On March 5, 2013 Robert Reich comments on The New York Times story I posted yesterday: Recovery In U.S. Is Lifting Profits, But Not Adding Jobs
Why is the stock market doing so marvelously well, while the real median wage keeps dropping and unemployment remains so high? Answer: Productivity keeps rising, allowing companies to do more with fewer workers; high unemployment allows companies to keep wages low; globalization allows them to expand and hire around the globe where markets are growing fastest; and the Fed’s easy-money policies have pushed investors into the stock market.
This spells widening inequality, because the people who save and invest the most have high incomes, while the people who rely most on wages have lower incomes. Corporate profits are claiming a larger share of national income than at any time in 60 years, while the portion of total income going to employees is near its lowest since 1966.
As my colleague Immanuel Saez recently found, all the economic gains between 2009 and 2011 (the last year for which data were available) went to the richest 1 percent of Americans. The bottom 99 percent continued to lose ground.
The sequestration is likely to make all this even worse, since it will slow the U.S. economy and keep unemployment higher than otherwise (see article below).
When and how will this end?
Robert Reich gets the answer to his question right in that “productivity [due to “machines” replacing workers] keeps rising, allowing companies to do more with fewer workers” but continues to fail to tie this to the issue of CONCENTRATED OWNERSHIP of productive capital dividend and capital gain income and the word “OWNERSHIP.” Reich and other academia, as well as our leaders, should be recommending effective programs for expanded ownership of productive capital, and address the problem of education on this subject.
Today’s techniques of finance are designed to make the rich richer. None are designed to make the poor richer. That’s why the poor are poor. The reason they are poor is because they do not have viable capital ownership. Thus, we need to focus on revising today’s techniques of finance to broaden capital ownership.
Jason Schwartz, who authored The New York Times article, 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.”
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
