On June 22, 2012, University of California, Berkeley Professor Robert Reich writes:
“Rarely in history has the cause of a major economic problem been so clear yet have so few been willing to see it.
“The major reason this recovery has been so anemic is not Europe’s debt crisis. It’s not, as right-wing economists tell us, because taxes are too high on corporations and the rich, safety nets are too generous to the needy, and regulations on business are too onerous.
“It’s not even, as some liberals contend, because the Obama administration hasn’t spent enough on a temporary Keynesian stimulus.
“The answer is in front of our faces. It’s because American consumers, whose spending is 70 percent of economic activity, don’t have the dough to buy enough to boost the economy –– and they can no longer borrow like they could before the crash of 2008.”
The cause is the resulting impact of our current approaches, which has been plutocratic government and concentration of capital ownership, which denies every citizen his or her pursuit of economic happiness (property). Market-sourced income (through concentrated capital ownership) has concentrated in individuals and families who will not recycle it back through the market as payment for consumer products and services. They already have most of what they want and need so they invest their excess in new productive power, making them richer and richer through greater capital ownership. This is the source of the distributional bottleneck that makes the private property, market economy ever more dysfunctional. The symptoms of dysfunction are capital ownership concentration and inadequate consumer demand, the effects of which translate into poverty and economic insecurity for the 99 percent majority of people who depend entirely on wages from their labor or welfare and cannot survive more than a week or two without a paycheck. The production side of the economy is under-nourished and hobbled as a result.
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.
The system is the problem, but it can and must be overhauled.
Even though the American economy is ripe with the physical, technical, managerial, and engineering prerequisites for improving the lives of the 99 percent majority, without reforming the financial system to broaden future productive capital ownership hopeless poverty, social alienation, and economic breakdown will persist.
Why? Because there is a crippling organizational malfunction that prevents making full use of the technological prowess that we have developed. The system does not fully facilitate connecting the majority of citizens, who have unsatisfied needs and wants, to the productive capital assets enabling productive efficiency and economic growth.
Without a policy shift to broaden productive capital ownership simultaneously with economic growth, further development of technology and globalization will undermine the American middle class and make it impossible for more than a minority of citizens to achieve middle-class status.
What needs to be adjusted is the opportunity to produce, not the redistribution of income after it is produced.
http://www.sfgate.com/opinion/article/Recovery-depends-on-middle-class-spending-power-3656031.php
