On November 18, 2013, John Cassidy writes in The New Yorker:
Everyone knows that the U.S. has high income inequality relative to other rich countries. But what you may not know, and which the above chart by the Luxembourg Income Study’s Janet Gornick makes clear, is that this isn’t the case before you take taxes and government transfers like Social Security into account. If you just look at peoples’ pre-tax/transfer income (also known as their “market” income), the U.K., Germany, and Finland are less equal than the U.S., and the U.S. ties Norway, Spain, the Netherlands, and Sweden. We’re well within the developed world norm. But other countries have adopted policies that reduce inequality far more than the policies that the U.S. has embraced do.
The reason is that our system perpetuates constant concentration of FUTURE wealth ownership in corporations that produce the bulk of our products and services. Our tax system is not structured to encourage corporations to pay out all their profits as taxable personal incomes to avoid paying corporate income taxes and to finance their growth by issuing new full dividend payout shares for broad-based citizen ownership. The Federal Reserve continues to monetize unproductive debt, including bailouts of banks “too big to fail” and Wall Street derivatives speculators, instead of creating an asset-backed currency that could enable every man, woman and child to establish a Capital Homestead Account or “CHA” (a super-IRA or asset tax-shelter for citizens) at their local bank to acquire a growing dividend-bearing stock portfolio to supplement their incomes from work and all other sources of income. The CHA would process an equal allocation of productive credit to every citizen exclusively for purchasing full-dividend payout shares in companies needing funds for growing the economy and private sector jobs for local, national and global markets. The shares would be purchased on credit wholly backed by projected “future savings” in the form of new productive capital assets as well as the future marketable goods and services produced by the newly added technology, renewable energy systems, plant, rentable space and infrastructure added to the economy. Risk of default on each stock acquisition loan would be covered by private sector capital credit risk insurance and reinsurance, but would not require citizens to reduce their funds for consumption to purchase shares.
The monetary system is faulty. Creating money backed only by government debt simply divides up the present value of existing and future marketable goods and services in the economy, creating more demand, and driving up the price level. Instead the exact opposite should be the rule. Money should not be created to loan out; instead, loans made for viable and financially feasible capital projects would create the money to finance them. Assuming that all money is created backed by the present value of existing and future marketable goods and services, the money supply will be “elastic”, and will increase and decrease directly with the increase and decrease in the present value of marketable goods and services in the economy, thereby avoiding both inflation and deflation.
The end result would be that citizens would become empowered as owners to meet their own consumption needs and government would become more dependent on economically independent citizens, thus reversing current global trends where all citizens will eventually become dependent for their economic well-being on our only legitimate monopoly –– the State –– and whatever elite controls the coercive powers of government.
The solutions can be found in the Agenda of The Just Third Way Movement at http://foreconomicjustice.org/?p=5797, Monetary Justice reform at http://capitalhomestead.org/page/monetary-justice and the Capital Homestead Act at http://www.cesj.org/homestead/index.htm and http://www.cesj.org/homestead/summary-cha.htm
http://www.newyorker.com/online/blogs/johncassidy/2013/11/inequality-and-growth-what-do-we-know.html
