Government Wrong On Jobs And Wages, Again?

“Something about the U.S. economy is not adding up….How can an economy that is growing so slowly produce such big declines in unemployment.”

This is a fair assessment. What then is the cause of slow growth and unemployment. Full employment is not an objective of businesses. Companies strive to keep labor input and other costs at a minimum. Private sector job creation in numbers that match the pool of people willing and able to work is constantly being eroded by physical productive capital’s ever increasing role. Over the past century there has been an ever-accelerating shift to productive capital––which reflects tectonic shifts in the technologies of production. The mixture of labor worker input and capital worker input has been rapidly changing at an exponential rate of increase for over 235 years in step with the Industrial Revolution (starting in 1776) and had even been changing long before that with man’s discovery of the first tools, but at a much slower rate. Up until the close of the nineteenth century, the United States remained a working democracy, with the production of products and services dependent on labor worker input. When the American Industrial Revolution began and subsequent technological advance amplified the productive power of non-human capital, plutocratic finance channeled its ownership into fewer and fewer hands, as we continue to witness today with government by the wealthy evidenced at all levels.

The solution is investment with the requirement that productive capital ownership be broadened, so that ALL Americans, can over time build a viable capital estate and earn income through their capital worker contribution, as the rich minority does now and has always done.

http://www.forbes.com/sites/investor/2012/03/15/government-wrong-on-jobs-and-wages-again/

Does Trade Promote Peace?

The emphasis should be on “FAIR TRADE,” not “FREE TRADE.” In the case of non-fair trade, should the government 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.

http://www.youtube.com/watch?feature=player_embedded&v=VyyCTKosPOA&utm_source=Facebook&utm_medium=social&utm_campaign=FacebookUpdate

Own Or Be Owned YouTube Video

Own or be Owned––Pass The Capital Homestead Act Now! Property, Person and Power––Part 1. The Promise of Participation––OWNERSHIP––Part 2.

An excellent interpretation of The Third Way platform for economic justice.

The Just Third Way is an advocacy platform of the Center For Economic And Social Justice (CESJ) (www.cesj.org), which I fully support. Norman Kurland, who founded CESJ and is the Executive Director, was one of my partners in Agenda 2000 Incorporated (1968-1978). I founded this advocacy consulting firm with binary economist Louis Kelso, who was my mentor, and John W. Dyckman, Chairman of the School of City and Regional Planning at the University of California, Berkeley. I taught binary economics at USC for a year during this period and founded the Institute For The Pursuit Of Economic Justice at Berkeley. You can see some of this history on my Facebook page and at www.foreconomicjustice.org. During this time I wrote and published a number of articles, which I am having re-formatted digitally and will re-publish on the Web site.

http://www.youtube.com/watch?v=fcsSokoVaxc&feature=youtu.be

The End Of Sound Money And The Triumph of Crony Capitalism

“At that moment, the Chinese rural economy — the only one it ever really had — was prostrate under the weight of 45 million dead from starvation, and far more debilitated and destitute. By underwriting a 40-year debt supercycle, however, the newly unshackled Fed fueled unstinting American demand for the output of East China’s rapidly expanding export factories…

“In so doing, it also drained China’s stricken rice paddies of their nimble young fingers and strong young backs by the tens of millions. Willing to work Dickensian hours for quasi-slave pay rates, this army of refugees from Mao’s mayhem put the world’s wage and cost structure through a three-decade long deflationary wringer.

“In this context, a clue to the next phase of this saga may lie in the conterfactual. Had Nixon kept the gold window open, China would have accumulated bullion, not bonds. America would have experienced deflationary austerity, not inflationary bubbles. And fiscal deficits would have mattered. Thus, today’s terminally imbalanced world has evolved at complete variance with the outcome that could have been expected under a regime of sound money.

“The risk is that the doomsday system for global money and trade that has metastasized since 1971 may be approaching its endgame. By all appearances, Mao’s great rural swamp has now pretty much been drained.

 “Global wages will therefore start rising, because even Walmart has not been able to discover another country inhabited by millions of one-dollar-per-day workers.”
Mark Phillips Here is Dave Stockman’s lecture discussing/summarizing some of the core points in his forthcoming book, the working-title of which is *The Triumph of Crony Capitalism*. Arguably, however, the best solution to all this is, at least in part, a radical reconsideration of American socio-economic/financial institutions. In this vein, it is imperative that the ideas of Louis Kelso, and his intellectual heir, Norman G Kurland be given a very, very serious and thorough investigation (as they’ve been shamefully underappreciated for decades…).”

Norman G Kurland Mark, I met with David Stockman when he was on the staff of John Anderson, then a Republican leader in the House. He offered no criticisms then of [Louis] Kelso’s ideas but never showed the intellectual boldness to advance our basic changes to the current tax, monetary and other laws that perpetuate monopoly capitalism. Is he waking up?”

What does it take to open the eyes of a Dave Stockman and others to the obvious solution: reform the “system” to broaden private ownership of productive capital to ALL Americans and eliminate special interests? David Stockman was director of the Office of Management and Budget under President Ronald Reagan.

http://mises.org/daily/5113/The-End-of-Sound-Money-and-the-Triumph-of-Crony-Capitalism

The Just Third Way Blog Spot

For those interested in expanding their knowledge and challenging their thinking, I recommend visiting The Just Third Way Blog Spot created by Norman Kurland and Michael Greaney. There you will find over 1,000 blog posts on democracy and economic power, economic justice and social justice.

The Just Third Way is an advocacy platform of the Center For Economic And Social Justice (CESJ) (www.cesj.org), which I fully support. Norman Kurland, who founded CESJ and is the Executive Director, was one of my partners in Agenda 2000 Incorporated (1968-1978). I founded this advocacy consulting firm with binary economist Louis Kelso, who was my mentor, and John W. Dyckman, Chairman of the School of City and Regional Planning at the University of California, Berkeley. I taught binary economics at USC for a year during this period and founded the Institute For The Pursuit Of Economic Justice at Berkeley. You can see some of this history on my Facebook page and at www.foreconomicjustice.org. During this time I wrote and published a number of articles, which I am having re-formatted digitally and will re-publish on the Web site.

http://just3rdway.blogspot.com/2012/03/welfare-blackmail-part-ii-obamas-choice.html

Training Our Competition

Gary Shapiro’s excellent article points out the stupidity of our higher education practices. But even more disappointing is the short- and long-term consequences of continued concentration of ownership of our non-human productive capacity.

President Obama stated: “What’s at stake is whether this will be a country where working people can earn enough to raise a family, build a modest savings, own a home, and secure their retirement.” As long as working people are limited by earning income solely through their labor worker wages, they will be left behind by the continued gravitation of economic bounty toward the top 1 percent of the people that the system is rigged to benefit. Working people and the middle class will continue to stagnate, resulting in a stagnated consumer economy. More troubling is that this continued stagnation will further dim the economic hopes of America’s youth, NO MATTER what their education level. The result will have profound long-term consequences for the nation’s economic health and further limit equal earning opportunity and spread income inequality. As the need for labor decreases and the power and leverage of productive capital increases, the gap between labor workers and capital owners will increase, which will result in upheavel. See http://foreconomicjustice.com/11/economic-justice/

http://www.forbes.com/sites/garyshapiro/2012/03/14/training-our-competition/

Unemployment Rate Drops In 45 States

“The unemployment rate fell in 45 states in U.S. states in January, a sign that nearly all of the country is benefiting from an improving economy and job market.

The Labor Department said Tuesday that only New York state reported a higher unemployment rate in January than the previous month. Unemployment rates were unchanged in four states.”

We need to focus on full production and broadening ownership of productive capital, which will secondarily result in the creation of jobs. The role of physical productive capital is to do ever more of the work, which produces income. Full employment is not an objective of businesses. Companies strive to keep labor input and other costs at a minimum. Private sector job creation in numbers that match the pool of people willing and able to work is constantly being eroded by physical productive capital’s ever increasing role. Over the past century there has been an ever-accelerating shift to productive capital––which reflects tectonic shifts in the technologies of production. The mixture of labor worker input and capital worker input has been rapidly changing at an exponential rate of increase for over 235 years in step with the Industrial Revolution (starting in 1776) and had even been changing long before that with man’s discovery of the first tools, but at a much slower rate. Up until the close of the nineteenth century, the United States remained a working democracy, with the production of products and services dependent on labor worker input. When the American Industrial Revolution began and subsequent technological advance amplified the productive power of non-human capital, plutocratic finance channeled its ownership into fewer and fewer hands, as we continue to witness today with government by the wealthy evidenced at all levels.

Sadly, the median household income is just over $49,000, while the annual median wage fell to just over $26,000, the lowest level since 1999. 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. This is a downward trend that will not reverse itself because the productive sector exponentially advances job-displacing technology-based productive capital expansion. whose ownership is further concentrated among the rich minority.

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. The reform of the “system,” must be structured so that eventually all citizens produce an expanding proportion of their income through their privately owned productive capital and simultaneously generate consumer purchasing power.

http://economywatch.msnbc.msn.com/_news/2012/03/13/10671578-unemployment-rate-drops-in-45-states

Think Again: American Decline

“The Chinese challenge to the United States is more serious for both economic and demographic reasons. The Soviet Union collapsed because its economic system was highly inefficient, a fatal flaw that was disguised for a long time because the USSR never attempted to compete on world markets. China, by contrast, has proved its economic prowess on the global stage. Its economy has been growing at 9 to 10 percent a year, on average, for roughly three decades. It is now the world’s leading exporter and its biggest manufacturer, and it is sitting on more than $2.5 trillion of foreign reserves. Chinese goods compete all over the world. This is no Soviet-style economic basket case.”

While labor is not cheap as it used to be in China and costs may soar twofold or even threefold by 2020, some predict that if China’s currency and shipping costs were to rise by 5 percent annually and wages were to go up by 30 percent a year, by 2015 it would be just as cheap to make things in North America as to make them in China and ship them there. While labor costs are often 30 percent  lower in countries other than China, this is typically more than offset by other problems, especially the lack of a reliable supply chain. Further, while increases in land prices, environmental and safety regulations and taxes all play a part, the biggest factor is labor. So while Chinese wages may be rising fast, so is Chinese productivity due to major investments in productive capital. Chinese workers, like American workers, see the ownership class getting richer and they want income growth that reflects Chinese productivity growth.

If cheap China is fading, what will replace it? Will factories shift to poorer countries with cheaper labor? That is the conventional wisdom, but it is wrong. Instead, China will automate more processes in its factories, replacing as many workers as possible with machines to increase productivity efficiencies.

But as with the United States, China will make the classic mistake of concentrating ownership of the machines (productive capital) in a minority and thus limit consumer demand for products and services produced by the machines because the worker labors are being replaced by capital worker owners and thus have declining earnings to purchase what is being produced.

The solution is to bolster investment in new productive capital simultaneously with broadening ownership of the productive capital assets with full dividend pay out to workers and others in the society to empower them to be fully productive through their capital worker input.

This is why it is critical that United States policy shift to broaden productive capital ownership simultaneously with economic growth. If not, 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.

New capital formation investments must broaden ownership of new productive capital assets. If we continue without reforming the “system,” the result will be further concentrated ownership and as the “system” denies opportunity to the American majority to participate in the future wealth creation of the American economy.

http://www.foreignpolicy.com/articles/2011/01/02/think_again_american_decline

The End Of Cheap China

“China is the world’s largest manufacturing power. Its output of televisions, smartphones, steel pipes and other things you can drop on your foot surpassed America’s in 2010. China now accounts for a fifth of global manufacturing. Its factories have made so much, so cheaply that they have curbed inflation in many of its trading partners. But the era of cheap China may be drawing to a close.”

While labor is not cheap as it used to be in China and costs may soar twofold or even threefold by 2020, some predict that if China’s currency and shipping costs were to rise by 5 percent annually and wages were to go up by 30 percent a year, by 2015 it would be just as cheap to make things in North America as to make them in China and ship them there. While labor costs are often 30 percent  lower in countries other than China, this is typically more than offset by other problems, especially the lack of a reliable supply chain. Further, while increases in land prices, environmental and safety regulations and taxes all play a part, the biggest factor is labor. So while Chinese wages may be rising fast, so is Chinese productivity due to major investments in productive capital. Chinese workers, like American workers, see the ownership class getting richer and they want income growth that reflects Chinese productivity growth.

If cheap China is fading, what will replace it? Will factories shift to poorer countries with cheaper labor? That is the conventional wisdom, but it is wrong. Instead, China will automate more processes in its factories, replacing as many workers as possible with machines to increase productivity efficiencies.

But as with the United States, China will make the classic mistake of concentrating ownership of the machines (productive capital) in a minority and thus limit consumer demand for products and services produced by the machines because the worker labors are being replaced by capital worker owners and thus have declining earnings to purchase what is being produced.

The solution is to bolster investment in new productive capital simultaneously with broadening ownership of the productive capital assets with full dividend pay out to workers and others in the society to empower them to be fully productive through their capital worker input.

This is why it is critical that United States policy shift to broaden productive capital ownership simultaneously with economic growth. If not, 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.economist.com/node/21549956

Apple Investors Whining About Not Getting A Dividend

“Case-in-point why workers can’t share in financial growth: providing a dividend means less cash is available for expensive R&D and supply chain upgrades.” Anthony Ramos

Retained earnings is a real problem because it always concentrates ownership of future capital formation assets in the same ownership class. Starting with the corporation, a creature of government, the government should provide tax incentives for full-dividend payouts to its stockholders, or alternatively dictate that from now on 100 percent of all profits be paid out fully as dividend payments to stockholders (thus, eliminating the corporate income tax), and be subject to progressive individual taxation rates during the short term. This would effectively prohibit retained earnings financing of new productive capital formation (reinvesting the corporate earnings already earned). The government could also limit debt financing by imposing some ratio formula to annual revenue under which a corporation could debt finance new productive capital formation with borrowed monies. Both retained earnings and debt financing only enhance the ownership holding value of the existing corporate ownership class and do nothing to create new owners. Thus, the rich get richer systematically and capital ownership concentration is furthered.

In place of retained earnings and debt financing, the government should require corporations to issue and sell full-voting, full-dividend payout stock to more people to underwrite new productive capital formation, with the purpose of providing opportunity for new owners, both employees of corporations and non-employees, to participate in a growing economy. Of course, there needs to be a financial mechanism put in place that will guarantee loan risks provided by banks and lending institutions. Otherwise, the system will continue to limit access to capital acquisition to those who already own capital—the rich––using savings-based investment. This is because “poor” people have no security or collateral, or sufficient income to pledge against the loan as security. Thus, criteria must be created to qualify the corporations subject to this policy and those corporations that qualify overseen so as to insure that their executives exercise prudent fiduciary responsibility to generate loan payback. Once the guaranteed loans are paid back, the new capital formation will continue to produce income for existing and future owners.

http://www.businessinsider.com/apple-investors-really-need-to-stop-whining-about-dividends-2012-3