http://www.latimes.com/business/la-me-emeryville-minimum-wage-20150817-story.html
This is an excellent article by Lee Romney that points out the diversity of business that will be impacted by the increasing wage levels required as a minimum wage that reflects a livable income for millions of people enslaved in low-wage jobs.
The REAL focus, however, should by on a LIVABLE INCOME, which is much more than income sourced from ONLY one’s labor input. By that I mean, one source of input is human (and thus employment enables one to earn wages or a salary) and the other source of input is non-human (what economists call capital assets OWNED by people who apply these assets as productive inputs in the workings of an economy). The wealthy ownership class is wealthy by definition because they OWN capital wealth assets that create their wealth valuation and produce a dividend or capital gains income as well as accumulated wealth value.
Yet, Americans, when addressing economic inequality and the necessity to raise the minimum wage, are singularly focused on JOBS, and essentially oblivious to the necessity to empower EVERY child, woman, and man to become a capital wealth OWNER.
The truth is that by simultaneously growing the economy (expanded productive capital assets) and creating NEW capital OWNERS, people would become richer with more disposable money that can be used for consumption to create demand for continued growth, without taking anything away from those who already OWN and without fueling inflation. Over time this means that because the economy now would dramatically expand NEW jobs would result in the short-term, and people would have been able to build a viable, diversified portfolio of OWNERSHIP shares in the corporations growing the economy for long term perpetual income, equity value, and financial retirement security.
What is the REAL solution? Implement the proposed Capital Homestead Act (also known as the Economic Democracy Act), which establishes a Capital Homestead Account (CHA) for EVERY child, woman, and man who is a citizen of the United States. Even with the poor, anemic performance of the American economy, at 2 percent or so of GDP (Gross Domestic Product––the monetary value of all the finished products and services produced within a country’s borders on an annual basis) that would support extending $7,000 of interest-free capital credit to EVERY child, woman, and man in their own personal CHA, regardless of their personal finances. At minimum, this amount would be available EVERY year and actually grow in magnitude simultaneously with the accelerated growth of the economy as more business growth occurs and jobs result, producing “customers with money” to further create demand for the products and services the economy is capable of producing. Capital investments generally pay for themselves within a 3 to 7 year window, and once paid for continue to generate income for their OWNERS indefinitely with proper maintenance and with restoration in the technical sense through research and development. Such compounding over a lifetime would produce a secure retirement and second income in addition to ANY income earned elsewhere, including wages.
The immediate effects of a CHA should be felt within 18 to 24 months — but not because of the dividends, but the effect on “job creation.”
This is because forming a couple trillion dollars worth of new capital will result in new jobs, which will trigger new demand as workers spend their income, and thus more jobs to meet the new demand. The direct effects of a CHA will be felt within 7 years (or sooner) . . . the length of time (estimated) needed to repay the first round of new capital completely and apply the full stream of dividends to consumption instead of debt service . . . which will create yet more demand and thus result in more job creation.
The first year of a Capital Homesteading program will focus first on the enormous number of projects that must be undertaken regardless of the cost of financing. This appears to be around $2 trillion. (Strictly speaking, Capital Homesteading “pure credit” financing would be interest-free, although not cost-free, as a small administration fee would be applicable so banks would manage the account).
Next in line would be those projects that have been in abeyance due solely to lack of available financing at a reasonable cost. This could be considered “additional investment” — but is it really? Let’s assume it is, since it’s above the bare minimum. While there are no solid figures for this, let’s assume that it’s roughly half of the amount of the “must be undertaken” projects, or $1 trillion. Just to be ultra-conservative, let’s include in that replacement capital that managers have realized will be cheaper financed with pure credit and the cash they’ve been retaining for replacement that belongs to the shareholders (OWNERS) can be paid out to the shareholders.
Thus, hypothetically, the additional new capital increment would increase the amount of new capital formation from $2 to $3 trillion.
As can be seen, the economic benefits of a Capital Homesteading program would begin immediately, as soon as the workers forming the new capital get paid. Once the initial loans are paid back, there would be another infusion of consumption income into the economy due to freeing up cash formerly used for debt service. This would increase by the same amount every year, everything else being equal.
All the loans would have to be paid back, in full, for the system to work, with capital credit insurance and reinsurance provided by a government reinsurance agency (ala the Federal Housing Administration concept) to repay the loans for failed projects. As for working capital and R&D — those are, technically, a capital item and an expense, respectively. If more cash is needed for operations, the company should issue and sell new shares, not retain earnings or use corporate debt, neither of which creates any new capital owners.
In other words, we need to shift to an OWNERSHIP CULTURE with the focus on policies and programs that ALWAYS expand capital ownership opportunities for the people, not collectively, but as individual participants and financial beneficiaries.
Support the Capital Homestead 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/ and http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-summary/. See http://cesj.org/learn/capital-homesteading/ and http://cesj.org/…/uploads/Free/capitalhomesteading-s.pdf.
