On November 1, 2018, Conor P. Williams writes on The Guardian:
From adolescence to our mid-30s, my wife and I have followed everycommon precept of responsible young adulthood – what conservatives venerate as “the success sequence”. We finished high school (then college, then grad school). We charged into the labor market and have stayed there. We had kids in a stable marriage. Neither of us quit our jobs or took a year off to “find ourselves”. We cut coupons and buy food in bulk.
We did this, in part, because we trusted what we believed was America’s basic bargain: work hard, play by the proverbial rules, and you’ll enjoy a healthy middle-class life. You’ll have a decent job, stable housing, affordable education and healthcare, and a clear route to retirement. But that old, potholed path doesn’t deliver like it used to, even for responsible rule-followers like us. Here in our mid-30s, my wife and I are still chasing homeownership, that final, elusive piece of middle-class life.
Today’s young families started to hit the labor market during the greatrecession. We’re buried in educational debt, and college costs for our kids are predicted to be even higher than ours. Housing near good-paying jobs iswildly expensive. Healthcare costs are uncertain. We’re less likely to have a guaranteed retirement pension through work, and current signals suggest that government-funded retirement supports will be significantly smaller, if they’re there at all.
These are bread-and-butter issues. While national political leaders are gridlocked on how to address the crises of widening inequality and limited upward mobility, we’re struggling to simply provide our children with the same opportunities that came relatively easily to earlier generations. Most young families aren’t cynical because the rich have private helicopter fleets and offshore bank accounts, per se. We’re frustrated because the American bargain we believed in is broken.
Take jobs and housing. Access to economic opportunity is increasingly regionalized in the United States. This means that many young workers can’t find good-paying jobs unless they move to communities – mostly urban, often coastal – where the costs of living are off the charts. The median list price for three-bedroom houses in our Washington DC neighborhood – which averages one violent crime approximately every five days – is nearly $600,000.
Sure, my family could move somewhere cheaper (and safer). But this wouldn’t just mean uprooting the kids; it would mean leaving the dynamic labor market where we’ve tripled our family’s income over the past decade. Even if my wife and I could both find jobs, median incomes in Kalamazoo, Michigan, my hometown, are about half of the DC metro area’s.
Perhaps we could have waited to have kids. But like most choices facing young families today, that involves a high-stakes catch-22: delaying having a family means taking on the additional health risks of “advanced parental age”. And then, don’t even think about taking time off to stay home and raise the kids full-time. Most families can’t afford to lose a parent’s income. Better to pay someone else (a lot) to parent your children all week.
Or, maybe, we could have saved less for retirement. But that doesn’t solve the problem; it only shifts it around. Absent a crystal ball, being behind on retirement savings isn’t better than being unable to buy a house in a community with meaningful economic opportunities.
In decades past, the “success sequence” path was much simpler, and yielded much more. A high school diploma offered a reasonable path to the middle class and a college degree cost one-third to one-half what it does today. Economic opportunity was more widely dispersed to small cities and rural communities, building broad-based prosperity and keeping housing costs down across the country.
When I was a teenager, older relatives hustled me off to summer jobs with tales of paying for college by working summers at the local grocery store. By contrast, my wife and I will start paying for our kids’ college expenses before we finish paying off our own student loans. Last year, I had three side jobs alongside my full-time position at a thinktank. That’s how we afford to save (and pay for emergencies). If a straight white guy like me has to grind like this to reach – and stay in – the middle class, know that it’s much more difficult for folks with fewer privileges.
These structural forces are reshaping the American family in painful, difficult ways. Is it any wonder that millennials are scuffling their way through work, life and love? In 2018, early-career monogamy can be expensive! Young workers can grow their income and build their assets, so long as they delay serious relationship commitments to follow professional trajectories that bounce them between high-income coastal cities. Pass up a new opportunity to stay near your college boyfriend? Enjoy that solitary studio rental, lovebirds – it’s your long-term home.
This should terrify you. The economics of early adulthood are fueling pessimism, radicalism, and a loss of faith in the basic premises of democracy. Half of all millennials today think the American dream is dead. No surprise, when the country’s implicit message is: “Go to school, work hard, and you might be able to enter the middle class – but not if you also want to raise a family.”
Young families have rarely had it easy in the US. But it’s brutal for folks starting out now. What could we do to help? Well, greater public investments in paid parental leave and universal early education programs would make it cheaper for young workers to have and raise healthy children in the early years. We could also get serious about building (much) more affordable housing near dynamic labor markets, along with more affordable healthcare and higher education systems.
But we also need to rebuild broad-based economic opportunity across more US communities. The country needs major investments in regional economic development so that more places offer viable, humane ladders to the middle class. This would dampen housing demand in superheated real estate markets like Washington DC’s.
The future belongs to the politician who comes up with a credible answer –and slate of policies – to address millennials’ struggle to build stable families (especially ones with less of a privileged head start than mine). It’s the problem shaping the rest of our politics. Some of this will be expensive. Those with private helicopter fleets might need to pay a little more in taxes. I’d bargain they can afford it.
Gary Reber Comments:
We live in depressingly frustrating and uncertain times. America lacks the leadership necessary to reform the core of our system to create an economic democracy based on inclusive prosperity, inclusive opportunity, and inclusive economic justice. Without economic democracy there can never be true social justice and political democracy.
The fundamental economic problem we face is the system is rigged to continuously concentrate OWNERSHIP of ALL FUTURE wealth-creating, income-producing capital asset formation and growth among a tiny group of individuals and families who comprise the current wealthy capital asset OWNERSHIP class. Their wealth and income earnings are derived from OWNING, not from jobs. Their earnings are far in excess of their consumption needs, and therefore they are able to SAVE and continuously INVEST in the FUTURE capital asset formation and growth of the American economy and other economies throughout the world. Their productive capital assets are held in a property-holding legal structure —the for-profit corporation — which they are the owners thereof. And, of course, their wealth is seen in the houses, gated communities, vehicles, yachts, airplanes, golfing and tennis clubs, clothing, and other consumptions they spend their income on.
This leaves the vast majority of Americans, who are not productive capital asset owners or owners of significant capital assets, struggling to save, pay bills and remain on firm financial footing. According to the 2018 Financial Health Pulse survey conducted by the Center for Financial Services Innovation, even the 28 percent of Americans who are financially healthy (“meaning they are in control of their spending, are saving money, don’t have too much debt and are planning for the unforeseen”) are still dependent on a job for their financial security. They, like the 90 percent of Americans, are also propertyless non-OWNERS of productive capital assets that create wealth and produce income.
Furthermore and significantly, the system requires risk collateral in the form of equity (the value of personal or corporation assets OWNED) be pledged in order for a commercial bank to extend capital credit to finance new viable capital asset formation. Thus, effectively, only those with “past savings” — the catch-all term for valuable assets and savings — are eligible for capital credit to finance the formation of productive capital asset projects. In essence, this is why and how the rich get richer, by monopolizing the OWNERSHIP of wealth-creating, income-producing capital assets.
Past and likely to be presidential candidate Senator Bernie Sanders is the ONLY leader that has even touched on this problem in his speeches and narratives in which he points to the reality that essentially 1 percent of the population OWNS more wealth and earns more income than the bottom 90 percent of the American population. But Senator Sanders has no solutions, nor do other past presidents and Congress persons and likely presidential contenders for the 2020 election, that will free economic growth from the slavery of past savings. Instead, he and others, are stuck in the thinking that job creation and boosting wage minimums or taxing to pay for a guaranteed national income is the answer in and of itself, or that these policy actions will uplift those on the bottom, or that taxpayer-subsidized “free” university and college tuition are the solutions to ensuring a living income in order to remain on firm financial footing.
The reality is these proposed “solutions” are essentially extensions of folklore, the embrace of the “get an education and a good-paying job,” but NEVER is there folklore directed at becoming a capital asset OWNER. One could surmise that leaning about the merits of OWNING productive capital assets is taboo in our educational system and not taught by academia. Though those, born into families experienced with OWNING a business, have gained this knowledge and share it with their children and heirs. But there is no formal education in our high schools, colleges or universities about the self-liquidating mechanics of acquiring OWNERSHIP of wealth-creating, income-producing capital assets.
Why is OWNING productive capital assets most important. Because OWNING is the legal right to control producing power and earning power through ownership of the non-human factor of production — physical capital (productive land; structures; infrastructure; tools; machines; robotics; computer processing and apps; artificial intelligence, certain intangibles that have the characteristics of property, such as patents and trade or firm names the like which are owned by people individually or in association with others). The other independent factor of production is human (labor workers who contribute manual, intellectual, creative and entrepreneurial work). Thus, fundamentally, economic value is created through human and non-human contributions.
Why is OWNING critical to obtaining financial security and prosperity? Because the productive capital factor input to creating goods, products and services is between 90 and 98 percent. In concentrated capital ownership terms, it is estimated that roughly 1 percent own 50 percent of the corporate wealth with 10 percent owning 90 percent. This leaves 90 percent of the people scrambling for the last 10 percent, with them dependent on their labor worker wages for financial security.
While folklore says an education and a good-paying job are all one needs to attain financial security, the non-human means of producing the goods, products and services a modern society embraces and depends upon has and will continue to see exponential growth both within our nation and globally. Such an ever-accelerating shift to productive capital — which reflects tectonic shifts in the technologies of production — destroys far more jobs than are created and because the use of productive capital eliminates the necessity for mass labor, the worth of labor is lessening.
The reality is that except for a relative few, the majority of the population, no matter how well educated, will not be able to find a job that pays sufficient wages or salaries to support a family or prevent ending up in a lifestyle, which is gradually being crippled by near poverty or poverty earnings. Thus, education is not the panacea, though it is critical for our future societal development and individual virtue. And younger, as well as older people, will increasingly find it harder and harder to secure a well-paying job — for most, their ONLY source of income — and will find themselves dependent on taxpayer-supported government welfare, open or disguised, or concealed.
As the income generated by the masses becomes less or stagnant with inflation mounting, and the masses are strapped with endless consumer debt, there will be less demand for economic growth within the nation. Instead of investing in new American capital asset projects and simultaneously creating new capital asset OWNERS who become “customers with money” to create demand, our narrowly-owned corporations are forming partnerships and investing in new productive capabilities in other countries, enabling them to vastly outpace our meager annual growth rate (China, for example). Such outsourcing further lessens demand for economic growth within our nation and drains our capabilities to produce ourselves within our own nation. Outsourcing makes us dependent on other countries to produce consumer goods and products we need and want, and to produce the supply chain necessary to assemblies of goods and products at home.
While Senator Sanders has been an advocate (though not put forth in his speeches at his rallies) for empowering workers of the corporations that employ them to become OWNERS as well as employees, using the financial mechanism known as the Employee Stock Ownership Plan (ESOP) (see http://www.cesj.org/learn/capital-homesteading/ch-vehicles/employee-stock-ownership-plans-esops/), this mechanism alone is not enough to transform our society into an OWNERSHIP SOCIETY, wherein EVERY citizen (individually) is a capital OWNER, benefiting from the wealth affluence and earnings produced for the OWNERS of successful corporations growing the economy.
The ESOP was the creation of binary economist and corporate tax lawyer Louis O. Kelso. The JUST Third WAY movement (note emphasis on JUST, not the “Third Way” that is monopolizing capital asset OWNERSHIP) is based on Kelsonian concepts, writings and financial mechanisms developed since the early 1960s with an agenda for broadening productive capital asset ownership simultaneously with the growth of the economy, in which universally, EVERY child, woman, and man is an OWNER and a customer of what we produce.
Obviously, an ESOP ONLY benefits those (and then, depending on how it is structured, not necessarily all) workers employed by a corporation. The original framework and intention for the ESOP was to provide a financial mechanism by which workers can acquire personal OWNERSHIP participation in the corporations who employ them using capital credit, repayable out of pre-tax earnings generated by their company’s growth, without sacrificing wage earnings or benefits.
But we need more than a financial mechanism that is just for workers to gain OWNERSHIP participation in the corporations who employ them. We need financial mechanisms that empower citizens beyond those who are employed to acquire OWNERSHIP stakes in the corporations growing the economy on a self-liquidating basis, exclusively using pre-tax earnings generated by the investments in the formation of future income-producing productive capital assets to pay off the insured, interest-free capital credit extended..
What is important to understand is that OWNERSHIP is largely determined by who has access to capital credit. Just as society can structure its laws and institutions to concentrate OWNERSHIP (as is the case in today’s and yesterday’s America), society can reform its laws and institutions to steadily decentralize OWNERSHIP of capital asset wealth and create new OWNERS simultaneously with the growth of the economy. Said another way, FUTURE corporate capital credit can be used to build OWNERSHIP into the same tiny group who now OWNS America, or it can be used to diffuse OWNERSHIP among the entire citizenry, creating a society in which EVERY citizen is a productive capital asset OWNER.
Our best hope to reform the system and create a new paradigm in which EVERY citizen is a productive capital asset OWNER is to elect a president and Congress that will embrace and implement an Every Citizen An Owner agenda. This is no small task as it will be necessary to educate today’s and tomorrow’s political leaders, who at present are sadly clueless. New justice-committed leaders, especially those who want to end the corruption built into our exclusionary system of monopoly capitalism, will need to surround themselves with economists from the binary, two-factor school. These men and women have dedicated themselves over decades to developing the financial mechanisms necessary to create this new paradigm of economic democracy in which EVERY child, woman, and man is empowered to acquire, on a self-liquidating basis, personal OWNERSHIP stakes in the FUTURE capital asset growth of the economy without the requirement of past savings .
At the core of the financial mechanisms is INSURED, interest-free capital credit used exclusively to finance the growth of a responsibly sustainable, renewable green economy that can support general affluence for EVERY American. Such capital credit would represent new, asset-based money creation. To have access to capital credit would not require ANY past-savings requirements or ANY reduction in wage or other sources of income or benefits, and would be strictly repayable out of the FUTURE earnings produced by new investments that represent new asset creation and growth. In essence, these financial mechanisms are the same financial mechanisms used by the current wealthy capital OWNERSHIP class to continuously accumulate more and more productive capital assets. The difference is that past savings are unnecessarily the requirement to secure the capital credit issued by local banks as collateral assets that can be seized should the investment not produce the earnings initially projected (what made the investment financially feasible in the first place). The interest-free component of capital credit represents the creation of NEW money that corresponds to the creation of NEW productive capital assets, and does not require borrowing from the already wealthy who have past savings to invest.
Spreading risk is the sensible path to solve the security issue. The risk can be absorbed by capital credit insurance or commercial risk insurance or government reinsurance (ala the Federal Housing Administration mortgage insurance concept). Capital credit insurance is the way to handle risk management in finance, by broadly insuring the risks. Such capital credit insurance would substitute for the security demanded by lenders to cover the risk of non-payment, thus enabling the poor and others with no or few assets (the 90 or so percent) to overcome the collateralization barrier that excludes the non-haves from access to acquiring wealth-creating, income-generating productive capital OWNERSHIP. Thus, capital credit insurance needs to be the substitute for the past-savings requirement. Utilizing capital credit insurance is the KEY to freeing economic growth from the slavery of past savings and creating an economic democracy in which EVERY citizen is an OWNER.
The purpose of production in a market economy is the consumption of goods, products, and services by the consumers who make up the economy. Consequently, you must either produce for your own consumption, or to trade to others for what they have produced that you want to consume. But without income derived from production, one cannot afford to purchase the goods, products and services one desires for themselves or their families. But when incomes rise among consumers who have the need and desire to improve their material standard of living, the market demand for goods, products and services strengthens, which in turn increases production and results in a growth economy that, as a byproduct, creates in-demand jobs.
The end result we should be aiming for is that citizens will become empowered as owners to meet their own consumption needs and government will 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 elites control the coercive powers of government, using job dependency, the police, courts of law, prisons, the tax system and so on as their means to control.
What we need is to implement a plan to finance the building of a future economy that can support financial health and general affluence for EVERY citizen. The foundation of that plan needs to be universal individual citizen productive capital asset ownership. To get there will require legislation that reforms the monetary, tax, and Federal Reserve banking and financial system.
The economists at the Center for Economic and Social Justice )www.cesj.org) are calling for a Capital Homestead Act (www.capitalhomestead.org), which takes its lead from the Homestead Act of 1862. Abraham Lincoln’s Homestead Act offered the landless white citizens of America part-ownership of the country by giving them 160 acres of frontier land, free, if they produced on it income for themselves and their families for a period of five years. In Lincoln’s America of 156 years ago, the problem confronting the vast majority of the citizens of our then, largely agricultural nation was that most people owned no land that they could work to sustain their livelihood. Today, the major problem for the vast majority of the people of our nation is that 90 percent of the people own no wealth-creating, income-producing capital (or a viable share) in their high-tech, physical capital-intensive economy. But unlike land, which is finite, forming productive capital assets is not.
The Capital Homestead Act would make it possible for every American to become an owner of productive capital, without taking from the tiny elite who now own America’s for-profit corporations. The Capitol Homestead Act is primarily a tax-sheltered vehicle for the democratization of capital credit through local banks and the Federal Reserve. It would enable every child, woman, and man to accumulate wealth and receive dividend incomes from newly issued shares in viably new and growing corporations, without being taxed on the accumulations (including property and shares gained through inheritance, savings, and arrangements like ESOPs, etc). In addition to serving as a source of capital credit for corporate workers, the Act provides for Capital Homestead Accounts (CHAs). CHAs would provide an ownership-building account for EVERY American citizen in an equal, annually allocated capital credit amount that represents the capital growth needs of the nation each year. CHAs would cover EVERY citizen (no matter their economic status), including individuals who do not work for profit-making enterprises, such as school teachers, civil servants, military personnel, police, and health workers, and for individuals who have no remunerative employment, such as the disabled, unemployed homemakers, seniors and children.
The Capital Homestead Act’s (aka Economic Democracy Act and Economic Empowerment Act) summary can be found 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/
Once understood that political power always follows property OWNERSHIP, if we are to have an economic democracy, which is necessary for a true political democracy, we need to ensure that capital asset OWNERSHIP is never again concentrated among the few and that ALL FUTURE wealth-creating, income-producing capital asset formation is financed in ways that it ends up broadly and universally OWNED by EVERY individual within the population of children, women, and men.
