“Contrary to what we hear from Republicans, America did not lose its way in the past few years. It lost its way a generation ago when it abandoned its faith in government.
“Conventional wisdom has it that come November the 2012 presidential election will be determined by the state of the economy. Actually, the real battle will be over a much older fundamental ideological issue in American politics: what role government should play in shaping our future. This special issue of The Nation is dedicated to bringing the debate about government front and center as the presidential race heats up.”
“Although the modern anti-government movement goes back to the tax revolts of the 1970s, the latest wave started with the capture of the GOP by evangelicals, the Tea Party and Grover Norquist’s anti-taxers. In 2010 they helped elect a group of far-right-wing members of Congress dedicated to breaking government’s back. Mitt Romney and Rick Santorum now propose budgets that would cut taxes sharply for the rich, decimate our most basic social programs and leave no room for significant investment in the future.”
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.
“…At the other end of the spectrum, Romney boasts of America’s military might and declares that freeing Wall Street and corporate America from government shackles would reinvigorate the economy.”
Romney policies would further concentrate ownership of productive capital in new capital formation investments based on “savings” among the rich 1 percent minority. 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 insurers, backed by a new government corporation, the Capital Diffusion Reinsurance Corporation, through which the loans could be guaranteed.
“…They’re against using government to address the nation’s growing inadequacies in infrastructure, energy technologies and education. They regard record-high income inequality and long-term economic stagnation as acceptable byproducts of the free market. They say the broken jobs machine will fix itself if business and the well-off can get tax breaks. They would repeal the new, though inadequate, Dodd-Frank financial regulations intended to stop Wall Street recklessness.”
We need leadership to awaken all American citizens to force the politicians to follow the people and lift all legal barriers to universal capital ownership access by every man, woman, and child as a fundamental right of citizenship and the basis of personal liberty and empowerment. The goal should be to enable every man, woman, and child to become an owner of ever-advancing labor-displacing technologies, new and sustainable energy systems, new rentable space, new enterprises, new infrastructure assets, and productive land and natural resources as a growing and independent source of their future incomes.
“… in his State of the Union address in January, Obama did engage with Americans on the value of government. Rather than addressing the deficit, usually among his top priorities, he championed federal spending to create jobs while rejecting Reagan’s simplistic individualism. “No one built this country on their own,” he said. “This nation is great because we built it together. This nation is great because we worked as a team”—“team” being the government. Obama’s 2013 budget also elevates jobs over deficits and makes government the spearhead of economic growth and income equality.”
Unfortunately, ever since the 1946 passage of the Full Employment Act, economists and politicians formulating national economic policy have beguiled us into believing that economic power is democratically distributed if we have full employment––thus the political focus on job creation and redistribution of wealth rather than on full production and broader capital ownership accumulation. Long ago that was once true because labor provided 95 percent of the input into the production of products and services. But today that is not true. Capital provides not less than 90 to 95 percent of the input. Thus, we are left with government policies that redistribute income in one form or another.
“The Bush years of 2001–07 saw the slowest rate of job creation of any post–World War II expansion, followed by the Great Recession of 2008. Now, three years after the recession technically ended, the unemployment rate remains well above 8 percent, and youth unemployment is nearly 20 percent. The median wage of men who work full time is no higher today than it was in 1969. If all men are included, the median male wage is 16 percent lower than it was in 1969, according to the Hamilton Project at the centrist Brookings Institution. This is because fewer men can find full-time work than a generation ago. A typical family’s income is lower than it was in 1999, yet people today pay more for their healthcare and move into more expensive neighborhoods to find decent schools for their kids. Women’s wages have risen, but not at a historically rapid pace. With wages low, Americans have saved less and borrowed more, especially in the 2000s, than in any decade in post–World War II history.”
Binary economist Louis Kelso was quoted as saying, “Conventional wisdom says there is only one way to earn a living, and that’s to work. Conventional wisdom effectively treats capital (land, structures, machines, and the like) as though it were a kind of holy water that, sprinkled on or about labor, makes it more productive. Thus, if you have a thousand people working in a factory and you increase the design and power of the machinery so that one hundred men can now do what a thousand did before, conventional wisdom says, ‘Voila! The productivity of the labor has gone up 900 percent!’ I say ‘hogwash.’ All you’ve done is wipe out 90 percent of the jobs, and even the remaining ten percent are probably sitting around pushing buttons. What the economy needs is a way of legitimately getting capital ownership into the hands of the people who now don’t have it.”
Kelso also 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.”
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, degrade job opportunities and earnings, and make it impossible for more than a minority of citizens to achieve middle-class status.
“Restoring Americans’ trust in government won’t be easy. We can start by debunking the destructive myths propounded by anti-government policy-makers and economists.”
We need to implement 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.
The rest of the column argues for restoring faith in government and informing Americans of the failure of free market policies. Faith in government will be restored when government begins to pave the path to universal ownership of future productive capital investment for ALL citizens and end the injustice of a “rigged” free market system that results in continued concentrated ownership of productive capital formation among the rich 1 percent minority.
What we really need in this 2012 presidential election year is a national discussion on the topic of the importance of capital ownership and how we can expand the base of private capital ownership simultaneously with the creation of new capital formation, with the aim of building long-term financial security for all Americans through accumulating a viable capital estate.
We need a recognition in America that we should deliberately begin to broaden the capital ownership base in a way that is consistent with the laws of property and the Constitutional safeguards of the rights of men and women to own property and be productive.
What needs to be adjusted is the opportunity to produce, not the redistribution of income after it is produced.