On March 4, 2013, Derek Thompson writes in The Atlantic:
Here are two things that are true about the economy today.
(1) The Dow Jones industrial average is poised to set a new record as corporate profits stretch to all-time highs.
(2) There are still fewer working Americans today than there were before the start of the Great Recession.
The fact that these two things can be true at the same time might outrage you. But it shouldn’t surprise you. In the last 30 years, there has been a great divergence between growth and workers’ incomes, as the New York Times reminds us today. Corporate profits have soared, in the last decade especially, particularly because of three things: Globalization has pushed down the cost of labor available to multinational corporations; technology has allowed companies to make more with fewer workers, in general; and Big Finance has gobbled up the economy, as the banks’ share of total corporate profits has tripled to about one-third since the middle of the last century, according to Evan Soltas.
In the reference to The York Times story published today (http://www.nytimes.com/2013/03/04/business/economy/corporate-profits-soar-as-worker-income-limps.html?smid=fb-share&_r=0), its author, Jason Schwartz demonstrates that he is another conventional thinker who does not see or understand the implications of his own words: “…productivity gains allow [companies] to increase sales without adding workers.” Derek Thompson correctly points to the three reasons for the great divergence between growth and workers’ income.
Of the three reasons, technological unemployment is the greatest threat, even on a global basis. This is because companies will continue to seek the most efficient means to produce the products and services they offer, and invest in the non-human factor of production. My mentor, binary economist Louis Kelso, is 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 (land, structures, machines, and the like) 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.”
In a competitive race to produce efficiently, in addition to a focus on productive capital investment, employers are either shortening the workweek or asking employees to take unpaid leave in unprecedented numbers. The only work that has increased is part-time work, and that is because it allows employers to reduce costs through a diminished benefit package or none at all.
The problem is that technological unemployment will become the norm globally and companies will not be able to find “customers with money” to purchase their products and services. Obviously, because for the vast majority of people a JOB is their ONLY means of an income source. The financial system is rigged to benefit those who already own and to perpetuate further CONCENTRATED OWNERSHIP of productive capital productivity gains. We need to reform the system to free economic growth from the slavery of “past” savings.
The solution is to reform the financial system to incentivize companies to finance their growth through the issuance and sale of new stock, with full voting and full profit dividend payout provisions, so that EVERY American can acquire the stock using insured pure capital credit and pay for their acquisition out of the “future” earnings of the investment.
Essentially, the pressing need is for everyone in a position of influence to raise the consciousness of the America people by making the nation’s NUMBER ONE focus the introduction of a National Right To Capital Ownership Bill that restores the American dream of property ownership as a primary source of personal wealth.
This is the solution to America’s economic decline in wealth and income inequality, which will result in double-digit economic growth and simultaneously broaden private, individual ownership so that EVERY American’s income significantly grows, providing the means to support themselves and their families with an affluent lifestyle. The Just Third Way Master Plan for America’s future is published at http://foreconomicjustice.org/?p=5797.
Support the Capital Homestead Act at http://www.cesj.org/homestead/index.htm and http://www.cesj.org/homestead/summary-cha.htm
http://www.theatlantic.com/business/archive/2013/03/corporate-profits-are-eating-the-economy/273687/
