On March 7, 2013, Paul Krugman writes in The New York Times:
Stocks are high, in part, because bond yields are so low, and investors have to put their money somewhere. It’s also true, however, that while the economy remains deeply depressed, corporate profits have staged a strong recovery. And that’s a bad thing! Not only are workers failing to share in the fruits of their own rising productivity, hundreds of billions of dollars are piling up in the treasuries of corporations that, facing weak consumer demand, see no reason to put those dollars to work.
I wish I could say that it’s all good news, but it isn’t. Those low interest rates are the sign of an economy that is nowhere near to a full recovery from the financial crisis of 2008, while the high level of stock prices shouldn’t be cause for celebration; it is, in large part, a reflection of the growing disconnect between productivity and wages.
The interest-rate story is fairly simple. As some of us have been trying to explain for four years and more, the financial crisis and the bursting of the housing bubble created a situation in which almost all of the economy’s major players are simultaneously trying to pay down debt by spending less than their income. Since my spending is your income and your spending is my income, this means a deeply depressed economy. It also means low interest rates, because another way to look at our situation is, to put it loosely, that right now everyone wants to save and nobody wants to invest. So we’re awash in desired savings with no place to go, and those excess savings are driving down borrowing costs.
Under these conditions, of course, the government should ignore its short-run deficit and ramp up spending to support the economy. Unfortunately, policy makers have been intimidated by those false priests, who have convinced them that they must pursue austerity or face the wrath of the invisible market gods.
While Paul Krugman generally acknowledges that productivity [due to “machines” replacing workers] keeps rising, allowing companies to do more with fewer workers, he continues to fail to tie this to the issue of CONCENTRATED OWNERSHIP of productive capital dividend and capital gain income and the word “OWNERSHIP.” Krugman and other academia, as well as our leaders, should be recommending effective programs for expanded ownership of productive capital, and address the problem of education on this subject.
Today’s techniques of finance are designed to make the rich richer. None are designed to make the poor richer. That’s why the poor are poor. The reason they are poor is because they do not have viable capital ownership. Thus, we need to focus on revising today’s techniques of finance to broaden capital ownership.
Unfortunately for the non- and under-capitalized American masses, they do not have sufficient savings to risk on Wall Street gambles. And because economic growth is enslaved to “past” savings, economic growth that financially benefits the masses as private owners of FUTURE dividend-income producing and capital gain valued productive capital assets does not work. What is needed are proposals to free economic growth from the slavery of “past” savings and finance FUTURE economic growth in ways in which ordinary Americans, without savings, can acquire viable capital portfolios of preferred stock in corporations and pay for their acquisition out of the earnings (“future” savings) of the investment -produced dividend income stream.
The pressing need is for everyone in a position of influence to raise the consciousness of the America people by making the nation’s NUMBER ONE focus the introduction of a National Right To Capital Ownership Bill that restores the American dream of property ownership as a primary source of personal wealth.
This is the solution to America’s economic decline in wealth and income inequality, which will result in double-digit economic growth and simultaneously broaden private, individual ownership so that EVERY American’s income significantly grows, providing the means to support themselves and their families with an affluent lifestyle. The Just Third Way Master Plan for America’s future is published at http://foreconomicjustice.org/?p=5797.
Support the Capital Homestead Act at http://www.cesj.org/homestead/index.htm and http://www.cesj.org/homestead/summary-cha.htm
http://www.nytimes.com/2013/03/08/opinion/krugman-the-market-speaks.html?_r=0
