Gary Reber's Posts - Coalition for Capital Homesteading2024-03-29T09:46:57ZGary Reberhttp://capitalhomestead.org/profile/GaryReber867http://storage.ning.com/topology/rest/1.0/file/get/986034054?profile=original&width=48&height=48&crop=1%3A1http://capitalhomestead.org/profiles/blog/feed?user=3dx1vdylebuxt&xn_auth=noPerpetual Unemployment And Underemploymenttag:capitalhomestead.org,2013-12-30:6384157:BlogPost:126212013-12-30T16:40:09.000ZGary Reberhttp://capitalhomestead.org/profile/GaryReber867
<p>In recent week there have been numerous excellent articles addressing the scope of problems related to our dependency on job creation as the ONLY source of income. But universally, the authors are oblivious to the non-job-dependent solution. Simply extending jobless benefits once again won't solve the problem of long-term unemployment and underemployment, and the diminishing impact income losses have on the long-term productive capacity of the United States economy.</p>
<p>The common thread…</p>
<p>In recent week there have been numerous excellent articles addressing the scope of problems related to our dependency on job creation as the ONLY source of income. But universally, the authors are oblivious to the non-job-dependent solution. Simply extending jobless benefits once again won't solve the problem of long-term unemployment and underemployment, and the diminishing impact income losses have on the long-term productive capacity of the United States economy.</p>
<p>The common thread of articles that address unemployment and underemployment are solutions that would build an American society of dependent citizens on tax extraction and national debt to provide social insurance. While social insurance is certainly an emergency measure that requires implementation, it should not be seen as a panacea. The real task is to change the culture, from one of wanting or lacking personal responsibility and dependency on the “State,” into one where our human nature can be sustained and advanced through a private property ownership mentality, pursuing individual virtue. We need to transform the present credo, as advocated by progressive political leaders and others from one of servitude and dependency to one of personal responsibility and sustainability by means of broadening wealth creating, income-producing private property ownership by EVERY citizen of the productive capital (non-human) means of production. Private property ownership is the cornerstone of American liberty. Without it our free enterprise system, our free markets, and our republican form of self-government cannot endure. Nor can we prosper without the equal opportunity to acquire capital ownership financed by its own earnings. We need to pursue policies that will strengthen the economic position of the individual, the family, and the local community with decreasing reliance on government welfare support financed by tax extraction and national debt. </p>
<p>While emergency assistance is necessary in the interim, the contributors and references cited in numerous articles are ALL one-factor thinkers: LABOR ONLY!––with a focus on wages rather than income, and "full employment" rather than "full production" as the economy's panacea. They ALL are stuck in the LABOR ONLY idea that ALL WEALTH is created by human labor. The reality is that less and less human labor is necessary to produce wealth. If that is the case, then ownership of the non-human means of production is necessary if one desires to be wealthy and affluent. Ownership is the key to providing sufficient income purchasing power, not JOBS alone.</p>
<p>The political maneuvering in Washington is directed at benefiting the wealthy capital ownership class, not the average person on "Main Street." Such policies as are pursued will further concentrate ownership of wealth-creating, income-producing productive capital assets among the 1 to 5 percent of the American population and further enhance the economic and political power of the wealthy ownership class.</p>
<p>The root cause of present injustices is the fact that the mass of people are practically bereft of ownership of wealth-creating, income producing productive capital. Policy objectives need to result in universally admitting the proletariats within the proprietary system. Widely distributed property ownership makes for social stability. All the solutions offered by the contributors and their references in the breadth of articles now published lacks the moral discipline of responsibility and ownership, and instead argues for a collective “State” approach to replace our private property-based American system.</p>
<p>No longer is the American economy labor-intensive with opportunity for jobs that strengthen the middle class. The new challenge is structuring the economy to empower EVERY citizen to benefit from technological advancement. 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 technology industry is always changing, evolving and innovating. As a result, the trend has been to diminish the importance of employment with productive capital ownership concentrating faster than ever, while technological change makes capital ever more productive. Bottom line: technology is an easier and faster way to get a job done.</p>
<p>Because technology increases the profitability of companies throughout the world, technology always has the advantage over human labor when the costs of them are the same. Digital automated systems now replace many middle management and many manual jobs. At some point the traditional jobs at the bottom of the economic pyramid paying low wages will become automated. This will result in more and more people chasing fewer and fewer jobs. At some point the issue of earning a living will become problematic for the American economy and those contributors and their references will have to address the issue of concentrated ownership as productive capital will obviate most jobs as we know them to be now.</p>
<p>Sadly, the system is rigged by the wealthy ownership class 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" owner 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 to 5 percent ranks.</p>
<p>The reality is that personal and family household income for those who are dependent on a job as their ONLY income source is declining. Wage and salary incomes will continue to decline simultaneously with global competition and, as a result of the necessity to turn to increasingly more productive non-human means of production, destroy jobs that will become unnecessary and devalue the worth of labor.</p>
<p>Full employment is not an objective of businesses. Companies strive to keep labor input and other costs at a minimum in order to maximize profits for the owners. 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. This will not change with companies realizing that they can operate more efficiently with fewer employees. Therefore, unless the employees are owners, the share of corporate profits going to the employees will continue to decline.</p>
<p>But because this is not well understood, what we as a society have been doing is to continually shift the work burden from human labor to real capital while distributing the earning capacity of capital “workers” (via capital ownership of stock in corporations) to non-owners through jobs and welfare. Such policies do not function effectively.</p>
<p>Thus, the 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.</p>
<p>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. This is manifested in the belief that labor work is the ONLY way to participate in production and earn income even though EVERY wealthy person and family knows that capital incomes can be far greater than wage incomes. Long ago labor work was prime 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. Full employment as the means to distribute income is not achievable. When capital "workers" (productive capital owners) replace labor workers (non-capital owners) as the principal suppliers of products and services, labor employment alone becomes inadequate. Thus, we are left with government policies that redistribute income in one form or another including unemployment benefits and other social insurance programs.</p>
<p>Conventional economists, political leaders and the national media are oblivious to the structural problems that plague our economy, especially with respect to the ways the system further concentrates ownership of wealth-creating, income-producing productive capital assets and growth among the already wealthy ownership class, which represents 1 to 5 percent of the population. With such concentrated economic power, the American majority is barred from participating in the ownership of the non-human factor assets that are doing the bulk of the production of products and services, leaving them with their ONLY income source a job or welfare. Thus they are shut out from a most significant income source to effectively empower them to be "customers with money" and propel economic demand, and thus real productive growth of the economy.</p>
<p>There is a way out if the Federal Reserve System can be reformed to act as a purveyor of economic growth.</p>
<p>Right now the Federal Reserve creates money by loaning it to banks, who re-loan it multiple times because of fractional banking rules. With Capital Homesteading (<a href="http://www.cesj.org/homestead/index.htm" target="_blank">http://www.cesj.org/homestead/index.htm</a> and <a href="http://www.cesj.org/homestead/summary-cha.htm" target="_blank">http://www.cesj.org/homestead/summary-cha.htm</a>), money would be created by loaning it directly to citizens using insured capital credit loans via banks at near-zero interest to invest in FUTURE wealth-creating, income-generating (full dividend payout) productive capital assets formed by producer companies. To build real wealth and also phase out our near-defunct social security scheme, the new full-reserve money would go into a long-term retirement account (a super IRA) to be invested in dividend-paying, asset-backed shares of diversified corporations. That way, money power would be spread to all citizens. The middle class would be invigorated using the principle of compounding interest, instead of being decimated by mushrooming public and personal debt.</p>
<p>In this way, the Federal Reserve could play a more positive role, removing artificial barriers to equal citizen access to acquiring and owning productive capital wealth. By creating asset-backed money for production, supported by growth-oriented tax policies, the Federal Reserve could truly help promote shared prosperity in a market system.</p>
<p>Wealth creation needs to benefit EVERY citizen. Virtually all the economic gains have pertained to the wealthy ownership class within the top 1 to 5 percent of the population, who own the vast wealth-creating, income-generating productive capital assets of American corporations.</p>
<p>Unless we reform the system, economic inequality will expand and the American people will experience far greater competition globally as teams of people and machines compete to produce and sell their products and services at the lowest possible cost. This means that we must look to increasing the productiveness of technological innovation and invention.</p>
<p>The reality is that more and more people are being squeezed financially, faced with dismal job prospects (their only source of income) and on the blink of having to turn to the government for unemployment benefits, welfare support and other social insurance programs funded by tax extraction and national debt. Americans, for the most part, are in a mode of retrenchment even though they have tremendous pent-up demand and unfulfilled dreams for a more affluent life, which they see enjoyed by the wealthy ownership class (without realizing that those people are wealthy because they OWN).</p>
<p>See "Perpetual Unemployment And Underemployment" at <a href="http://www.nationofchange.org/perpetual-unemployment-and-underemployment-1388414374" target="_blank">http://www.nationofchange.org/perpetual-unemployment-and-underemployment-1388414374</a>. </p>President Obama Put Spotlight On Economic Inequalitytag:capitalhomestead.org,2013-12-23:6384157:BlogPost:123712013-12-23T15:40:22.000ZGary Reberhttp://capitalhomestead.org/profile/GaryReber867
<p>On December 04, 2012, Barack Obama gave the most important speech of his presidency (<a href="http://www.whitehouse.gov/the-press-office/2013/12/04/remarks-president-economic-mobility" target="_blank">http://www.whitehouse.gov/the-press-office/2013/12/04/remarks-president-economic-mobility</a>). The topic was the rising level of economic inequality in America, which the President identified as "the defining challenge of our time: making sure our economy works for every working…</p>
<p>On December 04, 2012, Barack Obama gave the most important speech of his presidency (<a href="http://www.whitehouse.gov/the-press-office/2013/12/04/remarks-president-economic-mobility" target="_blank">http://www.whitehouse.gov/the-press-office/2013/12/04/remarks-president-economic-mobility</a>). The topic was the rising level of economic inequality in America, which the President identified as "the defining challenge of our time: making sure our economy works for every working American.”</p>
<p>Numerous transformative shifts have come together over the last few decades, he said, to create "an economy that's become profoundly unequal and families that are more insecure." The trends are "bad for our economy … bad for our families and social cohesion … bad for our democracy." President Obama declared: “the basic bargain at the heart of our economy has frayed. In fact, this trend toward growing inequality is not unique to America’s market economy. Across the developed world, inequality has increased.”</p>
<p>The President stated further: “But this increasing inequality is most pronounced in our country, and it challenges the very essence of who we are as a people. Understand we’ve never begrudged success in America. We aspire to it. We admire folks who start new businesses, create jobs, and invent the products that enrich our lives. And we expect them to be rewarded handsomely for it. In fact, we've often accepted more income inequality than many other nations for one big reason––because we were convinced that America is a place where even if you’re born with nothing, with a little hard work you can improve your own situation over time and build something better to leave your kids. As Lincoln once said, ‘While we do not propose any war upon capital, we do wish to allow the humblest man an equal chance to get rich with everybody else.’”</p>
<p>The new reality is that only a fraction of “hard working” Americans will break through the barriers to become wealth through ownership of wealth-creating, income-producing capital assets. No longer is “hard work” the assured path to upward mobility and building wealth.</p>
<p>Every op-ed editorial columnist who has addressed the subject of economic inequality has couched his or her column from the perspective of a one-factor thinker by which labor is the reason for productivity gains and should thus be rewarded with increasing wages and salaries. President Obama, also a one-factor thinker, declared that operating forces in the "system" has resulted in "an economy that's become profoundly unequal and families that are more insecure." And that poses "a fundamental threat to the American dream." But President Obama fails to define what he believes the American people believe to be "the American dream."</p>
<p>The President concludes with the statement: “So this is an issue that we have to tackle head on. And if, in fact, the majority of Americans agree that our number-one priority is to restore opportunity and broad-based growth for all Americans, the question is why has Washington consistently failed to act?”</p>
<p>President Obama, while projecting the notion of concern, has failed to advocate specific ideas for reversing inequality outside a jobs bill that relies on taxpayer extracted and incurred national debt to finance infrastructure building (without the stipulation of employee ownership of the companies awarded the contracts), make-work government job programs, and the expansion of government-dependent welfare support programs. Never has the President advocated for the real potential of a FUTURE economy without the barriers to economic growth that result in concentrated ownership of corporations and their underlying wealth-creating, income-producing capital assets.</p>
<p>Economists who are one-factor labor ONLY thinkers fail to grasp the reality that full employment is not an objective of businesses. Companies strive to keep labor input and other costs at a minimum in order to maximize profits for the owners. The reality is that corporations constantly seek means to production that will cut costs, including an emphasis on replacing stagnant labor productivity with far more productive gains achieved through the employment of human-intelligent machines, super-automation, robotics, digital computerized operations and other non-human productive capital assets. As a result, 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 productivity and role as an efficient and profitable replacement for labor.</p>
<p>What that means is that breaking down barriers to broadening private sector productive capital ownership and fighting inequality are not mutually exclusive efforts––they're the same effort, but with the emphasis on OWNERSHIP CREATION that exponentially employs the non-human factor of production rather than JOB CREATION, which will follow but continue to be a less necessary factor of economic growth.</p>
<p>The problem is that op-ed writers and conventional economists see production in one-factor labor input terms and claim that a larger portion of economic wealth "really belongs to the workers who are responsible for the productivity gains of recent decades." But the reality is that 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 technology industry is always changing, evolving and innovating. 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.</p>
<p>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. This is manifested in the belief that labor work is the ONLY way to participate in production and earn income. 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. Full employment as the means to distribute income is not achievable. When capital "workers" (productive capital owners) replace labor workers (non-capital owners) as the principal suppliers of products and services, labor employment alone becomes inadequate. Thus, we are left with government policies that redistribute income in one form or another. This inequality of opportunity to empower EVERY citizen to become a productive capital owner is the real source of economic inequality.</p>
<p>So while the masses of the American population now presently employed continue to have unsatisfied needs and wants for products and services, and are spending their limited incomes toward fulfilling their desires, they will continue to deny themselves consumption because of the underlying gut fear that they may not have a job in a year or five years, with no alternative except for a greater reliance on taxpayer extracted and incurred national debt financed government welfare, open and concealed. What purchasing they have done is arguably traceable to credit card debt and loans based on limited home equity values, as well as a practicing spending conservation. The reality is that increasingly more Americans are experiencing flatline or declining incomes and benefits from their jobs as well as increasing pressure to work longer hours for the same pay, with poor prospects for retirement security.</p>
<p>Conventional economists, political leaders, and the national media are oblivious to the role of physical productive capital, which is to do ever more of the work, which produces income to those who own such capital assets. Propertyless and under-capitalized Americans sense and experience that they are less secure with prospects for good incomes that they can rely on to support themselves and their families, but they feel helpless to do anything about their plight and continue to struggle on day by day, month by month. They will eventually come to realize that they are a statistic in a nation of industrial sharecroppers who work for somebody else and have no other source of income.</p>
<p>The majority of Americans, dependent on labor worker wages, no longer think that jobs and labor wages will return suddenly—if at all—and at a livable earnings level, that the value of their homes will rebound, or that their limited retirement funds will soon be fully restored. Americans are scared but attribute their worsening finances to job losses, reduced hours, wage givebacks, and overall reduced earnings. They do not understand the role of productive capital driven by technological innovation and science and the requirement for them to become capital "workers" (owners), as well as labor workers, to earn a viable economic future.</p>
<p>President Obama sees our generation’s task “as rebuilding America’s economic and civic foundation to continue the expansion of opportunity for this generation and the next generation.”</p>
<p>But 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.” We need to build an economy of universally productive individuals and households, through broadened private sector productive, wealth-creating, income-producing capital ownership and real job opportunities resulting from significant economic growth with GDP in the double digits.</p>
<p>Market-sourced income (through concentrated capital ownership) has concentrated in individuals and families who will not recycle it back through the market as payment for consumer products and services. They already have most of what they want and need so they invest their excess in new productive power, making them richer and richer through greater capital ownership. This is the source of the distributional bottleneck that makes the private property, market economy ever more dysfunctional. The symptoms of dysfunction are capital ownership concentration and inadequate consumer demand, the effects of which translate into poverty and economic insecurity for the 99 percent majority of people who depend entirely on wages from their labor or welfare and cannot survive more than a week or two without a paycheck. The production side of the economy is under-nourished and hobbled as a result.</p>
<p>We cannot balance the budget without cutting out coerced taxpayer-dependent redistribution of the earnings of capital "workers" (owners), 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 quiet revolution is the understanding and commitment to broadening the ownership of productive capital.</p>
<p>Conventionally, most people do not have the right to acquire productive capital with the self-financing earnings of capital; they are left to acquire, as best as they can, with their earnings as labor workers and the pledge of past savings. This is fundamentally hard to do and limiting. Thus, the most important economic right Americans need and should demand is the effective right to acquire capital with the earnings of capital. Note, though, millions of Americans own diluted stock value through the “stock market exchanges,” purchased with their earnings as labor workers, their stock holdings are relatively minuscule, as are their dividend payments compared to the top 10 percent of capital owners.</p>
<p>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 through their continuous accumulation of capital asset ownership, 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.</p>
<p>As binary economist Louis Kelso asserted: “The problem with conventional financing techniques is that they address only the productive power of enterprise and the enhancement of the earning power of the rich minority. Sustaining or increasing the earning power of the majority of consumers who are dependent entirely upon the earnings of their labor, or upon welfare, is left to government or governmentally assisted redistribution of income and to chance.”</p>
<p>Unfortunately, pursuing economic democracy has been frustrated by the systemic concentration of economic power and exclusionary access to future capital credit to the advantage of the wealthiest Americans. The so-called 1 percent rulers of corporations 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 dependence on arms production and sales, and social welfare programs due to the lack of an alternative to full employment and the growing economic helplessness and dependency. 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.</p>
<p>Today’s techniques of finance are designed to make the rich richer. None are designed to make the poor richer. That’s why the poor are poor. The reason they are poor is because they do not have viable capital ownership. Thus, we need to focus on revising today’s techniques of finance to broaden capital ownership.</p>
<p>The purpose of production in a market economy is the consumption of products and services by the consumers who make up the economy. But without income, the non-capital ownership class, the 99 percenters, cannot afford to purchase the products and services they desire. But when incomes rise among consumers who have the need and desire to improve their material standard of living, the market demand for products and services strengthens, which in turn increases production and results in a growth economy.</p>
<p>Our national economic policy needs to eliminate all barriers to enabling productive capital acquisition to take place through commercially insured capital credit. By doing so the result would be a quiet revolution in which economic plutocracy will transform to economic democracy.</p>
<p>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.</p>
<p>For specific policy solutions see the Agenda of The Just Third Way Movement at <a href="http://foreconomicjustice.org/?p=5797">http://foreconomicjustice.org/?p=5797</a> and support the Capital Homestead Act at <a href="http://www.cesj.org/homestead/index.htm">http://www.cesj.org/homestead/index.htm</a> and <a href="http://www.cesj.org/homestead/summary-cha.htm">http://www.cesj.org/homestead/summary-cha.htm</a></p>
<p>This op-ed was published by Nation Of Change at <a href="http://www.nationofchange.org/president-obama-put-spotlight-economic-inequality-1387811548" target="_blank">http://www.nationofchange.org/president-obama-put-spotlight-economic-inequality-1387811548</a></p>A Market-Based Alternative To A Redistributive Basic Incometag:capitalhomestead.org,2013-12-18:6384157:BlogPost:125402013-12-18T20:57:37.000ZGary Reberhttp://capitalhomestead.org/profile/GaryReber867
<p>Swiss citizens have submitted sufficient voter signatures to put an initiative on the ballot that would pay every citizen of Switzerland $2,800 per month, no strings attached. Similar efforts to provide a basic income to country citizens are under way throughout Europe. Even in the United States there is growing talk of establishing an annual Citizens Dividend or Social Credit for Americans as well.</p>
<p>Such schemes are redistributive and must be financed by a tax (open or disguised).…</p>
<p>Swiss citizens have submitted sufficient voter signatures to put an initiative on the ballot that would pay every citizen of Switzerland $2,800 per month, no strings attached. Similar efforts to provide a basic income to country citizens are under way throughout Europe. Even in the United States there is growing talk of establishing an annual Citizens Dividend or Social Credit for Americans as well.</p>
<p>Such schemes are redistributive and must be financed by a tax (open or disguised). While it is true that everyone today suffers from past injustices in terms of property rights, further extracting taxes to pay an annual Citizens Dividend or Social Credit will further destroy private property principles and bolster the State as the effective, if not legal title owner of property. In essence such schemes made ownership meaningless by taking away <i>control</i> (<i>usufruct</i>) through State confiscatory taxation for social purposes. Such schemes accede to the socialist principle that taxes are an exercise of the State’s ultimate property right.</p>
<p>Such schemes would shift property ownership (control) from individuals to the State and <i>usufruct </i>and control the fruits of ownership, and all income and increases in value attributable to property would belong to the State. The State would assume the right to exercise property in landed and other productive capital (effective title; <i>dominion</i> or <i>proprietas</i>) by controlling the fruits of ownership (exercise or use; <i>usufruct</i>), draining and exhausting a man’s means by excessive taxation for social purposes.</p>
<p>What is never addressed is that our country's founders regarded taxes as a grant from the citizens, and unjust without their consent. Such schemes counter our country's founding principles of consent of the governed.</p>
<p>The backers of such schemes consider ownership title an irrelevant legal technicality as long as effective title is vested in the State through the State’s control of all land and productive capital by taxing profits. That being the case, taxes would not be a grant from the people to the State to defray legitimate expenses of government, but instead, an exercise of an ultimate property right by the State, to be used for any social purpose, <i>i.e.</i>, to provide for <i>individual</i> welfare directly, instead of indirectly by maintaining the <i>common</i> good. In other words, advocates for a basic income for all would use the taxing power for a social purpose. Such a State tax appropriation would utterly destroy private property and is unjust <i>per se</i>. Taxation for social purposes (such as redistribution) in <i>any</i> amount lessens private means to achieve a presumably more equitable distribution of wealth. Such tax extraction measures should only be justified as an expedient in an emergency, with the purpose of keeping people alive and in reasonable health when no other recourse is available––not as the usual way of running society.</p>
<p>The fact is that taxation for “social purposes” accomplishes its ends <i>solely</i> by taking from those with “too much” for redistribution to those who are judged by the authorities as not having enough. This is prohibited under the natural law. The <i>principle</i> of taxing for social purposes as a usual thing instead of as an expedient in an emergency is itself the problem, not how much is taxed or how the tax is administered.</p>
<p>Furthermore, such proposals do not address the issue of concentrated ownership of wealth-creating, income-producing productive capital assets, or its impact on private property principles, but instead takes from those who are productive and redistribute earnings to those who are not or less productive. What should be the solution is to make EVERY citizen productive, so that they do not become dependent on an annual tax-extracted Citizens Dividend or Social Credit nor on wages from toil jobs or State welfare supports, but through owning wealth-creating, income-producing productive capital assets.</p>
<p>As an alternative that does protect private property principles and is market-based, implement the Capital Homestead Act (<a href="http://www.cesj.org/homestead/index.htm">http://www.cesj.org/homestead/index.htm</a> and <a href="http://www.cesj.org/homestead/summary-cha.htm">http://www.cesj.org/homestead/summary-cha.htm</a>). Here is an explanation of the main part of the proposal:</p>
<p>Right now in the United States, the Federal Reserve creates money by loaning it to banks, who re-loan it multiple times because of fractional banking rules. With Capital Homesteading, money would be created by loaning it directly to citizens at near-zero interest to invest in asset-based economic growth. To build real wealth and also phase out our near-defunct social security scheme, the new full-reserve money would go into a long-term retirement account to be invested in full-dividend-paying shares of qualified successful corporations. That way, money power would be spread to all citizens. The middle class would be invigorated using the principle of compounding interest, instead of being decimated by mushrooming public and personal debt.</p>
<p>For solutions see "Financing Economic Growth With 'FUTURE SAVINGS': Solutions To Protect America From Economic Decline" at NationOfChange.org <a href="http://www.nationofchange.org/financing-future-economic-growth-future-savings-solutions-protect-america-economic-decline-137450624">http://www.nationofchange.org/financing-future-economic-growth-future-savings-solutions-protect-america-economic-decline-137450624</a>.</p>
<p>In the United States, the reform of the financial system that resulted in the National Banking Act of 1863 restricted the non-rich to the existing (and diminishing) pool of past savings to finance new capital formation and economic development, while the rich could create their own money for the same purpose by issuing bills of exchange. The National Banks and state banks functioned as banks of deposit for the non-rich, severely restricting participation in the economic common good, while they served as banks of issue for the rich, giving them a virtual monopoly over the ownership of new productive capital assets other than homestead land and small ancillary businesses.</p>
<p>Unfortunately, both capitalism and socialism rely on the demonstrably false premise that the only way to finance new productive capital formation is to cut consumption and accumulate money savings; financing for all new productive capital is presumed to come out of the present value of production that was withheld from consumption.</p>
<p>As Harold Moulton demonstrated in <i>The Formation Of Capital</i> (1935), reducing consumption (withholding production from consumption) in order to finance new capital formation harms the financial feasibility of the new productive capital the investor intends to finance. It can even, when the investor realizes that there is insufficient consumer demand to justify the new productive capital formation, prevent the new productive capital from being formed in the first place.</p>
<p>Given that, as Adam Smith said, the sole purpose of production is consumption, one can reasonably conclude that it is contrary to the purpose of production to withhold production from consumption in order to finance new productive capital to increase production. More simply put, if we are not consuming all that is being produced now, of what conceivable use is it to increase production?</p>
<p>That is the “economic dilemma” (as Moulton put it) facing the “capitalist,” or (in socialism) the State if it takes over control of the economy. It should be obvious that new productive capital investment must take place if economic activity is to be sustained. At the same time, the individual investor cannot justify financing the formation of additional new productive capital when there is clearly insufficient demand for what existing productive capital is already producing.</p>
<p>It is, to all appearances, a perfect “Catch 22” situation. If the capitalist invests in new productive capital when there is no demand for what the productive capital will produce, he or she will go bankrupt. If, on the other hand, there is a demand for all that is being produced and more besides, there is little or no possibility of withholding anything from consumption to use in financing new productive capital formation.</p>
<p>Past savings — the present value of past cuts in consumption — are not, however, the only or even the best source of financing for new capital formation. There is also “future savings,” that is, the present value of future increases in production. Just as derivatives (“money”) called mortgages can be created using the present value of existing marketable goods and services as the “underlying” asset backing the derivative, derivatives called bills of exchange can be created using the present value of future marketable products and services as the underlying asset.</p>
<p>Believing — erroneously — that past savings are the only source for financing of new productive capital formation has one of two results. If we believe that the market will take care of things without the State doing more than policing abuses, enforcing contracts, and in general providing a level playing field, we end up with capitalism. Ownership of productive capital must be concentrated in the hands of a private sector elite, for only people whose productive capital assets produce far more than they can consume can afford to finance the formation of new productive capital, thereby providing jobs for the rest of us, to the extent that they are not necessary due to ever-increasing shifts in the technologies of production.</p>
<p>If, however, we believe that the market and private initiative cannot be trusted to take care of things, and that government action is required to both regulate and control the private sector so that everyone will be taken care of adequately and there will be sufficient investment to create enough jobs (whether or not we believe State control will continue to be necessary, or it will wither away), the State must take an ever-increasing role in the economy. That is socialism.</p>
<p>The way to avoid the fallacies of both capitalism and socialism is to realize that new productive capital formation can be financed better using the present value of future increases in production – future savings – than by using the present value of past cuts in consumption – past savings. Reliance on past savings, however (despite its obvious falsity) is accepted as an absolute dogma by all mainstream schools of economics, and virtually all of their offshoots. That is the challenge – to re-educate.</p>
<p>Of course to succeed practically in creating broadened private, individual ownership of FUTURE productive capital formation, there must be a provision to secure investment. This is where collateral insurance comes in (i.e. the provision of sufficient security to support a loan for productive capital acquisition). Because beneficiaries would be enabled to undertake financing on the strength of non-recourse pure capital credit loans from banks and other lenders, the question of collateral or other satisfactory security to support the loans is critical. Banks cannot extend pure capital credit without security to cover the risk of the borrower's inability to repay the loan. Nor can existing owners be saddled with the risk of business failure. Thus the risk of productive capital investment failure (a risk that is now borne primarily by existing owners, but with considerable governmental back-up mediation through economic intervention by way of taxing, borrowing, monetary, regulatory and other powers) can instead be commercially insured with government reinsurers in reserve if necessary. This would be included as an element in the cost of borrowing in the case of each pure capital credit loan to provide financial compensation to the lenders. Similar insurance mechanisms can be employed as used by the Federal Housing Administration (FHA) to overcome the formidable financial barrier that prevents most people form effective productive capital acquisition. Once we set put on this path to prosperity, opportunity, and economic justice it is an open question whether government involvement (and how much and in what form) is necessary to promote the market provision of pure capital credit insurance. In the writings of binary economist Louis Kelso, he consistently proposed the creation of an agency to operate on the broad principles as practiced by the FHA in providing loan insurance to home buyers. The FHA has experienced decades of profitable success in facilitating the financing of broader home ownership throughout the United States. Instead of financing with insured loans a consumer purchase (a home to live in) we would be financing productive capital asset formation that generates its own earnings out of which to pay back the loan. Capital credit insurance is not a government guarantee. To the contrary, capital credit insurance would be provided only if the premium is competitively attractive in view of the risk insured. Any investment risk that is not insurable on market principles should not be undertaken. The government's reinsurance corporation would be expected to meet the profitable performance standards of programs like the FHA's home loan insurance program.</p>
<p>The Agenda for the Just Third Way (<a href="http://foreconomicjustice.org/?p=5797">http://foreconomicjustice.org/?p=5797</a>) and the proposed Capital Homestead Act addresses the alternative to schemes for a basic income for all achieved through tax extraction and the coercive powers of the State.</p>
<p>Within the scope of the proposals, the Federal Reserve would stop monetizing unproductive debt, including bailouts of banks "too big to fail" and Wall Street derivatives speculators, and begin creating an asset-backed currency that could enable every man, woman and child to establish a Capital Homestead Account or "CHA" (a super-IRA or asset tax-shelter for citizens) at their local bank to acquire a growing dividend-bearing stock portfolio to supplement their incomes from work and all other sources of income. The CHA would process an equal allocation of productive credit to every citizen exclusively for purchasing full-dividend payout shares in companies needing funds for growing the economy and creating private sector jobs for local, national and global markets. The shares would be purchased on credit wholly backed by projected "future savings" in the form of new productive capital assets as well as the future marketable goods and services produced by the newly added technology, renewable energy systems, plant, rentable space and infrastructure added to the economy. Risk of default on each stock acquisition loan would be covered by private sector capital credit risk insurance and reinsurance, but would not require citizens to reduce their funds for consumption to purchase shares.</p>
<p>The end result is that citizens would become empowered as owners to meet their own consumption needs and government would become more dependent on economically independent citizens, thus reversing current global trends where all citizens will eventually become dependent for their economic well-being on our only legitimate social monopoly – the State – and whatever elite controls the coercive powers of government.</p>
<p>Support for this article was provided by the Center for Economic and Social Justice (<a href="http://foreconomicjustice.org/wp-admin/www.cesj.org">www.cesj.org</a>).</p>
<p>See "A Market-Based Alternative To A Redistributive Basic Income" at <a href="http://www.nationofchange.org/market-based-alternative-redistributive-basic-income-1387205383#comments" target="_blank">http://www.nationofchange.org/market-based-alternative-redistributive-basic-income-1387205383#comments</a>.</p>The "Tyranny" Of Capitalism, "Idolatry Of Money" And "Trickle-Down" Economicstag:capitalhomestead.org,2013-12-18:6384157:BlogPost:126082013-12-18T20:53:46.000ZGary Reberhttp://capitalhomestead.org/profile/GaryReber867
<p>Pope Francis used his first major written work to attack capitalism as a "new tyranny," while urging global leaders to fight poverty and inequality. In a document published Tuesday, November 26, 2013, Pope Francis denounced the “tyranny” of capitalism, "idolatry of money" and "trickle-down" economic policies, as well as consumerism and a financial system which he says rules rather than serves. The Pope urged politicians to guarantee all citizens “dignified work, education and…</p>
<p>Pope Francis used his first major written work to attack capitalism as a "new tyranny," while urging global leaders to fight poverty and inequality. In a document published Tuesday, November 26, 2013, Pope Francis denounced the “tyranny” of capitalism, "idolatry of money" and "trickle-down" economic policies, as well as consumerism and a financial system which he says rules rather than serves. The Pope urged politicians to guarantee all citizens “dignified work, education and healthcare."</p>
<p>The Pope cited that trickle-down economics DOES NOT WORK!!!</p>
<p>This should not be complicated and, in fact, there is a simple reason why inequality is widening. It is the perpetual CONCENTRATED OWNERSHIP of productive capital assets (land, structures, machines, super-automation, robotics, digital computerization, etc.) due to a system that bases FUTURE growth on financing with "past" savings, rather than finance economic growth paid for with "future" savings out of the earnings of the investments. Unfortunately, conventional economists, academia, political leaders, and the national media assume that the only way to finance new wealth-creating, income-producing capital is by cutting consumption and accumulating money savings. While incorrect, such thinking leads to the conclusion that only the rich can OWN or that the State must own or control the rich so they do what’s right.</p>
<p>The forces of greed capitalism want low-pay "slave labor" incomes for worker input in the production of products and services in order to keep labor input and other costs at a minimum and maximize profits to the ownership class. The reality is that the ownership class continues to amass capital ownership and derive the income and capital gains earned from their private ownership rights. The ownership class is benefiting from the reality that in most economic tasks, productive capital (not labor) is doing ever more of the work, is creating ever more of the wealth, and is contributing to ever more of the economic growth due to increasing capital productiveness rather than increasing human productivity. As a result, 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. The problem is that the ownership class has not taken the initiative to distribute more broadly private capital acquisition by workers and others simultaneously with the growth of businesses. The problem is the system is plagued with injustice and inefficient distribution of wealth. If we are to set the nation on a path to prosperity and growth then it is essential that we recognize that growth is primarily a function of increasing capital productiveness rather than increasing labor productivity. The question before us is who will OWN this FUTURE capital productivity and the resulting wealth-creating, income-producing capital assets?</p>
<p>Unfortunately with the means of production controlled narrowly due to concentrated capital ownership, which is benefiting from tectonic shifts in the technologies of production that eliminate jobs and devalue the worth of labor, there are fewer and fewer "customers with money" to purchase the products and services that the economy is capable of producing. Thus, 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 fewer well-paying jobs. 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.</p>
<p>While millions of Americans own diluted stock value through the “stock market exchanges,” purchased with their earnings as labor workers, their risked stock holdings are relatively minuscule, as are their dividend payments compared to the top 10 percent of capital owners. Even when economies are perceived as experiencing steady, low-inflationary, job-providing growth, the reality is that most people do not earn enough to sustain their reasonable needs and, instead, are heavily in debt and/or dependent upon some form of earnings redistribution to meet consumption wants and needs. While technological innovation and invention promises the increasing abundance of substantially increased output with much less human effort, there is widespread poverty, even in boom times in which too many people remain poor. “Trickle-down” does not solve poverty because for too many people, the “trickle” is usually only menial, low-pay jobs or welfare, open and concealed. The reality is that capital is the primary source of affluence, whereas labor rarely produces more than subsistence. The solution is to enable EVERY American to acquire capital and pay for their acquisition out of the future earnings of the capital––thus self-financed capital ownership acquisition in the non-human factor of production.</p>
<p>This paradigm shift impacting society does not have to be a painful transition. It should be welcomed because the promise is to eliminate toil––the labor work that one would not do if they were not paid to do it.</p>
<p>The United States lost 6.3 million manufacturing jobs between January 1990 and the industry’s low point in January 2010, a 36 percent decline, according to the Bureau of Labor Statistics. Since that low point, the industry has not added near enough jobs to offset the millions of losses. While America needs and will continue to need workers who can make and fix machines and the software that makes them run, still private sector job creation in numbers that match the pool of people willing and able to work will continue to be eroded by physical productive capital’s ever increasing role. As for jobs, they will be limited to the highly-educated and skilled and technical variety or the non- and low-skilled variety that companies seek to replace with machines. Such anemic job creation is far too limited to solve the reality that by the year 2020, more than 50 percent of the jobs available will be minimum wage jobs!</p>
<p>There’s nothing new about machines replacing people, but the rate of replacement is exponential and the result is that productivity gains lead to more wealth for the OWNERS of the non-human factor of production. However, for others who have always been dependent on jobs as their source of income, there has been a steady decline to poverty level labor incomes.</p>
<p>But what about China, the place where all the manufacturing jobs are supposedly going? True, China has added manufacturing jobs over the past 15 years. But now it is beginning its shift to super-robotic automation. Foxconn, which manufactures Apple’s iPhone and many other consumer electronics and is China’s largest private employer, has plans to install over a million manufacturing robots within three years. Thus, in reality off-shoring of manufacturing will eventually be replaced by human-intelligent super-robotic automation. And this is not unique to China, it is occurring in the United States and other countries as well, as ever-advancing technology allows businesses to reduce operating costs.</p>
<p>The pursuit for lower and lower cost production that relies on slave wage labor will eventually run out of places to chase. Eventually, “rich” countries, whose productive capital capability is narrowly owned by its citizens, will be forced to “re-shore” manufacturing capacity, and result in every-cheaper robotic manufacturing.</p>
<p>“The era we’re in is one in which the scope of tasks that can be automated is increasing rapidly, and in areas where we used to think those were our best skills, things that require thinking,” says David Autor, a labor economist at Massachusetts Institute of Technology.</p>
<p>Businesses are spending more on technology now because they spent so little during the recession. Yet total capital expenditures are still barely running ahead of replacement costs. “Most of the investment we’re seeing is simply replacing worn-out stuff,” says economist Paul Ashworth of Capital Economics.</p>
<p>Yet, while the problem is one that no one can no longer ignore, the solution also is one starring them in the face but they just can’t see the simplicity of it. The fundamental challenge to be solved is how do we reinvent and redesign our economic institutions to keep pace with job destroying and labor devaluing technological innovation and invention so not all of the benefits of owning FUTURE productive capacity accrues to today’s wealthy 1 percent ownership class, and ownership is broadened so that EVERY American earns income through fully-paid-out stock ownership dividends so they can afford to purchase the products and services produced by the economy.</p>
<p>None of this is new from a macro-economic viewpoint as productive capital is increasingly the source of the world’s economic growth. The role of physical productive capital is to do ever more of the work of producing more products and services, which produces income to its owners. 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 237 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.</p>
<p>People invented 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. Binary economist Louis Kelso attributed most changes in the productive capacity of the world since the beginning of the Industrial Revolution to technological improvements in our capital assets, and a relatively diminishing proportion to human labor. Capital, in Kelso’s terms, does not “enhance” labor productivity (labor’s ability to produce economic goods). In fact, the opposite is true. It makes many forms of labor unnecessary. Because of this undeniable fact, Kelso asserted that, “free-market forces no longer establish the ‘value’ of labor. Instead, the price of labor is artificially elevated by government through minimum wage legislation, overtime laws, and collective bargaining legislation or by government employment and government subsidization of private employment solely to increase consumer income.”</p>
<p>Furthermore, according to Kelso, productive capital is increasingly the source of the world’s economic growth and, therefore, should become the source of added property ownership incomes for all. Kelso postulated that if both labor and capital are independent factors of production, and if capital’s proportionate contributions are increasing relative to that of labor, then equality of opportunity and economic justice demands that the right to property (and access to the means of acquiring and possessing property) must in justice be extended to all. Yet, sadly, the American people and its leaders still pretend to believe that labor is becoming more productive.</p>
<p>Kelso also 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 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.”</p>
<p>A National Right To Capital Ownership Bill that restores the American dream should be advocated by the progressive movement, which addresses the reality of Americans facing job opportunity deterioration and devaluation due to tectonic shifts in the technologies of production.</p>
<p>There is a solution, which will result in double-digit economic growth and simultaneously broaden private, individual ownership while stimulating job growth during an era where a FUTURE economy is built that supports general affluence for EVERY American, so that EVERY American’s income significantly grows, providing the means to support themselves and their families with an affluent lifestyle. See the Just Third Way Master Plan for America’s future at <a href="http://foreconomicjustice.org/?p=5797">http://foreconomicjustice.org/?p=5797</a> and <a href="http://www.cesj.org">www.cesj.org</a>.</p>
<p>Policies need to insert American citizens into the low or no-interest investment money loop to enable non- and undercapitalized Americans, including the working class and poor, to build wealth and become “customers with money.” The proposed Capital Homestead Act (<a href="www.%20http://cesj.org/homestead/index.htm" target="_blank">www. http://cesj.org/homestead/index.htm</a>) would produce this result.</p>
<p>The solution is obvious but our leaders, academia, conventional economists and the media are oblivious to the necessity to broaden ownership in the new capital formation of the future simultaneously with the growth of the economy, which then becomes self-propelled as increasingly more Americans accumulate ownership shares and earn a new source of dividend income derived from their capital ownership in the “machines” that are replacing them or devaluing their labor value.</p>
<p>An essential part of the solution will require the reform of the Federal Reserve Bank to create new owners of future productive capital investment in businesses simultaneously with the growth of the economy. The solution to broadening private, individual ownership of America’s future capital wealth requires that the Federal Reserve stop monetizing unproductive debt, including bailouts of banks “too big to fail” and Wall Street derivatives speculators, and begin creating an asset-backed currency that could enable every man, woman and child to establish a Capital Homestead Account or “CHA” (a super-IRA or asset tax-shelter for citizens) at their local bank to acquire a growing dividend-bearing stock portfolio to supplement their incomes from work and all other sources of income. The CHA would process an equal allocation of productive credit to every citizen exclusively for purchasing full-dividend payout shares in companies needing funds for growing the economy and private sector jobs for local, national and global markets. The shares would be purchased on credit wholly backed by projected "future savings" in the form of new productive capital assets as well as the future marketable goods and services produced by the newly added technology, renewable energy systems, plant, rentable space and infrastructure added to the economy. Risk of default on each stock acquisition loan would be covered by private sector capital credit risk insurance and reinsurance, but would not require citizens to reduce their funds for consumption to purchase shares.</p>
<p>The end result is that citizens would become empowered as owners to meet their own consumption needs and government would become more dependent on economically independent citizens, thus reversing current global trends where all citizens will eventually become dependent for their economic well-being on our only legitimate monopoly –– the State –– and whatever elite controls the coercive powers of government.</p>
<p>See "The 'Tyranny' Of Capitalism, 'Idolatry Of Money' And 'Trickle-Down' Economics" at <a href="http://www.nationofchange.org/tyranny-capitalism-idolatry-money-and-trickle-down-economics-1385911252" target="_blank">http://www.nationofchange.org/tyranny-capitalism-idolatry-money-and-trickle-down-economics-1385911252</a>.</p>Does Welfare Have To Be The New Normal?tag:capitalhomestead.org,2013-12-18:6384157:BlogPost:124752013-12-18T20:48:59.000ZGary Reberhttp://capitalhomestead.org/profile/GaryReber867
<p>The recently published data from the Census Bureau is depressing––as more people in America today are on welfare than have full-time jobs.</p>
<p>At the end of 2011, the last year for which data are available, some 108.6 million people received one or more means-tested government benefit programs––bureaucratese for welfare.</p>
<p>Meanwhile, the Census data showed that there were just 101.7 million people with full-time jobs, including both the private and government sectors.</p>
<p>As a…</p>
<p>The recently published data from the Census Bureau is depressing––as more people in America today are on welfare than have full-time jobs.</p>
<p>At the end of 2011, the last year for which data are available, some 108.6 million people received one or more means-tested government benefit programs––bureaucratese for welfare.</p>
<p>Meanwhile, the Census data showed that there were just 101.7 million people with full-time jobs, including both the private and government sectors.</p>
<p>As a nation, we are dangerously becoming dependent on the State. Anytime more people are being paid not to be productive, it imperils our liberty and democracy.</p>
<p>In recent years, the welfare state has expanded, propelled by the deterioration of the middle class and the fear that people experience on the edge of poverty and in poverty. This condition is creating a political movement to provide an all-encompassing security blanket to protect Americans from all vagaries of economic life. There’s now a welfare program for everything from losing a job to food and healthcare assistance to having money to pay the rent. While such need has become increasingly necessary with seemingly endless duration, it is transforming our nation from self-dependency to State dependency.</p>
<p>According to official data from the government, 46.5 million Americans live in poverty with essentially 43 percent of all those on welfare officially considered poor. But the reach is far greater as over 150 million Americans receive monies from the State through Social Security, Medicare, veterans’ benefits, unemployment and other non-means and means-tested financial support funded through tax extraction and national debt.</p>
<p>Such dependency will not cease until our nation addresses the reality that tectonic shifts in the technologies of production destroy jobs and devalue the worth of labor, forcing people to resort to low-wage jobs and welfare support as their ONLY means of financial subsistence.</p>
<p>The reality is that increasingly EVERY human is having more and more interactions with machines and fewer with human beings. There is no escape from technological unemployment long-term as much more is to come.</p>
<p>The field of robotics is at the vanguard of this new wave of automation. The broad universal definition is a machine that can perform the job of a human. Robots can be mobile or stationary and hardware or software, but ALL are instruments of productive capital and ALL are the private property of corporations and businesses OWNED by individuals.</p>
<p>Business investment in machine and robotic super-automation hardware and software is more than it's ever been. But what are not back are the jobs.</p>
<p>The percentage of Americans with jobs is at a 20-year low due to tectonic shifts in the technologies of production and job destruction resulting from off shoring production to global economies who pay workers far less. In every industry, we are witnessing fewer interactions with other human beings. While conventional economists, academia, and political leadership has called upon education as the solution, the changes are coming so quickly it will be difficult for workers to retrain themselves and effectively compete for far fewer jobs over time. They are disadvantaged to compete with super-computers, which can program themselves to improve their performance. Even if the entire American population was college educated, there still would not be the need in the private sector to create jobs in numbers that match the pool of people willing and able to work due to human work constantly being eroded by physical productive capital’s ever increasing role. Technology increasingly is demonstrating skills on a par with and even surprising human skills.</p>
<p>While entrepreneurs will continue to create new business opportunities, the reality is that they will not be hiring large numbers of people. Public companies such as Apple, Amazon, Facebook and Google, for example, represent in total about $1 trillion in market capitalization value. Yet together they employ fewer than 150,000 people––less than ALL the new entrants into the American workforce monthly.</p>
<p>Annual investment by U.S. manufacturers in new technology has increased almost 30 percent since the "Great Recession" <i>ended</i>, and research institutions and robotics companies, funded by venture capital monies, are constantly searching for innovations to provide businesses solutions that lower the cost of production and operation and gain competitive efficiencies to maximize profits.</p>
<p>Technological invention and innovation is the ONLY means to effectively return manufacturing to the United States. But realistically, the global competition will be intense as other teams of engineers and scientists in other countries compete to create ever more sophisticated human-intelligent machines, super-automated processes, robotic workers, digital computerized operations etc. Thus, even if offshore manufacturing returns to the United States, well-paying jobs will be fewer than ever as most of the jobs will go to "robots.”</p>
<p>Sadly, unless addressed and the system reformed, State dependency is the prospect and the plight of a growing segment of the American population, solely dependent on low-pay hourly wage jobs and supplemental redistributive government welfare, which costs taxpayer billions of dollars, if not future trillions, and furthers our dependency on tax extraction and never-ending national debt and interest payments.</p>
<p>While our productive technological capability has been evolving for over a century during a period of labor demand, and initially made us better at our jobs, now it is becoming so sophisticated and prevalent that it is making many workers obsolete, even in the relatively labor-intensive service industries.</p>
<p>At the same time the situation is ripping our nation apart with one segment of the population declaring "laziness" and opposing minimum wage laws, Food Stamp benefits and Medicaid expansion, and another segment promoting job dependency, government-dictated wage laws (not free market), and socialistic welfare support. Both see ONLY a job as a source of income for the majority of Americans and fail to recognize that job creation is not a viable long-term solution, and that the non-human factor of production resulting from technological invention and innovation makes many forms of labor unnecessary. Both also fail to see that the majority of Americans are being systematically denied equal opportunity to acquire private sector individual wealth-creating, income-generating productive capital property ownership on the same terms that the wealthy ownership class now utilizes. Rich people are able to use their investment's earnings to pay off the capital credit loans used to finance their investments, without having to use their own money or deny themselves consumption. The unfortunate result is that the rich get richer through their continued concentration of productive capital ownership and the vast majority of Americans struggle with progressively less well-paid job opportunities, the devaluing of their worth as laborers, and the prospects of falling into poverty and dependent on tax extraction from the productive sector. As a result, politicians have continued the incurrence of national debt to support supplemental welfare programs that increasingly more Americans require to make ends meet.</p>
<p>This should not be what America is about. Instead, our focus should be on OWNERSHIP CREATION in which employees of companies and other ordinary citizens OWN full-dividend-paying-and-voting stock in the corporations they work for and patronize, and build over time a diversified portfolio of wealth-creating, income-producing stock assets that will provide them a second income beyond their reliance on a job. We need to reform the system to provide equal opportunity for EVERY American to become an OWNER, just like the wealthy ownership class, and significantly improve their long-term financial security. The focus needs to be on FUTURE sustainable production and broadened individual ownership. This will put us on a path to prosperity, opportunity, and economic justice and in the short-term significantly grow our economy with "full-employment" opportunities as EVERY American benefits from two sources of income and as we build a FUTURE economy that can support general affluence for every man, woman, and child.</p>
<p>We are at the horizon of a new technological frontier and the capabilities of computerization and robotics are projected to exponentially expand. The work in this FUTURE economy will be largely done by “machines,” and support general affluence for EVERY citizen.</p>
<p>As we build this FUTURE affluent economy, consumer confidence will be strengthened and businesses will benefit from an expanding population of "customers with money." This will drive the demand for products and services the economy will be capable of producing, while achieving environmental renewability and sustainable viability. At the same time United States credibility and leadership around the world will be restored as our economy booms and we successfully alter the choices people must make between choosing alternative, more costly "greener" choices that do not threaten the environment and their very livelihood.</p>
<p>While this is not a short-term "click-the-switch" solution, in the short-term we must not fail those who require supplemental support. But we need to adopt a long-term solution that will eliminate and drastically reduce dependency on tax extraction and national debt and build a FUTURE responsibly sustainable economy that can support general affluence for EVERY citizen and provide financial security into retirement.</p>
<p>For more on how to accomplish such structural reform, see "Financing Economic Growth With 'FUTURE SAVINGS': Solutions To Protect America From Economic Decline" at NationOfChange.org <a href="http://www.nationofchange.org/financing-future-economic-growth-future-savings-solutions-protect-america-economic-decline-137450624">http://www.nationofchange.org/financing-future-economic-growth-future-savings-solutions-protect-america-economic-decline-137450624</a>, "The Income Solution To Slow Private Sector Job Growth" at <a href="http://www.nationofchange.org/income-solution-slow-private-sector-job-growth-1378041490">http://www.nationofchange.org/income-solution-slow-private-sector-job-growth-1378041490</a>, and "A Solution To Eroding Retirement Security" at <a href="http://www.huffingtonpost.com/gary-reber/a-solution-to-eroding-retirement_b_4103834.html">http://www.huffingtonpost.com/gary-reber/a-solution-to-eroding-retirement_b_4103834.html</a> and at <a href="http://www.nationofchange.org/solution-eroding-retirement-security-1382020223">http://www.nationofchange.org/solution-eroding-retirement-security-1382020223</a>. Also see "Achieving The Green Economy" at <a href="http://www.nationofchange.org/achieving-green-economy-1373980790">http://www.nationofchange.org/achieving-green-economy-1373980790</a> and with complete footnotes with the footnotes at <a href="http://foreconomicjustice.org/?p=9082">http://foreconomicjustice.org/?p=9082</a></p>
<p>Support the Agenda of The Just Third Way Movement at <a href="http://foreconomicjustice.org/?p=5797">http://foreconomicjustice.org/?p=5797</a> and support the Capital Homestead Act at <a href="http://www.cesj.org/homestead/index.htm">http://www.cesj.org/homestead/index.htm</a> and <a href="http://www.cesj.org/homestead/summary-cha.htm">http://www.cesj.org/homestead/summary-cha.htm</a>. See the full Act at <a href="http://cesj.org/homestead/strategies/national/cha-full.pdf">http://cesj.org/homestead/strategies/national/cha-full.pdf</a>.</p>
<p>See "Does Welfare Have To Be The New Normal?" at <a href="http://www.nationofchange.org/does-welfare-have-be-new-normal-1386081767." target="_blank">http://www.nationofchange.org/does-welfare-have-be-new-normal-1386081767.</a></p>How To Reverse The Increasing Reliance Of Low-Wage Workers On Billions In Aid And Restore Economic Growthtag:capitalhomestead.org,2013-12-18:6384157:BlogPost:124732013-12-18T20:46:00.000ZGary Reberhttp://capitalhomestead.org/profile/GaryReber867
<p>The low wages paid to fast-food workers are costing taxpayers $7 billion a year in public assistance, according to a study released October 15, 2013 by the UC Berkeley Labor Center. The report, "Fast Food, Poverty Wages: The Public Cost of Low-Wage Jobs In The Fast Food Industry" (<a href="http://laborcenter.berkeley.edu/publiccosts/fastfoodpovertywages.shtml" target="_blank">http://laborcenter.berkeley.edu/publiccosts/fastfoodpovertywages.shtml</a>) was co-written with the University of…</p>
<p>The low wages paid to fast-food workers are costing taxpayers $7 billion a year in public assistance, according to a study released October 15, 2013 by the UC Berkeley Labor Center. The report, "Fast Food, Poverty Wages: The Public Cost of Low-Wage Jobs In The Fast Food Industry" (<a href="http://laborcenter.berkeley.edu/publiccosts/fastfoodpovertywages.shtml" target="_blank">http://laborcenter.berkeley.edu/publiccosts/fastfoodpovertywages.shtml</a>) was co-written with the University of Illinois at Urbana-Champaign's Department of Urban and Regional Planning. The study's release, and a companion report by the National Employment Law Project, comes after thousands of fast-food workers in 60 cities walked off their jobs in August, demanding higher pay. The study also comes at a time when Republicans in Congress are maneuvering to cut government assistance such as food stamps.</p>
<p>Full-time workers at such places as McDonald's and Burger King, and other fast-food businesses, don't make enough to support themselves, forcing them to enroll in welfare programs such as food stamps and Medicaid, the report shows. People working in fast-food jobs are more likely to live in or near poverty than any other job sector, with 43 percent having an income two times below the federal poverty level or less. This is costing states and the federal government billions of dollars in assistance, and emergency health care.</p>
<p>Such dependency will not cease until our nation addresses the reality that tectonic shifts in the technologies of production destroy jobs and devalue the worth of labor, forcing people to resort to low-wage jobs and welfare support as their ONLY means of financial subsistence.</p>
<p>The reality is that increasingly EVERY human is having more and more interactions with machines and fewer with human beings. There is no escape from technological unemployment long-term as much more is to come.</p>
<p>The field of robotics is at the vanguard of this new wave of automation. The broad universal definition is a machine that can perform the job of a human. Robots can be mobile or stationary and hardware or software, but ALL are instruments of productive capital and ALL are the private property of corporations OWNED by individuals.</p>
<p>Business investment in machine and robotic super-automation hardware and software is more than it's ever been. What's not back is the jobs.</p>
<p>The percentage of Americans with jobs is at a 20-year low due to tectonic shifts in the technologies of production. In every industry, we are witnessing fewer interactions with other human beings. While conventional economists, academia, and political leadership has called upon education as the solution, the changes are coming so quickly it will be difficult for workers to retrain themselves. They are disadvantaged to compete with super-computers, which can program themselves to improve their performance. Even if the entire American population was college educated, there still would not be the need in the private sector to create jobs in numbers that match the pool of people willing and able to work due to human work constantly being eroded by physical productive capital’s ever increasing role. Technology increasingly is demonstrating skills on a par with and even surprising human skills.</p>
<p>While entrepreneurs will continue to create new business opportunities, the reality is that they will not be hiring large numbers of people. Public companies such as Apple, Amazon, Facebook and Google, for example, represent in total about $1 trillion in market capitalization value. Yet together they employ fewer than 150,000 people––less than ALL the new entrants into the American workforce monthly.</p>
<p>Annual investment by U.S. manufacturers in new technology has increased almost 30 percent since the "Great Recession" <i>ended</i>, and research institutions and robotics companies, funded by venture capital, are constantly searching for innovations to lower cost of production and operation and gain competitive efficiencies.</p>
<p>Technological invention and innovation is the ONLY means to effectively return manufacturing to the United States. But realistically, the global competition will be intense as other teams of engineers and scientists in other countries compete to create ever more sophisticated human-intelligent machines, super-automated processes, robotic workers, digital computerized operations etc. Thus, even if offshore manufacturing returns to the United States, most of the jobs will go to "robots.”</p>
<p>Sadly, unless addressed and the system reformed, this is the prospect and the plight of a growing segment of the American population, solely dependent on low-pay hourly wage jobs and supplemental support government welfare, which costs taxpayer billions of dollars, if not future trillions, and furthers our dependency on never-ending national debt.</p>
<p>While our productive technological capability has been evolving for over a century, and initially made us better at our jobs. Now it is becoming so sophisticated and prevalent that it is making many workers obsolete, even in the relatively labor-intensive service industries.</p>
<p>At the same time the situation is ripping our nation apart with one segment of the population declaring "laziness" and opposing minimum wage laws, Food Stamp benefits and Medicaid expansion, and another segment promoting job dependency, government-dictated wage laws (not free market), and socialistic welfare support. Both see ONLY a job as a source of income for the majority of Americans and fail to recognize that job creation is not a viable long-term solution, and that the non-human factor of production resulting from technological invention and innovation makes many forms of labor unnecessary. Both also fail to see that the majority of Americans are being systematically denied equal opportunity to acquire private sector individual wealth-creating, income-generating productive capital property ownership on the same terms that the wealthy ownership class now utilizes. They are able to use the investment's earnings to pay off the capital credit loans used to finance their investments, without having to use their own money or deny themselves consumption. The unfortunate result is that the rich get richer through their continued concentration of productive capital ownership and the vast majority of Americans struggle with progressively less well-paid job opportunities, the devaluing of their worth as labors, and the prospects of falling into poverty and dependent on tax extraction from the productive sector and the continued incurrence of national debt to support supplemental welfare programs they require to make ends meet.</p>
<p>This should not be what America is about. Instead, our focus should be on OWNERSHIP CREATION in which employees of companies and other ordinary citizens OWN full-dividend paying and voting stock in the corporations they work for and patronize, and build over time a diversified portfolio of wealth-creating, income-generating stock assets that will provide them a second income beyond their reliance on a job. We need to reform the system to provide equal opportunity for EVERY American to become an OWNER, just like the wealthy ownership class, and significantly improve their long-term financial security. The focus needs to be on FUTURE sustainable production and broadened individual ownership. This will put us on a path to prosperity, opportunity, and economic justice and in the short-term significantly grow our economy with "full-employment" opportunities as EVERY American benefits from two sources of income.</p>
<p>We are at the horizon of a new technological frontier and the capabilities of computerization and robotics are projected to exponentially expand whereby the work in a new FUTURE-built economy that can support general affluence for EVERY citizen will be largely done by “machines.”</p>
<p>As we build this FUTURE affluent economy, consumer confidence will be strengthened and businesses will benefit from an expanding population of "customers with money." This will drive the demand for products and services the economy will be capable of producing, while achieving environmental renewability and sustainable viability. At the same time United States credibility and leadership around the world will be restored as our economy booms and we successfully alter the choices people must make between choosing alternative, more costly "greener" choices that do not threaten the environment and their very livelihood.</p>
<p>While this is not a short-term "click-the-switch" solution, in the short-term we must not fail those who require supplemental support. But we need to adopt a long-term solution that will eliminate and drastically reduce dependency on tax extraction and national debt and build a future responsibly sustainable economy that can support general affluence for EVERY citizen and provide financial security into retirement.</p>
<p>See "Financing Economic Growth With 'FUTURE SAVINGS': Solutions To Protect America From Economic Decline" at NationOfChange.org <a href="http://www.nationofchange.org/financing-future-economic-growth-future-savings-solutions-protect-america-economic-decline-137450624">http://www.nationofchange.org/financing-future-economic-growth-future-savings-solutions-protect-america-economic-decline-137450624</a>, "The Income Solution To Slow Private Sector Job Growth" at <a href="http://www.nationofchange.org/income-solution-slow-private-sector-job-growth-1378041490">http://www.nationofchange.org/income-solution-slow-private-sector-job-growth-1378041490</a>, and "A Solution To Eroding Retirement Security" at <a href="http://www.huffingtonpost.com/gary-reber/a-solution-to-eroding-retirement_b_4103834.html">http://www.huffingtonpost.com/gary-reber/a-solution-to-eroding-retirement_b_4103834.html</a> and at <a href="http://www.nationofchange.org/solution-eroding-retirement-security-1382020223">http://www.nationofchange.org/solution-eroding-retirement-security-1382020223</a>. Also see "Achieving The Green Economy" at <a href="http://www.nationofchange.org/achieving-green-economy-1373980790">http://www.nationofchange.org/achieving-green-economy-1373980790</a> and with complete footnotes with the footnotes at <a href="http://foreconomicjustice.org/?p=9082">http://foreconomicjustice.org/?p=9082</a></p>
<p>For more on how to accomplish such structural reform, see "Financing Economic Growth With 'FUTURE SAVINGS': Solutions To Protect America From Economic Decline" at NationOfChange.org <a href="http://www.nationofchange.org/financing-future-economic-growth-future-savings-solutions-protect-america-economic-decline-137450624">http://www.nationofchange.org/financing-future-economic-growth-future-savings-solutions-protect-america-economic-decline-137450624</a> and "The Income Solution To Slow Private Sector Job Growth" at <a href="http://www.nationofchange.org/income-solution-slow-private-sector-job-growth-1378041490">http://www.nationofchange.org/income-solution-slow-private-sector-job-growth-1378041490</a>.</p>
<p>Support the Agenda of The Just Third Way Movement at <a href="http://foreconomicjustice.org/?p=5797">http://foreconomicjustice.org/?p=5797</a> and support the Capital Homestead Act at <a href="http://www.cesj.org/homestead/index.htm">http://www.cesj.org/homestead/index.htm</a> and <a href="http://www.cesj.org/homestead/summary-cha.htm">http://www.cesj.org/homestead/summary-cha.htm</a>. See the full Act at <a href="http://cesj.org/homestead/strategies/national/cha-full.pdf">http://cesj.org/homestead/strategies/national/cha-full.pdf</a>.</p>
<p>See "How To Reverse The Increasing Reliance Of Low-Wage Workers On Billions In Aid And Restore Economic Growth" at <a href="http://www.nationofchange.org/how-reverse-increasing-reliance-low-wage-workers-billions-aid-and-restore-economic-growth-1382195936#comment-294097" target="_blank">http://www.nationofchange.org/how-reverse-increasing-reliance-low-wage-workers-billions-aid-and-restore-economic-growth-1382195936#comment-294097</a> and at <a href="http://www.nationofchange.org/how-reverse-increasing-reliance-low-wage-workers-billions-aid-and-restore-economic-growth-1382195936#comment-294097" target="_blank">http://www.huffingtonpost.com/gary-reber/how-to-reverse-the-increa_b_4125981.html</a>.</p>A Solution To Eroding Retirement Securitytag:capitalhomestead.org,2013-10-17:6384157:BlogPost:125182013-10-17T17:04:59.000ZGary Reberhttp://capitalhomestead.org/profile/GaryReber867
<p>It's great to be unemployed and retired if you can afford it.</p>
<p>But the plain truth is that more than four in five older Americans expect to keep working during their latter years, a sign that traditional retirement is out of reach for vast swaths of society, according to a new survey.</p>
<p>Among Americans ages 50 and older who currently have jobs, 82 percent expect to work in some form during retirement, according to the poll by the Associated Press-NORC Center for Public Affairs…</p>
<p>It's great to be unemployed and retired if you can afford it.</p>
<p>But the plain truth is that more than four in five older Americans expect to keep working during their latter years, a sign that traditional retirement is out of reach for vast swaths of society, according to a new survey.</p>
<p>Among Americans ages 50 and older who currently have jobs, 82 percent expect to work in some form during retirement, according to the poll by the Associated Press-NORC Center for Public Affairs Research.</p>
<p>In other words, “retirement” is increasingly becoming a misnomer.</p>
<p>“The survey illuminates an important shift in Americans’ attitudes toward work, aging and retirement,” said Trevor Tompson, Director of the AP-NORC Center. “Retirement is not only coming later in life, it no longer represents a complete exit from the workforce.”</p>
<p>For those who have been dependent on employment and/or welfare, the problem is that financially sustainable retirement is and will no longer be a reality. Even with Social Security, which is funded through payroll taxes called the Federal Insurance Contributions Act tax (FICA) and/or Self Employed Contributions Act Tax, (SECA), one must have had a job to be eligible for the entitlement––and the amount of Social Security is based on the income level generated from one's employment record of payroll tax contributions.</p>
<p>In the United States, retirement incomes are supported largely by three pillars: Social Security benefits, employer-provided pensions, and personal savings (including non-housing capital asset wealth and home equity). Employer-provided pensions continue to decrease and personal savings is not the norm among the vast majority of American households who must spend virtually every earned dollar on living expenses. While increasingly individuals are finding it necessary to continue working in retirement to supplement their income, most older Americans discontinue full-time career work and struggle to meet obligations with minimum-pay part- and full-time jobs. A proportion of retirees also receive income from welfare programs, such as Supplemental Security Income and other life-support services funded through tax extraction and government debt.</p>
<p>Presently, the United States continues to benefit from never-ending technological innovation and invention. This is exponentially generating tectonic shifts in the technologies of production –– the effect of which destroys jobs and devalues the worth of labor's contribution to the production of products and services. Thus, as the non-human factor of production becomes increasingly more productive, there will continue to be less employment opportunities as long as the economy does not significantly expand, especially with respect to affluent-level wage and salary income.</p>
<p>Amazingly, as a nation we continue to not address this reality or to understand that there are two independent factors of production –– human labor and non-human wealth-creating, income-generating productive capital. Individuals own capital assets (typically through stock ownership in corporations) such as productive land, structures, infrastructure, tools, machines, robotics, computer processing, and certain intangibles that have the characteristics of property. Just as one owns his or her labor used as a source of personal income, capital owners are entitled to the wealth and income their capital produces. Fundamentally, economic value is created through human and non-human contributions.</p>
<p>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 in order to maximize profits for their owners. 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. And without economic growth the prospects for employment in an increasingly productive capital-dependent economy will continue to diminish.</p>
<p>People 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. As a result, most changes in the productive capacity of the world since the beginning of the Industrial Revolution can be attributed to technological improvements in our capital assets, and a relatively diminishing proportion to human labor.</p>
<p>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.</p>
<p>Contrary to conventional thinking, productive capital does not “enhance” labor productivity (labor’s ability to produce economic goods). In fact, the opposite is true. It makes many forms of labor unnecessary. Because of this undeniable fact, free-market forces no longer establish the "value" of labor. Instead, the price of labor is artificially elevated by government through minimum wage legislation, overtime laws, and collective bargaining legislation or by government employment and government subsidization of private employment solely to increase consumer income and to provide taxpayer-supported job-dependent security. Thus, the government has become increasingly engaged in make-work policy-making. But this approach is cause for expanded government and is directly conflicting with the technological promise of toil elimination.</p>
<p>Because productive capital is increasingly the source of the world’s economic growth, shouldn't we be asking the question why is not productive capital the source of added property ownership incomes for all? Why are we not addressing how the system facilitates greed capitalism and envy while concentrating productive capital ownership among the 1 to 10 percent of the population? One would think that a reasonable and logical conclusion would be to consider this postulation: if both labor and productive capital are independent factors of production, and if productive capital’s proportionate contributions are increasing relative to that of labor, then shouldn't equality of opportunity and economic justice demand that the right to property (and access to the means of acquiring and possessing property) must in justice be extended to all? Sadly, the American people and its leaders continue to be ignorant of this plain truth and still pretend to believe that labor is becoming more productive, with a sole focus on job creation.</p>
<p>What is needed is for the system to facilitate spreading the ownership of productive capital more broadly as the economy grows with full payout of dividend earnings, without taking anything away from the 1 to 10 percent who now own 50 to 90 percent of the corporate productive capital wealth assets. In doing so, the ownership pie would desirably get much bigger and their percentage of the total ownership would decrease, as ownership gets broader and broader. This would benefit the traditionally disenfranchised poor and working and middle class, who are propertyless in terms of owning productive capital assets. It would also result is tremendous economic growth, which would benefit everyone including the already wealthy ownership class, and create opportunities for real jobs, not make-work as an expanded economy is built that can support general affluence for EVERY American citizen. Thus, as productive capital income is distributed more broadly and the demand for products and services is distributed more broadly from the earnings of capital, the result would be the sustentation of consumer demand, which will promote economic growth. That also means that over time, EVERY man, woman and child could accumulate a diversified portfolio of wealth-creating, income-generating productive capital assets to provide economic security in retirement and not be dependent on having to work during retirement or rely on government-assisted welfare.</p>
<p>One might ask how we failed to grasp the significance of productive capital's input and the necessity for broad private sector individual ownership? 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 productive capital ownership accumulation. This is manifested in the belief that labor work is the ONLY way to participate in production and earn income. Yet, the wealthy ownership class knows that this notion is idiotic.</p>
<p>One should ask what form would the structural reforms take. Employment in this new enlightened age would start at the time one enters the economic world as a labor worker, to become increasingly a productive capital owner, and at some point to retire as a labor worker and continue to participate in production and to earn income as a productive capital asset owner until the day you die. As a substitute for inheritance and gift taxes, a transfer tax would be imposed on the recipients whose asset holdings exceeded $1 million. This would encourage those owning concentrations of productive capital assets (effectively the 1 to 10 percent) to spread out their monopoly-sized estates to all members of their family, friends, servants and workers who helped create their fortunes, teachers, health workers, police, other public servants, military veterans, artists, the poor and the disabled.</p>
<p>Other stipulations for the structural reform would entail structuring a more just and simple tax system. The tax rate would be a single rate for all incomes from all sources above defined personal exemption levels so that the budget could be balanced automatically and even allow the government to pay off the growing unsustainable long-term debt. For example, a family of four would be provided an exemption of $100,000 to meet their ordinary living needs. The poor would pay the first dollar over their exemption levels as would the hedge fund operator and others now earning billions of dollars from capital gains, dividends, interest, rents and other property incomes. This would include the elimination of all tax loopholes and subsidies.</p>
<p>There would be tax policy to incentivize corporations to pay out all profits to their owners as taxable personal incomes to avoid paying stiff corporate income taxes and to finance their growth by issuing new full-dividend payout shares for broad-based individualized employee and citizen ownership with full-voting rights.</p>
<p> </p>
<p>The payroll tax on workers and their employers would be eliminated, but all promises for Social Security, Medicare, Medicare, government pensions, health, education, rent and subsistence vouchers for the poor would be paid out of general revenues until their new jobs and ownership accumulations provide new incomes to substitute for the taxpayer dollars to fill these needs.</p>
<p> </p>
<p>The structural reform policies would direct the Federal Reserve to create an asset-backed currency that could enable every man, woman and child to establish a Capital Homestead Account or "CHA" (a super-IRA or asset tax-shelter for citizens) at their local bank to acquire a growing and diversified dividend-bearing stock portfolio to supplement their incomes from work and all other sources of income. The CHA would process an equal allocation of productive credit to EVERY citizen exclusively for purchasing full-dividend payout shares in companies needing funds for growing the economy and private sector jobs for local, national and global markets. The shares would be purchased on credit wholly backed by projected "future savings" in the form of new productive capital assets as well as the future marketable products and services produced by the newly added technology, renewable energy systems, plant, rentable space and infrastructure added to the economy. Risk of default on each stock acquisition interest-free loan would be covered by private sector capital credit risk insurance and reinsurance, but would not require citizens to reduce their funds for consumption to purchase shares.</p>
<p> </p>
<p>The end result would be that citizens would become empowered as owners to meet their own consumption needs and government would become more dependent on economically independent citizens, thus reversing current global trends where all citizens will eventually become dependent for their economic well-being on our only legitimate monopoly –– the State –– and whatever elite controls the coercive powers of government to extract taxes, incur national debt and redistribute earnings from the productive sector.</p>
<p> </p>
<p>For more on how to accomplish such structural reform, see "Financing Economic Growth With 'FUTURE SAVINGS': Solutions To Protect America From Economic Decline" at NationOfChange.org <a href="http://www.nationofchange.org/financing-future-economic-growth-future-savings-solutions-protect-america-economic-decline-137450624">http://www.nationofchange.org/financing-future-economic-growth-future-savings-solutions-protect-america-economic-decline-137450624</a> and "The Income Solution To Slow Private Sector Job Growth" at <a href="http://www.nationofchange.org/income-solution-slow-private-sector-job-growth-1378041490">http://www.nationofchange.org/income-solution-slow-private-sector-job-growth-1378041490</a>.</p>
<p> </p>
<p>Support the Agenda of The Just Third Way Movement at <a href="http://foreconomicjustice.org/?p=5797">http://foreconomicjustice.org/?p=5797</a> and support the Capital Homestead Act at <a href="http://www.cesj.org/homestead/index.htm">http://www.cesj.org/homestead/index.htm</a> and <a href="http://www.cesj.org/homestead/summary-cha.htm">http://www.cesj.org/homestead/summary-cha.htm</a>. See the full Act at <a href="http://cesj.org/homestead/strategies/national/cha-full.pdf">http://cesj.org/homestead/strategies/national/cha-full.pdf</a>.</p>A Solution To Eroding Retirement Securitytag:capitalhomestead.org,2013-10-17:6384157:BlogPost:123542013-10-17T17:04:56.000ZGary Reberhttp://capitalhomestead.org/profile/GaryReber867
<p>It's great to be unemployed and retired if you can afford it.</p>
<p>But the plain truth is that more than four in five older Americans expect to keep working during their latter years, a sign that traditional retirement is out of reach for vast swaths of society, according to a new survey.</p>
<p>Among Americans ages 50 and older who currently have jobs, 82 percent expect to work in some form during retirement, according to the poll by the Associated Press-NORC Center for Public Affairs…</p>
<p>It's great to be unemployed and retired if you can afford it.</p>
<p>But the plain truth is that more than four in five older Americans expect to keep working during their latter years, a sign that traditional retirement is out of reach for vast swaths of society, according to a new survey.</p>
<p>Among Americans ages 50 and older who currently have jobs, 82 percent expect to work in some form during retirement, according to the poll by the Associated Press-NORC Center for Public Affairs Research.</p>
<p>In other words, “retirement” is increasingly becoming a misnomer.</p>
<p>“The survey illuminates an important shift in Americans’ attitudes toward work, aging and retirement,” said Trevor Tompson, Director of the AP-NORC Center. “Retirement is not only coming later in life, it no longer represents a complete exit from the workforce.”</p>
<p>For those who have been dependent on employment and/or welfare, the problem is that financially sustainable retirement is and will no longer be a reality. Even with Social Security, which is funded through payroll taxes called the Federal Insurance Contributions Act tax (FICA) and/or Self Employed Contributions Act Tax, (SECA), one must have had a job to be eligible for the entitlement––and the amount of Social Security is based on the income level generated from one's employment record of payroll tax contributions.</p>
<p>In the United States, retirement incomes are supported largely by three pillars: Social Security benefits, employer-provided pensions, and personal savings (including non-housing capital asset wealth and home equity). Employer-provided pensions continue to decrease and personal savings is not the norm among the vast majority of American households who must spend virtually every earned dollar on living expenses. While increasingly individuals are finding it necessary to continue working in retirement to supplement their income, most older Americans discontinue full-time career work and struggle to meet obligations with minimum-pay part- and full-time jobs. A proportion of retirees also receive income from welfare programs, such as Supplemental Security Income and other life-support services funded through tax extraction and government debt.</p>
<p>Presently, the United States continues to benefit from never-ending technological innovation and invention. This is exponentially generating tectonic shifts in the technologies of production –– the effect of which destroys jobs and devalues the worth of labor's contribution to the production of products and services. Thus, as the non-human factor of production becomes increasingly more productive, there will continue to be less employment opportunities as long as the economy does not significantly expand, especially with respect to affluent-level wage and salary income.</p>
<p>Amazingly, as a nation we continue to not address this reality or to understand that there are two independent factors of production –– human labor and non-human wealth-creating, income-generating productive capital. Individuals own capital assets (typically through stock ownership in corporations) such as productive land, structures, infrastructure, tools, machines, robotics, computer processing, and certain intangibles that have the characteristics of property. Just as one owns his or her labor used as a source of personal income, capital owners are entitled to the wealth and income their capital produces. Fundamentally, economic value is created through human and non-human contributions.</p>
<p>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 in order to maximize profits for their owners. 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. And without economic growth the prospects for employment in an increasingly productive capital-dependent economy will continue to diminish.</p>
<p>People 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. As a result, most changes in the productive capacity of the world since the beginning of the Industrial Revolution can be attributed to technological improvements in our capital assets, and a relatively diminishing proportion to human labor.</p>
<p>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.</p>
<p>Contrary to conventional thinking, productive capital does not “enhance” labor productivity (labor’s ability to produce economic goods). In fact, the opposite is true. It makes many forms of labor unnecessary. Because of this undeniable fact, free-market forces no longer establish the "value" of labor. Instead, the price of labor is artificially elevated by government through minimum wage legislation, overtime laws, and collective bargaining legislation or by government employment and government subsidization of private employment solely to increase consumer income and to provide taxpayer-supported job-dependent security. Thus, the government has become increasingly engaged in make-work policy-making. But this approach is cause for expanded government and is directly conflicting with the technological promise of toil elimination.</p>
<p>Because productive capital is increasingly the source of the world’s economic growth, shouldn't we be asking the question why is not productive capital the source of added property ownership incomes for all? Why are we not addressing how the system facilitates greed capitalism and envy while concentrating productive capital ownership among the 1 to 10 percent of the population? One would think that a reasonable and logical conclusion would be to consider this postulation: if both labor and productive capital are independent factors of production, and if productive capital’s proportionate contributions are increasing relative to that of labor, then shouldn't equality of opportunity and economic justice demand that the right to property (and access to the means of acquiring and possessing property) must in justice be extended to all? Sadly, the American people and its leaders continue to be ignorant of this plain truth and still pretend to believe that labor is becoming more productive, with a sole focus on job creation.</p>
<p>What is needed is for the system to facilitate spreading the ownership of productive capital more broadly as the economy grows with full payout of dividend earnings, without taking anything away from the 1 to 10 percent who now own 50 to 90 percent of the corporate productive capital wealth assets. In doing so, the ownership pie would desirably get much bigger and their percentage of the total ownership would decrease, as ownership gets broader and broader. This would benefit the traditionally disenfranchised poor and working and middle class, who are propertyless in terms of owning productive capital assets. It would also result is tremendous economic growth, which would benefit everyone including the already wealthy ownership class, and create opportunities for real jobs, not make-work as an expanded economy is built that can support general affluence for EVERY American citizen. Thus, as productive capital income is distributed more broadly and the demand for products and services is distributed more broadly from the earnings of capital, the result would be the sustentation of consumer demand, which will promote economic growth. That also means that over time, EVERY man, woman and child could accumulate a diversified portfolio of wealth-creating, income-generating productive capital assets to provide economic security in retirement and not be dependent on having to work during retirement or rely on government-assisted welfare.</p>
<p>One might ask how we failed to grasp the significance of productive capital's input and the necessity for broad private sector individual ownership? 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 productive capital ownership accumulation. This is manifested in the belief that labor work is the ONLY way to participate in production and earn income. Yet, the wealthy ownership class knows that this notion is idiotic.</p>
<p>One should ask what form would the structural reforms take. Employment in this new enlightened age would start at the time one enters the economic world as a labor worker, to become increasingly a productive capital owner, and at some point to retire as a labor worker and continue to participate in production and to earn income as a productive capital asset owner until the day you die. As a substitute for inheritance and gift taxes, a transfer tax would be imposed on the recipients whose asset holdings exceeded $1 million. This would encourage those owning concentrations of productive capital assets (effectively the 1 to 10 percent) to spread out their monopoly-sized estates to all members of their family, friends, servants and workers who helped create their fortunes, teachers, health workers, police, other public servants, military veterans, artists, the poor and the disabled.</p>
<p>Other stipulations for the structural reform would entail structuring a more just and simple tax system. The tax rate would be a single rate for all incomes from all sources above defined personal exemption levels so that the budget could be balanced automatically and even allow the government to pay off the growing unsustainable long-term debt. For example, a family of four would be provided an exemption of $100,000 to meet their ordinary living needs. The poor would pay the first dollar over their exemption levels as would the hedge fund operator and others now earning billions of dollars from capital gains, dividends, interest, rents and other property incomes. This would include the elimination of all tax loopholes and subsidies.</p>
<p>There would be tax policy to incentivize corporations to pay out all profits to their owners as taxable personal incomes to avoid paying stiff corporate income taxes and to finance their growth by issuing new full-dividend payout shares for broad-based individualized employee and citizen ownership with full-voting rights.</p>
<p> </p>
<p>The payroll tax on workers and their employers would be eliminated, but all promises for Social Security, Medicare, Medicare, government pensions, health, education, rent and subsistence vouchers for the poor would be paid out of general revenues until their new jobs and ownership accumulations provide new incomes to substitute for the taxpayer dollars to fill these needs.</p>
<p> </p>
<p>The structural reform policies would direct the Federal Reserve to create an asset-backed currency that could enable every man, woman and child to establish a Capital Homestead Account or "CHA" (a super-IRA or asset tax-shelter for citizens) at their local bank to acquire a growing and diversified dividend-bearing stock portfolio to supplement their incomes from work and all other sources of income. The CHA would process an equal allocation of productive credit to EVERY citizen exclusively for purchasing full-dividend payout shares in companies needing funds for growing the economy and private sector jobs for local, national and global markets. The shares would be purchased on credit wholly backed by projected "future savings" in the form of new productive capital assets as well as the future marketable products and services produced by the newly added technology, renewable energy systems, plant, rentable space and infrastructure added to the economy. Risk of default on each stock acquisition interest-free loan would be covered by private sector capital credit risk insurance and reinsurance, but would not require citizens to reduce their funds for consumption to purchase shares.</p>
<p> </p>
<p>The end result would be that citizens would become empowered as owners to meet their own consumption needs and government would become more dependent on economically independent citizens, thus reversing current global trends where all citizens will eventually become dependent for their economic well-being on our only legitimate monopoly –– the State –– and whatever elite controls the coercive powers of government to extract taxes, incur national debt and redistribute earnings from the productive sector.</p>
<p> </p>
<p>For more on how to accomplish such structural reform, see "Financing Economic Growth With 'FUTURE SAVINGS': Solutions To Protect America From Economic Decline" at NationOfChange.org <a href="http://www.nationofchange.org/financing-future-economic-growth-future-savings-solutions-protect-america-economic-decline-137450624">http://www.nationofchange.org/financing-future-economic-growth-future-savings-solutions-protect-america-economic-decline-137450624</a> and "The Income Solution To Slow Private Sector Job Growth" at <a href="http://www.nationofchange.org/income-solution-slow-private-sector-job-growth-1378041490">http://www.nationofchange.org/income-solution-slow-private-sector-job-growth-1378041490</a>.</p>
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<p>Support the Agenda of The Just Third Way Movement at <a href="http://foreconomicjustice.org/?p=5797">http://foreconomicjustice.org/?p=5797</a> and support the Capital Homestead Act at <a href="http://www.cesj.org/homestead/index.htm">http://www.cesj.org/homestead/index.htm</a> and <a href="http://www.cesj.org/homestead/summary-cha.htm">http://www.cesj.org/homestead/summary-cha.htm</a>. See the full Act at <a href="http://cesj.org/homestead/strategies/national/cha-full.pdf">http://cesj.org/homestead/strategies/national/cha-full.pdf</a>.</p>Democratic Capitalism And Binary Economics: Answers For A Troubled Nation And Economytag:capitalhomestead.org,2013-10-17:6384157:BlogPost:122852013-10-17T17:03:35.000ZGary Reberhttp://capitalhomestead.org/profile/GaryReber867
<p>WARNING! This is a “big picture” involved article and requires thinking about the propositions and solutions presented. It is long. Therefore, if you feel you cannot read through it in one session, I suggest you break it up into two or three sessions. During the first session, at least read through the topic “Democratic Capitalism Has Yet To Be Tried.”</p>
<p> </p>
<p> During the late 1960s and throughout the 1970s, following university doctorate studies in economic development and…</p>
<p>WARNING! This is a “big picture” involved article and requires thinking about the propositions and solutions presented. It is long. Therefore, if you feel you cannot read through it in one session, I suggest you break it up into two or three sessions. During the first session, at least read through the topic “Democratic Capitalism Has Yet To Be Tried.”</p>
<p> </p>
<p> During the late 1960s and throughout the 1970s, following university doctorate studies in economic development and urban and regional planning, I became a political economist and economic justice advocate. During that period I co-founded the advocacy consulting firm Agenda 2000 Incorporated with my mentors Louis O. Kelso and John W. Dyckman.</p>
<p> </p>
<p> Louis Kelso was a leading corporate, tax and financial lawyer, and political economist based in San Francisco and the author of The Capitalist Manifesto (Random House 1958), The New Capitalists (Random House 1961), Two-Factor Theory: The Economics Of Reality (Random House, 1967), and later Democracy And Economic Power: Extending The ESOP Revolution Through Binary Economics (Ballinger Publishing Company, Cambridge, Massachusetts, 1986; reprinted University Press of America, Lanham Maryland, 1991). The first two books were co-authored with Mortimer J. Adler, President of the Institute for Philosophical Research, former professor of the Philosophy of Law at the University of Chicago, and author of The Idea Of Freedom. Kelso’s latter two books were co-authored by Patricia Hetter Kelso, his collaborator and wife since 1963. The four books present Kelso’s theory of binary economics (or the economics of reality), which describes labor and capital as independently productive and the financial tools for democratizing capital ownership in a private property, market economy where most products are exponentially made by physical capital. For more reading visit <a href="http://www.kelsoinstitute.com">www.kelsoinstitute.com</a>.</p>
<p> </p>
<p> John Dyckman was Professor and Chairman of the Graduate School of Urban and Regional Planning at the University of California, Berkeley and the author of numerous books and articles on urbanization. Under Dyckman, I taught binary economic development theory in the graduate program for one year while running San Francisco-based Agenda 2000 and the advocacy Institute For The Pursuit Of Economic Justice at Berkeley, which I founded.</p>
<p> </p>
<p> Throughout this period I lectured at universities throughout the United States, England, and Europe, espousing binary economics and democratized, broadened individual capital ownership.</p>
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<p><b>Economic Power Has To Be Universally Distributed</b></p>
<p> </p>
<p> Binary economics and democratic capitalism, or what could be termed economic personalism, is founded on the principal that economic power has to be universally distributed amongst individual citizens and never allowed to concentrate. It is a value system based on the importance and dignity of every human person. The “pursuit of happiness” phrase in the Declaration of Independence was interchangeable in those times with the word “property.” The original phrasing was “the right to life, liberty and property.” “The pursuit of happiness” phrase was a substitute for the “property” phrase. In the forerunner of the Declaration of Independence and Bill of Rights, the 1776 Virginia Declaration of Rights declared that securing “Life, Liberty, with the means of acquiring and possessing Property” is the highest purpose for which any just government is formed. Democratizing economic power will return us to the pristine innocence and economic power diffusion we had in a pre-industrial society where labor was the principal factor in the creation of wealth.</p>
<p> </p>
<p> In simple terms, binary economics recognizes that there are two independent factors of production: people (labor workers who contribute manual, intellectual, creative and entrepreneurial work) and capital (land; structures; infrastructure; tools; machines; computer processing; certain intangibles that have the characteristics of property, such as patents and trade or firm names; and the like owned by capital workers). Fundamentally, economic value is created through human and non-human contributions. NOTE, real physical productive capital isn’t money; it is measured in money (financial capital), but it is really producing power and earning power through ownership of the non-human factor of production. Financial capital, such as stocks and bonds, is just an ownership claim on the productive power of real capital. In the law, property is the bundle of rights that determines one’s relationship to things.</p>
<p> </p>
<p> 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 in order to maximize profits for the owners. 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.</p>
<p> </p>
<p> People invented 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. Kelso attributed most changes in the productive capacity of the world since the beginning of the Industrial Revolution to technological improvements in our capital assets, and a relatively diminishing proportion to human labor. Capital, in Kelso’s terms, does not “enhance” labor productivity (labor’s ability to produce economic goods). In fact, the opposite is true. It makes many forms of labor unnecessary. Because of this undeniable fact, Kelso asserted that, “free-market forces no longer establish the ‘value’ of labor. Instead, the price of labor is artificially elevated by government through minimum wage legislation, overtime laws, and collective bargaining legislation or by government employment and government subsidization of private employment solely to increase consumer income.”</p>
<p> </p>
<p>Furthermore, according to Kelso, productive capital is increasingly the source of the world’s economic growth and, therefore, should become the source of added property ownership incomes for all. Kelso postulated that if both labor and capital are independent factors of production, and if capital’s proportionate contributions are increasing relative to that of labor, then equality of opportunity and economic justice demands that the right to property (and access to the means of acquiring and possessing property) must in justice be extended to all. Yet, sadly, the American people and its leaders still pretend to believe that labor is becoming more productive.</p>
<p> </p>
<p> At Agenda 2000, we used 90 percent, while the Rand Corporation statistic was 98 percent, to represent the productive capital factor input to creating products and services. 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. Thus, we have the great bulk of the people providing a mere 10 percent or less of the productive input. Contrast that to the less than 5 percent who own all the productive capital providing 90 percent or more of the productive input, and who initiate and oversee most of the technological advances that replace labor work with capital work. As a result, the trend has been to diminish the importance of employment with productive capital ownership concentrating faster than ever, while technological change makes capital ever more productive. But because this is not well understood, what we as a society have been doing is to continually shift the work burden from people labor to real capital while distributing the earning capacity of capital workers (via capital ownership of stock in corporations) to non-owners through jobs and welfare. Such policies do not function effectively.</p>
<p> </p>
<p> In a democratic growth economy, based on Kelso’s binary economics, the ownership of capital would be spread more broadly as the economy grows, without taking anything away from the 1 to 10 percent who now own 50 to 90 percent of the corporate wealth. Instead, the ownership pie would desirably get much bigger and their percentage of the total ownership would decrease, as ownership gets broader and broader, also benefiting the traditionally disenfranchised poor and working and middle class. Thus, productive capital income would be distributed more broadly and the demand for products and services would be distributed more broadly from the earnings of capital and result in the sustentation of consumer demand, which will promote economic growth. That also means that society can profitably employ unused productive capacity and invest in more productive capacity to service the demands of a growth economy.</p>
<p> </p>
<p> 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.</p>
<p> </p>
<p> 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. This is manifested in the belief that labor work is the ONLY way to participate in production and earn income. 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. Full employment as the means to distribute income is not achievable. When capital workers (productive capital owners) replace labor workers (non-capital owners) as the principal suppliers of products and services, labor employment alone becomes inadequate. Thus, we are left with government policies that redistribute income in one form or another.</p>
<p> Thus, as Kelso asserted, “the government continues to discharge its responsibility for the health and prosperity of the economy through coerced trickle-down; in other words, through redistribution achieved by the rigging of labor prices, by taxation to support redistribution and job “creation,” or subsidization by inflation and by all kinds of welfare, open and concealed.”</p>
<p> </p>
<p> Employment in the brave new world, Kelso proposed, starts at the time one “enters the economic world as a labor worker, to become increasingly a capital worker as you go along, and at some point to retire as a labor worker and continue to participate in production and to earn income as a capital worker until the day you die.”</p>
<p> </p>
<p> Kelso once wrote: “It doesn’t make any difference what’s going on in the scientific world or the business world or the industrial world, we still believe full employment will solve our income distribution problems. This is what major political figures have always maintained.”</p>
<p> </p>
<p> Kelso also 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.”</p>
<p> </p>
<p> 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.</p>
<p> 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.”</p>
<p>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.</p>
<p> 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.”</p>
<p> </p>
<p><b>Democratic Capitalism Has Yet To Be Tried</b></p>
<p> </p>
<p>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.</p>
<p> </p>
<p> 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.</p>
<p> </p>
<p> 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.</p>
<p> </p>
<p>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.</p>
<p> </p>
<p>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 revolution.</p>
<p> </p>
<p> Democratic capitalism has yet to be tried. We are absent a national discussion of where consumers earn the money to buy products and services and the nature of capital ownership, and instead argue about policies to redistribute income or not to redistribute income. If Americans do not demand that the contenders for the office of the presidency of the United States, the Senate, and the Congress address these issues, we will have wasted the opportunity to steer the American economy in a direction that will broaden affluence. We have adequate resources, adequate knowhow, and adequate manpower to produce general affluence, but we need as a society to properly and efficiently manage these resources while protecting and enhancing the environment so that our productive capital capability is sustainable and renewable. Such issues are the proper concern of government because of the human damage inflicted on our social fabric as well as to economic growth in which every citizen is fairly included in the American dream.</p>
<p> </p>
<p> The majority of Americans, dependent on labor worker wages, no longer think that jobs and labor wages will return suddenly—if at all—and at a livable earnings level, that the value of their homes will rebound, or that their limited retirement funds will soon be fully restored. Americans are scared but attribute their worsening finances to job losses, reduced hours, wage givebacks, and overall reduced earnings. They do not understand the role of productive capital driven by technological innovation and science and the requirement for them to become capital workers, as well as labor workers, to earn a viable economic future. And 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 “can earn enough to raise a family, build a modest savings, own a home, and secure their retirement.” In Kelso’s words, “build an economy of universally productive individuals and households.”</p>
<p> </p>
<p> Kelsonian binary economics and the various credit mechanisms derived from its understanding are not “socialist” or “communist” solutions but are based on the principles and dynamics of a free market economy. When understood, the current system is exposed as a system rigged to continually concentrate the ownership of capital in the 1 to 5 percent of the population. Also exposed are the moral implications of the current system, which is presently propelled by greed in our society. Democratic capitalism does not require people to be any better than they presently are, but it does enable our society to leverage both greed and generosity in a way that honestly recognizes and harnesses productive capital as the factor that exponentially produces the wealth in a technologically advanced society.</p>
<p> </p>
<p> The resulting impact of our current approaches has been plutocratic government and concentration of capital ownership, which denies every citizen his or her pursuit of economic happiness (property). Market-sourced income (through concentrated capital ownership) has concentrated in individuals and families who will not recycle it back through the market as payment for consumer products and services. They already have most of what they want and need so they invest their excess in new productive power, making them richer and richer through greater capital ownership. This is the source of the distributional bottleneck that makes the private property, market economy ever more dysfunctional. The symptoms of dysfunction are capital ownership concentration and inadequate consumer demand, the effects of which translate into poverty and economic insecurity for the 99 percent majority of people who depend entirely on wages from their labor or welfare and cannot survive more than a week or two without a paycheck. The production side of the economy is under-nourished and hobbled as a result.</p>
<p> </p>
<p>While Americans believe in political democracy, political democracy will not work without a property-based free market system of economic democracy. The system is the problem, but it can and must be overhauled. The two prerequisites are political power, which is the power to make, interpret, administer, and enforce laws, and economic power, the power to produce products and services, whether through labor power or productive capital.</p>
<p> </p>
<p> Kelso wrote: “In the distribution of social power, whether it be political power or economic power, all things are relative. The essence of economic democracy lies in the elimination of differences of earning power resulting from denial of equality of economic opportunity, particularly equal access to capital credit. Differences of economic status resulting from differences in advantages taken and uses made of differences based on inequality of economic opportunity, particularly those that give access to capital credit to the already capitalized and deny it to the non- or -undercapitalized, are flagrant violations of the constitutional rights of citizens in a democracy.”</p>
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<p><b>Solutions That Work</b></p>
<p> </p>
<p> 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.</p>
<p> </p>
<p> Starting with the business corporation, a legal entity created and sanctioned by state and federal government and judicial law, 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, facilitated by financing further productive capital acquisition out of the earnings of existing productive capital.</p>
<p> In place of retained earnings and debt financing, the government should require business 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; otherwise banks and lending institutions will not make the loans, and the system will continue to limit access to capital acquisition to those who already own capital—the rich. This is because “poor” people have no security or collateral, or sufficient income to pledge against the loan as security, and/or are disqualified on the grounds of either unproven unreliability or proven unreliability.</p>
<p> </p>
<p>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.</p>
<p> </p>
<p> While tax and investment stimulus incentives are excellent tools to strengthen economic growth, without the requirement that productive capital ownership is broadened simultaneously, the result will continue to further concentrate productive capital ownership among those who already own, and further create dependency on redistribution policies and programs to sustain purchasing power on the part of the 99 percent of the population who are dependent on their labor worker earnings or welfare to sustain their livelihood. By stimulating economic growth tied to broadened productive capital ownership the benefits are two-fold: one is that over time the 99 percenters will be enabled to acquire productive capital assets that are paid for out of the future earnings of the investments and gain greater access to job opportunities that a growth economy generates.</p>
<p> </p>
<p> Capital acquisition takes place on the logic of self-financing and asset-backed credit for productive uses. People invest in capital ownership on the basis that the investment will pay for itself. The basis for the commitment of loan guarantees is the fact that nobody who knows what he or she is doing buys a physical capital asset or an interest in one unless he or she is first assured, on the basis of the best advice one can get, that the asset in operation will pay for itself within a reasonable period of time––5 to 7 or, in a worst case scenario, 10 years (given the current depressive state of the economy). And after it pays for itself within a reasonable capital cost recovery period, it is expected to go on producing income indefinitely with proper maintenance and with restoration in the technical sense through research and development.</p>
<p> </p>
<p> Still, there is at least a theoretical chance, and sometimes a very real chance, that the investment might not pay for itself, or it might not pay for itself in the projected time period. So, there is a business risk. This is why: using the example of ESOP financing (next), the lender has no reason to loan to the ESOP trust unless it has two sources of repayment. In addition to determining that the investment is viable and that the company is credit worthy and reliably expected to make loan repayments, there needs to be security against default. Thus, for the lender to make the loan the company must provide the security.</p>
<p> </p>
<p><b>Employee Stock Ownership Plan (ESOP)</b></p>
<p> </p>
<p> Kelso was the architect and pioneer of the Employee Stock Ownership Plan (ESOP), which Kelso invented to enable working people without savings to buy stock in their employer company and pay for it out of its future dividend yield––on the promise of the capital investment’s future income.</p>
<p> </p>
<p> The ESOP provides access by employees to capital credit to buy company stock and pay for it in pre-tax dollars out of what the assets underneath that stock yield. Bank loans are made to the ESOP trust that represents employees, instead of to the company (current owners). The trust gives the lender a note and with the borrowed monies makes the investment in the company stock. The company then issues stock to the ESOP trust. The company now has the money, which otherwise could have been borrowed directly without the ESOP (benefiting current owners), to make the planned investment and repay the loan from pre-tax forecasted future capital earnings. The company promises the bank to make pre-tax full-dividend payments to the ESOP trust to enable the trust to replay the lender. Assuming that it would take five years for that capital investment to pay for itself, at the end of five years the employees now own the full stock value in the expanded company.</p>
<p> </p>
<p> Companies can use the ESOP as the credit mechanism to create employee ownership in ratios up to a 100 percent leverage buyout. Nothing has been taken away from the existing owners. However, using the ESOP, the existing owners will surrender the exclusive right to acquire more ownership in the company and have a smaller percentage of ownership in the total company, but they have not been prevented from making a fair rate of return on their thus-far accumulated ownership shares because the company earns a rate of return throughout the process. After the loan has been paid off with pre-tax earnings, the employees will have more earnings from capital and they will have more consumer power to purchase products and services. Multiply this by tens of thousands of employee-owned companies and the economy revs up to grow dramatically.</p>
<p> </p>
<p> There are now over 11,000 profitable ESOP companies, of which 1,500 of those companies are worker majority owned, with workers paying for their stock shares out of future corporate profits, not by reducing their take-home labor worker incomes.</p>
<p> </p>
<p> ESOPs work as designed when the workers receive the full property rights as owners, including full voting rights, not simply treated as beneficial owners with power concentrated at the top of the company, without any accountability or transparency. Unfortunately, some ESOPs have been structured so that the rights, powers, and benefits of ownership remain concentrated in a small non-accountable elite controlling corporate and financial governance. When the employees are owners, dependent on their income from the company’s bottom line rather than through ordinary labor wages and benefits, the workers’ economic interests are more invested to see that their company succeeds. In this way, each person in the company is empowered as a labor worker and as a capital worker (owner) and inspired to work together as a team to make better operational decisions to serve and maximize value to their customers.</p>
<p> </p>
<p> Under our current financial system, the security (collateral) necessary to secure an ESOP loan must come from the company, and therein the current owners are providing the security to broaden employee capital ownership with the benefit that expanded capital ownership drives expanded consumer power to purchase products and services.</p>
<p> </p>
<p> Under this scenario the company owners are “insuring” the risk without a benefit, which can be recompensated by paying the employees less labor wages, reduced pension benefits, and receiving government tax forgiveness benefits, which are written into the Internal Revenue Code.</p>
<p> </p>
<p> With the ESOP, employees can acquire capital ownership with the earnings of capital. ESOPs have thus far only provided part of the solution, and the stock acquisition is limited to the employer company.</p>
<p> </p>
<p> Robert Ashford, Professor of Law at the Syracuse University College of Law (New York) and a former lawyer in Kelso’s San Francisco law firm, specializes in the teaching of binary economics. He has expanded the ESOP trust into what he terms the “Super ESOP,” which includes multiple company diversification facilitated with private capital credit insurance or a government reinsurance agency (ala the Federal Housing Administration concept). Under Ashford’s plan, the promissory note can be offset to the government’s central Federal Reserve Bank in return for the cash equivalent of the amount of the loan, less an administrative fee. The only cost to the direct lending bank in making a loan to the corporation would be the administrative fee, or about 2 percent of the loan’s principal and then another 2 percent for capital credit insurance, with an additional quarter of a percent paid to the Federal Reserve Bank to monetize the loan and give the lender the same cash as it would have had if it had actually loaned money to the corporation. The lender’s cash loaned to the ESOP trust is replenished with the Federal Reserve Bank cash. When the company pays the ESOP trust enough money to enable the trust to repay the lender, the lender has to retrieve the note and pay back the Federal Reserve Bank. Thus, the loan cost would be essentially not more than 5 percent to allow ownership broadening financial capital to be invested in ownership broadening ESOP trusts to create new capitalists. Thus, national capital credit insurance replaces the requirement for the current corporate owners to pledge security.</p>
<p> </p>
<p> ESOPs and other Kelsonian plans avoid the gambling trade and Wall Street firms that play with your money. The ESOP circumvents that. According to Kelso: “In a single transaction, you finance tools for the employer and ownership for the employees. The pre-tax yield of corporate assets of prosperous companies varies from 25 to 60 percent. The yield on secondhand securities is around five or six percent. Sure, with capital gains, you can get a little more, but don’t forget, that’s a zero-sum game; for every gainer, there’s a loser. Wall Street doesn’t fly any airplanes or raise any corn or do anything else in the way of producing products and services. It just plays games with your dough. And when you take it out in pensions, you’re going to get less than the company put in for you. You have to; that’s the dynamics of it.”</p>
<p> </p>
<p> Other Kelsonian innovations include the Consumer Stock Ownership Plan (CSOP) and the General Stock Ownership Plan (GTOP), a plan designed to build capital ownership into politically designated classes of consumers within the jurisdiction of the authorizing government––state, local or federal. The ESOP, CSOP and GSOP are credit mechanisms that give corporate employees and others (non-corporate employees) access to stock ownership in future capital formation growth.</p>
<p> </p>
<p> 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. Consumer credit, on the other hand, does not generate its own repayment, and in order for the user to repay they must rely on other resources––for most Americans that means their labor worker earnings and personal savings.</p>
<p> </p>
<p> 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. The question is who pledges the security and takes the risk of failure to return the expected yield from which to repay the loan.</p>
<p> </p>
<p> Conventionally, most people do not have the right to acquire productive capital with the self-financing earnings of capital; they are left to acquire, as best as they can, with their earnings as labor workers. This is fundamentally hard to do and limiting. Thus, the most important economic right Americans need and should demand is the effective right to acquire capital with the earnings of capital. Note, though, millions of Americans own diluted stock value through the “stock market exchanges,” purchased with their earnings as labor workers, their stock holdings are relatively miniscule, as are their dividend payments compared to the top 10 percent of capital owners.</p>
<p> </p>
<p> 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.</p>
<p> </p>
<p> Thus, as Kelso asserted: “The problem with conventional financing techniques is that they address only the productive power of enterprise and the enhancement of the earning power of the rich minority. Sustaining or increasing the earning power of the majority of consumers who are dependent entirely upon the earnings of their labor, or upon welfare, is left to government or governmentally assisted redistribution of income and to chance.”</p>
<p> </p>
<p> Kelso created the ESOP as a credit mechanism, which, with the support of Senator Russell Long (Democrat, Louisiana), was included in the employee benefits sections of the Internal Revenue Code (Employee Retirement Income Security Act of 1974 [ERISA], also known as the Pension Reform Act) as legislation not to look like something new and different.</p>
<p> </p>
<p> At Agenda 2000 and the Institute For The Pursuit Of Economic Justice, we believed that the business corporation, which holds its capital assets in the form of stock ownership, was society’s greatest social invention and that its executives had a fiduciary responsibility to exercise its vast power and finance capital growth in ways that took in the corporation’s natural constituency of employees as stockholders. We recognized that industrialization established the business corporation as the dominant organizational force of modern America. We saw the business corporation as an untapped, unimagined potential entity for solving the very economic problems that defective corporate strategy has created. We advocated Kelso’s financing tools and economic proposals, while devising other practical ways designed to correct the imbalance between production and consumption at its source, and broaden ownership of productive capital in conformance with private property free market principles.</p>
<p> </p>
<p> We also explored financial mechanisms using the Real Estate Investment Trust (REIT) and Community Investment Corporation (CIC) to enable ownership of redevelopment projects by displaced property owners and residents who would share in the profits associated with land planning and development instead of only subsidizing and underwriting billions of dollars worth of commercial and other for-profit real estate projects that further concentrate capital ownership. The CIC is a way for planning and building new communities, or redeveloping low-income communities, under professional management and with access to interest-free Federal Reserve financing to purchase land, with the loans repaid by its land development and rental profits. The CIC was designed as a private-sector economic empowerment vehicle for all citizens who are permanent residents in a defined area. It would replace typical land development corporations whose “urban removal” schemes typically force out low-income residents unable to afford rising real estate costs associated with higher land values.</p>
<p> </p>
<p> Unfortunately, pursuing democratic capitalism has been frustrated by the systemic concentration of economic power and exclusionary access to future capital credit to the advantage of the wealthiest Americans. The so-called 1 percent rulers of corporations 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 dependence on arms production and sales, and social welfare programs due to the lack of an alternative to full employment and the growing economic helplessness and dependency. 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.</p>
<p> </p>
<p> Once the national economic policy bases policy decisions on two-factor 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.</p>
<p> What others and I at Agenda 2000 and the Institute For The Pursuit Of Economic Justice advocated was embracing the goal of teaching working people, the 99 percent, to become capital workers, those who work through their privately owned capital, which is employed in production to supplement their being a labor worker. The goal into the future is for all Americans to be capital workers and not be labor workers dependent on labor earnings too much of our lives. We should all be productive and produce products and services in a way in which the current state of technology permits. Not only is your right to life denied if you don’t have effective access to the ownership of capital, your liberty is denied because without economic power your political power is useless. Thus, the national economic policy should be universal participation in the ownership of productive capital, alongside full employment of the labor workforce as a direct result.</p>
<p> </p>
<p> At present, there is a brewing power struggle going on in the United States between individual human beings (citizens) and the plutocratic powers who manipulate our government and the would-be plutocratic powers (top corporate executive managers and financial barons). What the 99 percent movement is really all about is returning America to economic democracy. If we do not achieve economic democracy, then plutocracy will lead to fascism—the ownership of productive capital by the rich and by their institutions.</p>
<p> </p>
<p> As Kelso would say, today’s techniques of finance are designed to make the rich richer. None are designed to make the poor richer. That’s why the poor are poor. The reason they are poor is because they do not have viable capital ownership. Thus, we need to focus on revising today’s techniques of finance to broaden capital ownership.</p>
<p> </p>
<p> The purpose of production in a market economy is the consumption of products and services by the consumers who make up the economy. But without income, the non-capital ownership class, the 99 percenters, cannot afford to purchase the products and services they desire. But when incomes rise among consumers who have the need and desire to improve their material standard of living, the market demand for products and services strengthens, which in turn increases production and results in a growth economy.</p>
<p> </p>
<p>Abraham Lincoln said that the purpose of government is to do for people what they cannot do for themselves. Government also should serve to keep people from hurting themselves and to restrain man’s greed, which otherwise cannot be self-controlled. Anyone who seeks to own productive power that they cannot or won’t use for consumption are beggaring their neighbor––the equivalency of mass murder––the impact of concentrated capital ownership.</p>
<p> </p>
<p><b>Federal Reserve System</b></p>
<p> </p>
<p> On a larger scale, there is another path to solve the security issue, that is, the risk can be absorbed by capital credit insurance or commercial risk insurance. Thus, in order to achieve national economic democracy, we need a way to handle risk management in finance by broadly insuring the risks. Such capital credit insurance would substitute for the security demanded by lenders to cover the risk of non-payment, thus enabling the poor and others with few assets (the 99 percenters) to overcome the collateralization barrier that excludes the non-halves from access to productive capital.</p>
<p> </p>
<p> One feasible way is to lift ownership-concentrating Federal Reserve System credit barriers and other institutional barriers that have historically separated owners from non-owners and link tax and monetary reforms to the goal of expanded capital ownership. This can be done under the existing legal powers of each of the 12 Federal Reserve regional banks, and will not add to the already unsustainable debt of the Federal Government or raise taxes on ordinary taxpayers. 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.</p>
<p> </p>
<p> The fact is money power rules. When money power is broadly distributed in the hands of the citizens, not the politicians or bankers, the people shall rule.</p>
<p> </p>
<p> The Federal Reserve Board is already empowered under Section 13 of the Federal Reserve Act to reform monetary policy to discourage non-productive uses of credit, to encourage accelerated rates of private sector growth, and to promote widespread individual access to productive credit as a fundamental right of citizenship. The Federal Reserve Board needs to re-activate its discount mechanism to encourage private sector growth linked to expanded capital ownership opportunities for all Americans.</p>
<p> </p>
<p> Another actionable policy should provide that any government contract or loan guarantee be only awarded to American companies who, through the government award, expand their ownership to their employees.</p>
<p> </p>
<p> Still another short-term action, to reinvigorate “Make It In America” and “Made In America,” is 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.</p>
<p> </p>
<p> 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.</p>
<p> </p>
<p> 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.</p>
<p> </p>
<p><b>Ownership Unions</b></p>
<p> </p>
<p> The labor union movement should transform to a producers’ ownership union movement and embrace and fight for this new democratic capitalism. They should play the part that they have always aspired to––that is, a better and easier life through participation in the nation’s economic growth and progress. As a result, labor unions will be able to broaden their functions, revitalize their constituency, and reverse their decline.</p>
<p> </p>
<p>Unfortunately, at the present time the movement is built on one-factor economics––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. 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.”</p>
<p> </p>
<p>Kelso argued that unions “must adopt a sound strategy that conforms to the economic facts of life. If under free-market conditions, 90 percent of the goods and services are produced by capital input, then 90 percent of the earnings of working people must flow to them as wages of their capital and the remainder as wages of their labor work...If there are in reality two ways for people to participate in production and earn income, then tomorrow’s producers’ union must take cognizance of both...The question is only whether the labor union will help lead this movement or, refusing to learn, to change, and to innovate, become irrelevant.”</p>
<p> </p>
<p> Unions are the only group of people in the whole world who can demand a real Kelso-designed ESOP, who can demand the right to participate in the expansion of their employer by asserting their constitutional preferential rights to become capital owners, be productive, and succeed. The ESOP can give employees access to credit so that they can purchase the employer’s stock, pay for it in pre-tax dollars out of the assets that underlie that stock, and after the stock is paid for earn and collect the capital worker income from it, and accumulate it in a tax haven until they retire, whereby they continue to be capital workers receiving income from their capital ownership stakes. This is a viable route to individual self-sufficiency needing significantly less or no government redistributive assistance.</p>
<p> </p>
<p> The unions should reassess their role of bargaining for more and more income for the same work or less and less work, and embrace a cooperative approach to survival, whereby they redefine “more” income for their workers in terms of the combined wages of labor and capital on the part of the workforce. They should continue to represent the workers as labor workers in all the aspects that are represented today––wages, hours, and working conditions––and, in addition, represent workers as full voting stockowners as capital ownership is built into the workforce. What is needed is leadership to define “more” as two ways to earn income.</p>
<p> </p>
<p> If we continue with the past’s unworkable trickle-down economic policies, governments will have to continue to use the coercive power of taxation to redistribute income that is made by people who earn it and give it to those who need it. This results in ever deepening massive debt on local, state, and national government levels, which leads to the citizenry becoming parasites instead of enabling people to become productive in the way that products and services are actually produced.</p>
<p> </p>
<p> When labor unions transform to producers’ ownership unions, opportunity will be created for the unions to reach out to all shareholders (stock owners) who are not adequately represented on corporate boards, and eventually all labor workers will want to join an ownership union in order to be effectively represented as an aspiring capital owner. The overall strategy should assure that the labor compensation of the union’s members does not exceed the labor costs of the employer’s competitors, and that capital earnings of its members are built up to a level that optimizes their combined labor-capital worker earnings. A producers’ ownership union would work collaboratively with management to secure financing of advanced technologies and other new capital investments and broaden ownership. This will enable American companies to become more cost-competitive in global markets and to reduce the outsourcing of jobs to workers willing or forced to take lower wages.</p>
<p> </p>
<p> Kelso stated, “Working conditions for the labor force have, of course, improved over the years. But the economic quality of life for the majority of Americans has trailed far behind the technical capabilities of the economy to produce creature comforts, and even further behind the desires of consumers to live economically better lives. The missing link is that most of those unproduced goods and services can be produced only through capital, and the people who need them have no opportunity to earn income from capital ownership.”</p>
<p> </p>
<p> Walter Reuther, President of the United Auto Workers, expressed his open-mindedness to the goal of democratic worker ownership in his 1967 testimony to the Joint Economic Committee of Congress as a strategy for saving manufacturing jobs in America from being outcompeted by Japan and eventual outsourcing to other Asian countries with far lower wage costs: “Profit sharing in the form of stock distributions to workers would help to democratize the ownership of America’s vast corporate wealth, which is today appallingly undemocratic and unhealthy.</p>
<p> </p>
<p> “If workers had definite assurance of equitable shares in the profits of the corporations that employ them, they would see less need to seek an equitable balance between their gains and soaring profits through augmented increases in basic wage rates. This would be a desirable result from the standpoint of stabilization policy because profit sharing does not increase costs. Since profits are a residual, after all costs have been met, and since their size is not determinable until after customers have paid the prices charged for the firm’s products, profit sharing [through wider share ownership] cannot be said to have any inflationary impact on costs and prices.”</p>
<p> </p>
<p> Unfortunately for democratic unionism, the United Auto Workers, American manufacturing workers, and American citizens generally, Reuther was killed in an airplane crash in 1970 before his idea was implemented. Leonard Woodcock, his successor, never followed through.</p>
<p> </p>
<p><b>Strengthen The Middle Class</b></p>
<p> </p>
<p> There are other 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.</p>
<p> </p>
<p><b>A Just Third Way And The Capital Homestead Act</b></p>
<p> </p>
<p> Norman Kurland, who was associated with Agenda 2000, is now the Executive Director of the Washington, D.C. Center For Economic & Social Justice (CESJ.org) and Managing Director of Equity Expansion International, an investment banking firm helping the 99 percent non-rich to become owners of income-generating equity, without harming the property interests of existing owners. Norm is advocating a Just Third Way free market system that economically empowers all individuals and families through direct and effective ownership of the means of production. He and others are calling for a Capital Homestead Act (CHA) (<a href="http://www.capitalhomestead.org">www.capitalhomestead.org</a>), which takes its lead from the Homestead Act of 1862. The Homestead Act offered the landless white citizens of America part-ownership of the country by giving them 160 acres of frontier land, free, if they produced on it income for themselves and their families for a period of five years. The slogan of the Capital Homestead Act is “Own Or Be Owned.” The Capital Homestead Act’s summary can be found at <a href="http://www.cesj.org/homestead/summary-cha.htm">http://www.cesj.org/homestead/summary-cha.htm</a> and at <a href="http://www.cesj.org/about/programs/declarations/">http://www.cesj.org/about/programs/declarations/</a> monetaryjustice.htm.</p>
<p> </p>
<p> In Lincoln’s America of nearly 150 years ago, the problem confronting the vast majority of the citizens of our nation was that most people owned no land (capital). Today, the major problem for the vast majority of the people of our nation and of our world, for that matter, is that 99 percent of the people own no capital (or a viable share) in a high-tech, capital-intensive economy. The Capital Homestead Act would make it possible for every American to become a viable owner of productive capital and not just for the tiny elite who now own our corporations. The CHA is primarily a tax-sheltered vehicle for the democratization of capital credit through local banks. According to its architects, it would “enable every man, woman, and child to accumulate wealth and receive dividend incomes from newly issued shares in new and growing companies, without being taxed on the accumulations (including property and shares gained through inheritance, savings, and arrangements like ESOPs, CSOPs, and CICs). In addition to serving as a source of capital credit for corporate workers, CHAs would also provide an ownership-building account for individuals who do not work for profit-making enterprises, such as school teachers, civil servants, military personnel, police, and health workers, and for individuals who have no remunerative employment, such as the disabled, the unemployed homemakers and children.”</p>
<p> </p>
<p> The Center For Economic & Social Justice advocates new justice-committed leaders, especially those who want to end the corruption built into our exclusionary system of monopoly capitalism––the main source of corruption of any political system, democratic or otherwise. They advocate the need to radically overhaul the Federal tax system and monetary policies and institute proposals to get money power to the 99 percent of American citizens who now only rely on their labor worker earnings. Under the Just Third Way more just and simple tax system, the following is proposed:</p>
<p> • Eliminate all tax loopholes and subsidies,</p>
<p> • Provide an exemption of $100,000 for a family of four to meet their ordinary living needs,</p>
<p> • Encourage corporations to pay out all their profits as taxable personal incomes to avoid paying corporate income taxes and to finance their growth by issuing new full dividend payout shares for broad-based citizen ownership,</p>
<p> • Eliminate the payroll tax on workers and their employers, but</p>
<p> • Pay out of general revenues for all promises for Social Security, Medicare, Medicare, government pensions, health, education, rent and subsistence vouchers for the poor until their new jobs and ownership accumulations provide new incomes to substitute for the taxpayer dollars to fill these needs.</p>
<p> • The tax rate would be a single rate for all incomes from all sources above the personal exemption levels so that the budget could be balanced automatically and even allow the government to pay off the growing unsustainable long-term debt, but the poor would pay the first dollar over their exemption levels as would the hedge fund operator and others now earning billions of dollars from capital gains, dividends, rents and other property incomes which under some tax proposals would be exempted from any taxes.</p>
<p> • As a substitute for inheritance and gift taxes, a transfer tax would be imposed on the recipients whose holdings exceeded $1 million, thus encouraging the super-rich to spread out their monopoly-sized estates to all members of their family, friends, servants and workers who helped create their fortunes, teachers, health workers, police, other public servants, military veterans, artists, the poor and the disabled.</p>
<p> • The Federal Reserve would stop monetizing unproductive debt, including bailouts of banks "too big to fail" and Wall Street derivatives speculators, and</p>
<p> • Begin creating an asset-backed currency that could enable every man, woman and child to establish a Capital Homestead Account or "CHA" (a super-IRA or asset tax-shelter for citizens) at their local bank to acquire a growing dividend-bearing stock portfolio to supplement their incomes from work and all other sources of income.</p>
<p> • The CHA would process an equal allocation of productive credit to every citizen exclusively for purchasing full-dividend payout shares in companies needing funds for growing the economy and private sector jobs for local, national and global markets,</p>
<p> • The shares would be purchased on credit wholly backed by projected "future savings" in the form of new productive capital assets as well as the future marketable goods and services produced by the newly added technology, renewable energy systems, plant, rentable space and infrastructure added to the economy.</p>
<p> • Risk of default on each stock acquisition loan would be covered by private sector capital credit risk insurance and reinsurance, but</p>
<p> • Would not require citizens to reduce their funds for consumption to purchase shares.</p>
<p> </p>
<p> The end result is that citizens would become empowered as owners to meet their own consumption needs and government would become more dependent on economically independent citizens, thus reversing current global trends where all citizens will eventually become dependent for their economic well-being on our only legitimate monopoly –– the State –– and whatever elite controls the coercive powers of government.</p>
<p> </p>
<p><b>Need To Reevaluate And Define New Solutions</b></p>
<p> </p>
<p> 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 Kelso postulated, “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.”</p>
<p> </p>
<p><b>A Virtually Unlimited Potential</b></p>
<p> </p>
<p> The potential is virtually unlimited. Today we accept as normal public ownership of gigantic capital instruments like mass rail, subways, government office buildings, universities, water systems, and power systems. These government-owned enterprises and services could be transformed into competitive private sector companies managed by Private Facilities Corporations with the use of the asset or facility leased to the normal using body. The wages of the Private Facilities Corporation(s) are passed through to the leasing body. This would allow us to build the ownership of what is now public capital into individuals and reduce the cost of government, including public pension systems. Thus, when you build the ownership into the employees of the Private Facilities Corporation(s), who now have a vested interest in its quality of operation and maintenance, the contracted lease rental fee committed by the government entity will give the employee stockholders a reasonable return and lesson or replace the need for supplemental redistribution programs.</p>
<p> </p>
<p> Consumer Stock Ownership Plan financing can simultaneously build the ownership into the consumers of monopolies such as telecommunications, water and power companies, mass-transit, and even cable and satellite television, who are the source of all their funding, and dividends paid out to the consumer owners would become an offset to their utility bills.</p>
<p> </p>
<p> I have touched on a very short list of actionable ideas to broaden capital ownership via capital credit borrowed through banks and invested in “qualified” securities such as newly issued, full-dividend payout, full voting shares in mature companies. There are others including for-profit Citizens Land Banks/Cooperatives/Corporations organized for large-scale local land and infrastructural development and Homeowners Equity Corporations (HEC) for turning renters into owners. HECs would obtain acquisition loans from commercial banks to purchase distressed properties at the current market value, which in turn would discount the loans at the local Federal Reserve at a rate reflecting transaction costs and a revised risk premium. The homes could then be leased at a realistic market rate to their former owners or new tenants. The tenant would earn shares in the HEC as lease payments were made, sufficient to cover debt service, maintenance, and taxes. When the acquisition loan for a particular property was fully paid, the tenant could exchange his or her HEC shares for title, or continue as a tenant/shareholder at a reduced lease payment, sufficient to cover maintenance and property taxes.</p>
<p> </p>
<p> Through such economic democratization reforms, economic growth would be freed from the slavery of past savings, while creating a domestic source of new asset-backed, interest-free money and expanded bank credit to finance new capital formation repayable out of future savings (earnings).</p>
<p> </p>
<p><b>Leadership</b></p>
<p> </p>
<p> 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.</p>
<p> </p>
<p> 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.</p>
<p> </p>
<p> What needs to be adjusted is the opportunity to produce, not the redistribution of income after it is produced.</p>
<p> </p>
<p> The government should acknowledge its obligation to make productive capital ownership economically purchasable by capitalless Americans using capital credit, and, as Kelso states, “substantially assume financial responsibility for the economy through establishing and supervising the implementation of an economic, labor and business policy of democratized economic power.” Historically, capital has been the primary engine of industrialization. But as used, as Kelso has argued, has, as well, “been the chief cause of the institutional deformities that have created and maintained two incompatible classes: the overcapitalized and the undercapitalized.”</p>
<p> </p>
<p> We need to arrive at a new market economy structure in which on one level the employees of a corporation could walk into management and demand, in collective bargaining, the use of an ESOP—not just to trade a single block of stock for wage concessions, but to redesign the future of the company and its employees. We need, as a society, the assurance that as a corporate employer grows, it builds ownership into its employees. All of them! When people are in a position to earn the wages of their capital as well as the wages of their labor, their company is in a position to be more competitive through lower labor costs and increased technological innovation, while achieving higher employee incomes through the employee’ capital.</p>
<p> </p>
<p> Once this goal becomes the national political focus we will see an unbelievable discussion of workable plans to realize the goal. Remember that planning begins with a vision and a goal. This is not rocket science but it does require national leadership. Implementation requires amending a few laws that basically authorize the transactions that will broaden capital ownership paid for with the future earnings of capital investment. Allowing such transactions will provide incentives for profitable opportunities to employ unused capacity and promote stable economic growth.</p>
<p> </p>
<p> Still, after a half-century, we have no leaders with a growth strategy that could restore the economic productiveness of the American economy. The growth strategy I have presented is not new, but it has not yet registered in the minds of leaderless politicians and their advisors from the left to the right of the political spectrum and a population of people who have been mis-educated and mis-led by conventional economists from all the conventional schools of economics.</p>
<p> </p>
<p> Economist John Maynard Keynes, whose Keynesian model is widely taught, falsely presumed that the only way to balance mass productive power with mass purchasing power is through a wage system––ignoring the possibility of democratizing future ownership of labor-displacing productive capital technologies and rising ownership incomes as a market-generated means of eliminating wage slavery, welfare slavery, debt slavery and charity slavery for the 99 percent of humanity. Kelso argued that the Keynesian model fails to recognize that “when capital workers replace labor workers as the major suppliers of goods and services, labor employment alone becomes inadequate because labor’s share of the income arising from production cannot provide the progressively better standard of living that technology is making possible. Labor produces subsistence at best. Capital can produce affluence. To enjoy affluence, all households must engage to an increasing extent in capital work”</p>
<p>It is imperative that leaders seeking new solutions cease the opportunity presented by the 2012 presidential election to implement effective programs for expanded ownership of productive capital, and address the problem of education on this subject.</p>
<p> </p>
<p> One of my favorite Kelso quotes is: “The low credibility of government and of all lesser institutions in America today is a consequence of our own increasingly hollow democracy. It is reflected in the rising domestic crime rate and the social and political alienation of people in all walks of life, except for the rich and their sycophants. The real collapse of American ideological leadership in the world can best be seen in the feebleness and confusion that characterizes American foreign policy. The handwriting on the wall is clear: America must rethink the meaning of democracy and set about within its borders to rationalize its economic policy into one that synchronizes the shift from labor intensive to capital intensive production, with universal capital ownership and the payment of the full wages of capital to capital owners, so to restore economic democracy to our economy. We should democratize our plutocratic capitalist economy before we preach democracy to others.”</p>
<p> </p>
<p> At one point in 1976, the discussion led to The Joint Economic Committee of Congress endorsing the two-factor policy to broaden capital ownership as an economic goal for America. The 1976 Joint Economic Report stated: “To provide a realistic opportunity for more U.S. citizens to become owners of capital, and to provide an expanded source of equity financing for corporations, it should be made national policy to pursue the goal of broadened capital ownership. Congress also should request from the Administration a quadrennial report on the ownership of wealth in this country, which would assist in evaluating how successfully the base of wealth was being broadened over time.” Unfortunately the Congress has never paid any attention to this policy, and the goal has subsequently been unacknowledged and unheeded by our plutocratic political leaders.</p>
<p> </p>
<p> The stark reality is that we are in a depression reflected in rising unemployment and underemployment and instability that we will never escape from until we change our economic policy. Increasingly, more Americans will not be able to ever purchase a home, due to the packed inflationary wage and welfare base factored into the cost of building homes, which inflate prices, and will be forced to rent their entire life or depend on government living assistance––not able to accumulate equity that can help to sustain them in their retirement years. And this is the new reality now facing people in the middle class. The uncertainty of holding onto a good job is frightening to an increasingly wider base of middle-class working citizens. When you factor in the average non-salaried worker, even with a government-mandated minimum labor wage rate of $10.00+ per hour in some states, the outcome is grim. Never mind that consumer demand continues to dwindle because of insufficient income, solely tied to labor worker wages. The impact of the decline in consumer demand due to declining labor worker wages is that production will decline or desist without sustainable consumer demand.</p>
<p> </p>
<p> This is all coming about because we have severely mismatched the power to produce with the possession of unsatisfied needs and wants. Those capital workers who have unsatisfied needs and wants have ready access through conventional finance to get as much or more capital as they want. Our tax laws are designed to further benefit the 1 percent by providing enormous write offs and credits to producers (corporations) who are owned by the few, who already produce more than they can consume. Those who have only their labor power and its precarious value held up by coercive rigging and who desperately need capital ownership to enable them to be capital workers as well as labor workers to have a way to earn more income, cannot satisfy their unsatisfied needs and wants. With only access to labor wages, the 99 percenters will continue, in desperation, to demand more and more pay for the same or less work, as their input is exponentially replaced by productive capital.</p>
<p> </p>
<p> But if we change direction and systematically build earning power into consumers, we have the opportunity to reverse the depression perpetrated by systematically limiting the 99 percent to labor wages alone and through technology eliminating their jobs. We need solutions to grow the economy in ways that create productive jobs and widespread equity sharing. We need to systematically make capital credit to purchase capital accessible to economically underpowered people (the 99 percenters) in which the income from the capital investment is isolated until it pays for itself, and then begins to produce a stream of dividend income to the new capitalists. This can only be accomplished by enabling every person to have access to capital ownership and purchase the capital, and pay for it out of what the capital produces. It’s time good and well-intentioned people woke up and adopted a just third way beyond the greed model of monopoly capitalism and the envy model of the traditional welfare state. This will promote peace, prosperity, and freedom through harmonious justice.</p>
<p> </p>
<p> Norm Kurland argues, “The haves represent a tiny fraction of humanity. Our ideas will split them between those who see our point and understand that they would benefit everyone without taking anything away from them during their lives, and those who want to keep ownership in an exclusive club. The latter cannot publicly attack the institution of private property without threatening the legal foundation that gives them their monopoly over the money system and the ownership system.”</p>
<p> </p>
<p> 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.</p>
<p> </p>
<p> On the basic issue of economic empowerment of each individual, the essential goal needs to be economic democracy, which will finally make political democracy a meaningful reality.</p>
<p> </p>
<p> As Kurland points out, the emphasis on the systemic injustices of monopoly capitalism can only be addressed by comprehensive reforms to the tax, monetary and inheritance policies favoring the top 1 percent at the expense of the 99 percent. The current system perpetuates budget deficits and unsustainable government debt, underutilized workers, a lack of financing for financing advanced energy and green technologies, and outsourcing of U.S. industrial jobs to low-wage countries, trade deficits, shrinking consumption incomes among the poor and middle class, and conventional methods for financing productive growth that increase the ownership and power gaps between the top 1 percent and the 90 percent whose combined ownership accumulations are already less than the elite whose money power is widely known as the source of political corruption and the breakdown of political democracy.</p>
<p> </p>
<p> The unworkability of the traditional market economy is evidenced by the diverse and growing deficits––federal budget deficit, trade deficit, city, county and state budget deficits––which are making it increasingly impossible for governments at every level to function. The increasing deficit burden is the result of the growing numbers of people who cannot earn, from legitimate participation in production, enough income to support themselves and their families. Thus government is obliged to “redistribute” to starve off economic collapse. The key means of redistribution is taxation––taking from the legitimate producers and giving to the non- or under-producers––to make up the economy’s ever wider income and purchasing power shortfalls.</p>
<p>The fact is that political democracy is impossible without economic democracy. Those who control money control the laws that foster wage slavery, welfare slavery, debt slavery and charity slavery. These laws can and should be changed by the 99 percent and those among the 1 percent who are committed to a just and economically classless market economy, true equality of opportunity, and a level playing field in the future for 100 percent of Americans. By adopting economic policies and programs that acknowledge every citizen’s right to become a capital worker as well as a labor worker, the result will be an end to perpetual labor servitude and the liberation of people from progressive increments of subsistence toil and compulsive poverty as the 99 percent benefits from the rewards of productive capital-sourced income.</p>
<p> The question that requires an answer is now timely before us. It was first posed by Kelso in the 1950s but has never been thoroughly discussed on the national stage. Nor has there been the proper education of our citizenry that addresses what economic justice is and what ownership is. Therefore, by ignoring such issues of economic justice and ownership, our leaders are ignoring the concentration of power through ownership of productive capital, with the result of denying the 99 percenters equal opportunity to become capital owners. The question, as posed by Kelso is: “how are all individuals to be adequately productive when a tiny minority (capital owners) produce a major share and the vast majority (labor workers), a minor share of total goods and service,” and thus, “how do we get from a world in which the most productive factor—physical capital—is owned by a handful of people, to a world where the same factor is owned by a majority—and ultimately 100 percent—of the consumers, while respecting all the constitutional rights of present capital owners?”</p>
<p> </p>
<p> For clarity on this concept that transcends both capitalism and socialism by combining free markets with the democratization of economic power and capital ownership, please see the 28-minute video of CBS’ Mike Wallace’s interview with Mortimer Adler (<a href="http://www.hrc">http://www.hrc</a>. utexas.edu/multimedia/video/2008/wallace/adler_mortimer.html) and Mike Wallace’s interview with Louis Kelso and Senator Russell Long (<a href="http://www.youtube.com/watch?v=odDGX8q2o3I">http://www.youtube.com/watch?v=odDGX8q2o3I</a>) </p>The Income Solution To Slow Private Sector Job Growthtag:capitalhomestead.org,2013-10-17:6384157:BlogPost:123482013-10-17T16:58:38.000ZGary Reberhttp://capitalhomestead.org/profile/GaryReber867
<p>There is no solace in the statistics. Researchers at the American Enterprise Institute and the Center for Economic and Policy Research shows that a worker between the ages of 50 and 61 unemployed for over a year has only a 9 percent chance of finding a job in the next three months and only a 6 percent chance if he or she is 62 years or older. According to the Economic Policy Institute, there are approximately 3.3 unemployed workers for every job seeker.</p>
<p> </p>
<p>Because for the vast…</p>
<p>There is no solace in the statistics. Researchers at the American Enterprise Institute and the Center for Economic and Policy Research shows that a worker between the ages of 50 and 61 unemployed for over a year has only a 9 percent chance of finding a job in the next three months and only a 6 percent chance if he or she is 62 years or older. According to the Economic Policy Institute, there are approximately 3.3 unemployed workers for every job seeker.</p>
<p> </p>
<p>Because for the vast majority of Americans a JOB is their ONLY source of income, millions of families are one layoff or family emergency away from going into bankruptcy, and then what? Start over with nothing and extremely poor JOB prospects.</p>
<p> </p>
<p>And though millions of Americans own diluted stock value through the “stock market exchanges,” purchased with their earnings as labor workers, their stock holdings are relatively miniscule, as are their dividend payments compared to the top 10 percent of wealthy capital owners, whose primary source of income is from stock ownership dividends, capital gains, interest and rent––not wages.</p>
<p> </p>
<p>The American Dream is fast disappearing as people experience fewer opportunities to earn an income, and as a consequence cannot act as "customers with money" necessary to support a vibrant economy. The result is a permanent national recession at the brink of a second Great Depression.</p>
<p> </p>
<p>The conventional solutions are to pay higher wages and use tax extraction and national debt to finance make-work projects contracted out to narrowly-owned private sector companies who reap profitability as a result of their ownership, all in the name of JOB CREATION.</p>
<p> </p>
<p>Paying higher wages drives up the cost of producing marketable products and services, which costs are passed on to the consumer. Multiplying or creating jobs when technology can do the same thing cheaper also increases costs that are passed on to the consumer. This is “cost-push inflation” — the rising cost of an input to production “pushes” prices up.</p>
<p> </p>
<p>This is not to say that higher wages and unnecessary “job creation” also contribute to “demand-pull inflation.” When the wages and job creation are subsidized, the money comes out of increased government debt — money creation. Whether paid to consumers as welfare or to workers whose employment is effectively boondoggling, effective demand in the economy increases, which “pulls” prices higher in response, hence, “demand-pull inflation.</p>
<p> </p>
<p>Unfortunately, our political leaders, academia, and the national media offer up ONLY the same old conventional won't-work suggestions for the government to take the lead and arrange the marriage of private and public capital to regenerate real growth without the realization and requirement that the ownership of FUTURE productive capital wealth must be broad. No longer will we achieve growth the old-fashioned way, by investing in projects that enrich our productive capacity in the name of JOB CREATION, which is expected to have a multiplier effect, when in actual reality such investment continues to further CONCENTRATE OWNERSHIP of America's future wealth-creating, income-generating productive capital assets among a tiny ownership class.</p>
<p> </p>
<p>Of course, all this would be moot if 1) all people were capital owners and the price of labor could rise or sink to its “real” level, 2) all financing for new, non-speculative capital investment came out of future savings instead of past savings, and 3) government was prohibited from creating money (“emitting bills of credit”), living within its tax revenues, and borrowing out of existing savings to cover temporary shortfalls or meet emergencies.</p>
<p> </p>
<p>That’s what “Capital Homesteading” would do.</p>
<p> </p>
<p>Capital Homesteading is the ONLY viable solution to the economic decline of America. Its implementation requires that our leaders, academia and the national media recognize that all individuals to be adequately productive cannot do so when a tiny minority (capital owners) produce (via the productive assets they own) a major share and the vast majority (labor workers), a minor share of total output of the economy's products and services. The system must be reformed to create a world in which the most productive factor of the FUTURE — physical capital — now owned by a handful of people — is owned by a majority — and ultimately 100 percent — of the consumers, while respecting all the constitutional and private property rights of present capital owners.</p>
<p> </p>
<p>A balanced Just Third Way approach to building a FUTURE economy that supports general affluence for EVERY American is presently not in the national discussion. It appears that the President of the United States, the elected Congressional representatives and Senators, academia, and the media are oblivious to this principled solution that has the ingredients to power economic growth at double-digit GDP rates.</p>
<p> </p>
<p>This goal requires investment in FUTURE wealth-creating, income-generating productive capital assets while simultaneously broadening private, individual ownership of the resulting expansion of existing large corporations and future corporations. Not only is employee ownership the norm to be sought wherever there are workers but beyond employee ownership the norm should be to create an OWNERSHIP CULTURE whereby EVERY American can benefit financially by owning a diversified SUPER IRA-TYPE Capital Homestead Account (CHA) portfolio of income-producing, full-voting, full-dividend payout securities in America's expanding corporations and those newly created to produce the future products and services needed and wanted by society.</p>
<p> </p>
<p>Those who read this and are in a position of influence should reach out to President Obama and the leadership of his Organizing for Action as well as to other political leaders, and call for them to convene a national discussion using the national media and social media, and our educational institutions, to open up a discussion on EVERY CITIZEN AN OWNER opportunity. We need fresh and inspired leaders who can educate on this issue at this time because academia, the media, and our so-called leaders are not addressing how people make money and the significance of OWNING wealth-creating, income-generating productive capital assets. We need to get people to understand that as with today, in the FUTURE we will continue to experience tectonic shifts in the technologies of production, which will destroy jobs and devalue the worth of labor. This is a crucial understanding because at present for the 99 percent of the nation a JOB is the ONLY source of income to support themselves and their families. We need political leaders who will commit to a government policy focus on OWNERSHIP CREATION, by which jobs will result and naturally follow as the economy revs up to double-digit GDP growth and fully applies technological innovation and invention to shift from unnecessary labor toil to human-intelligent machines, super-automation, robotics, and digital computerized operations.</p>
<p> </p>
<p>To accomplish the goal of universal ownership, the Federal Reserve needs to stop monetizing unproductive debt, and begin creating an asset-backed currency that could enable every child, woman and man to establish a Capital Homestead Account or "CHA" at their local bank to acquire a growing dividend-bearing diversified stock portfolio to supplement their incomes from work and all other sources of income, and provide future financial security in retirement. Steadily over time this will create a robust economy with millions of "customers with money" to purchase the products and services that are needed and wanted.</p>
<p> </p>
<p>We need to apply the proven principles of insurance to the financing of FUTURE wealth-creating, income-generating productive capital assets. We need to empower individuals to acquire multiple company diversification ownership facilitated with private capital credit insurance or a government reinsurance agency (ala the Federal Housing Administration concept). The promissory note can be offset to the government’s central Federal Reserve Bank in return for the cash equivalent of the amount of the loan, less an administrative fee. The only cost to the direct lending bank in making a loan to the corporation would be the administrative fee, or about 2 percent of the loan’s principal and then another 2 percent for capital credit insurance, with an additional quarter of a percent paid to the Federal Reserve Bank to monetize the loan and give the lender the same cash as it would have had if it had actually loaned money to the corporation. The lender’s cash loaned to the company's Employee Stock Ownership Plan (ESOP) trust and/or the individual Capital Homestead Account or "CHA" (a SUPER-IRA or asset tax-shelter for citizens) is replenished with the Federal Reserve Bank cash. When the company pays the ESOP trust or CHA enough money to enable the trust(s) to repay the lender, the lender has to retrieve the note and pay back the Federal Reserve Bank. Thus, the loan cost would be essentially not more than 5 percent to allow ownership broadening financial capital to be invested in ownership broadening ESOP and CHA trusts to create new capitalists. As such, national capital credit insurance replaces the requirement for pledging past savings and security (which for the most part most Americans do not have).</p>
<p> </p>
<p>Our leaders need to put on the table for national discussion this SUPER-IRA idea and the necessary reform of our tax policies that would incentivize corporations to pay out fully their earnings in the form of dividend income and issue and sell new stock to grow, instead of financing with “retained earnings” and borrowing, which further concentrates ownership among the people who now are the corporate owners. The CHA would process an equal allocation of productive credit to every citizen exclusively for purchasing full-dividend payout shares in companies needing funds for growing the economy and private sector jobs for local, national and global markets,</p>
<p> </p>
<p>The shares would be purchased on credit wholly backed by projected "future savings" (earnings) in the form of new productive capital assets with future marketable products and services produced by the newly added technology, renewable energy systems, plant, rentable space and infrastructure added to the economy.</p>
<p> </p>
<p>As noted above, risk of default on each stock acquisition loan would be covered by private sector capital credit risk insurance and reinsurance (ala the Federal Housing Administration concept), but would not require citizens to reduce their funds for consumption to purchase shares.</p>
<p> </p>
<p>Essentially, the pressing need is for everyone in a position of influence to encourage President Obama to raise the consciousness of the America people by making his NUMBER ONE focus the introduction of a National Right To Capital Ownership Bill that restores the American dream of responsible property ownership as a primary source of personal wealth.</p>
<p> </p>
<p>This is the solution to America's economic decline in wealth and income inequality, which will result in double-digit economic growth and simultaneously broaden private, individual ownership so that EVERY American's income significantly grows, providing the means to support themselves and their families with an affluent lifestyle and to financially sustain them in their retirement.</p>
<p> </p>
<p>The Just Third Way Master Plan for America's future is published at <a href="http://foreconomicjustice.org/?p=5797">http://foreconomicjustice.org/?p=5797</a>.</p>
<p> </p>
<p>Support the Capital Homestead Act at <a href="http://www.cesj.org/homestead/index.htm">http://www.cesj.org/homestead/index.htm</a> and <a href="http://www.cesj.org/homestead/summary-cha.htm">http://www.cesj.org/homestead/summary-cha.htm</a></p>
<p> </p>
<p>See "Financing Economic Growth With 'FUTURE SAVINGS': Solutions To Protect America From Economic Decline" at NationOfChange.org <a href="http://www.nationofchange.org/financing-future-economic-growth-future-savings-solutions-protect-america-economic-decline-137450624">http://www.nationofchange.org/financing-future-economic-growth-future-savings-solutions-protect-america-economic-decline-137450624</a>.</p>
<p> </p>Democrats Have Failed...But Opportunity For Redemption Awaitstag:capitalhomestead.org,2013-10-17:6384157:BlogPost:123472013-10-17T16:57:31.000ZGary Reberhttp://capitalhomestead.org/profile/GaryReber867
<p>As a lifelong advocate for economic justice, who in 1974 ran for Congress on a platform for economic justice (<a href="http://foreconomicjustice.org/?p=336">http://foreconomicjustice.org/?p=336</a>), it saddens me to see the United States of America continue to fail, leaving Americans serfdom subjects of plutocratic government and concentrated capital ownership, which denies every citizen his or her pursuit of economic happiness (property).</p>
<p> </p>
<p>President Obama and the Democrats…</p>
<p>As a lifelong advocate for economic justice, who in 1974 ran for Congress on a platform for economic justice (<a href="http://foreconomicjustice.org/?p=336">http://foreconomicjustice.org/?p=336</a>), it saddens me to see the United States of America continue to fail, leaving Americans serfdom subjects of plutocratic government and concentrated capital ownership, which denies every citizen his or her pursuit of economic happiness (property).</p>
<p> </p>
<p>President Obama and the Democrats have failed the American people, especially the poor and propertyless who are increasingly dependent on ever-lower-paying jobs, taxpayer-supported welfare financed through tax extraction and national debt, and charity.</p>
<p> </p>
<p>The Democrats have yet to declare CONCENTRATED OWNERSHIP of the non-human productive capital assets of American enterprise as the main culprit to the inability of the 99 percent to expand and strengthen their source of income and increasingly become "customers with money" to purchase the products and services the economy is capable of producing. Never has ANY Democrat, during their political career, used the term "ownership" of the means of production to educate the electorate of the necessity to OWN productive capital assets. And without a clear understanding of the problem and a goal projection, there can be no successful PLAN to correct the income and wealth inequality that has resulted ever since America entered the age of the Industrial Revolution, when the nation began its shift from labor intensive production to non-human physical productive capital means of production. Such assets, due to the unjust structure of a plutocratic financial system, allows the ownership class to continually monopolize ALL future productive capital investment –– ownership channeled into fewer and fewer people.</p>
<p> </p>
<p>The Democrats never have advocated that we must respect the traditional understanding of private property as a natural right, inherent in each person, albeit limited in its exercise. They have failed to declare that the reliance on "past savings" as the only source of financing for economic growth necessarily means that only those people who can afford to cut consumption and save significantly will receive the benefits of economic growth as investor owners instead of wage or welfare recipients.</p>
<p> </p>
<p>The Democrats have never once pointed out that as job destroying and labor-devaluing technology advances and the scale of economic growth becomes too expensive for the resources of average people, only the rich will own the enterprises that generate the bulk of production. This is the greed or "hoggist" capitalism that is practiced in America. Everyone other than the rich who own capital is limited to wages or sub-economic microenterprises, unless the rich decide to be generous and voluntarily surrender some of their wealth so that others can own productive capital, too.</p>
<p> </p>
<p>The Democrats are part of the problem in that they have stepped into the ranks of those who, within this "past savings" paradigm, see as the alternative to having a few rich people monopolize ownership to change what “ownership” means. By changing what ownership means, the State (whether the central government or the local community) decides what and how much of the fruits of ownership go to those who hold legal title, and what and how much is distributed in some fashion to others in the local community or the nation at large. This makes title a meaningless concept, abolishes private property, and is socialism, by whatever label.</p>
<p> </p>
<p>The Democrats need to acknowledge that if we restrict financing of economic growth to what can be withheld from consumption out of what has been produced in the past, we are necessarily trapped into either monopoly capitalism (concentrated private ownership of productive capital) or socialism (concentrated State ownership or control of productive capital).</p>
<p> </p>
<p>The Democrats need to see that there is a way out: a source of financing economic growth that does not depend on how much consumption can be reduced.</p>
<p> </p>
<p>Instead of using the present value of past reductions in consumption to finance economic growth, it is possible –– even preferable –– to finance economic growth using the present value of future increases in production. In other words, shift from a “past savings” system, to a “future savings” system.</p>
<p> </p>
<p>The focus needs to be on OWNERSHIP CREATION, not JOBS CREATION, which has been the Democrats' pitch thus far. Instead the challenge is to reform the system to provide equal opportunity for ALL Americans to acquire ownership of FUTURE wealth-creating, income-generating productive capital assets with "FUTURE SAVINGS" (earnings) generated by the investments. Thus, over time EVERY American citizen will be able to accumulate a viable, income-generating capital estate portfolio to provide a second income to their wages earned from job employment or provide a sustainable income without the need to be employed in a job or dependent on welfare or charity.</p>
<p> </p>
<p>For solutions see "Financing Economic Growth With 'FUTURE SAVINGS': Solutions To Protect America From Economic Decline" at <a href="http://foreconomicjustice.org/?p=9206">http://foreconomicjustice.org/?p=9206</a> and at <a href="http://www.nationofchange.org/financing-future-economic-growth-future-savings-solutions-protect-america-economic-decline-137450624">http://www.nationofchange.org/financing-future-economic-growth-future-savings-solutions-protect-america-economic-decline-137450624</a></p>
<p> </p>
<p>Support the Capital Homestead Act at <a href="http://www.cesj.org/homestead/index.htm">http://www.cesj.org/homestead/index.htm</a> and <a href="http://www.cesj.org/homestead/summary-cha.htm">http://www.cesj.org/homestead/summary-cha.htm</a></p>
<p> </p>
<p>This should be the message that the Democrats should deliver on the 50th anniversary of the March on Washington for Jobs and Freedom.</p>Financing Economic Growth With “FUTURE SAVINGS” –– Solutions To Protect America From Economic Declinetag:capitalhomestead.org,2013-10-17:6384157:BlogPost:124552013-10-17T16:56:25.000ZGary Reberhttp://capitalhomestead.org/profile/GaryReber867
<p>While conservatives blame poor governance and unions for the fall of Detroit and other American cities, which have filed for bankruptcy, there is another side to the story. The horrific part is that there are many cities that are headed in the exact same direction as Detroit. The entire country could follow Detroit's lead as tectonic shifts in the technologies of production and globalization to produce at the lowest possible cost destroy jobs and devalue the worth of labor.</p>
<p>The United…</p>
<p>While conservatives blame poor governance and unions for the fall of Detroit and other American cities, which have filed for bankruptcy, there is another side to the story. The horrific part is that there are many cities that are headed in the exact same direction as Detroit. The entire country could follow Detroit's lead as tectonic shifts in the technologies of production and globalization to produce at the lowest possible cost destroy jobs and devalue the worth of labor.</p>
<p>The United States is headed for more personal and family economic turmoil and social unrest and upheaval due to a faulty economic system that fosters the concentration of wealth-creating, income-generating productive capital––the ownership of non-human productive assets such as land, structures, machines, super-automation, robotics, digital computerized operations, etc. The system is faulty because economic growth is based on individual and family accumulations of savings, with ALL economic growth dependent on past savings "invested" to further concentrate productive capital ownership. This will leave the vast majority, or the so-called 99 percent, who are property-less as related to ownership of productive capital assets, unable to save sufficiently and instead struggling to sustain their livelihood month to month, as they fear for job loss and having to rely on taxpayer-supported government welfare.</p>
<p>To change the rules and reform the system, the outcome of FUTURE policies must be to facilitate financing economic growth with "FUTURE SAVINGS," and simultaneously create new capitalist owners of wealth-creating, income-generating productive capital assets. "FUTURE SAVINGS" are profits used to repay loans for new capital formation and acquisition of existing productive assets by new owners.</p>
<p>Critically, we must recognize that Americans and the world's people do not have to end up desolute and bereft as the FUTURE unfolds due to fundamentally flawed assumptions in modern economics and finance: that new capital formation is impossible without first cutting consumption, saving, then investing. The result has been that the "supply of loanable funds" derived from past savings determines the "production possibilities curve" or rate at which economic growth can be sustained.</p>
<p>If we are to achieve the goal of general affluence for every human being, the first requirement is to increase progressively the total amount of the income to be shared. This requires increased production, not redistribution, in order to generate incomes that would be distributed according to market principles. This is the ONLY means to promote a fuller utilization of our productive facilities and a consequent progressive increase in the aggregate income to be available for distribution, and to which increasing quantities of newly created products and services would become available to everyone.</p>
<p>"Distribution is the trouble" said Dr, Harold G. Moulton, President of Brookings Institution, in his 1935 book <i>The Formation Of Capital</i>. Said Moulton, "The way our income is distributed provides an inadequate purchasing power for our full production."</p>
<p>The problem that needs to be addressed is threefold: 1) how to increase production, 2) how to distribute the income from production according to relative inputs of human labor and non-human productive capital, and 3) how to distribute that income to people who will use the increased income for consumption, not reinvestment (to further concentrate ownership of wealth-creating, income-generating productive capital assets).</p>
<p>In today's economic world, economic progress and the financing of FUTURE growth is subject to a reliance on existing accumulations of savings that result from cutting current consumption. Income, instead of being spent on consumption to keep production and consumption in balance, is diverted into savings. With fewer customers purchasing what is produced, the financing of FUTURE productive capital used to produce new products and services becomes less financially feasible. </p>
<p>As is noted in the forward to the "new edition" of Moulton's <i>The Formation Of Capital</i>, written by Norman G. Kurland, Michael D. Greaney and Dawn K. Brohawn, my colleagues at the Center for Economic and Social Justice (<a href="http://foreconomicjustice.org/wp-admin/www.cesj.org">www.cesj.org</a>):</p>
<p>“Financial feasibility refers to the ability of new capital investment to pay for itself out of the future earnings of the new capital. This is an application of Adam Smith's observation that the purpose of production is consumption. A standard test to determine whether a company should invest in new capital is whether there is sufficient consumer demand to support the marketable good or service to produced. In other words, why add a new productive asset or tool if no one is going to buy (consume) what it produces? Thus, as Moulton emphasizes in this book, demand for capital is derived from consumer demand.</p>
<p>“Worse, from the standpoint of political and social stability, using past savings to finance growth accelerates, and provides a rationalization for maintaining and even increasing, concentrated ownership of the means of production. It also leads to expanding the role and powers of the State in a desperate effort to stabilize the economy. The rights of private property (i.e., the rights to the fruits of, and control over, what one owners) are taken from individual citizens and transferred to the State.”</p>
<p>The resulting problem is that to the extent that the savings investment approach increases production, the economic benefit accrues to the current owners, who re-invest to acquire more productive capital wealth rather than consume a growing portion of their capital incomes. This concentrates ownership even further.</p>
<p>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.</p>
<p>The conventional approach relies on savings for additional investment in new productive capital assets, instead of providing the means to satisfy people's material needs and wants. The result has been to create a global ownership class of very rich people who reinvest most of their capital incomes to further their concentrated wealth ownership.</p>
<p>Supporters of this economic paradigm argue that no income generated by capital should be used for consumption. Instead, all capital income should be reinvested in ways that create new capital, thereby providing jobs for the masses until full employment is reached. Thus, most economist today assume that there is virtually no other means whereby most people can earn an income except in the form of wages paid for their labor.</p>
<p>Moulton summarized the results of his investigation:</p>
<p>“We find no support whatever for the view that capital expansion and the extension of the roundabout process of production may be carried on for years at a time when consumption is declining. [i.e., when saving is taking place.] The growth of capital and the expansion of consumption are virtually concurrent phenomena.”</p>
<p>Of course, the supporters of the arcane economic paradigm ignore and are oblivious to the reality that tectonic shifts in the technologies of production are destroying jobs and devaluing the worth of labor as increasingly the non-human productive capital factor is replacing the need for labor in the production of products and services needed and wanted by society.</p>
<p>Understanding Moulton is absolutely necessary in order for us to set out on a path to prosperity, opportunity, and economic justice. The question that Moulton poses is what should be the source of financing for capital formation?</p>
<p>Moulton answered the question as follows:</p>
<p>“A new and even more dynamic factor has come into the process of capital formation through the evolution of modern commercial banking. The development of the banking system, with its ability to manufacture credit, has served to render funds immediately available for the purposes of capital creation without the necessity of waiting upon the slower processes of accumulating funds from individual savings. The result is to sustain productivity at a higher level and to facilitate the growth of new capital at a more rapid rate than would otherwise have occurred.”</p>
<p>In other words, as noted in the forward to Moulton's new edition:</p>
<p>“New capital formation can be financed by using money created by the commercial banking system. It is not necessary (and even counterproductive from the standpoint of economic equilibrium and sustainable growth) to rely on cutting consumption to generate the savings necessary to finance new capital formation.</p>
<p>“Following Moulton's reasoning, the remedy to an economic downturn is thus not to manipulate the money supply by increasing government debt or bailing out failed speculation (which, among other problems, distorts the operation of the market and places a debt burden on future taxpayers). Nor is it an effective, long term solution to stimulate demand by subsidizing artificial job creation, legislating higher minimum wages, ignoring market forces in collective bargaining negotiations, imposing price controls or supports (especially on interest rates), or redistributing existing wealth. Such measures may be necessary at times as expedients, but are ultimately self-defeating. Instead, what is needed is to:</p>
<p>“1) Increase production by financing new capital formation through the extension of bank credit backed by the present value of the future stream of income to be generated by the new capital.</p>
<p>“2) Get the profits generated by the new capital into the hands of all workers and citizens who will use it for consumption, not reinvestment in additional new capital.”</p>
<p>In reading <i>The Formation Of Capital</i>, Moulton fails to list as a possible solution widespread, direct private ownership of the means of production. As noted by my colleagues at CESJ in the forward to the new edition:</p>
<p>“A broad base of owners and diversity in the forms of productive capital owned would ensure that all workers and as many people as possible, including the disabled and poorest of the poor, would receive income generated by many forms of advancing technology, and would use the income from their capital for consumption rather than reinvestment.”</p>
<p>Moulton's omission was addressed by Louis Kelso and Mortimer J. Adler in their 1958 book <i>The Capitalist Manifesto</i>. Kelso, a successful corporate lawyer and self-schooled economist, was also an expert in finance who later formed a leading investment banking firm specializing in his financial mechanism, the Employee Stock Ownership Plan (ESOP) and other methods for financing worker and broader citizen individual ownership in productive capital. In the late 1960s, I had the privilege to form with Kelso Agenda 2000 Incorporated, a consulting firm, whose advocacy mission was to provide financial mechanism for economic development based on the Kelsonian principles underlying the binary economic or two-factor model of economic reality.</p>
<p><i>The Capitalist Manifesto</i> made the moral and economic case for widespread ownership of the means of production. How to finance widespread productive capital ownership was spelled out in the assertive subtitle to <i>The New Capitalists: A Proposal To Free Economic Growth From The Slavery Of Savings</i>. (Both books are available as free downloads at <a href="http://www.kelsoinstitute.org/pdf/cm-entire.pdf">http://www.kelsoinstitute.org/pdf/cm-entire.pdf</a> and <a href="http://www.kelsoinstitute.org/pdf/nc-entire.pdf">http://www.kelsoinstitute.org/pdf/nc-entire.pdf</a>, respectively.)</p>
<p>Not surprisingly, the source that Kelso and Adler referenced most often in <i>The New Capitalists</i> is Moulton's <i>The Formation Of Capital</i>. Moulton showed how the extension of commercial bank credit can be used to finance capital formation without requiring existing accumulations of savings. What Kelso and Adler argued as the solution to the income distribution problem was to democratize access to direct, private ownership of new capital formation.</p>
<p>Over the past century there has been an ever-accelerating shift to productive capital––which reflects tectonic shifts in the technologies of production. Advancing technology continues to rapidly take over the vast bulk of production from human labor.</p>
<p>As pointed out in the forward to the new edition of <i>The Formation Of Capital</i>, Moulton demonstrated that the chief means by which capital formation is financed in a modern industrial and financial economy is commercial bank credit backed by the present value of the future stream of income to be generated by the newly formed capital assets themselves with the collateralization requirement of existing accumulations of savings (already owned assets). To this Kelso added that 1) the ownership of the new capital financed with what he called "pure credit" must be broadly owned, and 2) the universal collateralization requirement could be met by using capital credit insurance and reinsurance in place of existing accumulations of savings.</p>
<p>Kelso's refinements of Moulton's work underpin a comprehensive national economic program called "Capital Homesteading" (<a href="http://www.cesj.org/homestead/index.htm">http://www.cesj.org/homestead/index.htm</a> and <a href="http://www.cesj.org/homestead/summary-cha.htm">http://www.cesj.org/homestead/summary-cha.htm</a>), developed by the Center for Economic and Social Justice. The "Capital Homestead Act," which gives a legislative framework to the program is a way to implement both Moulton's insights and Kelso's solution to the income distribution problems of a modern economy. It would empower every American man, woman and child, including the poorest of the poor, with equal opportunity and the social tools to acquire, control and enjoy the fruits of productive corporate capital assets. Based on a new socio-economic paradigm that some have called the "Just Third Way" (as the moral alternative to traditional capitalism and socialism), Capital Homesteading also offers a template that can be tailored to eradicate poverty and economic powerlessness in the poorest of nations around the globe. (see the Agenda of The Just Third Way Movement at <a href="http://foreconomicjustice.org/?p=5797">http://foreconomicjustice.org/?p=5797</a>.)</p>
<p>The means by which Capital Homesteading proposes to achieve its goals involve major restructuring of America's tax system and Federal Reserve policies (see abridged <a href="http://foreconomicjustice.org/?p=8942">http://foreconomicjustice.org/?p=8942</a>). These are designed to lift artificial barriers to more equitable distribution of FUTURE corporate capital and stimulate faster growth rates of private sector investment. Capital Homesteading would shift primary national income maintenance policies from inflationary artificial wage increases and unproductive income redistribution expedients, to market-based <i>ownership</i> sharing and dividend incomes.</p>
<p>The proposed Capital Homestead Act would reform monetary institutions and tax laws to democratize access to capital (productive) credit. By universalizing citizen access to direct capital ownership by making available "interest-free" productive credit and new, asset-backed money for increasing production, Capital Homesteading would close the power and opportunity gap between today's haves and have-nots, without taking away property from today's owners.</p>
<p>As my colleagues conclude in the forward to the new edition:</p>
<p>“Moulton's insights in <i>The Formation Of Capital</i> suggest a practical and morally sound basis for restructuring the financial system to enable money to be created as needed to finance sustainable economic growth. World poverty <i>can</i> be eradicated, something not possible within the current economic paradigms, which rely on existing accumulations of savings to finance capital formation. With the specter of another economic depression looming over today's world, and with the widening gap between "haves" and "have-nots" threatening social harmony, there is no real justification for delaying the implementation of a program of Capital Homesteading to establish and maintain a free, prosperous and just economy for all.”</p>
<p>For other related articles, please see my article "Democratic Capitalism And Binary Economics: Solutions For A Troubled Nation and Economy" at <a href="http://foreconomicjustice.org/11/economic-justice/">http://foreconomicjustice.org/11/economic-justice/</a>.</p>
<p>Also please see my article "The Absent Conversation: Who Should Own America?" published by <i>The Huffington Post</i> at <a href="http://www.huffingtonpost.com/gary-reber/who-should-own-america_b_2040592.html">http://www.huffingtonpost.com/gary-reber/who-should-own-america_b_2040592.html</a> and by <i>OpEd News</i> at <a href="http://www.opednews.com/articles/THE-Absent-Conversation--by-Gary-Reber-130429-498.html">http://www.opednews.com/articles/THE-Absent-Conversation--by-Gary-Reber-130429-498.html</a></p>
<p>Also see "The Path To Eradicating Poverty In America" at <a href="http://www.huffingtonpost.com/gary-reber/the-path-to-eradicating-p_b_3017072.html">http://www.huffingtonpost.com/gary-reber/the-path-to-eradicating-p_b_3017072.html</a> and "The Path To Sustainable Economic Growth" at <a href="http://www.huffingtonpost.com/gary-reber/sustainable-economic-growth_b_3141721.html">http://www.huffingtonpost.com/gary-reber/sustainable-economic-growth_b_3141721.html</a>.</p>
<p>Also see the article entitled "The Solution To America's Economic Decline" at <a href="http://www.nationofchange.org/solution-america-s-economic-decline-1367588690">http://www.nationofchange.org/solution-america-s-economic-decline-1367588690</a> and "Education Is Critical To Our Future Societal Development" at <a href="http://www.nationofchange.org/education-critical-our-future-societal-development-1373556479">http://www.nationofchange.org/education-critical-our-future-societal-development-1373556479</a>. And also "Achieving The Green Economy" at <a href="http://www.nationofchange.org/achieving-green-economy-1373980790">http://www.nationofchange.org/achieving-green-economy-1373980790</a>. Also see it complete with the footnotes at <a href="http://foreconomicjustice.org/?p=9082">http://foreconomicjustice.org/?p=9082</a>.</p>Second Income Plantag:capitalhomestead.org,2013-10-17:6384157:BlogPost:123462013-10-17T16:54:59.000ZGary Reberhttp://capitalhomestead.org/profile/GaryReber867
<p>The reality of the economic state of affairs in the United States is that income inequality, unemployment, underemployment, and anemic GDP growth is rooted in the tectonic shift in the technologies of production and its concentrated ownership, which, as a practical matter, is destroying jobs and devaluing the worth of labor, widening the income gap between the rich and poor and struggling (each resentful and suspicious of the other), and resulting in our inability to achieve double-digit GDP…</p>
<p>The reality of the economic state of affairs in the United States is that income inequality, unemployment, underemployment, and anemic GDP growth is rooted in the tectonic shift in the technologies of production and its concentrated ownership, which, as a practical matter, is destroying jobs and devaluing the worth of labor, widening the income gap between the rich and poor and struggling (each resentful and suspicious of the other), and resulting in our inability to achieve double-digit GDP growth.</p>
<p>The result is the consumer populous is not able to get the money to buy the products and services produced increasingly by the non-human factor—physical productive capital—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.</p>
<p>The recommended solutions are founded on binary economics.1 Binary economics is a new way of approaching economic reality and as a new paradigm provides a new way of enhancing everyone’s economic well being. The binary or two-factor paradigm recognizes two independent factors of production—human and non-human. This new paradigm relates to the property right to productive capital acquisition and recognizes the essential requirement that universal, individual market participation in productive capital acquisition is essential to putting us on a path to prosperity, opportunity, economic justice, and sustainable growth for the economy as a whole. The tools to achieve universal ownership and enable those without viable productive capital holdings to become owners are the very same credit, insurance, and financial principles and techniques presently employed by existing owners to acquire productive capital with the earnings of capital.</p>
<p> </p>
<p>Currently, the system is wedded to the “<b>past savings</b>” approach to capital credit and outdated Keynesian government-dependent solutions. The necessary solutions proposed would achieve broad-based citizen ownership, using asset-backed and insured capital credit made accessible from local banks and the Federal Reserve credit, with the loans repayable, as with 100 percent leveraged S-Corp ESOPs, with tax-free profits (“<b>future savings</b>”). This would automatically free future economic growth from the dictatorship of Wall Street controllers of money for capital assets or bureaucrats controlling debt-backed money from shrinking government loan programs. </p>
<p> </p>
<p>To solve this challenge, several policies must be implemented:</p>
<p>1. Tax reform is needed to incentivize broadened individual ownership of corporations by their employees. As an incentive, provide a tax deduction to corporations for dividend payouts, which would tighten-up the right of each owner to his or her full share of profits, a basic and historic right of private property. It would eliminate double and triple taxes on corporate profits, shifting the burden of taxation to personal incomes after exempting initial incomes that would allow low and middle class citizens not to pay taxes on incomes needed to cover basic living expenses. It will also encourage corporations to finance their growth through the issuance of new full voting, full dividend payout shares for financing their productive capital growth needs through Employee Stock Ownership Plans (ESOPs) and Capital Homestead Accounts (CHAs). Politically we need to insist that politicians lift barriers to the democratization of future ownership opportunity, based on sound principle, rather than redistributive taxation.</p>
<p>2. As increasingly more workers acquire ownership stakes in FUTURE corporate productive capital assets using ESOP financing mechanisms, workers will build second incomes to support their living expenses, which in turn means they will be better "customers with money" to support demand for the products and services that the economy is capable of producing. By reason of the higher marginal spending rate on the part of workers’ second incomes, more of the additional income earned by the new capitalists (who have many unsatisfied consumer needs and wants) will be spent on consumption than if the income had been earned by those capitalists who now have concentrated the ownership of productive capital exclusively, and who have few, if any, consumer needs and wants. Such broadened incremental consumption will fuel a demand for more consumer products and services, which in turn will provide incentive for greater productive capital investment.</p>
<p>3. For all Americans, the Federal Reverse needs to create an asset-backed currency that can enable every man, woman, and child to establish a Capital Homestead Account or "CHA" (a super-IRA or asset tax-shelter for citizens) at their local bank to acquire a growing dividend-bearing stock portfolio to supplement their incomes from work and all other sources of income. The CHA would process an equal allocation of productive credit to every citizen exclusively for purchasing full-dividend payout shares in companies needing funds for growing the economy and private sector jobs for local, national, and global markets. The shares would be purchased using essentially interest-free credit wholly backed by projected "future savings" in the form of new productive capital assets as well as the future marketable products and services produced by the newly added technology, renewable energy systems, plant, rentable space, and infrastructure added to the economy. Risk of default on each stock acquisition loan would be covered by private sector capital credit risk insurance and, if necessary, government reinsurance but would not require citizens to reduce their funds for consumption to purchase shares.</p>
<p>4. Reform the tax code such that the tax rate would be a single rate for all incomes from all sources above an established personal exemption level (for example, an exemption of $100,000 for a family of four to meet their ordinary living needs) so that the budget could be balanced automatically and even allow the government to pay off the growing unsustainable long-term debt. The poor would pay the first dollar over their exemption levels as would the stock fund operator and others now earning billions of dollars from capital gains, dividends, rents, and other property incomes.</p>
<p>5. As a substitute for inheritance and gift taxes, a transfer tax should be imposed on the recipients whose holdings exceeded $1 million, thus encouraging the super-rich to spread out their monopoly-sized estates to all members of their family, friends, servants, and workers who helped create their fortunes, teachers, health workers, police, other public servants, military veterans, artists, the poor and the disabled.</p>
<p>6. Eliminate all tax loopholes and subsidies.</p>
<p>These polices would result in rapid and substantial economic growth with the GDP rate in double digits. As a result of the stimulus effect, more REAL, decent paying job opportunities and further technological advancement would be created while simultaneously broadening private, individual ownership of FUTURE wealth-creating, income-generating productive capital assets, which would support second and primary incomes for ALL Americans.</p>
<p>In this new FUTURE economy, a citizen would start to benefit financially at the time he or she enters the economic world as a labor worker, to become increasingly a capital owner, whose productive capital assets contribute as a non-human worker earning a second income, and at some point to retire as a labor worker and continue to participate in production and to earn income as a capital owner until death.</p>
<p>As we ALL contribute to the building of a FUTURE economy that can support general affluence for EVERY man, woman, and child, at some point as the technologies of production further advance there will be far less need for human workers, and productive capital asset ownership, acquired using the self-financing earnings of capital, will become the primary income source for most people. As general affluence becomes more widespread, people will be free and economically secure to pursue their creative desires and pleasures, further contributing to the cultural and societal development of the country.</p>
<p>Support the Agenda of The Just Third Way Movement at <a href="http://foreconomicjustice.org/?p=5797">http://foreconomicjustice.org/?p=5797</a></p>
<p>Support Monetary Justice at <a href="http://capitalhomestead.org/page/monetary-justice">http://capitalhomestead.org/page/monetary-justice</a></p>
<p>Capital Homesteading is a plan for getting ownership, income, and power to every citizen. Support the Capital Homestead Act at <a href="http://www.cesj.org/homestead/index.htm">http://www.cesj.org/homestead/index.htm</a> and <a href="http://www.cesj.org/homestead/summary-cha.htm">http://www.cesj.org/homestead/summary-cha.htm</a></p>
<p> </p>
<p>1 In simple terms, binary economics recognizes that there are two factors of production: people (labor workers who contribute manual, intellectual, creative, and entrepreneurial work) and capital (land; structures; infrastructure; tools; machines; super-automation, robotics, digital computer processing and operations; certain intangibles that have the characteristics of property, such as patents and trade or firm names; and the like owned by people.) Essentially, capital is any non-human productive asset that is used to create and produce products and services and earn economic gain and income for its owners. Thus, fundamentally, economic value is created through human and non-human contributions. NOTE, real physical productive capital isn’t money; it is measured in money (financial capital), but it is really producing power and earning power through ownership of the non-human factor of production. Financial capital, such as stocks and bonds, is just an ownership claim on the productive power of real capital. In the law, property is the bundle of rights that determines one’s relationship to things.</p>Achieving The Green Economytag:capitalhomestead.org,2013-10-17:6384157:BlogPost:123452013-10-17T16:53:18.000ZGary Reberhttp://capitalhomestead.org/profile/GaryReber867
<p>Given the worsening condition of the environment on planet Earth, the political and economic obstacles facing the regulation of greenhouse gases in the United States are overwhelming. Under such non-leadership conditions, only the most tepid reforms are politically feasible. Yet, Americans simply are not irritated enough to realize that the climate of our planet is in mortal danger, which places our humankind future at risk of absolute failure.</p>
<p> </p>
<p>The technology for mass…</p>
<p>Given the worsening condition of the environment on planet Earth, the political and economic obstacles facing the regulation of greenhouse gases in the United States are overwhelming. Under such non-leadership conditions, only the most tepid reforms are politically feasible. Yet, Americans simply are not irritated enough to realize that the climate of our planet is in mortal danger, which places our humankind future at risk of absolute failure.</p>
<p> </p>
<p>The technology for mass conversion to renewable energy exists, and systemic change now would avoid the worst extremes of global warming. While increasingly more Americans are becoming aware and choosing to adopt reusable and sustainable practices, these efforts are far from enough to reverse course. Massive reductions in carbon dioxide emissions through fundamental changes in energy production are essential.</p>
<p> </p>
<p>The reality and thus political and economic challenge is that changing the status quo would decrease profits of powerful corporations with vested interests in current technologies that threaten environmental renewability and sustainable viability, and politicians continue to serve their interests above all others, regardless of the laws of physics.</p>
<p> </p>
<p>Capital Homesteading1, which is based on binary economics2, offers a way out of the quandary, which pits concern for the environment against immediate needs, desires, convenience, and the profit interests of powerful corporations. Through Capital Homesteading we can achieve green growth in which Americans would be better able to afford more food, clothing, shelter, health care, transportation, education, communication, and provide the necessary demand for green technologies and production processes that produce green products. As Capital Homesteading takes hold, Americans would not only become stronger consumers and "customers with money" but also gain stronger property interests in the environment and be better able to afford the greener choice.</p>
<p> </p>
<p>As we build general affluence for EVERY American, only then can we successfully alter the choices people must make between choosing alternative, more costly greener choices that do not threaten the environment and their very livelihood. This challenge is particularly a challenge for the property-less struggling middle class and the poor who must deal daily with livelihood issues, due to the precarious situation and loss of employment and the devaluing of the worth of labor as a result of tectonic shifts in the technologies of production resulting in less need for human worker input. Thus, realistically most people cannot be expected to sacrifice what little wealth and income they have to support more costly greener choices.</p>
<p> </p>
<p>To see the change that so many Americans would like to see with respect to the support for greener choices will require that American lifestyles and tastes adopt more costly processes, products, and activities that are the greener substitute.</p>
<p> </p>
<p>But the reality is that none of these changes can be practically achieved unless enough people can afford them. The policy proposals that comprise the proposed Capital Homestead Act (<a href="http://www.cesj.org/homestead/index.htm">http://www.cesj.org/homestead/index.htm</a>) will enable all Americans, increasingly as years advance, to become better able to discover, choose, accept, and most critically afford the greener alternatives.</p>
<p> </p>
<p>While the technology and technical processes exist that enable greener alternatives, they are more expensive and most consumers cannot afford them, which means that producers are limited and otherwise cannot afford to make them. But under the policies proposed as Capital Homesteading the resulting accelerating economic growth will result in more "customers with money" due to their increasing ownership holdings in FUTURE wealth-creating, income-generating productive capital assets3 and thus become wealthier customers, better able to afford greener products and alternative production processes.</p>
<p> </p>
<p>As a result, the political willpower to resist the economic pressures to destroy the environment will substantially strengthen and the United States will be better positioned to resist and halt processes that threaten the country's resource and environmental renewability and sustainable viability. Americans must realize that in order to achieve effective green consciousness, the extent of achieving such will always be limited by what we can afford. By pursuing a policy of widespread individual ownership of FUTURE productive capital investment we will be able to support opportunities for building a new market-based economy that supports general affluence for EVERY citizen and voluntarily achieves lifestyle green coexistence with the environment and its support for other life on earth.</p>
<p> </p>
<p>As this evolution occurs there will be a wider and deeper understanding of the economics of environmental issues, a stronger market for greener alternatives, and broadened private property interests in the environment and the necessary productive capital assets to produce green products. This will result in transformative conditions that support the discovery and promotion of greener ways of life.</p>
<p> </p>
<p>_______________________________</p>
<p> </p>
<p>1 Capital Homesteading is a plan for getting ownership, income, and power to every citizen. Support the Capital Homestead Act at <a href="http://www.cesj.org/homestead/index.htm">http://www.cesj.org/homestead/index.htm</a> and <a href="http://www.cesj.org/homestead/summary-cha.htm">http://www.cesj.org/homestead/summary-cha.htm</a></p>
<p> </p>
<p>2 Binary economics is a new way of approaching economic reality and as a new paradigm provides a new way of enhancing everyone’s economic well being. The binary or two-factor paradigm recognizes two independent factors of production—human and non-human. This new paradigm relates to the property right to productive capital acquisition and recognizes the essential requirement that universal, individual market participation in productive capital acquisition is essential to putting us on a path to prosperity, opportunity, economic justice, and sustainable growth for the economy as a whole. The tools to achieve universal ownership and enable those without viable productive capital holdings to become owners are the very same credit, insurance, and financial principles and techniques presently employed by existing owners to acquire productive capital with the earnings of capital.</p>
<p> </p>
<p>3 In simple terms, binary economics recognizes that there are two factors of production: people (labor workers who contribute manual, intellectual, creative, and entrepreneurial work) and capital (land; structures; infrastructure; tools; machines; super-automation, robotics, digital computer processing and operations; certain intangibles that have the characteristics of property, such as patents and trade or firm names; and the like owned by people.) Essentially, capital is any non-human productive asset that is used to create and produce products and services and earn economic gain and income for its owners. Thus, fundamentally, economic value is created through human and non-human contributions. NOTE, real physical productive capital isn’t money; it is measured in money (financial capital), but it is really producing power and earning power through ownership of the non-human factor of production. Financial capital, such as stocks and bonds, is just an ownership claim on the productive power of real capital. In the law, property is the bundle of rights that determines one’s relationship to things.</p>Education Is Critical To Our Future Societal Developmenttag:capitalhomestead.org,2013-10-17:6384157:BlogPost:124542013-10-17T16:51:40.000ZGary Reberhttp://capitalhomestead.org/profile/GaryReber867
<p>A recent study from researchers at Georgetown University projects that there will be 55 million new jobs by 2020 for which there will be a growing call for more educated workers with the necessary education and training to meet the demand.</p>
<p>This is a report that is out-of-sync with the economics of reality.</p>
<p>Given the current invisible structure of the economy, except for a relative few, the majority of the population, no matter how well educated, will not be able to find a job…</p>
<p>A recent study from researchers at Georgetown University projects that there will be 55 million new jobs by 2020 for which there will be a growing call for more educated workers with the necessary education and training to meet the demand.</p>
<p>This is a report that is out-of-sync with the economics of reality.</p>
<p>Given the current invisible structure of the economy, except for a relative few, the majority of the population, no matter how well educated, will not be able to find a job that pays sufficient wages or salaries to support a family or prevent a lifestyle, which is gradually being crippled by near poverty or poverty earnings. Thus, education is not the panacea, though it is critical for our future societal development. And younger, as well as older people, will increasingly find it harder and harder to secure a well-paying job––for most, their ONLY source of income––and will find themselves dependent on taxpayer-supported government welfare, open and disguised or concealed.</p>
<p>For decades employment opportunity in the United States was such that the majority of people could obtain a job that could support their livelihood, though, in most cases related to a family, it eventually required the father and mother to both work, if they aspired to live a "middle-class" lifestyle. With "Free Trade" those opportunities began to disintegrate as corporations sought to seek lower-cost production taking advantage of global cheap labor rates and non-regulation, as well as lower tax rates abroad. This resulted in a chain reaction forcing more and more companies to outsource in order to stay competitive (thus the rise of China, India, Mexico, and other third-world nation economies).</p>
<p>At the same time, tectonic shifts in the technologies of production were exponentially occurring (and continue to do so), which resulted (and continues to result) in less job opportunities as production was shifted from people making things to "machines" (the non-human factor) of technology making things. The combination of cheap global labor costs and lower, long-term-invested "machine" costs has forced the worth of labor downward, and this will continue to be the reality. Our only way to far greater prosperity, opportunity, and economic justice is to embrace technological innovation and invention and the resulting human-intelligent machines, super-automation, robotics, digital computerized operations, etc. as the primary economic engine of growth.</p>
<p>But significantly, unless we reform our system to empower EVERY American to acquire, via pure, interest-free insured capital credit loans, viable full-ownership holdings (and thus entitlement to full-dividend earnings) in the companies growing the economy, with the future earnings of the investments paying for the initial loan debt to acquire ownership, the concentration of ownership of ALL future productive capital will continue to be amassed by a wealthy minority ownership class. Companies will continue to globalize in search of "customers with money" or simply fail, as exponentially there will be fewer and fewer customers to support their businesses worldwide. Why, because the majority will be disconnected from the dividend income derived from the non-human means of production that is replacing the need for labor workers who earn wages and salaries, which are then used to purchase products and services.</p>
<p>Soon, industrial monopoly capitalism will reach its twin goals: concentration of productive capital ownership among the elite ownership class and work performed with as few labor workers and the lowest possible wages and salaries. The question to be answered is "What then?"</p>
<p>The transition to the non-human factor of production has been occurring for decades but is now experiencing exponential development––the result of tectonic shifts in the technologies of production. As costs for computer-controlled machines become less than the cost of human workers, and the skills and productivity of the machines exceed those of human workers, then robot worker numbers will rapidly increase and enable our society to build architectural wonders, revitalize and redevelop our cities and build new cities of wonder and amazement, along with support energy, transport, and communications systems. Super-automation and robotics is transforming the world of manufacturing as robots become lighter, more mobile, and more flexible with better sensing, perception, decision-making, and planning and control capabilities due to advanced digital computerization. Super-automation and robotics operated by human-intelligent computerization will dramatically improve productivity and provide skills and abilities previously unique to human workers. This will effectively increase the size of the labor work force globally beyond that provided by human workers, no matter what the level of education attained. With advanced human-level artificial intelligence, computer-controlled machines will be able to learn new knowledge and skills by simply downloading software programs and apps. This means that the years of training that apply to personal human development will no longer apply to the further sophistication and operation of the machines. The result will be that productivity will soar while the need and demand for human labor will further decline.</p>
<p>Unfortunately, in the long term, unless the vast majority of people have a substantial and viable source of income other than wages and salaries, the impact of technological innovation and invention as embodied in human-level artificial intelligence, machines, super-automation, robotics, digital computerized operations, etc. will be devastating.</p>
<p>There are ONLY two options: either "Own or Be Owned." The "Owned" model is what our society practices today and is expressed as monopoly capitalism (concentrated ownership) or socialism (taxpayer-supported redistributed social benefits). The "Own" model, or what my colleagues and I term the Just Third Way (see <a href="http://www.cesj.org/thirdway/thirdway-intro.htm">http://www.cesj.org/thirdway/thirdway-intro.htm</a>), has yet to be implemented on the scale necessary to empower every man, woman, and child to acquire private, individual ownership stakes in the future income-producing productive capital assets of the "intelligent automated machine age"––facilitated by the future earnings of their investments in the companies developing and employing this unprecedented economic power.</p>
<p>Unfortunately, the disruptive nature of exponential growth in technology and its impact on productivity––tectonically shifting production of products and services from human workers to non-human means––is not understood and ignored by the economic establishment, academia, and our political leaders.</p>
<p>While the rate of technological progress is directly proportional to the number and quality of the people engaged in the fields of science and engineering, economic policy is the mechanism that fuels investment and development of technological innovation and invention. This is where education is critical to our future societal development.</p>
<p>Education should be encouraged and expanded. Everyone should have the opportunity to personally develop their own exceptional innate abilities and unlock their creativity.</p>
<p>But except for the personal development benefit to advancing one's education, the reality is that far less "educated" people will be necessary in the long term to produce the products and services necessary and valued by society. This is due to the exponential development of human-level artificial intelligence, which is embodied in advanced automation and robotics.</p>
<p>Those college graduates who do succeed within the fields of science and engineering are hired workers to do what? Our scientists, engineers, and executive managers, who are not owners themselves of the companies they work for, except for those in the highest employed positions, are encouraged to work to destroy employment by making the capital owners' assets 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.</p>
<p>We need to realize that full employment is not a function 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.</p>
<p>We need to reform and restructure our economy and set as the GOAL broadened private, individual ownership of future wealth-creating, income-generating productive capital assets among ALL Americans, with capital estates ever building as the economy grows. 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. By changing course, over time and within a few decades, our "machined-powered" growth economy would produce greater wealth, and widespread private, individual ownership would assure prosperity, opportunity, and general affluence for every citizen. Broadened productive capital ownership would strengthen our democracy and individuals and families would be less or non-dependent on government welfare, whether disguised or not.</p>
<p>This prosperous society is achievable because, fortunately, in the near term, we can begin to grow our way out of the swelling unemployment and underemployment by increasing our investment significantly as a ratio of Gross Domestic Product (GDP) resulting in double-digit growth, while simultaneously broadening private, individual ownership of future income-producing productive capital investments, thus initiating the process of empowering every man, woman, and child to build over time a viable capital estate and reap the income generated. The key operative is BROADEN OWNERSHIP. Such investment would, in the short term, generate millions of new "real" productive jobs. The result would not only be that the GDP would dramatically grow but tax revenues from the high rate of economic growth would enable us to balance the federal budget, fully fund Social Security, Medicare, and Medicaid, provide Universal Health Care, Universal University Education, lower tax rates, and maintain a strong military, all simultaneously.</p>
<p>We have the opportunity to free economic growth from the "enslavement" of human labor and from the financial mechanisms that are based on the slavery of past savings. Technological progress, though, is no longer dependent on the number and quality of human workers. This fact will become obvious eventually to anyone who can think and analyze as they realize the reality that human labor will cease to be the primary source of wealth production in the future. As a result we can expect over the long term that unemployment and underemployment will remain high indefinitely. But the difference will be that people will drop out of the labor force voluntarily because they will be able to live off their dividend earnings via their ownership portfolios. This will create swelling demand for human workers who want to continue working. And with both dividend and wage and salary incomes for everyone there will be more customers to purchase the products and services produced, which in turn will create further dividends and earnings, which will create more customers, etc.</p>
<p>While the future holds less promise for universal job employment due to the ever-progressing contribution of technological-driven production using human-intelligent machines, super-automation, robotics and digital computerized operations, the jobs that will be in demand will require some mastery of technology, math, and science. 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. If we don't re-chart our economic policies to broaden private, individual ownership of new productive capital formation, then more troubling is that the continued stagnation of the American economy 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 productive capital asset owners will increase, and the conditions will become very frightening and very chaotic.</p>
<p>Sadly, our leaders are not prepared and are not preparing the American people for the coming economic collapse and the next Great Depression, due to their lack of wisdom and foresight to understand that full employment is not an objective of businesses and private sector job creation opportunities are constantly being eroded by physical productive capital’s ever increasing role––as the use of human-intelligent machines, super-automation, robotics, digital computerized operations, etc. replaces labor workers to produce products and services.</p>
<p>The question that requires an answer is now timely before us. It was first posed by binary economist Louis Kelso in the 1950s but has never been thoroughly discussed on the national stage. Nor has there been the proper education of our citizenry that addresses what economic justice is and what ownership is. Therefore, by ignoring such issues of economic justice and ownership, our leaders are ignoring the concentration of power through ownership of productive capital, with the result of denying the 99 percenters equal opportunity to become productive capital owners. The question, as posed by Kelso is: “how are all individuals to be adequately productive when a tiny minority (capital owners) produce a major share and the vast majority (labor workers), a minor share of total goods and service,” and thus, “how do we get from a world in which the most productive factor—–physical capital—–is owned by a handful of people, to a world where the same factor is owned by a majority—–and ultimately 100 percent—–of the consumers, while respecting all the constitutional rights of present capital owners?”</p>
<p>The path to prosperity, opportunity, and economic justice can be found in the writings about the Capital Homestead Act at <a href="http://www.cesj.org/homestead/index.htm">http://www.cesj.org/homestead/index.htm</a>. For more overviews related to this topic see my article "The Absent Conversation: Who Should Own America?" published by The Huffington Post at <a href="http://www.huffingtonpost.com/gary-reber/who-should-own-america_b_2040592.html">http://www.huffingtonpost.com/gary-reber/who-should-own-america_b_2040592.html</a> and by OpEd News at <a href="http://www.opednews.com/articles/THE-Absent-Conversation--by-Gary-Reber-130429-498.html">http://www.opednews.com/articles/THE-Absent-Conversation--by-Gary-Reber-130429-498.html</a></p>
<p>Also see "The Path To Eradicating Poverty In America" at <a href="http://www.huffingtonpost.com/gary-reber/the-path-to-eradicating-p_b_3017072.html">http://www.huffingtonpost.com/gary-reber/the-path-to-eradicating-p_b_3017072.html</a> and "The Path To Sustainable Economic Growth" at <a href="http://www.huffingtonpost.com/gary-reber/sustainable-economic-growth_b_3141721.html">http://www.huffingtonpost.com/gary-reber/sustainable-economic-growth_b_3141721.html</a>, and the article entitled "The Solution To America's Economic Decline" at <a href="http://www.nationofchange.org/solution-america-s-economic-decline-1367588690">http://www.nationofchange.org/solution-america-s-economic-decline-1367588690</a></p>The Solution To America’s Economic Declinetag:capitalhomestead.org,2013-10-17:6384157:BlogPost:125142013-10-17T16:49:29.000ZGary Reberhttp://capitalhomestead.org/profile/GaryReber867
<p>As a nation, we have lost the essence of the “American Dream”––economic freedom and self-sufficiency realized through private property ownership rights and democratic government.</p>
<p>Our basic premises should be:</p>
<p>There is no genuine political liberty without economic liberty, and that which is destructive of economic liberty is necessarily destructive of political liberty. Liberty does not mean license to steal or hoard.</p>
<p>The “American Dream” of 1776 enunciated in the…</p>
<p>As a nation, we have lost the essence of the “American Dream”––economic freedom and self-sufficiency realized through private property ownership rights and democratic government.</p>
<p>Our basic premises should be:</p>
<p>There is no genuine political liberty without economic liberty, and that which is destructive of economic liberty is necessarily destructive of political liberty. Liberty does not mean license to steal or hoard.</p>
<p>The “American Dream” of 1776 enunciated in the founding papers of the Republic, underwrote minimal Government and maximal individual political and economic liberty, and drew inspiration from the widely held view that life, liberty, and property were an inseparable trinity.</p>
<p>That dream has largely been converted into a nightmare in modern America through the concentrated control effects of giant Government and monopoly capitalism, which may be handmaidens in tyranny. This situation has come about because of philosophical thinking that is inadequate to meet the needs of 21st century thinking, which has not kept pace with the fruits of science; and the situation is also due to a combination of conspiracy, greed, and archaic political philosophy.</p>
<p>What has and continues to escape the focus of conventional economists, and the politics of progressives, centralists and conservatives, is that the wealthy are rich because they own productive capital––non-human wealth-creating assets used to produce products and services. The reality is that in most economic tasks and in the overall economy, productive capital (not human labor) is independently doing evermore of the work that results in the products and services produced for consumption. It is productive capital’s increasing productiveness and evolution, rather than human effort (productivity conventionally considered) that is the productive means most responsible for economic growth. Effectively, technological innovation and invention limits new, higher-productivity jobs to relatively fewer workers, leaving most other people willing and able to work with lower-paying job opportunities or no jobs at all. This increasing majority is finding it more and more difficult to afford the products and services that are increasingly produced by productive capital.</p>
<p>When the right to participate in production through productive capital ownership is effectively denied, especially when tectonic shifts in the technologies of production destroy and degrade the worth of jobs, then the people affected become increasingly insecure in satisfying their and their family’s basic survival. Such conditions force them to seek low-pay, low-security jobs, or either charity or welfare, or desperately engage in illegitimate means. Such disintegration tears at society’s sense of fairness and justice, and spreads resentment, alienation and despair.</p>
<p>It is essential that people focus their thinking on the understanding of who and what creates wealth, in order to fully understand how to solve growing income inequality and the disintegration of the nation wherein the majority of citizens are regulated to low-pay job serfdom and public welfare.</p>
<p>In a modern, technological era it is the ownership of wealth-creating productive capital assets, not the labor of people that is the primary creator of affluence.</p>
<p>Hence, it is access to ownership of productive capital assets, not to jobs, wherein the national economic policy guidelines for the 21st century ought to lie. As ownership of wealth-creating productive capital becomes widely diffused, political power ought also to be widely diffused.</p>
<p>Productive capital is defined as the non-human means of producing products and services (land; structures; infrastructure; tools; human-intelligent and non-human-intelligent machines; super-automation; robotics; digital computerized processing and operations; certain intangibles that have the characteristics of property, such as patents and trade or firm names; and the like owned by individuals).</p>
<p>Tectonic shifts in the technologies of production are constant and result in new formations of productive capital, whose role is to do ever more of the work, which produces income to the owners of the capital assets. People invented 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.</p>
<p>Businesses employ both productive capital and people, but full employment is not an objective of businesses. Companies strive to keep labor input and other costs at a minimum in order to produce efficiently and profitably. Because of the ever-accelerating shift to productive capital to lower business operational costs, jobs are constantly being eroded. The other aspect impacting job security––the overwhelming source of income for the majority of Americans––is global competition and the sourcing of low-cost “slave” labor. As a result, American businesses seeking to compete in global markets and within the United States market, which is driven by low pricing demand, have out-sourced manufacturing to other countries whose labor costs are significantly lower and whose tax extraction rates and environmental regulations are respectively far less costly and stringent. Such out-sourcing is motivated by the market demand to produce their products and services more efficiently and more profitably.</p>
<p> This combination of free-market forces means that 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, compounded by far less costly out-sourcing of production.</p>
<p>As a result, there are fewer and fewer “customers with money” to purchase the products and services that can be more efficiently produced with productive capital. Economic growth will always be stalled when there are high levels of economic inequality because there will be an imbalance between production and consumption.</p>
<p>Why is this happening?</p>
<p>The reason is simple. A relative few people OWN the preponderance of the nation’s productive capital assets and are positioned to OWN the FUTURE productive wealth, from which they earn dividend income and valuable capital gains asset growth. This is why there is widening economic inequality resulting in class conflict between the so-called 1 percent “successful” ownership class and the 99 percent, who are capital-less or under-capitalized, and whose ONLY source of income is a job or taxpayer-supported government welfare derived from tax extraction and national debt. This Income inequality is exponentially crippling the United States from realizing its creative and social and just economic potential.</p>
<p>Thus, there is the imbalance between production and consumption. A few wealthy people are thereby able to rig the “system” 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 owner more productive. How much employment can be destroyed by substituting machines for people or lowering operational costs 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 or devaluing labor wages and salaries. And yet you can’t have mass production without mass human consumption. It is the exponential disassociation of production and consumption, which is the problem with the United States economy, and the reason that ordinary citizens must gain access to productive capital ownership to improve their economic well being.</p>
<p> The solution is to employ capital credit mechanisms to facilitate the productive capital acquisition by EVERY citizen, whether poor or in the middle class, to fuel a larger and more affluent economy. This can be facilitated on the basis of self-finance, whereby the productive capital assets, after returning its acquisition costs, begin to pay a fully-distributed capital earnings dividend to its new owners, thus initially supplementing their labor income and reducing their taxpayer-supported welfare dependence, and over time building income to replace their dependency on job earnings and secure their retirement as they age.</p>
<p>For the nation to overcome widening income inequality, the obvious, logical solution is for people to OWN THE “MACHINES” and non-human means of production that result from technology. Broadening productive capital ownership should be the priority course of action for the FUTURE. “FUTURE” is capitalized to emphasize that the private property rights of ALL citizens MUST be respected, honored, and protected. Thus, ANY solution(s) to transform the United States into an OWNERSHIP CULTURE must not undermine or seize the private property of the 1 to 10 percent who now own up to 90 percent of the corporate wealth. Instead, the solution(s) MUST expand the ownership pie over time and result in EVERY American man, woman and child earning income to support an affluent life. The result would be that those who now own America would still be owners but their percentage of the total ownership would decrease over time, as ownership gets broader and broader and benefits the traditionally disenfranchised poor and working and middle class, who will become sought-after “customers with money.” Thus, productive capital income would be distributed more broadly and the demand for products and services would be distributed more broadly from the earnings of capital and result in the sustentation of consumer demand, which will promote economic growth. This also means that society can profitably employ unused and idle productive capacity and invest in more productive capacity to service the demands of a growth economy.</p>
<p> </p>
<p>Significantly, by facilitating the acquisition of FUTURE wealth-creating productive capital assets by ALL Americans, everyone will increasingly be able to afford to purchase with their productive capital earnings (dividend income) what is increasingly produced by productive capital. This in turn will create the market conditions for sustainable economic growth, and as private, individual ownership spreads, the larger the economy will grow as people’s incomes increasingly grow and they purchase more products and services to satisfy their needs and wants. Thus, the effect created would be a self-propelling economic engine of growth capable of producing general affluence for every American, and not limited to those few who now OWN America’s productive power and whose consumption needs are satisfactorily, if not overly met.</p>
<p> </p>
<p>This balanced Just Third Way approach to building a FUTURE economy that supports affluence for EVERY American is presently not in the national discussion. It appears that the President of the United States, the elected Congressional representatives and Senators, academia, and the media are oblivious to this principled solution that has the ingredients to power economic growth at double-digit GNP rates.</p>
<p> </p>
<p>To achieve this goal requires investment in FUTURE income-producing, wealth-creating productive capital assets while simultaneously broadening private, individual ownership of the resulting expansion of existing large corporations and future corporations. Not only is employee ownership the norm to be sought wherever there are workers but beyond employee ownership the norm should be to create an OWNERSHIP CULTURE whereby EVERY American can benefit financially by owning a SUPER IRA-TYPE Capital Homestead Account (CHA) portfolio of income-producing, full-voting, full-dividend payout securities in America’s expanding corporations and those newly created to produce the future products and services needed and wanted by society.</p>
<p>This master plan agenda can be accomplished by applying the logic of corporate finance, which is self-financing and asset-backed credit for productive uses to grow the economy. People invest in capital ownership on the basis that the investment will pay for itself. The problem facing the nation is routed in the financial system, which must be reformed.</p>
<p>The wealthy ownership class understands and employs the strategy of investing in opportunities expected to pay for themselves in a reasonable period of time, typically 5 to 7 years, perhaps 10 in some circumstances. This is the fundamental logic of corporate finance couched in "return on investment" terms. This same logic is the personal investment strategy steadfastly followed by successful capitalized and under-capitalized investors. The rich further understand that once the acquisition cost is paid for out of the FUTURE earnings of the productive capital investment, the asset then continues to earn income indefinitely, or in perpetuity. This is precisely the process used by the rich to get richer.</p>
<p>The solution is not to focus on JOB CREATION but to focus on OWNERSHIP CREATION whereby EVERY American can acquire private, individual ownership in FUTURE income-producing productive capital asset investments without the need to limit their financing requirements to past savings and/or require workers to reduce their consumption incomes to become owners. This is not about creating small businesses, which tend to be operated by hands-on entrepreneurs and proprietors, but about creating a viable portfolio of income-producing, full-dividend, full-voting stock ownership in large corporations, whereby there is no education and talent requirement to simply be a share owner. Large corporations are already publicly owned by millions of Americans. But what they have purchased is value-diluted stock through the “stock market exchanges,” purchased with their earnings as labor workers. Their stock holdings are relatively miniscule, as are their dividend payments compared to the top 10 percent of capital owners. And no one addresses whether Dow Jones gains have anything to do with the reality of the health of businesses. The stock market deals in secondhand securities, which essentially translates to a gaming casino. Wall Street has convinced us to see ourselves as “investors” instead of “gamblers” and “perceived values” instead of “bets.”</p>
<p>Conventionally, most people do not have the right to acquire productive capital with the self-financing earnings of capital; they are left to acquire, as best as they can, with their earnings as labor workers. This is fundamentally hard to do and limiting. Thus, the most important economic right Americans need and should demand is the effective right to acquire capital with the earnings of capital.</p>
<p>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. Unfortunately, not enough 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 or “Hoggism.”</p>
<p>The Just Third Way is a balanced approach, which 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 wealth-creating productive capital assets 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.</p>
<p>Economic democracy has yet to be tried. We are absent a national discussion of where consumers earn the money to buy products and services and the nature of capital ownership, and instead argue about policies to redistribute income or not to redistribute income, or to engage in austerity measures or pursue government stimulus.</p>
<p>But how will we ever achieve affluence for EVERY American and eliminate poverty and reliance on taxpayer-supported government welfare, which is fueling national debt? This will require a return to higher income tax and corporate tax rates, which are lowered or entirely eliminated when corporations have demonstrated growth decisions that enable their workers and other citizens to finance their future growth and share in the companies’ fate as share owners. This would enable us to more effectively create investment stimulus incentives through reduced tax rates. While tax and investment stimulus incentives are excellent tools to strengthen economic growth, without the requirement that productive capital ownership is broadened simultaneously, the result will continue to further concentrate productive capital ownership among those who already own, and further create dependency with redistribution policies and programs to sustain purchasing power on the part of the 99 percent of the population who are dependent on their labor worker earnings or welfare to sustain their livelihood. By stimulating economic growth tied to broadened productive capital ownership the benefits are two-fold: one is that over time the 99 percenters will financially benefit from acquiring productive capital assets that are paid for out of the future earnings of the investments and gain greater access to job opportunities that a growth economy generates.</p>
<p>Starting with the business corporation, a legal entity created and sanctioned by state and federal government and judicial law, the government should provide tax incentives for full-dividend payouts to its stockholders, or alternatively legislate that from now on 100 percent of all profits be paid out fully as dividend payments to stockholders (thus, eliminating the corporate income tax), with the dividend income subject to individual taxation. 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 legislating 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, facilitated by financing further productive capital acquisition out of the earnings of existing productive capital.</p>
<p>In place of retained earnings and debt financing, the government should incentivize business 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. This approach can be applied to singular corporations or multiple corporate diversification portfolios facilitated with private capital credit insurance or a government reinsurance agency (ala the Federal Housing Administration concept). This would provide the solution to the need for a financial mechanism put in place that will guarantee loan risks; otherwise banks and lending institutions will not make the loans, and the system will continue to limit access to capital acquisition to those who already own capital—the rich. This is because “poor” people have no security or collateral, or sufficient income to pledge against the loan as security, and/or are disqualified on the grounds of either unproven unreliability or proven unreliability.</p>
<p>Criteria must be created to qualify the corporations subject to this policy and those corporations that qualify overseen so as to ensure 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, and subsequently provide “customers with money” to support the output of the economy.</p>
<p>This approach would use the existing taxing power of government in a way to restructure the economy along the guidelines of universal access to ownership of productive capital wealth with a thrust toward the creation of new wealth.</p>
<p>The ultimate result of the use of the taxing power of government to stimulate the widespread access to ownership of productive capital wealth should be a growing independence of an economically emancipated people both from reliance upon government and from the wage slavery brought into being by monopolistic and oligarchic ownership; and the role and function in our lives both of government and of monopoly and oligarchy ownership ought to diminish.</p>
<p>The national goal should be to foster an economic policy direction toward broadening private ownership participation for all people in the capital wealth base of our economy.</p>
<p>The American Dream since the time of the Founding Fathers has been to foster individually owned free enterprise. Our economic policies, and tax laws foster concentration of business ownership in the hands of a wealthy few by subsidizing and favoring narrowly owned conglomerates and monopolistic combines. This is not good. We need a new economic policy thrust, which will promote the birth of profitable new business enterprises and expand the ownership of large corporations, while stimulating the entrepreneurial creative spirit of business innovators.</p>
<p>This is an agenda for “a quiet revolution”––a national movement for economic justice, tax equity, and governmental responsibility. The thrust of this movement is to focus upon tax reformation and economic policy. To guide this movement toward realizing the goal of economic justice positive and constructive reforms in the tax laws, policies, and procedures of the U.S. Government will be necessary.</p>
<p>When the Federal income tax was authorized by the 16th amendment to the Constitution, it was designed to levy taxes in a progressive and fair way on all income, “from whatever source derived,” in order to pay for the legitimate functions of government as authorized by the people through their elected representatives.</p>
<p>But, over the years, exception after exception has been made to this principle; tax loopholes have allowed the wealthy and the wealthy owners of the corporations to escape high taxes. This means that the tax burden has fallen increasingly on low- and moderate-income working people.</p>
<p>The average American worker works at least 2 out of 5 days just to pay taxes, while scores of wealthy people with incomes over $1 million pay no Federal income taxes at all.</p>
<p>This is not just.</p>
<p>There is hardly any progressivity in taxation. Those with low and moderate incomes pay a higher percentage in taxes than those with higher incomes.</p>
<p>Tax loopholes and government subsidies are really a welfare program for the rich.</p>
<p><b>Recommendations For Tax Reformation: A Just Tax Concept For The U.S. Government</b></p>
<p>Implicit in the original income tax concept was the “ability-to-pay-theory,” that those who earn or receive more income should pay a progressively larger proportion of their incomes to support government.</p>
<p>Another concept inherent in the original income tax law was that government should limit in some manner the vast personal incomes derived by a few people or legal entities owning huge amounts of capital wealth and property.</p>
<p>Tax policies today encourage concentration of capital wealth and property, generating on one hand a huge governmental bureaucracy to regulate centralized economic activity, and on the other hand, an ever-expanding number of economically dependent people requiring another huge government bureaucracy to administer to their needs.</p>
<p>The economic, social, and legal injustices of our society are fostered by tax policies, which enable the rich to become richer, while the majority of the working people, the elderly, small businessmen, family farmers, and poor pay the taxes.</p>
<p>As a nation, we must adopt an economic policy designed to broaden private individual ownership of all forms of property––particularly property ownership rights which yield viable incomes to people. The function of Federal tax policy then should be to encourage broadened private, individual ownership, and discourage private concentrations of capital wealth and excessive personal incomes from property holdings.</p>
<p>For genuine tax reform, positive, constructive, and just reforms in tax law, with review every 5 years or less, are needed.</p>
<p>Recommended Tax Reforms</p>
<p>1. Personal earned incomes and property-derived incomes</p>
<p>The tax rate would be a single rate for all incomes of natural persons from all sources above a personal exemption level so that the budget could be balanced automatically and even allow the government to pay off the growing unsustainable long-term debt, but the poor would pay the first dollar over their exemption levels as would the hedge fund operator and others now earning billions of dollars from capital gains, dividends, rents and other property incomes (which under some tax proposals would be exempted from any taxes). Provide an exemption of $100,000 for a family of four to meet their ordinary living needs.</p>
<p> </p>
<p>Eliminate the payroll tax on workers and their employers, but pay out of general revenues for all promises for Social Security, Medicare, Medicaid, government pensions, health, education, rent and subsistence vouchers for the poor until their new jobs and ownership accumulations provide new incomes to substitute for the taxpayer dollars to fill these needs.</p>
<p> </p>
<p>2. Inheritance and estate taxes</p>
<p>As a substitute for inheritance and gift taxes, a transfer tax would be imposed on the recipients whose holdings exceeded $1 million, thus encouraging the super-rich to spread out their monopoly-sized estates to all members of their family, friends, servants and workers who helped create their fortunes; teachers; health workers; police; other public servants; military veterans; artists; the poor; and the disabled.</p>
<p> </p>
<p>Each year tens of billions of dollars in wealth-creating productive capital assets are passed along to heirs under current tax laws. The revenues generated from inheritance taxes should be pledged to support the Social Security program, thus achieving a reduction in Social Security taxes, which are becoming a tax burden.</p>
<p>3. Corporations and business taxes for non-small business enterprises</p>
<p>A. Investment credit tax incentives––The net result of new capital wealth formation is to create more productive land, industrial plant and equipment, machinery, tools, et cetera. In a highly technological economy the purpose of scientific advancement is not to create jobs (labor intensive production), but to substitute more efficient machines, buildings, tools, and productive land for labor––human work effort. This is the basis of increasing productiveness, and has been since the invention of the wheel to today’s age of cybernetics. Invention and innovation are supposed to save labor and free people for the enjoyment of the good life, the pursuant of happiness, and the improvement of their minds and bodies––to enable the fulfillment of the needs of the flesh (man’s material needs and well-being), so that the works of the soul may flow.</p>
<p>With an economic policy designed to foster widespread private equity ownership participation in the capital wealth assets of our economy, the use and purpose of the investment tax credit device as a special governmental subsidy to private corporations has a significant potential for encouraging broader ownership of income-producing productive property rights among all people.</p>
<p>If an investment tax credit is given to a business organization, it should be limited to finance real new capital wealth expansion for widespread private ownership participation by individuals and families.</p>
<p>The Federal Reserve should stop monetizing unproductive debt and begin creating an asset-backed currency that could enable every man, woman and child to establish a Capital Homestead Account or "CHA" (a super-IRA or asset tax-shelter for citizens) at their local bank to acquire a growing dividend-bearing stock portfolio to supplement their incomes from work and all other sources of income. The CHA would process an equal allocation of productive credit to every citizen exclusively for purchasing full-dividend payout shares in companies needing funds for growing the economy and private sector jobs for local, national and global markets. The shares would be purchased on credit wholly backed by projected “future savings” in the form of new productive capital assets as well as the future marketable products and services produced by the newly added technology, renewable energy systems, plant, rentable space and infrastructure added to the economy. Risk of default on each stock acquisition loan would be covered by private sector capital credit risk insurance and reinsurance, but would not require citizens to reduce their funds for consumption to purchase shares.</p>
<p> </p>
<p>B. Nonpublic close corporations––All non-publicly registered and traded corporations, that is, those that are close corporations owned by a few people, and not classified under definitions set by the Small Business Administration, Department of Commerce, as a “small business,” or whose stock is not traded on the open markets and broadly owned, should be taxed as personal holding companies. The tax policy for close corporations, which by their nature concentrate wealth and limit free enterprise, should result in expanded ownership of capital wealth and discourage such organizations.</p>
<p>The income of such corporations should be treated as the personal incomes of their owners and taxed at personal income tax rates as herein recommended.</p>
<p>This tax policy will discourage private concentrations of capital wealth, and encourage viable small businesses and widespread private popular ownership shares in the small and large business corporations of America.</p>
<p>C. Public corporations––Tax policy of the Federal Government should encourage broad private ownership of public corporations, Publicly registered business corporations should be taxed on a basis, which encourages broad ownership and the fullest distribution of earnings to their owners.</p>
<p>The following tax policies for all publicly owned private corporations should be applied, based upon the philosophy that a corporation is a creature of the State, created by law, recognized as an “artificial person,” able to amass vast amounts of capital wealth with limited liability, and can have a life in perpetuity. Since a corporation is a legally created entity, and not a human being, its function, powers, responsibilities, and ownership are a matter of significant social, political, and economic policy.</p>
<p>Public corporations should be taxed as follows:</p>
<p>If profits are retained, that is, reinvested and not paid to the stockholder-owners, the corporation will pay a 90 percent tax on retained earnings.</p>
<p>Dividends paid out to stockholders-owners would be deductible from corporate earnings thus making these earnings subject to personal income tax rates.</p>
<p>All subsidiary corporations and partially or wholly owned enterprises of a parent or holding corporation will be taxed as a separate enterprise entity, as under the above recommended policy.</p>
<p>4. Business sole proprietorships and partnerships, and close corporations classified as small business</p>
<p>No change in existing tax procedure are necessary, except that the tax rate on such business incomes would be the same for individuals.</p>
<p>5. Capital gains tax––non-public corporations and close corporations</p>
<p>For individuals, capital gains realized on the sale of a personal residence, owned and occupied by a natural person or persons and/or a family would be taxed at the personal income tax rate.</p>
<p>All other capital gains in property interests (real or personal, securities et cetera) unless exchanged within 1 year for property of equivalent value, would be taxed at the personal income tax rate.</p>
<p>6. Capital property holdings tax: Limits on ownership</p>
<p>All individuals, whether their property is combined with others in joint tenancies, co-tenancies, or community property holdings of natural persons should be subject to a capital property holdings tax if the certified net worth or equity value of the property holding of the taxpayer exceeds $1 million.</p>
<p>7. Tax loopholes and subsidies</p>
<p> Eliminate all.</p>
<p>Legitimate Functions Of Government And Governmental Responsibility</p>
<p>Tax policy must, by necessity, be linked to a definition of the legitimate functions of government and governmental responsibility with respect to the uses of Federal tax revenues.</p>
<p>Therefore, the tax revenues flowing to the Federal Government as a result of these recommendations should be used for the following purposes:</p>
<p>1. Promote the general welfare for all people.</p>
<p>2. Encourage viable and broadly owned business enterprise, and a free competitive market.</p>
<p>3. Foster broad private individual ownership of the capital wealth base of our economy.</p>
<p>4. Insure a fair and meaningful stake among individuals in the future of our nation.</p>
<p>5. Promote economic justice for all people.</p>
<p>6. Enhance civilization, and encourage the arts, science, significant educations, and other creative human endeavors.</p>
<p>7. Guarantee individual liberty, and economic security and independence for all people.</p>
<p>8. Promote peace and world enrichment, while providing for the common defense.</p>
<p>9. Encourage community enhancement and environmental quality.</p>
<p>10. Enhance life, health, and personal happiness for all people.</p>
<p>11. Foster domestic tranquility and fraternity.</p>
<p>12. Encourage human tolerance, respect, and personal responsibility and dignity.</p>
<p>13. Promote mutual cooperation and trust for mutual benefit for all people.</p>
<p>The ultimate result that we should seek is growing independence of an economically emancipated people both from reliance upon government and from the wage slavery brought into being by monopolistic and oligarchic ownership, and the role and function in our lives both of government and of monopoly and oligarchic ownership ought to diminish.</p>
<p>Recommendations For Future Study</p>
<p>While these tax reform recommendations will generate substantial revenue increases to the Federal Government, strengthen the nation, and result in reducing the burden upon all poor and working people, particularly those families with incomes under $30,000 per year, an in-depth study is necessary to determine the full impact of such a new tax and economic policy thrust, as herein advocated.</p>
<p>A Tax Reformation Commission should be established by the U.S. Congress to conduct an in-depth study of these tax reform recommendations and those of others to determine the impact of these measures on the economy, the structure of private property ownership and free enterprise, the concentration of wealth, income distribution, and revenues generated to the Federal Government.</p>
<p>The U.S. Congress should establish a census of wealth valuation inventory. Every five years, the Commissioner of Internal Revenue, in conjunction with the Bureau of the Census, should conduct a valuation census of the property holding of all individuals, held in accordance with regulations published in the Federal Register. These records should be treated with the same confidentiality as is presently given to personal income tax records.</p>
<p>The wealth valuation computations for each individual would be used to establish one’s priority relative to other individuals for qualifying for government programs aimed at strengthening the self-sufficiency of the individual through acquisition and ownership of new and/or transferred capital wealth assets.</p>
<p>Concluding Remarks</p>
<p>The fact is that political democracy is impossible without economic democracy. Those who control money control the laws that foster wage slavery, welfare slavery, debt slavery and charity slavery. These laws can and should be changed by the 99 percent and those among the 1 percent who are committed to a just and economically classless market economy, true equality of opportunity, and a level playing field in the future for 100 percent of Americans. By adopting economic policies and programs that acknowledge every citizen’s right to become a capital owner as well as a labor worker, the result will be an end to perpetual labor servitude and the liberation of people from progressive increments of subsistence toil and compulsive poverty as the 99 percent benefits from the rewards of productive capital-sourced income.</p>
<p> </p>
<p>A National Right To Capital Ownership Act and the Capital Homestead Act that restores the American dream should be advocated by the progressive movement, which addresses the reality of Americans facing job opportunity deterioration and devaluation due to tectonic shifts in the technologies of production.</p>
<p> </p>
<p>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 to the Federal Reserve. The Federal Reserve Board is already empowered under Section 13 of the Federal Reserve Act to reform monetary policy to discourage non-productive uses of credit, to encourage accelerated rates of private sector growth, and to promote widespread individual access to productive credit as a fundamental right of citizenship. The Federal Reserve Board needs to re-activate its discount mechanism to encourage private sector growth linked to expanded productive capital ownership opportunities for all Americans.</p>
<p> </p>
<p>The labor union movement should transform to a producers’ ownership union movement and embrace and fight for this new democratic capitalism. They should play the part that they have always aspired to––that is, a better and easier life through participation in the nation’s economic growth and progress. As a result, labor unions will be able to broaden their functions, revitalize their constituency, and reverse their decline. Unfortunately, at the present time the movement is built on one-factor economics––the labor worker. The insufficiency of labor worker earnings to purchase products and services increasingly produced by productive capital 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.</p>
<p> </p>
<p>The unions should reassess their role of bargaining for more and more income for the same work or less and less work, and embrace a cooperative approach to survival, whereby they redefine “more” income for their workers in terms of the combined wages of labor and capital on the part of the workforce. They should continue to represent the workers as labor workers in all the aspects that are represented today––wages, hours, and working conditions––and, in addition, represent workers as full voting stockowners as capital ownership is built into the workforce. What is needed is leadership to define “more” as two ways to earn income.</p>
<p> </p>
<p>If we continue with the past’s unworkable “trickle-down” economic policies, governments will have to continue to use the coercive power of taxation to redistribute income that is made by people who earn it and give it to those who need it. This results in ever-deepening massive debt on local, state, and national government levels, which leads to the citizenry becoming parasites instead of enabling people to become productive in the way that products and services are actually produced.</p>
<p> </p>
<p>There is a solution to America’s economic decline, which will result in double-digit economic growth and simultaneously broaden private, individual ownership so that EVERY American's income significantly grows, providing the means to support themselves and their families with an affluent lifestyle. This new paradigm is the subject of the Agenda of The Just Third Way Movement at <a href="http://foreconomicjustice.org/?p=5797">http://foreconomicjustice.org/?p=5797</a> and is founded on the concept of Monetary Justice (<a href="http://capitalhomestead.org/page/monetary-justice">http://capitalhomestead.org/page/monetary-justice</a>).</p>
<p>A Petition to reform the Federal Reserve to provide capital credit to ALL Americans can be supported at <a href="http://signon.org/sign/amend-the-federal-reserve.fb27?source=c.fb&r_by=3904687">http://signon.org/sign/amend-the-federal-reserve.fb27?source=c.fb&r_by=3904687</a>. The proposed Capital Homestead Act (<a href="http://www.cesj.org/homestead/index.htm">http://www.cesj.org/homestead/index.htm</a> and <a href="http://www.cesj.org/homestead/summary-cha.htm">http://www.cesj.org/homestead/summary-cha.htm</a>) would accomplish the necessary reforms.</p>The Path To Sustainable Economic Growthtag:capitalhomestead.org,2013-10-17:6384157:BlogPost:123442013-10-17T16:46:01.000ZGary Reberhttp://capitalhomestead.org/profile/GaryReber867
<p>At the core of understanding America’s economic disintegration and seemingly intractable economic problems is the need to learn a new way of thinking that explains why the operation of our modern industrial economy is simply not working. Although tectonic shifts and advances in the technologies of production promise the increasing abundance of exponential growth in the economy's capacity to produce products and services with much less human effort, there is widespread poverty and a…</p>
<p>At the core of understanding America’s economic disintegration and seemingly intractable economic problems is the need to learn a new way of thinking that explains why the operation of our modern industrial economy is simply not working. Although tectonic shifts and advances in the technologies of production promise the increasing abundance of exponential growth in the economy's capacity to produce products and services with much less human effort, there is widespread poverty and a disintegration of middle class status. Even when the economy has experienced some degree of growth, too many people remain poor or are excluded from the resulting limited economic abundance. The notion that the economic benefits flowing to a wealthy class will "trickle-down" is a non-sensible theory and only results in "trickle" menial, low-pay jobs, private charity, and public taxpayer-supported welfare, in plain view and disguised.</p>
<p> </p>
<p>What has and continues to escape the focus of conventional economists, and the politics of progressives, centralists and conservatives, is that the wealthy are rich because they own productive capital––non-human wealth-creating assets used to produce products and services. The reality is that in most economic tasks and in the overall economy, productive capital (not human labor) is independently doing evermore of the work that results in the products and services produced for consumption. It is productive capital's increasing productiveness and evolution, rather than human effort (productivity conventionally considered) that is the productive means most responsible for economic growth. Effectively, technological innovation and invention limits new higher productivity jobs to relatively fewer workers, leaving most other people willing and able to work with lower paying job opportunities or no jobs at all. This increasing majority is finding it more and more difficult to afford the products and services that are increasingly produced by productive capital.</p>
<p> </p>
<p>It is essential that people focus their thinking on the understanding of who and what creates wealth, in order to fully understand how to solve growing income inequality and the disintegration of the nation wherein the majority of citizens are regulated to low-pay job serfdom and public welfare.</p>
<p> </p>
<p>The required new thinking must respect property rights, and the right of all citizens to acquire private and individual ownership of wealth-creating productive capital assets. This is the path to prosperity, opportunity, and economic justice––the ONLY path that will assure democratic and free market conditions.</p>
<p> </p>
<p>The reality is that while increasingly productive capital growth is the means to achieving general affluence for all citizens, the practical opportunity to acquire productive capital is not accessible to everyone. The vast majority of citizens are unnecessarily excluded from effective participation in the property rights and earnings of productive capital assets. This is not to say that the opportunity to acquire productive capital does not exist, but that the opportunity is unnecessarily denied to the middle class and poor (the savings-poor capital-less and under-capitalized) and effectively limited to the few who are already well-capitalized and thereby wealthy. Even though the wealthy ownership class represents less than 10 percent of the population with the very rich representing 1 percent or less of the population, they all use the potent financial mechanism of capital credit to acquire productive capital assets, with virtually all assets acquired using the earnings of the productive capital to pay for their acquisition. Through this financial mechanism the rich effectively acquire more riches through the process of acquiring capital productiveness with the earnings of production.</p>
<p> </p>
<p>In the meantime, while the economy's technical prowess is capable of producing the products and services needed and wanted by ALL people, the poor and middle class are unable to realize their needs and wants no matter how hard they work, because they cannot earn enough through a job to consume what the economy can produce.</p>
<p> </p>
<p>While ALL citizens have the right to earn an income through participating in production, ONLY a few are privileged to effectively participate in production beyond their own labor to include their wealth-creating productive capital assets.</p>
<p> </p>
<p>When the right to participate in production through productive capital ownership is effectively denied, especially when tectonic shifts in the technologies of production destroy and degrade the worth of jobs, then the people affected become increasingly insecure in satisfying their and their family's basic survival. Such conditions force them to seek low-pay, low-security jobs, or either charity or welfare, or desperately engage in illegitimate means. Such disintegration tears at society's sense of fairness and justice, and spreads resentment, alienation and despair.</p>
<p> </p>
<p>The solution should be obvious––that is to eliminate what amounts to an effective monopoly on productive capital acquisition. This will unleash the economy's full potential to harness and employ wealth-producing productive capital assets broadly owned by ALL Americans, while respecting the full property rights of all and without taking anything from the wealthy who now OWN America. The effect would be to democratize both political power and economic power.</p>
<p> </p>
<p>The solution is to employ capital credit mechanisms to facilitate the productive capital acquisition by EVERY citizen, whether poor or in the middle class, to fuel a larger and more affluent economy. This can be facilitated on the basis of self-finance, whereby the productive capital assets, after returning its acquisition costs, begin to pay a fully-distributed capital earnings dividend to its new owners, thus initially supplementing their labor income and reducing their taxpayer-supported welfare dependence, and over time building income to replace their dependency on job earnings and secure their retirement as they age.</p>
<p> </p>
<p>Significantly, by facilitating the acquisition of FUTURE wealth-creating productive capital assets by ALL Americans, everyone will increasingly be able to afford to purchase with their productive capital earnings (dividend income) what is increasingly produced by productive capital. This in turn will create the market conditions for sustainable economic growth, and as private, individual ownership spreads, the larger the economy will grow as people's incomes increasingly grow and they purchase more products and services to satisfy their needs and wants. Thus, the effect created would be a self-propelling economic engine of growth capable of producing general affluence for every American, and not limited to those few who now OWN America’s productive power and whose consumption needs are satisfactorily, if not overly met.</p>
<p> </p>
<p>To reform the system and make universal productive capital ownership America's future reality requires limited government action. Traditionally, government programs for investment have produced jobs, but relatively few capitalist owners. Until the structural defects of the system are reformed to achieve effective individual ownership of FUTURE productive capital assets for ALL, the system will continue to perpetually benefit the well-capitalized wealthy, while everyone else is regulated to scarcer jobs and welfare dependency. The action that is required is to eliminate the financial mechanism barriers that effectively concentrate the ownership of productive capital assets, and establish an infrastructure necessary to protect the productive capital acquisition rights of ALL citizens.</p>
<p> </p>
<p>Furthermore, ALL government incentives supported by taxpayer dollars and debt, to stimulate the economy with the object of providing more growth and jobs, need to have the stipulation that the corporations receiving the financial benefit demonstrate the creation of new owners, both employees and non-employees. Today, such stimulus does not effectively create new productive capital owners but benefits those who already OWN, in the name of job creation. But the jobs and corresponding wages, which actually result, are often short-lived and always insufficient to effectively assure financial security. The proposition that taxpayer dollars and debt stimulus be used to create new owners in FUTURE productive capital creation, acquired by using the earnings of productive capital, will enable people to harness for themselves the productive power of wealth-creating capital assets to pay for its own acquisition and restoration and thereafter to earn income indefinitely.</p>
<p> </p>
<p>The wealthy ownership class understands and employs the strategy of investing in opportunities expected to pay for themselves in a reasonable period of time, typically 5 to 7 years, perhaps 10 in some circumstances. This is the fundamental logic of corporate finance couched in "return on investment" terms. This same logic is the personal investment strategy steadfastly followed by successful capitalized and under-capitalized investors. The rich further understand that once the acquisition cost is paid for out of the FUTURE earnings of the productive capital investment, the asset then continues to earn income indefinitely, or in perpetuity. This is precisely the process used by the rich to get richer.</p>
<p> </p>
<p>Thus, rather than preach austerity and redistribution, Americans should seek prosperity through economic growth financed through capital credit and paid for out of the earnings of productive capital while simultaneously creating new capital owners. This new earnings source will enable ALL Americans to earn sufficient income to live well, and not rely solely on a job. This will also strengthen individualism, personal responsibility and respect for equal rights and empower individuals to more fully realize their inherent potentials.</p>
<p> </p>
<p>The end result will be to forge a true free market economy in which EVERY American privately and individually participates in the increasing utilization of productive capital to create wealth, and in turn uses this viable dividend income source to satisfy their consumer needs and wants. Collectively, this will fuel affluence and sustainable economic growth.</p>
<p> </p>
<p>This new paradigm is the subject of the Agenda of The Just Third Way Movement at <a href="http://foreconomicjustice.org/?p=5797">http://foreconomicjustice.org/?p=5797</a> and is founded on the concept of Monetary Justice (<a href="http://capitalhomestead.org/page/monetary-justice">http://capitalhomestead.org/page/monetary-justice</a>).</p>
<p>A Petition to reform the Federal Reserve to provide capital credit to ALL Americans can be supported at <a href="http://signon.org/sign/amend-the-federal-reserve.fb27?source=c.fb&r_by=3904687">http://signon.org/sign/amend-the-federal-reserve.fb27?source=c.fb&r_by=3904687</a>. The proposed Capital Homestead Act (<a href="http://www.cesj.org/homestead/index.htm">http://www.cesj.org/homestead/index.htm</a> and <a href="http://www.cesj.org/homestead/summary-cha.htm">http://www.cesj.org/homestead/summary-cha.htm</a>) would accomplish the necessary reforms.</p>The Path To Eradicating Poverty In Americatag:capitalhomestead.org,2013-10-17:6384157:BlogPost:125132013-10-17T16:41:13.000ZGary Reberhttp://capitalhomestead.org/profile/GaryReber867
<p>During the four years of the “Obama Recovery,” poverty in the United States has soared to the highest levels since the beginning of the “War on Poverty,” the one war that nobody talks about an exit strategy for.</p>
<p>"The U.S. Census Bureau puts the number of Americans in poverty at levels not seen since the mid-1960s when President Lyndon B. Johnson launched the federal government’s so-called War on Poverty. As President Barack Obama began his second term in January, nearly 50 million…</p>
<p>During the four years of the “Obama Recovery,” poverty in the United States has soared to the highest levels since the beginning of the “War on Poverty,” the one war that nobody talks about an exit strategy for.</p>
<p>"The U.S. Census Bureau puts the number of Americans in poverty at levels not seen since the mid-1960s when President Lyndon B. Johnson launched the federal government’s so-called War on Poverty. As President Barack Obama began his second term in January, nearly 50 million Americans — one in six — were living below the income line that defines poverty, according to the bureau. A family of four that earns less than $23,021 a year is listed as living in poverty. The bureau said 20 percent of the country’s children are poor." –– Associated Press</p>
<p>Poverty will persist endlessly until this nation addresses the issue of the exponential disassociation of production and consumption, which 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. In order to eradicate poverty we need to adjust the opportunity to produce, not the redistribution of income after it is produced, which has proven to be an unworkable and unsustainable solution.</p>
<p>Without reforming the system, the projection is that by the year 2020, more than 50 percent of the American people will not earn more than the minimum wage. Of course, this means bad news for ending the economy's depression and eradicating poverty. Until we address and reform the financial structure of the economy, depression will continue and worsen. The problem is that you can’t have mass production without mass human consumption––no production, no growth.</p>
<p>The rise of part-time employment and underemployment is on a projectory to get far worse with tens of millions of Americans facing unemployment and underemployment due to cheap global labor and tectonic shifts in the technologies of production that are destroying jobs and devaluing jobs in terms of wage and salary levels, forcing American to subsist at poverty or near-poverty levels.</p>
<p>Soon, industrial monopoly capitalism will reach its twin goals: concentration of productive capital ownership among the elite ownership class and work performed with as few labor workers and the lowest possible wages and salaries. The question to be answered is "Then what?"</p>
<p>Of course, to reach this twin goal will require "investment." The term "invest" sounds good on paper or in speeches, especially when justified on the basis that investment will create JOBS. But the reality is that no one is addressing the CONCENTRATED OWNERSHIP of the income-producing assets that result from investments under the current financial system. Such assets created by investment are the result of tectonic shifts in the technologies of production, which is the real reason, as well as outsourcing, that jobs are being destroyed and devalued in terms of wage and salary levels. Until President Obama and the United States Congress address this BIG ISSUE, unemployment and welfare roles will dramatically expand. It is only through future investment with the stipulation of simultaneously broadening private, individual ownership of income-producing productive capital––the non-human means of production embodied in human-intelligent machines, super-automation, robotics, digital computerized operations, etc.––that we will be able to enrich EVERY American's life, and finally end poverty in America.</p>
<p>As a nation, we continue to ignore the possibility of democratizing future ownership of labor-displacing productive capital technologies and rising ownership incomes as a market-generated means of eliminating wage slavery, welfare slavery, debt slavery and charity slavery for the 99 percent of humanity. Binary economist Louis Kelso argued that the Keynesian model fails to recognize that “when capital workers replace labor workers as the major suppliers of goods and services, labor employment alone becomes inadequate because labor’s share of the income arising from production cannot provide the progressively better standard of living that technology is making possible. Labor produces subsistence at best. Capital can produce affluence. To enjoy affluence, all households must engage to an increasing extent in capital work”</p>
<p>For decades employment opportunity in the United States was such that the majority of people could obtain a job that could support their livelihood, though in most cases related to a family, it required the father and mother to both work, if they aspired to live a "middle class" lifestyle. With "Free Trade" those opportunities began to disintegrate as corporations sought to seek lower cost production taking advantage of global cheap labor rates and non-regulation, as well as lower tax rates abroad. This resulted in a chain reaction forcing more and more companies to out-source in order to stay competitive (thus the rise of China, Indiana Mexico, and other third-world nations economies).</p>
<p>At the same time tectonic shifts in the technologies of production were exponentially occurring (and continue to do so), which resulted in less job opportunities as production was shifted from people making things to "machines" of technology making things. The combination of cheap global labor costs and lower long-term invested "machine" costs has forced the value of labor downward and this will continue to be the reality. Our only way to far greater prosperity, opportunity, and economic justice is to embrace technological innovation and invention and the resulting human-intelligent machines, superautomation, robotics, digital computerized operations, etc as the primary economic engine of growth.</p>
<p>But significantly, unless we reform our system to empower EVERY American to acquire, via insured capital loans, viable full-ownership holdings (and thus entitlement to full-dividend earnings) in the companies growing the economy with the future earnings of the investments paying for the initial loan debt to acquire ownership, then the concentration of ownership of ALL future productive capital will continue to be amassed by a wealthy minority. Companies will continue to globalized in search of "customers" with money or simply fail as exponentially there will be fewer and fewer customers to support their businesses worldwide. Why, because the majority will be disconnected from the income derived from the non-human means of production that is replacing the need for labor workers.</p>
<p>Education is not the solution, though it is critical for our future societal development. But except for a relative few, the majority of the population, no matter how well educated, will not be able to find a job that pays sufficient wages or salaries to support a family or to prevent a lifestyle which is gradually being crippled by near poverty or poverty earnings.</p>
<p>Already, GDP growth is at a near standstill. Lowering taxes on the wealthy ownership class will not much impact this reality because they will not invest unless their are "customers with money" to create demand. This will continue to be the reality unless we reform the system to connect the majority of people to the property rights of the non-human production of products and services while simultaneously spurring economic growth, and entitle them to the full earnings of capital (dividends, interest and rent) as a second income source to supplement their earnings from their labor in the short-term, with the long-term lifetime goal of earnings from capital ownership being the primary source of their income. This is the ONLY way to strengthen individuals and empower them to become personally responsible for their lives and not be dependent on taxpayer redistribution and national debt to sustain welfare support, open or concealed.</p>
<p>Sadly, our leaders are not prepared and are not preparing the American people for the coming economic collapse and the next Great Depression, due to their lack of wisdom and foresight to understand that 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––the use of "machines," super-automation, robotics, digital computerized operations, etc. to produce products and services.</p>
<p>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.</p>
<p>A National Right To Capital Ownership Bill that restores the American dream should be advocated by the progressive movement, which addresses the reality of Americans facing job opportunity deterioration and devaluation due to tectonic shifts in the technologies of production.</p>
<p>There is a solution, which will result in double-digit economic growth and simultaneously broaden private, individual ownership so that EVERY American's income significantly grows, providing the means to support themselves and their families with an affluent lifestyle. The Just Third Way Master Plan for America's future is published at <a href="http://foreconomicjustice.org/?p=5797">http://foreconomicjustice.org/?p=5797</a>.</p>
<p>The solution is obvious but our leaders, academia, conventional economist and the media are oblivious to the necessity to broaden ownership in the new capital formation of the future simultaneously with the growth of the economy, which then becomes self-propelled as increasingly more Americans accumulate ownership shares and earn a new source of dividend income derived from their capital ownership in the "machines" that are replacing them or devaluing their labor worth.</p>
<p>Support the Capital Homestead Act at <a href="http://www.cesj.org/homestead/index.htm">http://www.cesj.org/homestead/index.htm</a> and <a href="http://www.cesj.org/homestead/summary-cha.htm">http://www.cesj.org/homestead/summary-cha.htm</a></p>The Path To Sustainable Economic Growthtag:capitalhomestead.org,2013-10-17:6384157:BlogPost:124532013-10-17T16:37:42.000ZGary Reberhttp://capitalhomestead.org/profile/GaryReber867
<p>At the core of understanding America’s economic disintegration and seemingly intractable economic problems is the need to learn a new way of thinking that explains why the operation of our modern industrial economy is simply not working. Although tectonic shifts and advances in the technologies of production promise the increasing abundance of exponential growth in the economy's capacity to produce products and services with much less human effort, there is widespread poverty and a…</p>
<p>At the core of understanding America’s economic disintegration and seemingly intractable economic problems is the need to learn a new way of thinking that explains why the operation of our modern industrial economy is simply not working. Although tectonic shifts and advances in the technologies of production promise the increasing abundance of exponential growth in the economy's capacity to produce products and services with much less human effort, there is widespread poverty and a disintegration of middle class status. Even when the economy has experienced some degree of growth, too many people remain poor or are excluded from the resulting limited economic abundance. The notion that the economic benefits flowing to a wealthy class will "trickle-down" is a non-sensible theory and only results in "trickle" menial, low-pay jobs, private charity, and public taxpayer-supported welfare, in plain view and disguised.</p>
<p> </p>
<p>What has and continues to escape the focus of conventional economists, and the politics of progressives, centralists and conservatives, is that the wealthy are rich because they own productive capital––non-human wealth-creating assets used to produce products and services. The reality is that in most economic tasks and in the overall economy, productive capital (not human labor) is independently doing evermore of the work that results in the products and services produced for consumption. It is productive capital's increasing productiveness and evolution, rather than human effort (productivity conventionally considered) that is the productive means most responsible for economic growth. Effectively, technological innovation and invention limits new higher productivity jobs to relatively fewer workers, leaving most other people willing and able to work with lower paying job opportunities or no jobs at all. This increasing majority is finding it more and more difficult to afford the products and services that are increasingly produced by productive capital.</p>
<p> </p>
<p>It is essential that people focus their thinking on the understanding of who and what creates wealth, in order to fully understand how to solve growing income inequality and the disintegration of the nation wherein the majority of citizens are regulated to low-pay job serfdom and public welfare.</p>
<p> </p>
<p>The required new thinking must respect property rights, and the right of all citizens to acquire private and individual ownership of wealth-creating productive capital assets. This is the path to prosperity, opportunity, and economic justice––the ONLY path that will assure democratic and free market conditions.</p>
<p> </p>
<p>The reality is that while increasingly productive capital growth is the means to achieving general affluence for all citizens, the practical opportunity to acquire productive capital is not accessible to everyone. The vast majority of citizens are unnecessarily excluded from effective participation in the property rights and earnings of productive capital assets. This is not to say that the opportunity to acquire productive capital does not exist, but that the opportunity is unnecessarily denied to the middle class and poor (the savings-poor capital-less and under-capitalized) and effectively limited to the few who are already well-capitalized and thereby wealthy. Even though the wealthy ownership class represents less than 10 percent of the population with the very rich representing 1 percent or less of the population, they all use the potent financial mechanism of capital credit to acquire productive capital assets, with virtually all assets acquired using the earnings of the productive capital to pay for their acquisition. Through this financial mechanism the rich effectively acquire more riches through the process of acquiring capital productiveness with the earnings of production.</p>
<p> </p>
<p>In the meantime, while the economy's technical prowess is capable of producing the products and services needed and wanted by ALL people, the poor and middle class are unable to realize their needs and wants no matter how hard they work, because they cannot earn enough through a job to consume what the economy can produce.</p>
<p> </p>
<p>While ALL citizens have the right to earn an income through participating in production, ONLY a few are privileged to effectively participate in production beyond their own labor to include their wealth-creating productive capital assets.</p>
<p> </p>
<p>When the right to participate in production through productive capital ownership is effectively denied, especially when tectonic shifts in the technologies of production destroy and degrade the worth of jobs, then the people affected become increasingly insecure in satisfying their and their family's basic survival. Such conditions force them to seek low-pay, low-security jobs, or either charity or welfare, or desperately engage in illegitimate means. Such disintegration tears at society's sense of fairness and justice, and spreads resentment, alienation and despair.</p>
<p> </p>
<p>The solution should be obvious––that is to eliminate what amounts to an effective monopoly on productive capital acquisition. This will unleash the economy's full potential to harness and employ wealth-producing productive capital assets broadly owned by ALL Americans, while respecting the full property rights of all and without taking anything from the wealthy who now OWN America. The effect would be to democratize both political power and economic power.</p>
<p> </p>
<p>The solution is to employ capital credit mechanisms to facilitate the productive capital acquisition by EVERY citizen, whether poor or in the middle class, to fuel a larger and more affluent economy. This can be facilitated on the basis of self-finance, whereby the productive capital assets, after returning its acquisition costs, begin to pay a fully-distributed capital earnings dividend to its new owners, thus initially supplementing their labor income and reducing their taxpayer-supported welfare dependence, and over time building income to replace their dependency on job earnings and secure their retirement as they age.</p>
<p> </p>
<p>Significantly, by facilitating the acquisition of FUTURE wealth-creating productive capital assets by ALL Americans, everyone will increasingly be able to afford to purchase with their productive capital earnings (dividend income) what is increasingly produced by productive capital. This in turn will create the market conditions for sustainable economic growth, and as private, individual ownership spreads, the larger the economy will grow as people's incomes increasingly grow and they purchase more products and services to satisfy their needs and wants. Thus, the effect created would be a self-propelling economic engine of growth capable of producing general affluence for every American, and not limited to those few who now OWN America’s productive power and whose consumption needs are satisfactorily, if not overly met.</p>
<p> </p>
<p>To reform the system and make universal productive capital ownership America's future reality requires limited government action. Traditionally, government programs for investment have produced jobs, but relatively few capitalist owners. Until the structural defects of the system are reformed to achieve effective individual ownership of FUTURE productive capital assets for ALL, the system will continue to perpetually benefit the well-capitalized wealthy, while everyone else is regulated to scarcer jobs and welfare dependency. The action that is required is to eliminate the financial mechanism barriers that effectively concentrate the ownership of productive capital assets, and establish an infrastructure necessary to protect the productive capital acquisition rights of ALL citizens.</p>
<p> </p>
<p>Furthermore, ALL government incentives supported by taxpayer dollars and debt, to stimulate the economy with the object of providing more growth and jobs, need to have the stipulation that the corporations receiving the financial benefit demonstrate the creation of new owners, both employees and non-employees. Today, such stimulus does not effectively create new productive capital owners but benefits those who already OWN, in the name of job creation. But the jobs and corresponding wages, which actually result, are often short-lived and always insufficient to effectively assure financial security. The proposition that taxpayer dollars and debt stimulus be used to create new owners in FUTURE productive capital creation, acquired by using the earnings of productive capital, will enable people to harness for themselves the productive power of wealth-creating capital assets to pay for its own acquisition and restoration and thereafter to earn income indefinitely.</p>
<p> </p>
<p>The wealthy ownership class understands and employs the strategy of investing in opportunities expected to pay for themselves in a reasonable period of time, typically 5 to 7 years, perhaps 10 in some circumstances. This is the fundamental logic of corporate finance couched in "return on investment" terms. This same logic is the personal investment strategy steadfastly followed by successful capitalized and under-capitalized investors. The rich further understand that once the acquisition cost is paid for out of the FUTURE earnings of the productive capital investment, the asset then continues to earn income indefinitely, or in perpetuity. This is precisely the process used by the rich to get richer.</p>
<p> </p>
<p>Thus, rather than preach austerity and redistribution, Americans should seek prosperity through economic growth financed through capital credit and paid for out of the earnings of productive capital while simultaneously creating new capital owners. This new earnings source will enable ALL Americans to earn sufficient income to live well, and not rely solely on a job. This will also strengthen individualism, personal responsibility and respect for equal rights and empower individuals to more fully realize their inherent potentials.</p>
<p> </p>
<p>The end result will be to forge a true free market economy in which EVERY American privately and individually participates in the increasing utilization of productive capital to create wealth, and in turn uses this viable dividend income source to satisfy their consumer needs and wants. Collectively, this will fuel affluence and sustainable economic growth.</p>
<p> </p>
<p>This new paradigm is the subject of the Agenda of The Just Third Way Movement at <a href="http://foreconomicjustice.org/?p=5797">http://foreconomicjustice.org/?p=5797</a> and is founded on the concept of Monetary Justice (<a href="http://capitalhomestead.org/page/monetary-justice">http://capitalhomestead.org/page/monetary-justice</a>).</p>
<p>A Petition to reform the Federal Reserve to provide capital credit to ALL Americans can be supported at <a href="http://signon.org/sign/amend-the-federal-reserve.fb27?source=c.fb&r_by=3904687">http://signon.org/sign/amend-the-federal-reserve.fb27?source=c.fb&r_by=3904687</a>. The proposed Capital Homestead Act (<a href="http://www.cesj.org/homestead/index.htm">http://www.cesj.org/homestead/index.htm</a> and <a href="http://www.cesj.org/homestead/summary-cha.htm">http://www.cesj.org/homestead/summary-cha.htm</a>) would accomplish the necessary reforms.</p>The Absent Conversationtag:capitalhomestead.org,2013-10-17:6384157:BlogPost:123432013-10-17T16:34:42.000ZGary Reberhttp://capitalhomestead.org/profile/GaryReber867
<p>Our President, Senate and Congressional representatives in the United States are failing the American people. It is evident that none are speaking of a vision for a future system of economic democracy based on equality of opportunity for every person to become an owner of wealth-creating productive capital. This is particularly of importance for the President of the United States who has the national stage at his disposal to espouse targeted leadership. As you read this article, the intent…</p>
<p>Our President, Senate and Congressional representatives in the United States are failing the American people. It is evident that none are speaking of a vision for a future system of economic democracy based on equality of opportunity for every person to become an owner of wealth-creating productive capital. This is particularly of importance for the President of the United States who has the national stage at his disposal to espouse targeted leadership. As you read this article, the intent is to query “Who should own America?” going forward.</p>
<p> </p>
<p>Why the focus on “productive capital?” Physical capital is non-human "things" owned by people used to produce products and services (productive land, resources, structures, infrastructure, tools, machines, super-automation, robotics, digital computerized processing and operations, etc. and certain intangibles that have the characteristics of property such as patents and trade names). Real physical capital isn’t money; it is measured in money (financial capital), but it is really producing power and earning power through ownership of the non-human factor of production. In the law, property is the bundle of rights that determines one’s relationship to things.</p>
<p> </p>
<p>The reality, which is ignored in our political discussions and even by conventional economists and the media, is that productive capital is increasingly the source of the world’s economic growth and, therefore, should become the source of added property ownership incomes for all. The ownership of productive capital is the source of wealth and income for the richest Americans––not a job.</p>
<p> </p>
<p>Businesses, whether small or large, or sole proprietors, partnerships, or business corporations, are formed to provide products and services at a profit. Their success or failure is dependent on whether or not there are “customers with money.”</p>
<p> </p>
<p>Unfortunately, politicians, economists and the media focus on JOB CREATION as the ONLY way to create “customers with money” and provide a source of income for peoples’ livelihood. Yet the demand for people (labor workers who contribute manual, intellectual, creative and entrepreneurial work) is being made less necessary as productive capital is increasingly the source of the world’s economic growth. What should we conclude from this assessment of reality? Well, simply that if both labor and productive capital are interdependent factors of production, and if capital’s proportionate contributions are increasing relative to that of labor, then equality of opportunity and economic justice demands that the right to property (and access to the means of acquiring and possessing property) must in justice be extended to all.</p>
<p> </p>
<p>The role of physical capital is to do ever more of the work, which produces income to the business owners. Full employment is not an objective of businesses. Companies strive to keep labor input and other costs at a minimum in order to maximize profit. Private sector job creation in numbers that match the pool of people willing and able to work is constantly being eroded by physical capital’s ever-increasing role.</p>
<p> </p>
<p>The function of research and technology is 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 innovation and 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).</p>
<p> </p>
<p>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.</p>
<p> </p>
<p>What we really need is a national discussion on the topic of the importance of wealth-creating productive capital ownership and how we can expand the base of private productive capital ownership simultaneously with the creation of new productive capital formation, with the aim of building long-term financial security for all Americans through accumulating a viable income-producing capital estate.</p>
<p> </p>
<p>If we are to significantly expand the population of “customers with money” and significantly grow the economy, then the ownership of FUTURE productive capital must be spread more broadly and simultaneously with the growth, without taking anything away from the 1 to 10 percent of the people who now own 50 to 90 percent of the wealth controlled by businesses. Thus, productive capital income would be distributed more broadly and the demand for products and services would be distributed more broadly from the earnings of capital and result in the sustentation of consumer demand, which will promote economic growth. That also means that society can profitably employ unused productive capacity and invest in more productive capacity to service the demands of a growth economy.</p>
<p> </p>
<p>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 productive capital ownership accumulation resulting from OWNERSHIP CREATION. This is manifested in the misguided belief that labor work is the ONLY way to participate in production and earn income.</p>
<p> </p>
<p>Thus, when politicians advocate taxpayer money spending to stimulate industry development, there needs to be a conscious policy to broaden private, individual ownership in the companies benefiting from the stimulus––not just argue the justification for taxation redistribution and further national debt based on how many jobs would result. We also need to incentivize business corporations to fully pay out all their profits to their shareowners as taxable personal incomes to avoid paying corporate income taxes and to finance their growth by issuing new full dividend payout shares for broad-based individual citizen ownership.</p>
<p> </p>
<p>To accomplish this we must ensure that FUTURE economic growth be financed to create new owners of expanding existing and future businesses to ensure that the consumer populous is able to get the money to buy the products and services produced as a result of substituting “machines” for people.</p>
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<p>But how can we accomplish this goal of creating new owners of FUTURE productive capital investment simultaneously with the growth of the economy?</p>
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<p>The solution requires that the Federal Reserve stop monetizing unproductive debt, including bailouts of banks “too big to fail” and Wall Street derivatives speculators, and begin creating an asset-backed currency that could enable every man, woman and child to establish a Capital Homestead Account or “CHA” (a super-IRA or asset tax-shelter for citizens) at their local bank to acquire a growing dividend-bearing stock portfolio to supplement their incomes from work and all other sources of income. Policies need to insert American citizens into the low or no-interest investment money loop to enable non- and undercapitalized Americans, including the working class and poor, to build wealth and become “customers with money.” That’s what the Capital Homestead Act addresses.</p>
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<p>The “Capital Homesteading” concept is the direction America needs to take to build an OWNERSHIP CULTURE and ensure a balance between production and consumption.</p>
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<p>This new paradigm is the subject of the Agenda of The Just Third Way Movement at <a href="http://foreconomicjustice.org/?p=5797">http://foreconomicjustice.org/?p=5797</a> and is founded on the concept of Monetary Justice (<a href="http://capitalhomestead.org/page/monetary-justice">http://capitalhomestead.org/page/monetary-justice</a>).</p>
<p>A Petition to reform the Federal Reserve to provide capital credit to ALL Americans can be supported at <a href="http://signon.org/sign/amend-the-federal-reserve.fb27?source=c.fb&r_by=3904687">http://signon.org/sign/amend-the-federal-reserve.fb27?source=c.fb&r_by=3904687</a>. The proposed Capital Homestead Act (<a href="http://www.cesj.org/homestead/index.htm">http://www.cesj.org/homestead/index.htm</a> and <a href="http://www.cesj.org/homestead/summary-cha.htm">http://www.cesj.org/homestead/summary-cha.htm</a>) would accomplish the necessary reform.</p>
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<p>Own or Be Owned!</p>