HEY, AMERICA: Check Out How 90 Percent Of Us Have Gotten Shafted Over The Past 30 Years… (Demo)

By Gary Reber Uncategorized August 27, 2012

On August 22, 2012, Henry Blodget writes in the Business Insider that income inequality is arguably the most important economic story in this country right now.

With all of America’s income gains now going to the richest 10 percent of Americans–and especially the richest 1 percent–the middle class is strapped.

And since the middle class provides most of the spending in the economy (rich people can only buy so many cars, houses, and vacations), this means that the growth of most companies has stalled.

The Economic Policy Institute has put together an amazing interactive chart that shows how this inequality has developed over the past 30 years.

In the past 30 years, 96 percent of the growth of average incomes in this country have gone to the richest 10 percent of the country. And in the past 10 years, the incomes of the other 90% have declined.

The next question, of course, is what has caused the shift of the past 30 years, as well as what can be done to reverse it. The cause is likely a number of factors, from globalization (the entry of 3 billion low-cost laborers into the workforce) to tax policy to technology. And there’s no easy and quick solution.

But you’d certainly have to be a member of the top 10 percent to think that the trend over the past 30 years is okay. You’d also have to be pretty short-sighted. Because if that trend continues, and if you’re in the top 10 percent because you own or work for a company that serves the other 90 percent, demand for your products will soon be going down.

Henry Blodget does a respectable job of defining the end result of the rigged American financial system that is so structured to favor those who are already wealthy, at the expense of the under-capitalized or capital-less American majority. Blodget refers to his misguided solution at http://www.businessinsider.com/how-to-fix-the-economy-in-one-simple-chart-2012-8

Yet this is another shallow article on how to fix the economy with the focus on JOB CREATION rather than OWNERSHIP CREATION. While Henry Blodget recognizes that without a source of income people cannot pay for the consumption of products and services, he limits his solution to JOB CREATION and wage charity. He provides charts showing that consumers are strapped or broke because most of the income gains in the past 30 years have gone to the top 10 percent (and especially the top 1 percent) but fails to connect that this income is the rightful property of the owners (no matter how few) of the non-human factor of production––productive capital––the result of tectonic shifts in the technologies of production that is evident in human-intelligent machines, superautomation, robotics, digital computerized oeprations, etc. embodied in various business corporations, LLC, partnerships, etc.

Blodget attributes income inequality to globalization (cheaper labor overseas), a decline in the minimum wage, the decline of private-sector unions, changes in the tax code (tax cuts for the highest earners) and excessive compensation for senior executives of business corporations, all of which is couched in references to jobs and employment. He fails to address the connection of globalization and tax code cuts to the ownership of inome-producing productive capital assets generated through the organization of business corporations and other for-profit entities.

Blodget argues that business corporations are paying very little to their rank-and-file employees, but does not address the reality that cheap global labor and the non-human means of production are forcing down the value of labor in the United States (and globally). Instead, he argues paying workers more for less work and more than the free market values that would otherwise operate in a market economy.

Blodget acknowledges that a lot of Americans don’t even have jobs (with more unemployment on the horizon) but fails to attribute the role of production cost efficiencies (cheap labor and “machines”) that increasingly eliminate the need for labor, both non- and skilled, and as well, educated labor.

On the plus side, Blodget advocates creating a sustainable economic recovery to get the private-sector cranking, not the public sector. But his solution is to “persuade American corporations (and their owners) to hire more employees and pay them more, thus giving these employees (American consumers) more spending money. In other words, we should take some of those surplus corporate profits and invest them in Americans.”

Blodget fails to call this approach what it is, that is, income redistribution, because the so-called “surplus corporate profits” are the earnings of the owners of those business corporations and if we are to uphold the principal of private property rights, rightly belong to those owners.

Blodget argues that “we instill a new value system in our companies, one in which employees–American workers–are treated as a constituency that is as important as the two other corporate constituencies that everyone already agrees are important––shareholders and customers.”

This is cockymania talk.

The REAL SOLUTION is to finance future economic growth of American business corporations by empowering EVERY American to acquire private, individual ownership in the eonomy’s future income-producing productive capital assets. Rather than the Federal Reserve providing money to banks for non-productive lending, Chairman Benjamin Bernanke and other members of the Federal Reserve need to wake-up and implement Section 13 paragraph 2, which directs the Federal Reserve to create credit for local banks to make loans where there isn’t enough savings in the system to finance economic growth. Thus, capital investment loans should be made to EVERY American with payback provided by the future earnings of the investments. This would free economic grwoth from the slavery of “past” savings. The Federal Reserve should 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.

The Federal Reserve Bank should be used to provide interest-free capital credit (including only transaction and risk premiums) and monetize each capital formation transaction, determined by the same expertise that determines it today––management and banks––that each transaction is viably feasible so that there is virtually no risk in the Federal Reserve. The first layer of risk would be taken by the commercial credit insurers, backed by a new government corporation, the Capital Diffusion Reinsurance Corporation, through which the loans could be guaranteed. This entity would fulfill the government’s responsibility for the health and prosperity of the American economy.

The monies would be strictly allocated for investment in the economic growth of the economy, and taking advantage of the Capital Homestead Account investment monies would be voluntary on the part of business corporations with the stipulation that the stockholders would receive the full-dividend payouts of the earnings and when the loan is repaid, continue to benefit from the full-dividend income stream.

Such a solution does not require redistribution or hoping that business corporations will increase their labor costs by paying higher wages and salaries otherwise not supported by free market competition. Such polities will simultaneously grow America’s productive capacity and provide people with income to buy the products and services produced, restoring the necessary balance between production and consumption.

The Federal Reserve Board is already empowered under Section 13 of the Federal Reserve Act to reform monetary policy to discourage non-productive uses of credit, to encourage accelerated rates of private sector growth, and to promote widespread individual access to productive credit as a fundamental right of citizenship. The Federal Reserve Board needs to re-activate its discount mechanism to encourage private sector growth linked to expanded capital ownership opportunities for all Americans. Such policies will increase corporate profits because Americans will end up with more spending money, which in turn, will increase profits and more money to spend by consumers on the products and services produced.

Why this approach?

Soon, industrial monopoly capitalism will reach its twin goals: concentration of productive capital ownership among the elite ownership class and work performed with as few labor workers and the lowest possible wages and salaries. The question to be answered is “Then what?”

Of course, to reach this twin goal will require “investment.” The term “invest” sounds good on paper or in speeches, especially when justified on the basis that investment will create JOBS. But the reality is that no one is addressing the CONCENTRATED OWNERSHIP of the income-producing assets that result from investments under the current financial system. Such assets created by investment are the result of tectonic shifts in the technologies of production, which is the real reason, as well as outsourcing, that jobs are being destroyed and degraded in terms of wage and salary levels. Until a Romney or Obama address this BIG ISSUE, unemployment and welfare roles will dramatically expand. It is only through future investment with the stipulation of simultaneously broadening private, individual ownership of income-producing productive capital––the non-human means of production embodied in human-intelligent machines, superautomation, robotics, digital computerized operations, etc.––that we will be able to enrich EVERY American’s life.

As a nation, we continue to ignore the possibility of democratizing future ownership of labor-displacing productive capital technologies and rising ownership incomes as a market-generated means of eliminating wage slavery, welfare slavery, debt slavery and charity slavery for the 99 percent of humanity. Binary economist Louis Kelso argued that the Keynesian model fails to recognize that “when capital workers replace labor workers as the major suppliers of goods and services, labor employment alone becomes inadequate because labor’s share of the income arising from production cannot provide the progressively better standard of living that technology is making possible. Labor produces subsistence at best. Capital can produce affluence. To enjoy affluence, all households must engage to an increasing extent in capital work [ownership]”

For decades employment opportunity in the United States was such that the majority of people could obtain a job that could support their livelihood, though in most cases related to a family, it required the father and mother to both work, if they aspired to live a “middle class” lifestyle. With “Free Trade” those opportunities began to disintegrate as corporations sought to seek lower cost production taking advantage of global cheap labor rates and non-regulation, as well as lower tax rates abroad. This resulted in a chain reaction forcing more and more companies to out-source in order to stay competitive (thus the rise of China, Indiana Mexico, and other third-world nations economies).

At the same time tectonic shifts in the technologies of production were exponentially occurring (and continue to do so), which resulted in less job opportunities as production was shifted from people making things to “machines” of technology making things, The combination of cheap global labor costs and lower long-term invested “machine” costs has forced the value of labor downward and this will continue to be the reality. Our only way to far greater prosperity, opportunity, and economic justice is to embrace technological innovation and invention and the resulting human-intelligent machines, superautomation, robotics, digital computerized operations, etc as the primary economic engine of growth.

But significantly, unless we reform our system to empower EVERY American to acquire, via insured capital loans, viable full-ownership holdings (and thus entitlement to full-dividend earnings) in the companies growing the economy with the future earnings of the investments paying for the initial loan debt to acquire ownership, then the concentration of ownership of ALL future productive capital will continue to be amassed by a wealthy minority. Companies will continue to globalized in search of “customers” with money or simply fail, as exponentially there will be fewer and fewer customers to support their businesses worldwide. Why, because the majority will be disconnected from the income derived from the non-human means of production that is replacing the need for labor workers.

Education is not the solution, though it is critical for our future societal development. But except for a relative few, the majority of the population, no matter how well educated, will not be able to find a job that pays sufficient wages or salaries to support a family or to prevent a lifestyle which is gradually being crippled by near poverty or poverty earnings.

Already, GDP growth is at a near standstill. Lowering taxes on the wealthy ownership class will not much impact this reality because they will not invest unless their are customers to create demand. This will continue to be the reality unless we reform the system to connect the majority of people to the property rights of the non-human production of products and services while simultaneously spurring economic growth, and entitle them to the earnings of capital (dividends, interest and rent) as a second income source to supplement their earnings from their labor in the short-term, with the long-term lifetime goal of earnings from capital ownership being the primary source of their income. This is the ONLY way to strengthen individuals and empower them to become personally responsible for their lives and not depended on taxpayer redistribution and national debt to sustain welfare support, open or concealed.

Blodget needs to reassess his focus on JOB CREATION and embrace the goal of universal CAPITAL OWNERSHIP. These ideas need to reach the Business Insider readership and the national media if we are to bring about the necessary paradigm shift necessary to put America on the path to prosperity, opportunity, and economic justice.

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

http://www.businessinsider.com/income-inequality-2012-8

HEY, AMERICA: Check Out How 90 Percent Of Us Have Gotten Shafted Over The Past 30 Years… (Demo)

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