On March 9, 2014, Robert Reich writes on Nation Of Change:
The U.S. economy is picking up steam but most Americans aren’t feeling it. By contrast, most European economies are still in bad shape, but most Europeans are doing relatively well.
What’s behind this? Two big facts.
First, American corporations exert far more political influence in the United States than their counterparts exert in their own countries.
In fact, most Americans have no influence at all. That’s the conclusion of Professors Martin Gilens of Princeton and Benjamin Page of Northwestern University, whoanalyzed 1,799 policy issues and found that “the preferences of the average American appear to have only a miniscule, near-zero, statistically non-significant impact upon public policy.”
Instead, American lawmakers respond to the demands of wealthy individuals (typically corporate executives and Wall Street moguls) and of big corporations — those with the most lobbying prowess and deepest pockets to bankroll campaigns.
The second fact is most big American corporations have no particular allegiance to America. They don’t want Americans to have better wages. Their only allegiance and responsibility to their shareholders — which often requires lower wages to fuel larger profits and higher share prices.
When GM went public again in 2010, it boasted of making 43 percent of its cars in places where labor is less than $15 an hour, while in North America it could now pay “lower-tiered” wages and benefits for new employees.
American corporations shift their profits around the world wherever they pay the lowest taxes. Some are even morphing into foreign corporations.
As an Apple executive told The New York Times, “We don’t have an obligation to solve America’s problems.”
I’m not blaming American corporations. They’re in business to make profits and maximize their share prices, not to serve America.
But because of these two basic facts — their dominance on American politics, and their interest in share prices instead of the well-being of Americans — it’s folly to count on them to create good American jobs or improve American competitiveness, or represent the interests of the United States in global commerce.
By contrast, big corporations headquartered in other rich nations are more responsible for the well-being of the people who live in those nations.
That’s because labor unions there are typically stronger than they are here — able to exert pressure both at the company level and nationally.
VW’s labor unions, for example, have a voice in governing the company, as they do in other big German corporations. Not long ago, VW even welcomed the UAW to its auto plant in Chattanooga, Tennessee. (Tennessee’s own politicians nixed it.)
Governments in other rich nations often devise laws through tri-partite bargains involving big corporations and organized labor. This process further binds their corporations to their nations.
Meanwhile, American corporations distribute a smaller share of their earnings to their workers than do European or Canadian-based corporations.
And top U.S. corporate executives make far more money than their counterparts in other wealthy countries.
The typical American worker puts in more hours than Canadians and Europeans, and gets little or no paid vacation or paid family leave. In Europe, the norm is five weeks paid vacation per year and more than three months paid family leave.
And because of the overwhelming clout of American firms on U.S. politics, Americans don’t get nearly as good a deal from their governments as do Canadians and Europeans.
Governments there impose higher taxes on the wealthy and redistribute more of it to middle and lower income households. Most of their citizens receive essentially free health care and more generous unemployment benefits than do Americans.
So it shouldn’t be surprising that even though the U.S. economy is doing better, most Americans are not.
The U.S. middle class is no longer the world’s richest. After considering taxes and transfer payments, middle-class incomes in Canada and much of Western Europe are higher than in U.S. The poor in Western Europe earn more than do poor Americans.
Finally, when at global negotiating tables — such as the secretive process devising the “Trans Pacific Partnership” trade deal — American corporations don’t represent the interests of Americans. They represent the interests of their executives and shareholders, who are not only wealthier than most Americans but also reside all over the world.
Which is why the pending Partnership protects the intellectual property of American corporations — but not American workers’ health, safety, or wages, and not the environment.
The Obama administration is casting the Partnership as way to contain Chinese influence in the Pacific region. The agents of America’s interests in the area are assumed to be American corporations.
But that assumption is incorrect. American corporations aren’t set up to represent America’s interests in the Pacific region or anywhere else.
What’s the answer to this basic conundrum? Either we lessen the dominance of big American corporations over American politics. Or we increase their allegiance and responsibility to America.
It has to be one or the other. Americans can’t thrive within a political system run largely by big American corporations — organized to boost their share prices but not boost America.
http://www.huffingtonpost.com/robert-reich/the-conundrum-of-corporation-and-nation_b_6830058.html
http://www.rawstory.com/rs/2015/03/robert-reich-why-americans-are-screwed-and-europeans-are-not/
Robert Reich appears constantly to bad mouth big American corporations claiming that they essentially harm ordinary people, who have no voice in their operations. It is true that ordinary Americans, who are propertyless have no voice, or even those who stock holdings are relatively minuscule have no voting rights, in corporate affairs. But Reich offers no solutions, nor does he recognize that the crux of the problem is concentrated ownership of corporations, and that the solution is to reform the system to empower EVERY citizen to become an owner with full voting rights and a beneficiary of full-earnings dividend payouts.
There is a way by which we can increase the allegiance and responsibility of big American corporations to America as well as lesson, if not eliminate, the dominance of big American corporations over America.
Change is a constant in life and in business, specifically with new business start-ups and business expansion that employs ever advancing physical productive capital assets (structures, tools, machines and robotics, super-automation, computerization, etc.) resulting from technological invention and innovation.
The problem is that economic growth, whether anemic (as today) or robust (what can be the future) is financed such that the tiny minority who already OWN the vast wealth of the major corporations that produce 90 percent of the products and services society consumes, keeps getting richer and richer as they accumulate more and more capital assets––thus widening income and wealth ownership inequality. Their reach, in terms of what they produce (as owners of productive capital assets) is global as they seek to dominate all production of products and services worldwide.
Of course, at some point in the future the present system will shut down resulting in a tremendous loss in value due to an inability to find enough “customers with money” to maintain mass production. Why, because the core function of technological invention and innovation is to create “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. Thus, effectively tectonic shifts in the technologies of production destroy jobs, enable global production using far cheaper labor, and overall devalue the worth of labor. Productive capital makes many forms of labor unnecessary, and thus eliminates or curtails the income earned through labor contributions.
It is important to understand that fundamentally, economic value is created through human and non-human contributions. NOTE, real physical productive 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. Financial capital, such as stocks and bonds, is just an ownership claim on the productive power of real capital. In the law, property is the bundle of rights that determines one’s relationship to things.
The problem that results as less human productive input is necessary, as labor workers are replaced by non-human “things” that more efficiently produce products and services, is income is no longer earned by those workers who are displaced, thus reducing the population of “customers with money” to purchase the products and services that can be produced. Eventually, there will not be enough “customers with money” and the system will implode.
How do we prevent this economic disaster, abate concentrated capital ownership (the root cause), and finance economic growth simultaneously with creating new capital owners who would earn income from the earnings of their capital asset wealth?
The solutions are embodied in the proposed Capital Homestead Act (http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-a-plan-for-getting-ownership-income-and-power-to-every-citizen/ and http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-summary/).
The Capital Homestead Act takes its lead from the Homestead Act of 1862. In Lincoln’s America of 153 years ago, the problem confronting the vast majority of the citizens of our nation was that most people owned no land that they could work to sustain their livelihood. The Homestead Act offered the landless white citizens of America part-ownership of the country by giving them 160 acres of frontier land, free, if they produced on it income for themselves and their families for a period of five years. Today, the major problem for the vast majority of the people of our nation and of our world, for that matter, is that 99 percent of the people own no or insufficient capital in a high-tech, capital-intensive economy. The Capital Homestead Act would make it possible for EVERY citizen to become a viable owner of productive capital and not just for the tiny elite who now own our corporations.
Under the proposed Capital Homestead Act, EVERY citizen would have a Capital Homestead Account (CHA). The CHA is primarily a tax-sheltered vehicle for the democratization of capital credit through local banks. It would enable every child, woman, and man to accumulate wealth and receive dividend incomes from newly issued shares in new and growing companies, without being taxed on the accumulations (including property and shares gained through inheritance, savings, and other capital credit mechanisms entailing employees of corporations and others [non-corporate employees such as such as school teachers, civil servants, military personnel, police, and health workers, and for individuals who have no remunerative employment, such as the disabled, the unemployed homemakers and children] access to stock ownership in future capital formation growth, and, as well, through for-profit, professionally-managed, citizen-owned-and-governed community land planning and development enterprises, designed to enable every citizen of a community of any size to acquire a direct ownership stake in local land, natural resources and basic infrastructure.
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.
Thus, EVERY corporation, including start-ups, would be eligible to issue and sell new stock to be purchased by citizens using insured, interest-free capital credit on the basis that the proposed capital formation project passes the “litmus test” for self-financing. The risk insurance premiums would be graduated with financing for higher risk ventures costing more in insurance risk premiums.
Capital acquisition takes place on the logic of self-financing and asset-backed credit for productive uses. People invest in capital ownership on the basis that the investment will pay for itself. The basis for the commitment of loan guarantees is the fact that nobody who knows what he or she is doing buys a physical capital asset or an interest in one unless he or she is first assured, on the basis of the best advice one can get, that the asset in operation will pay for itself within a reasonable period of time––5 to 7 or, in a worst case scenario, 10 years (given the current depressive state of the economy). And after it pays for itself within a reasonable capital cost recovery period, it is expected to go on producing income indefinitely with proper maintenance and with restoration in the technical sense through research and development.
The result of simultaneously financing new capital formation (as well as employee buy-outs and the restoration of and profitable employment of unused productive capacity) while creating new capital owners who have access to self-liquidating insured, capital credit loans, is that we would be able to correct the imbalance between production and consumption at its source, and broaden ownership of productive capital in conformance with private property free market principles.
The goal should be to enable every child, woman, and man to become an owner of ever-advancing labor-displacing technologies, new and sustainable energy systems, new rentable space, new enterprises, new infrastructure assets, and productive land and natural resources as a growing and independent source of their future incomes. Accomplishing such individual empowerment will enable us, as a nation, to achieve economic democracy, which will finally make political democracy a meaningful reality, and put us on the path of inclusive prosperity, inclusive opportunity, and inclusive economic justice.
The end result is that citizens would become empowered as owners to meet their own consumption needs and government would become more dependent on economically independent citizens, thus reversing current global trends where all citizens will eventually become dependent for their economic well-being on the State and whatever elite controls the coercive powers of government.
