Worker Productivity Gains Due To Technological Improvements

Worker productivity gains measured by exponentially greater ratios of productive capital (“machines”––the non-human factor of production) is useless in a technological age where computers are able to manage businesses, schedule factories, maintain inventories, operate automatic factories, and control many types of mechanical systems and robots in the performance of complicated operations that produce products and services. 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). It makes many forms of labor unnecessary. Furthermore, according to Kelso, productive capital is increasingly the source of the world’s economic growth and, therefore, should become the source of added property ownership incomes for all. Kelso postulated that if both labor and capital are 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.

Labor Sticks With Democrats

Dateline February 20, 2012 Los Angeles Times: “Labor sticks with Democrats.”

Labor appears squarely back in Democrats’ corner for the 2012 election––pushed in large part by Republican attacks on collective bargaining rights.

Said Gerald McEntee, the American Federation of State, County and Municipal Employees President, “What’s the alternative?”

The alternative is for labor unions to shift gears and and use their collective bargaining rights to broaden ownership with employees of corporations empowered to acquire stock ownership in future company growth and pay for their acquisition out of the future earnings of the investments.

The labor union movement should transform to an ownership union movement and embrace and fight for this new democratic capitalism. Unfortunately, at the present time the movement is built on one-factor economics––the labor worker. Yet it is the only group of people in the whole world who can demand a real Louis Kelso-designed Employee Stock Ownership Plan (ESOP), who can demand the right to participate in the expansion of their employer by asserting their constitutional preferential rights to become capital owners, be productive, and succeed. The ESOP can give employees access to credit so that they can purchase the employer’s stock, pay for it in pre-tax dollars out of the assets that underlie that stock, and after the stock is paid for earn and collect the capital worker income from it, and accumulate it in a tax haven until they retire, whereby they continue to be capital workers receiving income from their capital ownership stakes. This is a viable route to individual self-sufficiency needing significantly less or no government redistributive assistance.

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

If we continue with the past’s unworkable trickle-down economic policies, governments will have to continue to use the coercive power of taxation to redistribute income that is made by people who earn it and give it to those who need it. This results in ever deepening massive debt on local, state, and national government levels, which leads to the citizenry becoming parasites instead of enabling people to become productive in the way that products and services are actually produced.

When labor unions transform to ownership unions, opportunity will be created for the unions to reach out to all shareholders (stock owners) who are not adequately represented on corporate boards, and eventually all labor workers will want to join an ownership union in order to be effectively represented as an aspiring capital owner. An ownership union would work collaboratively with management to secure financing of advanced technologies and other new capital investments and broaden ownership. This will enable American companies to become more cost-competitive in global markets and to reduce the outsourcing of jobs to workers willing or forced to take lower wages.

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

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

Unfortunately for democratic unionism, the United Auto Workers, American manufacturing workers, and American citizens generally, Reuther was killed in an airplane crash in 1970 before his idea was implemented. Leonard Woodcock, his successor, never followed through.

Union-Busting

Labor unions need to shift gears and and use their collective bargaining rights to broaden ownership with employees of corporations empowered to acquire stock ownership in future company growth and pay for their acquisition out of the futur…e earnings of the investments.

The labor union movement should transform to an ownership union movement and embrace and fight for this new democratic capitalism. Unfortunately, at the present time the movement is built on one-factor economics––the labor worker. Yet it is the only group of people in the whole world who can demand a real Louis Kelso-designed Employee Stock Ownership Plan (ESOP), who can demand the right to participate in the expansion of their employer by asserting their constitutional preferential rights to become capital owners, be productive, and succeed. The ESOP can give employees access to credit so that they can purchase the employer’s stock, pay for it in pre-tax dollars out of the assets that underlie that stock, and after the stock is paid for earn and collect the capital worker income from it, and accumulate it in a tax haven until they retire, whereby they continue to be capital workers receiving income from their capital ownership stakes. This is a viable route to individual self-sufficiency needing significantly less or no government redistributive assistance.

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

If we continue with the past’s unworkable trickle-down economic policies, governments will have to continue to use the coercive power of taxation to redistribute income that is made by people who earn it and give it to those who need it. This results in ever deepening massive debt on local, state, and national government levels, which leads to the citizenry becoming parasites instead of enabling people to become productive in the way that products and services are actually produced.

When labor unions transform to ownership unions, opportunity will be created for the unions to reach out to all shareholders (stock owners) who are not adequately represented on corporate boards, and eventually all labor workers will want to join an ownership union in order to be effectively represented as an aspiring capital owner. An ownership union would work collaboratively with management to secure financing of advanced technologies and other new capital investments and broaden ownership. This will enable American companies to become more cost-competitive in global markets and to reduce the outsourcing of jobs to workers willing or forced to take lower wages.

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

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

Unfortunately for democratic unionism, the United Auto Workers, American manufacturing workers, and American citizens generally, Reuther was killed in an airplane crash in 1970 before his idea was implemented. Leonard Woodcock, his successor, never followed through.

If the 99 percent, who are limited to declining labor worker earnings or welfare, do participate in exponential growth of job-displacing technology, then further concentration of ownership of productive capital will accelerate and the 99 pe…rcent will be further tied to wage slavery or welfare. We need to arrive at a new market economy structure in which on one level the employees of a corporation could walk into management and demand, in collective bargaining, the use of an ESOP—not just to trade a single block of stock for wage concessions, but to redesign the future of the company and its employees. We need, as a society, the assurance that as a corporate employer grows, it builds ownership into its employees. All of them! When people are in a position to earn the wages of their capital as well as the wages of their labor, their company is in a position to be more competitive through lower labor costs and increased technological innovation, while achieving higher employee incomes through the employee’ capital.

Once this goal becomes the national political focus we will see an unbelievable discussion of workable plans to realize the goal. Remember that planning begins with a vision and a goal. This is not rocket science but it does require national leadership. Implementation requires amending a few laws that basically authorize the transactions that will broaden capital ownership paid for with the future earnings of capital investment. Allowing such transactions will provide incentives for profitable opportunities to employ unused capacity and promote stable economic growth.

Still, after a half-century, we have no leaders with a growth strategy that could restore the economic productiveness of the American economy. The growth strategy I have presented is not new, but it has not yet registered in the minds of leaderless politicians and their advisors from the left to the right of the political spectrum and a population of people who have been mis-educated and mis-led by conventional economists from all the conventional schools of economics. See http://www.widescreenreview.com/blog_detail.php?id=837.

Change To Believe In

For those people who believe that the system is fixed and the people cannot be organized to change the system no matter how corrupt it has become, its instructional to point out that the 99 percent “Occupy Wall Street” movement was not controlled by corporate leaders or by Wall Street money. And they got their message out despite the mass media. Their main weakness was that they did not have a systemic economic “solution” to the source of their frustrations and fears. They lacked the knowledge and leadership to advocate solutions to continued concentrated ownership of income-producing productive capital.

The last major system change was orchestrated by a fraction of the African American community, a significantly smaller body of America than the labor movement or the 99 percent who have been enslaved by the current system.

Here are two quotes from Dr. Martin Luther King, Jr. whose words address the mindset of your critic and the many who think like him:

“I have almost reached the regrettable conclusion that the Negro’s great stumbling block in the stride toward freedom is not the White Citizen’s Counciler or the Ku Klux Klanner, but the white moderate who is more devoted to “order” than to justice; who prefers a negative peace which is the absence of tension to a positive peace which is the presence of justice. […] Shallow understanding from people of good will is more frustrating than absolute misunderstanding from people of ill will.” [Letter from a Birmingham Jail, 1963]

“When people get caught up with that which is right and they are willing to sacrifice for it, there is no stopping point short of victory. [Memphis Speech, 1968]

King and those at the front lines of changing the system of institutionalized racism also were frustrated by the lack of support from most leaders in African American churches.

Also useful to understanding change is from Arthur C. Clarke, who characterized the four successive stages of response to any new and revolutionary innovation as follows:

1. It’s crazy!

2. It may be possible — so what?

3. I said it was a good idea all along.

4. I thought of it first.

The Aharonov-Bohm effect, predicted in 1959, required nearly 30 years after its 1960 demonstration by Chambers until it was begrudgingly accepted. Mayer, who discovered the modern thermodynamic notion of conservation of energy related to work, was hounded and chastised so severely that he suffered a breakdown. Years later, he was lionized for the same effort. Wegener, a German meteorologist, was made a laughing stock and his name became a pseudonym for “utter fool,” because he advanced the concept of continental drift in 1912. In the 1960s the evidence for continental drift became overwhelming, and today it is widely taught and part of the standard science curriculum. Gauss, the great mathematician, worked out nonlinear geometry but kept it firmly hidden for 30 years, because he knew that if he published it, his peers would destroy him. In the 1930s, Goddard was ridiculed and called “moon-mad Goddard” because he predicted his rocketry would carry men to the moon. Years later when the Nazi fired V-1 and V-2 rockets against London, those rockets used the gyroscopic stabilization and many other features discovered and pioneered by Goddard. And as everyone knows, rocketry did indeed carry men to the moon. Science has a long and unsavory history of severely punishing innovation and new thinking. In the modern world such scientific suppression of innovation is uncalled-for, but it is still very much the rule rather than the exception.”

(Arthur C. Clarke, in “Space Drive: A Fantasy That Could Become Reality,” Nov./Dec. 1994, p. 38.)

Exponential High Unemployment And Underemployment

‘The longest stretch of high unemployment in this country since the Great Depression’

Again, rather than focusing on policies to realize full production, the focus of attention is on full employment, or in reality at the moment high unemployment. What is needed is a national discussion that addresses the question of income distribution, which will result in the realization that advanced technology and superautomation will continue to displace labor workers and without their ownersh…ip, on a personal individual level, in the new productive capital assets that result, unemployment will continue to widen. We need to make our institutions for productive capital financing and income distribution result in the majority of our personal income derived from the ownership of productive capital with the benefits of productivity increases distribute primarily through dividends (stock ownership in corporations) instead of through labor worker wages and salaries. The end result is 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 where all citizens will eventually become dependent for their economic well-being on our only legitimate monopoly –– the State –– and whatever elite controls the coercive powers of government.

Social Security In Peril

Dateline February 19, 2012 “Social Security In Peril.” “…with every extension of the payroll tax holiday, which was first enacted in 2010, the prospect that Congress will ever restore the tax to its statutory 6.2 percent of covered income [wage earnings] recedes a little bit further over the horizon. And that’s bad news for Social Security”

As job-displacing technology continues to exponentially replace labor workers (people) with machines (non-human productive capital) the pool of tax monies to support Social Security for the 99 percent will dwindle and will be unsustainable. Instead, we need to embrace policies that will broaden ownership of productive capital among the 99 percent (non-owners) as well as adopt a Just Third Way in the form of a more just and simple tax system. The Center For Economic & Social Justice advocates new Justice-committed leaders, especially those who want to end the corruption built into our exclusionary system of monopoly capitalism––the main source of corruption of any political system, democratic or otherwise. They advocate the need to radically overhaul the Federal tax system and monetary policies and institute proposals to get money power to the 99 percent of American citizens who now only rely on their labor worker earnings. The following is proposed:
• Eliminate all tax loopholes and subsidies,
• Provide an exemption of $100,000 for a family of four to meet their ordinary living needs,
• Encourage corporations to pay out all their profits as taxable personal incomes to avoid paying corporate income taxes and to finance their growth by issuing new full dividend payout shares for broad-based citizen ownership,
• Eliminate the payroll tax on workers and their employers, but
• Pay out of general revenues for all promises for Social Security, Medicare, Medicare, government pensions, health, education, rent and subsistence vouchers for the poor until their new jobs and ownership accumulations provide new incomes to substitute for the taxpayer dollars to fill these needs.
• The tax rate would be a single rate for all incomes from all sources above the personal exemption levels so that the budget could be balanced automatically and even allow the government to pay off the growing unsustainable long-term debt, but the poor would pay the first dollar over their exemption levels as the hedge fund operator and others now earning billions of dollars from capital gains, dividends, rents and other property incomes which under some tax proposals would be exempted from any taxes.
• As a substitute for inheritance and gift taxes, a transfer tax would be imposed on the recipients whose holdings exceeded $1 million, thus encouraging the super-rich to spread out their monopoly-sized estates to all members of their family, friends, servants and workers who helped create their fortunes, teachers, health workers, police, other public servants, military veterans, artists, the poor and the disabled.
• The Federal Reserve would 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.
• The CHA would process an equal allocation of productive credit to every citizen exclusively for purchasing full-dividend payout shares in companies needing funds for growing the economy and private sector jobs for local, national and global markets,
• The shares would be purchased on credit wholly backed by projected “future savings” in the form of new productive capital assets as well as the future marketable goods and services produced by the newly added technology, renewable energy systems, plant, rentable space and infrastructure added to the economy.
• Risk of default on each stock acquisition loan would be covered by private sector capital credit risk insurance and reinsurance, but
• Would not require citizens to reduce their funds for consumption to purchase shares.

The end result is 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 where all citizens will eventually become dependent for their economic well-being on our only legitimate monopoly –– the State –– and whatever elite controls the coercive powers of government.

DreamWorks Plans China Studio

Dateline February 18, 2012 Los Angeles Times “DreamWorks plans China studio.”

DreamWorks Animation SKO Inc. has announced plans to build a studio in Shanghai in partnership with two state-owned Chinese media companies. The new company will be named Oriental DreamWorks, a joint venture with China Media Capital and Shanghai Media Group. “We share the same vision with DreamWorks Animation to build a …worldclass family entertainment company,” said Ruigang Li, Chairman and CEO of the new Oriental DreamWorks. DreamWorks CEO Jeffrey Kazenberg said, “We already have people working on over a half-dozen projects. When you look out five to seven years from now, China will be the No. 1 media market in the world.”

It’s one thing to distribute the studio’s American-made popular titles in China, and quite another to start a Chinese company that will produce animation titles and compete with American counterparts. This is especially problematic given that the Chinese government will prop-up the new venture with all sorts of financial incentives.

DreamWorks is now another American company that is embracing China as a future source of cheap labor. Unless we reverse our policies to increase productivity over the coming decades, the American standard of living is certain to decline.

At present, American corporations are increasingly abandoning the United States and its communities to invest in productive capital formation outside the United States, particularly in China, Mexico, India, and other parts of Asia. As a result, America is experiencing the de-industrialization of America. Such overseas operations have the advantage of “sweat-shop” slave labor rates relative to American standards (Apple recently exposed), low or no taxation, supportive infrastructure provisions, currency manipulation, and few if any environmental regulations––which translate to lower-cost production. Thus, producing the same product or service in the United States would be far more expensive. For most people, economic globalization means a growing gap between rich and poor, technological alienation of the labor worker from the means of production, and the phenomenon of global corporations and strategic alliances forcing labor workers in high-cost wage markets, such as the United States, to compete with labor-saving capital tools and lower-paid foreign workers. Unemployment in the United States is high and there is an accelerating displacement of labor workers by technology and cheaper foreign labor, resulting in greater economic uncertainty and unstable retirement incomes for the average American citizen––causing the average citizen to become increasingly dependent on government wealth redistribution programs.

Our worldclass animation creativity should be further nurtured at home and exported to China, not the other way about.

Where Are The Jobs?

 

This condition will continue to persist due to the fundamental inadequacies in the way we manager our economic system. Without reforming the system we continue policies based on the philosophy of helping the unfortunate (those losing jobs) to make it within the existing “full employment” system. Even increasing the fairness of the competition and the equality of opportunity to secure jobs, those w…ho are more aggressive, more intelligent or fortunate to be in the right place at the right time get the better positions, which are limited. As long as the overwhelming percentage of income is distributed through the earnings paid to labor workers, the challenge will be to continue to “create jobs,” which inevitably generates overwhelming pressures for full employment at any cost. The result is that make-work projects of every type and description are created in order to pump up the economy and provide people with earnings from their labor to purchase products and services. If one has no job, then, except for unemployment compensation or welfare, one has no income! For decades we have pursued policies to encourage and foster growth in such a way as to ensure that employment remains high and layoffs are unnecessary whenever possible. Yet the American economy only supports a limited number of jobs in which persons of average intelligence can produce enough wealth to justify present-day inflated wage rates. Paradoxically, such policies have created conditions which virtually guarantee serious unemployment. We have become unconscious as to how productive capital (non-human “things”) has and continues to displace labor (people), with the ownership of productive capital constantly and increasingly concentrated among the 1 percent. As long as the income distribution system is structured so that virturaly all income to the lower and middle classes is derived from labor worker earnings (wages and salaries) we will not be able to realize our full potential in eliminating poverty and progressing toward a state of universal affluence. The “system” requires reform to empower the 99 percent to acquire over time, through credit mechanisms, viable ownership stakes in income-producing productive capital increasingly taking form as superautomation (computer-aided manufacturing and robotics). With broadening ownership of productive capital as the goal, we will be able to unleash the wealth-producing power of available and future machines, computers, and scientific and technical knowledge. Such unleashing of the physical capacity of productive capital will enable the American economy to produce many more products and services than are now produced as much lower prices than now exist and, while at the same time, create many more jobs which need doing than there are unemployed persons seeking work.

20 Signs You Might Be A Typical American Worker

http://www.businessinsider.com/20-signs-you-might-be-a-typical-american-worker-2012-2

Americans need to understand that productive capital representative by non-human instruments of production such as advanced automation and intelligent systems technology, will continue to displace labor workers, reducing job opportunities to wages at the poverty line or just over. We need to fix the “system” so that we empower the 99 percent, who now do not own, to acquire broadened ownership in productive capital using credit mechanisms that enable them to pay for their acquisition out of the future earnings of the new capital formation growth of the economy.

MSNBC's Ed Schultz: A Rare Liberal Success

Dateline February 17, 2012 Los Angeles Times: “MSNBC’s Ed Schultz: A rare liberal success.”

Ed Schultz is a courageous angry-sounding news commentator who rails against the government, Congress and dastardly politicians. Ed criticizes Congress for not giving more help to the poor, the government for cutting off unemployment benefits, and politicians for pledging to dissolve unions. He is a champi…on for the poor and the middle class. Ed presents himself as the one true advocate for the working man, standing up for the unemployed and the middle class.

According to Michael Harrison, the publisher of Talkers, a Web site and magazine that follows talk radio, “Schultz has very intelligently aligned himself with the interests of large groups of piople in this country who have not been spoken for.”

Ed was a Republican until 2000 and his year’s as a conservative talk radio host helped him hone the combative personality that conservatives such as Rush Limbaugh are known for. According to the article, Schultz likes talking to working people. He has an understanding of how to connect with real people.

I see Ed Schultz as a potential advocate for broadened ownership of job-displacing technology and productive capital as a direction our country should embrace with the benefit of not only saving and creating jobs, but most importantly empowering the poor, working people and the middle class to over time benefit as owners in the American market-based economy with growing ownership stakes in a growth economy.

Schultz needs to realize that balancing mass productive power with mass purchasing power through a wage system is not the best course to continue on, given the endless scope of advanced technology applied to producing products and services. Such ignores the possibility of democratizing future ownership of labor-displacing productive capital technologies and rising ownership incomes as a market-generated means of eliminating wage slavery, welfare slavery, debt slavery and charity slavery for the 99 percent of humanity.