On March 19, 2019 Leigh Thomas writes on Reuters:
A strong majority of people in wealthy countries want to tax the rich more and there is broad support for building up the welfare state in most countries, a survey conducted for the OECD showed on Tuesday.
In all of the 21 countries surveyed, more than half of those people polled said they were in favor when asked: “Should the government tax the rich more than they currently do in order to support the poor?” The OECD gave no definition of rich.
Higher taxation of the rich has emerged as a political lightning rod in many wealthy countries, with U.S Democrats proposing hikes and “yellow vest” protesters in France demanding the wealthy bear a bigger tax burden.
Support was highest in Portugal and Greece, both emerging from years of economic crisis, at nearly 80 percent compared with an average of 68 percent, the Organisation for Economic Cooperation and Development said.
The Paris-based forum’s survey of 22,000 people about perceived social and economic risks also found deep discontent with governments’ social welfare polices, which many people said were insufficient, the OECD said.
On average, only 20 percent said they could easily receive public benefits if needed while 56 percent thought it would be difficult to get benefits, the survey found.
People were on average particularly concerned about access to good quality, affordable long-term care for the elderly, housing and health services.
Not only did people say they were not getting their fair share given what they paid into the system, people in all countries except Canada, Denmark, Norway and the Netherlands did not think that their governments were heeding their views.
“These feelings spread across most social groups, and are not limited just to those deemed ‘left behind’,” the OECD said in an analysis of the survey’s results.
The feeling of injustice was even higher among the highly educated and high-income households, it added.
In light of the high level of discontent, a majority of people wanted their government to do more in all countries except France and Denmark, whose welfare systems are among the most generous in the world.
Most people said the top priority should be better pensions with 54 percent saying that would make them feel more economically secure.
Healthcare followed in second place at 48 percent while nearly 37 percent were in favor of a guaranteed basic income benefit, which has attracted international interest from policymakers but has yet to be tried at the national level.
Gary Reber Comments:
There is a growing revolt agains economic inequality, stagnant growth and trickle-down economics.
Focusing on the United States, President Trump’s promise to boost economic growth to an anemic 3.5 percent or even 4 percent from the 2 percent average of the previous decade has not happened nor will it happen with trickle-down economic policies.
People, due to their plight to avoid destitute poverty, want a welfare state that will take care of them, instead of wanting an economic system that will empower them to be productive through their personal ownership stakes in the things used to produce that are eliminating their means to earn an income to support themselves and their families.
Broadening Productive Capital Ownership Is The Solution
Trickle-down economics does not work. What will work is simultaneously broadening private, individual ownership of new productive capital investment as the American economy grows, turning labor workers and others into owners of new productive wealth-creating, income-producing capital assets, who will benefit from expanded earnings through the full-dividend payout of the earnings the investments generated by the corporations growing the economy, both established ones and viable start-ups. In turn, this will strengthen consumer demand and create even greater economic growth and growing asset portfolios for ALL Americans (all children, women and men), thus reducing dependence on government redistribution “make-work employment” and “welfare” programs. In this way, EVERY citizen, regardless of age or any other factor, can contribute productively to society.
The more wider income allocation in the economy will generate more “customers with money” and in turn more demand. But the focus needs to be on broadening productive capital ownership, which in turn will result in more job opportunities, but not necessarily full employment long-term because once the new infrastructure and other aspects of a physical affluent society are built, the need for workers dissipates. But if they OWN the resulting productive capital assets formed, they generate for themselves a new source of non-wage dividend earning income to spend on consumption as “customers with money” and continue to stimulate the quality of our society.
Modern technology and rapidly developing intelligent systems technology means that modern industry, the employer of middle class prosperity, simply does not need millions of new workers, while the population of available workers is multiplying. Truly intelligent “machines” (productive capital) will have the potential to eliminate poverty and usher in a new age of inclusive prosperity, inclusive opportunity and inclusive economic justice while closing the gap between rich and poor through broadened access to self-liquidating capital credit for investment in new productive capital assets so that everyone can become a capital owner (not limited to the already wealthy capital ownership class) with income from ownership of the economy’s future productive capital assets.
The problem is that there presently exists no means by which the majority of American citizens can fully benefit from the unprecedented productive potential of technological innovation in which the non-human factor of production is displacing the human factor of production. As most customers for the goods, products and services that can be produced are labor workers, market demand will exponentially decline unless society’s customer base can gain access to capital credit to acquire long term viable ownership portfolios in future productive capital assets.
Up to this point in our history, wages and salaries have been paid to labor workers to provide income that generates consumer demand in the market. Without jobs, labor workers cannot buy the products and services that are produced, and without “customers with money”, business enterprises cannot expand production. The principle operative in business is to maximize earnings to the owners of businesses, whether small or large corporations or individuals, not to create jobs or provide income for labor workers.
A Fundamental Structural Problem
There is a fundamental structural problem plaguing are private property productive capital system. It explains why the middle class is in decline and poverty persists despite our obvious capability to produce and meet demand for goods, products and services needed and wanted by our citizenry. With declining labor worker incomes and the prospects of more people living with insufficient or no income, demand in the market likewise declines. Conventionally, without a job there is no money. And as technological innovation gains exponential momentum there will be fewer and fewer jobs for labor workers to produce the products and services that they cannot buy because they don’t have jobs. Thus, this vicious circle is the current embodiment of concentrated ownership “capitalism” with only the already wealth;y capital ownership class hoarding all future economic growth, whether in the 2 percent range or the 4 percent or greater range.
Capitalism is not designed to benefit the working class and poor. Capitalism is designed to benefit the owners of productive capital. Few people can save enough to become wealthy by using their meager savings to speculate on the risky secondary Wall Street gambling casino. Yet the financial system is based on “savings” and as a result the percentage of people that derives most of their income from returns on productive capital investments is small. But it does not have to be.
What if we could reverse this trend of only the already wealthy productive capital owners getting more wealthy and turn the vast pool of Americans into productive capital owners and thus consumers? If that were done, more labor workers would be required (at least in the short term) to produce goods, products and services that would be demanded by these new consumers, who are. as well, the new owners of the productive capital assets created to expand productive capacity to meet demand. This would effectively recover the economy from the present lingering recession to the point where business enterprises again can develop and profitably manufacturer and sell their products and services in America. And as companies expand to meet demand with investment in new productive capital and American manufactory capability (not outsourcing or off-shoring manufacturing), new owners would participate and through their full earnings dividend payout create more demand.
Such a system can be created that rewards labor workers with skills that are in demand, while at the same time provide capital dividend income to them and to those not needed for the production of goods, products and services. Such a creation would embrace productive capital as a replacement for labor as the principal factor in production with continued productivity growth. Thus, the future economy would generate material wealth for ALL Americans created by technological invention embodied in super-automation, automated factories, intelligent machines and robotics, and sophisticated computerization, including artificial intelligence (AI).
In this way, we can build a future economy that can support the general affluence of EVERY citizen, and free our people to engage in the creative works they would love to do, in place of jobs they hate to do or are not satisfying, but necessary to earn an income.
The Systemic Injustices Of Monopoly Capitalism
The systemic injustices of monopoly capitalism can only be addressed by comprehensive reforms to the tax, monetary and inheritance policies favoring the top 1 percent at the expense of the 99 percent. The current system perpetuates budget deficits and unsustainable government debt, underutilized workers, a lack of financing for building advanced energy and green technologies and new and revitalized infrastructure, the outsourcing of U.S. manufacturing jobs to low-wage countries, and trade deficits, shrinking consumption incomes among the poor and middle class. The current system also perpetuates conventional methods for financing productive growth that increase the ownership and power gaps between the top 10 percent and the 90 percent whose combined ownership accumulations are already less than the elite whose money power is widely known as the source of political corruption and the breakdown of political democracy.
The un-workability of the traditional market economy is evidenced by the diverse and growing deficits — federal budget deficit, trade deficit, city, county and state budget deficits — and the national debt (now over $22 trillion and growing), which are making it increasingly impossible for governments at every level to function. The increasing deficit burden is the result of the growing numbers of people who cannot earn, from legitimate participation in production (jobs), enough income to support themselves and their families. Thus, government is obliged to “redistribute” to starve off economic collapse. The key means of redistribution is taxation — taking from the legitimate producers and giving to the non- or under-producers — to make up the economy’s ever-wider income and purchasing power shortfalls.
Corporate tax lawyer, investment banker, author and binary economist Louis O. Kelso once wrote: “It doesn’t make any difference what’s going on in the scientific world or the business world or the industrial world, we still believe full employment will solve our income distribution problems. This is what major political figures have always maintained.” One can substitute for “full employment” with boosts in the minimum wage and a “guaranteed” universal basic income and other “safety net” entitlements as solutions to our income distribution problems, without ever addressing how to democratize wealth and prevent the further accumulation of concentrated capital wealth among those people who already OWN America.
Kelso also was quoted as saying, “Conventional wisdom says there is only one way to earn a living, and that’s to work. Conventional wisdom effectively treats capital as though it were a kind of holy water that, sprinkled on or about labor, makes it more productive. Thus, if you have a thousand people working in a factory and you increase the design and power of the machinery so that one hundred men can now do what a thousand did before, conventional wisdom says, ‘Voila! The productivity of the labor has gone up 900 percent!’ I say ‘hogwash.’ All you’ve done is wipe out 90 percent of the jobs, and even the remaining ten percent are probably sitting around pushing buttons. What the economy needs is a way of legitimately getting capital ownership into the hands of the people who now don’t have it.”
The Solution To Financing Growth And Simultaneously Creating New Productive Capital Owners
The fact of the matter is that the problem of financing growth can be solved with ease, and in a way that not only doesn’t require additional government debt, it can lead to paying down the debt that is already outstanding.
That solution gets the United States and any country out of the hole they’re in with respect to the presumed scarcity of money, and makes it possible for everybody to purchase part (shares) of the new capital formation that would be financed. By everybody, I mean EVERY child, woman and man. Each individual can do this by purchasing newly issued shares that finance the new, viable productive capital projects using insured, interest-free capital credit (new money), making dividends tax deductible at the corporate level, paying out all corporate earnings as dividends, and repaying the credit extended to purchase shares out of the dividends on a tax-deferred basis.
Afterwards, the dividends can be taxed as personal income to the recipient and the balance used for consumption purposes. This would take a great burden off the government and increase tax revenues at the same time, allowing repayment of the outstanding debt without imposing austerity measures that only cripple growth.
As for the financial mechanisms necessary to significantly broaden capital ownership simultaneously with the responsible growth of the economy, we need to lift ownership-concentrating Federal Reserve System credit barriers and other institutional barriers that have historically separated owners from non-owners and link tax and monetary reforms to the goal of expanded capital ownership. Removing barriers that inhibit or prevent ordinary people from purchasing capital that pays for itself out of its own future earnings is paramount as an actionable policy. This can be done under the existing legal powers of each of the 12 Federal Reserve regional banks, and will not add to the already unsustainable debt of the federal government or raise taxes on ordinary taxpayers.
We need to free the system of dependency on Wall Street and the accumulated savings and money power of the rich and super-rich who control Wall Street. The Federal Reserve System has stifled the growth of America’s productive capacity through its monetary policy by monetizing public-sector growth and mounting federal deficits and “Wall Street” bailouts; by favoring speculation over investment; by shortchanging the capital credit needs of entrepreneurs, inventors, farmers, and workers; by increasing the dependency with usurious consumer credit; and by perpetuating unjust capital credit and ownership barriers between rich Americans and those without savings.
The Federal Reserve Bank should be used to provide interest-free capital credit (including only transaction and risk premiums) and monetize each capital formation transaction, determined by the same expertise that determines it today — management and banks — that each transaction is viably feasible so that there is virtually no risk in the Federal Reserve. The first layer of risk would be taken by the commercial credit insurers, backed by a new government corporation –– the Capital Diffusion Reinsurance Corporation (CDRC) –– through which the loans could be guaranteed. The CDRC would reinsure any portion of any financing risk assessed as reasonable and insurable but not already insured by the commercial capital credit insurance underwriters. In establishing the CDRC, the federal government would not be undertaking a new responsibility but merely simplifying and rationalizing an existing one. This entity would fulfill the government’s responsibility for the health and prosperity of the American economy.
The Capital Diffusion Reinsurance Corporation would function similar to the Federal Housing Administration, generally known as “FHA”, which provides mortgage insurance on loans made by FHA-approved lenders throughout the United States and its territories. The FHA insures mortgages on single family and multifamily homes including manufactured homes. FHA borrowers pay for mortgage insurance, which protects the lender from a loss if the borrower defaults on the loan. While pay-downs on home mortgages require a separate source of income, capital credit for productive capital formation is self-liquidating, with the earnings from the investment the source of the pay-down.
The fact is money power rules. When money power is broadly distributed in the hands of the citizens, not the politicians or bankers, the people shall rule. Ensuring that money power is broadly distributed should be the primary role of the Federal Reserve.
The Federal Reserve Board is already empowered under Section 13 of the Federal Reserve Act to reform monetary policy to discourage non-productive uses of credit, to encourage accelerated rates of private sector growth, and to promote widespread individual access to productive credit as a fundamental right of citizenship. The Federal Reserve Board needs to re-activate its discount mechanism to encourage private sector growth linked to universal capital ownership opportunities for all Americans.
The Federal Reserve, which has been largely responsible for the powerlessness of most American citizens, should set an example for all the central banks in the world. Members of the Federal Reserve need to wake-up and implement Section 13 paragraph 2, which directs the Federal Reserve to create credit for local banks to make loans to finance economic growth. We should not destroy the Federal Reserve or make it a political extension of the Treasury Department, but instead reform it so that the American citizens in each of the 12 Federal Reserve Regions become the owners. The result will be that money power will flow from the bottom up, not from the top down, not for consumer credit, not for credit that doesn’t pay for itself or non-productive uses of credit, but for credit for productive uses to expand the economy’s rate of growth.
Resources
For a more in-depth understanding of these policy concepts read “Economic Democracy And Binary Economics: Solutions For A Troubled Nation and Economy” at http://www.foreconomicjustice.org/?p=11.
The financial mechanism program is described in the Center for Economic and Social Justice’s (www.cesj.org) Capital Homesteading proposal. See the proposed Capital Homestead Act (aka Economic Democracy Act and Economic Empowerment 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/.
Also support Monetary Justice at http://capitalhomestead.org/page/monetary-justice.
