On June 27, 2017, Jason Le Miere writes on Newsweek:
One big problem in America is that while there is plenty of money, rich people have too much of it. So says the world’s second-richest man, Warren Buffett. The 86-year-old CEO of investing house Berkshire Hathaway has a net worth of $75.6 billion, according to Forbes, and he says massive sums like that are the reason why many people are struggling to get by.
“The real problem, in my view, is the prosperity has been unbelievable for the extremely rich people,” he told PBS Newshour Monday.
“If you go to 1982, when Forbes put on their first 400 list, those people had $93 billion. Now they have $2.4 trillion, [a multiple of] 25 for one. This has been a prosperity that’s been disproportionately rewarding to the people on top.”
Since the 1980s, the richest 1 percent of Americans have seen their share of total income roughly double, to 20 percent. Meanwhile, the bottom 50 percent have seen their share decline in a big way, to 12 percent from 20 percent. Inequality in America is now even more pronounced than in China.
“The economy is doing well, but all Americans aren’t doing well,” Buffett added. “But we have got $57,000 or $58,000 of [gross domestic product] per person. That is a lot of stuff.”
Buffett said that the inequality is a natural result of an evolving economy in the U.S., but that more needs to be done in order to help those who have seen their jobs go by the wayside.
“We actually export 12 or 13 percent of our GDP,” he said. “It was only 5 percent in 1970. But it benefits us. It benefits the rest of the world. It doesn’t benefit the steelworker maybe in Ohio. And that’s the problem that has to be addressed because when you have something that’s good for society, but terribly harmful for given individuals, we have got to make sure those individuals are taken care of.”
Buffett pointed out that the economy has been growing since 2009, following the recession the previous year. Since entering the White House in January, and even before, President Trump has been quick to claim credit for any sign of further improvement in the economy.
Buffett, though, urged Trump to be careful what he claimed responsibility for.
“If I ever get elected president, I will never claim credit for anything the market does, because I don’t want to be blamed when it goes the other direction,” he said.
Buffett has said the solution is simple: “They [people] should just keep buying and buying and buying a little bit of America as they go along. And 30 or 40 years from now, they will have a lot of money.” Yet the reality is the vast majority of Americans are either in poverty, near-poverty, afloat due to consumer credit and living week-to-week or month-to-month. They are in situations that prevent them from saving and speculating, as Buffet has said he has since he was 11.
With all his wealth tied to his personal OWNERSHIP of wealth-creating, income-producing productive capital assets held by him in the business corporations that he has an ownership interest under the Berkshire Hathaway multinational conglomerate company (18 percent share capital ownership), you would think that he would be educating himself to and advocating financial mechanisms that, with NO requirement of past savings (equity worth), would empower EVERY child, woman, and man to acquire ownership interests in new, productive and viable capital asset formation simultaneously with the growth of the economy, on the basis that the investments will generate their own earnings sufficient to repay the insured (lender security), interest-free capital credit and then go on producing income indefinitely with proper maintenance and with restoration in the technical sense through research and development.
At the top of the order of Buffett’s and fellow billionaires’ philanthropy is a plan to use at least half of their their wealth to support causes focused on “poverty alleviation” and “education.”
I think the most good can result if the focus of their wealth is on reforming the monetary and financial system to eliminate the requirement of “past” savings to qualify for capital credit to finance viable capital asset formation projects and provide for EVERY citizen to acquire ownership stakes in future viable capital asset formation simultaneously with the growth of the economy, without taking from those who already own.
A study of billionaires would certainly result in either inheritance of large sums of capital asset ownership stakes or savings accumulated to invest in wealth-creating, income-producing capital assets, on the basis that the investments paid for themselves. In either case, the key operative is “past” savings, which the vast majority of people do not have as they are dependent on jobs in which they earn insufficient income to meet their personal and family consumption needs. And because they are trapped in poverty or near poverty, or even in middle-class status, they cannot earn sufficient income to satisfy their wants above their consumption necessities, and even then they carry high consumer debt.
If only these billionaires would support education to enlightened all Americans and politicians to reform the monetary and financial system and enact legislation to provide an annual allocation into the capital credit account of EVERY child, woman, and man strictly for investment in new viable capital asset formation projects tied to the growth of the economy, which generate their own revenue stream to initially pay off he loan and following produce a full-earnings dividend for consumption (creating further demand for the economy’s growth).
Of course, there needs to be a financial mechanism put in place that will guarantee loan risks; otherwise banks and lending institutions will not make the loans, and the system will continue to limit access to capital acquisition to those who already own capital — the rich. This is because “poor” people have no security or collateral, or sufficient income resulting in savings to pledge against the loan as security, and/or are disqualified on the grounds of either unproven unreliability or proven unreliability.
What historically empowered America’s original capitalists was conventional savings-based finance and the pledging or mortgaging of assets, with access to further ownership of new productive capital available only to those who were already well capitalized. As has been the case, credit to purchase capital is made available by financial institutions ONLY to people who already own capital and other forms of equity, such as the equity in their home or small business that can be pledged as loan security — those who meet the universal requirement for collateral. Lenders will only extend credit to people who already have assets. Thus, the rich are made ever richer through their continuous accumulation of capital asset ownership, while the poor (people without a viable capital estate) remain poor and dependent on their labor to produce income. Thus, the system is restrictive and capital ownership is clinically denied to those who need it. This is what Buffet is vaguely referring to when he says: “The real problem, in my view, is the prosperity has been unbelievable for the extremely rich people,”
Thus, the question is who pledges the security and takes the risk of failure to return the expected yield from which to repay the loan. The answer is the capital credit loan security (collateral) requirement can be replaced with private capital credit insurance or a government reinsurance agency (ala the Federal Housing Administration concept).
Criteria must be created to qualify the corporations, both new start-ups and established ones, subject to this policy and those corporations that qualify overseen so as to insure that their executives exercise prudent fiduciary responsibility to generate loan payback. Once the guaranteed loans are paid back to the lending entity, the new capital formation will continue to produce income for existing and new owners.
The non-profit Center for Economic and Social Justice (www.cesj.org) is dedicated to such education to alleviate poverty and educate on the financial mechanisms and legislation necessary to put Americans on a path to inclusive prosperity, inclusive opportunity, and inclusive economic justice.
At the CESJ Web site are volumes of articles and proposed legislation focused on broadening individual capital asset wealth and income simultaneously with the growth of the economy, without redistribution by empowering EVERY citizen to be productive through their capital asset and their labor contributions to the economy.
The end result is that citizens would become empowered as owners to meet their own consumption needs and government would become more dependent on economically independent citizens, thus reversing current global trends where all citizens will eventually become dependent for their economic well-being on the State and whatever elite controls the coercive powers of government.
Support the Agenda of The JUST Third Way Movement at http://foreconomicjustice.org/?p=5797, http://www.cesj.org/resources/articles-index/the-just-third-way-basic-principles-of-economic-and-social-justice-by-norman-g-kurland/, http://www.cesj.org/wp-content/uploads/2014/02/jtw-graphicoverview-2013.pdf and http://www.cesj.org/resources/articles-index/the-just-third-way-a-new-vision-for-providing-hope-justice-and-economic-empowerment/.
Support Monetary Justice at http://capitalhomestead.org/page/monetary-justice.
Support the Capital Homestead Act (aka Economic Democracy Act)
at http://www.cesj.org/learn/capital-homesteading/, http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-a-plan-for-getting-ownership-income-and-power-to-every-citizen/, http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-summary/ and http://www.cesj.org/learn/capital-homesteading/ch-vehicles/. And The Capital Homestead Act brochure, pdf print version at http://www.cesj.org/wp-content/uploads/2014/11/C-CHAflyer_1018101.pdf and Capital Homestead Accounts (CHAs) at http://www.cesj.org/learn/capital-homesteading/ch-vehicles/capital-homestead-accounts-chas/
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