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A U.S. Productivity Puzzle (Demo)

Leroy and Lauri Dixon

http://www.latimes.com/business/la-fi-economy-low-productivity-20151002-story.html

This article is written from the standpoint of a one-factor thinker. Los Angeles Times business writer Don Lee appears to be the one who continues to be puzzled. Anyone with any ability to reason should deduce from the beginnings of mankind, picking up the first stick or stone, that most changes in the productive capacity of the world since the beginning of time can be attributed to technological improvements in our capital assets, and a relatively diminishing proportion to human labor. People invented “tools” to reduce toil, enable otherwise impossible production, create new highly automated industries, and significantly change the way in which products and services are produced from labor intensive to capital intensive––the core function of technological invention and innovation.

Technology is about reducing the necessity for human input, particularly human toil and enabling otherwise impossible production, all the while increasing efficiency of production at lower costs. The reason the economy is stalled, despite the never-before-seen extent of technological prowess, is not because technology is failing us, but instead because there is not enough “customers with money” necessary for creating demand for products and services. To expect that as technological invention and innovation excels that the human input should earn more as labor workers assumes wrongly that non-human capital “enhances” labor productivity (labor’s ability to produce economic goods). In fact, the opposite is true. It makes many forms of labor unnecessary. The result of technological invention and innovation has created tectonic shifts in the technologies of production, which is rapidly spreading throughout the world, destroying jobs and devaluing the worth of labor as more and more people must compete for fewer and fewer decent paying jobs. Wages have been slashed in many areas and in other cases entire industries have been outsourced to countries where corporations can pay workers pennies on the dollar.

What Don Lee or any body of economists fail to address is that productive capital is increasingly the source of the world’s economic growth and, therefore, should become the source of added property ownership incomes for all. But because the ownership of productive capital assets are vastly concentrated among a tiny minority of wealthy people, the vast majority of Americans are finding it increasingly more challenging to earn decent wages from a job to be able to afford the products and services they need and desire.

Technological change makes tools, machines, structures, and processes ever more productive while leaving human productiveness largely unchanged (our human abilities are limited by physical strength and brain power––and relatively constant). The technology industry is always changing, evolving and innovating. The result is that primary distribution through the free market economy, whose distributive principle is “to each according to his production,” delivers progressively more market-sourced income to capital owners and progressively less to workers who make their contribution through labor.

Unfortunately, ever since the 1946 passage of the Full Employment Act, economists and politicians formulating national economic policy have beguiled us into believing that economic power is democratically distributed if we have full employment––thus the political focus on job creation and redistribution of wealth rather than on equal opportunity to produce, full production and broader capital ownership accumulation. This is manifested in the myth that labor work is the ONLY way to participate in production and earn income, and that individual talent and effort are what distinguish the wealthy from the non-wealthy. Long ago that was once true because labor provided 95 percent of the input into the production of products and services. But today that is not true. Physical capital provides not less than 90 to 95 percent of the input. Full employment as the means to distribute income is not achievable. When the “tools” of capital owners replace labor workers (non-capital owners) as the principal suppliers of products and services, labor employment alone becomes inadequate. Thus, we are left with government policies that redistribute income in one form or another.

If we postulate that if both labor and capital are independent factors of production, and if capital’s proportionate contributions are increasing relative to that of labor, then logically equality of opportunity and economic justice demands that the right to property (and access to the means of acquiring and possessing property) must in justice be extended to all. Yet, sadly, the American people and its leaders still pretend to believe that labor is becoming more productive, and ignore the necessity to broaden personal ownership of wealth-creating, income-producing capital assets simultaneously with the growth of the American economy.

To put this in context, it is important to briefly note that throughout history, man has endeavored to overpower the time constraints of physical and biological processes. It is now an accepted fact that accelerated scientific and technological innovation has directly led to a speeding up of all physical and social processes in the name of progress. The competitive drive has led to a frantic national and international chase for more efficient methods of production and distribution. In the process, humanity has pushed to develop even more powerful technologies, on the assumption that such technologies would accomplish more and more useful functions in less time. The results have been a dramatic acceleration of change and concentration of wealth ownership.

The solution is to create a democratic growth economy, wherein the ownership of productive capital assets would be spread more broadly as the economy grows, without taking anything away from the 1 to 10 percent who now own 50 to 90 percent of the corporate wealth. Instead, the ownership pie would desirably get much bigger and their percentage of the total ownership would decrease, as ownership gets broader and broader, benefiting EVERY citizen, including the traditionally disenfranchised poor and working and middle class. Thus, productive capital income, from full earnings dividend payouts, would be distributed more broadly and the demand for products and services would be distributed more broadly from the earnings of capital and result in the sustentation of consumer demand, which will promote economic growth and more profitable enterprise. That also means that society can profitably employ unused productive capacity and invest in more productive capacity and green technologies to service the demands of a growth economy. As a result, our business corporations would be enabled to operate more efficiency and competitively, while broadening wealth-creating ownership participation, creating new capitalists and “customers with money” to support the products and services being produced.

“Hoggism,” today’s capitalism, is about the ability of greedy rich people to manipulate the lives of people who struggle with declining labor worker earnings and job opportunities, and then accumulate the bulk of the money through monopolized productive capital ownership. Our scientists, engineers, and executive managers who are not owners themselves, except for those in the highest employed positions, are encouraged to work to destroy employment by making the capital “worker” owner more productive. How much employment can be destroyed by substituting machines for people is a measure of their success––always focused on producing at the lowest cost. Only the people who already own productive capital are the beneficiaries of their work, as they systematically concentrate more and more capital ownership in their stationary 1 percent ranks. Yet the 1 percent are not the people who do the overwhelming consuming. The result is the consumer populous is not able to earn the money to buy the products and services produced as a result of substituting machines for people. And yet you can’t have mass production without mass human consumption made possible by “customers with money.” It is the exponential disassociation of production and consumption that is the problem in the United States economy, and the reason that ordinary citizens must gain access to productive capital ownership to improve their economic well-being.

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