On March 1, 2014, David Sirota writes on Nation Of Change:
Entitled “Subsidizing the Corporate One Percent,” the report from the taxpayer watchdog group Good Jobs First shows that the world’s largest companies aren’t models of self-sufficiency and unbridled capitalism. To the contrary, they’re propped up by billions of dollars in welfare payments from state and local governments.
Such subsidies might be a bit more defensible if they were being doled out in a way that promoted upstart entrepreneurialism. But as the study also shows, a full “three-quarters of all the economic development dollars awarded and disclosed by state and local governments have gone to just 965 large corporations” — not to the small businesses and startups that politicians so often pretend to care about.
In dollar figures, that’s a whopping $110 billion going to big companies. Fortune 500 firms alone receive more than 16,000 subsidies at a total cost of $63 billion.
These kinds of handouts, of course, are the definition of government intervention in the market. Nonetheless, those who receive the subsidies are still portrayed as free-market paragons.
Consider Charles and David Koch. Their company, Koch Industries, has relied on $88 million worth of government handouts. Yet, as the major financiers of the anti-government right, the Kochs are still billed as libertarian free-market activists.
Similarly, behold the big tech firms. They are often portrayed as self-made success stories. Yet, as Good Jobs First shows, they are among the biggest recipients of the subsidies.
Intel leads the tech pack with 58 subsidies worth $3.8 billion.
Next up is IBM, which has received more than $1 billion in subsidies. Most of that is from New York — a state proudly promoting its corporate handouts in a new ad campaign.
Then there’s Google’s $632 million and Yahoo’s $260 million — both sets of subsidies primarily from data center deals. And not to be forgotten is 38 Studios, the now bankrupt software firm that received $75 million in Rhode Island taxpayer cash. The company received the handout at the very moment Rhode Island was pleading “poverty” to justify cuts to public workers’ retirement benefits.
Along with propping up companies that are supposedly free-market icons, the subsidies are also flowing to financial firms that have become synonymous with never-ending bailouts. Indeed, companies like Goldman Sachs, Bank of America and Citigroup — each of which were given massive taxpayer subsidies during the financial crisis — are the recipients of tens of millions of dollars in additional subsidies.
All of these handouts, of course, would be derided if they were going to poor people. But because they are going to extremely wealthy politically connected conglomerates, they are typically promoted with cheery euphemisms like “incentives” or “economic development.” Those euphemisms persist even though many subsidies do not end up actually creating jobs.
In light of that, the Good Jobs First report is a reality check on all the political rhetoric about dependency. Most of that rhetoric is punitively aimed at the poor. That’s because, unlike the huge corporations receiving all those subsidies, the poor don’t have armies of lobbyists and truckloads of campaign contributions that make sure programs like food stamps are shrouded in the anodyne argot of “incentives” and “development.”
But as the report proves, if we are going to have an honest conversation about dependency and free markets, then the billions of dollars flowing to politically connected companies need to be part of the discussion.
As the study also shows, a full “three-quarters of all the economic development dollars awarded and disclosed by state and local governments have gone to just 965 large corporations”
If we are ever to end corporate subsidies, which thus far have enriched a minority of people by allowing them to concentrate ownership of the non-human productive sector rather than broadening ownership, and spending on social welfare programs we must begin to recognized that there are two-factor of production––human and non-human––and that the latter is the more productive. 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 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 beyond that provided by human workers, no matter what the level of education attained. Thus, if we do not address the impact of technology on poverty, then millions more Americans in the short term and long term will find themselves at the poverty or below poverty level, unable to be self-suffcient but dependent on “everything from Social Security to Medicare and on through the list.” Edelman says the immediate challenge is keeping the social welfare programs that we already have.
That is why if there are to be subsidies and government-issued contracts, there MUST be conditions and requirements that stipulate that companies receiving the subsidies and contracts be employee and broadly citizen owners. Of course, ideally subsidies and tax loopholes should be completely eliminated and policies implement that will steadily widen private sector ownership by individual citizens simultaneously with the technological growth of the economy.
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, and the support energy, transport, and communications systems. With advanced human-level artificial intelligence, computer-controlled machines will be able to learn new knowledge and skills by simply downloading software. 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.
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, superautomation, robotics, digital computerized operations, etc will be devastating.
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 I and others term the Just Third Way (see http://www.cesj.org/thirdway/thirdway-intro.htm) 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 “machine age”––facilitated by the future earnings of their investments in the companies developing and employing this unprecedented economic power.
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 ignored by the economic establishment and our political leaders.
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.
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. That fact is 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.
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 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.
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 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?”
Americans need to wake up and fight for policies that will eliminate subsidies and empower EVERY American to secure their future income source through the OWNERSHIP of wealth-creating, income-generating productive capital assets, not through a JOB. By significantly expanding private sector individual ownership of such assets there can be a total elimination of the necessity for income-robbing subsidies.
The point is, we need to implement policies that provide EQUALITY of opportunity so that EVERY American can be productive through his or her contribution of OWNED wealth-creating, income-generating productive capital assets, which is exponentially replacing the need for labor workers. The system needs to be reformed by policies that provide opportunities for ordinary Americans, without savings or high incomes, to acquire shares of ownership in FUTURE productive capital assets and pay for their acquisition with the earnings of the investments. Broadening ownership is the ONLY way to ensure prosperity for EVERY American while protecting the private property rights of those who own. It is the ONLY way to counter the job destroying and worth devaluation of labor due to tectonic shifts in the technologies of production.
Corporations should be incentivized to pay out 100 percent of earnings and instead of using retained earnings and debt financing, neither of which creates any new owners, issue and sell new stock whose purchase would be accomplished using insured capital credit loans issued by local banks to ordinary Americans, with the loans paid back from the earnings of the investments.
See The Capital Homestead Act––A Plan For Getting Ownership, Income, And Power To Every Citizen at http://www.cesj.org/homestead/flyer-cha.htm
The path to prosperity, opportunity, and economic justice can be found in the writings about the Capital Homestead Act at http://www.cesj.org/homestead/index.htm. Also, please see my article “Democratic Capitalism And Binary Economics: Solutions For A Troubled Nation and Economy” at http://foreconomicjustice.com/11/economic-justice/ or follow me on Facebook at http://www.facebook.com/pages/For-Economic-Justice/347893098576250 and http://www.facebook.com/editorgary
http://www.nationofchange.org/how-rich-became-dependent-government-welfare-1393683962
