An article from AlterNet outlines the fact that America does NOT have the wealthiest middle class in the world, actually far from it at #27. The rich are getting richer and the middle class is getting poorer. Reaganomics, Austrian Economics and Trickle-Down is all crap. What’s new?
Thom Hartmann fails to address the REAL reason the middle class is getting poorer: they are propertyless with ONLY their diminishing labor worth to sell in an ear in which tectonic shifts in the technologies of production are destroying and devaluing the worth of labor.
What we need now is a “New Deal” that implements the Capital Homestead Act (http://www.cesj.org/homestead/index.htm and http://www.cesj.org/homestead/summary-cha.htm).
Under Capital Homesteading, basic economic laws and policies would be established to encourage national and regional central banks, corporate and individual income tax authorities, commercial and investment bankers, capital credit insurance and reinsurance companies, industrial and community development planners, legal and enterprise financial advisors, and unions to determine the nation’s annual needs for the quantity of money needed for accelerated rates of sustainable private sector capital growth and asset transfers to provide every citizen personal access to capital credit repayable with the projected future pretax earnings of the acquired capital. As a substitute for collateral required in today’s financial world to cover potential risk of default of borrowing for investment, the new system would cover risk through capital credit insurance financed by the pooling of risk premiums on all borrowed money. Only those who have already accumulated large accumulations of past savings today can provide such collateral. This explains why the rich will automatically accumulate most of the growth capital in the world, unless Capital Homesteading reforms are adopted.
Every man, woman and child from birth to death could be granted periodically (at least annually) an equal allotment of asset-backed and privately insured capital credit repayable with future savings. Such credit would flow through a personal tax-sheltered capital asset accumulation trust or “Capital Homestead Account” established at a local bank. Citizens, supported by licensed advisors, would have informed choices of investing their allotment of capital credit in shares in an enterprise for which a member of the family works, or public utilities, for-profit Citizens Land Banks or Community Land Cooperatives, and other approved categories of commercial, industrial or agricultural enterprises willing to issue full dividend payout shares.
Once the citizen’s offer (in the form of a bill of exchange) to purchase new shares on insured capital credit is scrutinized and the offer accepted by the commercial bank lender, the bank would create asset-backed money for the purchase of the shares. The bank,would create the new asset-backed money by approving a promissory note or establishing a deposit account for the borrower. The bank’s discount rate would cover all bank service charges and the risk premium. Commercial banks would immediately rediscount all Capital Homesteading loans for new currency supplied interest-free (since no past savings would be involved) by the central bank, thereby ensuring an elastic, stable, uniform and private sector asset-backed currency to replace the currencies that in most of the world are backed almost entirely by non-productive government debt.
Growth of the economy would no longer be subject to the slavery of past savings, reflected in the subtitle of the second book by Kelso and Adler. (The New Capitalists: A Proposal to Free Economic Growth from the Slavery of [Past] Savings.) Kelso based his revolutionary “pure credit” approach to financing broad-based capital ownership on the 1935 book by Harold Moulton, then president of Brookings Institution, entitled The Formation of Capital. (CESJ republished Moulton’s book, the Foreword of which is athttp://www.cesj.org/homestead/reforms/moneycredit/formationofcapital_cesj.pdf. Both Kelso-Adler books can be downloaded free athttp://www.cesj.org/publications/freedownloads.html)
Wealthy citizens with large accumulations (who would have the same privilege as non-rich citizens to an equal annual Capital Homestead allotment of capital credit) would be encouraged to spend their savings which would enable the economy to grow even faster or to enable the rich to invest in high risk ventures not eligible for Capital Homestead credit, or to engage in charity and spending for improving the nation’s education and health systems and other investments for the common good.
Dividends on shares financed through Capital Homesteading would be tax deductible at the enterprise level, deferred from personal taxation when used to repay shares held in the purchaser’s tax-sheltered Capital Homestead Account, but taxable when available as consumption income when distributed at the personal level. Thus, the poorest citizen, whether employed or disabled, could continue over their lives to accumulate assets on a tax-deferred basis and over time begin to receive rising capital incomes to supplement consumption incomes from other sources, free and independent from the need for charity or welfare.
