On June 13, 2017, Pedro Nicolai da Costa writes on Business Insider:
Why does the US economy still feel iffy to most Americans despite an eight-year economic expansion and historically low unemployment?
Look no further than this eye-popping chart of income growth between 1980 and 2014 courtesy of Berkeley’s elite-squad of inequality research, including Thomas Piketty, Emmanuel Saez, and Gabriel Zucman.
Featured in a recent blog from the University of Chicago’s Booth School of Business, the graphic highlights just how stratospheric income growth has been for the very wealthiest Americans — and how stagnant, in contrast, wages have been for the rest.
That’s not a typo on the right. Incomes for the top 0.001% richest Americans surged 636% during the 34-year period. Wow.
There’s more. “The average pretax income of the bottom 50% of US adults has stagnated since 1980, while the share of income of US adults in the bottom half of the distribution collapsed from 20% in 1980 to 12% in 2014,” writes Howard Gold, founder and editor of GoldenEgg Investing, in the Chicago Booth blog.
“In a mirror-image move, the top 1% commanded 12% of income in 1980 but 20% in 2014. The top 1% of US adults now earns on average 81 times more than the bottom 50% of adults; in 1981, they earned 27 times what the lower half earned.”
Here’s a link to the full paper for the academically inclined.
http://www.businessinsider.com/us-inequality-is-worse-than-you-think-2017-6
What absolutely amazes me are people who appear to have no idea as to why the wealthy are getting richer and richer, while the vast majority of Americans see no real significant gains in their labor incomes.
Both the cause and the solution is our technological advances.
Why are technological advances the cause? Because tectonic shifts in the technologies of production are displacing the need for human labor and at the same time devaluing the worth of labor. Yet labor is the ONLY means to an earned income that the vast majority of people have.
The role of physical productive capital is to do ever more of the work, which produces income. Full employment is not an objective of businesses. Companies strive to keep labor input and other costs at a minimum in order to maximize profits for the owners. Thus, the elimination of workers with cost-efficient machines and computerization, and the consequent devaluation of labor’s worth as more and more people compete for fewer and fewer good paying jobs.
Businesses strive to minimize marginal cost, the cost of producing an additional unit of a good, product or service once a business has its fixed costs in place. Reducing marginal costs enables businesses to increase profits, offer goods, products and services at a lower price, or both. Increasingly, new technologies are enabling companies to achieve near-zero cost growth without having to hire people. Thus, private sector job creation in numbers that match the pool of people willing and able to work is constantly being eroded by physical productive capital’s ever increasing role. Those who own the non-human capital are the ones who are getting richer by continually accumulating all future wealth-creating, income producing capital assets.
Over the past century there has been an ever-accelerating shift to productive capital––which reflects tectonic shifts in the technologies of production. The mixture of labor worker input and capital (owner) worker input has been rapidly changing at an exponential rate of increase for over 235 years in step with the Industrial Revolution (starting in 1776) and had even been changing long before that with man’s discovery of the first tools, but at a much slower rate. Up until the close of the nineteenth century, the United States remained a working democracy, with the production of products and services dependent on labor worker input. When the American Industrial Revolution began and subsequent technological advance amplified the productive power of non-human capital, plutocratic finance channeled its ownership into fewer and fewer hands, as we continue to witness today with government by the wealthy evidenced at all levels. People invented 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––the core function of technological invention.
Most changes in the productive capacity of the world since the beginning of the Industrial Revolution can be attributed to technological improvements in our capital assets, and a relatively diminishing proportion to human labor. Capital does not “enhance” labor productivity (labor’s ability to produce economic goods). In fact, the opposite is true. It makes many forms of labor unnecessary.
Why are technological advances the solution? Because productive capital is increasingly the source of the world’s economic growth. Therefore, productive capital should become the source of added property ownership incomes for all. Simply put, if both labor and capital are independent factors of production, and if capital’s proportionate contributions are increasing relative to that of labor, then equality of opportunity and economic justice demands that the right to property (and access to the means of acquiring and possessing property) must in justice be extended to all.
The system of big government and socialistic programs funded by tax extraction and non-asset-based national debt are not the answer to anything. The socialistic system almost always results in increased oppression, increased poverty or sameness as EVERY citizen becomes dependent on the State.
What we need is a system that empowers individuals and families to become fully productive, own stakes in the corporations growing our economy, be creative, build businesses and to take care of themselves. The MOST IMPORTANT need is to extend equal opportunity to EVERY child, woman, and man to share individually in the FUTURE wealth-creating, income-producing capital assets of corporations growing the economy, whereby financing new capital formation and transfers of existing assets is accomplished from the bottom-up and without redistributing property rights of the rich and super-rich with regard to their existing assets (exception at death).
Instead, we have a system where all power and all wealth are increasingly controlled by giant banks and giant corporations that are in turn controlled by the global elite. The “financialization” of the global economy has turned almost everyone on the planet into “debt serfs,” and the compound interest on all of that debt enables the global elite to constantly increase their giant piles of money.
Not only has EVERY person become a debt slave, but also a wage slave, and increasingly a welfare and charity slave. Over the past four decades the total amount of consumer debt in America has gone from about 2.2 trillion dollars to nearly 60 trillion dollars. Many Americans work as debt serfs their entire lives, and they never even know the names or the faces of those that they are making rich as they slowly pay off their debts.
Most thinking people should realize that never-ending consumer debt is not a wise situation to put one into. Such consumer debt requires a source of income that is promised to be paid to the owners of the note, credit card, or mortgage.
But there is a good form of debt, which is constantly used by the rich and the super-rich to make themselves richer. It is capital credit, a loan specifically tailored to finance FUTURE investment, repayable out of FUTURE earnings, without the need for “past savings” or the reduction in one’s personal consumption needs and wants or income. In the business world, physical capital is expected to go on producing income indefinitely with proper maintenance and with restoration in the technical sense through research and development. This is how technological advances occur and develop over time.
What is needed is to reform the system to simultaneously create new wealth-creating, income-producing capital asset formation and broaden its ownership so that increasingly over time more and more citizens will derive financial benefit and second incomes and/or sole incomes from their expanding diversified wealth-creating, income-producing capital asset portfolios. In this way, we can balance production with consumption––the purpose of production.
This can be achieved with insured, no-interest capital credit loans provided by local banks to EVERY child, woman and man, repayable out of FUTURE earnings generated from new, viable capital asset projects, without the need to pledge “past savings” or equities, or reduce one’s consumption level or income.
The necessary bank repayment insurance can either be facilitated with private capital credit insurance or a government reinsurance agency (ala the Federal Housing Administration concept).
While other forms of non-asset-based debt is inflationary, commercial capital credit relies on non-inflationary capital asset creation, unlike government expenditures which rely on tax extraction or non-asset-backed debt to redistribute or inject inflationary money into the system.
The socialism practiced today relies on tax extraction and non-asset-based national debt to firstly redistribute monies collected into social welfare programs and second to finance public infrastructure and the military, etc. To the extent that modern “capitalistic” economies redistribute they are practicing socialism.
For those who are interested in the specifics of the solution see the Just Third Way and the Capital Homestead Act – the purpose of which is to eliminate privilege and provide EQUAL OPPORTUNITY for EVERY child, woman and man to build independent, sustainable financial security and incomes through acquiring ownership in FUTURE wealth-creating, income-producing capital assets financed without the necessity of pledging “past savings” or a reduction in consumption or income from any source.
The solution eliminates the barriers to ordinary people forming capital themselves in association with others without the necessity for “past savings” or the pledging of equities which only the wealthy ownership class has.
The JUST Third Way is a radical overhaul of the economic system (i.e., the Federal tax system, Federal Reserve policy, inheritance law, welfare and entitlement system, etc.) that will achieve genuine economic democracy, based on the Platform of the Unite America Party and its links and the proposed Capital Homestead Act. Our Platform is a call for a vision of political economy that can unite the left and the right, based on binary economist Louis Kelso’s ownership-based paradigm. Now is the time to cure America’s political cancer (Crony Capitalism) and restore America to again becoming a model for global citizens in all countries.
For a new vision see http://www.foreconomicjustice.org/?p=12331 and www.facebook.com/uniteamericaparty. Support the Unite America Party Platform, published by The Huffington Post at http://www.huffingtonpost.com/gary-reber/platform-of-the-unite-ame_b_5474077.html as well as OpEd News at http://www.opednews.com/articles/Platform-of-the-Unite-Amer-by-Gary-Reber-Party-Leadership_Party-Platforms-DNC_Party-Platforms-GOP-RNC_Party-Politics-Democratic-140630-60.html.
Support Monetary Justice at http://capitalhomestead.org/page/monetary-justice.
Support the Capital Homestead Act at 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/.
