In this graphic presentation posted on October 22, 2012 on The Big Picture blog at ritholtz.com the statement is made that:
Republican presidential candidate Mitt Romney recently reiterated an oft-heard pro-business line: “Corporations Are People.” This wasn’t just political rhetoric––the Supreme Court legally recognized corporations as persons in an 1886 ruling, citing the 14th Amerndment. So it then begs the question: if corporations are people, what sort of people are they?
This graphic presentation depicts “business corporations” as a bad element, and the record often substantiates the blame.
But as an organizational mechanism, the “business corporation” offers a tremendous opportunity to play a responsible and contributive role in societal development.
The problem is that the state charters and tax policy pertaining to business corporations provide no parameters to assure that business corporations are incentivized to reflect broadened ownership. Instead what typically occurs is that a very few individuals end up owning the stock of the business corporation and thus are entitled to the “profits” derived from the operation and the management of the underlying productive capital assets––all the things that are not people (labor) comprised such as productive land, resources, structures, machines, human-intelligent machines, robotics, superautomation and digital computerized operations, etc.
With power concentrated at the top of the business corporation, the owners control the operational direction of the company. But, for example, when ALL the employees are owners, dependent on their income from the company’s bottom line rather than through ordinary labor wages and benefits, the workers’ economic interests are more invested to see that their company succeeds. In this way, each person in the company is empowered as a labor worker and as a capital worker (owner) and inspired to work together as a team to make better operational decisions to serve and maximize value to their customers. This principle works as well when others, not directly employed, are participant owners. They actually become good customers of the products and services produced by the business corporations they own stock in.
In concentrated capital ownership terms, roughly 1 percent own 50 percent of the corporate wealth with 10 percent owning 90 percent. This leaves 90 percent of the people scrambling for the last 10 percent, with them dependent on their labor worker wages to purchase capital as in the secondary stock market. Thus, we have the great bulk of the people providing a mere 10 percent or less of the productive input. Contrast that to the less than 5 percent who own all the productive capital providing 90 percent or more of the productive input, and who initiate and oversee most of the technological advances that replace labor work with the productive capital they own. As a result, the trend has been to diminish the importance of employment with productive capital ownership concentrating faster than ever, while technological change makes capital ever more productive. But because this is not well understood, what we as a society have been doing is to continually shift the work burden from people labor to real capital while distributing the earning capacity of capital workers (via capital ownership of stock in corporations) to non-owners through artificial job creation and welfare, and because this is not enough to support the economy, through constantly expanding national debt. Such policies do not function effectively.
Alternatively, in a just growth economy comprised of business corporations competing with each other to produce marketable products and services, the ownership of productive capital would be spread more broadly as the economy grows, without taking any property interests 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, also benefiting the traditionally disenfranchised poor and working and middle class. Thus, productive capital income 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. That also means that society can profitably employ unused productive capacity that exists in the physical world and invest in more productive capacity to service the demands of a growth economy.
What is important to understand, and why the focus on JOB CREATION will continue to fall short in terms of providing REAL job opportunities in numbers that match the pool of people willing and able to work, is that 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 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 productive capital owners and progressively less to workers who make their contribution through labor.
To blame business corporations for not creating jobs is not understanding the problem. The role of physical productive capital is to do ever more of the work, which produces income. The choice is either physical productive capital or labor workers willing to work for less. 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. This will continue into the future of humankind.
What can we do? The main objective that we ALL need to embrace as Americans is the idea that EVERY American should have the equal opportunity to be productive in the society and earn a decent livable income. The focus needs to be on INCOME whether that is achieved through OWNERSHIP or JOB CREATION, or a combination.
To achieve this objective requires us to reevaluate our tax and central banking institutions, as well as, labor and welfare laws. We need to innovate in such ways that we lower the barriers to equal economic opportunity and create a level playing field based on anti-monopoly and anti-greed fairness and balance between production and consumption. In so doing, every citizen can begin to accumulate a viable capital estate without having to take away from those who now own by using the tax system to redistribute the income of capital owners. What the “haves” do lose moving forward is the productive capital ownership monopoly they enjoy under the present unjust system. A key descriptor of such innovation is to find the ways in which “have nots” can become “haves” without taking from the “haves.” Thus, the reform of the “system,” as binary economist Louis Kelso postulated, “must be structured so that eventually all citizens produce an expanding proportion of their income through their privately owned productive capital and simultaneously generate enough purchasing power to consume the economy’s output.”
There are solutions formulated to make it possible for “have nots” to become “haves” while respecting the free market and private property principles that the United States was founded on, and without taking from today’s “haves.” The plan is embodied in the Capital Homestead Act.
Support the Capital Homestead Act at http://www.cesj.org/homestead/index.htm and http://www.cesj.org/homestead/summary-cha.htm
The Capital Homestead Act is a comprehensive national economic strategy for empowering every American citizen, including the poorest of the poor, with the means to acquire, control and enjoy the fruits of productive corporate assets.
This long-range agenda involves major restructuring of our tax system and our Federal Reserve policies to lift unjust artificial barriers to more equitable distribution of future corporate capital and faster growth rates of private sector investment. It would shift primary national income maintenance policies from inflationary wage and unproductive income redistribution expedients to market-based ownership sharing and dividend incomes.
The Capital Homestead Act’s central focus is the democratization of capital (productive) credit. By universalizing citizen access to direct capital ownership through access to interest-free productive credit, it would close the power and opportunity gap between today’s haves and have-nots, without taking away property from today’s owners.
Please see my article “Democratic Capitalism And Binary Economics: Solutions For A Troubled Nation and Economy” at http://foreconomicjustice.com/11/economic-justice/ or follow me on Facebook at http://www.facebook.com/pages/For-Economic-Justice/347893098576250 and http://www.facebook.com/editorgary
Also follow the Center for Economic and Social Justice at www.cesj.org and http://capitalhomestead.org/ Join the OWN Team at http://capitalhomestead.org/group/the-on-team
Also see The Kelso Institute at http://www.kelsoinstitute.org/
Like the Just Third Way Group at http://www.facebook.com/groups/Justthirdway/
Support the Capital Homestead Act at http://www.cesj.org/homestead/index.htm and http://www.cesj.org/homestead/summary-cha.htm
Join the OWN Team to advocate OWNERSHIP CREATION at http://capitalhomestead.org/group/the-own-team The only commitment is to participate in the Weekly Action Point, which is usually just a Facebook post. Other activities are strictly voluntary!
http://www.ritholtz.com/blog/2012/10/corporations-are-people/
