On June 29, 2020, Yun Li writes on CNBC Markets:
- The employment-population ratio — the number of employed people as a percentage of the U.S. adult population — plunged to 52.8% in May, meaning 47.2% of Americans are jobless.
- As the coronavirus-induced shutdown tore through the labor market, the share of population employed dropped sharply from a recent high of 61.2% in January, farther away from a post-war record of 64.7% in 2000.
- “To get the employment-to-population ratio back to where it was at its peak in 2000 we need to create 30 million jobs,” said Torsten Slok, Deutsche Bank’s chief economist.
- Investors will look to this week’s June jobs report for an update on the pace of the labor market recovery.
WATCH NOWVIDEO09:29Can the US labor market bounce back from Covid-19?
Nearly half of the population is still out of a job showing just how far the U.S. labor market has to heal in the wake of the coronavirus.
The employment-population ratio — the number of employed people as a percentage of the U.S. adult population — plunged to 52.8% in May, meaning 47.2% of Americans are jobless, according to Bureau of Labor Statistics. As the coronavirus-induced shutdowns tore through the labor market, the share of population employed dropped sharply from a recent high of 61.2% in January, farther away from a post-war record of 64.7% in 2000.
This ratio is a broader look at the employment picture. It takes into account adults not in the labor force and captures those who were discouraged about the prospects of finding a job, whereas the unemployment rate looks at people actively looking for a job.
“To get the employment-to-population ratio back to where it was at its peak in 2000 we need to create 30 million jobs,” Torsten Slok, Deutsche Bank’s chief economist, said in an email. Slok included the chart in a report to clients.
Investors will look to this week’s June jobs report for an update on the pace of the labor market recovery. Economists polled by Dow Jones are expecting nonfarm payroll to increase by 3.15 million in June, after a shocking surge of 2.5 million in May, the biggest jobs increase ever in a single month.
Meanwhile, the jobless rate is expected to decline to 12.4% this month from 13.3% in May, according to Dow Jones. The unemployment rate doesn’t capture those who stopped looking for a job. The labor force is about 60% of the U.S. adult population.
After the unexpected snapback in May, there have been signs of a slowdown in the labor-market improvement as fears of a coronavirus resurgence deepened in recent weeks. The number of Americans filing for unemployment claims came in higher than expected for the past two weeks straight.
“Right now the economy’s recovery is being dragged down by the millions and millions of Americans without jobs and [who] simply haven’t got it,” Chris Rupkey, MUFG Union Bank’s chief financial economist, said in a note. “The massive job losses mean the economy isn’t out of the woods yet.”
States including Texas and Florida have paused plans for further reopening amid a record spike in coronavirus cases. The number of new daily Covid-19 cases across the nation jumped 42% over the past week to an average of about 38,200 on Sunday, according to data from Johns Hopkins University.
The June jobs report comes out Thursday at 8:30 a.m. ET.
Gary Reber Comments:
According to writers on the subject, virtually universal is the assessment that millions and millions of jobs will need to be reinstated and that the world will be saved if fixed wages and benefits are increased to a level beyond the dreams of avarice of a century ago. The irony that the higher fixed wages go, the worse off workers become seems to escape them as the price level rises more than the wage increase, and workers get replaced by less expensive machinery and/or the controlling business owners shift production to low cost slave-wage labor countries.
The reason American workers have suffered a devastating loss of economic power over the past four decades, is two-fold: 1) As unions and workers demanded increases in wages and benefits for the same worker input, the controlling owners of corporations began to automate their production and in the process, they owned greater asset values; 2) they also sought to significantly lower the cost of labor and other cost factors, such as regulations and taxes, by shuttering manufactories in our homeland and investing in developing countries, such as Communist China and other slave-wage Asian countries, who welcomed the American investment, technology-sharing, and opportunity to develop their manufacturing capabilities.
This transformation was largely ignored by the American public, who as consumers welcomed lower-priced non-American-made goods, ignoring or not realizing that globalization would destroy their only means to produce –– a job –– and thus their means to consume.
It is reported that during this time, economic output of the United States has almost tripled. Conventional economists attribute this to an increase in labor productivity. But the investment in productive capital (the non-human factor of production) 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 as does the globalization of production to slave-wage labor countries.
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 and create consumption demand.
The sole focus of government and the leadership that is supposed to represent our, the people’s best interests is job creation stimulated by investment in the businesses owned by the already wealthy capital ownership class.
Advocates for a job guarantee as the sole solution to when the economy contracts are promoting endless wage slavery, albeit to provide socially useful work
Conventional economists fail to address that in the United States, and for that matter, everywhere in the world, productive capital is increasingly the source of economic growth. Logically, if this is an undeniable fact, shouldn’t productive capital become the source of added property ownership incomes for all? If one simply postulates 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 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. This is the logical approach to prevent costs and prices from rising due to inflated fixed wages and benefits. Yet, sadly, the American people and its leaders, still pretend to believe that labor is becoming more productive and couch all policy directions in the name of job creation and wage increases, while envying the wealthy capital asset ownership class. Americans ignore the necessity to broaden personal ownership of wealth-creating, income-producing capital asset portfolios simultaneously with the growth of the economy, and create consumption demand.
No matter how much labor is necessary or unnecessary in the economy, it is imperative that the issue of concentrated capital ownership is addressed, and policies are enacted to simultaneously create new capital owners of the corporations growing the economy, both established and viable start-ups,as the economy grows.
Why is it that educated people cannot see the weakness of the wage slave system? How is it that the vast majority of Americans virtually never learn about why the rich get so much richer every year while everyone else gets left behind?
There is no question that we need to get big money out of politics, which allows the wealthy to control policy-making to the benefit of their ownership interests. As well, we need to set social responsibilities for the controlling owners of corporations that regulate their operations. Political democracy can only be meaningful if supported by economic democracy. Benjamin Watkins Leigh and Daniel Webster understood this when they stated a simple fact: power follows property. “Property” will either seize power, or “power” will take over property. The real solution is to open up access to the opportunity and means for everyone to become capital owners.
We need to simultaneously ensure equal opportunity for EVERY child, woman, and man to acquire ownership stakes in the wealth-creating, income-producing productive assets as they are formed and our economy grows, not just focus only on job creation. This can be achieved without the requirement of holding a job or past saving to risk using insured, interest-free capital credit, solely repayable with the full pre-tax earnings of the investments. The loans would be insured using private capital credit insurance or public insurance. Government guarantees all sorts of things: loans, contracts. It’s not novel for the public sector to provide guarantees.
Citizen-Owned Federal Reserve
One feasible way to significantly broaden capital ownership simultaneously with the responsible growth of the economy is to lift ownership-concentrating Federal Reserve System credit barriers and other institutional barriers that have historically separated owners from non-owners and link tax and monetary reforms to the goal of expanded capital ownership. Removing barriers that inhibit or prevent ordinary people from purchasing capital that pays for itself out of its own future earnings is paramount as an actionable policy. This can be done under the existing legal powers of each of the 12 Federal Reserve regional banks, and will not add to the already unsustainable debt of the federal government or raise taxes on ordinary taxpayers.
We need to free the system of dependency on Wall Street and the accumulated savings and money power of the rich and super-rich who control Wall Street. The Federal Reserve System has stifled the growth of America’s productive capacity through its monetary policy by monetizing public-sector growth and mounting federal deficits and “Wall Street” bailouts; by favoring speculation over investment; by shortchanging the capital credit needs of entrepreneurs, inventors, farmers, and workers; by increasing the dependency with usurious consumer credit; and by perpetuating unjust capital credit and ownership barriers between rich Americans and those without savings.
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 (CDRC) –– through which the loans would be guaranteed. The CDRC would reinsure any portion of any financing risk assessed as reasonable and insurable but not already insured by the commercial capital credit insurance underwriters. In establishing the CDRC, the federal government would not be undertaking a new responsibility but merely simplifying and rationalizing an existing one. This entity would fulfill the government’s responsibility for the health and prosperity of the American economy.
The Capital Diffusion Reinsurance Corporation would function similar to the Federal Housing Administration, generally known as “FHA”, which provides mortgage insurance on loans made by FHA-approved lenders throughout the United States and its territories. The FHA insures mortgages on single family and multifamily homes including manufactured homes. FHA borrowers pay for mortgage insurance, which protects the lender from a loss if the borrower defaults on the loan. While pay-downs on home mortgages require a separate source of income, capital credit for productive capital formation is self-liquidating, with the earnings from the investment the source of the pay-down.
The fact is money power rules. When money power is broadly distributed in the hands of the citizens, not the politicians or bankers, the people shall rule. Ensuring that money power is broadly distributed should be the primary role of the Federal Reserve.
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 universal capital ownership opportunities for all Americans.
The Federal Reserve, which has been largely responsible for the powerlessness of most American citizens, should set an example for all the central banks in the world. 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 to finance economic growth. We should not destroy the Federal Reserve or make it a political extension of the Treasury Department, but instead reform it so that the American citizens in each of the 12 Federal Reserve Regions become the owners, who would regulate the monetization process. The result will be that money power will flow from the bottom up, not from the top down, not for consumer credit, not for credit that doesn’t pay for itself or non-productive uses of credit, but for credit for productive uses to expand the economy’s rate of socially responsible and environmentally enhanced growth.
By implementing Section 13 of the Federal Reserve Act the central bank can be used as a means to make every American a productive capital owner, serving as the only alternative to the two twin oligarchies of capitalism and socialism.
System Reform
As we conquer the COVID-19 virus and push forward, we will need to put into place a reformed monetary and tax system designed to facilitate building a future economy and society that provides equal opportunity for EVERY citizen to participate as owners of productive capital assets. Together we can achieve universal general affluence, based on our core values of fairness, respect, kindness, equal opportunity, courage, persistence, resilience, accountability and justice –– values that can unite us.
The bottom line is that American prosperity must be inclusive, with equal opportunity for EVERY citizen to gain ownership stakes in the corporations growing the economy and to share profits and productivity gains across the economic spectrum. We must include non-managerial and managerial workers, current shareholders, workers not employed in corporations and non-employed citizens –– of every age, race, color and ethnicity.
We must now reform the system and prevent those at the top of the income and wealth scale from exclusively benefiting from economic growth at the expense of the vast majority, and see to it that EVERY citizen, including all workers, enjoy the fruits of economic growth as we, following our triumphal containment of the virus, build an economy that can support general affluence for EVERY child, women and man.
One thing is certain, we have the opportunity to affect necessary system reform before the pandemic disruption has a permanent negative effect, and to embrace the development of tectonic shifts in the technologies of production to grow our economy responsibly and sustainably, and protect and enhance our environment so that EVERY child, woman and man can enjoy a healthy and prosperous future.
Economic stimuli in the moment must focus on emergency government spending and worker income restoration to stimulate investment and consumption. Once the pandemic ends, however, we must immediately shift to long-term systemic reform. The priority must be to create capital ownership estates for EVERY citizen. In the interim, planning for systemic reform and execution is essential and mandatory.
While policy makers and aware citizens know that unlocking the economy will be a difficult and painful process, no one knows exactly what the post-COVID-19 economy will look like.
The key issue in the post economic crisis will not be a lack of new money, but a lack of new owners of productive capital, resulting from a lack of a monetary system that universalizes equal opportunities for every person to access and acquire ownership stakes in the productive capabilities to be developed to meet future economic needs. Had stimulus packages in previous years been designed to create new owners along with new capital formation, our economy would have experienced sustainable and non-inflationary growth. More resources would have been available, and more people would have been economically secure and not dependent solely on jobs to deal with disasters such as the COVID-19 pandemic.
Collateralized by capital credit insurance, self-liquidating capital credit should, as a fundamental right, be made available on an equal basis to all citizens. This would turn today’s non-owners into economically independent owners of productive capital. Such credit would finance the purchase of new or existing productive assets needed by businesses. Future earnings on the shares would pay off the acquisition loans.
What’s needed is an immediate restoration of consumer household spending power and a protective floor under incomes that may soon also collapse should mass layoffs emerge once again in another two or three months.
In the immediate short term, strictly as an emergency measure, massive government debt will be required, which will add substantially to the national debt now exceeding over $26 trillion (or about $72,000 per citizen) and increasing. Such debt results when the government spends money created and regulated by the central bank that has nothing of value behind it other than the government’s promise to pay in the future via taxation. Those measures, however, should cease immediately after the crisis is over. Future taxes should be collected to repay the government’s increasing debt from deficit spending.
Capital Homestead Act
As a matter of national policy, immediately enact the Capital Homestead Act (aka Economic Democracy Act and Economic Empowerment Act) proposed by the Center for Economic and Social Justice (www.cesj.org). The act would establish citizen tax-sheltered Capital Homestead Accounts (CHAs) for each citizen (see http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-a-plan-for-getting-ownership-income-and-power-to-every-citizen/).
The Act provides for the post-pandemic response to reform the system for inclusive growth and prosperity, broadening capital ownership simultaneously. The financial instruments and tools provided in the Act would empower EVERY citizen to transition from a non-owning wage or welfare slave, beholden to those who are owners or the government, into an economically independent owner of wealth-creating, income-generating productive capital.
To build a future economy, self-liquidating zero percent interest capital credit loans, collateralized by capital credit insurance, would be equally allocated, on an annual basis based on the projected capital needs of businesses, to EVERY citizen (children, women and men, from birth to death) exclusively for the purpose of investing in the new growth and transferred capital of the economy. These loans would cover all costs of purchasing voting, full-dividend payout shares of corporations and cooperatives that produce goods and services for potential national and global consumers.
The access to insured, self-liquidating zero percent interest capital credit loans would have to be truly universal to remove the stigma attached to means-tested programs such as food stamps. An equal amount of annual capital credit would go to everyone, whether they’re employed or not. No strings attached. No means test. No politicians demanding that you seek out even a menial job before getting the loans.
Each citizen’s capital acquisition loans would be wholly repayable with the full pre-tax stream of future profits earned on the shares, without any requirement to pledge past personal savings or reduce salaries, wages or benefits to invest.
The new monies would be used to invest in responsible and sustainable, environmentally sound growth projects and infrastructure, including alternative energy expansion and other climate crisis mitigation. These new development projects would hire workers in addition to creating new owners. This will be necessary since the current crisis will mean conventional private business investment will collapse across the board and such much needed investment will no longer be forthcoming from the private sector to revive the economy and create general affluence for EVERY citizen.
With the new monies, all manner of environmentally enhanced and sustainable projects can be planned and executed such as clean energy expansion, carbon pollution elimination, public transit development, robust infrastructure construction, smart grid expansion, green building, new “smart” cities, urban redevelopment, housing developments, homeland manufacturing capabilities, etc.
Immediate Response –– Capital Credit And Government Loan Guarantees
We need to use the powerful and proper function of commercial banks to create money by making loans and canceling money once loans are repaid. For this, commercial banks charge a one-time service fee (not interest) to cover administrative costs. Therefore, creating money can be entirely interest free (but not cost free). In addition to the principal to be repaid on interest-free capital credit loans to citizens, there would be a one-time premium to cover the risk of loan default as well as reasonable charges for the services of the Federal Reserve and commercial bank lenders.
Instead of printing trillions of dollars and giving it away, we need to make the money available as commercial loans with repayment guaranteed by the federal government.
In the immediate short term while the pandemic has the economy locked down, any corporation that receives an interest-free capital credit loan from a commercial bank “sold” to the Federal Reserve through the Discount Window with a federal government loan guarantee (loan default insurance via a Capital Diffusion Reinsurance Corporation or CDRC) would be required to issue full-dividend payout, voting shares in the amount of the proceeds of the loan and allocate the shares equally to each employee. The shares would be put into an escrow account until such time the capital credit loan is repaid. For the duration of the emergency, all debt service payments would be suspended.
Throughout the pandemic, the corporation benefiting from the federal government-backed grants, loans and loan guarantees would pay EVERY one of its employees an equal amount of emergency wage income sufficient to meet subsistence needs. These subsistence wages could not be used for acquiring capital. Payments for consumption needs should be in the form of grants that are passed through dollar for dollar to employees during the duration of the crisis to support purchase demand and enable the economy to keep functioning. The emergency capital credit loans would be used to finance broadly owned new productive capital investment to restart production and expand productive capacity.
Once the interest-free (but not cost free) working capital and new long-term capital loans are repaid with a reasonable capital cost recovery period, the money that was created to operate and purchase the capital and then repaid would be cancelled, avoiding both inflation and deflation. The capital itself would continue to produce wealth and generate consumption income for its new owners from ongoing full-dividend payouts from profits distributed as dividends tax deductible by the corporation but treated as regular income by the recipients. The capital would produce income indefinitely with proper maintenance and with restoration in the technical sense through research and development.
When normal operations resume, the corporation would cease emergency subsistence payments, with employees paid at market-determined rates, with any increases coming from profits instead of increasing fixed wages and benefits.
Under this proposal, when a corporation becomes profitable, pre-tax profits paid out as dividends (tax-deductible to the corporation) would be paid through tax-sheltered employee ownership accounts to the loan-issuing commercial bank, thus canceling the corporation’s indebtedness. As the loans are repaid, shares would be released from escrow and put into each employee’s individual Employee Capital Homestead Account (ECHA), a vehicle similar to today’s tax-sheltered Employee Stock Ownership Plan (ESOP) accounts. (ECHAs could later transition to full CHAs when the Capital Homestead Act for all citizens is passed and implemented.) Full-dividend payouts would be passed through (after reasonable deductions for bank administration costs) to each employee to use for consumption.
A politically practical alternative to creating a new legal vehicle (the ECHA) would be to channel government-guaranteed loans made through local banks to a company’s Employee Stock Ownership Plan Trust. ESOPs, which are tax-advantaged corporate finance vehicles, are already recognized under United States law, and thus would not require additional Congressional approval. ESOPs can be used by any company incorporated as a C-Corporation or an S-Corporation. For purposes of receiving government-guaranteed loans for working capital or long-term growth capital, ESOPs should be required to issue and allocate new, full-dividend, voting shares to all employees on an equal basis.
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A politically practical alternative to creating a new legal vehicle (the ECHA) would be to channel government-guaranteed loans made through local banks to a company’s Employee Stock Ownership Plan Trust. ESOPs, which are tax-advantaged corporate finance vehicles, are already recognized under United States law, and thus would not require additional Congressional approval. ESOPs can be used by any company incorporated as a C-Corporation or an S-Corporation. For purposes of receiving government-guaranteed loans for working capital or long-term growth capital, ESOPs should be required to issue and allocate new, full-dividend, voting shares to all employees on an equal basis.
In a worst case scenario, in the event of loan default on the part of the corporation, the federal government making the emergency loan guarantee would repay the balance of the loan to the issuing commercial bank, in which case the loan is extinguished and the proceeds are used to redeem the commercial bank’s paper (promissory note) from the Federal Reserve.
Since 1985 in the United States, commercial bank loans for industry, commerce, and agriculture that have gone bad typically have been between 1 and 5 percent (https://www.federalreserve.gov/releases/chargeoff/delallsa.htm). Assuming that 5 percent of all government-insured commercial bank loans may default, a $2 trillion+ loan guarantee package would cost the government a lot less –– $100 billion or more depending on the total trillions of dollars guaranteed. The government can waive an insurance premium or, for example, charge a 1 percent premium, in which case the government would collect $20 billion and reduce the loss by that amount.
In immediate and future time frames, we must ensure that federal government grants and loans do not end up with corporations whose controlling owners would buy back their stock, in order to reduce the number of shares so the remaining shareholders can consolidate more ownership, and buy up the assets auctioned off by corporations that go out of business during the pandemic. Otherwise, without ownership-broadening stipulations tied to grants and loans, the result will be the ownership of our nation’s wealth will become even more concentrated than before the pandemic struck. Consequently, there will be more Americans poorer as poverty spreads while multi-millionaires and billionaires become wealthier.
Recovery Money Creation
As the economy recovers, all money backed by government debt should be gradually retired and replaced with money backed by private-sector productive capital assets.
After termination of emergency financing, EVERY citizen would be able to establish a Capital Homestead Account (CHA) that is legally advantaged to acquire new qualified full-dividend payout, voting shares of any corporation with fully insured, interest-free capital credit. A one-time premium to cover the risk of loan default as well as reasonable charges for the services of the central bank and bank lenders would be in addition to the principal to be repaid on capital credit loans to citizens. The corporations eligible would be both established and startups, and would use the money exclusively to fund viable projects to grow the economy. CHAs, as with the temporary ECHAs, would make the debt service payments with pre-tax dividends to Federal Reserve-backed commercial banks issuing the capital credit, and afterwards, upon liquidation, paid to citizen beneficiaries as regular taxable personal income.
As part of the normal money creation process, Federal Reserve policies should allow for covering reasonable and fair financing costs of the central bank and commercial banks providing interest-free capital credit loans annually and equally to EVERY citizen for the exclusive purpose of financing future capital expansion via corporations. If a corporation rejects citizen financing, they would not qualify for interest-free capital credit through the Federal Reserve/commercial banking system. Political and media pressure will help to persuade corporations to do the right thing and have ALL citizens share in our collective prosperity.
The grants or alternatively preferred government insured capital credit would finance the purchase of new or existing productive assets needed by businesses. Future earnings on the shares would pay off the grants or loans. Once the grants or loans are repaid, the money created to purchase the capital would be cancelled, avoiding both inflation and deflation. The capital itself would continue to be a source of wealth and generate consumption income for its new owners.
Capital Credit Insurance
A note about insurance: Once the economy has recovered, capital credit loans would be insured and guaranteed against loan default by private capital credit insurers, commercial risk insurers or a federal government reinsurance agency (á la the Federal Housing Administration mortgage insurance concept) –– the Capital Diffusion Reinsurance Corporation (CDRC) –– through which the loans would be guaranteed. The CDRC would reinsure any portion of any financing risk assessed as reasonable and insurable but not already insured by the commercial capital credit insurance underwriters. In establishing the CDRC, the federal government would not be undertaking a new responsibility but merely simplifying and rationalizing an existing one. This entity would fulfill the government’s responsibility for the health and prosperity of the American economy.
Such capital credit insurance would substitute for the security now demanded by lenders to cover the risk of non-payment, thus enabling the poor and others with no or few assets (the 99 percent) to overcome the collateralization barrier that excludes them from access to the means to finance their ownership of wealth-creating, income-generating productive capital. (A portion of their capital credit allotment will be used to cover the one-time cost of capital loan insurance and bank service charges.)
Before the loan is made, the lender, risk insurance company, and other entities will first determine the “feasibility” of each particular loan. (“Feasibility” means that the enterprise’s new capital investment is expected to generate enough profits to pay for itself within a reasonable capital cost recovery period. Such a feasibility analysis will judge the soundness of the enterprise that needs to purchase the new capital assets, including the quality of its management and workforce, its current and future markets, etc.)
Self-liquidating capital credit, collateralized by capital credit insurance, is critical for stimulating the economy’s recovery and responsible growth. Insured, interest-free capital credit should be made available annually on an equal basis to ALL citizens exclusively for investment, turning today’s non-owners into economically independent owners of productive capital simultaneously with the responsible growth of the economy. This credit would finance the purchase of new or existing productive capital assets needed by businesses. Future share earnings generated by the investments would pay off the acquisition loans –– in other words, past savings or reductions of current consumption income would not be necessary to finance capital formation.
Once the commercial bank loans are repaid, the money created to form the new productive capital would be cancelled, avoiding both inflation and deflation, and continue to generate consumption income for its new owners.
Every new productive capital increment added to the economy would generate future earnings to pay for its financing. Consequently, normal market forces would synchronize effective demand and supply for economic growth. This would continue as long as the new capital assets serve as an additional source of consumption income for today’s non-owning citizens, particularly the poor and others who do not have sufficient and secure incomes, thus reducing the need for government taxpayer redistribution and dependency on welfare, open and concealed. In this way, workers and other current non-owner citizens would help sustain economic growth and secure their own financial independence as they grow their wealth by becoming owners of the future increase in capital productiveness.
Further Economic Measures
Further economic measures will be needed to address the recession and recovery.
To meet the full costs of the government and start paying down its debt, a single tax rate should be imposed for all incomes from all sources above personal and family exemption levels so that the budget could be balanced automatically and even allow the government to pay off the growing unsustainable long-term national debt. The exemption should be sufficient to meet each citizen’s or family’s common domestic needs. The poor would pay the first dollar over their exemption levels as would the hedge fund operator and others now earning billions of dollars from capital gains, dividends, rents and other property incomes which under some tax proposals would be exempted from any taxes. Other personal taxes, such as payroll taxes, should be phased out. Remove all tax loopholes to eliminate corporate and personal tax avoidance, and business subsidies. Pay out of general revenues for all promises for Social Security, Medicare, government pensions, health, education, rent and subsistence vouchers for the poor until their new jobs and ownership accumulations provide new incomes to substitute for the taxpayer dollars to fill these needs.
To encourage full payout of corporate pre-tax earnings and finance new capital formation through the issuance and sale of new shares, dividends should be tax-deductible at the corporate level, enabling corporations to reduce their tax liability to zero. Dividends should be taxed as personal consumption incomes, except when used to pay for “qualified” shares (i.e., shares meeting required standards) held within each citizen’s tax-sheltered trust account. To pressure corporations to finance their growth, other than with retained earnings and corporation debt (neither of which creates any new owners), and pay out their full earnings as dividends to their actual owners, the corporate tax rate should be raised to at least 90 percent.
Leadership And Resolve
To overcome the COVID-19 coronavirus pandemic threatening our lives and our economy will require leadership, resolve, scientific knowledge, planning and resources. We must adopt laws promoting major reforms in monetary policy, central banking, tax and other laws for establishing a sustainable, resilient and just economy. Through a new visionary political and economic paradigm, we can build for EVERY person a more environmentally sound and sustainable economy that secures and enhances our personal futures, with preparedness to deal with future crises.
One sign of hope is the pandemic has turned millions of people into good neighbors with a sense of realization that we are all interdependent on each other. Hopefully that can translate to reforming the system so that ownership and power concentration can be reversed with EVERY child, woman, and man having the right to property and equal opportunity access to the means of acquiring and possessing property to enhance the economic security, safety, and well-being of ALL. This will ensure inclusive prosperity and economic justice as our nation progresses into the future in harmony with all the people on Earth.
Note: Some of the opinions expressed in this article are mine and not CESJ’s. Dawn Brohawn, Michael D. Greaney, and other CESJ colleagues contributed to this article.
Gary Reber is the founder and Executive Director of For Economic Justice (www.foreconomicjustice.org), a critic of economic policy and economic inequality, and an advocate and author for economic justice through broadened ownership of wealth-creating, income-producing physical productive capital. Mr. Reber is a board member of the Center for Economic and Social Justice (CESJ) and a founding member of the Coalition for Capital Homesteading. In 1967, Mr. Reber founded with binary economist, ESOP inventor, financial lawyer and universal citizen ownership theorist Louis O. Kelso, Agenda 2000 Incorporated to advocate policies and programs to broaden productive capital ownership in urban and economic development projects.
