On August 5, 2012, Paul Krugman, an op-ed columnist for The Mew York Times writes that:
One depressing aspect of American politics is the susceptibility of the political and media establishment to charlatans. You might have thought, given past experience, that D.C. insiders would be on their guard against conservatives with grandiose plans. But no: as long as someone on the right claims to have bold new proposals, he’s hailed as an innovative thinker. And nobody checks his arithmetic.
So why have so many in Washington, especially in the news media, been taken in by this flimflam? It’s not just inability to do the math, although that’s part of it. There’s also the unwillingness of self-styled centrists to face up to the realities of the modern Republican Party; they want to pretend, in the teeth of overwhelming evidence, that there are still people in the G.O.P. making sense. And last but not least, there’s deference to power — the G.O.P. is a resurgent political force, so one mustn’t point out that its intellectual heroes have no clothes.
But they don’t. The Ryan plan is a fraud that makes no useful contribution to the debate over America’s fiscal future.
During the presidential campaign, Romney has called for lower taxes almost across the board. He wants to reduce the corporate tax rate to 25 percent from 35 percent; end the estate tax; end taxes on corporate profits reported offshore; cut the top personal income tax rate to 28 percent and eliminate taxes on investment income for people with adjusted gross income below $200,000.
In its “Believe in America” jobs plan released last year, the Romney campaign criticized federal policy for fostering corporate tax avoidance: “Corporations, for their part, are subject to rules and regulations that all too often encourage tax gamesmanship while discouraging reinvestment in the American economy.”
Krugman, as with other academia and the national media fail to offer up “fresh food for thought” and instead offer up the same old unworkable Keynesian economic approaches, which do not broaden capital ownership. They never put forth questions as to how our proclaimed elected leaders would address the continuing concentration of ownership of productive capital among the 1 to 2 percent that now OWN America, or as to what policies they would put forth to reverse this trend and broaden private, individual ownership of future income-producing productive capital assets. Answers to these questions should be the focus and are the BIG ISSUE or “elephant in the room” that is being completely ignored, even though tectonic shifts in the technologies of production will continue to exponentially destroy and degrade jobs, catapulting Americans into near poverty or poverty. Unfortunately, Klugman’s op-ed writings in The New York Times never position the op-ed to probe what critical questions should be asked, nor are the politicians addressing this issue, that unless addressed and redirected will result in a national economic disaster.
Tax and investment stimulus incentives can be excellent tools to strengthen economic growth, but without the requirement that productive capital ownership is broadened simultaneously, the result will continue to further concentrate productive capital ownership among those who already own, and further create dependency on redistribution policies and programs to sustain purchasing power on the part of the 99 percent of the population who are dependent on their labor worker earnings or welfare to sustain their livelihood. By stimulating economic growth tied to broadened productive capital ownership the benefits are two-fold: one is that over time the 99 percenters will be enabled to acquire productive capital assets that are paid for out of the future earnings of the investments and gain greater access to job opportunities that a growth economy generates.
Starting with the business corporation, a legal entity created and sanctioned by state and federal government and judicial law, the government should provide tax incentives for full-dividend payouts to its stockholders, or alternatively dictate that from now on 100 percent of all profits be paid out fully as dividend payments to stockholders (thus, eliminating the corporate income tax), and be subject to progressive individual taxation rates during the short term. This would effectively prohibit retained earnings financing of new productive capital formation (reinvesting the corporate earnings already earned). The government could also limit debt financing by imposing some ratio formula to annual revenue under which a corporation could debt finance new productive capital formation with borrowed monies. Both retained earnings and debt financing only enhance the ownership holding value of the existing corporate ownership class and do nothing to create new owners. Thus, the rich get richer systematically and capital ownership concentration is furthered, facilitated by financing further productive capital acquisition out of the earnings of existing productive capital.
