Using Taxes To Save Jobs

Dateline February 2, 2012 Los Angeles Times: The headline reads “Using Taxes To Save Jobs.” I would rewrite that headline as “Using Taxes To Broaden Productive Capital Ownership, Save Jobs And Create Jobs.”

President Obama wants to use the tax code to promote manufacturing and deter U.S. corporations from shipping jobs overseas. This is a goal to support. However, given the policies suggested to …accomplish this goal the result will be to further concentrate ownership of productive capital in the 1 percent, leaving the 99 percent with the scraps of scarce and declining jobs due to the role of technology, which replaces labor workers with “machines.” President Obama appears not to be willing to discuss or does not understand the role of productive capital driven by technological innovation and science and the requirement for American workers and all citizens to become capital workers (owners), as well as labor workers, to earn a viable economic future.

Technological change makes tools, machines, structures, and processes ever more productive while leaving human productiveness largely unchanged (our human abilities are limited by physical strength and brain power––and relatively constant). The result is that primary distribution through the free market economy, whose distributive principle is “to each according to his production,” delivers progressively more market-sourced income to capital owners and progressively less to workers who make their contribution through labor.

President Obama’s narrow use of tax incentives will help to spur manufacturing and deter U.S. corporations from shipping jobs oversees but the so-called 1 percent rulers of corporations will still have rigged the financial system to enable this already rich ownership class to systematically further enrich themselves as capital formation occurs and technological industrialization spreads throughout the world, leaving behind the 99 percent to depend on income redistribution through make work “full employment” policies, government boondoggles, excessive military build-up, and social welfare programs. The unsatisfied needs and wants of society are not in that 1 percent or for that matter the 5 percent; those people are not the ones who are hurting.

Without a policy shift to broaden productive capital ownership simultaneously with economic growth, with tax incentives as an “urging” and “persuading” proposition, 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.

Legislation On The Books…

Dateline February1, 2012 Los Angeles Times: “Legislation already on the books, if left alone, would do several things: Tax cuts passed under President George W. Bush’s administration would expire December 31, generating more revenue. And deep budget cuts passed as part of last summer’s debt ceiling deal would be automatically triggered, slashing spending in 2013.”

The result will be to curtail th…e nation’s modest economic growth, The unemployment rate will rise back above 9 percent due to the significant reduction in government spending and thus the extent of government jobs (whether real, boondoggle or make-work) and resulting sluggish consumer demand.

Given that you can’t have mass production without mass human consumption, this is an unsustainable fiscal course. Compound this with the fact that our scientists, engineers, and executive managers who are not productive capital owners themselves, except for those in the highest employed positions, are encouraged to work to destroy employment by making the capital worker more productive though his or her ownership of productive capital assets. 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. That is why the government has had to redistribute income through government jobs and contracts to stimulate consumer demand.

We cannot balance the budget without cutting out coerced taxpayer-dependent redistribution, which if we did at this juncture would kill the economy and ruin lives. But 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.

The policy changes we really need embrace the goal of broadening ownership of productive capital simultaneously with economic growth so that consumer demand is bolstered among the 99 percent who now do not own productive capital assets.

Facebook IPO

While the Facebook Initial Public Offering (IPO) is now the “big” financial gambling news, who benefits from IPOs? According to the Los Angeles Times (February 3, 2012) “too few companies are going public, and they’re waiting too long to do so. Researchers say that start-up companies have been responsible for 100 percent of the job growth in the United States since the late 1970s, and that the vast majority of the jobs created by new companies arrived after their IPOs. Those statistics make a powerful argument that IPOs can serve the public’s interests as well as those of company executives and venture capitalists.”

Start-up companies generally get their money from professional venture investors (the initial “smart” money) and later through IPO stock market investors (the gamblers). But in reality, once a risky start-up achieves the level of projected sustainability and profitability to merit an IPO public offering, the company’s employees and public are excluded and are regulated to the sidelines of the Wall Street gambling casino, with Wall Street brokerage firms that handle the deals parceling out shares to hedge funds, mutual funds and some ultra-wealthy individuals that generate big trading commissions. Small “retail” investors are left with no choice but to try to buy shares on the first day of trading. Of course, the “bet” is that the stock value on day one will soar and the investors will be able to sell at a much higher price for a capital gain. This is the game of those who have money to invest. The end result continues to further concentrate ownership and create wealth and income disparities.

This is were there is a corrective opportunity to set up credit mechanisms to insure that the employees and public can acquire shares in profitable companies or companies scrutinized to have profit potential that represent reasoned security and sustainability using the mechanism of risk insurance. Such risk could be taken by commercial insurers, backed by a new government corporation, the Capital Diffusion Reinsurance Corporation, through which the loans could be guaranteed. The policy goal should be to broaden ownership of productive capital ownership represented by the growth assets of the new companies so that company employees and other non-employees are empowered to acquire the new stock assets with the future earnings generated by the investment. This would enable employees to earn a second income through their capital worker ownership shares, and over time build a viable capital estate.

Insurance is key to the success of a broadened productive capital ownership policy. In any investment there are risks of a possible eventuality that the venture may not deliver on its projected claims of growth and profitability or may fail. The principal of insurance is that most will succeed. Thus, insurance can facilitate economic growth that otherwise would not be possible and simultaneously broaden productive capital ownership among the 99 percent who now do not own.

The Buffett Rule

Dateline February 3, 2012 Los Angles Times: “Citizens For Tax Justice, a liberal tax reform group, figures that the Buffett Rule woljd 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 income inequality, when we won’t really have even touched it. The medium family income in Ameri…ca is about $50,000, 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.

Obama Promotes His Ideas For Luring Jobs Back To The United States

In recent weeks President Obama has hit the road to proote his ideas for luring jobs back to the United States in an effort to give new hope to factory workers.

President Obama declared “There’s no reason why we can’t restore that basic American promise that if you work hard, you can d well.” This is a false claim in a technological age where people continue 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––the core function of technological invention.

Technological change makes tools, machines, structures, and processes ever more productive while leaving human productiveness largely unchanged (our human abilities are limited by physical strength and brain power––and relatively constant). The result is that primary distribution through the free market economy, whose distributive principle is “to each according to his production,” delivers progressively more market-sourced income to capital owners and progressively less to workers who make their contribution through labor.

President Obama and other “leaders” still believe full employment will solve our income distribution problems. It doesn’t make any difference what’s going on in the scientific world or the business world or the industrial world.

Until we, as a society, understand how wealth is produced, how consumers earn the money to buy products and services and the nature of capital ownership, we will not be able to set a course to obtain an affluent quality of life for middle and working class citizens, where everyone, according to President Obama, “can earn enough to raise a family, build a modest savings, own a home, and secure their retirement.”

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.

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 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, 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 multichannel 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.

President Obama’s tax incentives to strengthen manufacturing in the United States and entice manufacturing back to the United States, and pledge to seek economic equality through employment needs to tie broadened productive capital ownership requirements to his economic policies to empower the 99 percent to acquire ownership in productive capital assets simultaneously with economic growth and pay for those investments with the future earnings of the new capital formation developments. This is a Just Third Way, with the benefit of generating full employment and eventually full creativity.

Always Strive To Create Productive Value

The economy through its business sector should always strive to create productive value. In order to accomplish this, there needs to be sustainable consumer demand for products and services produced by Americans. Americans need to be connec…ted via individual ownership to the productive capital instruments used to produce the products and services to be consumed. At present, there is a disconnect with the 1 percent owning 90+ percent of the economy’s current productive capital structure, with the other 99 percent having to depend on their declining labor worker earnings to support the nation’s need for sustainable consumer demand. The 1 percent cannot possible spend their capital worker earnings on consumer products and services, to they end up investing the excess and further concentrating productive capital ownership. What is needed is a financial system that uses innovative credit mechanisms to enable the workforce and other Americans to acquire ownership in new capital formation endeavors and to pay for their acquisition out of the future earnings underlying the new capital formation. This will have the result of broadening productive capital ownership, expanding jobs, and providing Americans with the opportunity to not only earn from their labor but also to earn from their capital ownership assets, and over time build a viable capital estate.

Government Leadership Needed

Government leadership is necessary to overcome the continued concentration of productive capital ownership in the 1 percent. A new government corporation, the Capital Diffusion Reinsurance Corporation, is one entity that can use the power o…f the Federal Reserve to guarantee loans for the acquisition of capital ownership by the 99 percent with payback of the loan provided by the earnings of the capital assets over a reasonable period of time––say 5 to 7 years. Small start-up companies will continue to be driven by entrepreneurial efforts and will continue to use venture capital and debt financing. But once they attain IPO status and are determined to be stable and low risk, then their future growth should be financed so as to broadened ownership among their employees and non-employees with Capital Diffusion Reinsurance Corporation security backing. ESOPs are structured variously, but there are over 11,000 ESOPs with 1,500 of them majority employee owned. The alternatives are grim, either further concentration of capital ownership in the 1 percent or redistribution of capital worker incomes to the 99 percent in order to provide subsistence income.

Hoggism

Hoggish affluence is the reward to the 1 percent for their concentration of capital ownership. But reasonable affluence is possible for the 99 percent to achieve as long as we are able to efficiently manage our resources and produce more wi…th less. Thus, we need sustainable and renewable resource management and greater productive efficiencies. All this is possible through science and engineering but we need leaders to set the goals.

A Quick Comparison––Capitalism, Socialism And The "Just Third Way"

A QUICK COMPARISON
OF CAPITALISM, SOCIALISM AND THE “JUST THIRD WAY”

Center for Economic and Social Justice, © August 24, 2005 (updated 2010)
 
Capitalism
Socialism
“Just Third Way”
/ Political power accessible to all; economic power concentrated in a wealthy elite / Economic and political power concentrated in a governing elite / Both economic and political power are accessible to all
/ Capital ownership concentrated in a wealthy elite / Capital ownership concentrated in a collective controlled by a bureaucratic elite / Capital ownership is systematically deconcentrated and made directly accessible to every person
/ Capital incomes beyond consumption capacity for a wealthy elite / Adequate and secure incomes from capital for a governing elite / Adequate and secure capital incomes directly accessible to every person
/ Individualistic, atomistic system (ignores or trivializes common good) / Collectivist system (denies economic freedom and sovereignty of individual) / System based on sovereignty of every person, within institutions embodying principles of social justice
/ Institutionalizes greed / Institutionalizes envy / Institutionalizes justice
/ Materialistic ideology and system which ignores the growing income insecurity of non-owning workers facing displacement by technology or lower-paid workers / Materialistic ideology and system based on and fostering the absolute dependency of all citizens on the state for their income security and well-being / Moral philosophy and economic system based on the inherent dignity and sovereignty of each person, which underpins the inalienable right of every person to be a worker and capital owner within a society where spiritual values and the respect for all creation transcend material values
/ Labor-centric, classical laissez-faire economic system (ultimately recognizes that only one factor–labor–produces wealth and creates economic value) / Labor-centric Marxist and Keynesian systems (only one factor–labor–produces wealth and creates economic value) / Kelsonian binary economic system [two interdependent and distinct factors– human (“labor”) and non-human (“capital”)– directly produce wealth and create economic value]
/ Win-lose, zero-sum, scarcity, “dog-eat-dog” orientation / Lose-lose, zero-sum, scarcity, forced-leveling orientation / Win-win, synergistic, post-scarcity orientation (systems and technology are improved to do more with less)
/ Sacrifices justice for efficiency / Sacrifices efficiency for a collectivist version of “justice” / Justice and efficiency go hand-in-hand
/ Wage system (jobs for the many, capital ownership for the few) / Wage system (jobs for all, capital ownership for none) / Ownership system (every citizen and worker a direct capital owner)
/ Equality of opportunity to work; inequality of opportunity to own / Forced duty to work and forced equality of results as determined by governing elite / Equality of opportunity to work; equality of opportunity to own
/ Protects private property rights of the few who own productive wealth, and monopolizes access to future ownership opportunities / Truncates or eliminates rights of private property, putting control over means of production in hands of political elite / Universalizes right to private property and protects rights of property (to extent others are not harmed)
/ “Hands-off” role of the state regarding monopolization of ownership and control; state ends up redistributing wealth and incomes / Economic power is centralized in or regulated by the state; state redistributes incomes / Economic role and power of the state is limited primarily to preventing abuses and monopolies, and dismantling barriers to universal participation in direct capital ownership
/ Prices and wages protected from global competition; promotes mercantilism / Prices and wages controlled by government / Prices, wages and profits set by free and open markets with profits spread among many owners
/ Capital credit available to a few; consumer credit available to the many / All credit controlled by state / Universalized access to capital credit made available through local financial institutions
/ Past savings used to finance future ownership by few / Past savings used to finance future ownership by state / Pure credit, future savings and capital credit insurance used to finance growth linked to future direct ownership opportunities for all
/ Technology controlled by a private sector elite, subject to government oversight / Technology controlled by a non-accountable governing elite / Technology owned and controlled directly or through private sector entities that are accountable to many shareholders and stakeholders
/ “Social safety net” for poor: Trickle-down incomes and social entitlements provided through government transfers of income, institutional charity and personal charity / “Social safety net” for poor: Trickle-down incomes and social entitlements provided through state monopolies, forced redistribution of wealth and income by government / “Social safety net” for poor: Directly connects poor individuals and families to growth dividends, supplemented by personal charity, institutional charity, and government transfers
/ Indifference to environmental degradation; economically powerless become victims of development and environmental hazards; the well-being of future generations is sacrificed for short-term profits / Economic inefficiencies lead to inability to finance the most advanced and environmentally sustainable technology; economically powerless become victims of development and environmental hazards / Anticipatory approach to sustainable growth and development internalizes externalities, assigning environmental costs to polluters and passing costs on to consumers; offers means of financing most advanced “green” technologies; economically empowers people directly through private property to protect themselves against environmental hazards; and plans for future generations
/ Purpose of education is to train people to get jobs / Purpose of education is to train people to get jobs / Purpose of education is to teach people how to become life-long learners and virtuous human beings, with the capacity to adapt to change, to become masters of technology and builders of civilization through their “leisure work”, and to pursue the highest spiritual values.

Louis Kelso's Economic Vision For The 21st Century

 

by Norman G. Kurland and Dawn K. Brohawn
(© 2004 Center for Economic and Social Justice.
Updated from the original article published in Owners at Work,
the newsletter of the Ohio Employee Ownership Center, Winter 1999-2000.)

America has crossed the threshold into the 21st century as the most prosperous and powerful nation on the planet. Gazing toward the vast frontier of the global economy, we see a rapidly changing landscape shaped by forces beyond the control of any individual or nation. Space Age technology, global finance, global markets and transnational corporations are impelling us toward an uncertain future.

We as a nation have benefited from modern technology. It has contributed to our economic success in the world. It has lengthened our life spans and shrunk to fractions of a second the transmission of a message or billions of dollars across the planet. The global economy has brought the American consumer a year-round cornucopia of goods from every corner of the world. Competitive forces continue to drive down the price of personal computers, video recorders, and cellular phone systems, putting unimaginably powerful tools of information and communication in the hands of the average citizen. Choice abounds.

But Americans have also seen harbingers of troubles to come: the disappearance of entire sectors of labor as robots, artificial intelligence, and advanced office machines enter the work place. Globalization has encouraged the flight of jobs and capital to lower-wage regions of the world. Blue-collar workers and middle management alike have become targets for corporate downsizing. Today, six Ph.D. computer scientists from India can be hired over the Internet for the price of a comparable American. Thousands of jobs have been lost to a computer chip. Even in the midst of our prosperity most of us feel powerless to control our own futures or unable to find meaning in our current condition.

There is an economic fault line running throughout America and the world which today’s economic gurus seem unable to explain or remedy: the widening wealth and income gap between a tiny rich elite and multitudes of poor in every country (including the United States), and between developed and developing nations. Surrounded by global communications, the global economy, and our global environment, we cannot help but feel the tremors inside and outside our borders. With the growing economic imbalances come bloody conflicts, widespread starvation, international crime and corruption, depletion of the planet’s non-replenishable resources, unconscionable destruction of the environment and systematic suppression of human potential and life-enhancing technology.

Seeing through the chaos of our rapidly changing world, one post-scarcity visionary of the 20th Century, lawyer-economist Louis Kelso, understood the power of technology either to liberate or dehumanize people. Popularly known as the inventor of the employee stock ownership plan (ESOP), Kelso observed that modern capital tools and their phenomenal power to “do more with less” have offered people an escape from scarcity to shared abundance.

As a lawyer Kelso also saw that the design of our “invisible” institutional environment and social tools determines the quality of people’s relationship to technology. Intangibles, such as our laws and financial systems, determine which people will be included or excluded from sharing of access to equal economic opportunity, power and capital incomes.

Access to capital ownership, asserted Kelso, is as fundamental a human right as the right to the fruits of one’s labor. Furthermore, Kelso argued, the democratization of capital credit is the “social key” to universalizing access to future ownership of productive wealth, so that every person, as an owner, could eventually gain income independence through the profits from one’s capital.


Kelso’s Economics of Ownership and Justice

At the heart of what Kelso called “binary economics” is a simple but revolutionary proposition. Kelso stated that people could legitimately create economic value through two (thus binary) factors of production:

  • Labor (which Kelso defined as all forms of economic work by people, including manual, intellectual, creative, and entrepreneurial work, and so-called “human capital”), and
  • Capital (defined by Kelso as anything non-human contributing the production of marketable goods and services, including tools, machines, land, structures, system improvements, and patents).

Capital, in Kelsonian terms, does not merely “enhance” labor’s ability to produce economic goods. (It wasn’t Bill Gates’ labor that accounted for the increase in his wealth in one year’s time from $50 billion to $90 billion; his capital would have kept producing even if Bill Gates were in a coma.) According to Kelso, capital (increasingly the source of economic growth) should increasingly become the source of added property incomes for every person.


Kelso based his ideal market system on the three basic principles of economic justice:

  1. Participation, the input principle. If both labor and capital are responsible for production, then equality of opportunity demands that the right toproperty (and access to the means of acquiring and possessing property) must, in justice, be extended to all. 
  2. Distribution, the out-take principle. Property rights require that income be distributed based on what one contributes to production—one’s labor, one’s capital, or both. Assuming that capital ownership is spread broadly, the free and open market under Kelso’s system becomes the most democratic and efficient means for determining just prices, just wages and just profits. If both sales revenues and all labor costs are set by globally competitive market forces, then profits (the revenues left over after all labor costs are subtracted) represent a market-based return to capital. 
  3. Limitation, the feedback principle (which some Kelsonians call the principle of “Harmony” or “Social Justice“). This principle restores balance between “participation” (input) and “distribution” (out-take) and puts limits on monopolistic accumulations of capital and other abuses of property.

Kelsonian Macroeconomic Reforms

Democratized access to money, capital credit and credit insurance would become instruments of inclusion, not exclusion, and the means for “procreative” financing of whatever capital the economy needs to move toward prosperous lives for all members of society. Kelso’s monetary, tax and other “Capital Homesteading” reforms would allow us to finance sustainable growth through techniques that offer more universal access to future ownership. (See “The Federal Reserve Discount Window,” Journal of Employee Ownership Law and Finance, Winter 1998, and “A New Look at Prices and Money: The Kelsonian Binary Model for Achieving Rapid Growth Without Inflation,” The Journal of Socio-Economics, Volume 30, 2001, authored by Norman G. Kurland.)


Kelsonian Microeconomic Reforms

Justice-Based Management (JBM) [originally termed “Value-Based Management” or “VBM”] is a Kelsonian system for building and sustaining an ownership culture within the enterprise. Applying principles of economic justice, the philosophy of servant leadership and Kelsonian financing techniques, JBM was conceived as the new management system for the 21st century.

JBM systematically anchors capital and builds ownership into successive generations of employees. JBM also re-orients the operational and governance systems of today’s enterprises from the present top-down, risk-averse and conflict-prone patterns of the wage system, to a system of participatory ownership where risk, rewards and responsibilities are shared among many co-owners. JBM would enable all workers to become reconciled with the realities of global competition. With their labor incomes supplemented by capital incomes, workers could shift a growing portion of their incomes from automatic fixed wage increases (which also increase cost pressures on their company) to more equitable sharing of bottom-line profits.

The role of the labor unions will also evolve as unions move from the economics of conflict to the economics of co-ownership. Unions will regain their original role as a democratic society’s most important institution for advancing economic justice by organizing all non-owners, not just workers, to help get them their fair share of the growing capital pie.


A Capital Homestead Act for America

How can we realize Louis Kelso’s vision for America and the rest of the world? A 21st century counterpart to Abraham Lincoln’s Homestead Act (which was limited to a finite land frontier) would provide every citizen and family with access to future capital and profits in a frontier without boundaries. The Capital Homestead Act is a comprehensive legislative program of Kelsonian tax, monetary, and fiscal reforms to make every citizen a stakeholder in the unlimited technological frontier. (See Capital Homesteading for Every Citizen: A Just Free Market Solution for Saving Social Security, by Norman G. Kurland, Dawn K. Brohawn, and Michael D. Greaney, published by Economic Justice Media, 2004; available as a free PDF document from www.cesj.org.)

Facilitated by capital credit and loan default insurance available under “Capital Homesteading” reforms, each citizen will begin to accumulate dividend-yielding shares in (1) the company he works for through an ESOP, (2) the companies he regularly buys from through consumer stock ownership plans (CSOP), (3) a community investment corporation (CIC) to link him to the profits from local land planning and development, and (4) a diversified portfolio of blue-chip growth and other companies he invests in through a Capital Homestead Account (CHA).


A Glimpse of the Future

Envisioning a Kelsonian future where every American has a viable capital ownership stake in a growing economy, we predict:

  • America’s moral leadership will be restored as we set an example for the rest of the world on how to achieve genuine economic democracy and justice for all. 
  • Wealth, economic power and income gaps between the rich and poor will shrink, without present owners being deprived of their property rights. 
  • Sharing profits and control of technology, all people will become empowered, not victimized, by technological change. 
  • Market gluts and “overproduction” will be eliminated, as overall supply is matched by the simultaneous creation of mass purchasing power. 
  • Enthusiastic and productive worker-owners will produce goods and services of the highest quality at lower cost within corporations operating with more democratic accountability, efficiency and equity.
  • Politicians will become more accountable to more economically empowered and independent citizens, who will be less dependent economically on government welfare, subsidies and income redistribution.
  • Personal, family and community life will strengthen as more people gain greater control over their economic destinies.
  • The environment will become healthier as “Capital Homesteading” enables Americans to fund green technologies and non-polluting, “hydrogen age” energy sources that in the past lacked financing for their commercialization.
  • The quality of education and work will radically improve, as technology reduces the need for economic toil, and as more people gain the time and means to engage in lifetime learning and non-paid “leisure work,” enabling them to work creatively for their personal, as well as the common, good and the advance of civilization.
  • A flourishing and peaceful world society will be built upon the decentralization of economic power, and, as in the first American Revolution, the power of government will again subordinate itself to the sovereignty of each human person.

In the 20th century, many lived lives of quiet desperation, struggling from paycheck-to-paycheck, or from hand-to-mouth, with no ownership stake in society’s wealth-producing assets. Most 20th century Americans were limited to a choice between the wage-systems of capitalism and the wage-systems of socialism. Many lost hope that they and their descendants would ever share in the American Dream.

Just as Lincoln provided opportunities for propertyless people in 19th century America to gain a piece of the world’s shrinking land frontier, 21st century Americans will gain their ownership share in the limitless technological growth frontier. In the 21st century, Americans will be given a new choice, a “just third way” opened up by Louis Kelso, an alternative model of development that transcends both Wall Street capitalism and all forms of socialism. Choosing this road will lead America back to its revolutionary roots to a more participatory, unified and empowering “Second American Revolution” and a more just, free and efficient market economy. America will then again serve as “the last best hope of mankind.”

[For original post see http://www.cesj.org/binaryeconomics/kelsovision.htm]