The Rise Of The Welfare State (Demo)

On September 11, 2013, Lance Roberts writes on StreetTalkLive:

It is interesting to note that while the unemployment rate has been falling, currently at 7.3%, it has not been because of a strongly increasing workforce.  Rather it has been a function of people leaving the workforce.  This, of course, brings up the obvious question of how these people are live if they aren’t working.

I read a great article by Diana Furchtgott-Roth at E21 entitled “When It Pays Not To Work.”  In this article she cites some alarming statistics:

“Lawrence Lindsey, president and chief executive officer of The Lindsey Group, estimates that if the labor force participation rate were the same today as it was before the recession began, the unemployment rate would be 11.2 percent, rather than 7.3 percent.

One reason for this continuing trend is the panoply of government benefits, including unemployment insurance, now available up to 73 weeks, depending on the state. On average, unemployed Americans can receive 53 weeks of unemployment insurance, up from 26 weeks before the recession.

Over 8.9 million adults received disability insurance from the Social Security Administration in July 2013, the latest data available.  The number of people receiving benefits is 23 percent higher compared to  five years earlier and 55 percent higher than 2003. Benefits are higher, too.  Recipients get an average of $1,129 monthly, 12 percent more than in 2008 and 35 percent more than in 2003.

Over 47 million Americans receive benefits from the Supplemental Nutrition Assistance Program (formerly food stamps), Other elements of the federal safety net include mortgage relief, and Temporary Assistance to Needy Families.  The provision of subsidized health care for those earning below 400 percent of the poverty line under the Affordable Care Act, beginning in 2014, will exacerbate this.

These programs have expanded in two ways. Eligibility has increased, and the programs have become more generous.”

The chart below shows the rise in social benefits as a percentage of real disposable income which is currently near the highest level on record.

The next chart shows the current number of food stamp participants through June of 2013 at 47.8 million with an estimate of cots that will likely exceed $81 billion.

The reality is that when an individual can make more living on welfare than working it is quite easy for a mass number of individuals to simply disappear from the work force. The problem is that such a structural transformation of the workforce is economically damaging long term.

As I showed in my recent missive on long term economic growthwe are already experiencing the lowest rate of annualized economic growth in history.  With an aging population rapidly moving towards retirement; the structural employment imbalance will lead to far more economic ills in the not so distant future as the drain on welfare programs intensifies as people continue to leave the workforce.

The United States has serious structural problems, which is creating the need for emergency “welfare” assistance because job prospects are increasingly not at a livable-wage level, which for some people in the population a reason not to even seek employment. But a much more sinister problem is unfolding which will continue to widen the gap between the “haves” and the “havenots.” This is the indisputable fact that tectonic shifts in the technologies of production is destroying jobs (thus expanding the available pool of workers competing with each other) and devaluing the worth of labor and by globalization, which shifts employment to other countries where labor is less costly as well as regulations and controls.

The role of physical productive capital is to do ever more of the work, which produces income. Full employment is not an objective of businesses. Companies strive to keep labor input and other costs at a minimum. Private sector job creation in numbers that match the pool of people willing and able to work is constantly being eroded by physical productive capital’s ever increasing role. This is resulting in either low-wage service jobs not yet “technoized” with human-intelligent machines, super-automation, robotics, digital computerized operations, etc. or high-wage/salary jobs that require advanced education.

Because 99 percent of the American population are not the owners of the productive capital assets and therefore are not entitled to the earnings generated, the result is the consumer populous is increasingly 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.

Otherwise, the United States will continue to evolve into a welfare state supported by tax extraction and national debt, with welfare practiced openly and concealed.

Yet, you never hear conservatives or progressives advocate for broadened private sector individual ownership of productive capital assets simultaneously with the growth of the economy. Why?

Even if every American achieved a doctorate degree, there would still be not enough decent-paying job opportunities created to employ every American. This would not be a problem if the 90 million Americans who are unemployed and underemployed OWNED viable, diversified stock portfolios of major American companies who payed out to their stock holders their full earnings profits. But that is not the reality. The vast 99 percent of Americans are job serfs or welfare serfs, with constantly declining prospects for income earnings tied to a job due to tectonic shifts in the technologies of production. The jobs just are not there, which will provide a level of income to support survival, never mind general affluence.

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.

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.

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.

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.

That’s what “Capital Homesteading” would do.

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.

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.

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.

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.

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.

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.

The Just Third Way Master Plan for America’s future is published athttp://foreconomicjustice.org/?p=5797.

Support the Capital Homestead Act at http://www.cesj.org/homestead/index.htmand http://www.cesj.org/homestead/summary-cha.htm

For solutions see “Financing Economic Growth With ‘FUTURE SAVINGS’: Solutions To Protect America From Economic Decline” at NationOfChange.org http://www.nationofchange.org/financing-future-economic-growth-future-savings-solutions-protect-america-economic-decline-137450624

http://streettalklive.com/daily-x-change/1814-the-rise-of-the-welfare-state.html