity growth by allowing workers more leisure time. Workers in the United States put in 20 percent more hours each year on average than workers in other wealthy countries like Germany and the Netherlands. In these countries, it is standard for workers to have five or six weeks a year of paid vacation, as well as paid family leave and paid vacation. We should look to follow this example in the United States as well.

If we pursue these policies to maintain high levels of employment then workers will be well-positioned to secure the benefits of higher productivity in higher wages. This was certainly the story in the quarter century after World War II when real wages rose at a rate of close to two percent annually.

Of course these policies will not ensure that no workers ever suffer from automation. While we can never guarantee that no worker is harmed by improvements in technology in a dynamic economy, we can look to soften the impact.

One obvious policy would be to require severance pay, for example two weeks of pay for each year worked. This would both give displaced workers somewhat of a cushion and changes the incentives for employers. If a company knows that it faces large payout if it lays off a number of long-term employees, then it has more incentive to think about modernizing its facilities and retraining workers. This would be a win-win where the company has an interest in ensuring that its workers are as productive as possible while the workers get to keep their jobs.

In short, there is no reason that productivity growth should ever be viewed as the enemy of workers. We just need the right set of policies to ensure that they share in the gains.

http://www.truth-out.org/opinion/item/39626-bill-gates-is-clueless-on-the-economy

I have problems with Dean Baker’s arguments. First he states that “[robots] allow us to produce more goods and services with the same amount of human labor.” They can do far more including doing work that humans are entirely not capable of or would rather not toil at, and doing such most efficiently and at greater consistent quality at less costs to the business corporations who substitute labor workers with the non-human means of production.

Baker argues that productivity growth has not been as robust as in previous periods. This may be true but significant substitution of labor workers with the non-human means of production is a never-ending process, and the speed at which this shift in the technologies of production occurs is dependent on the demand for economic growth fueled by “customers with money.” No or decreasing levels of “customers with money” means economic growth halts or becomes slower.

The role of physical productive capital is to do ever more of the work, which produces wealth and thus income to those who own productive capital assets. Full employment is not an objective of businesses. Companies strive to keep labor input and other costs at a minimum in order to maximize profits for the owners. They strive to minimize marginal costs, the cost of producing an additional unit of a good, product or service once a business has its fixed costs in place, in order to stay competitive with other companies racing to stay competitive through technological innovation. Reducing marginal costs enables businesses to increase profits, offer goods, products and services at a lower price (which people as consumers seek), or both. Increasingly, new technologies are enabling companies to achieve near-zero cost growth without having to hire people. Thus, 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.

The result is that the price of products and services are extremely competitive as consumers will always seek the lowest cost/quality/performance alternative, and thus for-profit companies are constantly competing with each other (on a local, national and global scale) for attracting “customers with money” to purchase their products or services.

Baker cannot deny the fact that 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 239 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 advances 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 and innovation. 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.

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 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. Yet, sadly, the American people and its leaders still pretend to believe that labor is becoming more productive, and ignore the necessity to broaden personal ownership of wealth-creating, income-producing capital assets simultaneously with the growth of the American economy.

It is this ignorance of the necessity for broadened individual wealth-creating, income-producing capital simultaneously with the growth of the economy that is the real problem. If we financed what growth we have in ways that create new capital owners and the earnings of that capital growth were fully paid out as dividend income to the owners, this would create more “customers with money” to demand exponential growth to realize general affluence for EVERY child, woman, and man. Creating demand is how to speed productivity growth, which also will create significant employment opportunities as labor workers also will be needed to work in conjunction with the non-human means of production to build a future affluent economy. This, in turn, will substantially increase tax revenues to support education and infrastructure revitalization and expansion and other expenditures of societal development.

In a democratic growth economy, based on Kelso’s binary economics (human and non-human productive inputs), the ownership of productive capital assets would be spread more broadly as the economy grows, without taking anything away from the 1 to 10 percent who now own 50 to 90 percent of the corporate wealth. Instead, the ownership pie would desirably get much bigger and their percentage of the total ownership would decrease, as ownership gets broader and broader, benefiting EVERY citizen, including the traditionally disenfranchised poor and working and middle class. Thus, productive capital income, from full earnings dividend payouts, would be distributed more broadly and the demand for products and services would be distributed more broadly from the earnings of capital and result in the sustentation of consumer demand, which will promote environmentally responsible economic growth and more profitable enterprise. That also means that society can profitably employ unused productive capacity and invest in more productive capacity to service the demands of a growth economy. As a result, our business corporations would be enabled to operate more efficiency and competitively, while broadening wealth-creating ownership participation, creating new capital owners and “customers with money” to support the products and services being produced.

Baker’s thinking is manifested in the myth that labor work is the ONLY way to participate in production and earn income, and that individual talent and effort are what distinguish the wealthy from the non-wealthy. Long ago that was once true because labor provided 95 percent of the input into the production of products and services. But today that is not true. Physical capital provides not less than 90 to 95 percent of the input. When the “tools” of capital owners replace labor workers (non-capital owners) as the principal suppliers of products and services, labor employment alone becomes inadequate. Thus, we are left with government policies that redistribute income in one form or another.

Baker suggests that “the Federal Reserve should be pushing down interest rates to try to boost demand, as growing productivity increases the ability of the economy to produce more goods and services” but fails to point out lower interest rates enable the present wealthy capital ownership class to use cheap capital credit secured by their past savings and equity. Instead, what we should lift ownership-concentrating Federal Reserve System credit barriers and other institutional barriers that have historically separated owners from non-owners and link tax and monetary reforms to the goal of expanded capital ownership. This can be done under the existing legal powers of each of the 12 Federal Reserve regional banks, and will not add to the already unsustainable debt of the Federal Government or raise taxes on ordinary taxpayers. We need to free the system of dependency on Wall Street and the accumulated savings and money power of the rich and super-rich who control Wall Street. The Federal Reserve System has stifled the growth of America’s productive capacity through its monetary policy by monetizing public-sector growth and mounting Federal deficits and “Wall Street” bailouts; by favoring speculation over investment; by shortchanging the capital credit needs of entrepreneurs, inventors, farmers, and workers; by increasing the dependency of with usurious consumer credit; and by perpetuating unjust capital credit and ownership barriers between rich Americans and those without savings.

The Federal Reserve Bank should be used to provide interest-free capital credit (including only transaction and risk premiums) and monetize each future capital formation transaction, determined by the same expertise that determines it today––management and banks––that each transaction is viably feasible so that there is virtually no risk in the Federal Reserve. The first layer of risk would be taken by commercial credit insurers, backed by a new government corporation, the Capital Diffusion Reinsurance Corporation, through which the loans could be guaranteed. Such capital credit insurance would substitute for the security demanded by lenders to cover the risk of non-payment, thus enabling the poor and others with no or few assets (the 99 percenters) to overcome the collateralization barrier that excludes the non-halves from access to productive capital. This entity would fulfill the government’s responsibility for the health and prosperity of the American economy.

Baker, instead maintains that high levels of employment will enable workers to be well-positioned to secure the benefits of higher productivity in higher wages. But Baker ignores the imperative to earn higher income through capital ownership and disregards that productivity gains, without system reform, will continue to concentrate and further enrich the already wealthy capital ownership class.

One thing I do agree with Baker on is there is no reason that productivity growth should ever be viewed as the enemy of workers, but ONLY if workers and in the larger context, EVERY child, woman and man share in the productivity gains as OWNERS, and not be limited to wages alone.

Comment from Center for Economic and Social Justice (www.cesj.org):

Bill Gates’s idea about taxing robots has been getting a lot of play recently. The problem is that it would create more problems that it solves. The solid foundation of any economy is whether it can produce what people consume, and whether every producer is a consumer, and vice versa. To put it more simply, if you want a sound economy, you have to produce what you consume, and consume what you produce, one way or another. Thus, if only labor is productive, then everybody needs to own his or her own labor — which, unless you’re a slave, is always the case. If only land is productive, then everybody needs to own land.  If only technology (“robots”) is productive, then everybody needs to own technology.  Obviously, claiming that only one factor is productive is wrong; in a perfect world, everyone needs to own each factor of production, whether labor or capital, in the same proportion as it is used in production. This is not usually feasible, especially when people take advantage of their social nature and specialize, but it gives a good rule of thumb to follow. For example, if technology is ten times more productive than human labor, someone has to own technology that will produce ten times what his or her labor would produce just to have a decent income (absent distortions such as minimum wage laws and redistribution, of course). The bottom line is that only by owning — not taxing — robots will ordinary people gain enough income and restore Say’s Law of Markets so that all production is for consumption, and people have enough production to be able to consume.

 

 

Minimum Wage Massacre: Wendy’s Unleashes 1,000 Robots To Counter Higher Labor Costs

On February 27, 2017, Tyler Durden writes on Zerohedge:

In yet another awkwardly rational response to government intervention in deciding what’s “fair”, the blowback from minimum wage demanding fast food workers has struck again. Wendy’s plans to install self-ordering kiosks in 1,000 of its stores – 16% of its locations nationwide.

“Last year was tough — 5 percent wage inflation,” said Bob Wright, Wendy’s chief operating officer, during his presentation to investors and analysts last week. He added that the company expects wages to rise 4 percent in 2017. “But the real question is what are we doing about it?”

Wright noted that over the past two years, Wendy’s has figured out how to eliminate 31 hours of labor per week from its restaurants and is now working to use technology, such as kiosks, to increase efficiency.

Wendy’s chief information officer, David Trimm, said the kiosks are intended to appeal to younger customers and reduce labor costs. Kiosks also allow customers of the fast food giant to circumvent long lines during peak dining hours while increasing kitchen production.

As Dispatch.com reports, the Dublin-based burger giant started offering kiosks last year, and demand for the technology has been high from both customers and franchise owners.

“There is a huge amount of pull from (franchisees) in order to get them,” David Trimm, Wendy’s chief information officer, said last week during the company’s investors’ day.

 “With the demand we are seeing … we can absolutely see our way to having 1,000 or more restaurants live with kiosks by the end of the year.”

A typical store would get three kiosks for about $15,000. Trimm estimated the payback on those machines would be less than two years, thanks to labor savings and increased sales. Customers still could order at the counter.

Kiosks are where the industry is headed, but Wendy’s is ahead of the curve, said Darren Tristano, vice president with Technomic, a food-service research and consulting firm.

“They are looking to improve their automation and their labor costs, and this is a good way to do it,” he said.

Who could have seen that coming? As we noted previously, minimum wage laws – while advertised under the banner of social justice – do not live up to the claims made by those who tout them. They do not lift low wage earners to a so-called “social minimum”. Indeed, minimum wage laws — imposed at the levels employed in Europe — push a considerable number of people into unemployment. And, unless those newly unemployed qualify for government assistance (read: welfare), they will sink below, or further below, the social minimum.

As Nobelist Milton Friedman correctly quipped, “A minimum wage law is, in reality, a law that makes it illegal for an employer to hire a person with limited skills.”

Despite the piling up mountain of evidence on the harmful “unintended consequences” of artificially high minimum wages, we suspect we already know how this story ends.  After all, it’s much easier to win elections by promising people more stuff rather than less.  And, as an added bonus, when it all goes horribly wrong it’s very easy to lame the blame at the feet of the wealthy 1%’ers who are behind all the layoffs. Checkmate.

http://www.zerohedge.com/news/2017-02-27/minimum-wage-massacre-wendys-unleashes-1000-robots-counter-higher-labor-costs

This is yet another recent article that looks at a future where there will be  hordes of citizens of zero economic value as tectonic shifts in the technologies of production destroy jobs and devalue the worth of labor.  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.

Using common sense, if raising the minimum wage will not kill jobs then why not raise the minimum wage to $25.00 or $50.00 or $100.00 per hour? Of course there are consequences that either are reflected in job elimination or increased prices. Virtually never are the OWNERS of corporations willing reduce profits. If wage levels were not a factor there would be no reason for ANY company to exit production in the United States and move production to foreign lands with significantly less labor costs. Also, there is the impact on pricing levels, as any increases in the cost of production or service always results in pricing increases.

If this were not the case, then no companies would be compelled to seek other more cost-efficient means of production or to move production to foreign countries whose workers are paid far less than  Americans.  Increasingly, companies are seeking more efficient and less long term costs that non-human technology can deliver to reduce their operating costs, provide higher build quality, automate service, and maximize profits for their OWNERS. As is virtually always the case, the OWNERS of companies do not want to reduce profits.

What the proponents of raising the minimum wage fundamentally are addressing is that low-paid American workers need to earn more income.

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 Robot That Takes Your Job Should Pay Taxes, Says Bill Gates

On February 17, 2017, Kevin J. Delaney writes on Quartz Media LLC [US]:
Robots are taking human jobs. But Bill Gates believes that governments should tax companies’ use of them, as a way to at least temporarily slow the spread of automation and to fund other types of employment.

It’s a striking position from the world’s richest man and a self-described techno-optimist who co-founded Microsoft, one of the leading players in artificial-intelligence technology.

In a recent interview with Quartz, Gates said that a robot tax could finance jobs taking care of elderly people or working with kids in schools, for which needs are unmet and to which humans are particularly well suited. He argues that governments must oversee such programs rather than relying on businesses, in order to redirect the jobs to help people with lower incomes. The idea is not totally theoretical: EU lawmakers considered a proposal to tax robot owners to pay for training for workers who lose their jobs, though on Feb. 16 the legislators ultimately rejected it.

“You ought to be willing to raise the tax level and even slow down the speed” of automation, Gates argues. That’s because the technology and business cases for replacing humans in a wide range of jobs are arriving simultaneously, and it’s important to be able to manage that displacement. “You cross the threshold of job replacement of certain activities all sort of at once,” Gates says, citing warehouse work and driving as some of the job categories that in the next 20 years will have robots doing them.

You can watch Gates’ remarks in the video above. Below is a transcript, lightly edited for style and clarity.

Quartz: What do you think of a robot tax? This is the idea that in order to generate funds for training of workers, in areas such as manufacturing, who are displaced by automation, one concrete thing that governments could do is tax the installation of a robot in a factory, for example.

Bill Gates: Certainly there will be taxes that relate to automation. Right now, the human worker who does, say, $50,000 worth of work in a factory, that income is taxed and you get income tax, social security tax, all those things. If a robot comes in to do the same thing, you’d think that we’d tax the robot at a similar level.

And what the world wants is to take this opportunity to make all the goods and services we have today, and free up labor, let us do a better job of reaching out to the elderly, having smaller class sizes, helping kids with special needs. You know, all of those are things where human empathy and understanding are still very, very unique. And we still deal with an immense shortage of people to help out there.

So if you can take the labor that used to do the thing automation replaces, and financially and training-wise and fulfillment-wise have that person go off and do these other things, then you’re net ahead. But you can’t just give up that income tax, because that’s part of how you’ve been funding that level of human workers.

And so you could introduce a tax on robots…

There are many ways to take that extra productivity and generate more taxes. Exactly how you’d do it, measure it, you know, it’s interesting for people to start talking about now. Some of it can come on the profits that are generated by the labor-saving efficiency there. Some of it can come directly in some type of robot tax. I don’t think the robot companies are going to be outraged that there might be a tax. It’s OK.

Could youfigure out a way to do it that didn’t dis-incentivize innovation?

Well, at a time when people are saying that the arrival of that robot is a net loss because of displacement, you ought to be willing to raise the tax level and even slow down the speed of that adoption somewhat to figure out, “OK, what about the communities where this has a particularly big impact? Which transition programs have worked and what type of funding do those require?”

You cross the threshold of job-replacement of certain activities all sort of at once. So, you know, warehouse work, driving, room cleanup, there’s quite a few things that are meaningful job categories that, certainly in the next 20 years, being thoughtful about that extra supply is a net benefit. It’s important to have the policies to go with that.

People should be figuring it out. It is really bad if people overall have more fear about what innovation is going to do than they have enthusiasm. That means they won’t shape it for the positive things it can do. And, you know, taxation is certainly a better way to handle it than just banning some elements of it. But [innovation] appears in many forms, like self-order at a restaurant—what do you call that? There’s a Silicon Valley machine that can make hamburgers without human hands—seriously! No human hands touch the thing. [Laughs]

And you’re more on the side that government should play an active role rather than rely on businesses to figure this out?

Well, business can’t. If you want to do [something about] inequity, a lot of the excess labor is going to need to go help the people who have lower incomes. And so it means that you can amp up social services for old people and handicapped people and you can take the education sector and put more labor in there. Yes, some of it will go to, “Hey, we’ll be richer and people will buy more things.” But the inequity-solving part, absolutely government’s got a big role to play there. The nice thing about taxation though, is that it really separates the issue: “OK, so that gives you the resources, now how do you want to deploy it?”

The robot that takes your job should pay taxes, says Bill Gates

The basis of this article is 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.

Bill Gates must have lost his mind if he now assumes that “robots” or the broader non-human factor of production are real people and can pay taxes. No they are not, but real people do OWN the non-human means of production, they are, in fact, a tiny wealthy capital ownership class of Americans, representing less than 1 percent of the population. This wealthy capital ownership class rigged the system to ensure that they will OWN the future technologies that will propel greeter productivity and efficiency in the production of products and services.

What people need is income, and a handout generated by taxing those who are productive, whether as labors or as owners of non-human productive capital assets, is not the solution. Instead we need to empower EVERY citizen to become productive either through their labor input or their ownership of the non-human factor of production they contribute to the economy.

As was declared back in 1976 by the Joint Economic Committee of the Congress of the United States: “To provide a realistic opportunity for more U.S. citizens to become owners of capital, and to provide an expanded source of equity financing for corporations, it should be made national policy to pursue the goal of broadened capital ownership.”

Because non-human 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?

Both Bill Gates and Elon Musk have recently spoken about a solution to economic inequality based on a Universal Basic Income. Yet both Elon Musk and Bill Gates are significant capital owners who do not see empowering EVERY citizen to become a capital owner a solution. Instead they suggest that everyone else become dependent on the State, while they and others in the wealthy capital ownership class continue to amass more wealth-creating, income-producing capital asset formation ownership, and retain the political power that follows property ownership .

Their solution to the ever widing income inequality gap is to redistribute income earned by those productive in society to provide a subsistence universal income without creating universal individual citizen capital ownership in the productive capital assets of the future. Of course. the existing wealthy capital ownership class wants to OWN the future while pacifying the masses of American citizens by providing subsistence incomes to each citizen whose income source otherwise is limited in reality to a job.

Elon Musk represents one of the perfect examples of crony-end game capitalism disguised to the taxpaying citizens as necessary to create jobs and advance solutions to environmental enhancement. In his case, the game is played in the name of alternative transportation, planetary colonization and the environment. NO WHERE is there a stipulation that the subsidies, tax exemptions, loans and grants be conditioned on 100 percent worker owned companies, not as a collective but in individual worker titles, or that the financing is structured so that the workers will end up owning a significant share of the new capital assets and the benefits of the future wealth-creation and income generated.

While thousands of jobs will be created in the future, subsidized by taxpayer incentives, in large measure the new factories will be technologically infused with advanced “robotics,” digitalized operations, and super-automation capital assets, that will be OWNED by Elon Musk and a select narrow group of wealthy owners who get to cash in on taxpayer incentives and subsidies while the worth of the corporations accelerate.

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

Instead of socialist redistribution of crums to the masses, what is needed is a massive loan guarantee economic growth plan which aims to balance production and consumption by empowering EVERY American to acquire private, individual ownership in FUTURE wealth-creating, income-producing productive capital asset investments and pay for their loans out of the earnings of the investments, without the requirement of past savings or any source of income. This approach embraces the logic of corporate finance, that is, that the investments will over time, typically within 3 to 7 years, produce income to pay for the capital credit extended and to continue to produce income for the corporate owners over the course of numerous years in the future.

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

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

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

What we need is for the Federal Reserve to stop monetizing unproductive debt, including bailouts of banks “too big to fail,” “auto companies,” 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. The CHA would process an equal allocation of productive credit to every citizen exclusively for purchasing full-dividend payout shares in companies needing funds for growing the economy and private sector jobs for local, national and global markets. The shares would be purchased on credit wholly backed by projected “future savings” in the form of new productive capital assets as well as the future marketable goods and services produced by the newly added technology, renewable energy systems, plant, rentable space and infrastructure added to the economy. Risk of default on each stock acquisition loan would be covered by private sector capital credit risk insurance and reinsurance back  by the government, but would not require citizens to reduce their funds for consumption to purchase shares. ALL subsidized loan guarantees would have the stipulation that the companies benefiting from the loan infusion demonstrate NEW owners be created among their employees and others in which ownership shares are purchased on credit wholly backed by projected “future savings” in the form of new productive capital assets.

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

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

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

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

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

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

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

Support the Capital Homestead Act 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/.

Comment from Center for Economic and Social Justice (www.cesj.org):

Bill Gates’s idea about taxing robots has been getting a lot of play recently. The problem is that it would create more problems that it solves. The solid foundation of any economy is whether it can produce what people consume, and whether every producer is a consumer, and vice versa. To put it more simply, if you want a sound economy, you have to produce what you consume, and consume what you produce, one way or another. Thus, if only labor is productive, then everybody needs to own his or her own labor — which, unless you’re a slave, is always the case. If only land is productive, then everybody needs to own land.  If only technology (“robots”) is productive, then everybody needs to own technology.  Obviously, claiming that only one factor is productive is wrong; in a perfect world, everyone needs to own each factor of production, whether labor or capital, in the same proportion as it is used in production. This is not usually feasible, especially when people take advantage of their social nature and specialize, but it gives a good rule of thumb to follow. For example, if technology is ten times more productive than human labor, someone has to own technology that will produce ten times what his or her labor would produce just to have a decent income (absent distortions such as minimum wage laws and redistribution, of course). The bottom line is that only by owning — not taxing — robots will ordinary people gain enough income and restore Say’s Law of Markets so that all production is for consumption, and people have enough production to be able to consume.

Twenty-First Century Coaching And Team Building

On February 27, 2017, William R. Mansfield, Founder, Mansfield Institute for Public Policy and Social Change, Inc. writes on The Just Third Way Web site:

How will the economic realities of the 21st Century shape the way companies train and develop their workforces?

The nature of production, work and how most people earn their living have changed dramatically. Labor-replacing technologies (including robotics, advanced information systems and artificial intelligence), and global competition driven by an unrelenting push for short-term quarterly gains, have forever transformed local, national and the global economies.

Virtually entire industries have moved offshore seeking lower-cost labor. Many companies that have remained in the U.S. have shifted to reliance on contingent workers, outsourcing, and automation. Many of the first-rung jobs on the career ladder have simply disappeared. Job security has become an anachronism, a story told by the elders of earlier days. And retirement income? That’s another major challenge most working people have yet to face.

The root of this economic dilemma is that owners of labor are being displaced by technology . . . and they don’t own and receive the profits produced by the technology that is displacing them.  Yes, there is a serious problem with “job flight” to lower cost wage systems.  If ordinary workers owned the technology, however, and didn’t have to rely on labor alone for income, labor costs could be kept to a minimum.  As labor statesman Walter Reuther pointed out so long ago, if income comes from bottom-line profits instead of increasing the costs of production, workers will have more income, and prices will stay low and competitive in global trade.

Good jobs with decent pay are getting harder to find, particularly for millennials entering the workforce, even with advanced degrees.  But occasionally a “good news” story appears featuring workers gaining a leg-up in a firm that does well by its people.

From the Wage System to the Ownership System

Across the country, in all sectors and in significant numbers, are workplaces that respect the dignity of workers and maintain the efficacy of work. Not only do they offer decent wages and retirement income, but they extend pathways for dramatic earnings gains and career advancement through shared ownership opportunities.

What’s more, these worker-owned firms demonstrate proven success, often outperforming their peers, because of (not despite) their commitment to workers. According to the National Center for Employee Ownership in Oakland, California, companies that share ownership through Employee Stock Ownership Plans or ESOPs, regularly share profits, and practice participatory management and governance, are 150% more profitable than otherwise comparable firms.

These firms have put in place practical solutions that simultaneously bolster the company’s competitiveness and profitability, economically empower workers, and strengthen long-term economic prospects for the whole community. Such organizations have already found some answers to 21st Century challenges.

Worker ownership is good, but it may not be enough.  Even a worker-owned company needs “structures of justice” within the company and its operations.

How money is created determines who owns capital.

One essential structure of justice relates to how a company’s growth is financed. Where the money comes from for expansion will determine who has future ownership and control in the company.

Model ESOP companies are normally financed by private sector lenders through loans that meet the company’s needs for productive capital assets. Such loans under Federal ESOP laws are repaid entirely with future pretax profits (i.e., “future savings”). This allows every worker to earn shares through a tax-sheltered ESOP trust without reducing their savings, wages, salaries or bonuses. No one puts up his or her own money to acquire shares on capital credit repayable from each year’s profits of the company.

ESOPs can, therefore, be designed to allocate each year an equal number of shares that have been paid for to every full-time worker, from the top executive to the janitor, despite their differences in salaries, wages and bonuses.

Democratizing and equalizing future ownership opportunities as a fundamental human right of every worker will promote a more democratic and participatory “servant leadership” culture and governance system within the company. True “servant leaders” know (or learn) how to help educate and effectively empower every member of the team to serve others and together provide the greatest possible value to their customers. Servant leaders must themselves be committed to constantly improving the “ownership culture” for all present and future worker-owners in the company.

That presents a new challenge for today’s leaders.  Clearly a work environment in which everyone is a co-owner is very different from the typical one in which those shareholders who hold the controlling shares appoint members of the board of directors, and the board hires management to keep the workers in line for the “benefit” of the controlling shareholders. The board then has the power to violate the historically recognized private property (ownership) rights of owners by not paying out profits — withholding “the fruits of ownership” to which minority shareholders are entitled. Keeping profits within the company (under the rationalization of “retained earnings”) further concentrates ownership powers of the controlling shareholders and the managers they select. The only ones who win in such a “typical” business situation are the majority owners and the top managers they control.

When the workers share in the risks, rewards, rights and responsibilities of ownership, the work environment changes profoundly. Management and board members must act like true servant leaders, who can lead, teach and coach, not just boss workers around.  The board and management must respect the dignity of workers in ways that benefit all those with a stake in the company’s success, including customers, vendors, and the community.

All the things people now look for in traditional jobs — and much more — can be achieved through a sound, justice-based program whereby workers become owners of the company and are not simply manipulated to “think like owners“ merely to create profits for others. That requires a new type of leader who inspires, teaches, guides and empowers others as partners and respected members of a team.

http://just3rdway.blogspot.com/2017/02/twenty-first-century-coaching-and-team_27.html?spref=fb

This article by William Mansfield, is spot on in his analysis and solution to economic inequality. Mansfield effectively addresses the subject of work and non-human productive capital ownership.

Broadening The Ownership Of New Capital: ESOPs And Other Alternatives

http://ufdc.ufl.edu/AA00022586/00001/1x

This is educational and ties to the conclusion of the report by the 1976 Joint Economic Committee, which stated “To provide a realistic opportunity for more U.S. citizens to become owners of capital, and to provide an expanded source of equity financing for corporations, it should be made national policy to pursue the goal of broadened capital ownership.” Also see http://www.foreconomicjustice.org/?p=16347

Taxing Robots And “Free Money” In A Future Of Job Automation

On February 26, 2017, Kathleen Riley writes on Futurism:

As technology advances, we are finding newer and cheaper ways to manufacture goods and offer services.

This has come in the form of job automation and artificial intelligence (AI), where the value of human labor decreases resulting in massive losses of jobs. Approximately 47 percent of the entire US work force is predicted to phase out with the progression of automation and AI.

Before Obama left the White House, he left a strong message for Americans stating that strong measures need to be taken in order to prevent millions of job losses. So far, there have been two major proposed solutions to these concerns: Universal Basic Income (UBI) and robot taxes.

TAXING ROBOTS

It sounds strange that we’d be forcing a non sentient object to pay taxes, but many people including Bill Gates have sided with this option. Gates stated that if you tax robots, you’ll prevent the loss of income tax revenue normally made by human laborers. The total taxed amount could then be used to retrain and prepare displaced human workers for employment again.

But how much would you know to tax robots? Would the amount be the same across all robots? It all sounds like a logistical nightmare. But companies who opt for automation and AI in their labor force would pay tremendous up-front costs on top of the potentially hefty tax amount. It could possibly deter companies from even moving towards using robots in the first place.

GETTING PAID TO BREATHE

Got a pulse? Well you’re in luck. Universal Basic Income (UBI) is making waves as another popular alternative.

The basic idea of UBI is that every citizen of a country receives a monthly stipend that they can use to cover living expenses. This amount requires no fine print, you pretty much just have to be alive.

Elon Musk swears by UBI, but economists are still debating on whether or not the practice is cost effective. The cost of the welfare program could exceed the overall benefit. It’s also necessary to mention the biggest concern for UBI, which is the question of motivation. If a person is handed a check every month for doing nothing, what incentive would they have for trying to find employment?

OUR SOLUTION?

Finland recently launched its UBI program for 2,000 lucky Finnish citizens, with a couple success stories already floating around.

Juha Jarvinen was one of the 2,000 recipients of UBI, and he stated that the checks would greatly motivate him to restart his previously failed business. The practice was also tested in India by several different NGOs, who found that workers who received cash handouts doubled production rates.

For the generation of millenials, the shift to job automation might not be as bad. Considered the generation to hop through jobs, millenials have been shown to place more emphasis on personal fulfillment rather than income.

For the others who rely on a consistent job and have found employment with the same company for many years, we need to take quick action in developing new occupations and industries. Whether it be UBI or robot taxes, we are still going to face mass job automation and artificial intelligence looming over the labor force in the coming years. It’s important to prevent the problem rather than creating a solution once it happens.

https://futurism.com/taxing-robots-and-free-money-in-a-future-of-job-automation/

The basis of this article is 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.

What people need is income and a handout generated by taxing those who are productive, whether as labors or as owners of non-human productive capital assets, is not the solution. Instead we need to empower EVERY citizen to become productive either through their labor input or their ownership of the non-human factor of production they contribute to the economy.

As was declared back in 1976 by the Joint Economic Committee of the Congress of the United States: “To provide a realistic opportunity for more U.S. citizens to become owners of capital, and to provide an expanded source of equity financing for corporations, it should be made national policy to pursue the goal of broadened capital ownership.”

Because non-human 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?

Both Bill Gates and Elon Musk have recently spoken about a solution to economic inequality based on a Universal Basic Income. Yet both Elon Musk and Bill Gates are significant capital owners who do not see empowering EVERY citizen to become a capital owner a solution. Instead they suggest that everyone else become dependent on the State, while they and others in the wealthy capital ownership class continue to amass more wealth-creating, income-producing capital asset formation ownership, and retain the political power that follows property ownership .

Their solution and that of Futurism to the ever widing income inequality gap is to redistribute income earned by those productive in society to provide a subsistence universal income without creating universal individual citizen capital ownership in the productive capital assets of the future. Of course. the existing wealthy capital ownership class wants to OWN the future while pacifying the masses of American citizens by providing subsistence incomes to each citizen whose income source otherwise is limited in reality to a job.

Elon Musk represents one of the perfect examples of crony-end game capitalism disguised to the taxpaying citizens as necessary to create jobs and advance solutions to environmental enhancement. In his case, the game is played in the name of alternative transportation, planetary colonization and the environment. NO WHERE is there a stipulation that the subsidies, tax exemptions, loans and grants be conditioned on 100 percent worker owned companies, not as a collective but in individual worker titles, or that the financing is structured so that the workers will end up owning a significant share of the new capital assets and the benefits of the future wealth-creation and income generated.

While thousands of jobs will be created in the future, subsidized by taxpayer incentives, in large measure the new factories will be technologically infused with advanced “robotics,” digitalized operations, and super-automation capital assets, that will be OWNED by Elon Musk and a select narrow group of wealthy owners who get to cash in on taxpayer incentives and subsidies while the worth of the corporations accelerate.

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

Instead of socialist redistribution of crums to the masses, what is needed is a massive loan guarantee economic growth plan which aims to balance production and consumption by empowering EVERY American to acquire private, individual ownership in FUTURE wealth-creating, income-producing productive capital asset investments and pay for their loans out of the earnings of the investments, without the requirement of past savings or any source of income. This approach embraces the logic of corporate finance, that is, that the investments will over time, typically within 3 to 7 years, produce income to pay for the capital credit extended and to continue to produce income for the corporate owners over the course of numerous years in the future.

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

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

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

What we need is for the Federal Reserve to stop monetizing unproductive debt, including bailouts of banks “too big to fail,” “auto companies,” 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. The CHA would process an equal allocation of productive credit to every citizen exclusively for purchasing full-dividend payout shares in companies needing funds for growing the economy and private sector jobs for local, national and global markets. The shares would be purchased on credit wholly backed by projected “future savings” in the form of new productive capital assets as well as the future marketable goods and services produced by the newly added technology, renewable energy systems, plant, rentable space and infrastructure added to the economy. Risk of default on each stock acquisition loan would be covered by private sector capital credit risk insurance and reinsurance back  by the government, but would not require citizens to reduce their funds for consumption to purchase shares. ALL subsidized loan guarantees would have the stipulation that the companies benefiting from the loan infusion demonstrate NEW owners be created among their employees and others in which ownership shares are purchased on credit wholly backed by projected “future savings” in the form of new productive capital assets.

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

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

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

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

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

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

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

Support the Capital Homestead Act 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/.

The 1976 Joint Economic Report

The 1976 Joint Economic Report
Joint Economic Committee
Congress of the United States
Senate Report No. 94-690
 
BROADENING THE OWNERSHIP OF NEW CAPITAL
 
Wealth in the United States is concentrated in the hands of a rela- tively small fraction of the population. Unfortunately, the data on wealth are sparse. The last comprehensive attempt by the Federal Government to measure its characteristics and distribution was made by the Federal Reserve Board in 1962. It was estimated that more than three-quarters of the country’s total wealth was owned by less than one-fifth of the people, while more than one-quarter was owned by just the top 0.5 percent. The Federal Government should remedy the lack of up-to-date information on personal wealth through periodic surveys and comprehensive reports on this subject.
 
(See recommendations for changes in taxes on small business in the section on this subject at the end of Chapter V. ‘Senator Proxmire states: “The corporate income tax is not a progressive tax. Its incidence falls on consumers and employees far more than on stockholders. It inhibits investment. It should be reduced as the President has requested. I would favor an even greater reduction.”)
 
The distribution of wealth reflects in large part the pattern of ownership of non-residential capital with corporate shares being one of its principle forms. This category of wealth is much more concentrated than total wealth, with the top percentile of the personal income distribution owning 51 percent of the market value of individually owned corporate stock and receiving 47 percent of the dividends. Meanwhile, the new capital assets generated by businesses, which in recent years have averaged well over $100 billion annually, redound largely to the benefit of these persons who already have great wealth.
 
The number of shareholders, moreover, declined by some 18 percent from 1970 to 1975, and data suggest that young people today are not purchasing stocks in significant volume. Balancing this declining role of the individual investor has been the rise of financial institutions, which since 1950 have more than trebled their share of the market value of stock holdings.
 
To begin to diffuse the ownership of capital and to provide an opportunity for citizens of moderate incomes to become owners of capital rather than relying solely on their labor as a source of income and security, the Committee recommends the adoption of a national policy to foster the goal of broadened ownership. The spirit of this goal and what it purports to accomplish was endorsed by many of the witnesses at our regional hearings.
 
Without getting into specifics, the types of programs which could be established to help meet this goal will be outlined. Such alternative methods of broadening capital ownership are under study by the Committee.
 
In the individual firm, employee ownership can be encouraged directly through tax incentives to the employees to purchase stock or to firms to place newly issued stock into the hands of their employees.
 
The latter approach, known as Employee Stock Ownership Plans (ESOPs), was examined in recent hearings by the Committee. An alternative plan involves multi-firm funds which would receive
tax-favored contributions from affiliated firms and issue nonnegotiable fund certificates to the employees. This type of fund, which has been in operation in France and West Germany, may diversify its portfolio, although it may ‘be limited to particular industries and regions.
 
Providing ownership opportunities not just to employees but to citizens at large could be accomplished through various devices. One example would be the establishment of funds which would accumulate personal savings on a tax-preferred basis and use them to acquire a diversified portfolio of equity shares in corporations. For instance, individuals with earned income not exceeding $20,000 could be allowed to save up to $3,000 a year in one or more funds and to deduct this amount from their taxable incomes. Whatever the means used, a basic objective should be to distribute newly created capital broadly among the population. Such a policy
would redress a major imbalance in our society and has the potential for strengthening future business growth.
 
To provide a realistic opportunity for more U.S. citizens to become owners of capital, and to provide an expanded source of equity financing for corporations, it should be made national policy to pursue the goal of broadened capital ownership.
Congress also should request from the Administration
a quadrennial report on the ownership of wealth in this country which would assist in evaluating how successfully the base of wealth was being broadened over time.

The GOP Unveils A ‘Permanent Save’ For Social Security — With Massive Benefit Cuts

On December 9, 2016, Michael Hiltzik writes in the Los Angeles Times:

Amid all the hand-wringing over Republican plans to eviscerate Medicare and Medicaid and repeal the Affordable Care Act, it shouldn’t be overlooked that the GOP has the knives out for Social Security too.

The latest reminder comes from Rep. Sam Johnson, R-Tex., chairman of the Ways and Means Social Security subcommittee. Johnson on Thursday uncorked what he termed a “plan to permanently save Social Security.”

Followers of GOP habits won’t be surprised to learn that it achieves this goal entirely through benefit cuts, without a dime of new revenues such as higher payroll taxes on the wealthy. In fact, Johnson’s plan reduces the resources coming into the program by eliminating a key tax –another way that he absolves richer Americans of paying their fair share, while increasing the burdens of retirement for almost everyone else.

Predictably, this plan has already been hailed by the Committee for a Responsible Federal Budget, a billionaire’s front group that likes to portray itself as a neutral budget watchdog. (The foundation of hedge fund billionaire Peter G. Peterson, whose hostility to Social Security is well-documented, provided $3.3 million in funding for the committee in 2015; that’s the equivalent of about half the group’s revenue of $7.1 million in 2014)

The group calls Johnson’s proposal “a thoughtful plan” and the product of “true leadership.” But it also says that “revenue and benefit changes both need to be on the table.” Johnson’s plan doesn’t meet that standard at all.

Typically, Social Security “reform” proposals at least pay lip service to the fact that the payroll tax has been giving the wealthy a larger and larger pass, by covering an ever-shrinking percentage of their wages and exempting the capital gains and dividends that make up a larger share of high-end income.

Johnson’s plan doesn’t mention that at all. It does, however, give higher-income beneficiaries a tax cut by eliminating income tax on benefits starting in 2045. The tax affects about 30% of retirees by treating at least half of the benefits of those earning more than $32,000 as taxable income.

By law, the tax must be credited to the Social Security system. It’s scheduled to bring in as much as $78 billion in 2025. Johnson’s rationale here is murky. If Social Security is in such bad shape that he sees the need to slash benefits, why cut its revenue, too?

Social Security’s actuaries, who analyzed the plan at Johnson’s request, agreed that it would improve the program’s finances, but noted that virtually every provision involved a benefit cut.

Let’s take a look.

Johnson’s “Social Security Reform Act” changes the program’s benefit formula to provide modest benefit increases for the lowest-earning workers in the system— those who earned up to an annual average of about $22,105 over their lifetimes in inflation-indexed pay — with cuts for everyone else ranging from 17% to as much as 43%, compared with currently scheduled benefits, by 2080.

The act would cut way back on cost-of-living increases for retirees. It would do this by cutting out cost-of-living raises entirely for retirees earning adjusted gross income of more than $85,000 ($170,000 for couples) starting in December 2018, and using the chained consumer price index to calculate the COLA for all others. (The income threshold would be adjusted for inflation.)

Johnson asserts that the chained CPI is “a more accurate measure of inflation,” but he’s blowing smoke. There are no grounds to say the index, which was heavily promoted a few years ago by yet another gang associated with Peter G. Peterson, is more accurate than the index used today. If anything, it understates price increases in housing and healthcare, which have especially pronounced impacts on the household budgets of seniors. Conservatives like it for one reason: It grows more slowly than the regular CPI, so it’s cheaper. As we explained a few years ago, using the chained CPI is a benefit cut, and one that gets larger year by year. Period.

Johnson would also cut benefits for the spouses and children of retired and disabled workers by pegging them to average wages, rather than to the wages actually earned by the worker. This pares the benefits for families earning more than the average.

Finally, the measure also raises the full retirement age, which is now pegged to reach 67 by 2022, to 69 by 2030. this means that workers taking early retirement, which is permitted as soon as age 62, would face a steeper cut in annual benefits for starting early. Johnson would increase the age up to which delayed retirement credits may be earned to 72, from 70. Workers who can afford to put off claiming Social Security will reap the great rewards from this maneuver; by their nature, they tend to be wealthier people who have the resources to live on while deferring Social Security.

Conservatives often argue that raising the retirement age is innocuous because Americans are living longer. Their lengthier retirements, it’s argued, put an unexpected strain on Social Security’s finances, and they don’t need all that money anyway.

But this change is unfair and short-sighted for several reasons. One is that life expectancy is closely tied to income, education and careers. Well-heeled persons who spend much of their lives behind a desk — congressmen from Texas and analysts at billionaire-funded think tanks, say — are more likely to live longer and can stay in their careers well into their 60s and 70s. That’s not so for workers who spent their careers in menial or physically challenging work.

Raising the retirement age is also predicated on life expectancies rising indefinitely. Just as trees don’t grow into the stratosphere, there’s no guarantee this trend isn’t finite. Indeed, just this week the Centers for Disease Control and Prevention reported that U.S. life expectancies actually declined last year for the first time since 1993, falling to 78.8 years at birth from 78.9 in 2014, statistically a major decline.

It may be unwise to draw too sweeping a conclusion from a single year’s figures, but this statistic is a reminder that life expectancy is a dynamic phenomenon, and we may merely have been living through a two-decade bump. Nature may have its own ideas about the appropriate average lifespan for members of the human race.

The bottom line is that Johnson’s plan is one of the most cynical and dishonest Social Security “fixes” to come down the Republican chute in years. It “fixes” Social Security in the same sense that one “fixes” a cat, and makes the program less relevant for millions of Americans facing retirement with ever shrinking resources.

Is this a serious policy prescription? Social Security advocates are properly aghast. As Nancy Altman, co-founder of Social Security Works, put it Friday, in the last election “no one voted for massive cuts to Social Security, nor to end the program as we know it.” Donald Trump even campaigned on a hands-off pledge.

“Trump needs to immediately reassure the American people that he will keep his campaign promise and veto this awful bill,” Altman said. “He should tweet that immediately.”

http://www.latimes.com/business/hiltzik/la-fi-hiltzik-social-security-gop-20161209-story.html

Also see http://www.foreconomicjustice.org/?p=16066.

Social Security is based on taxable earnings from JOBS in the form of payroll taxes. Because the function of technology is to “save” labor or in other words shift from labor intensive production of products and services to the non-human productive capital input, jobs are increasingly being replaced by human-intelligent machines, super-automation, robotics, digital computerized operations, etc.

President Obama stated: “What’s at stake is whether this will be a country where working people can earn enough to raise a family, build a modest savings, own a home, and secure their retirement.” As long as working people are limited by earning income solely through their labor worker wages and rely on their Social Security benefits, they will be left behind by the continued gravitation of economic bounty toward the top 1 percent of the people  that the system is rigged to benefit. The reality is that the 1 percent primarily derive their wealth through the ownership of wealth-creating, income-producing capital assets. Working people and the middle class, on the other hand, will continue to stagnate relying ONLY on their labor whose worth is rapidly eroding, resulting in a stagnated consumer economy. More troubling is that this continued stagnation will further dim the economic hopes of America’s youth, no matter what their education level. The result will have profound long-term consequences for the nation’s economic health and further limit equal earning opportunity and spread income inequality. As the need for labor decreases and the power and leverage of productive capital increases, the gap between labor workers and capital owners will increase, which will ultimately result in upheaval. Dependent on a tax on wages and salaries, Social Security will falter as tectonic shifts in the technologies of production destroy jobs and devalue the worth of labor.

The majority of Americans, dependent on labor worker wages, no longer think that jobs and labor wages will return suddenly—if at all—and at a livable earnings level, that the value of their homes will re­bound, or that their limited retirement funds will soon be fully restored. Americans are scared but attribute their worsening finances to job losses, reduced hours, wage givebacks, and overall reduced earnings. They do not understand the role of productive capital driven by technological innovation and science and the requirement for them to become capital owners whose productive assets do the work, as well as labor workers, to earn a viable economic future. And until we, as a society, understand how wealth is produced, how consumers earn the money to buy products and services and the nature of capital ownership, we will not be able to set a course to obtain an affluent quality of life for middle and working class citizens, where everyone “can earn enough to raise a family, build a modest savings, own a home, and secure their retirement.”

Unemployment and underemployment is high, and will continue to be so, and there is an accelerating displacement of labor workers by technology and cheaper foreign labor, resulting in greater economic uncertainty and unstable retirement incomes for the average American citizen––causing the average citizen to become increasingly dependent on government wealth redistribution programs, openly or disguised.

The stark reality is that we are in a depression reflected in rising unemployment and underemployment and instability that we will never escape from until we change our economic policy. Increasingly, more Americans will not be able to ever purchase a home, due to the packed inflationary wage and welfare base factored into the cost of building homes, which inflate prices, and will be forced to rent their entire life or depend on government living assistance––not able to accumulate equity that can help to sustain them in their retirement years. This is the new reality now facing people in the middle class. The uncertainty of holding onto a good job is frightening to an increasingly wider base of middle-class working citizens. When you factor in the average non-salaried worker, even with a government-mandated minimum labor wage rate of $10.00+ per hour in some states, the outcome is grim. Never mind that consumer demand continues to dwindle because of insufficient income, solely tied to labor worker wages. The impact of the decline in consumer demand due to declining labor worker wages is that production will decline or desist without sustainable consumer demand.

The solution is to CREATE new OWNERS of wealth-creating, income-producing FUTURE productive capital assets simultaneously with the exponential growth of the economy, constantly driven by more “customers with money.” Unfortunately, conventionally, most people do not have the right to acquire productive capital with the self-financing earnings of capital; they are left to acquire, as best as they can, with their earnings as labor workers, relying on past savings (the denial of consumption). This is fundamentally hard to do and limiting. Thus, the most important economic right Americans need and should demand is the effective right to acquire capital with the earnings of capital. Note, though, millions of Americans own diluted stock value through the “stock market exchanges,” purchased with their earnings as labor workers, their stock holdings are relatively miniscule, as are their dividend payments compared to the top 10 percent of capital owners.

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

The solutions can be found in the Agenda of The Just Third Way Movement at http://foreconomicjustice.org/?p=5797, Monetary Justice reform at http://capitalhomestead.org/page/monetary-justice and  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/

Costco Gets Creative To Meet Shoppers’ Huge Appetite For Organics

On April 1, 2016, Janet I. Tu writes in the Seattle Times:

At Costco’s recent shareholder meeting, CEO Craig Jelinek touted the vast amounts of food the company sold last year, from 83 million rotisserie chickens to $6.1 billion worth of produce.

As for organics, one of the fastest-growing categories in food sales and one in which Costco has become a major player?

“We cannot get enough organics to stay in business day in and day out,” Jelinek told the gathered investors.

So to boost its supply, Costco is trying something new: It’s working with farmers to help them buy land and equipment to grow organics.

The effort is still in its infancy. So far, Costco is working with just one partner, loaning money to help San Diego-based Andrew and Williamson Fresh Produce buy equipment and 1,200 acres of land in the Mexican state of Baja California.

But Costco is looking at expanding the initiative. The idea is to ensure a greater supply of organic foods at a time when demand is soaring but supply has not kept up.

While other retailers might have loan programs for suppliers to upgrade equipment or offer financial incentives such as advance payments or long-term contracts, helping farmers buy land to grow organics appears to be unusual in the industry.

The nascent program joins a list of other Costco food initiatives that try to ensure the warehouse giant can meet the voluminous demand of its customers.

The Issaquah-based retailer, for instance, has a poultry plant in Alabama dedicated to raising chickens for the fresh meat and rotisserie chickens it sells.

It started working with a Mexican vendor two years ago to get wild shrimp from the Sea of Cortez, allowing the retailer to diversify from relying on shrimp caught in Thailand, where human trafficking and slave labor in the fishing industry are pervasive.

And in the last year, Costco bought cattle and is contracting with owners of organic fields in Nebraska to have ranchers there raise the livestock to ensure supply for its organic ground-beef program.

“A few years ago, Craig [Jelinek] came to me and said: ‘Fresh food — we need to have sustainable lines of supplies into the future,’ ” said Jeff Lyons, Costco’s senior vice president of fresh foods.

Behind each of the initiatives, Lyons said, are the questions: “What do we see down the road that could be a challenge in terms of supply? And what can we put in place today to grow that particular scarce resource?”

Proper soil

Organic food is one such scarce resource, its supply limited in part because the transition from conventional farming to organic farming takes several years and is costly. Virgin land that is ready to grow organics is scarce or prohibitively expensive.

Demand, meanwhile, has leapt with sales of organic food jumping from $11.13 billion in 2004 to $35.95 billion in 2014, according to the Organic Trade Association, which represents the supply chain from farmers to retailers.

“Demand is increasing. But we’re not seeing the same level of farmland,” said association spokeswoman Angela Jagiello.

While organic-food sales reached nearly 5 percent of total food sales last year, organic farmland makes up only about 1 percent of U.S. farm acreage.

“We’re not seeing the level of growth we need in domestic supply to meet demand,” Jagiello said. “It’s the No. 1 strategic issue facing the industry.”

So stretched is the supply chain that some organic packaged-food companies, such as Nature’s Path and Pacific Foods, have bought their own farms or are raising their own chickens, according to The Wall Street Journal. Restaurant chain Chipotle Mexican Grill, meanwhile, began providing financing to help farmers shift from conventional to organic food, the newspaper reported.

For Costco, the idea of loaning money to longtime supplier Andrew and Williamson Fresh Produce (A&W for short) took shape when Lyons took a tour of A&W’s Baja operations.

The supplier had heard about 1,200 acres of land in San Quintin, Baja California, that seed company Seminis wanted to sell.

The land had lain fallow for years, so it could be used immediately to grow organics, said Ernie Farley, one of A&W’s owners.

A&W, which had experience growing organic strawberries, raspberries, blackberries and tomatoes, told Lyons it wanted to pursue buying the land. The availability of this much land, not to mention that it could grow organics right away, was rare along the Pacific Coast, where acreage is often grabbed by developers.

But money was an issue. A&W didn’t have all the cash on hand it would need to buy the land outright.

And more recently, A&W has been dealing with fallout of a salmonella outbreak linked to cucumbers produced in Baja California and distributed by A&W that infected 888 people in 39 states, hospitalized 191, and resulted in six deaths in four states. (Costco says that outbreak would not have affected cucumbers it sells, since it carries only hothouse cucumbers; the ones linked to the outbreak were field grown.)

Lyons was supportive of A&W’s desire to buy the land, Farley recalls, and said that it made sense strategically for Costco to get involved, given the growing demand for organics and Costco’s desire to attract and retain customers over the next decades.

Costco ended up loaning A&W money to buy the land — neither company would say how much — and the deal is being completed.

Going forward, Costco will have first right to everything that meets its requirements that comes off that land.

In addition, Costco loaned A&W money to buy equipment to grow organic raspberries on another piece of land, also in San Quintin, that A&W is leasing.

“By helping them with financing, we got access to and purchased about 145,000 cases of organic raspberries that we normally would not have access to,” Lyons said. “Because they normally would not have done the deal or could not have done it. Or, if they could have, we may not have gotten first dibs.”

Costco is considering doing something similar with other companies, including a large group with operations in Chile and Mexico.

“There are lots of discussions going on,” Lyons said. “The challenge for the farmer is: ‘We may go down this road and what happens if something bad happens?’ We have to make sure we don’t get them in a position of financial trouble. We need to make sure the loans are totally secure. If it doesn’t work out for them, we want to continue to buy conventional from them to make sure they’re A-OK.”

Tough transition

Part of the reason the supply of organic foods is so limited is that it’s onerous to transition from conventional to organic farming.

“Traditional ag is the way it is because it yields more, which leads to less expensive food,” said Will Rodger, director of policy communications with the American Farm Bureau.

Transitioning to organic farming takes three years — the window set by the U.S. Department of Agriculture for pesticides and other nonorganic substances to wash away from the soil. The switch often also requires new equipment and new processes to grow and manage the crops.

“The difficulty is that in this three-year window, you’re using organic methods but you’re only getting conventional prices for what you’re selling,” Rodger said. “The margins right now are better on organic produce. But you have to take that three-year hit.”

Some natural-food retailers have their own programs to help suppliers or to preserve farmland.

Whole Foods, for instance, has had since 2006 a loan programto help its local producers grow their businesses. About $18 million has been lent so far, for everything from helping farmers buy equipment to building greenhouses and packing facilities, according to the company.

PCC Natural Markets, meanwhile, supports preservation of farmland through PCC Farmland Trust, which the Seattle-based co-op founded in 1999.

The trust is independent of the co-op, though PCC’s annual support for it exceeds $100,000. The trust has worked to conserve more than 1,600 acres of Washington farmland, according to PCC. Some of the crops grown on those lands end up being sold by PCC, but that is not a requirement.

Aside from Whole Foods and now Costco, “it’s very uncustomary in the [food] industry for retailers to provide capital to suppliers,” especially given the industry’s thin margins, said Burt Flickinger III, retail analyst with Strategic Research Group.

And he’s not heard of any that provide loans for land.

Doing so “secures Costco a long-term supply, rather than having that land be developed or have that farmer or food producer be selling to Costco competitors,” Flickinger said. “This way, Costco strategically locks in a long-term, high-quality source of supply which its competitors will not have access to.”

That’s important because Costco has become one of the nation’s biggest sellers of organic food.

Beating Whole Foods?

In 2014, for the first time, conventional retailers such as Costco, Wal-Mart and Kroger bested natural-food retailers, including Whole Foods, in sales of organic foods, according to the Organic Trade Association.

And last year, after Costco said its sales of organic products exceeded $4 billion annually, one investment bank surmised the warehouse giant may have surpassed Whole Foods to become the nation’s largest organic grocer.

Flickinger says that, at the least, Costco is the top seller nationwide of the types of organic foods it carries. Other retailers, though, carry a broader range of products.

Still, Costco’s increased focus on organics is significant and comes at a time when organic food is the fastest-growing food category, increasing at 8 to 11 percent a year, versus 2 to 2.5 percent for food sales overall, he said.

That Costco is working on increasing its supply of organic foods is good news to Letitia Chapman, who was shopping recently for organic fruits and vegetables at Costco in Seattle.

A few months ago, the sales rep from Seattle decided to start eating more organic food as part of a lifestyle change. While the longtime Costco shopper liked the organic produce she found, sometimes Costco simply doesn’t carry enough organics, she said.

“I tend to end up going to Whole Foods,” she said. “If Costco could get more, that would be awesome.”

http://www.seattletimes.com/business/retail/costco-gets-creative-to-meet-shoppers-huge-appetite-for-organics/

Providing capital credit loans is definitely the direction that our country needs to embrace. These loans are based on the logic of corporate finance in which the loan is specifically to form new capital assets (in this case land and equipment for farming organically-grown produce), which have been determined to produce sufficient earnings to pay off the loan and continue to produce income for the owners.

The question is who are the owners? Are they an already wealthy ownership class assembly of individuals or will new owners be created. In either case, the loan is based on the future earnings to liquidate the loan. Thus, no past savings are required to secure the capital credit loan.

From the article:

“Costco ended up loaning A&W money to buy the land — neither company would say how much — and the deal is being completed.

“Going forward, Costco will have first right to everything that meets its requirements that comes off that land.

“In addition, Costco loaned A&W money to buy equipment to grow organic raspberries on another piece of land, also in San Quintin, that A&W is leasing.

“’By helping them with financing, we got access to and purchased about 145,000 cases of organic raspberries that we normally would not have access to,’ Lyons said. ‘Because they normally would not have done the deal or could not have done it. Or, if they could have, we may not have gotten first dibs.’

“Costco is considering doing something similar with other companies, including a large group with operations in Chile and Mexico.”

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

What we need is for the Federal Reserve to stop monetizing unproductive debt, including bailouts of banks “too big to fail,” “auto companies,” 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. The CHA would process an equal allocation of productive credit to every citizen exclusively for purchasing full-dividend payout shares in companies needing funds for growing the economy and private sector jobs for local, national and global markets. The shares would be purchased on credit wholly backed by projected “future savings” in the form of new productive capital assets as well as the future marketable goods and services produced by the newly added technology, renewable energy systems, plant, rentable space and infrastructure added to the economy. Risk of default on each stock acquisition loan would be covered by private sector capital credit risk insurance and reinsurance back  by the government, but would not require citizens to reduce their funds for consumption to purchase shares. ALL subsidized loan guarantees would have the stipulation that the companies benefiting from the loan infusion demonstrate NEW owners be created among their employees and others in which ownership shares are purchased on credit wholly backed by projected “future savings” in the form of new productive capital assets.

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

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/.