No Easy Answers: Why Left-Wing Economics Is Not The Answer To Right-Wing Populism

(Javier Zarracina/Vox)

On March 13, 2017, Zack Beauchamp writes on VOX:

On November 20, less than two weeks after Donald Trump’s upset win, Bernie Sanders strode onto a stage at Boston’s Berklee Performance Center to give the sold-out audience his thoughts on what had gone so disastrously wrong for the Democratic Party.

Sanders had a simple answer. Democrats, he said, needed to field candidates who would unapologetically promise that they would be willing “to stand up with the working class of this country and … take on big-money interests.”

Democrats, in other words, would only be able to defeat Trump and others like him if they adopted an anti-corporate, unabashedly left-wing policy agenda. The answer to Trump’s right-wing populism, Sanders argued, was for the left to develop a populism of its own.

That’s a belief widely shared among progressives around the world. A legion of commentators and politicians, most prominently in the United States but also in Europe, have argued that center-left parties must shift further to the left in order to fight off right-wing populists such as Trump and France’s Marine Le Pen. Supporters of these leaders, they argue, are motivated by a sense of economic insecurity in an increasingly unequal world; promise them a stronger welfare state, one better equipped to address their fundamental needs, and they will flock to the left.

“[It’s] a kind of liberal myth,” Pippa Norris, a Harvard political scientist who studies populism in the United States and Europe, says of the Sanders analysis. “[Liberals] want to have a reason why people are supporting populist parties when their values are so clearly against progressive values in terms of misogyny, sexism, racism.”

The problem is that a lot of data suggests that countries with more robust welfare states tend to have stronger far-right movements. Providing white voters with higher levels of economic security does not tamp down their anxieties about race and immigration — or, more precisely, it doesn’t do it powerfully enough. For some, it frees them to worry less about what it’s in their wallet and more about who may be moving into their neighborhoods or competing with them for jobs.

Take Britain’s Labour Party, which swung to the populist left by electing Jeremy Corbyn, a socialist who has proposed renationalizing Britain’s rail system, as its leader in 2015. The results have been disastrous: the Brexit vote in favor of leaving the European Union, plummeting poll numbers for both Corbyn and his party, and a British political scene that is shifting notably to the right on issues of immigration and multiculturalism.

The US faces even sharper pressures, as much of the public sees social spending in highly racialized terms — a phenomenon without parallel in the rest of the Western world. A more populist Democratic platform might rally more voters to Trump, as many whites will see it as a giveaway to undeserving minorities.

“Illegal immigrant households receive far more in federal welfare benefits than native American households,” Trump wrote in a 2016 Facebook post. “I will fix it.”

The puzzle of social democracy

Since World War II, Western European politics has been structured by the ideals of social democracy. From Germany to France to Sweden to Italy, every nation adopted some version of the basic social democratic vision — a mixed-market economy defined by both private property and deep government involvement, with high levels of taxation and sometimes stifling government regulation of the private sector, in exchange for a generous social welfare system that offers things like universal health care and free or heavily subsidized education.

Different countries had different ways of going about it, of course: France’s political economy is not the same as Britain’s is not the same as Norway’s. But the basic model was the same everywhere. Even “conservative” leaders, like France’s Charles de Gaulle and West Germany’s Konrad Adenauer, developed socioeconomic programs that serve as the backbone of their welfare states today.

The social democratic project, by the numbers, has worked pretty well. The 10 countries with the lowest poverty rates in the world are all in Europe (the US ranks 34 out of 35 total countries in the OECD, an organization of wealthy countries). Researchers have also found clear correlations between the size of a country’s welfare state and social mobility, indicating that countries that provide citizens with extensive benefits, like Norway and Denmark, can help them better provide for themselves down the road.

Indeed, the countries that score highest on surveys of national happiness aren’t the richest or the ones with the nicest weather — they’re ones located in frigid Scandinavia, a region defined principally by its exceedingly generous welfare states.

This isn’t to say that there aren’t drawbacks to European welfare states. There’s real evidence that excessive regulation can stymie innovation and make it harder to start new firms, and that some welfare state labor protections (like the notorious French laws limiting corporations’ ability to fire employees) can make doing business maddeningly difficult.

By most measures, though, Europe’s social and economic programs provide their citizens with better standards of living than can be found in the US. That, however, hasn’t kept the parties that advocate and defend those policies most vigorously from steadily losing votes.

The chart below, from the London School of Economics’ Simon Hix and the University of London’s Giacomo Benedetto, show how those parties have done in elections in 18 Western European countries between 1945 and 2016.

 Javier Zarracina/Vox

This creates a puzzle: Why did voters who by and large benefit from social democracy turn against the parties that most strongly support it?

It’s a hard question to answer if you believe people cast their ballots principally on the basis of their perceived economic interests. European social democrats have been proposing ideas that more objectively speak to the material interests of voters, particularly in the working class, for decades. In virtually every country in Western Europe, however, it hasn’t been enough to help the parties maintain their historic levels of public support.

Ironically, that could be because the European left is the victim of its own success. Ronald Inglehart, an eminent political scientist at the University of Michigan, argues that the combination of rapid economic growth and a robust welfare state have provided voters with enough economic security that they could start prioritizing issues beyond the distribution of wealth — issues like abortion, same-sex marriage, and, most crucially, immigration.

So it’s not that European social democrats failed to sell their economic message, or that economic redistribution became unpopular. It’s that economic issues receded in importance at the same time as Europe was experiencing a massive, unprecedented wave of nonwhite, non-Christian immigration.

That, in turn, brought some of the most politically potent nonmaterial issues — race, identity, and nationalism — to the forefront of Western voters’ mind. How comfortable were they, really, with multicultural, multifaith societies?

The traditional social democratic message didn’t really speak to these cultural anxieties. But the right’s did.

Social democracy failed to stop the far right

Jean-Marie (L) and Marine Le Pen, two generations of French far-right leaders.
(Javier Zarracina/Vox)

In 1972, right around when Europe’s social democrats were reaching their continent-wide apex, French firebrand Jean-Marie Le Pen founded a new political party called the Front National (FN). It was a populist party, one that argued that ordinary people were being exploited by a corrupt class of cosmopolitan elites. They were also authoritarian, constantly warning of the dangers of crime and the need for a harsh state response.

In 1984, the FN had an electoral breakthrough, winning about 11 percent of the French national vote in the European Parliament elections. It had done so through a pioneering strategy of attacking nonwhite immigration without overtly making arguments for white Christian superiority — a kind of racism-without-racism — that appealed to voters’ fears about cultural change (and, later, terrorism) without making the kind of nakedly racist arguments that had been delegitimized by the Nazis.

This was the birth of the modern far right — a continent-wide political movement that reinvented white identity politics for the post-Hitler age.

In 1986, Jörg Haider — a firebrand who once praised Hitler for having a “proper employment policy” — took over Austria’s Freedom Party (FPÖ), transforming it into a xenophobic party along the FN’s lines. In 1999, the FPÖ came in second in Austria’s parliamentary elections, joining a government led by the center-right People’s Party.

In 2001, a Dutch sociology professor named Pim Fortuyn launched a new political movement oriented entirely around opposition to Muslim immigration. By 2002, Fortuyn’s new party, the Pim Fortuyn List, was second in the national polls — momentum halted only by Fortuyn’s assassination at the hands of a left-wing extremist.

These parties had no unified economic message. Some, like the FN, developed something called “welfare chauvinism” — an economic platform fairly similar to that of social democrats, but paired with an idea that immigrants should be excluded from receiving these benefits. Others, like the FPÖ, took a line more similar to Europe’s conservatives, arguing for cuts to government spending and taxes.

This difference on economics didn’t really seem to affect their successes. Research by Elisabeth Ivarsflaten, a professor at the University of Bergen, finds European voters’ views on immigration policy were a “near-perfect” predictor of their likelihood of supporting their country’s far-right party. Views on the welfare state, by contrast, weren’t especially correlated with likelihood of supporting the far right, as you can see on the below chart:

 (Javier Zarracina/Vox)

What this suggests, then, is that a party’s stance on economics isn’t very important to right-wing populist voters. People choose to back those parties because they want someone to shut down immigration and restrict the rights of Muslims, not because of those parties’ stances on trade or welfare spending.

Kai Arzheimer, a professor at Germany’s University of Mainz, studied data on working-class voters, the traditional base of social democratic parties, between 1980 and 2002. He found that the stronger the welfare state, the bigger the gains for far-right parties among the working class. The top third of countries — that is, the ones with the largest welfare states — saw roughly four times the rate of far-right support among the working class as the countries in the bottom third did.

You see a similar sort of pattern inside countries. Right-wing populists typically have gotten their best results in wealthier areas of countries — that is, with voters who experience the least amounts of economic insecurity.

It’s important to bear in mind that the rise of the far right isn’t solely, or even mostly, the result of social democratic decline. The far right has pulled in some working-class voters, butmost of its supporters are petty bourgeoisie (like shopkeepers) or low-educated, fairly high-income people (like successful plumbers). Swaying these voters through economic proposals will be difficult.

“They [social democrats] shouldn’t be purely focused on winning back the voters who went to the radical right, because when push comes to shove, a significant part of that electorate is deeply nativist,” Cas Mudde, a scholar of the European far right at the University of Georgia, tells me. “They want a party that is nativist; the only way to win them back is pretty much by becoming radical right or radical right-light.”

Or, as Arzheimer put it in an interview: “I can’t really believe that it is possible to beat the populists in terms of populism.”

If social democrats see their future as a competition for votes with right-wing populists, then they have two choices: Lose the election, or lose their progressive identity.

The British Labour Party tried tacking left on the economy — and it is flailing

Jeremy Corbyn (L) and former UKIP leader Nigel Farage.
(Javier Zarracina/Vox)

European social democratic parties have not responded especially well to the far right’s rise. Some haven’t really adjusted their approach, while others have tried Mudde’s “radical right light” option, tacking right on issues of immigration and racial identity. It has not worked out well.

Take the Social Democrats in Denmark, a country that has historically been relatively tough on immigration. In the country’s 2015 parliamentary election, party leader and incumbent Prime Minister Helle Thorning-Schmidt promised to deny benefits to asylum seekers if they were unemployed. The right-wing bloc won the election, and went on to pass a law that allowed Danish police to seize assets worth more than $1,450 from asylum seekers who enter the country. The far-right People’s Party went from 13 seats in parliament to 21, making them the second-most-popular party. Thorning-Schmidt promptly lost her job.

One social democratic party took a different tack, moving hard to the left on economic policy. That’d be Britain’s Labour Party, whose move grew out of a result of a fight inside the party that goes back decades.

In the 1970s and ’80s, Labour was more or less an unabashed socialist party, an approach that, at the time, was being trounced by Margaret Thatcher and her unapologetically right-wing Conservatives. Two Labour Party leaders — Tony Blair and Gordon Brown — blamed their party’s left-wing platform for its losses, and became the leaders of a movement called New Labour. Under their leadership, Labour became one of the most pro-market social democratic parties in Europe, supporting privatization of government-controlled industries and using market-friendlier policies, like tax credits, to address poverty.

Substantively, New Labour’s record was mixed — but politically, it succeeded for a long time. Labour won its first parliamentary election in the New Labour era in 1997, and then controlled the premiership for 13 uninterrupted years under Blair and, subsequently, Brown. But a combination of the Great Recession, public exhaustion with Labour control of the government, and left-wing anger at New Labour’s retreat from socialism and participation in the Iraq War led to its defeat in 2010 parliamentary elections.

After the 2010 defeat, Labour swung back to the left. The next leader after Brown, Ed Miliband, won his leadership on the back of union support — announcing, in a post-victory speech, that “New Labour is dead.” After Miliband’s Labour Party lost badly in a May 2015 election, Miliband resigned. Labour replaced him with a relatively unknown member of Parliament named Jeremy Corbyn — a move some British observers have compared to the Democrats nominating Jill Stein for president.

Corbyn’s platform was a return to the Labour ideals of the 1970s and ’80s. The BBC has an excellent rundown of his policy proposals, which included, among other things, renationalizing Britain’s railroads, abolishing tuition for British universities, and imposing rent controls to deal with Britain’s affordable housing problem. He’s even suggested reopening the coal mines that used to be a big part of Britain’s economy.

“The reason we are losing ground to the right today is because the message of what socialism is and what it can achieve in people’s daily lives has been steadily diluted,” Corbyn said in a March 2016 speech. “Unless progressive parties and movements break with that failed economic and political establishment it is the siren voices of the populist far-right that will fill the gap.”

Corbyn’s year-plus of Labour leadership has been something of a test case for this theory. So far, it has failed utterly.

When Corbyn took control of Labour leadership last September, UKIP — Britain’s far-right, anti-EU party — had been in decline, netting around 10 percent in the Britain Elects poll aggregator. By the June 2016 Brexit vote over whether to leave the EU, UKIP’s numbers had risen to a little over 15 percent.

Corbyn and Labour publicly supported staying in the EU, but didn’t campaign for it particularly hard. It may not have mattered: Eric Kaufmann, a professor at the University of London who studies populism, looked at what Brexit voters said were the “most important” issues facing the UK. More than 40 percent said immigration; a scant 5 percent said “poverty and inequality.”

According to Kaufmann, this reflects an uncomfortable truth: The kind of voter who’s attracted to the far right just doesn’t care a whole lot about inequality and redistribution, Corbyn’s signature issues. Tacking left to win them over, as Corbyn has, is “a bad idea,” he told me in a phone conversation.

Tacking left has definitely been bad for Labour, which has stunningly low levels of public support. Only 24 percent of Britons approve of Corbyn’s performance, according to the pollster Ipsos MORI, while 62 percent disapprove. This leaves him with net approval rating of -38, the worst any UK opposition leader from any party has recorded at this point in their tenure in the past 35 years of Ipsos polling. Another poll, from YouGov, found that 24 percent of Britons backed Labour — its lowest numbers in YouGov polling since the party was in government in 2009.

Let that sink in for a second. Corbyn’s Labour Party is polling as badly today as it was when it was in power during a global economic meltdown. It is polling substantially worse than it was in 2005, when British troops were dying in Iraq as part of a war known to be waged on false pretenses. In fact, Labour won a parliamentary election held that year.

Britain Elect’s projections say that if an election had been held in early March, the Conservatives would have won by a whopping 13.9 percent. That would be a 4.6-point improvement on their already-large 2015 victory, while Labour would fall from an already weak position by 2.2 percentage points.

“I think it is a serious possibility that Labour has come to the end of its existence,” Matt Williams, a scholar of British politics at Oxford University, says. “Socialism, of some variety, is either not considered viable or is deeply unpopular, and in some cases is both.”

One can dispute Williams’s judgment here, but several facts are undeniable. During Corbyn’s leadership, the far right has gained influence on UK politics, not lost it. Corbyn’s policy platform hasn’t stemmed the spread of anti-immigrant populism, and the Tories have made restricting immigration a central part of their agenda. Corbyn himself is now pandering to the right wing; he ordered Labour MPs to vote to begin the Brexit process in Parliament. And his numbers keep falling and falling.

Left-wing politicians and writers insist that populist policies would win back disenchanted voters. In Britain, the exact opposite has happened.

The differences between America and Europe make the strategy even less promising in the US

Sanders and Trump.
(Javier Zarracina/Vox)

You might expect things to be a bit different in the United States.

The American welfare state has always been weaker than its counterparts around the West. Correspondingly, you see the highest rates of inequality in the developed world, with 3 million American children living on less than $2 a day and a health care system that ranksdead last in the respected Commonwealth Fund’s measures of performance among 11 developed countries. It’s a level of material suffering that, you might think, should be to be fertile ground for left-wing populism.

“The working class of this country is being decimated. That’s why Donald Trump won,” Bernie Sanders said in his Boston speech. “We need all of those candidates and public officials to have the guts to stand up to the oligarchy. That is the fight of today.”

There’s at least suggestive evidence, as my colleague Andrew Prokop writes, that Sanders misread the election results — that embracing left-wing populism won’t, in fact, win over Trump voters.

Take a look at results from several pivotal Senate races. In two Midwestern states, Wisconsin and Ohio, Democrats ran Sanders-esque populists — former Sen. Russ Feingold and Gov. Ted Strickland, respectively. Both lost by a wider margin than Hillary Clinton did in their state. By contrast, the Democratic candidates who most outperformed Clinton’s statewide results — Missouri’s Jason Kander and Indiana’s Evan Bayh — ran as economic centrists.

The bigger issue is that America’s welfare state is weak for the same fundamental reason that Donald Trump captured the Republican nomination in the first place: racial and cultural resentment. That profoundly complicates efforts to make left-wing populism successful in America.

In 2001, three scholars at Harvard and Dartmouth — Alberto Alesina, Edward Glaeser, and Bruce Sacerdote — found that the higher the percentage of black residents in a state, the less its government spent on welfare payments.

 Javier Zarracina/Vox

This, they hypothesized, was not an accident. People are only willing to support redistribution if they believe their tax dollars are going to people they can sympathize with. White voters, in other words, don’t want to spend their tax dollars on programs that they think will benefit black or Hispanic people.

The United States is marked by far more racial division than its European peers. Poverty, in the minds of many white Americans, is associated with blackness. Redistribution is seen through a racial lens as a result. The debate over welfare and taxes isn’t just about money, for these voters, but rather whether white money should be spent on nonwhites. “Hostility between races limits support for welfare,” Alesina, Glaeser, and Sacerdote conclude flatly in the paper.

Now, it’s been a decade and a half since this paper was published, so it’s possible the evidence has shifted. I called up Sacerdote to ask him whether any subsequent research has caused him to change his mind. His answer was firmly negative. “It’s almost sad that it’s held up so well,” he told me.

Another study, by Korea University’s Woojin Lee and Yale’s John Roemer, used data from the American National Election Studies (ANES) to identify the percentage of white voters who express high levels of racial antagonism in the United States. They then use this to build a statistical model of American elections that, roughly, attempts to measure what percentage of the Republican and Democratic vote can be attributable to the parties’ differing opinions on racial, economic, and other issues — and to what extent racial attitudes negatively impact white voters’ views of economic redistribution.

Lee and Roemer found that if racism played no role in determining whom Americans voted for, and people voted only on the basis of other cultural and economic preferences, the Democratic vote share between 1976 and 1992 would have increased dramatically. The average national income tax rate, they estimate, would be 11 to 18 points higher, as voters would be more willing to use taxes to finance a European-style welfare state.

“Voter racism,” they conclude, “pushes both parties in the United States significantly to the right on economic issues.”

The upshot is that a significant shift to the left on economic policy issues might fail to attract white Trump supporters, even in the working class. It could even plausibly hurt the Democrats politically by reminding whites just how little they want their dollars to go to “those people.” One can only imagine what Trump would tweet.

Indeed, this kind of politics — not-so-subtly manipulating racial grievances to undercut support for social spending — has been practiced by Republicans and conservative Democrats for decades. Ronald Reagan, for example, famously used the specter of the “welfare queen” — an (implied) black woman who lived lavishly by manipulating the welfare system — as a rationale for his budget cuts.

“What Reagan had succeeded in doing was tarnishing liberalism as a giveaway to people of color,” Ian Haney López, a professor at UC Berkeley who studies race and American politics, says. “Investment in our cities, investment in our schools, investment in social welfare programs, all of that was branded as giveaway to undeserving minorities.”

The uncomfortable truth is that America’s lack of a European-style welfare state hurts a lot of white Americans. But a large number of white voters believe that social spending programs mostly benefit nonwhites. As such, they oppose them with far more fervor than any similar voting bloc in Europe.

In this context, tacking to the left on economics won’t give Democrats a silver bullet to use against the racial resentment powering Trump’s success. It could actually wind up giving Trump an even bigger gun. If Democrats really want to stop right-wing populists like Trump, they need a strategy that blunts the true drivers of their appeal — and that means focusing on more than economics.

http://www.vox.com/world/2017/3/13/14698812/bernie-trump-corbyn-left-wing-populism

The solution is not to create a stronger welfare state, which would result in the eventual dependency of citizens for their economic well-being on the State and whatever elite controls the coercive powers of government. Instead we should be empowering EVERY citizen to contribute productively to the future economy, through their labor and/or their ownership of wealth-creating, income-producing productive capital so that citizens would become empowered as owners to meet their own consumption needs and government would become more dependent on economically independent citizens, thus reversing current global trends of State dependency.

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

At present the economy’s growth is anemic and the vast majority of citizens are facing job insecurity and wage stagnation.

We need to return to environmentally responsible and quality growth if we are to create general affluence for EVERY citizen. One feasible way is to lift ownership-concentrating central bank (such as the 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.

Thus, we should be using the Federal Reserve Bank to insure loans that will translate to long-term growth of the economy, and NOT engage austerity measures that will result in negative growth.

The Millennial Workplace

On March 13, 2017, William R. Mansfield, Founder, Mansfield Institute for Public Policy and Social Change, Inc. writes on the Just Third Way:

In one very real sense, it is extremely misleading to talk about “the Millennial Workplace” as if Millennials are somehow inherently different as human beings from every generation that has gone before.  Obviously that is not true, as basic common sense tells us.  If someone is human, he or she is as fully human, and is human in the same way, as everyone else, no ifs, ands, or buts.

 
An amorphous “workforce” tends to dehumanize people.

On the other hand, today’s Millennial generation — ages seventeen to thirty-five or thereabouts — does face significantly different challenges from every previous generation in the world’s history.  They are entering the workforce (itself a relatively new concept on the world scene) and bringing with them a new perception of what work should be like.

This new perception affects power relationships in general and, naturally, how specific relationships between employers and employers, employers and employees, and employees and employees should be structured.  In order to create a “Millennial friendly” workplace, there are a few things we should know about the generation that will represent nearly 75 percent of the work force by 2030 — but, fortunately, they are no different from what we need to know about every other worker or person.

First — more than any other generation in history, Millennials are face to face with the specter of becoming “obsolete.”  Since the advent of the Industrial Revolution there has always been the fear of being replaced with a machine.  The answer, however, has always been retraining for another job, even if it is lower paying.

 
Advancing technology always replaces human labor.

For the last century, the rate of economic growth in global markets hides the fact that all forms of human labor are becoming redundant as robotics, artificial intelligence and other advanced technologies have become increasingly the source of marketable productiveness. With the growing concentration of capital incomes from productive capital assets among fewer and fewer capital owners, however, and the consequent decrease in median consumption power among most citizens everywhere, the economic growth that could formerly be counted on to absorb “excess” labor made redundant has slowed dramatically within productive enterprises.

Added to this is the way in which government redistribution programs have also disguised the fact that fewer and fewer people are able to produce with labor alone, even when combined with technology other people own.  The so-called “Welfare State,” however, is also showing signs that it cannot be sustained for much longer on government deficit spending that now exceeds $66,000 per U.S. citizen.

Finally, the rate of technological advancement is displacing labor at an ever-accelerating rate.  It is not longer a question of whether robots will replace people, but when.

When these factors are combined, the situation appears hopeless for Millennials.  They know there is an extremely high probability that it is only a matter of time before they become completely unnecessary in the production process, and an added burden to overloaded and nearly bankrupt government redistribution programs.

. . . hopeless, that is, within the current paradigm.

What is needed is a drastic shift to a more inclusionary free enterprise paradigm known as the “Just Third Way”, one that enables victims of the system to become its masters, without violating property rights of current owners over their existing capital.  And the only way to do that is by applying the three principles of economic justice (1. Participation, 2. Distribution, 3. Social Justice), and implementing and maintaining the four pillars of an economically just social order:

  1. A limited economic role for the State,

  2. Free and open markets as the best means of determining just prices, just wages, and just profits,

  3. Restoration of the rights of private property, and

  4. Widespread capital ownership.

That’s all very nice, but those “four pillars” are a pretty tall order, aren’t they?  How can this be done at the level of the individual enterprise?

It’s not easy, but it can be done to a limited extent within the framework of existing law.  This is through what the Center for Economic and Social Justice (CESJ) calls “The JBM S-Corp ESOP,” where “JBM” means “Justice-Based Management,” and “ESOP” stands for “Employee Stock Ownership Plan.”

So how does this work within the context of the four pillars?

  1. Limited economic role for the State. Unfortunately, little can be done at this point about limiting the power of the State, except for people to do the best they can to make their companies profitable without government subsidies, including tariffs or trade quotas.  By having a company that is organized as an S-Corp and owned 100% by the workers through an ESOP trust, the corporation pays no income taxes to the government at either the state or federal level, limiting government control to that small degree, at least.

  1. Free and open markets. Again, not much can be done at this point.  One company cannot buck the system and expect to do anything other than go under.  The best that can be done is what should be done, anyway: be honest and fair in all dealings with workers, customers, and shareholders.

  2. Restoration of the rights of private property. Now, this is something that can be done if a 100% worker-owned company passes through the vote on all shares, and all future profits are used to (1) pay off loans to purchase new or existing shares that can be tax-sheltered within worker accounts within the ESOP trust; (2) pay out dividends or bonuses to supplement each worker’s incomes; (3) or to finance new capital growth assets of the company in ways that benefit all worker-owners.

  3. Widespread capital ownership. This is the key, and what makes it possible to restore the rights of private property under existing law is that future profits are tax-deductible at the corporate level if the enterprise is 100%-owned by workers through an S-Corp ESOP. More universal access for every citizen to participate in the productive process as a capital owner is theoretically possible, but will require new Federal laws based on the expanded ownership benefits available to ESOPs.

Yes, this is little enough — but it is a great deal compared to what companies that are not oriented along Just Third Way lines can and will do.  And people can do more than what the economic system allows them to do.

http://just3rdway.blogspot.com/2017/03/the-millennial-workplace.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+TheJustThirdWay+%28The+Just+Third+Way%29

Trump Wants Faster Growth. The Fed Isn’t So Sure.

A shopper in Manhattan on Saturday. The Fed is moving to raise its benchmark rate months earlier than markets had expected because the economy appears to be gaining steam. CreditJohn Taggart for The New York Times

On March 12, 2017, Binyamin Appelbaum writes in The New York Times:

For President Trump and his economic advisers, the strong February jobs report was a cause for celebration — and a first step toward delivering on the president’s promise of faster economic growth.

For the Federal Reserve, it was the final confirmation that the time had come to raise interest rates to prevent the United States economy from overheating.

Mr. Trump and Janet L. Yellen, the Fed’s chairwoman, appear to be headed toward a collision, albeit in slow motion. Mr. Trump has said repeatedly that he is determined to stimulate faster growth while the central bank, for its part, is indicating that it will seek to restrain any acceleration in economic activity.

On Wednesday, the Fed plans to make a first move in the direction of restraint. The central bank has all but announced that it will raise its benchmark interest rate at the conclusion of a two-day meeting of its policy-making committee.

Continue reading the main story

The move itself is minor. The rate is expected to remain below 1 percent, and interest rates on consumer and business loans will still be remarkably low by historical standards. But the Fed is moving months earlier than markets had expected at the beginning of the year, precisely because the economy appears to be gaining steam.

Both Fed officials and independent economists are quick to emphasize that the central bank is not trying to pre-empt the new administration’s policies. The Fed is raising rates because economic conditions are improving. Winter did not chill the United States economy this year. The stock market keeps fizzing upward; employment and wages are growing; companies and consumers are optimistic.

“The thought that by tweaking the funds rate you could send some kind of political message is crazy, and they know that, and they’re not going to do it,” said Jon Faust, an economist at Johns Hopkins University and a former adviser to Ms. Yellen. “On the other hand, this is the first first quarter in about six years that isn’t looking scary, so it’s not surprising they would be considering a rate increase.”

The essential point, however, is that the Fed does not want faster growth. Fed officials estimate that the economy is already growing at something like the maximum sustainable pace. Fed officials predicted in December that the economy would expand 2.1 percent this year, slightly faster than the 1.8 percent pace they regard as sustainable. The Fed will publish new projections on Wednesday.

Growth above the sustainable pace can lead to higher inflation. That, in turn, can force the Fed to raise rates more quickly, a course that often ends in a recession.

Representative Steve Pearce, a New Mexico Republican, asked Ms. Yellen rather incredulously at a congressional hearing in February whether the Fed would really try to offset faster growth by raising rates more quickly. Ms. Yellen’s response was carefully couched, but it amounted to “yes.”

She said the Fed was fine with faster growth so long as it reflected an improvement in economic fundamentals. On the other hand, she said, the Fed would try to offset faster growth “if we think that it is demand-based and threatens our inflation objective” — a technical description of what would happen if Congress cut taxes or increased spending.

The White House and the Fed have very different economic outlooks.

Mr. Trump has repeatedly painted economic conditions in some of the bleakest language ever used by an American president, and he has described his fiscal policy agenda as necessary to revive growth and restore the nation’s prosperity.

Gary Cohn, the head of the president’s National Economic Council, told CNBC on Friday that he expected job growth to strengthen in the coming months.

“We’re very excited about what’s ahead of us,” he said.

Fed officials, by contrast, see the pace of job growth as unsustainable. The unemployment rate fell below 5 percent last May. Since then, employment has continued to expand at an average of 215,000 jobs a month — more than twice the job growth necessary to keep pace with population growth. The faster growth is good news for the economy, indicating that adults who gave up on finding jobs are returning to work. The question is how long that can continue.

There are already growing signs of a tighter labor market. The Federal Reserve Bank of Dallas recently reported that Texas employment in residential construction had nearly reached the level seen before the 2008 financial crisis and that skilled workers like framers, masons and bricklayers were in short supply. Average hourly earnings, adjusting for inflation, climbed 20.3 percent in the Texas construction sector from 2011 to 2016, compared with 5.9 percent for all Texans in private-sector jobs, the Dallas Fed reported. The National Association of Homebuilders reported that 82 percent of builders regarded the cost and availability of labor as their primary concern.

The Fed’s slow march toward higher interest rates is gradually raising borrowing costs for businesses and consumers. The average rate on a 30-year mortgage loan was 4.21 percent last week, up about half a percentage point from the same time last year, according to Freddie Mac. Rates on credit cards and car loans have also ticked higher, although borrowing costs remain well below historical norms.

As for interest on saving accounts, banks tend to raise those rates more slowly than they raise rates on loans. But as the Fed pushes up rates, savings rates will eventually increase, too.

Ms. Yellen and other Fed officials have been careful to acknowledge the persistence of a range of economic problems. Labor force participation is low. Productivity growth remains weak. Middle-income families have seen little income growth.

But these problems, in the view of Fed officials, cannot be addressed by holding down the Fed’s benchmark rate. “Monetary policy cannot, for instance, generate technological breakthroughs or affect demographic factors that would boost real G.D.P. growth over the longer run,” Ms. Yellen said in a speech this month in Chicago. “And monetary policy cannot improve the productivity of American workers.”

She noted that the White House and Congress could adopt fiscal policies that would improve those fundamental factors, although doing so would take time.

The Fed, an institution whose mission was famously described by a former chairman as taking away the punch bowl just as the party gets going, has a long history of angering politicians who would prefer to let the good times roll.

But in this case there is no reason for the Fed to rush. The Fed has indicated what it will do. Now, it can afford to wait and see what fiscal policy makers do.

President Trump has promised “massive tax relief for the middle class,” and his Treasury secretary, Steven Mnuchin, said last month that he wanted to see a bill passed before Congress goes on summer vacation in August. That is an ambitious timetable, not least because health care legislation is first in line. But even if the deadline is met, more months will pass before the money accumulates in the pockets of businesses and consumers, and before the money is spent.

“The thing that makes it relatively easy for the Fed is that fiscal policy usually takes a long time,” said James A. Wilcox, an economist at the University of California, Berkeley. “Financial markets don’t wait for all of that to happen, of course, but the actual spending and employment effects — they usually take a while to show up.”

President Trump and his advisers, meanwhile, have shown little sign of the belligerence toward the Fed that characterized Mr. Trump’s campaign pronouncements.

Mr. Trump has also not seized quickly on the opportunity to appoint his own people to the central bank. Two seats on the Fed’s seven-person board have been vacant for almost three years because Senate Republicans refused to consider President Barack Obama’s nominees. But Mr. Trump has not put forward his own.

Mark Calabria, the chief economist for Vice President Mike Pence, said last week that the White House planned to fill vacancies at the Fed and other regulatory agencies “in short order.” But he added that the administration was still considering its options.

David Nason, a General Electric executive who was regarded as a leading candidate, recently withdrew his name from consideration.

Mr. Trump also has the opportunity to replace Ms. Yellen as chairwoman when her four-year term ends in February, although she could remain on the board.

The Federal Reserve does not want growth. What?
“The essential point, however, is that the Fed does not want faster growth. Fed officials estimate that the economy is already growing at something like the maximum sustainable pace. Fed officials predicted in December that the economy would expand 2.1 percent this year, slightly faster than the 1.8 percent pace they regard as sustainable.”
At present the economy’s growth is anemic and the vast majority of citizens are facing job insecurity and wage stagnation.
We need to return to environmentally responsible and quality growth if we are to create general affluence for EVERY citizen. One feasible way is to lift ownership-concentrating central bank (such as the 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 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.
 
Thus, we should be using the Federal Reserve Bank to issue interest-free loans that will translate to long-term growth of the economy, and NOT engage austerity measures that will result in negative growth.

 

 

 

 

 

 

 

 

 

An AI Completed 360,000 Hours Of Finance Work In Just Seconds

On February 12, 2017, Dom Galeon and Kristin Houser write on Futurism:

A New COIN

JP Morgan Chase & Co. is the biggest bank in the United States. It is one of the largest employers in the American banking sector, with more than 240,000 employees serving millions of customers. Some of those employees are lawyers and loan officers who spend a total of 360,000 hours each year tackling a slew of rather mundane tasks, such as interpreting commercial-loan agreements. Now, the company has managed to cut the time spent on this work down to a matter of seconds using machine learning.

“People always talk about this stuff as displacement. I talk about it as freeing people to work on higher-value things…”

In June, JP Morgan started implementing a program called COIN, which is short for Contract Intelligence. COIN runs on a machine learning system that’s powered by a new private cloud network that the bank uses. Apart from shortening the time it takes to review documents, COIN has also managed to help JP Morgan decrease its number of loan-servicing mistakes. According to the program’s designers, these mistakes stemmed from human error in interpreting 12,000 new wholesale contracts every year.

COIN is part of the bank’s push to automate filing tasks and create new tools for both its bankers and clients. Automation is now a growing part of JP Morgan’s $9.6 billion technology budget. In fact, over the past two years, technology spending in JP Morgan’s consumer banking sector has totaled about $1 billion. “We have invested heavily in technology and marketing — and we are seeing strong returns,” the bank said in a presentation prior to its annual investor day.

Efficiency Makes a Case for Automation

Over the coming years and decades, artificial intelligence (AI) is expected to usher in a new era of automation. Accordingly, the increase in automated systems will bring with it job displacement in a number of industries, including finance, transportation, manufacturing, information technology, and even law. In total, one study projected that 57 percent of the world’s jobs are at risk of being replaced by automated systems.

This is due, in part, to growing access to technology and cheaper computing systems. Automation can increase efficiency and limit or altogether eliminate human error, as JP Morgan’s COIN program has demonstrated. “We’re starting to see the real fruits of our labor,” said Matt Zames, the bank’s CTO. “This is not pie-in-the-sky stuff.”

An AI Completed 360,000 Hours of Finance Work in Just Seconds
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The bank, however, doesn’t see their move toward better automated systems as a cause of unemployment. “People always talk about this stuff as displacement. I talk about it as freeing people to work on higher-value things, which is why it’s such a terrific opportunity for the firm,” said Dana Deasy, Chief Information Officer at JP Morgan.

Whatever the case may be, automation will cause a job disruption in the years to come. In some places, like JP Morgan, it’s already begun. Institutions, both private and public, have to be ready to adjust to the economic future automation will bring with it.

An AI Completed 360,000 Hours of Finance Work in Just Seconds

As with most things, there are good and bad applications, and we should certainly not want to create AI that is applied in a bad way.

But the real investigation that needs to occur is Who Will Own The AI And The Productive Applications Of Technology To The Economy?

The urgency is to figure out means for people to earn an income without dependency on jobs. The focus should not be on a pro-job growth future but alternative to wage dependency as economists across the board predict further losses as AI, robotics, and other technologies continue to be ushered in.

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

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

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

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

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

Also see the article entitled “The Solution To America’s Economic Decline” at http://www.foreconomicjustice.org/9206/financing-future…economic-decline and “Education Is Critical To Our Future Societal Development” at http://www.foreconomicjustice.org/?p=9058. And also “Achieving The Green Economy” at http://foreconomicjustice.org/?p=9082.

Also see “Financing Economic Growth With ‘FUTURE SAVINGS’: Solutions To Protect America From Economic Decline” at http://www.foreconomicjustice.org/9206/financing-future…economic-decline and “The Income Solution To Slow Private Sector Job Growth” at http://www.foreconomicjustice.org/9872/the-income-solut…ector-job-growth.

A New Social Security System For The Sharing Economy

On March 10, 2017, Nick Hanauer and David Rolf write on Economics:

The American middle class is facing an existential crisis. For more than three decades, declining wages, fraying benefits, and the rising costs of education, housing, and other essentials have stressed and squeezed middle-class Americans. But by far the biggest threat to middle-class workers—and to our economy as a whole—comes from the changing nature of employment itself.

Gone is the era of the lifetime career, let alone the lifelong job and the economic security that came with it, having been replaced by a new economy intent on recasting full-time employees into contractors, vendors, and temporary workers. It is an economic transformation that promises new efficiencies and greater flexibility for “employers” and “employees” alike, but which threatens to undermine the very foundation upon which middle-class America was built. And if the American middle class crumbles, so will an American economy that relies on consumer spending for 70 percent of its activity, and on a diverse and inclusive workforce for 100 percent of the innovation that drives all future prosperity.

This crisis is not unfolding in a vacuum. For more than 30 years, the Democratic Party has suffered from a crisis of identity, leadership, and vision on issues of political economy that has left it unable to either articulate or defend the true interests of the middle class. Democrats might tinker around the edges, arguing for more economic justice and fairness, but for the most part they have largely accepted, or at least failed to counter, the fictitious trickle-down explanation of what growth is (higher profits) and where it comes from (lower taxes and less regulation). And so, through Republican and Democratic administrations alike, corporate America has seen less regulation, lower taxes, and higher profits, while middle-class America has gotten the shaft.

This acquiescence to the conservative economic narrative has proven to be a political disaster as well. Progressives proudly back economic justice, but economic justice arguments alone are not enough to sway a majority of voters, many of whom value the promise of growth and employment over economic fairness. That is why progressives must reframe the economic debate by replacing the dominant trickle-down narrative with a new and better middle-out explanation of where growth and prosperity really come from—one based on economic inclusion.

In the technological economy of the twenty-first century, growth and prosperity are the consequences of a virtuous cycle between innovation and demand. Innovation is how we solve problems and raise living standards, while consumer demand is how markets distribute and incentivize innovation. It is social, civic, and economic inclusion—the full, robust participation of as many people as possible—that drives both innovation and demand. And inclusion requires policies that secure a thriving middle class.

The trickle-down theory—the one that lionizes the rich as “job creators”—insists that the American middle class is a consequence of growth, and that only if and when we have growth can we afford to include more people in our economy. But trickle-down has it exactly backwards: Properly understood, the middle class is the source of all growth and prosperity in a modern technological economy, and economic security is the essential feature of what it means to be included in the middle class.

Economic security is what frees us from the fear that one job loss, one illness—one economic downturn amidst a business cycle guaranteed to produce economic downturns—could cost us our home, our car, our family, and our social status. It’s what grants us permission to invest in ourselves and in our children, and to purchase the non-subsistence goods and experiences that make our lives healthier, happier, and more fulfilling. It gives us the confidence to live our lives with the realistic expectation of a more prosperous and stable economic future, and to take the entrepreneurial risks that are the lifeblood of a vibrant market economy. A secure middle class is the cause of growth, not its effect; in fact, our economy cannot reach its full potential without it. And a middle class that lives in constant fear of falling out of the middle class isn’t truly middle class at all.

From 1950 through 1980, during the heyday of the Great American Middle Class, a combination of New Deal programs, a corporate culture of civic responsibility, and a powerful labor movement provided a majority of American workers with health insurance, unemployment insurance, workers’ compensation insurance, pensions, job security, rising wages, overtime pay, paid vacation, paid sick days, a 40-hour workweek, and access to affordable, high-quality education. These are the benefits that provide the economic security of a decent and dignified life that defines what it means to be middle class, and that led to an unprecedented increase in living standards and economic growth. And under the old economy, they were, and still are, largely provided by one’s employer.

But in transforming the traditional relationship between employer and employee, the new economy is quickly stripping away these benefits. That is why it is essential that we imagine and adopt new policies that guarantee all workers the basic level of economic security necessary to sustain and grow the American middle class, and with it, the economy as a whole. We must acknowledge the radically different needs of a new generation of Americans—many of whom already have more employers in a week than their parents had in a lifetime—by adopting a new “Shared Security System” designed to fit the flexible employment relationships of the “sharing economy.”

Life in the Sharing Economy

Take, for example, an American worker whose story is increasingly typical of this new age. We’ll call her “Zoe.” Zoe is a woman in her late 20s who works part time at a hotel outside Denver. She’s worked at the front desk for five years, and her supervisor says he’s happy with her performance—but he never schedules her for more than 29 hours in a single week, so she does not qualify for health insurance or other benefits that full-time workers enjoy. Her annual raises amount to a fraction of a percent increase to her weekly pay, hardly enough to keep up with inflation.

Between rent, automobile expenses, and buying her own health insurance (now federally subsidized, thanks to Obamacare), Zoe has needed to find additional sources of income. She’s always liked gardening, so she started auctioning her services as a landscaper on the popular work-outsourcing site TaskRabbit. The work was fairly easy and enjoyable—mostly lawn mowing and hedge trimming for elderly homeowners in her neighborhood—so she quickly abandoned the middleman and began contracting her services directly to clients. The work takes about ten hours a week, and she earns an additional $100 or so a week at it, depending on the season.

But those two jobs combined don’t pay enough to keep Zoe in the black. On Friday and Saturday nights, she’ll usually pick up a “shift” working as a driver for the peer-to-peer ride-sharing service UberX. Zoe ferries young people to and from bars across town, responding to calls on the app for four or five hours a night, amounting to another $150 or so a week. Occasionally, on the rare weekday off, she’ll go live on UberX to drive people to and from the airport.

That’s not all. During tourist season, Zoe will pick up a little spending money by renting out her apartment on Airbnb, living in her parents’ house for days or weeks at a time. And when her schedule at the hotel allows it, she’ll pick up a temp job or two, usually doing light office work at a local hospital; but her work schedule changes from week to week, and temp work is unreliable, so she can’t often coordinate jobs. Zoe would like to go back to college to finish her degree, but can’t seem to piece together either the time or the money. Besides, she has friends and co-workers with college degrees, living similar lives, only with the added burden of tens of thousands of dollars in student debt.

If you think all her hard work amounts to a stable lifestyle, you’re wrong. Zoe doesn’t have enough money in the bank to sustain a savings account, let alone to contribute to retirement. She’s never late with her rent, but the idea of owning a house is far out of reach. Sometimes, when she catches a bad cold, or inclement weather conspires against her part-time piecemeal work, she’s forced to put groceries, the electricity bill, or gas on her credit card. It can take months to pay that balance back down.

But the cost is more than just financial. Zoe can’t remember a time when she wasn’t tired. She’s never taken a vacation in her adult life. (The right and ability to take a vacation are integral parts of what it means to be middle class, yet a Google Consumer Survey found that 42 percent of all American adults failed to take a single day of vacation in 2014.) She can’t imagine ever being able to retire. She barely has time for dating, let alone settling down and starting a family of her own. She dreads the day when her car just stops running, because she knows that would destroy her financially. Zoe doesn’t have any idea what the process of bankruptcy is like, but that doesn’t keep her from having nightmares about it. Sometimes when she listens to the radio while driving between jobs, Zoe hears that America is finally pulling out of the Great Recession, that prosperity is on the rise again. She doesn’t know what to make of that, but she knows she’s not feeling particularly prosperous. In fact, she feels a little bit poorer with each passing year.

Zoe’s parents help her and her siblings out as best they can, but they must carefully marshal their own savings. Zoe’s father, Joe, worked most of his adult life at a local brewery, working his way up from the loading dock to delivery driver to local sales rep, until a series of mergers and the Great Recession forced him into early retirement. Zoe’s mother, Liz, works as the office manager at a small law firm, but plans to join her husband in retirement in a few years. Thirty-plus years at the brewery earned Joe a modest pension, and once the kids were out of the house, he and Liz were able to squirrel away additional retirement savings. Social Security will supplement their nest egg, while Medicare will provide for their health care. They paid off their mortgage years ago, so their housing expenses will remain minimal. They’ve budgeted their retirement years to the last penny; it won’t be lavish—a little travel, a lot of golf—but it will be secure.

The contrast between the experience of Zoe’s generation and that of her parents is stark. Zoe’s parents entered the workforce with the expectation that hard work would be rewarded with decent pay, improving prospects, and a comfortable retirement; it was an era in which the benefits that define a middle-class lifestyle were largely provided through one’s job, and an era in which employers generally accepted that they had a responsibility to safeguard the welfare of their workers. Of equal significance, it was an era in which most Americans could reasonably expect to work for only a handful of companies over the course of their career, and certainly no more than one employer at a time. This was the social contract of the 1950s, ’60s, and ’70s, and it was a contract that fostered the economic security and stability that enabled the middle class to thrive, and the American economy and businesses to prosper.

But for Zoe’s generation, this contract no longer exists. The hotel that employs her views her paycheck as just another operating expense to manage and to trim, while the clients she services via UberX and TaskRabbit and Airbnb do not view her as an employee at all. Zoe works longer hours than her parents ever did, but she earns no time-and-a-half overtime pay, accrues no sick days or vacation days, and accumulates no pension or 401(k). And in the “sharing economy” that is frequently proclaimed to be the future of work—an economy of work, but not “jobs”—Zoe and her cohort are even denied the unemployment and workers’ compensation insurance that have composed the barest threads of our social safety net for the last hundred years.

The lesson we can take from Zoe’s experience is that our traditional job-based benefit system no longer makes sense in an economy in which fewer and fewer workers will hold traditional jobs. For while the sharing economy promises many exciting new opportunities, without a new labor-ownership framework, it simply cannot provide the economic benefits, stability, and security necessary for a robust and thriving middle class.

Uncertainty and the Middle Class

If sustained economic growth requires policies that sustain the middle class—policies designed to include more and more people in the economy as both innovators and consumers—then what exactly does it mean to be middle class? For the purposes of our discussion, “middle class” is less of an income distinction and more of a social one. Typically, middle-class Americans purchase homes, they educate themselves and their children, they participate in their community, they spend money on leisure and other discretionary purchases, and they save for retirement. Over the course of their lives, middle-class Americans build personal wealth, however modestly, and sometimes they start businesses. And they can do all these things because they have the confidence and the wherewithal—the economic security—to plan for the future. Or, to use a word our nation’s business leaders would surely understand, a functional middle class enjoys certainty.

Since the onset of the Great Recession, corporate leaders and their surrogates in Congress have demanded certainty from government—usually in the form of lower taxes, smaller deficits, and less regulation. Indeed, it is a talking point that has been repeated so often that it has assumed the status of conventional wisdom. “All businesses are coming to Congress,” House Budget Chair Paul Ryan told NPR back in September 2011. “They want certainty . . . certainty on regulations, certainty on taxes, on energy costs. And so we need to go back and go at the fundamental foundations of economic growth, get those fundamentals right.” On his campaign website, 2012 Republican presidential nominee Mitt Romney blamed “uncertainty” for our nation’s then-anemic post-recession job growth, arguing that government must “provide businesses with the certainty and stability they need to make those investments.” And more recently, Bank of America CEO Brian Moynihan called on President Obama to create a “certainty premium” to coax corporate profits back into the market. “If we can just allow people to keep their confidence up by getting some of these [tax reform] issues off the table,” Moynihan was quoted in a December 2012 Politico piece as saying, “you would see the economy grow and momentum continue to build, and unemployment continue to ease down, and housing starts [go] up and housing prices [go] up. All that will continue to build on itself.”

Of course, business does require a degree of certainty to operate—you’re not likely to see American corporations invest in Somalia right now, for example, because they can’t be sure the Somali government will enforce the rule of law. Without the protection of laws, assets could be seized, workers could be imperiled, and profits could disappear. But the demand for this heightened certainty is somewhat odd—it seems to fly in the face of the hypercompetitive laws of capitalism that the modern market was built upon and the risk-taking that is theoretically the source of reward for investors. It is at least ironic to hear CEOs who fancy themselves “risk takers” when defending their own astronomical pay demand certainty as a prerequisite for making new business investments. But that is apparently the new contract they want between government and business. What few business leaders seem willing to concede is that 99 percent of the certainty they seek comes from a confident and thriving customer base and rising consumer demand. It’s not a lack of profits or capital that is holding back our recovery, but a lack of demand. And middle-class consumers will resume their discretionary spending only when they once again feel certain of their economic future.

If our captains of industry are so certain that certainty is necessary for industry, then it surely must be true that their customer base, the American middle class, needs some of that certainty as well. For without the certainty that they will remain in the middle class, middle-class Americans simply cannot fulfill their crucial economic role.

The middle-class uncertainty that started creeping up on us in the 1980s came to a head as the bottom fell out of the housing bubble in 2008. Consumer demand collapsed and, seven years later, it has yet to return to pre-recession levels. Much of our crisis of weak demand stems from four decades of stagnant incomes—a 6-percent-of-GDP, trillion-dollar-a-year transfer of wealth from wages to corporate profits that has sapped American consumers of their prior strength. But much of it also comes from the way the changing nature of employment is stripping away the labor standards and benefits that are prerequisites for sustaining an economically secure middle class.

The labor standards that created the middle class are being balkanized by a mishmash of federal and local laws, deteriorating union protections, and convoluted new business and ownership models that often are intentionally designed to disempower workers. The truth is that Zoe doesn’t work for a hotel; she works for the local subsidiary of a national company that manages front desks at hundreds of hotels nationwide. The rest of the hotel is staffed by an equally complex ecosystem of contractors and subcontractors: Housekeeping is farmed out to one contractor, the restaurant to another contractor, and security to yet another. One company owns the land and the building, while a hotel management firm leases it. The only thing that’s “Hilton” or “Marriott” or “Sheraton” about a hotel might be the franchised brand—the sign hanging above the front door and the logo on the towels.

There is nothing inherently wrong with this arrangement. Our highly complex economy requires and rewards heightened specialization. But each of those contractors has likely won a cutthroat bidding war to earn its contract, in which it has offered the most services in exchange for the least amount of money—and the least empowered workers, like Zoe, are the ones who end up paying the highest price. Even if Zoe and her co-workers wanted to organize, against whom would they strike? And if the front-desk management company were to raise prices in order to give Zoe full-time work and the benefits that go with it, the hotel management company could always just switch to a cheaper contractor.

This is the new “you’re on your own,” benefit-free, race-to-the-bottom reality for millions of American workers. And as more new innovative businesses and business models are invented, this process will only accelerate. As the sharing economy kicks into high gear, more and more Americans will become independent contractors activated at the touch of a button on an app, working for a fleet of employers. According to a 2015 Bureau of Labor Statistics report, Americans born in the late Baby Boom have held around 12 jobs in adulthood. It’s possible that 30 years from now, the average American might well work for four or five or even more different employers in a single week. This hyper-nimble form of employment means the economy will likely be even more efficient in years to come, as workers are hired for very specific tasks of a highly limited duration. But a nation of independent contractors is a nation of workers without any of the benefits that defined the decent and dignified life that gave one reason to be optimistic about the future—a gross violation of the social contract that helped create the greatest economic expansion, the most dramatic increase in living standards, and the largest, most prosperous, most productive, and most secure middle class in human history.

And even if trickle-down’s low-tax, low-regulation, benefit-free policies could grow GDP as fast or faster than “middle out”—and they can’t—why would Americans choose that? Why would we choose an America in which just 10 percent of Americans enjoy 100 percent of the rewards of economic growth (as they have since 1980), while the vast majority of middle-class families struggle to remain middle class? For a nation full of Zoes is a nation full of people who simply do not have the time or energy to help their children with their homework, to be good neighbors, or to participate in the civic life of their communities. And a nation full of Zoes simply cannot provide the massive input of innovation and consumer demand that our economy requires of the middle class.

It is important to state that this is not an argument against innovation. We welcome the efficiencies and flexibility that companies like TaskRabbit and Uber bring to the market. But innovation also brings with it disruption, and if we want to preserve the economic security of the American middle class, then we need to respond with an equally innovative set of labor policies.

A Twenty-First-Century Social Contract

An economy based on micro-employment requires the accrual of micro-benefits, and a twenty-first-century sharing economy requires a twenty-first-century social contract that assures shared economic security and broad prosperity.

We propose a new Shared Security System that endows every American worker with, first, a “Shared Security Account” in which to accrue the basic employment benefits necessary for a thriving middle class, and second, a new set of “Shared Security Standards” that complement and reinforce that account.

One can think of the Shared Security Account as analogous to Social Security, but encompassing all of the employment benefits traditionally provided by a full-time salaried job. Shared Security benefits would be earned and accrued via automatic payroll deductions, regardless of the employment relationship, and, like Social Security, these benefits would be fully prorated, portable, and universal.

Proration. The obvious solution to the explosion of part-time work—voluntary or otherwise—is to prorate the accrual of benefits on an hourly or equivalent basis. For example, if Zoe works 30 hours a week at the hotel, she should earn three-quarters of the benefits offered by a full-time 40-hour-a-week job; if she works 20 hours a week, she should earn half the benefits. There is no doubt that many employers push their employees into part-time work in order to avoid the added cost of paying any benefits at all. Proration would eliminate this perverse incentive and the economic distortions and inefficiencies that come with it.

To be clear, proration is not a radical idea. Social Security and Medicare have always been prorated: Zoe’s employer pays half of her 15.3 percent combined Social Security and Medicare tax, regardless of how many hours she works. But all mandatory benefits that normally accrue to full-time employees on a daily basis—sick days, vacation days, health insurance, unemployment insurance, workers’ compensation insurance, retirement matching, Social Security, and Medicare—should also accrue to part-time employees (hourly, salaried, or contract) and sharing-economy providers on a prorated hourly or equivalent basis.

Portability. Job-based benefits no longer make sense in an economy where fewer and fewer workers hold traditional jobs. This is why these accrued benefits must be fully portable, following the worker from job to job, or contract to contract. For example, paid vacation days that Zoe accrues at one employer could be carried over to her next, although the cost of paying for these days would come from funds banked in her Shared Security Account. Because benefits from multiple employers are pooled into the same account, portability and proration work together to provide workers with the full panoply of benefits, even within the flexible micro-employment environment of the sharing economy.

Universality. In the new economy, a basic set of benefits and labor standards must be universal across all employers and all forms of employment, with few exceptions or exemptions. While there is much to recommend the innovations introduced by companies like Uber and TaskRabbit, they are currently exploiting gigantic loopholes in our social contract by transforming jobholders into independent contractors, thus stripping them of essential benefits. A robust set of mandatory universal benefits would put all employees and employers alike on an equal footing, while providing the economic security and certainty necessary for the middle class to thrive.

Within the context of the Shared Security Account, there would be essentially two types of benefits: those that are accrued over time, retaining a specific dollar value, and those that provide insurance against life events, foreseen or otherwise. And the two types of benefits would be accounted for differently.

Mandatory accrued benefits should include a minimum of five days a year of paid sick leave, 15 days a year of paid vacation leave, a matching 401(k) contribution, and the same health insurance premium contribution as currently required under the Affordable Care Act (ideally, health care would fall into the insurance benefit category, but that is a larger battle). Employers—that is to say, whatever entity is paying the worker—would be required to contribute to the worker’s Shared Security Account with each paycheck, with the contributions prorated based on a standard eight-hour day, 40-hour week, and 2,080-hour year. For example, 20 days a year of combined vacation and sick leave is equivalent to a contribution of $0.0769 for every dollar of wages paid, and that is the rate at which companies like TaskRabbit and Uber would contribute for non-hourly piecework (of course, there will always be under-the-table employment that circumvents these requirements, but that is true already). There would be restrictions on how and when the worker could withdraw the funds.

Mandatory insurance benefits should include unemployment, workers’ compensation, and paid maternity, paternity, family, and medical leave. These would not be cash benefits that the employee could accrue and cash out, but rather pooled insurance to which both the employer and employee would contribute small premiums as a percentage of pay, based on actuarial tables.

As for who collects and holds these contributions, there are several potential options. It could be the state or federal government, as with existing payroll deductions. It could be one or more not-for-profit institutions analogous to the old Blue Cross and Blue Shield. It could be a public/private institution created expressly for this purpose. It might even be the bank or credit union with which you’ve already set up direct deposit (it is quite likely that the value of holding these funds would more than cover the cost of administration, leading to competition for your business). As little as a decade ago, such a system might have been considered a costly logistical and accounting burden, but the electronic debits and credits of one’s Shared Security Account are nothing compared to the transactional complexity of the fast-growing sharing economy.

The universal, portable, and prorated features of the Shared Security Account would assure that all workers accrued basic job benefits regardless of the changing nature of employment. But that alone is not enough to provide the economic security necessary for the middle class to grow and thrive. The new economy also requires the adoption of a complementary set of minimal Shared Security Standards to level the playing field among employers while giving all Americans the opportunity to fully participate in our economy.

Paid leave. Employers would be legally obligated to grant you time off to use the leave benefits accrued in your Shared Security Account, without intimidation or retaliation.

Livable minimum wage. The federal minimum wage should be raised to $15 an hour, indexed to inflation, and adjusted up or down geographically to account for substantial disparities in local cost of living.

Overtime pay. The federal overtime threshold—the amount you must earn less than to qualify for mandatory overtime—should be raised from $23,660 to $69,000, and readjusted annually to a level sufficient to cover the same 65 percent of salaried workers who were covered back in 1975.

Pay equity. At the bare minimum, protections like those in the Paycheck Fairness Act must ensure wage parity between women and men.

Fair scheduling. Middle-class security is impossible without a reasonable and stable work schedule. Employers must be required to give fair notice to workers on scheduling.

Together, the Shared Security Account and the Shared Security Standards—along with critical family support programs like affordable child care, high-quality universal preschool, debt-free college education, and immigration reform—would comprise a new social contract designed to fit the flexible employment relationships of the new economy. By condensing these benefits into one holistic, self-reinforcing, and portable package of standards we call the “Shared Security System,” we streamline the employment process, making it easier for the sharing economy to absorb new employees, and freeing employers from the burden of tracking employee benefits.

These are not outrageous demands. Most Americans already enjoy many of these benefits—our challenge is to retain them in the face of the changing nature of employment. And the benefits for the economy would come in the form of more than the intangible (but crucial) metric of worker happiness. The new system would subtract the inefficiency of negotiation from the hiring process. It would encourage employers to provide additional benefits in order to attract the best workers on the job market. It would increase productivity. And it would level the playing field between the large number of employers who believe in providing benefits for their workforce and that small subset of rapacious employers who sacrifice worker happiness for the sake of profits, lowering the bar for everyone else.

What Middle-Class America Could Look Like

Consider Zoe’s improved situation under the Shared Security System’s suite of benefits and labor standards. Not only would Zoe earn prorated benefits at her hotel job, she would also accrue additional benefits in her side landscaping business, as an UberX driver, and as a temp at the hospital. Since benefit proration would eliminate employers’ financial incentive to keep workers under the 30-hour-a-week “full-time” employment threshold, the hotel might finally offer Zoe the stability of a regular full-time job. And if on occasion she worked more than 40 hours a week at the hotel, she would earn time-and-a-half overtime for her troubles.

If Zoe got sick, she would no longer be forced to choose between her health and her job. Paid sick days earned at all of her jobs would be aggregated in Zoe’s Shared Security Account, and the hotel would be legally obligated to allow her to take up to five sick days a year without the threat of retaliation: The hotel would grant the time off, and Zoe’s Shared Security Account would pay out the benefit. The same would hold true for accumulated vacation days.

For the first time in her life, Zoe would be saving money for her retirement, as each of her employers would match 401(k) contributions per hours worked. The few cents she contributes to her retirement fund for every hour worked gardening on TaskRabbit might not seem like a lot of money, but when all the contributions are totaled for every hour of work Zoe puts in every week, she’ll begin to notice a healthy sum stashed away in her monthly statements. The security of knowing that she’s building toward her retirement would likely encourage Zoe to do more to increase her standard of living in the here and now, and to invest in a future that no longer seems like a tightrope walk over a chasm.

Thanks to the minimum wage increase mandated under the Shared Security Standards—up from Colorado’s current minimum wage of $8.23 to about $15 an hour—Zoe would enjoy a tremendous increase in quality of life. With the additional disposable income, she could not only spend more freely within her own community, thereby increasing the profits of local businesses, but she could also plan to take the first vacation of her adult life. Her expenditures on plane tickets, hotels, and goods and services might not amount to much in total, but the ability of millions of people just like her to finally enjoy the security and freedom to spend money on vacations, small luxuries, and hobbies would invigorate the economy in a way it hasn’t enjoyed in decades. Further, if she decided to have a child, her entire world wouldn’t come crashing down around her; maternity benefits, affordable child care, and universal preschool would ensure that she’d be able to give her new family the time it deserves.

If Zoe eventually moved to another job, her accrued benefits would move with her. Or maybe, with her Shared Security Account boosting her confidence, and the opportunity for a debt-free education, Zoe would choose to go back to college for her horticulture degree, in hopes of becoming a landscape architect. No matter what path she chooses, she now has options, like her parents did, for becoming a fully functioning and contributing member of the Great American Middle Class.

Middle-Out Economics and the Progressive Agenda

There are those who blame the decline of the American middle class on structural changes in the underlying economy—on globalization, new technologies, and other disruptive innovations. But that explanation is disingenuous. For in reality, the erosion of the middle class is a direct result of the economic and social policies we have chosen to implement in Washington, D.C., and in state capitals throughout the nation.

We have chosen to cut taxes on billionaires and to deregulate the financial industry. We have chosen to starve our schools and to saddle our children with more than $1.2 trillion worth of student debt. We have chosen to erode the minimum wage and the overtime threshold and the bargaining power of labor. None of this was an accident. The existential crisis facing America’s middle class is the consequence of deliberate policy choices based on trickle-down’s fundamentally flawed theory of economic growth. At times, progressives have been complicit; at other times, merely compliant. But by failing to articulate an alternative economic theory, they have consistently failed to offer voters a better choice.

We believe that seeing growth as a consequence of including more people in a secure middle class not only accurately describes the real economy; it can unite progressives in a new and important way. Across the broader progressive agenda—on immigration, on education, on civil rights, voting rights, marriage equality, health care, pay equity, the minimum wage, and on many other issues—the one thing that our policies all have in common is that they are fundamentally inclusive. For decades, we have promoted this agenda largely as a matter of fairness, but middle-out economics explains why our policies are also inherently pro-growth. It is through this theory of economic inclusion, this message that growth and fairness go hand in hand, that the various elements of the broad progressive coalition—social justice and labor, along with Silicon Valley and business interests—can unite behind a single, coherent, pro-growth economic narrative that puts us squarely on the side of the middle class. And crucially, this narrative will appeal to voters beyond the progressive coalition—independent and swing voters, many of whom value the promise of growth and employment over the ideal of economic fairness.

We must do more than just offer voters a new economic theory—we must draw a sharp contrast with conservatives by proposing bold new policies predicated on the economic primacy of the middle class. The Shared Security System is one such proposal. But more than just demonstrating an innovative solution to providing economic security that is adapted to the sharing economy, a bold new proposal like the Shared Security System would demonstrate progressives’ unwavering and unequivocal commitment to the middle class—to the proposition that growth and prosperity come not from tax cuts for the rich, but from inclusive policies focused on creating a secure middle class. By establishing our twenty-first-century Shared Security System, we will usher in a new era of middle-class economic security, and by so doing also provide American businesses with the economic stability and certainty that they demand.

A New Social Security System for the Sharing Economy

This is a thought-provoking article, of which much I agree. The Shared Security System is a good idea to better the financial security of American citizens who are employed as “… benefits would be earned and accrued via automatic payroll deductions.” It is predicated on a prorated earnings system—the more you earn from wages the more financial security you build.

There is one huge omission.

The article addresses employment, and assumes that the ONLY way to earn income is through a job. It completely ignores any discussion of concentrated capital ownership and the denial to access to low or interest-free capital credit by the essentially 99 percent of the population—a root cause of economic inequality.

The article fails to recognize that fundamentally, economic value is created through human and non-human contributions.

I continue to be surprised by Nick Hanauer because he is a wealthy man, not from a job, but because he OWNS significant wealth-creating, income-producing capital assets. Yet, his advocacy is limited to minimum wage increases and now this, the Shared Security System proposal. Over the past couple of years I have critiqued a few of Hanauer’s articles, with no response. And yet, Hanauer could be supporting the work of others who seek to create an economic democracy in which EVERY citizen is a productive capital OWNER.

It is true as stated that: “…it was an era in which the benefits that define a middle-class lifestyle were largely provided through one’s job, and an era in which employers generally accepted that they had a responsibility to safeguard the welfare of their workers.” It was an era in which “middle-class Americans [could] build wealth [through savings], however modestly, and sometimes they start businesses.” “Much of our crisis of weak demand stems from four decades of stagnant incomes—a 6-percent-of-GDP, trillion-dollar-a-year transfer of wealth from wages to corporate profits that has sapped American consumers of their prior strength.”

Of course, Hanauer and David Rolf fail to point out that in the era they speak, productive input into the economy still was labor intensive. Wages have stagnated because tectonic shifts in the technologies of production have been and will continue to destroy jobs and devalue the worth of labor, unless a bolt of continuous environmentally responsible and quality growth can be generated requiring both skilled and unskilled labor, in concert with the non-human means of production to build a future economy that can support general affluence for EVERY citizen.

I think what is not well understood is that the role of physical productive capital is to do ever more of the work, which produces wealth and thus income to those who OWN the productive capital. Full employment is not an objective of businesses nor paying above labor-market wages (the more people seeking jobs, the less wage-level employers need to pay). 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 lowering production and operational costs and attracting “customers with money” to purchase their products or services.

The authors pose the question: “Why would we choose an America in which just 10 percent of Americans enjoy 100 percent of the rewards of economic growth (as they have since 1980), while the vast majority of middle-class families struggle to remain middle class?”

We shouldn’t, of course, yet that is our present-day reality.

I completely agree with the authors’ statement: “What few business leaders seem willing to concede is that 99 percent of the certainty they seek comes from a confident and thriving customer base and rising consumer demand. It’s not a lack of profits or capital that is holding back our recovery, but a lack of demand. And middle-class consumers will resume their discretionary spending only when they once again feel certain of their economic future” [and earn significant income to fulfill their aspirations, wants, and needs].

That means Americans must be empowered to earn more income, which will then create demand and future confidence. Thus, instead of policies directed at “redistributive” outcomes, we need to ensure that EVERY citizen can contribute productively to the economy. By adopting economic policies and programs that acknowledge every citizen’s right to contribute productively to the economy as a capital owner as well as a labor worker, the result will be an end to perpetual labor servitude and the liberation of people from progressive increments of subsistence toil and compulsive poverty as the 99 percent benefits from the rewards of productive capital-sourced income.

I already mentioned that Hanauer has consistently surprised me as he has routinely failed to point to the reason “the rich are getting richer.” Obviously, the distinction between the rich and the non-rich is that the rich OWN wealth-creating, income-producing capital assets, the very essence of technological progress, and the poor only have their labor to sell to the wealthy capital ownership class (their employers).

The fact that the core function of technological invention and innovation is to invent “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, should surprise no one who is conscious and who has even causally observed the constant shift to non-human productive inputs in the manufacturing, distribution, and sales of products, as well as the delivery of services, that has been occurring during their lifetime. The first burst of this phenomena was the Industrial Revolution, which replaced many jobs, but still that was primarily an age of labor-intensive production. But now we are in an age of technology sophistication that is permeating every sector of industry and our day-to-day lives. Such exponential growth of technology is causing tectonic shifts in the technologies of production, which is and will continue to destroy jobs and devalue the worth of labor.

As for a livable minimum WAGE, the authors advocate: “The federal minimum wage should be raised to $15 an hour, indexed to inflation, and adjusted up or down geographically to account for substantial disparities in local cost of living.”

Using common sense, if raising the minimum wage will not kill jobs then why not raise the minimum wage to $25.00 or more 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 to 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 and operational restrictions. 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 and consistency, automate services, and maximize profits for their OWNERS. As is virtually always the case, the OWNERS of companies do not want to reduce profits.

The urgency is to figure out means for people to earn an income without dependency on jobs. The focus should not be on a pro-job growth future, especially dependent on “unstable lifestyles”—”an economy of work, but not ‘jobs’” but an alternative to wage dependency, as economists across the board predict further job losses as AI, robotics, and other technologies continue to be ushered in.

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

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

Also what needs to be understood is that human productivity has not advanced (our human abilities are limited by physical strength and brain power—and relatively constant), but that the productiveness of the non-human factor of production—productive capital—is the reason that private sector corporations, majority owned by the “1 percent,” are utilizing the non-human factor of production increasingly to create efficiencies and save labor costs. It is the function of technology to save people from toil and to enable us to do things that otherwise are humanly impossible without non-human input. The critical question becomes who should own productive capital? The issue of OWNERSHIP is unbelievably overlooked by those in academia and politics, as well as by the authors of this piece. Yet we live in a country founded upon private property rights and individuals owning the non-human means of production.

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

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

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

Businesses are spending more on technology now because they spent so little during the recession. Yet total capital expenditures are still barely running ahead of replacement costs. “Most of the investment we’re seeing is simply replacing worn-out stuff,” says economist Paul Ashworth of Capital Economics. This scenario will continue until we understand the sole purpose of production is consumption, and to have an economic just society, EVERY citizen, as an individual, must have equal rights to property (and access to the means of acquiring and possessing property).

Yet, while the problem is one that no one can no longer ignore, the solution also is one starring them in the face but they just can’t see the simplicity of it. That is why it is so frustrating to me that a rich man and proclaimed progressive such as Nick Hanauer has yet to voice his agreement and advocate for this justice to be extended to all.

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

Until we adopt this solution, subsequent technological advance will continue to amplify the productive power of non-human capital, with plutocratic finance channeling its ownership into fewer and fewer hands, as we continue to witness today with government by the wealthy evidenced at all levels.

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

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

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

The question that requires an answer is now timely before us. It was first posed by Kelso in the 1950s but has never been thoroughly discussed on the national stage. Nor has there been the proper education of our citizenry that addresses what economic justice is and what capital ownership is. Therefore, by ignoring such issues of economic justice and capital ownership, our leaders are ignoring the concentration of power through monopoly ownership of productive capital, with the result of denying the 99 percenters equal opportunity and access to become capital owners.

The question, as posed by Kelso is: “how are all individuals to be adequately productive when a tiny minority [capital owners] produce a major share and the vast majority [labor workers], a minor share of total goods and services,” and thus, “how do we get from a world in which the most productive factor—physical capital—is owned by a handful of people, to a world where the same factor is owned by a majority—and ultimately 100 percent—of the consumers, while respecting all the constitutional rights of present capital owners?”

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

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

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

Citizens would become empowered as owners to meet their own consumption needs and government would become more dependent on economically independent citizens, thus reversing current global trends where all citizens will eventually become dependent for their economic well-being on the State and whatever elite controls the coercive powers of government.

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

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

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

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

Also see the article entitled “The Solution To America’s Economic Decline” at http://www.foreconomicjustice.org/9206/financing-future…economic-decline and “Education Is Critical To Our Future Societal Development” at http://www.foreconomicjustice.org/?p=9058. And also “Achieving The Green Economy” at http://foreconomicjustice.org/?p=9082.

Also see “Financing Economic Growth With ‘FUTURE SAVINGS’: Solutions To Protect America From Economic Decline” at http://www.foreconomicjustice.org/9206/financing-future…economic-decline and “The Income Solution To Slow Private Sector Job Growth” at http://www.foreconomicjustice.org/9872/the-income-solut…ector-job-growth.

AI’s PR Problem

On March 3, 2017, Jerry Kaplan writes on the MIT Technology Review:

HBO’s “Westward” features a common plot device—synthetic hosts rising up against their callous human creators. But is it more than just a plot twist? After all, smart people like Bill Gates and Steven Hawking have warned that artificial intelligence may be on a dangerous path and could threaten the survival of the human race.

They’re not the only ones worried. The Committee on Legal Affairs of the European Parliament recently issued a report calling on the EU to require intelligent robots to be registered, in part so their ethical character can be assessed. The “Stop Killer Robots” movement, opposed to the use of so-called autonomous weapons in war, is influencing both United Nations and U.S. Defense Department policy.

Artificial intelligence, it seems, has a PR problem. While it’s true that today’s machines can credibly perform many tasks (playing chess, driving cars) that were once reserved for humans, that doesn’t mean that the machines are growing more intelligent and ambitious. It just means they’re doing what we built them to do.

The robots may be coming, but they are not coming for us—because there is no “they.” Machines are not people, and there’s no persuasive evidence that they are on a path toward sentience.

We’ve been replacing skilled and knowledgeable workers for centuries, but the machines don’t aspire to better jobs and higher employment. Jacquard looms replaced expert needleworkers in the 19th century, but these remarkable devices—programmed with punch cards for a myriad of fabric patterns—didn’t spell doom for dressmakers and tailors. Until the mid-20th century we relied on our best and brightest to do arithmetic—being a “calculator” used to be a highly respected profession. Now that comparably capable devices are given away as promotional trinkets at trade shows, the mathematically minded among us can focus on tasks that require broader skills, like statistical analysis. Soon, your car will be able to drive you to the office upon command, but you don’t have to worry about it signing up with Uber to make a few extra bucks for gas while you’re in a staff meeting (unless you instruct it to).

AI makes use of some powerful technologies, but they don’t fit together as well as you might expect. Early researchers focused on ways to manipulate symbols according to rules. This was useful for tasks such as proving mathematical theorems, solving puzzles, or laying out integrated circuits. But several iconic AI problems—such as identifying objects in pictures and converting spoken words to written language—proved difficult to crack. More recent techniques, which go under the aspirational banner of machine learning, proved much better suited for these challenges. Machine-learning programs extract useful patterns out of large collections of data. They power recommendation systems on Amazon and Netflix, hone Google search results, describe videos on YouTube, recognize faces, trade stocks, steer cars, and solve a myriad of other problems where big data can be brought to bear. But neither approach is the Holy Grail of intelligence. Indeed, they coexist rather awkwardly under the label of artificial intelligence. The mere existence of two major approaches with different strengths calls into question whether either of them could serve as a basis for a universal theory of intelligence.

For the most part, the AI achievements touted in the media aren’t evidence of great improvements in the field. The AI program from Google that won a Go contest last year was not a refined version of the one from IBM that beat the world’s chess champion in 1997; the car feature that beeps when you stray out of your lane works quite differently than the one that plans your route. Instead, the accomplishments so breathlessly reported are often cobbled together from a grab bag of disparate tools and techniques. It might be easy to mistake the drumbeat of stories about machines besting us at tasks as evidence that these tools are growing ever smarter—but that’s not happening.

Public discourse about AI has become untethered from reality in part because the field doesn’t have a coherent theory. Without such a theory, people can’t gauge progress in the field, and characterizing advances becomes anyone’s guess. As a result the people we hear from the most are those with the loudest voices rather than those with something substantive to say, and press reports about killer robots go largely unchallenged.

I’d suggest that one problem with AI is the name itself—coined more than 50 years ago to describe efforts to program computers to solve problems that required human intelligence or attention. Had artificial intelligence been named something less spooky, it might seem as prosaic as operations research or predictive analytics.

Perhaps a less provocative description would be something like “anthropic computing.” A broad moniker such as this could encompass efforts to design biologically inspired computer systems, machines that mimic the human form or abilities, and programs that interact with people in natural, familiar ways.

We should stop describing these modern marvels as proto-humans and instead talk about them as a new generation of flexible and powerful machines. We should be careful about how we deploy and use AI, but not because we are summoning some mythical demon that may turn against us. Rather, we should resist our predisposition to attribute human traits to our creations and accept these remarkable inventions for what they really are—potent tools that promise a more prosperous and comfortable future.

https://www.technologyreview.com/s/603761/ais-pr-problem/

As with most things, there are good and bad applications, and we should certainly not want to create AI that is applied in a bad way.

But the real investigation that needs to occur is Who Will Own The AI And The Productive Applications Of Technology To The Economy?

According to a study conducted by Oxford University, 47 percent of jobs will disappear in the next 25 years, due to sophisticated automation via AI.

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

Yet the author of this piece states: “What is up for debate is how quickly this is likely to occur.”

No, the urgency is to figure out means for people to earn an income without dependency on jobs. The focus should not be on a pro-job growth future but alternative to wage dependency as economists across the board predict further losses as AI, robotics, and other technologies continue to be ushered in.

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

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

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

Also what needs to be understood is that human productivity has not advanced (our human abilities are limited by physical strength and brain power––and relatively constant), but that the productiveness of the non-human factor of production––productive capital––is the reason that private sector corporations, majority owned by the “1 percent,” are utilizing the non-human factor of production increasingly to create efficiencies and save labor costs. It is the function of technology to save people from toil and to enable us to do things that otherwise are humanly impossible without non-human input. The critical question becomes who should own productive capital? The issue of OWNERSHIP is unbelievably overlooked by those in academia and politics, as well as by the author of this piece. Yet we live in country founded upon private property rights and individuals owning the non-human means of production.

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

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

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

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

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

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

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

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

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

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

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

The question that requires an answer is now timely before us. It was first posed by Kelso in the 1950s but has never been thoroughly discussed on the national stage. Nor has there been the proper education of our citizenry that addresses what economic justice is and what capital ownership is. Therefore, by ignoring such issues of economic justice and capital ownership, our leaders are ignoring the concentration of power through monopoly ownership of productive capital, with the result of denying the 99 percenters equal opportunity and access to become capital owners.

The question, as posed by Kelso is: “how are all individuals to be adequately productive when a tiny minority (capital owners) produce a major share and the vast majority (labor workers), a minor share of total goods and services,” and thus, “how do we get from a world in which the most productive factor—physical capital—is owned by a handful of people, to a world where the same factor is owned by a majority—and ultimately 100 percent—of the consumers, while respecting all the constitutional rights of present capital owners?”

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

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

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

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

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

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

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

Also see the article entitled “The Solution To America’s Economic Decline” at http://www.foreconomicjustice.org/9206/financing-future…economic-decline and “Education Is Critical To Our Future Societal Development” at http://www.foreconomicjustice.org/?p=9058. And also “Achieving The Green Economy” at http://foreconomicjustice.org/?p=9082.

Also see “Financing Economic Growth With ‘FUTURE SAVINGS’: Solutions To Protect America From Economic Decline” at http://www.foreconomicjustice.org/9206/financing-future…economic-decline and “The Income Solution To Slow Private Sector Job Growth” at http://www.foreconomicjustice.org/9872/the-income-solut…ector-job-growth.

Infrastructure Revitalization Priced In The Trillions Of Dollars

On Friday, March 10, 2017, the Center for Economic and Social Justice (www.cesj.org) posted News from the Network, Vol. 10, No. 10:

Infrastructure in the United States has been given a “grade” of D+. The price tag for bringing things up to par is (according to the experts) trillions and trillions of dollars.  Naturally, nobody knows where to get the money, but that’s only because they’re not looking at making actual people owners of the infrastructure and putting things on a for-profit basis. With modern technology, it should be relatively easy for regular users of roads, bridges, airports, and so on, to be billed regularly for their actual use, while others pay at the point of use, as is the case with many toll roads today. Commercial banks could extend financing and rediscount the loans at the Federal Reserve, creating new money backed by the infrastructure itself.

Wind And Solar Power Are Disrupting Electricity Systems

On February 25, 2017, The Economist writes:

ALMOST 150 years after photovoltaic cells and wind turbines were invented, they still generate only 7% of the world’s electricity. Yet something remarkable is happening. From being peripheral to the energy system just over a decade ago, they are now growing faster than any other energy source and their falling costs are making them competitive with fossil fuels. BP, an oil firm, expects renewables to account for half of the growth in global energy supply over the next 20 years. It is no longer far-fetched to think that the world is entering an era of clean, unlimited and cheap power. About time, too.

There is a $20trn hitch, though. To get from here to there requires huge amounts of investment over the next few decades, to replace old smog-belching power plants and to upgrade the pylons and wires that bring electricity to consumers. Normally investors like putting their money into electricity because it offers reliable returns. Yet green energy has a dirty secret. The more it is deployed, the more it lowers the price of power from any source. That makes it hard to manage the transition to a carbon-free future, during which many generating technologies, clean and dirty, need to remain profitable if the lights are to stay on. Unless the market is fixed, subsidies to the industry will only grow.

Policymakers are already seeing this inconvenient truth as a reason to put the brakes on renewable energy. In parts of Europe and China, investment in renewables is slowing as subsidies are cut back. However, the solution is not less wind and solar. It is to rethink how the world prices clean energy in order to make better use of it.

Shock to the system

At its heart, the problem is that government-supported renewable energy has been imposed on a market designed in a different era. For much of the 20th century, electricity was made and moved by vertically integrated, state-controlled monopolies. From the 1980s onwards, many of these were broken up, privatised and liberalised, so that market forces could determine where best to invest. Today only about 6% of electricity users get their power from monopolies. Yet everywhere the pressure to decarbonise power supply has brought the state creeping back into markets. This is disruptive for three reasons. The first is the subsidy system itself. The other two are inherent to the nature of wind and solar: their intermittency and their very low running costs. All three help explain why power prices are low and public subsidies are addictive.

First, the splurge of public subsidy, of about $800bn since 2008, has distorted the market. It came about for noble reasons—to counter climate change and prime the pump for new, costly technologies, including wind turbines and solar panels. But subsidies hit just as electricity consumption in the rich world was stagnating because of growing energy efficiency and the financial crisis. The result was a glut of power-generating capacity that has slashed the revenues utilities earn from wholesale power markets and hence deterred investment.

Second, green power is intermittent. The vagaries of wind and sun—especially in countries without favourable weather—mean that turbines and solar panels generate electricity only part of the time. To keep power flowing, the system relies on conventional power plants, such as coal, gas or nuclear, to kick in when renewables falter. But because they are idle for long periods, they find it harder to attract private investors. So, to keep the lights on, they require public funds.

Everyone is affected by a third factor: renewable energy has negligible or zero marginal running costs—because the wind and the sun are free. In a market that prefers energy produced at the lowest short-term cost, wind and solar take business from providers that are more expensive to run, such as coal plants, depressing power prices, and hence revenues for all.

Get smart

The higher the penetration of renewables, the worse these problems get—especially in saturated markets. In Europe, which was first to feel the effects, utilities have suffered a “lost decade” of falling returns, stranded assets and corporate disruption. Last year, Germany’s two biggest electricity providers, E.ON and RWE, both split in two. In renewable-rich parts of America power providers struggle to find investors for new plants. Places with an abundance of wind, such as China, are curtailing wind farms to keep coal plants in business.

The corollary is that the electricity system is being re-regulated as investment goes chiefly to areas that benefit from public support. Paradoxically, that means the more states support renewables, the more they pay for conventional power plants, too, using “capacity payments” to alleviate intermittency. In effect, politicians rather than markets are once again deciding how to avoid blackouts. They often make mistakes: Germany’s support for cheap, dirty lignite caused emissions to rise, notwithstanding huge subsidies for renewables. Without a new approach the renewables revolution will stall.

The good news is that new technology can help fix the problem (see article). Digitalisation, smart meters and batteries are enabling companies and households to smooth out their demand—by doing some energy-intensive work at night, for example. This helps to cope with intermittent supply. Small, modular power plants, which are easy to flex up or down, are becoming more popular, as are high-voltage grids that can move excess power around the network more efficiently.

The bigger task is to redesign power markets to reflect the new need for flexible supply and demand. They should adjust prices more frequently, to reflect the fluctuations of the weather. At times of extreme scarcity, a high fixed price could kick in to prevent blackouts. Markets should reward those willing to use less electricity to balance the grid, just as they reward those who generate more of it. Bills could be structured to be higher or lower depending how strongly a customer wanted guaranteed power all the time—a bit like an insurance policy. In short, policymakers should be clear they have a problem and that the cause is not renewable energy, but the out-of-date system of electricity pricing. Then they should fix it.

http://www.economist.com/news/leaders/21717371-thats-no-reason-governments-stop-supporting-them-wind-and-solar-power-are-disrupting

While there may be less monopoly ownership of power plants, within the entities that own the power plants, individual ownership is concentrated, and thus profits return to those who own. A solution that should be explored is to implement Citizens Land Banks (CLB), that are owned by the individuals they serve, thus broadening private ownership of power plants and other infrastructure.

A CLB is a for-profit, professionally-managed, citizen-owned-and-governed community land planning and development enterprise, designed to enable every citizen of a community of any size to acquire a direct ownership stake in local land, natural resources and basic infrastructure.

A CLB is a social vehicle for every man, woman and child to gain, as a fundamental right of citizenship, a single lifetime, non-transferable ownership interest in all the Bank’s assets, share equally in property incomes from rentals and user fees from leases or use of the Bank’s assets, accumulate appreciated equity values from enhanced land values, and gain an owner’s voice in the governance of future land development.

A CLB is an innovative legal and financing tool empowered to borrow on behalf of all citizen-shareholders and service the debt with pre-tax dollars to meet the land acquisition, capitalization and operational needs of the Bank. The CLB shelters from taxation the equity accumulations of citizen-shareholders and protects the outside assets of the citizens in the event of loan default or if the enterprise fails.

A CLB is a social tool designed to encourage a just, free and non-monopolistic market economy. It applies the democratic principles of equal opportunity and equal access to the means to participate as an owner as well as a worker. It demonstrates that anything that can be owned by government can and should be owned, individually and jointly, by the citizens.

A CLB is a major feature in a proposed national economic agenda known as “Capital Homesteading for Every Citizen,” which is designed to reform existing monetary, credit and tax barriers to provide every American an equal opportunity to share in the governing powers and profits from new entrepreneurial ventures, new technologies, new structures, and new rentable space built upon the land. Capital Homesteading offers a “Just Third Way” of reversing unsustainable federal deficits and debt, and revitalizing and growing the American free enterprise system in a sustainable and environmentally sound way.

Effective Communication And Conflict Resolution

On March 9, 2017, William R. Mansfield, Founder Mansfield Institute for Public Policy and Social Change, Inc., writes:

Conflict is unavoidable in any situation involving other people.  The art of management (or, if you will, servant leadership) involves to a great extent the ability to resolve conflicts in a just manner. That means respecting the natural dignity of every human person involved in the situation.

Within the Just Third Way, there are three critical factors to resolving conflict.  These are, 1) Solidarity, 2) Institutional structures for resolving conflicts when they arise, and 3) Capital ownership within a business enterprise.

Solidarity

Solidarity, a key element of the Just Third Way, relates to the three principles of economic justice, 1) Participation, 2) Distribution, and 3) Social Justice.  Solidarity is acceptance by all members of the group of the basic principles that define the group as that specific group.

Solidarity is key to the effective functioning of the group as a group, as well as to acceptance of the rights of private property and free association that provide the “glue” holding society together.  Solidarity, however, presumes that all members of the group can understand, and then communicate effectively, the basic principles that define the group as that group.  This presents a problem if communication is ineffective.

The success of a business depends upon effective communication within the organization.  Managing communication and promoting healthy conflict resolution should, therefore, be a goal of management.  If nothing else, effective communication can decrease conflict that interferes with the proper functioning of a business enterprise.

For example, a study commissioned in 2008 by CPP Inc., the Myers-Briggs Company, revealed that workers spend nearly three hours per week dealing with conflict.  Compounded across all workers in the U.S., this results in 385 million working days per year.

This is a significant period of time devoted to activity that does not support productive activity either directly or indirectly.  Businesses cannot afford to lose that much potentially productive effort and resources to conflict.

Unless everyone in an organization or institution accepts the basic assumptions of that organization or institution, and accepts them in the same way, conflict can ignite from the smallest word or action and spark destructive responses and behaviors.  Unresolved or poorly navigated conflict can damage and even destroy relationships.

Conflict, however, does not have to be destructive.  Handled effectively, conflict can actually contribute to stronger, deeper relationships and can help to address ongoing problems and concerns.  Effective communication skills serve a key role in successfully resolving conflict, both in the home and in the workplace.

Institutional Structures for Conflict Resolution

There are two types of conflict in any organization, and thus two general methods of resolving conflict, depending on the kind of conflict involved.

The first type of conflict is that based on flaws in the institution itself.  As a “social tool,” an institution must be designed properly and used correctly, or it won’t work the way intended.  Conflict can — unintentionally — be built in to the organization.

Institutional flaws, however, are often the ones most people ignore: something wrong in the structuring of power relationships at any level or all levels within the institution.  True, as Lord Acton noted, power tends to corrupt, and absolute power tends to corrupt absolutely.  That is why everyone within an institution must have the equal opportunity and means to acquire power so that power is broken up and shared.

Then, while solving institutional conflicts should be the job of those inside the institution or organization, the advice of an outside observer may be essential.  This is because people inside the institution can simply be too “close” to the problem and fail to see it.  Plus, where power is concentrated within an institution, leaders cannot address conflicts among different levels within the institution or recommend corrective actions.

If the institution promotes solidarity, and everyone goes along with it, institutional conflicts can often be resolved very easily.  If everyone within the institution shares power to resolve conflicts, and everyone wants the conflict to be resolved, everyone will work with others to help restructure the institution.

What happens, however, when the institution is restructured to promote the empowerment of all workers, but some feel others in the organization are manipulating them or otherwise taking unfair advantage?  Or suppose there are people who just aren’t getting along with others or with the institution as a whole?

This is the second type of conflict, personal conflict, and it is sometimes the most difficult to resolve.  It most often results from a feeling of powerlessness, which isolates people from their co-workers and others in society.

Traditionally, leaders and managers have often tried to resolve personal conflicts informally, on a one to one basis.  This can sometimes work . . . but don’t count on it.  When someone with power relates to someone without power, someone is going to feel as if he was imposed on . . . and it won’t be the one with power.

It is much better that there be some “institutional mechanism” in place to deal with personal conflicts.  This must be a part of the system itself, to deal with this kind of conflict effectively — or at all.

The specific structuring of a means of dealing with personal conflict within an organization must be carefully considered.  It is, after all, far too easy for people with the wrong kind of power to manipulate a grievance committee or arbitration board and use it to get rid of people they don’t want, cover up their own incompetence, or even seize even more power and concentrate it in their own hands to the ultimate detriment of the organization.

Any such mechanism must be objective, fair, and — especially — it must be perceived as such.  An arbitration board or committee can be objective and fair, but if people do not think so, it is useless.

In a “typical” company in which there are owners, managers, and workers, and never shall any of them meet on common ground, the perception of fairness, much less actual fairness, is virtually impossible.  No one is equal in status, so fairness and justice, which can only truly function among equals, are out of the question.

There is, in fact, only one proven method to provide a foundation for fairness and justice in the workplace, and to lay the groundwork for effective conflict resolution.  And that is to make sure that every worker has power, and the only way to do that is to ensure that every worker has the equal opportunity and effective means to become an owner of that organization.

Capital Ownership Within a Business Enterprise

To many people it seems as if expanded capital ownership is touted as a panacea as a result of all the problems it has the potential to solve.  That, however, is a misleading way to look at it.  Expanded capital ownership has the potential to solve so many problems because having ownership — and thus having power — is an inherent part of what it means to be human.

To deprive people of ownership (and thus power), or the means of acquiring and possessing capital, is to deny human nature.  And that causes more problems than anyone ever thought of solving by abolishing private property.  Nature is unforgiving, and always takes revenge.

True conflict resolution depends on people meeting together as “power equals” and getting matters settled, not only with fairness and justice, but with the perception that fairness and justice are the guiding principles.  And that is one reason why having worker-owners, instead of mere workers, is so important to build solidarity and get everyone pulling together in the same direction.

It is, after all, an ancient dictum that “Power naturally and necessarily follows property.”  In order to have the power to change the institutions of your organization or institution, or to resolve conflicts between individuals in a just and fair manner, you must have the power to do so and the right that comes only from ownership.

That is why any system that conforms to the principles of the Just Third Way must include capital ownership as an integral part of that system.  When a society or institution has both people with power, and people without power, there is going to be conflict.  Everyone in an organization must have power.

No leader or manager can truly resolve conflict simply by imposing desired conditions from above or silencing dissent by fiat.  That only whitewashes a problem and lays the groundwork for bigger problems in the future, whether institutional or personal.

True conflict resolution depends on people of equal status, and that means everyone has an equal opportunity and access to the means to become capital owners.  They can then organize to study and correct the problems that are causing the conflict at both the individual and the institutional level.

http://just3rdway.blogspot.com/2017/03/effective-communication-and-conflict_9.html

Tech May [IS] Widen the Gap Between Rich and Poor

On February 8, 2017, Roey Tzezana writes on Futurism:

  • Robots like the Moley cooking system are examples of how the technology of the future will possibly have a hand in every part of our day.
  • Such infiltration could lead to the gap widening between the rich and the poor.

You’re watching MasterChef on TV. The contestants are making their very best dishes and bring them to the judges for tasting. As the judges’ eyes roll back with pleasure, you are left sitting on your couch with your mouth watering at the praises they heap upon the tasty treats.

Well, it doesn’t have to be that way anymore. Meet Moley, the first robotic cook that might actually reach your household.

Moley is composed mostly of two highly versatile robotic arms that repeat human motions in the kitchen. The arms can basically do anything that a human being can, and in fact, receive their ‘training’ by recording highly esteemed chefs at their work. According to the company behind Moley, the robot will come equipped with more than 2,000 digital recipes installed and will be able to enact each and every one of them with ease.

I could go on describing Moley, but a picture is worth a thousand words, and a video clip is worth around thirty thousand words a second. So take a minute of your time to watch Moley in action. You won’t regret it.

Moley is projected to get to market in 2017, and should cost around $15,000.

What impact could it have for the future? Here are a few thoughts.

IMPACT ON PROFESSIONAL CHEFS

Moley is not a chef. It is incapable of thinking up of new dishes on its own. In fact, it is not much more than a ‘monkey’ replicating every movement of the original chef. This description, however, pretty much applies to 99 percent of kitchen workers in restaurants. They spend their work hours doing exactly as the chef tells them to. As a result, they produce dishes that should be close to identical to each other.

As Moley and similar robotic kitchen assistants come into use, we will see a reduced need for cooks and kitchen workers in many restaurants. This trend will be particularly noticeable in large junk food networks like McDonald’s that have the funds to install a similar system in every branch of the network, thereby cutting their costs. And the kitchen workers in those places? Most of them will not be needed anymore.

Professional chefs, though, stand to gain a lot from Moley. In a way, food design could become very similar to creating apps for smartphones. Apps are so hugely successful because everybody has an end device – the smartphone – and can download an app immediately for a small cost. Similarly, when many kitchens make use of Moley, professional chefs can make lots of money by selling new and innovative digital recipes for just one dollar each.

ARE WE BECOMING A PLUTONOMY?

In 2005, Citigroup sent a memo to its wealthiest clients, suggesting that the United States is rapidly turning into a plutonomy: a nation in which the wealthy and the prosperous are driving the economy, while everybody else pretty much tags along. In the words of the report –

“There is no such thing as “The U.S. Consumer” or “UK Consumer”, but rich and poor consumers in these countries… The rich are getting richer; they dominate spending. Their trend of getting richer looks unlikely to end anytime soon.”

There is much evidence to support Citigroup’s analysis, and Boston Consulting Group has reached similar conclusions when forecasting the increase in financial wealth of the super-rich in the near future. In short, it would seem that the rich keep getting richer, whereas the rest of us are not enjoying anywhere near the same pace of financial growth. It is therefore hardly surprising to find out that one of the top pieces of advice given by Citigroup in its Plutonomy Memo was basically to invest in companies and firms that provide services to the rich and the wealthy. After all, they’re the ones whose wealth keeps on increasing as time moves on. Why should companies cater to the poor and the downtrodden, when they can focus on huge gains from the top 10 percent of the population?

Moley could easily be a demonstration for a service that befits a plutonomy. At $15,000 per robot, Moley could find its place in every millionaire’s house. At the same time, it could kick out of employment many of the low-level, low-earning cooks in kitchens worldwide.

You might say, of course, that those low-level cooks would be able to compete in the new app market as well, and offer their own creations to the public. You would be correct, but consider that any digital market becomes a “winner takes all” market. There is simply no place for plenty of big winners in the app – or digital recipe – market.

Moley, then, is essentially another invention driving us closer to plutonomy.

AND YET…

New technologies have always cost some people their livelihood while helping many others. Matt Ridley, in his masterpiece The Rational Optimist, describes how the guilds fought relentlessly against the industrial revolution in England, even though that revolution led in a relatively short period of time to a betterment of the human condition in England. Some people lost their workplace as a result of the industrial revolution, but they found new jobs. In the meantime, everybody suddenly enjoyed from better and cheaper clothes, better products in the stores, and an overall improvement in the economy since England could export its surplus of products.

Moley and similar robots will almost certainly cost some people their workplaces, but in the meantime it has the potential to minimize the cost of food, minimize time spent on making food in the household (I’m spending 45-60 minutes every day making food for my family and me), and elevate the lifestyle quality of the general public – but only if the technology drops in price and can be deployed in many venues, including personal homes.

FUTURE TECHNOLOGY GAP?

If it’s a forecast you want, then here it is. While we can’t know for sure whether Moley itself will conquer the market, or some other robotic company, it seems likely that as AI continues to develop and drop in prices, robots will become part of many households. I believe that the drop in prices would be significant over a period of twenty years so that almost everybody will enjoy the presence of kitchen robots in their homes.

That said, the pricing and services are not a matter of technological prowess alone, but also a social one: will the robotic companies focus on the wealthy and the rich, or will they find financial models with which to provide services for the poor as well?

This decision could shape our future as we know it, and define whether we’ll keep our headlong dive towards plutonomy.

Tech May Widen the Gap Between Rich and Poor

What is surprising about this article is that the author fails to point to the reason “the rich are getting richer.” Obviously, the distinction between the rich and the non-rich is that the rich OWN wealth-creating, income-producing capital assets, the very essence of technological progress, and the poor only have their labor to sell to the wealthy capital ownership class.

The fact that the core function of technological invention and innovation is to invent “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, should surprise no one who is conscious and who has even causally observed the constant shift to non-human productive inputs in the manufacturing, distribution, and sales of products, as well as the delivery of services, that has been occurring during their lifetime. The first burst of this phenomena was the Industrial Revolution, which replaced many jobs, but still this was primarily an age of labor-intensive production. But now we are in an age of technology sophistication that is permeating every sector of industry and our day-to-day lives. Such exponential growth of technology is causing tectonic shifts in the technologies of production, which is and will continue to destroy jobs and devalue the worth of labor.

The urgency is to figure out means for people to earn an income without dependency on jobs. The focus should not be on a pro-job growth future but an alternative to wage dependency as economists across the board predict further losses as AI, robotics, and other technologies continue to be ushered in.

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

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

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

Also what needs to be understood is that human productivity has not advanced (our human abilities are limited by physical strength and brain power––and relatively constant), but that the productiveness of the non-human factor of production––productive capital––is the reason that private sector corporations, majority owned by the “1 percent,” are utilizing the non-human factor of production increasingly to create efficiencies and save labor costs. It is the function of technology to save people from toil and to enable us to do things that otherwise are humanly impossible without non-human input. The critical question becomes who should own productive capital? The issue of OWNERSHIP is unbelievably overlooked by those in academia and politics, as well as by the author of this piece. Yet we live in country founded upon private property rights and individuals owning the non-human means of production.

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

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

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

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

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

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

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

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

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

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

The question that requires an answer is now timely before us. It was first posed by Kelso in the 1950s but has never been thoroughly discussed on the national stage. Nor has there been the proper education of our citizenry that addresses what economic justice is and what capital ownership is. Therefore, by ignoring such issues of economic justice and capital ownership, our leaders are ignoring the concentration of power through monopoly ownership of productive capital, with the result of denying the 99 percenters equal opportunity and access to become capital owners.

The question, as posed by Kelso is: “how are all individuals to be adequately productive when a tiny minority (capital owners) produce a major share and the vast majority (labor workers), a minor share of total goods and services,” and thus, “how do we get from a world in which the most productive factor—physical capital—is owned by a handful of people, to a world where the same factor is owned by a majority—and ultimately 100 percent—of the consumers, while respecting all the constitutional rights of present capital owners?”

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

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

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

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

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

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

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

Also see the article entitled “The Solution To America’s Economic Decline” at http://www.foreconomicjustice.org/9206/financing-future…economic-decline and “Education Is Critical To Our Future Societal Development” at http://www.foreconomicjustice.org/?p=9058. And also “Achieving The Green Economy” at http://foreconomicjustice.org/?p=9082.

Also see “Financing Economic Growth With ‘FUTURE SAVINGS’: Solutions To Protect America From Economic Decline” at http://www.foreconomicjustice.org/9206/financing-future…economic-decline and “The Income Solution To Slow Private Sector Job Growth” at http://www.foreconomicjustice.org/9872/the-income-solut…ector-job-growth.