On December 5, 2012, Josh Boak writes in The Fiscal Times:
When selling his tax hikes to the public, President Obama often advertises the economic gravy train that chugged through the Clinton-era as proof that higher taxes won’t derail growth.
Bill Clinton in 1993 raised top marginal rates on the wealthiest to 39.6 percent, the same level Obama wants to restore them to as part of the fiscal cliff talks with congressional Republicans. The administration’s nuanced argument—backed by a spate of economic studies—is that the economy can easily weather the increase, but statements from Obama and his deputies occasionally insinuate that boom times will return if only patricians paid the IRS more money.
“Remember, that was a time of remarkably good economic growth, in this country—very strong private investment, strong job growth, strong broad-based growth in incomes,” Treasury Secretary Tim Geithner said this week on “Fox News Sunday.” “It was a good time for the American economy. It makes a lot of sense.”
The REAL problem is that production and consumption are far out of balance with concentrated ownership of the productive capital assets by less than 10 percent of the population, and even more narrowly held by less than 1 percent. The ownership rights entitle wealthiest Americans to the income derived from their capital asset portfolios.
Significant economic growth without broadening private, individual ownership of the non-human productive capital assets formed is not feasible. Of course, there is the debt financed growth that the government has used in the past to relieve the Great Depression and the Great Recession, but such stimulus has never addressed the ownership issue and provided stipulations that as taxpayer monies are pledged and spent by companies in the private sector those companies must demonstrate that their ownership is broadening firstly among their employees and secondly by other under- or non-capitalized Americans. And the ever-increasing national debt is not sustainable, nor is it necessary a society burden as long as debt financial mechanisms are appropriately used to finance new real physical productive capital growth simultaneously with broadening private, individual ownership whereby EVERY American is enabled to acquire ownership and build over time a viable income-prodcing capital estate.
The cause of our “shriveling workforce” is both the excedox of productive investment from the United States to global centers where essentially slave labor and non-regulation is the norm and the impact of tectonic shifts in the technologies of production, which destroys and degrades jobs as a result of “things” (productive capital) replacing labor workers with human-intellignt machines, superautomation, robotics, digital computerized operations, etc.
Through Free Trade Agreements enacted under President Clinton, not Fair Trade Agreements, China has become an “industrial behemoth with nearly $38 billion worth of products and services exported to the United States ANNUALLY! This has had and continues to have a crushing impact on new productive capital formation and job opportunities.
Taxpayer investments in education, infrastructure and basic research are declining. Yet a skilled workforce is more productive, just as highways, bridges, railways, and airports can enable daily commerce.
From my Huffington Post article (http://www.huffingtonpost.com/
Why the focus on “productive capital?” Physical capital is non-human “things” owned by people used to produce products and services (productive land, resources, structures, infrastructure, tools, machines, superautomation, robotics, digital computerized processing and operations, etc. and certain intangibles that have the characteristics of property such as patents and trade names). Real physical capital isn’t money; it is measured in money (financial capital), but it is really producing power and earning power through ownership of the non-human factor of production. In the law, property is the bundle of rights that determines one’s relationship to things.
The reality which is ignored in our political discussions and even by conventional economists and the media is that productive capital is increasingly the source of the world’s economic growth and, therefore, should become the source of added property ownership incomes for all. The ownership of productive capital is the source of wealth and income for the richest Americans––not a job.
Businesses, whether small or large, or sole proprietors, partnerships, or business corporations are formed to provide products and services at a profit. Their success or failure is dependent on whether or not there are “customers with money.”
Unfortunately, politicians, economists and the media focus on JOB CREATION as the ONLY way to create “customers with money” and provide a source of income for peoples’ livelihood. Yet the demand for people (labor workers who contribute manual, intellectual, creative and entrepreneurial work) is being made less necessary as productive capital is increasingly the source of the world’s economic growth. What should we conclude from this assessment of reality? Well, simply that if both labor and productive capital are interdependent 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 role of physical capital is to do ever more of the work, which produces income to the business owners. Full employment is not an objective of businesses. Companies strive to keep labor input and other costs at a minimum in order to maximize profit. Private sector job creation in numbers that match the pool of people willing and able to work is constantly being eroded by physical capital’s ever-increasing role.
The function of research and technology is to invent 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 innovation and invention. Technological change makes tools, machines, structures, and processes ever more productive while leaving human productiveness largely unchanged (our human abilities are limited by physical strength and brain power––and relatively constant).
It is the exponential disassociation of production and consumption that is the problem in the United States economy, and the reason that ordinary citizens must gain access to productive capital ownership to improve their economic well-being.
What we really need is a national discussion on the topic of the importance of productive capital ownership and how we can expand the base of private productive capital ownership simultaneously with the creation of new productive capital formation, with the aim of building long-term financial security for all Americans through accumulating a viable income-producing capital estate.
If we are to significantly expand the population of “customers with money” and significantly grow the economy, then the ownership of productive capital must be spread more broadly and simultaneously with the growth, without taking anything away from the 1 to 10 percent of the people who now own 50 to 90 percent of the wealth controlled by businesses. Thus, productive capital income would be distributed more broadly and the demand for products and services would be distributed more broadly from the earnings of capital and result in the sustentation of consumer demand, which will promote economic growth. That also means that society can profitably employ unused productive capacity and invest in more productive capacity to service the demands of a growth economy.
Unfortunately, ever since the 1946 passage of the Full Employment Act, economists and politicians formulating national economic policy have beguiled us into believing that economic power is democratically distributed if we have full employment––thus the political focus on JOB CREATION and redistribution of wealth rather than on full production and broader productive capital ownership accumulation resulting from OWNERSHIP CREATION. This is manifested in the misguided belief that labor work is the ONLY way to participate in production and earn income.
Thus, when politicians advocate taxpayer money spending to stimulate industry development, there needs to be a conscious policy to broaden private, individual ownership in the companies benefiting from the stimulus––not just argue the justification for taxation redistribution and further national debt based on how many jobs would result. We also need to incentivize business corporations to pay out all their profits as taxable personal incomes to avoid paying corporate income taxes and to finance their growth by issuing new full dividend payout shares for broad-based citizen ownership.
To accomplish this we must ensure that FUTURE economic growth be financed to create new owners of expanding existing and future businesses to ensure that the consumer populous is able to get the money to buy the products and services produced as a result of substituting “machines” for people.
But how can we accomplish this goal of creating new owners of FUTURE productive capital investment simultaneously with the growth of the economy?
The solution requires that the Federal Reserve stop monetizing unproductive debt, including bailouts of banks “too big to fail” and Wall Street derivatives speculators, and begin creating an asset-backed currency that could enable every man, woman and child to establish a Capital Homestead Account or “CHA” (a super-IRA or asset tax-shelter for citizens) at their local bank to acquire a growing dividend-bearing stock portfolio to supplement their incomes from work and all other sources of income. Policies need to insert American citizens into the low or no-interest investment money loop to enable non- and undercapitalized Americans, including the working class and poor, to build wealth and become “customers with money.” That’s what the Capital Homestead Act addresses.
We can do far better if we can transform the current “hoggist” concentrated ownership society that is America today to one that is an economic democracy. The time has come for all Americans to be provided an equal opportunity to become an empowered owner of a growing income-producing capital estate to supplement their job incomes and meet their retirement needs through their personal tax-sheltered Capital Homestead Accounts, a super-IRA.
We’re now building a network through the Coalition for Capital Homesteading to mobilize enough well-informed justice-minded people to create the necessary threshhold of “people power” to attract the support of the politicians seeking “the solution” to the current economic mess in this country. The Coalition will enlighten leaders to they’re missing for turning America into a nation of owners. Check out the Coalition’s Web site at www.capitalhomestead.org to learn more about the Capital Homestead Act and how to become personally involved. For those in your personal network who remain skeptical, you can send them to our CESJ Web site at www.cesj.org.
Support the Capital Homestead Act athttp://www.cesj.org/homestead/index.htm and http://www.cesj.org/homestead/summary-cha.htm
Sign the Petition at http://signon.org/sign/reform-the-federal-reserve.fb23?source=c.fb&r_by=3904687
Sign the WhiteHouse.gov petition athttps://petitions.whitehouse.gov/petition/reform-federal-reserve/PhY3Jswk
The “Capital Homesteading” concept is the Just Third Way direction America needs to take to build an OWNERSHIP CULTURE and ensure a balance between production and consumption.
Own or Be Owned!
