Robert Reich: Economic Redistribution Isn’t Enough (Demo)

Which will also mean fewer profits for the handful of billionaire executives and owner-investors, because potential consumers won’t be able to afford what they’re selling.

What to do? We might try to levy a gigantic tax on the incomes of the billionaire winners and redistribute their winnings to everyone else. But even if politically feasible, the winners will be tempted to store their winnings abroad – or expatriate.

Suppose we look instead at the patents and trademarks by which government protects all these new inventions.

Such government protections determine what these inventions are worth. If patents lasted only three years instead of the current twenty, for example, What’sApp would be worth a small fraction of $19 billion – because after three years anybody could reproduce its messaging technology for free.

Instead of shortening the patent period, how about giving every citizen a share of the profits from all patents and trademarks government protects? It would be a condition for receiving such protection.

Say, for example, 20 percent of all such profits were split equally among all citizens, starting the month they turn eighteen.

In effect, this would be a basic minimum income for everyone.

The sum would be enough to ensure everyone a minimally decent standard of living – including money to buy the technologies that would free them up from the necessity of working.

Anyone wishing to supplement their basic minimum could of course choose to work – even though, as noted, most jobs will pay modestly.

This outcome would also be good for the handful of billionaire executives and owner-investors, because it would ensure they have customers with enough money to buy their labor-saving gadgets.

Such a basic minimum would allow people to pursue whatever arts or avocations provide them with meaning, thereby enabling society to enjoy the fruits of such artistry or voluntary efforts.

We would thereby create the kind of society John Maynard Keynes predicted we’d achieve by 2028  – an age of technological abundance in which no one will need to work.

Happy Labor Day.

http://www.salon.com/2015/09/02/robert_reich_economic_redistribution_isnt_enough_partner/?utm_source=facebook&utm_medium=socialflow

Robert Reich stubbornly continues to pursue his big question: “How to redistribute the profits from these marvelous labor-saving inventions, so we’ll have the money to buy the free time they provide?”

Reich is limited in his thinking because he views economic production ONLY through labor, the human input, and while he points to the reality that technologies are replacing the necessity for labor, his solution is to take as much as possible from those doing the producing with the non-human productive capital assets they OWN, and have the State redistribute the earnings to everyone else. Of course, this would effectively destroy private property in the means of production.

Reich does recognize that you can’t have mass production without mass human consumption made possible by “customers with money.” But Reich fails to grasp that 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 FURUTRE productive capital ownership to improve their economic well-being.

Reich is correct in stating that “the ratio of employees to customers is already dropping to mind-boggling lows” and that “profits go to an ever-smaller circle of executives and owner-investors.”

“What to do?,” Reich asks. Of course, “levy a gigantic tax on the incomes of the billionaire winners and redistribute their winnings to everyone else.”

Reich advocates giving every citizen a share of the profits from all patents and trademarks government protects, as a condition for a person or company receiving patent protection. The profits from ALL patents Reich would split equally among all citizens, starting the month they turn eighteen, would in effect, “be a basic minimum income for everyone.” But then effectively that translates to the profits of corporations employing patents. But that too is redistribution.

What amazes me about Robert Reich, with his ability to define problems and disseminate writings and videos as well as teach as a university professor of economics, is he has a problem with seeing the obvious solution to the inequality of income and wealth and to the continued diminishment of jobs and devaluation of the worth of labor due to tectonic shifts in the technologies of production.

It should be obvious that IF the rich are rich because the system ENABLES them to constantly accumulate productive capital wealth OWNERSHIP, and thus be entitled to the income derived from profits, then ordinary citizens must gain access to FUTURE productive capital ownership to improve their economic well-being. This means that the system needs to be reformed to empower ordinary citizens (EVERY child, woman, and man) to acquire personal OWNERSHIP shares in new, viable capital growth projects pursued by the corporations growing the economy.

The key to creating new capital owners simultaneously with the growth of the economy is to immediately open the Federal Reserve Discount Window to rediscount “qualified agricultural, commercial, and industrial paper” (a function defined in Section 13 of the Federal Reserve Act) from commercial banks.  This is what the Federal Reserve was designed to do. But we must make certain that “qualified” is defined as including a provision that expands ownership of newly formed capital, and is limited to financially feasible capital projects adequately collateralized, and “acceptable collateral” is defined as capital credit insurance. Extend the term of qualified paper to up to ten or fifteen years, as was done in part in the 1930s in an effort to provide funding for new capital (it didn’t work very well because otherwise qualified borrowers lacked collateral in the form of capital credit insurance to be able to take advantage of the program). Short-term paper (90 day or less) may qualify without the expanded capital ownership provision, unless renewed past 360 days. (This will institute 100 percent reserves for all loans rediscounted at the Federal Reserve.) All of this is either currently in the law, or could be added without legislation with regulations. Also, begin phasing out open market operations in government debt paper, with the goal of retiring the debt completely and backing the money supply 100 percent with private sector assets.

This solution is part of the proposed Capital Homestead Act, which is way past do being enacted. I also find it amazing that Robert Reich NEVER talks about or write about CHA as it would enable every child, woman, and man to borrow newly created money to purchase a pro rata share of the capital “growth ring” added to the economy each year, to be repaid with future dividends received on the shares purchased.

Those seriously interested in exploring non-conventional solutions need to read the article A New Look at Prices and Money: The Kelsonian Model for Achieving Rapid Growth Without Inflation at http://www.cesj.org/wp-cont…/uploads/…/11/pricesandmoney.pdf. In this paper, a case is made for a major transformation of any nation’s monetary system so that in the future new money would be created in ways that would unharness the full productive potential of society, while closing the growing wealth gap between the richest 10 percent and the rest of society — and to do so voluntarily without the need to redistribute existing wealth. Prices, wages and interest rates would be controlled under the proposed model of development completely by competitive market forces, not by the whim of central bankers, politicians or organized power blocs.

With a bit of study and serious thinking, I think you will agree that this solution upholds the principles of private property that our nation was founded upon and abates the further concentration of capital wealth ownership by providing equal opportunity to acquire and OWN future capital asset wealth, in which EVERY citizen becomes an OWNER and is thus a productive contributor to our societal development through the “tools” they OWN. This is the essence of the proposed Capital Homestead Act. Seehttp://www.cesj.org/…/capita…/capital-homestead-act-summary/. Seehttp://cesj.org/learn/capital-homesteading/ andhttp://cesj.org/…/uploads/Free/capitalhomesteading-s.pdf.