Beyond The "Buffett Rule"

“The Senate will soon take up President Obama’s proposed “Buffett rule,” which would require people earning $2 million or more to pay at least 30% of their income in federal taxes. The inspiration for the rule was financier Warren Buffett’s observation that because he makes his living from investment…”

The proposal would require that people with annual incomes of $1 million or more pay at least 30% of their income in federal taxes. Democratic strategists believe the idea has a strong political punch — particularly now, when many Americans are filing their taxes — and taps into the widely held belief that the U.S. economy and political system tilt in favor of the wealthy.

Citizens For Tax Justice, a liberal tax reform group, figures that the Buffett Rule would affect about 0.08 percent of taxpayers, or 1 out of every 1,250. People will be tempted to think that by enacting the Buffett Rule, we have solved the problem of growing inequality, when we won’t really have even touched it. The medium family income in America is about $50,000 (half above and half below), which means that if two people in your family are working and they bring in a total of more than $50,000, you’re in the top half, and any redistribution through the tax system for the purpose of reducing inequality might increase your taxes, not reduce them.

There continues to be heated discussion about tax reform and tax reduction, as well as budget cuts. However, as widely discussed, the proposals will both further concentrate ownership of productive capital and result in the requirement for further redistribution through the tax system in order for the 99 percent to have income to create consumer demand. Still, there are no leaders who are advocating a reform of our financial system that will end the monopoly the 1 percent now enjoys, which empowers them to continue to amass concentrated ownership of productive capital (represented in income through capital gains and dividends taxed at 15 percent). This unjust system must be reformed so that the 99 percent can acquire productive capital ownership simultaneously with the economy’s growth and pay for their acquisition out of the future earnings of the new capital formation investment. This is the Just Third Way that over time will empower the 99 percent to build viable capital estates, while simultaneously optimizing the application of technological innovation and invention and providing jobs as a result of far greater economic growth.

This should be the idea that has a strong political punch.

The current debate about a fairer tax code and ending the Bush tax cuts relates to what percent of Gross Domestic Product (GDP) should the federal government spend and what percent of GDP should be collected in taxes. Unfortunately, the current economy is growing at the Congressional Budget Office projected rate of less than 3 percent. This is pitiful, especially in light of the advances in technological production processes that are capable of producing a quality material lifestyle for ALL American citizens. The focus needs to be on growth with at least a 6 percent growth rate and a targeted 20 percent growth rate, which would allow the society to maintain promised health care and Social Security commitments to a growing elderly population, stabilize taxes at 15 percent of GDP, and balance the budget. With growth rates well over 6 percent, health care and Social Security benefits could be increased, taxes could be lowered, while achieving a surplus.

The path to such prosperity requires recharting the financial system to empower ALL citizens to acquire long term viable private, individual ownership portfolios representing assets of new productive capital (the non-human factor of production embodied in superatomated and computerized processes that require less labor worker or no labor worker input) and pay for their acquisition out of the future earnings of the productive capital investments financed by credit insured by the Federal Reserve.

The accelerated growth rate, due to the the infusion of credit into productive capital investment, would result in a majority of Americans earning additional income from wages and salaries and dividend, interest, and capital gains from other opportunities created beyond the dividend income payout from the productive capital investments. The accelerated growth rate would produce jobs that pay well and would significantly expand markets due to rising consumer demand, which in turn would generate greater business profits and opportunity for more productive capital investment. Everyone would benefit––rich and poor. There would be lower unemployment (making for the elimination of make-work), higher personal incomes, lower deficits due to greater tax revenues, lower tax rates, and better government services, with every citizen benefiting from a higher standard of living.

Such a path to prosperity would empower ordinary citizens, the majority of which are capitalless, to own a substantial percentage of the future productive capital formation creating the growth of the economy. The GOAL would be to assure that every man, woman and child would be able to accumulate a portfolio of productive capital assets large enough to provide a secure source of income. After a few decades, dividend income from the ownership of productive capital assets would become the primary source of income, though well-paying job opportunities would be plentiful for those who want to work for the satisfaction that can come from employment, whether in business, education, healthcare, science, and government or other self-rewarding contributions to society.

http://www.latimes.com/news/opinion/opinionla/la-ed-buffett-rule-20120414,0,4504843.story

The Most Vital Issue In American Politics Today

The Bureau of Labor Statistics (BLS) reckons that by 2020 the overwhelming majority of jobs will still require only a high school diploma or less, and that nearly three-fourths of “job openings due to growth and replacement needs” over the next decade will pay a median wage of less than $35,000 a year, with nearly 30 percent paying a median of about $20,000 (in 2010 dollars).

Right now about 50 million Americans are working in: office and administrative support occupations (median wage of $31,250), sales and related occupations ($24,840), food preparation and serving occupations ($18,900). Not too much knowledge required. The growth jobs of tomorrow, according to the BLS: Childcare workers ($19,430), personal care aides ($19,730), home health aides ($20,610), janitors and cleaners ($22,210), teacher assistants ($23,220), nonconstruction laborers ($23,460), security guards ($23,900) and construction laborers ($29,730).

The column by Alexander Cockburn appearing in the April 23, 2012 edition of The Nation raises the issue of “Why We Must Raise The Minimum Wage.”

Cockburn writes:

“Everyone knows the story of Henry Ford more than doubling his production line workers’ pay to $5 a day in January 1914. Ford explained to aghast fellow capitalists that he would be creating customers for his cheap cars, building a new American middle class.

“Nearly a century later, in 2005, Walmart CEO Lee Scott called on Congress to raise the minimum wage, since “our customers simply don’t have the money to buy basic necessities between pay checks.” Walmart haters whacked away at Scott for hypocrisy, but he was being perfectly reasonable in identifying what was then and is now America’s number-one problem: a huge chunk of the population barely survives on starvation wages. If you adjust for inflation, median personal income hasn’t moved for almost half a century. Nearly a quarter of US households have zero to negative net worth. It just takes one unlucky turn of the cards—an illness, an accident, a brush with the law—to put them under.”

His solution:

“Higher wages for the jobs that are out there. The current federal minimum wage is $7.25 per hour. Work a forty-hour week for $7.25 and you end up with $15,080 a year. This is just above the federal poverty line for an individual ($11,000) but well below the line for a family of four ($22,000). And it’s just a bit more than the manufacturer’s recommended retail price for the Ford Fiesta ($13,200), Ford’s cheapest car this year. In 1914 an assembly line worker could buy a Model T with four months’ pay.
”

In reality, Alexander Cockburn’s does not provide the solution! His solution essentially keeps vast pools of people at near poverty or poverty levels and does not create a strong middle class with the purchasing power to sustain American economic growth.

What will work is simultaneously broadening private, individual ownership of new productive capital investment as the American economy grows, turning labor workers and others into new capitalists who will benefit from expanded earnings through the full-dividend payout of the earnings the investments generate, which in turn will strengthen consumer demand and create even greater economic growth and growing asset portfolios for ALL Americans, thus reducing dependence on government redistribution “make-work employment” and “welfare” programs.

Modern technology and rapidly developing intelligent systems technology means that modern industry, the employer of middle class prosperity, simply does not need millions of new workers, while the population of available workers is multiplying. Truly intelligent “machines” (productive capital) will have the potential to eliminate poverty and usher in a new age of prosperity, opportunity and economic justice while closing the gap between rich and poor through broadened access to capital credit for investment in new productive capital assets so that everyone can become a capitalist with income from ownership of the economy’s future productive capital assets.

Free market capitalism can be a good thing because it involves the principle of private ownership. Private ownership creates incentive for individuals and business corporations to acquire productive capital, because the profits accrue to the owners. The problem is that there presently exists no means by which the majority of American citizens can fully benefit from the unprecedented productive potential of technological innovation in which the non-human factor of production is displacing the human factor of production. As most customers for the products and services that can be produced are labor workers, market demand will exponentially decline unless society’s customer base can gain access to capital credit to acquire long term viable ownership portfolios in future productive capital assets.

President Obama invokes “the knowledge economy,” putatively replete with well-paying jobs demanding advanced skills in all the high-tech arts that can make America great again. But this is not the real economy of tomorrow for most Americans.

Up to this point in our history, wages and salaries have been paid to labor workers to provide income that generates consumer demand in the market. Without jobs, labor workers cannot buy the products and services that are produced, and without customers, business enterprises cannot expand production. The principle operative of capitalism is to maximize income to the owners of the business corporation, not to create jobs or provide income for labor workers.

This is a fundamental structural problem plaguing the capitalist system. It explains why the middle class is in decline and poverty persists despite capitalism’s obvious capability to produce and meet demand for products and services needed and wanted by our citizenry. With declining labor worker incomes and the prospects of more people living with insufficient or no income, demand in the market likewise declines. Without a job there is no money. And as technological innovation gains exponential momentum there will be fewer and fewer jobs for labor workers to produce the products and services that they cannot buy because they don’t have jobs. Thus, this vicious circle is the current embodiment of capitalism.

Capitalism is not designed to benefit the working class and poor. Capitalism is designed to benefit the owners of productive capital. Few people can save enough to become wealthy by investing their savings. Yet the financial system is based on “savings” and as a result the percentage of people that derives most of their income from returns on productive capital investments is small. But it does not have to be.

What if we could reverse this trend and turn the vast pool of Americans into productive capital owners and thus consumers? If that were done, more labor workers would be required (at least in the short term) to produce products and services that would be demanded by these new consumers, who are as well the new capitalist owners of the productive capital assets created to expand productive capacity to meet demand. This would effectively recover the economy from the present recession to the point where business enterprises again can profitably sell their products and services. And as companies expand to meet demand with investment in new productive capital, new owners would participate and through their income dividend payout create more demand.

Such a system can be created that rewards labor workers with skills that are in demand, while at the same time provide capital dividend income to them and to those not needed for the production of products and services. Such a creation would embrace productive capital as a replacement for labor as the principal factor in the production with continued productivity growth. Thus, the future economy would generate material wealth for ALL Americans created by technological invention embodied in superautomation, automate factories, intelligent machines, and sophisticated computerization.

http://www.thenation.com/article/167183/why-we-must-raise-minimum-wage

 

The End Of Capitalism –– So What's Next?

The capitalism practiced today is what, for a long time, I have termed “Hoggism,” propelled by greed and the sheer love of power over others. “Hoggism” institutionalizes greed (creating concentrated capital ownership, monopolies, and special privileges). “Hoggism” is about the ability of greedy rich people to manipulate the lives of people who struggle with declining labor worker earnings and job opportunities, and then accumulate the bulk of the money through monopolized productive capital ownership. Our scientists, engineers, and executive managers who are not owners themselves, except for those in the highest employed positions, are encouraged to work to destroy employment by making the capital worker more productive. How much employment can be destroyed by substituting machines for people is a measure of their success––always focused on producing at the lowest cost. Only the people who already own productive capital are the beneficiaries of their work, as they systematically concentrate more and more capital ownership in their stationary 1 percent ranks. Yet the 1 percent are not the people who do the overwhelming consuming. The result is the consumer populous is not able to get the money to buy the products and services produced as a result of substituting machines for people. And yet you can’t have mass production without mass human consumption. It is the exponential disassociation of production and consumption that is the problem in the United States economy, and the reason that ordinary citizens must gain access to productive capital ownership to improve their economic well-being.

Binary economist Louis Kelso postulated: “When consumer earning power is systematically acquired in the course of the normal operations of the economy by people who need and want more consumer goods and services, the production of goods and services should rise to unprecedented levels; the quality and craftsmanship of goods and services, freed of the cornercutting imposed by the chronic shortage of consumer purchasing power, should return to their former high levels; competition should be brisk; and the purchasing power of money should remain stable year after year.”

Without this necessary balance hopeless poverty, social alienation, and economic breakdown will persist, even though the American economy is ripe with the physical, technical, managerial, and engineering prerequisites for improving the lives of the 99 percent majority. Why? Because there is a crippling organizational malfunction that prevents making full use of the technological prowess that we have developed. The system does not fully facilitate connecting the majority of citizens, who have unsatisfied needs and wants, to the productive capital assets enabling productive efficiency and economic growth.

Kelso said, “We are a nation of industrial sharecroppers who work for somebody else and have no other source of income. If a man owns something that will produce a second income, he’ll be a better customer for the things that American industry produces. But the problem is how to get the working man [and woman] that second income.”

In Kelso’s words, “a democratic capitalist economy is a private-property, free-market economy in which goods and services are produced through the voluntary and universal cooperation of concurrent labor workers and capital workers under a politically democratic government.” At present the United States economy, nor for that matter any other economy does not operate as a private-property democratic-capitalist, free-market economy. What needs to transpire is an understanding of binary economics along with instituting credit mechanisms that will implement the goal of broadening productive capital ownership in ways wholly compatible with the U.S. Constitution and the protection of private property.

America has tried the Republican “cut spending, cut taxes, and cut ‘entitlements’” and the Democrat “protect ‘entitlements,’ provide tax-payer supported stimulus, lower middle and working class taxes, tax the rich and redistribute” brands of economic policy, as well as a mixture of both. Republican ideology aims to revive hard-nosed laissez-faire appeals to hard-core conservatives but ignores the relevancy of healing the economy and halting the steady disintegration of the middle class and working poor.

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

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

http://www.huffingtonpost.com/klaus-schwab/end-of-capitalism—-_b_1423311.html

Trade Deficit Narrows, Boosting Economic Growth Forecast

Economists sharply raised their forecast for first-quarter economic growth after news of an unexpectedly big drop in the nation’s trade deficit in February.

“Macroeconomic Advisers, a major forecasting firm, marked up its estimate for first-quarter gross domestic product growth to an annualized rate of 3.1% from 2.6%. Only a few weeks ago, it was projecting a more-moderate GDP growth of about 2% in the first quarter.”

The current debate about a fairer tax code and ending the Bush tax cuts relates to what percent of Gross Domestic Product (GDP) should the federal government spend and what percent of GDP should be collected in taxes. Unfortunately, the current economy is growing at the Congressional Budget Office projected rate of less than 3 percent. This is pitiful, especially in light of the advances in technological production processes that are capable of producing a quality material lifestyle for ALL American citizens. The focus needs to be on growth with at least a 6 percent growth rate and a targeted 20 percent growth rate, which would allow the society to maintain promised health care and Social Security commitments to a growing elderly population, stabilize taxes at 15 percent of GDP, and balance the budget. With growth rates well over 6 percent, health care and Social Security benefits could be increased, taxes could be lowered, while achieving a surplus.

The path to such prosperity requires recharting the financial system to empower ALL citizens to acquire long term viable private, individual ownership portfolios representing assets of new productive capital (the non-human factor of production embodied in superatomated and computerized processes that require less labor worker or no labor worker input) and pay for their acquisition out of the future earnings of the productive capital investments financed by credit insured by the Federal Reserve.

The accelerated growth rate, due to the the infusion of credit into productive capital investment, would result in a majority of Americans earning additional income from wages and salaries and dividend, interest, and capital gains from other opportunities created beyond the dividend income payout from the productive capital investments. The accelerated growth rate would produce jobs that pay well and would significantly expand markets due to rising consumer demand, which in turn would generate greater business profits and opportunity for more productive capital investment. Everyone would benefit––rich and poor. There would be lower unemployment (making for the elimination of make-work), higher personal incomes, lower deficits due to greater tax revenues, lower tax rates, and better government services, with every citizen benefiting from a higher standard of living.

Such a path to prosperity would empower ordinary citizens, the majority of which are capitalless, to own a substantial percentage of the future productive capital formation creating the growth of the economy. The GOAL would be to assure that every man, woman and child would be able to accumulate a portfolio of productive capital assets large enough to provide a secure source of income. After a few decades, dividend income from the ownership of productive capital assets would become the primary source of income, though well-paying job opportunities would be plentiful for those who want to work for the satisfaction that can come from employment, whether in business, education, healthcare, science, and government or other self-rewarding contributions to society.

http://www.latimes.com/business/money/la-fi-mo-economy-trade-20120412,0,3590727.story

China's Exports Keep Rising Despite Higher Costs

“China is offsetting the head winds because it keeps capturing more market share,” said Louis Kuijs, an economist formerly at the World Bank and now at the Fung Global Institute in Hong Kong. “Yes, labor is becoming more expensive over time, but it’s still much cheaper than the U.S. or Europe. The ratio of price to quality is still far more favorable for production in China.”

The country’s investment in heavy machinery will help China increase its share of global exports to an unprecedented 15% or more by 2020, said Janet Zhang, an analyst for GaveKal Dragonomics, a China-based economic research firm.

“China is gradually climbing up the value chain,” Zhang said. “This is an opportunity for companies to upgrade to overcome labor costs and shortages.”

Workers account for about one-third of costs in labor-intensive sectors. But now China’s economic expansion is now focused on investment in new productive capital machinery with capita investment spurred by China’s state-controlled banks.

To compete, America must engage in an all-out initiative to extend capital credit to ALL Americans to acquire viable private, individual ownership portfolios in corporations to expand American-made productive capital capabilities. Such investments can be accomplished using commercial banking insurance and Federal Reserve reinsurance, with the loans paid back out of the future earnings of the investments.

To reinvigorate “Make It In America” and “Made In America,” the federal government should create financial incentives and tax provisions to reward American companies that bring manufacturing back to the United States from abroad, promote manufacturing investment, and incentivize more investment by foreign companies, all with the condition that the employees will share in the ownership benefits generated by the new capital formation projects. The result will be more broadened employee ownership and in-sourcing of jobs created by the new capital formation projects, and make America self-reliant.

The government should impose robust import levies and tariffs (tax) on particular classes of imports that are determined to be manufactured outside the United States and exported back to the United States that do not qualify as “Fair Trade” and unfairly undercut an American-make equivalent. At present, American business 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 deindustrialization of America. This has forced policy makers to adopt a redistributive socialist solution rather than a democratic capitalist one whereby democratic economic growth of the earning power of the citizens would flourish simultaneously with new, broadly-owned productive capital formation investments in the United States. Such overseas operations have the advantage of “sweat-shop” slave labor rates relative to American standards, 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 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.

We need a policy change, which assures truly “Fair Trade” and that exponentially reduces the exodus of our manufacturing prowess and invigorates America’s entrepreneurial exceptionalism and competitive spirit to create products and services in the spirit of “the best that they can be.” We need policies that will de-incentivize American multinational corporations and others from undercutting “American Made,” while simultaneously competitively lowering the cost of production through expanded capital worker ownership. At present, the various incentives in place do not broaden capital ownership but instead further concentrate ownership.

http://www.latimes.com/business/la-fi-china-exports-20120413,0,3141111.story

http://www.latimes.com/business/la-fi-china-gdp-20120413,0,194100.story

Is What President Obama Is Saying About Income Stagnation And Inequality Wrong?

“The market will take care of everything,” they tell us. If we just cut more regulations and cut more taxes—especially for the wealthy—our economy will grow stronger. … But here’s the problem: It doesn’t work. It has never worked. … Over the last few decades, huge advances in technology have allowed businesses to do more with less, and it’s made it easier for them to set up shop and hire workers anywhere they want in the world. … In the last few decades, the average income of the top 1 percent has gone up by more than 250 percent to $1.2 million per year. …  And if the trend of rising inequality over the last few decades continues, it’s estimated that a child born today will only have a one-in-three chance of making it to the middle class—33 percent. … “

The above thinking is based on one-factor economic thinking –– that is the labor worker. The insufficiency of labor worker earnings to purchase increasingly capital-produced products and services gave rise to labor laws and labor unions designed to coerce higher and higher prices for the same or reduced labor input. With government assistance, unions have gradually converted productive enterprises in the private and public sectors into welfare institutions. Binary economist Louis Kelso stated: “The myth of the ‘rising productivity’ of labor is used to conceal the increasing productiveness of capital and the decreasing productiveness of labor, and to disguise income redistribution by making it seem morally acceptable.”

The real solution is to institute policies and program that empower ALL Americans to acquire, over time, viable private, individual ownership portfolios of new productive capital assets created to grow the economy. Using capital credit financing methods insured by commercial banks and reinsured by the Federal Reserve, the acquisition of new productive capital can be paid for out of the future earnings of the investments.

There are actionable policies that will dramatically impact the market economy and strengthen the middle class in a positive way, while expanding the base of private capital ownership and thus strengthening the way consumers make the money to purchase the products and services made possible by the new capital formation. The result will be to expand production and bring more wealth to the economy, which will provide not only growth in expanded ownership of productive capital but also in expanded employment opportunities as the economy revs up to meet expanded consumer demand. Furthermore, the more broadly real capital is acquired by individuals throughout our society with the earnings of capital, the more we will profitably employ unused capacity and promote economic growth. With greater earnings from capital worker investment, people will be able to support and pay for products resulting from “greener” technologies that today people cannot afford. Such policies are perfectly in tune with the natural incentive of business corporations to broaden ownership so that the market for their products will increase. Such policies will liberate the economy.

http://blog.american.com/2012/04/why-pretty-much-everything-obama-is-saying-about-income-stagnation-and-inequality-is-wrong/comment-page-1/#comment-120446

The US Is So Screwed-Up Now, That China Is A Much Better Place To Do Business

The CEO of American icon Coca-Cola, Muhtar Kent, says that China’s now a better place to do business than the United States. So much for “Made In America.”

As Coca-Cola and other companies expand to make their products and sell them in China, the new investments should be financed to broaden American private, individual ownership in the new productive capital assets embodied in new automated factories, distribution centers, and computerized operations.

To reinvigorate “Make It In America” and “Made In America,” the government should create financial incentives and tax provisions to reward American companies that bring manufacturing back to the United States from abroad, promote manufacturing investment, and incentivize more investment by foreign companies, all with the condition that the employees will share in the ownership benefits generated by the new capital formation projects. The result will be more broadened employee ownership and in-sourcing of jobs created by the new capital formation projects, and make America self-reliant.

The government should impose robust import levies and tariffs (tax) on particular classes of imports that are determined to be manufactured outside the United States and exported back to the United States that do not qualify as “Fair Trade” and unfairly undercut an American-make equivalent. At present, American business 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 deindustrialization of America. This has forced policy makers to adopt a redistributive socialist solution rather than a democratic capitalist one whereby democratic economic growth of the earning power of the citizens would flourish simultaneously with new, broadly-owned productive capital formation investments in the United States. Such overseas operations have the advantage of “sweat-shop” slave labor rates relative to American standards, 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 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.

We need a policy change, which assures truly “Fair Trade” and that exponentially reduces the exodus of our manufacturing prowess and invigorates America’s entrepreneurial exceptionalism and competitive spirit to create products and services in the spirit of “the best that they can be.” We need policies that will de-incentivize American multinational corporations and others from undercutting “American Made,” while simultaneously competitively lowering the cost of production through expanded capital worker ownership. At present, the various incentives in place do not broaden capital ownership but instead further concentrate ownership.

Trickle Down Economics: The Biggest Con In Politics

The article provides a quick explanation to what Trickle Down Economics actually is:

“Trickle Down Economics is the belief that as the wealthy or big corporations increase profits or are taxed less, they will then “trickle” those excess profits down to the rest of us in the way of more jobs, increased pay, and better benefits.”

Trickle-down economics does not work. What will work is simultaneously broadening private, individual ownership of new productive capital investment as the American economy grows, turning labor workers and others into new capitalists who wi…ll benefit from expanded earnings through the full-dividend payout of the earnings the investments generate, which in turn will strengthen consumer demand and create even greater economic growth and growing asset portfolios for ALL Americans, thus reducing dependence on government redistribution “make-work employment” and “welfare” programs.

Modern technology and rapidly developing intelligent systems technology means that modern industry, the employer of middle class prosperity, simply does not need millions of new workers, while the population of available workers is multiplying. Truly intelligent “machines” (productive capital) will have the potential to eliminate poverty and usher in a new age of prosperity, opportunity and economic justice while closing the gap between rich and poor through broadened access to capital credit for investment in new productive capital assets so that everyone can become a capitalist with income from ownership of the economy’s future productive capital assets.

Free market capitalism can be a good thing because it involves the principle of private ownership. Private ownership creates incentive for individuals and business corporations to acquire productive capital, because the profits accrue to the owners. The problem is that there presently exists no means by which the majority of American citizens can fully benefit from the unprecedented productive potential of technological innovation in which the non-human factor of production is displacing the human factor of production. As most customers for the products and services that can be produced are labor workers, market demand will exponentially decline unless society’s customer base can gain access to capital credit to acquire long term viable ownership portfolios in future productive capital assets. Up to this point in our history, wages and salaries have been paid to labor workers to provide income that generates consumer demand in the market. Without jobs, labor workers cannot buy the products and services that are produced, and without customers, business enterprises cannot expand production. The principle operative of capitalism is to maximize income to the owners of the business corporation, not to create jobs or provide income for labor workers.

This is a fundamental structural problem plaguing the capitalist system. It explains why the middle class is in decline and poverty persists despite capitalism’s obvious capability to produce and meet demand for products and services needed and wanted by our citizenry. With declining labor worker incomes and the prospects of more people living with insufficient or no income, demand in the market likewise declines. Without a job there is no money. And as technological innovation gains exponential momentum there will be fewer and fewer jobs for labor workers to produce the products and services that they cannot buy because they don’t have jobs. Thus, this vicious circle is the current embodiment of capitalism.

Capitalism is not designed to benefit the working class and poor. Capitalism is designed to benefit the owners of productive capital. Few people can save enough to become wealthy by investing their savings. Yet the financial system is based on “savings” and as a result the percentage of people that derives most of their income from returns on productive capital investments is small. But it does not have to be.

What if we could reverse this trend and turn the vast pool of Americans into productive capital owners and thus consumers? If that were done, more labor workers would be required (at least in the short term) to produce products and services that would be demanded by these new consumers, who are as well the new capitalist owners of the productive capital assets created to expand productive capacity to meet demand. This would effectively recover the economy from the present recession to the point where business enterprises again can profitably sell their products and services. And as companies expand to meet demand with investment in new productive capital, new owners would participate and through their income dividend payout create more demand.

Such a system can be created that rewards labor workers with skills that are in demand, while at the same time provide capital dividend income to them and to those not needed for the production of products and services. Such a creation would embrace productive capital as a replacement for labor as the principal factor in the production with continued productivity growth. Thus, the future economy would generate material wealth for ALL Americans created by technological invention embodied in superautomation, automate factories, intelligent machines, and sophisticated computerization.

http://rightoffacliff.com/2012/01/22/trickle-down-economics-the-biggest-con-in-politics/

 

 

A Battle Cry At Northrop Over U.S. Cuts

With proposed federal budget cuts threatening military contracts and employment in Southern California’s aerospace industry, about 2,000 Northrop Grumman Corp. workers were urged by Rep. Howard “Buck” McKeon (R-Santa Clarita), the Chairman of the House Armed Services Committee, to fight to save industry jobs.

This is yet a another measure of tax redistribution and government borrowing to prop up the American economy, whereby job attrition due to the exponential shift from labor to productive capital as the primary means utilized to produce products and services is causing military/industrial boondoggle policy support. Real, productive employment will result from a national policy to empower ALL citizens to accumulate viable portfolios in productive capital assets simultaneously with the growth of the economy’s capability to produce products and services needed and demanded by consumers.

We cannot balance the budget without cutting out coerced taxpayer-dependent redistribution of the earnings of capital workers, which if we did at this juncture would collapse the economy and ruin lives, resulting in social strife, personal suffering and degradation, the erosion of freedom, and ultimately anarchy, which will bring on totalitarian government. While welfare, private charity, boondoggle employment and other redistribution measures are now seen as necessary, they do not have to be sustained indefinitely. There are policies that can be adopted and executed to reverse the ultimate direction of collapse of the American market economy system. These policies are based on the recognition that as the production of products and services changes from labor intensive to capital intensive, the way in which every human being––not just a few, but every person––earns his or her income must change in the same way. At the core of this revolution is the understanding and commitment to broadening the ownership of productive capital.

http://www.latimes.com/business/la-fi-defense-cuts-20120403,0,165492.story

http://www.latimes.com/business/la-fi-northrop-tax-credit-20140812-story.html

JOBS Measure And Job Growth

The JOBS Act has the potential to be a good program, but unfortunately it requires people to first accumulate “savings” in order to purchase newly issued shares of stock representing investment in new productive capital formation. And that means that only a minority of people can benefit, and even then their asset holdings will be minimum compared to the 1 percent wealthy minority who now own America, and who continue to exponentially concentrate future ownership.

In concentrated capital ownership terms, roughly 1 percent own 50 percent of the corporate wealth with 10 percent owning 90 percent. This leaves 90 percent of the people scrambling for the last 10 percent, with them dependent on their labor worker wages to purchase capital.

With 95 percent of our citizens systemmatically denied legitimate access to “private property” in our ever-expanding base of productive capital, with government and corporate managers now withholding arbitrarily about 75 percent of the stream of profits from productive capital, the institution private property has atrophied almost to the point of its extinction. If the trend continues, the government-controlled redistribution of corporate profits will result in a socialist state.

What we need is a system which extends “pure credit” or “capital credit” to every American citizen to invest in the economic future of America. Capital credit is restricted to the purchase of assets that are expected to pay for themselves out of the revenue generated from the capital investment, which it financed, and therefore these assets are expected to earn a continuing flow of profit for whoever owns the assets.

Capital formation investments are made by companies annually based on projections a number of years out (at least 5 to 10 years) with the expectation that the investment will pay for itself as a result of sustainable growth and consumer demand. Thus, the concept embraces the idea that capital formation is self-financing.

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

We need to free the system of dependency on Wall Street or the accumulated savings and money power of the rich and super-rich who control Wall Street. The Federal Reserve System has stifled the growth of America’s productive capacity through its monetary policy by monetizing public-sector growth and mounting Federal deficits and “Wall Street” bailouts; by favoring speculation over investment; by shortchanging the capital credit needs of entrepreneurs, inventors, farmers, and workers; by increasing the dependency of with usurious consumer credit; and by perpetuating unjust capital credit and ownership barriers between rich Americans and those without savings. The Federal Reserve Bank should be used to provide interest-free capital credit (including only transaction and risk premiums) and monetize each capital formation transaction, determined by the same expertise that determines it today––management and banks––that each transaction is viably feasible so that there is virtually no risk in the Federal Reserve. The first layer of risk would be taken by the commercial credit insurers, backed by a new government corporation, the Capital Diffusion Reinsurance Corporation, through which the loans could be guaranteed. This entity would fulfill the government’s responsibility for the health and prosperity of the American economy.

The newly issued 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 in the economy.

Once the national economic policy bases policy decisions on two-factor (human and non-human employment in production) binary economics, productive capital acquisition would take place through commercially insured capital credit, resulting in a quiet revolution in which economic plutocracy will transform to economic democracy.

We need to reevaluate our tax and central banking institutions, as well as, labor and welfare laws. We need to innovate in such ways that we lower the barriers to equal economic opportunity and create a level playing field based on anti-monopoly and anti-greed fairness and balance between production and consumption. In so doing, every citizen can begin to accumulate a viable capital estate without having to take away from those who now own by using the tax system to redistribute the income of capital workers. What the “haves” do lose is the productive capital ownership monopoly they enjoy under the present unjust system. A key descriptor of such innovation is to find the ways in which “have nots” can become “haves” without taking from the “haves.” Thus, the reform of the “system,” as binary economist Louis Kelso stated, “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.”

http://www.latimes.com/business/la-fi-congress-jobs-20120328,0,6015492.story

http://www.latimes.com/business/la-fi-jobs-bill-20120323,0,7922766.story