On June 19, 2013, Les Leopold writes on Salon.com:
America is the richest country on Earth. We have the most millionaires, the most billionaires and our wealthiest citizens have garnered more of the planet’s riches than any other group in the world. We even have hedge fund managers who make in one hour as much as the average family makes in 21 years!
This opulence is supposed to trickle down to the rest of us, improving the lives of everyday Americans. At least that’s what free-market cheerleaders repeatedly promise us.
Unfortunately, it’s a lie, one of the biggest ever perpetrated on the American people.
Our middle class is falling further and further behind in comparison to the rest of the world. We keep hearing that America is number one. Well, when it comes to middle-class wealth, we’re number 27.
The most telling comparative measurement is median wealth (per adult). It describes the amount of wealth accumulated by the person precisely in the middle of the wealth distribution—50 percent of the adult population has more wealth, while 50 percent has less. You can’t get more middle than that.
Wealth is measured by the total sum of all our assets (homes, bank accounts, stocks, bonds etc.) minus our liabilities (outstanding loans and other debts). It the best indicator we have for individual and family prosperity. While the never-ending accumulation of wealth may be wrecking the planet, wealth also provides basic security, especially in a country like ours with such skimpy social programs. Wealth allows us to survive periods of economic turmoil. Wealth allows our children to go to college without incurring crippling debts, or to get help for the down payment on their first homes. As Billie Holiday sings, “God bless the child that’s got his own.”
Well, it’s a sad song. As the chart below shows, there are 26 other countries with a median wealth higher than ours (and the relative reduction of U.S. median wealth has done nothing to make our economy more sustainable).
The reasons for this deplorable condition should not be complicated and, in fact, there is a simple reason why inequality is widening. It is the perpetual CONCENTRATED OWNERSHIP of productive capital assets due to a system that bases FUTURE growth on financing with “past” savings, rather than rather than finance economic growth paid for with “future” savings out of the earnings of the investments. Unfortunately, conventional economists, academia, political leaders, and the national media assume that the only way to finance new capital is by cutting consumption and accumulating money savings. This, while incorrect, leads to the conclusion that only the rich can own, or that the State must own or control the rich so they do what’s right.
The forces of greed capitalism want low-pay “slave labor” incomes for worker input in the production of products and services in order to keep labor input and other costs at a minimum and maximize profits to the ownership class. The reality is that the ownership class continues to amass capital ownership and derive the income earned from their private ownership rights. The ownership class is benefiting from the reality that in most economic tasks, productive capital (not labor) is doing ever more of the work, is creating ever more of the wealth, and is contributing to ever more of the economic growth due to increasing capital productiveness rather than increasing human productivity. As a result, private sector job creation in numbers that match the pool of people willing and able to work is constantly being eroded by physical productive capital’s ever increasing role. The problem is that the ownership class has not taken the initiative to distribute more broadly private capital acquisition by workers and others. The problem is the system is plagued with injustice and inefficient distribution of wealth. If we are to set the nation on a path to prosperity and growth then it is essential that we recognize that growth is primarily a function of increasing capital productiveness rather than increasing labor productivity. The question before us is who will OWN this FUTURE capital productivity and the resulting wealth-creating capital assets?
Unfortunately with the means of production controlled narrowly due to concentrated capital ownership which is benefiting from tectonic shifts in the technologies of production that eliminate and devalue jobs and thus there are fewer and fewer “customers with money” to purchase the products and services that the economy is capable of producing. The result is the consumer populous is not able to get 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. 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.
While millions of Americans own diluted stock value through the “stock market exchanges,” purchased with their earnings as labor workers, their stock holdings are relatively miniscule, as are their dividend payments compared to the top 10 percent of capital owners. Even when economies are perceived as experiencing steady, low-inflationary, job-providing growth, the reality is that most people do not earn enough to sustain their reasonable needs and, instead, are heavily in debt and/or dependent upon some form of earnings redistribution. While technological innovation and invention promises the increasing abundance of substantially increased output with much less human effort, there is widespread poverty, even in boom times in which too many people remain poor. “Trickle-down” does not solve poverty because for too many people, the “trickle” is usually only menial, low-pay jobs or welfare, open and concealed. The reality is that capital is the primary source of affluence, whereas labor rarely produces more than subsistence. The solution is to enable EVERY American to acquire capital and pay for their acquisition out of the future earnings of the capital––thus self-financed capital ownership acquisition in the non-human factor of production.
This paradigm shift impacting society does not have to be a painful transition. It should be welcomed because the promise is to eliminate toil––the labor work that one would not do if they were not paid to do it.
The United States lost 6.3 million manufacturing jobs between January 1990 and the industry’s low point in January 2010, a 36 percent decline, according to the Bureau of Labor Statistics. Since that low point, the industry has added nearly 500,000 jobs––not near enough to offset the millions of losses. While America needs and will continue to need workers who can make and fix machines and the software that makes them run, still private sector job creation in numbers that match the pool of people willing and able to work will continue to be eroded by physical productive capital’s ever increasing role. As for jobs, they will be limited to the highly-skilled and technical variety or the non- and low-skilled variety that companies seek to replace with machines. Such anemic job creation is far too limited to solve the reality that by the year 2020, more than 50 percent of the jobs available will be minimum wage jobs!
There’s nothing new about machines replacing people, but the rate of replacement is exponential and the result is that productivity gains lead to more wealth for the OWNERS of the non-human factor of production, but for others who have always been dependent on jobs as their source of income, there has been a steady decline to poverty-level labor incomes.
But what about China, the place where all the manufacturing jobs are supposedly going? True, China has added manufacturing jobs over the past 15 years. But now it is beginning its shift to super-robotic automation. Foxconn, which manufactures the iPhone and many other consumer electronics and is China’s largest private employer, has plans to install over a million manufacturing robots within three years. Thus, in reality off-shoring of manufacturing will eventually be replaced by human-intelligent super-robotic automation.
The pursuit for lower and lower cost production that relies on slave wage labor will eventually run out of places to chase. Eventually, “rich” countries, whose productive capital capability is owned by its citizens, will be forced to “re-shore” manufacturing capacity, and result in every-cheaper robotic manufacturing.
“The era we’re in is one in which the scope of tasks that can be automated is increasing rapidly, and in areas where we used to think those were our best skills, things that require thinking,” says David Autor, a labor economist at Massachusetts Institute of Technology.
Businesses are spending more on technology now because they spent so little during the recession. Yet total capital expenditures are still barely running ahead of replacement costs. “Most of the investment we’re seeing is simply replacing worn-out stuff,” says economist Paul Ashworth of Capital Economics.
Yet, while the problem is one that no one can no longer ignore, the solution also is one starring them in the face but they just can’t see the simplicity of it.
The fundamental challenge to be solved is how do we reinvent and redesign our economic institutions to keep pace with job destroying and devaluing technological innovation and invention so not all of the benefits of owning FUTURE productive capacity accrues to today’s wealthy 1 percent ownership class, and ownership is broadened so that EVERY American earns income through stock ownership dividends so they can afford to purchase the products and services produced by the economy.
None of this is new from a macro-economic viewpoint as productive capital is increasingly the source of the world’s economic growth. The role of physical productive capital is to do ever more of the work of producing more products and services, which produces income to its owners. Full employment is not an objective of businesses. Companies strive to keep labor input and other costs at a minimum. Private sector job creation in numbers that match the pool of people willing and able to work is constantly being eroded by physical productive capital’s ever increasing role. Over the past century there has been an ever-accelerating shift to productive capital––which reflects tectonic shifts in the technologies of production. The mixture of labor worker input and capital worker input has been rapidly changing at an exponential rate of increase for over 235 years in step with the Industrial Revolution (starting in 1776) and had even been changing long before that with man’s discovery of the first tools, but at a much slower rate. Up until the close of the nineteenth century, the United States remained a working democracy, with the production of products and services dependent on labor worker input. When the American Industrial Revolution began and subsequent technological advance amplified the productive power of non-human capital, plutocratic finance channeled its ownership into fewer and fewer hands, as we continue to witness today with government by the wealthy evidenced at all levels.
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. Binary economist Louis Kelso attributed most changes in the productive capacity of the world since the beginning of the Industrial Revolution to technological improvements in our capital assets, and a relatively diminishing proportion to human labor. Capital, in Kelso’s terms, does not “enhance” labor productivity (labor’s ability to produce economic goods). In fact, the opposite is true. It makes many forms of labor unnecessary. Because of this undeniable fact, Kelso asserted that, “free-market forces no longer establish the ‘value’ of labor. Instead, the price of labor is artificially elevated by government through minimum wage legislation, overtime laws, and collective bargaining legislation or by government employment and government subsidization of private employment solely to increase consumer income.”
Furthermore, according to Kelso, 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. Kelso postulated that if both labor and capital are interdependent factors of production, and if capital’s proportionate contributions are increasing relative to that of labor, then 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.
A National Right To Capital Ownership Bill that restores the American dream should be advocated by the progressive movement, which addresses the reality of Americans facing job opportunity deterioration and devaluation due to tectonic shifts in the technologies of production.
There is a solution, 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.
The solution is obvious but our leaders, academia, conventional economist and the media are oblivious to the necessity to broaden ownership in the new capital formation of the future simultaneously with the growth of the economy, which then becomes self-propelled as increasingly more Americans accumulate ownership shares and earn a new source of dividend income derived from their capital ownership in the “machines” that are replacing them or devaluing their labor value.
The solution will require the reform of the Federal Reserve Bank to create new owners of future productive capital investment in businesses simultaneously with the growth of the economy. The solution to broadening private, individual ownership of America’s future capital wealth requires that the Federal Reserve stop monetizing unproductive debt, including bailouts of banks “too big to fail” and Wall Street derivatives speculators, and begin 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. Policies need to insert American citizens into the low or no-interest investment money loop to enable non- and undercapitalized Americans, including the working class and poor, to build wealth and become “customers with money.” The proposed Capital Homestead Act would produce this result.
Support the Capital Homestead Act at http://www.cesj.org/homestead/index.htm and http://www.cesj.org/homestead/summary-cha.htm
Sign the Petition at http://signon.org/sign/amend-the-federal-reserve.fb27?source=c.fb&r_by=3904687
See “Financing Economic Growth With ‘FUTURE SAVINGS’: Solutions To Protect America From Economic Decline” at NationOfChange.org http://www.nationofchange.org/financing-future-economic-growth-future-savings-solutions-protect-america-economic-decline-137450624
http://www.salon.com/2013/06/19/american_middle_class_prosperity_is_pure_fantasy_partner/
