Anthony, we should uphold property rights. Instead of taking from current corporate owners of productive capital assets (the non-human factor of production), we should assist corporate employees to acquire newly issued shares of stock in their companies using insured credit mechanisms. The companies would issue new stock; the employees would purchase the stock; and the employees would pay for their acquisition out of future earnings in the investment. Starting with the corporation, a creature of government, 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.In place of retained earnings and debt financing, the government should require corporations to issue and sell full-voting, full-dividend payout stock to more people to underwrite new productive capital formation, with the purpose of providing opportunity for new owners, both employees of corporations and non-employees, to participate in a growing economy. Of course, there needs to be a financial mechanism put in place that will guarantee loan risks provided by banks and lending institutions. Otherwise, the system will continue to limit access to capital acquisition to those who already own capital—the rich. This is because “poor” people have no security or collateral, or sufficient income to pledge against the loan as security. Thus, criteria must be created to qualify the corporations subject to this policy and those corporations that qualify overseen so as to insure that their executives exercise prudent fiduciary responsibility to generate loan payback. Once the guaranteed loans are paid back, the new capital formation will continue to produce income for existing and future owners.While tax and investment stimulus incentives are excellent tools to strengthen economic growth, 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.

February 12, 2012

The Solution to the Jobs Crisis

 I’m beginning to consider the merits of something called Distributism or the “Third Way,” where workers own the profits of the *private* company.  The way it would look in real life is that gov’t would mandate employees be granted voting shares and Retained Earnings (profits) would be forcibly and entirely distributed as dividends to all shareholders.  Corporations would still be private but workers wouldn’t vote or innovate their jobs to China.

 Yes, it would hold up expensive R&D and innovation entirely.  But technology is out of control:  the avg worker is no longer being asked to machine an engine part but DESIGN the engine part.  The point of technology is also to eliminate jobs by making tasks easier.  The end result is that, outside of the Fortune 500 (which has not produced net jobs in decades), the only American jobs left are in Services (retail, hospitality, healthcare).  i.e. do not pay for retirement, housing or healthcare (you get to pick 2 max).

Apparently half of all Americans earned $26,000 last year.  You don’t come back from that b/c you can’t retrain them (who will pay?).  Single-payer healthcare and higher taxes are all but certain.  You can either choose that form of socialism or the interventionist policy I described above by letting workers share in the mammoth corporate profits.  Apparently only 30% of stock is owned by the middle class.

We have another problem here as well:  they don’t WANT to be retrained.  If they wanted to work in STEM fields or skilled healthcare rolls they would have already enrolled in those programs.

If someone knows of another way out of the jobs crunch I would love to hear it.  It can’t be energy jobs b/c Americans won’t take those (you have to move to the Dakotas etc, and you can just remain a waiter and vote yourself healthcare anyway).

All of the trends I cite above are happening and based on studies I’ve read and you’re welcome to verify them if you think I’m oversimplifying them.  You really should be able to see these trends all around you as it is.

This plan would insure “Multiplier Effects” of each dollar stay in America vs going to China as it is now.  The financial industry that the 1% hold their wealth in produce very few Multiplier Effects.  Witness Apple’s $80bil cash hoard that is not employing anyone but some accountants and fund managers who then hold their wealth in the financial industry.