Alexandria Ocasio-Cortez and Ayanna Pressley, who were both just elected to Congress from, respectively, New York’s 14th Congressional District and Massachusetts’s Seventh Congressional District, at a rally in October. (AP Photo / Mary Schwalm)
On November 15, 2018. Chris Hughes writes on The Nation:
With the results of the November midterm elections, we have officially witnessed the end of Rubinomics. Former Treasury secretary Bob Rubin was the ringleader of an incremental, neoliberal economics ascendant in the Democratic Party in the 1990s and through the Obama years. The Rubin school oversaw the deregulation of banking and finance, free-trade agreements with insufficient worker and environmental protections, and the dismantling of core parts of the safety net with Bill Clinton’s “welfare reform” of 1996. These economists, taking a page from Ronald Reagan, argued that markets self-regulate if we just leave them alone.
History has proven them wrong, and this month’s elections signaled the start of a fresh approach. A decade out from the Great Recession, wages are still stagnant, and the cost of living is spiraling out of control. Even though typical economic indicators, like the low unemployment rate, suggest we live in a strong economy, exit polls show that only a third of voters say their own financial situation has improved in the past two years.
A new cohort of candidates this year chose to run on a clear, unapologetic economic progressivism as good politics and good policy. A new analysis found that two-thirds of the incoming Democratic freshman class in Congress campaigned on some form of Medicare for All or the expansion of Social Security. Nearly 80 percent campaigned on tax credits that benefit working families or on rolling back Trump’s tax cuts for the wealthy.
The election showed that the percolating economic progressivism of newly elected Representatives Alexandria Ocasio-Cortez and Ayanna Pressley was not just a flash in the pan—it’s a politics that works at the ballot.
Take Lauren Underwood, a progressive woman of color just elected to Congress from a suburban Illinois toss-up district. She ran against the Trump tax cuts, calling for reform of a tax system that “overburdens middle-class families with paying more than their fair share of taxes.” Katie Hill, in the formerly Republican-dominated Southern California suburbs, and Cindy Axne in Iowa also ran successful populist campaigns.
Similarly, voters in clearly red states showed their support for progressive economics in direct elections for ballot measures. In Missouri and Arkansas, voters increased the state minimum wage. In Utah, Idaho, and Nebraska, voters approved ballot measures to expand Medicaid, blowing past the intransigence of Republicans and conservative Democrats.
Not every candidate running on a progressive agenda won, and there is much to be learned from races where we came up short. But most newly elected House Democrats won on progressive economic ideas. To be clear, this is not about a rivalry between the Bernie Sanders and Hillary Clinton wings of the party. In fact, most of these candidates shunned direct connections with Sanders, Clinton, Elizabeth Warren, and other national politicians. Instead, they moved to where voters are today in 2018, and voters rewarded them.
As we hurtle toward the crowded 2020 field of candidates vying for the Democratic nomination, when it comes to economics, the premium will be on boldness and originality. We are already seeing potential candidates set themselves apart by injecting new ideas into the debate: Senator Warren’s proposal to have worker representatives on large corporate boards, Senator Kirsten Gillibrand’s proposal for a postal bank, Sanders’s vision of a job guarantee, and Cory Booker’s proposal for a new baby bond program.
Some of the most ambitious ideas are on tax policy. The race to repeal and replace President Trump’s tax bill has begun, and Senator Kamala Harris has proposed a monthly cash payment of up to $500 that would complement existing tax credits for working families earning up to $100,000. Another 2020 contender, Ohio Senator Sherrod Brown, won re-election handily after introducing a substantially broadened Earned Income Tax Credit reaching well into the middle class. Both policies share many elements of the Working Families Tax Credit that the organization I co-chair, Economic Security Project, has proposed.
These are ambitious proposals, on the scale of President Trump’s tax cuts in terms of their cost but incomparable in terms of benefit. They build upon the boldness that worked well for candidates in this midterm election, and add an even deeper level of detail and thoughtfulness to build broader support. That is a winning formula for Democrats in 2020, and thankfully, would signal a definitive end to the era of Rubinomics.
https://www.thenation.com/article/midterms-democrats-progressive-economics/
Gary Reber Comments:
Progressives are unfortunately embracing “taking economics” instead of “producing economics.” “Taking economics” is appropriating the wealth of Americans who are defined as being rich and the corporate institutions through which they become rich. “Producing economics” is equally empowering EVERY child, woman, and man to be productive by creating new and expanding means of production, with the aim of building a future environmentally responsible economy that can support general affluence for EVERY citizen, which are broadly, if not universally owned by citizens, as individuals through justice-managed corporate institutions.
No where does Chris Hughes, the co-chair of the Economic Security Project, mention, never less advocate for EVERY citizen becoming a productive, wealth-creating, income-producing capital (asset) owner.
Hughes should be querying “Who should own America?” going forward.
Why should the focus be on “productive capital?” Physical capital is non-human “things” owned by people used to produce goods, products and services (productive land, resources, structures, infrastructure, tools, machines, super-automation, robotics, artificial intelligence, digital computerized processing and operations, etc.). Real physical capital isn’t money; it is measured in money (financial capital), but it is really producing power and earning power through ownership of the non-human factor of production. In the law, property is the bundle of rights that determines one’s relationship to things.
The reality which is ignored in our political discussions and even by conventional economists and the media is that 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. The ownership of productive capital is the source of wealth and income for the richest Americans — not a job. And if the system is not reformed, the current wealthy capital ownership class and their heirs will OWN the future as owners of future productive capabilities not yet formed.
Businesses, whether small or large, or sole proprietors, partnerships, or business corporations are formed to produce goods, products and services at a profit. Their success or failure is dependent on whether or not there are “customers with money.” There can be no growth and betterment of our physical world without the demand created by “customers with money.”
Unfortunately, politicians, economists and the media focus on job creation as the only way to create “customers with money” and provide a source of income for peoples’ livelihood. Or they focus on “taking” from those who are productive and redistributing to those in need.
They need to realize that the demand for people (labor workers who contribute manual, intellectual, creative and entrepreneurial work) is being made less necessary as productive capital is increasingly the source of the world’s economic growth. What should we conclude from this assessment of reality? Well, simply that if both labor and productive 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.
The role of physical capital is to do ever more of the work, which produces income to the business owners. Full employment is not an objective of businesses. Companies strive to keep labor input and other costs at a minimum in order to maximize profit. Private sector job creation in numbers that match the pool of people willing and able to work is constantly being eroded by physical capital’s ever increasing role.
The function of research and technology is to invent 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 innovation and invention. 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).
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.
What we really need leading up to the 2020 presidential election year is a national discussion on the topic of the importance of productive capital ownership and how we can expand the base of private productive capital ownership simultaneously with the creation of new productive capital formation, with the aim of building long-term financial security for all Americans through accumulating a viable income-producing capital estate.
If we are to significantly expand the population of “customers with money” and significantly grow the economy, then the ownership of productive capital must be spread more broadly and simultaneously with its creation and growth, without taking anything away from the 1 to 10 percent of the people who now own 50 to 90 percent of the wealth controlled by businesses. Thus, s 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 and invest in more productive capacity to service the demands of a growth economy.
Unfortunately, ever since the 1946 passage of the Full Employment Act, economists and politicians formulating national economic policy have beguiled us into believing that economic power is democratically distributed if we have full employment — thus the political focus on job creation and redistribution of wealth rather than on full production and broader productive capital ownership accumulation resulting from ownership creation. This is manifested in the misguided belief that labor work is the only way to participate in production and earn income.
Thus, when politicians advocate taxpayer money spending to stimulate industry development, there needs to be a conscious policy to broaden private, individual ownership in the companies benefiting from the stimulus — not just argue the justification for taxation redistribution and further national debt based on how many jobs would result. We also need to incentivize business corporations to pay out all their profits as taxable personal incomes to avoid paying corporate income taxes and to finance their growth by issuing and selling new full-dividend payout shares for broad-based citizen ownership.
To accomplish this we must ensure that future economic growth be financed to create new owners of expanding existing and future businesses to ensure that the consumer populous is able to get the money to buy the products and services produced as a result of substituting “machines” for people.
But how can we accomplish this goal of creating new owners of future productive capital investment simultaneously with the growth of the economy?
The solution requires that the Federal Reserve stop monetizing unproductive debt and begin creating an asset-backed currency that could enable every child, woman , and man 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, or as a substitute, 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.” That’s what the Capital Homestead Act addresses.
The “Capital Homesteading” concept is the direction America needs to take to build an OWNERSHIP CULTURE and ensure a balance between production and consumption.
Support the enactment of the proposed Capital Homestead Act (aka Economic Democracy Act and Economic Empowerment Act) at http://www.cesj.org/learn/capital-homesteading/, http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-a-plan-for-getting-ownership-income-and-power-to-every-citizen/, http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-summary/ and http://www.cesj.org/learn/capital-homesteading/ch-vehicles/. And The Capital Homestead Act brochure, pdf print version at http://www.cesj.org/wp-content/uploads/2014/11/C-CHAflyer_1018101.pdf and Capital Homestead Accounts (CHAs) at http://www.cesj.org/learn/capital-homesteading/ch-vehicles/capital-homestead-accounts-chas/
