On October 20, 2013, Robert Kuttner writes in The Huffington Post:
America’s very rich keep trying to start a movement among college students to blame senior citizens for the sorry state of the economy that kids will inherit. Specifically, the billionaires keep trying to scapegoat Social Security.
Where to start? If you itemize all the reasons why recent college graduates face a wretched economy, Social Security doesn’t even make the list. What does make the list are unreliable jobs that pay lousy wages, the aftereffects of a financial bubble created on Wall Street, and unaffordable college that leaves graduates starting life with more than a trillion dollars worth of debt.
The next generation, and the one after that, will have a shot at a decent life if we can get growth and a fairer distribution of earnings back on track. That project has nothing whatever to do with Social Security or the federal deficit. On the contrary, if we keep on the austerity kick and further cut social outlays that promote opportunities, growth will be even slower.
The biggest lie in Druckenmiller’s crusade is the premise that the income distribution problem is somehow generational and that he, as a billionaire, has anything whatever in common with most college students or most recipients of Social Security. One of his pitches to students is that Social Security is excessive because he, a very wealthy man, receives it but doesn’t need it.
But for the vast majority of the elderly, Social Security is a lifeline, and a meager one at that. Some two-thirds of all seniors depend on Social Security for half of their income. Fully 46 percent of elderly widows and other unmarried seniors depend on Social Security for at least 90 percent of their income.
The entire projected 75-year shortfall in the Social Security trust funds that conservatives make such a big deal about is around one percent of GDP per year. We could make it up with modest tax increases on wealthy people like Druckenmiller.
Since Social Security is financed by payroll taxes — on wage and salary income — the real Social Security crisis is the crisis of stagnant wages. If average wages had continued to track average productivity growth during the past three decades, as they did in the three decades after World War II, Social Security would be in perpetual surplus.
The real crisis facing the elderly is not that Social Security is excessive but that it’s inadequate — especially with the collapse of traditional pensions in favor of far less reliable 401k plans (another counter-revolution made on Wall Street.)
This op-ed is in reference to statements made by billionaire Stanley Druckenmiller in an interview in The Wall Street Journal.
What is interesting to me is that the closest Stan Druckenmiller gets to the distinction between the vast majority of Americans dependent on wages and government welfare support and the wealthy ownership class is his use of the terminology of “coupon clippers”––meaning those who are the OWNERS of corporate stock representing productive capital assets.
The 400 wealthiest Americans and the other 1 to 10 percent richest Americans are rich because they own wealth-creating, income-generating productive capital assets. The disenfranchised poor and working and middle class are propertyless in terms of owning productive capital assets.
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?
Still there is perhaps promise for Druckenmiller to understand the change that is necessary to reform the system to provide equal opportunity for EVERY American to acquire wealth-creating, income-generating productive capital assets on the basis that the investments will pay for themselves––and 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.
See further analysis in my article “A Solution To Eroding Retirement Security” at http://www.huffingtonpost.com/gary-reber/a-solution-to-eroding-retirement_b_4103834.html and at http://www.nationofchange.org/solution-eroding-retirement-security-1382020223.
My colleague at the Center for Economic and Social Justice (www.cesj.org) Norman Kurland comments:
Your interview with Stanley Druckenmiller “How Washington Really Redistributes Income” (Wall Street Journal, October 19-20) offers one of the most realistic descriptions of what’s wrong with Washington politics today. What’s needed is a systemic solution — not just a third way but a genuinely “Just Third Way.
Druchenmiller might be open to an approach that President Reagan as early as 1974 called an Industrial Homestead Act” based on the macroeconomic systems theory of Louis O. Kelso in his 1958 book with the philosopher Mortimer J.Adler, The Capitalist Manifesto. A comprehensive national economic agenda now called “The Capital Homestead Act” — would (1) stimulate non-inflationary market-based growth, (2) create millions of new private jobs without government subsidies, (3) begin to reduce income redistribution spending, (4) radically simplify the Federal income tax system in ways that automatically eliminate future budget deficits, (5) switch to general revenues for funding “entitlement” promises, (6) equalize access to future capital ownership opportunities for every citizen as a fundamental human right (as is now available for over 12 million American private sector workers through Kelsonian-invented Employee Stock Ownership Plans (ESOPs), (7) encourage local commercial banks and capital credit insurance companies, supported by the Federal Reserve, to enable every man, woman and child to borrow through a “Capital Homestead Account (CHA)” or IRA asset-backed and insured capital credit to purchase new or transferred equity shares from viable commercial, industrial and agricultural enterprises repayable (as with ESOPs) with tax-deductible future profits of companies issuing CHA shares, and (8) return the Federal Reserve to its original policy under Section 13(2) of the Federal Reserve Act favoring asset-backed money over government debt-backed money policies, which was a major contributing factor to the threat to the U.S. dollar as the world reserve currency.
A summary of the proposed Capital Homestead Act can be read at http://www.cesj.org/homestead/
summary-cha.htm. If both Ronald Reagan and Hubert Humphrey could agree that our national economic policy should encourage equal ownership opportunities as a twin pillar to full employment, my hunch is that open-minded members of the top 0.01 percent of the wealthiest Americans like Stanley Druchenmiller will also support the Just Third Way. It will revive the original economic morality of the American economy as a just free market and private property-based model spreading economic empowerment from government to the people, uniquely without redistributing property rights from current owners.
http://www.huffingtonpost.com/robert-kuttner/stanley-druckenmiller-social-security_b_4133863.html
