Finally, the word “OWNERSHIP” is used to describe economic reality by Professor Robert Reich, who I truly admire and respect, “But most of these gains are going to the richest 10 percent of Americans who own 90 percent of the shares traded on Wall Street. And the lion’s share of the gains are going to the wealthiest 1 percent. Shares are up because corporate profits are up, and profits are up largely because companies have figured out how to do more with less.”
The doing “more with less” is the result of applying advanced technological innovation and invention (the non-human productive capital factor of production) to “making” and “delivery” processes that prior relied on labor workers.
As Reich correctly concludes:
“Most of the gains from the productivity revolution are going to the owners of capital, while typical workers are either unemployed or underemployed, or else getting wages and benefits whose real value continues to drop.”
Increasingly, the world belongs to those collecting capital gains through their ownership of productive capital assets.
Reich boldly states:
“None of this is sustainable, economically or socially.
“It’s not sustainable economically because it has resulted in chronically inadequate demand for goods and services. That’s meant anemic growth punctuated by recessions. Without a larger share of the economic gains, the vast middle class doesn’t have the purchasing power to buy the goods and services an ever-more productive economy can generate.
“It’s not sustainable socially because it has resulted in rising frustration over the inability of most people to get ahead.”
Reich states that a large portion of the public believes the game is rigged, and no longer trusts that the major institutions of society–– big business, Wall Street, or government –– are on their side. That is the NOW REALITY! The financial system is rigged. 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 revolt.
Reich concludes:
“Public anger and frustration can ignite in two very different ways. One is toward reforms that more broadly share the productivity gains.
“The other is toward demagogues that turn people against one another.”
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.
Unfortunately, Reich offers no solutions. The solution is to engage in policies and programs that empower ordinary Americans to acquire private, individual ownership in new productive capital investment in the American economy and pay for their acquisition out of the future earnings of the investments.
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.
