Hillary Clinton 2016 Economic Plan

ANKENY, IA - AUGUST 26:  Democratic presidential candidate and former U.S. Secretary of State Hillary Clinton speaks to guests gathered for a campaign event on the campus of Des Moines Area Community College on August 26, 2015 in Ankeny, Iowa.  A recent poll has Clinton leading all other Democratic contenders in Iowa by about 30 percentage points.  (Photo by Scott Olson/Getty Images)
ANKENY, IA – AUGUST 26: Democratic presidential candidate and former U.S. Secretary of State Hillary Clinton speaks to guests gathered for a campaign event on the campus of Des Moines Area Community College on August 26, 2015 in Ankeny, Iowa. A recent poll has Clinton leading all other Democratic contenders in Iowa by about 30 percentage points. (Photo by Scott Olson/Getty Images)

On November 29, 2015, Kimberly Amadeo writes on About News:

Hillary Clinton’s 2016 economic plan is focused on increasing middle-class incomes. To do this, she advocates three steps.

The first step is to boost the economy. How? Give tax cuts to the middle class and small businesses, establish an infrastructure bank, and fund more scientific research. Also, help women enter the workforce by requiring businesses to pay for family leave and give sick days to all.

Her other ideas, like making college and child care more affordable, and comprehensive immigration reform, need to be fleshed out more.

The second step is to create fair growth. Clinton would raise the minimum wage to $15 an hour, increase workers’ benefits, expand overtime, and encourage businesses to share profits with employees. She also wanted to invest in students and teachers, support unions and collective bargaining, strengthen the Affordable Care Act, expand job training, lower college and healthcare costs, and fight wage theft.(Source: “It’s Time to Raise Incomes for Hard-Working Americans,” Hillary Clinton 2016 LinkedIn page, July 13, 2015)

The third step is to support long-term economic growth. Hillary would combat “quarterly capitalism” byraising short-term capital gains taxes for those earning $400,000 or more a year, the top 0.5% of taxpayers. Investments held between one and two years would be taxed at the maximum income-tax rate of 39.6%.  Assets held for longer would be taxed on a sliding scale, such as 36% for those held 2-3 years, 32% for those held three to four years, and 20% (the current rate) for those held for six years or more.

(Source: Dunstan Prial, “Hillary Clinton Would Double Taxes on Short-Term Capital Gains,” Fox Business, July 24, 2015.

Clinton would also tax high-frequency traders. She would extend the statute of limitations for financial crimes, and require CEOs personally pay part of any fines levied on their companies. These regulations were written with the help of former Congressman Barney Frank. (Source: “Clinton Proposes Wall Street Curbs,” WSJ, October 8, 2015.)

Ironically, she also thinks the Dodd-Frank Wall Street Reform Act did not go far enough to end the threat from too-big-to-fail banks. She proposes a risk fee levied on all banks with more than $50 billion in assets, high debt levels, or too much reliance on short-term funding.

(Source: “Clinton Proposes Big Bank ‘Risk Fee,” WSJ, October 9, 2015)

Clinton now opposes the Trans-Pacific Partnership. She said it should go further to produce new jobs, raise wages, and protect national security. She supported the TPP while Secretary of State. (Source: “In Shift, Clinton Opposes Trade Pact,” WSJ, October 8, 2015.)


The Former Secretary of State, Senator, and First Lady announced her candidacy for President in 2016 on April 12, 2015. She is the front-runner for the Democratic nomination. In an April 14 press conference in Monticello, Iowa, she laid out the four pillars of her platform:

  1. Create the economy of tomorrow, not yesterday. She recognizes that income inequality is depressing demand, and slowing economic growth. She mentioned that hedge fund managers pay lower taxes (via the capital gains tax) than most middle-class Americans. Her focus is on creating jobs, and may steal from husband Bill’s 14 job creation ideas.
  2. Strengthen families. This would presumably include the emphasis on “healthcare, education, and enrichment emphasized in the newly-released epilog to her book, Hard Choices. She supports Obama’s proposal to make community college free.
  3. Defense. She supports free trade agreements, which she’s said is more important than defense in establishing global leadership. So, you can expect her to push for a comprehensive defense solution that includes diplomacy as much as military might. (Source: The Daily Beast, Clinton Speech to Economic Club, October 14, 2011)
  4. Change campaign financing.

Before her announcement, Clinton used her position with the Bill, Hillary and Chelsea Clinton Foundationto outline her economic agenda. In a June 2013 speech, Clinton laid out three priorities: early childhood education, equal opportunities and pay for women, and economic development using private/ public partnerships.

To promote economic development, she advocated a program like the $4.6 million “social impact bond” issued by Goldman Sachs. The firm will only profit if the program meets its goals of reducing the need for remedial education, meaning taxpayers will only end up paying for it if it works. (Source: YahooNews, Clinton Addresses Education, Women and Economy, June 13, 2013; CBS News, Clinton to Focus on Economic Issues, June 13, 2013; ThinkProgessClinton Call on Business to Support Pre-school, June 14, 2013)

Clinton’s Economic Priorities as Secretary of State

Clinton was Secretary of State from 2009-2013. She lobbied for American companies within foreign countries. She drafted the Trans-Pacific Partnership, and pried open Chinese markets to U.S. companies. She lobbied for women’s and human rights. She forged major diplomatic breakthroughs with Russia (since rescinded by Putin).

She also led the U.S. response to the Arab Spring, especially in Libya. However, she was investigated for not preventing the attack on a U.S. diplomatic post in Benghazi, Libya that killed U.S. ambassador Christopher Stevens and three others on September 11, 2012. An independent panel found “systematic failures and leadership and management deficiencies” at the State Department. (Source: Businessweek,Clinton’s Business Legacy, January 10, 2013; Biography.com, Hillary Clinton)

Clinton’s 2008 Economic Platform

While running for President in 2008, Clinton’s economic platform included the following:

  • Create a balanced budget by developing budget rules that require new expenditures be funded with revenues or cuts.
  • Provide health plan tax credits. Expand private plans used by Congress, or Medicare to all.
  • A $50 billion Strategic Energy Fund to fund an alternative energy agency and provide incentives for alternative energy use.
  • Double the size of the enforcement unit in U.S. Trade Representative’s Office to increase compliance with trade agreements.
  • Expand the Trade Adjustment Assistance agency to help workers displaced by outsourcing.
  • Tax relief including child tax credit, Earned Income Tax Credit and marriage penalty relief. Reform theAMT to protect middle class earners.
  • Provide a $3,500 tuition tax credit and other education incentives totaling $8 billion per year. It will be funded by repealing the estate tax only for those with assets below $7 million.
  • Allow states’ Mortgage Revenue Bond programs to address refinancing. Increase cap an additional $2.5 billion.
  • Allow Fannie Mae and Freddie Mac to insure jumbo loans.
  • Create the American Retirement Account to allow tax-deferred contributions of up to $5,000 per year. The first $1000 contributed into any retirement account will be eligible for dollar-to-dollar tax credits. (Source: HillaryClinton.com, Issues)

Clinton’s plan was well-thought out and detailed. She was the only 2008 candidate to advocate a balanced budget. The tax credit, health insurance and retirement plans would have added dollars to consumers’ pockets, strengthening the economy. Many of her proposals would have increased the power of existing agencies, such as Fannie Mae and state Mortgage Revenue Bond programs, without increasing federal spending.

Her retirement plan would have gone a long way towards helping with the looming Social Security crisis. Her proposal to fix the Alternative Minimum Tax has been a problem long overdue. In short, this platform would have definitely benefited the U.S. economy.

Clinton’s 2008 Economic Stimulus Plan

Clinton proposed these steps to resolve the 2008 financial crisis:

  1. A $30 billion housing crisis fund to help local governments prevent foreclosures.
  2. A 90-day moratorium on foreclosures.
  3. A rate freeze on subprime mortgages for five years or until banks convert them into affordable loans.
  4. More power to state housing financing agencies to help families refinance.
  5. Increased portfolio caps at Fannie Mae and Freddie Mac.
  6. $25 billion in emergency home heating assistance.
  7. $5 billion for various energy efficiency measures.
  8. $10 billion in additional unemployment insurance.
  9. $40 billion in tax rebates if the economy gets worse.
  10. Convene the Working Group on Financial Markets, coordinating with regulators around the world.
  11. Provide relief for mortgage holders.
  12. Liberalize the 2005 bankruptcy law. (Sources: HillaryClinton.com, Remarks on the Global Economic Crisis, January 22, 2008; Aggressive Economic Plan, January 11, 2008)

Clinton’s Economic Priorities as Senator and First Lady

Clinton was the U.S. Senator from New York from 2000-2008. She served on the Armed Services Committee, the Health, Education, Labor and Pensions Committee, the Environment and Public Works Committee, the Budget Committee and the Select Committee on Aging. She was a member of the Commission on Security and Cooperation in Europe. She worked across party lines to build support for the expansion of economic opportunity and access to quality, affordable health care.

After 9/11, she supported funding to rebuild New York, and addressed the health concerns of the first responders at Ground Zero. She fought for better healthcare and benefits for wounded service members, veterans and members of the National Guard and Reserves.

Clinton was First Lady from 1993-2001. While there, she was Chair of the Task Force on National Healthcare Reform. She continued to be a leading advocate for expanding health insurance coverage, ensuring children are properly immunized, and raising public awareness of health issues.

In 1994, she also helped create the Department of Justice’s Office on Violence Against Women. In 1997, she supported the passage of the State Children’s Health Insurance Program (SCHIP), which expanded health insurance for children in lower-income families. She helped pass the Adoption and Safe Families Act, which eased the removal of children from abusive situations.(Sources: White House.gov, Hillary Clinton; NPR, Hillary Clinton; U.S. Department of State, Hillary Clinton)

Clinton’s Early Career

Secretary Clinton has a B.A. from Wellesley College (1969) and J.D. from Yale Law School (1973). She was an assistant professor at the University of Arkansas School of Law, and worked for the Rose Law firm. She was appointed by President Carter in 1977 to chair the board of the Legal Services Corporation. She was First Lady of the State of Arkansas from 1979-1981 and 1983-1992. During that time, she chaired the Arkansas Education Standards Committee, co-founded the Arkansas Advocates for Children and Families, and served on the boards of the Arkansas Children’s Hospital, and Legal Services and the Children’s Defense Fund, as well as TCBY and Wal-Mart.


There are a lot of economic policy positions to sort through that are presented in this article.

The first step, which includes some tax relief for the middle class and small businesses, an infrastructure bank, and expanded scientific research, sounds encouraging but the specifics are not revealed. Lower taxes result in less revenue to fund necessary governmental functions. Will this gap be made  up with higher taxes on the wealthy capital ownership class? An infrastructure bank MUST provide interest-free capital credit to companies with the requirement that they be fully employee-owned and pay out fully their earnings to their owners, who then would be taxed at the personal income rates. Scientific research, which ultimately benefits product development by businesses, must carry stipulations that those businesses by fully employee owned and pay out fully their earnings to their owners.

The second step, which includes raising the minimum wage, is a redistribution policy forcing employers (the capital asset ownership class) to pay more in wages for the same degree of work or less, as well as to automate further or shift production to other countries with far lower wage rates and less or no restrictive regulations.

Clinton would encourage businesses to share profits with employees. Bernie Sanders advocates that employees OWN the businesses they are employed by using worker cooperative and Employee Stock Ownership Plan (ESOP) structures. This is a far more effective means to broaden OWNERSHIP of businesses simultaneously with their growth.

Clinton advocates supporting unions and collective bargaining, but how would she reform the labor union movement so as not to continue the division between the ownership class and the working class. The real need is to advocate that the labor union movement transform to a producers’ ownership union movement and embrace and fight for workers, as individuals, to become OWNERS of the companies that employ them.

Step three has to do with the tax rates on capital gains, both short-term and long-term gains. What is really needed is to eliminate all tax loopholes and subsidies and create a tax incentive that encourages corporations to pay out all their profits to their owners as taxable personal incomes to avoid paying corporate income taxes and to finance their growth by issuing new full-voting, full-dividend payout shares for broad-based citizen ownership, which would be financed with insured, interest-free capital credit, repayable out of the future earnings of the investments in their growth. With far greater tax revenue generated at the personal level, we need to eliminate the payroll tax on workers and their employers, but pay out of general revenues for all promises for Social Security, Medicare, government pensions, health, education, rent and subsistence vouchers for the poor until their new jobs and ownership accumulations provide new incomes to substitute for the taxpayer dollars to fill these needs.

As part of the overall tax reforms, there should be, as a substitute for inheritance and gift taxes, a transfer tax imposeded on the recipients whose holdings exceed $1 million, thus encouraging the super-rich to spread out their monopoly-sized estates to all members of their family, friends, servants and workers who helped create their fortunes, teachers, health workers, police, other public servants, military veterans, artists, the poor and the disabled.

Also the Federal Reserve needs to 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 child, woman and man to establish a Capital Homestead Account or “CHA” (a super-IRA or asset tax-shelter for citizens) at their local bank to purposely acquire a growing dividend-bearing stock portfolio to supplement their incomes from work and all other sources of income. The CHA would process an equal allocation of productive credit to every citizen exclusively for purchasing full-dividend payout shares in companies needing funds for growing the economy and private sector jobs for local, national and global markets. The shares would be purchased using interest-free credit wholly backed by projected “future savings” in the form of new productive capital assets as well as the future marketable goods and services produced by the added technology, renewable energy systems, manufacturing factories, rentable space for entrepreneurial endeavor and infrastructure, both repair and new, added to the economy. Risk of default on each stock acquisition loan would be covered by private sector capital credit risk insurance and reinsurance, but would not require citizens to reduce their funds for consumption to purchase shares.

The end result is that citizens would become empowered as owners to meet their own consumption needs and government would become more dependent on economically independent citizens, thus reversing current global trends where all citizens will eventually become dependent for their economic well-being on the State and whatever elite controls the coercive powers of government.

As part of the third step, in addition to stricter regulations on banks, the Dodd-Frank Wall Street Reform Act needs to be reinstated.

Not supporting the Trans Pacific Partnership (TPP) is wise. If enacted, the agreement will promote the interests of giant, multinational corporations over the interests of labor, environmental, consumer, human rights, or other stakeholders in democracy, AND FURTHER CONCENTRATE OWNERSHIP OF THE NON-HUMAN PRODUCTIVE CAPITAL MEANS OF PRODUCTION!

The REAL STORY is a story about the collusion among a globally wealthy ownership class to further concentrate private sector ownership in ALL FUTURE wealth-creating, income-generating productive capital asset creation on a global scale. A sorta FREE TRADE ON STEROIDS!

We need to re-embrace the 1976 discussion by The Joint Economic Committee of Congress that called for endorsing a policy to broaden capital ownership as an economic goal for America. The 1976 Joint Economic Report stated: “To provide a realistic opportunity for more U.S. citizens to become owners of capital, and to provide an expanded source of equity financing for corporations, it should be made national policy to pursue the goal of broadened capital ownership. Congress also should request from the Administration a quadrennial report on the ownership of wealth in this country, which would assist in evaluating how successfully the base of wealth was being broadened over time.” Unfortunately the Congress has never paid any attention to this policy, and the goal has subsequently been unacknowledged and unheeded by our plutocratic political leaders. We need new leadership that will fight for this policy direction.

The stark reality is that we are in a depression reflected in rising “real” (not statistical) unemployment and underemployment and instability that we will never escape from until we change our economic policy. Increasingly, more Americans will not be able to ever purchase a home, due to the packed inflationary wage and welfare base factored into the cost of building homes, which inflate prices, and will be forced to rent their entire life or depend on government living assistance––not able to accumulate equity that can help to sustain them in their retirement years. And this is the new reality now facing people in the middle class. The uncertainty of holding onto a good job is frightening to an increasingly wider base of middle-class working citizens. When you factor in the average non-salaried worker, even with a government-mandated minimum labor wage rate of $10.00+ per hour in some states and cities, the outcome is grim. Never mind that consumer demand continues to dwindle because of insufficient income, solely tied to labor worker wages. The impact of the decline in consumer demand due to declining labor worker wages is that production will decline or desist without sustainable consumer demand. Furthermore, those corporations growing the economy, both nationally and globally, will expand globally with investment in new productive capital projects and seek “customers with money” abroad.

This is all coming about because we have severely mismatched the power to produce with the possession of unsatisfied needs and wants. Those capital owners who have unsatisfied needs and wants have ready access through conventional finance to get as much or more productive capital as they want. Our tax laws are designed to further benefit the 1 percent by providing enormous write-offs and credits to producers (corporations) who are owned by the few, who already produce more than they can consume. Those who have only their labor power and its precarious value held up by coercive rigging and who desperately need capital ownership to enable them to be capital workers as well as labor workers to have a way to earn more income, cannot satisfy their unsatisfied needs and wants. With only access to labor wages, the 99 percenters will continue, in desperation, to demand more and more pay for the same or less work, as their input is exponentially replaced by productive capital.

But if we change direction and systematically build earning power into consumers, we have the opportunity to reverse the depression perpetrated by systematically limiting the 99 percent to labor wages alone and through technology eliminating their jobs. We need solutions to grow the economy in ways that create productive jobs and widespread equity sharing. We need to systematically make insured, interest-free capital credit to purchase capital accessible to economically underpowered people (the 99 percent) in which the income from the capital investment is isolated until it pays for itself, and then begins to produce a stream of dividend income to the new capitalists. This can only be accomplished by enabling every person to have access to capital ownership and purchase the capital, and pay for it out of what the capital produces. It’s time good and well-intentioned people woke up and adopted a Just Third Way paradigm (http://cesj.org/learn/just-third-way/) beyond the greed model of monopoly, “hoggist” capitalism and the envy model of the traditional welfare state. This will promote peace, prosperity, and freedom through harmonious justice.

How Organized Labor’s Allegiance To Establishment Democrats Is Killing Unions

On November 11, 2015, C. Robert Gibson writes on Occupy.com:

Hillary Clinton’s latest union endorsement — this time, from the 2.1 million member Service Employees International Union (SEIU) — has, once again, been an example of union leadership prioritizing political connections in high places over the best interests of its members

As In These Times reported, the SEIU endorsement has angered local chapters so much that they’re breaking off from the main union and endorsing Bernie Sanders, as they already have in New Hampshire, the first official presidential primary state. Rank-and-file dues-paying members of the SEIU said the executive board’s announcement came too early, and point out that while Clinton’s proposal for a $12 an hour minimum wage flies in the face of the SEIU’s own Fight For $15 campaign. Both of Clinton’s opponents in the Democratic primary, Bernie Sanders and Martin O’Malley, have gotten behind the call for a $15 an hour minimum wage.

The SEIU’s Facebook page has been full of angry rants from dues-paying members upset with the endorsement. Daily Kos collected some of the more descriptive posts from the page’s wall:

“Please retract the SEIU endorsement for Hillary Clinton. She does NOT represent the average working American. She takes funding from Wall Street PLUS foreign donations as well as contributions from Private Prison Corporations. So just exactly who does she work for?” Wrote Cathy Bosell Haye.

“This is scandalous, shameful, counterintuitive, problematic, defeating, and divisive. Pathetic,” wrote Angel Rodriguez. “SEIU’s biggest national campaign is the Fight for $15 and a union. Across the country, we are organizing workers to strike and demand a $15 minimum wage. DESPITE THIS: Hillary Clinton is on public record as opposing a federal minimum wage of $15 per hour.’’

So if the SEIU’s endorsement wasn’t due to Clinton’s progressive values, why did they endorse her?

Other unions that have endorsed Clinton’s 2016 campaign paint a clearer picture. The Association of Federal, State, County, and Municipal Employees (AFSCME) also endorsed Clinton earlier. As Huffington Post reported, AFSCME was largely responsible for the rise of Bill Clinton in 1992, and endorsed Clinton in 2007 during her last attempt at the Democratic nomination. And just as it happened with the SEIU endorsement, AFSCME members revolted at the national leadership’s decision to endorse Clinton, saying an endorsement this early only served to divide members, and that union leadership should instead focus on issues that unite the union’s members.

Clinton’s first union endorsement came from the American Federation of Teachers (AFT), which represents public K-12 teachers as well as college-level instructors. As with SEIU and AFSCME, AFT members resisted the leadership’s endorsement of Clinton, as it only served to stifle debate that is essential to the Democratic process. A petition circulated by AFT members calling for national leadership to pull back their endorsement of Clinton has garnered over 5,500 signatures as of the time of this writing.

As CounterPunch pointed out in this article, unions have steadily been declining as labor leaders continue to implore members to trust “friendly” parties rather than try to make the unions a political force in and of themselves. Curiously, over the past 60 years, union membership has declined at the same time as wages have stagnated or dropped. In 2012 research from the Economic Policy Institute’s research found that the share of the workforce that had union representation dropped from 26 percent to 13 percent between 1973 and 2011. That time period covers 3 Democratic administrations, and 4 Republican administrations. Regardless of the party in power, union membership and wages continued to decline.

The numbers bear out — labor unions’ longtime ties to establishment Democratic politicians hasn’t won them more membership, and hasn’t grown the middle class. On the contrary, both parties have overseen large gains in wealth for the top 1 percent of Americans, and the simultaneous evaporation of the middle class. If labor unions really want to hold power again, they should focus instead on pushing members of both parties to support their goals, rather than aligning with politicians to have a seat at the table of power. The future of organized labor may depend on it.



The labor union movement should transform to a producers’ ownership union movement and embrace and fight for this new democratic capitalism. They should play the part that they have always aspired to – that is, a better and easier life through participation in the nation’s economic growth and progress. As a result, labor unions will be able to broaden their functions, revitalize their constituency, and reverse their decline.

Unfortunately, at the present time the movement is built on one-factor economics – the labor worker. The insufficiency of labor worker earnings to purchase increasingly capital-produced products and services gave rise to labor laws and labor unions designed to coerce higher and higher prices for the same or reduced labor input. With government assistance, unions have gradually converted productive enterprises in the private and public sectors into welfare institutions. binary economist Louis Kelso stated: “The myth of the ‘rising productivity’ of labor is used to conceal the increasing productiveness of capital and the decreasing productiveness of labor, and to disguise income redistribution by making it seem morally acceptable.”

Kelso argued that unions “must adopt a sound strategy that conforms to the economic facts of life. If under free-market conditions, 90 percent of the goods and services are produced by capital input, then 90 percent of the earnings of working people must flow to them as wages of their capital and the remainder as wages of their labor work…If there are in reality two ways for people to participate in production and earn income, then tomorrow’s producers’ union must take cognizance of both…The question is only whether the labor union will help lead this movement or, refusing to learn, to change, and to innovate, become irrelevant.”

Unions are the only group of people in the whole world who can demand a real Kelso-designed ESOP, who can demand the right to participate in the expansion of their employer by asserting their constitutional preferential rights to become capital owners, be productive, and succeed. The ESOP can give employees access to credit so that they can purchase the employer’s stock, pay for it in pre-tax dollars out of the assets that underlie that stock, and after the stock is paid for earn and collect the capital worker income from it, and accumulate it in a tax haven until they retire, whereby they continue to be capital workers receiving income from their capital ownership stakes. This is a viable route to individual self-sufficiency needing significantly less or no government redistributive assistance.

The unions should reassess their role of bargaining for more and more income for the same work or less and less work, and embrace a cooperative approach to survival, whereby they redefine “more” income for their workers in terms of the combined wages of labor and capital on the part of the workforce. They should continue to represent the workers as labor workers in all the aspects that are represented today––wages, hours, and working conditions––and, in addition, represent workers as full voting stockowners as capital ownership is built into the workforce. What is needed is leadership to define “more” as two ways to earn income.

If we continue with the past’s unworkable trickle-down economic policies, governments will have to continue to use the coercive power of taxation to redistribute income that is made by people who earn it and give it to those who need it. This results in ever deepening massive debt on local, state, and national government levels, which leads to the citizenry becoming parasites instead of enabling people to become productive in the way that products and services are actually produced.

When labor unions transform to producers’ ownership unions, opportunity will be created for the unions to reach out to all shareholders (stock owners) who are not adequately represented on corporate boards, and eventually all labor workers will want to join an ownership union in order to be effectively represented as an aspiring capital owner. The overall strategy should assure that the labor compensation of the union’s members does not exceed the labor costs of the employer’s competitors, and that capital earnings of its members are built up to a level that optimizes their combined labor-capital worker earnings. A producers’ ownership union would work collaboratively with management to secure financing of advanced technologies and other new capital investments and broaden ownership. This will enable American companies to become more cost-competitive in global markets and to reduce the outsourcing of jobs to workers willing or forced to take lower wages.

Kelso stated, “Working conditions for the labor force have, of course, improved over the years. But the economic quality of life for the majority of Americans has trailed far behind the technical capabilities of the economy to produce creature comforts, and even further behind the desires of consumers to live economically better lives. The missing link is that most of those unproduced goods and services can be produced only through capital, and the people who need them have no opportunity to earn income from capital ownership.”

Walter Reuther, President of the United Auto Workers, expressed his open-mindedness to the goal of democratic worker ownership in his 1967 testimony to the Joint Economic Committee of Congress as a strategy for saving manufacturing jobs in America from being outcompeted by Japan and eventual outsourcing to other Asian countries with far lower wage costs: “Profit sharing in the form of stock distributions to workers would help to democratize the ownership of America’s vast corporate wealth, which is today appallingly undemocratic and unhealthy.

“If workers had definite assurance of equitable shares in the profits of the corporations that employ them, they would see less need to seek an equitable balance between their gains and soaring profits through augmented increases in basic wage rates. This would be a desirable result from the standpoint of stabilization policy because profit sharing does not increase costs. Since profits are a residual, after all costs have been met, and since their size is not determinable until after customers have paid the prices charged for the firm’s products, profit sharing [through wider share ownership] cannot be said to have any inflationary impact on costs and prices.”

Unfortunately for democratic unionism, the United Auto Workers, American manufacturing workers, and American citizens generally, Reuther was killed in an airplane crash in 1970 before his idea was implemented. Leonard Woodcock, his successor, nor any subsequent union leader never followed through.

The state of the labor union movement remains stuck in non-workable approaches in the face of the exponential growth of the non-human means of production – technology invention and innovation – which destroys jobs and devalues the worth of labor.

Ayn Rand Killed The American Dream: Our free-Market Economy Only Works For The 1 Percent

Ayn Rand killed the American dream: Our free-market economy only works for the 1 percentEnlargeAyn Rand, Paul Krugman (Credit: WIkimedia/Reuters/Anton Golubev)

On June 21, 2015, Matthieu Ricard writes on Salon:

Excerpted from the book “Altruism”

The billionaire investor and philanthropist George Soros uses the term “free market fundamentalism” to describe the belief that the free market is not only the best but the only way of managing an economic system and preserving civil liberties. “The doctrine of laissez-Faire capitalism holds that the common good is best served by the uninhibited pursuit of self-interest,” he writes. If the laissez-faire attitude of an entirely deregulated free market were based on the laws of nature and had some scientific value, if it were anything other than an act of faith pronounced by the champions of ultraliberalism, it would have stood the test of time. But it hasn’t, since its unpredictability and the abuses it has permitted have led to the financial crises with which we are only too familiar. For Soros, if the doctrine of economic laissez- faire — a term dear to philosopher Ayn Rand — had been submitted to the rigors of scientific and empirical research, it would have been rejected a long time ago.

The free market facilitates the creation of businesses; innovation across many fields, for example in new technology, health, the Internet, and renewable energy; and affords undeniable opportunities to young entrepreneurs wishing to start up business activities that will further society. We have also seen that commercial exchange between democratic nations considerably reduces the risk of armed conflict between them. Yet, in the absence of any safeguard, the free market permits a predatory use of financial systems, giving rise to an increase in oligarchies, inequality, exploitation of the poorest producers, and the monetization of several aspects of human life whose value derives from anything other than money.

The Price of Everything, the Value of Nothing

In his book What Money Can’t Buy: The Moral Limits of Markets, Michael Sandel, one of the United States’ most high-profile philosophers and an adviser to President Obama, says that neo-liberal economists understand the price of everything and the value of nothing.

In 1997, he ruffled a lot of feathers when he questioned the morality of the Kyoto Protocol on global warming, the agreement that removed the moral stigma attached to environmentally harmful activities by simply introducing the concept of buying the “right to pollute.” In his view, China and the United States are the least receptive countries to his outspoken objections to free market fundamentalism: “In other parts of east Asia, Europe and the UK, and India and Brazil, it goes without arguing that there are moral limits to markets, and the question is where to locate them.” He gives some examples of the commercialization of values which in his view should not be monetized:

• For $8,000, Western couples can buy the services of an Indian surrogate mother;

• For $250,000, a rich hunter can pay for the right to kill a black rhinoceros in South Africa, a protected species in danger of extinction;

• For $1,500 to $25,000 per year, an increasing number of doctors in the United States are offering a “concierge” service, granting permanent access to their mobile telephone and the opportunity for same-day appointments;

• An online casino “gave” $10,000 to a single mother from Utah desperate to raise money to pay her son’s school fees, on the condition that she had to have their Internet domain name permanently tattooed across her forehead.

Can we monetize everything? Would there be any sense in letting someone buy a Nobel Prize if they had not deserved it? As for slavery, it continues to exist, just in different forms: trafficking women and children for prostitution the world over; Bangladeshi, Nepalese and Pakistani workers harshly exploited in the Gulf states; entire families in India shackled by debts spanning several generations to employers who deprive them of any freedom (more than ten million children from such families are subjected to forced labor in this way).

The only question the economist asks is: “How much?”

Markets make no distinction between worthy and unworthy choices: it is only the parties concerned who can confer value on any of the things or services exchanged. This can apply to anything, even hiring a hit man.

Do we want a market economy or a market society?

According to Sandel, even if the market economy is an effective tool for organizing productive activities, from a moral point of view, it should not invade all sectors of human life.

It therefore is not free trade in itself that must be called into question, but the fact that all freedom can only be implemented in a manner that is responsible toward those around you. These responsibilities are governed by moral values and by an ethical code that is respectful of the well-being of the community as a whole, starting with the obligation not to harm others when pursuing self-interest. By virtue of the fact that the unscrupulous and profit-hungry miss no opportunity to take advantage of unconditional freedom for their own profit and to the detriment of others, it is essential to establish regulations, which are nothing more than protective measures for society. This is, however, not what has happened, as Amartya Sen explains:

“The apparatus of regulation was dismantled year after year by the Reagan administration until George W. Bush’s time in office. But the success of the liberal economy has always certainly depended not only on the dynamism of the market itself, but also on regulatory mechanisms and controls to ensure that speculation and profit-seeking do not lead to excessive risk-taking.. . . If  you are concerned about freedom or happiness, you must try to organize the economy in such a way that they are possible.”

According to Stiglitz, “well-designed regulations did succeed in ensuring the stability of our financial system for decades, so regulations can work. Moreover, this period of tight financial regulation was also one of rapid economic growth, a period in which the fruits of that growth were more widely shared than they are today. . . . By contrast, in the period of ‘liberalization’ the growth of a typical citizen’s income was far lower than in the period of regulation. . . . There is a simple reason for the failure of liberalization: when social returns and private rewards are misaligned, all economic activity gets distorted, including innovation. The innovation of the financial sector was directed not at improving the well-being of Americans but at improving the well-being of bankers.”

The reality is that the free market economy does not work as well as its supporters claim. They say that it leads to greater stability, but successive global crashes have shown that it can be very unstable and have devastating consequences. What’s more, all the evidence points to the markets being far less effective than they maintain, and that the fairness of supply and demand, so dear to classical economists, is nothing but a myth, since we live in a world where a vast number of needs remain unsatisfied, and in particular where the investment required to eradicate poverty and respond to the challenges of global warming is lacking. For Stiglitz, unemployment, which prevents countless workers from contributing to the economy to their full potential, is the worst failing of the deregulated market, the greatest source of inefficiency, and one of the major drivers of inequality. Poverty, as Amartya Sen explains, is a deprivation of freedom, and not just any freedom: the freedom to express the potential that each person has in life.

The politicians and economists who have dominated the US political establishment since the Reagan administration thought we had to do away with all regulation pertaining to the free market and give free rein to the laissez-faire philosophy. They thought it was the best way to create equal opportunities for all: the most enterprising and the hardest working would be those who would succeed the most. The American Dream glorifies the shoe shiner who becomes a millionaire through sheer force of ingenuity and perseverance. Yet studies show that in the United States, with the odd exception, the wealthiest people, who lest we forget make up 1 percenr of the population, as well as their descendants, have the greatest chance of preserving their level of wealth in the long term. Stiglitz summarizes the situation as follows: “America had created a marvelous economic machine, but evidently one that worked only for those at the top.”

According to the champions of deregulation, the rich’s accumulation of wealth is supposed to benefit the poor due to the fact that they create jobs, stimulate the economy, and let wealth “trickle down” to the bottom. We must therefore not kill the goose that lays the golden egg. The problems start when the goose keeps all its eggs. The reality is that nowadays there is a minimal amount of trickling down, and it no more quenches the thirst of the poor than the water of a mirage.

In collaboration with economists from various countries, French economist Thomas Piketty has analyzed hundreds of years of tax records from thirty countries across Europe, the US and Japan. The conclusion of his fifteen years of painstaking analysis from this unprecedented mass of data is that the rich are getting richer and that their wealth doesn’t trickle down. In fact it trickles up. These findings, presented in Capital in the Twenty-first Century,flatly contradict the claim, repeated over and again by libertarian economists, that the accumulation of wealth at the top of the pyramid benefits everyone by filtering down to the middle classes and the poor. This is simply not true.

One of the main features of Piketty’s findings is that when people obtain most of their wealth through inheritance and from subsequently investing it, they invariably grow richer and richer, while those who earn wages and salaries for their productive work grow relatively poorer. This goes plainly against the idea that a small government and a deregulated economy made the USA a land of opportunity for all. The current system resembles a game of Monopoly with one player having one set of dice and the other three. The latter can only get richer and richer. His success has nothing to do with his hard work and personal skills. The three sets of dice represent inherited wealth, earnings made on financial investment and assets (such as property, art collections, etc., which generate non-taxable passive income), and proportionately less taxation on the rich. One set of dice stands for productive work based on personal skills.

Piketty has also shown that the only times when inequality decreased in the USA was when the government directly intervened to promote growth, during the New Deal in the 1930s and the Marshall Plan after World War II. Then the working person could hope to gain equal footing with the financiers through his or her own merit and hard work. Based to some extent on altruism, a Keynesian style of economics is aimed at achieving prosperity for both present and future generations, not at ensuring the selfish, short-term gain of a minority. Thoughtful regulation allowed the creation of a balance in society by applying an incremental wealth tax rate. People were more concerned for their fellow man and the social contract had a stronger element of cooperation instead of barefaced competition. From the 1980s on, the American Dream ended with the likes of Ronald Reagan, Milton Friedman, and Ayn Rand, as social solidarity waned and inequality continued to grow thanks to major tax cuts granted to the rich.

If more and more citizens across the world are feeling outrage toward the current economic system it is because, as Stiglitz says, following the 2008 crisis: “It was rightly perceived to be grossly unfair that many in the financial sector (which, for shorthand, I will often refer to as ‘the bankers’) walked off with outsize bonuses, while those who suffered from the crisis brought on by these bankers went without a job. . . . What happened in the midst of the crisis made clear that it was not contribution to society that determined relative pay, but something else: bankers received large rewards, though their contribution to society — and even to their firms— had been negative. The wealth given to the elites and to the bankers seemed to arise out of their ability and willingness to take advantage of others.”

To illustrate this, let us remember that at the onset of the crisis, Goldman Sachs highly recommended that its customers invest in Infospace, a startup selling various online services that had grown rapidly and been given the highest possible rating, even though it was dismissed by an analyst as a “piece of junk.” Excite, a similar business that also had a strong rating, was dismissed as “such a piece of crap.” In 2008, after 9 million poor Americans had lost their houses, often their sole asset, the heads of Goldman Sachs received 16 billion dollars in bonuses. Similarly, the five most senior people at Lehman Brothers, one of the biggest sellers of risky mortgage loans, pocketed over 1 billion dollars in bonuses between 2000 and 2007. When the company went bankrupt and their customers were ruined, they held on to the entirety of this money. As Stiglitz remarks: “Something has happened to our sense of values, when the ends of making more money justifies the means, which in the US subprime crisis meant exploiting the poorest and least-educated among us.”


The result of a free-market system without just regulation is the concentration of wealth-creating, income-producing capital assets among a wealthy ownership class, effectively excluding the vast majority or citizens the opportunity and means to acquire ownership of capital assets simultaneously with the growth of the economy.

The purpose of production in a market economy is the consumption of products and services by the consumers who make up the economy. But without income, the non-capital ownership class, the 99 percenters, cannot afford to purchase the products and services they desire. But when incomes rise among consumers who have the need and desire to improve their material standard of living, the market demand for products and services strengthens, which in turn increases production and results in a growth economy that, as a byproduct, creates REAL jobs, not the government style make-work that has become so prominent.

Abraham Lincoln said that the purpose of government is to do for people what they cannot do for themselves. Government also should serve to keep people from hurting themselves and to restrain man’s greed, which otherwise cannot be self-controlled. Anyone who seeks to own productive power that they cannot or won’t use for consumption are beggaring their neighbor––the equivalency of mass murder––the impact of concentrated capital ownership.

Door Might Be Closed On Firms’ IPOs


The reality is that an Initial Public Offering (IPO) is the most used financial mechanism to raise money to finance corporate growth that actually can create new capital asset OWNERS. The problem is that to invest requires past savings. And if past savings are the only source of financing for new capital asset formation (which is demonstrably not the case), then only rich private individuals or the State can own capital.

Of course, using future savings to finance new capital asset formation and acquisition of capital by propertyless people resolves this paradox easily, as considered and recommended by binary economist Louis Kelso and philosopher Mortimer Adler.

As it stands now, while OWNING private property, namely productive capital assets, is an individual right, only an élite has the ability to exercise it. The result is that economic growth is shackled by the slavery of past savings.

As a result, the United States is headed for more personal and family economic turmoil and social unrest and upheaval due to a faulty economic system that fosters the concentration of wealth-creating, income-generating productive capital – the ownership of non-human productive assets such as land, structures, machines, super-automation, robotics, digital computerized operations, etc. The system is faulty because economic growth is based on individual and family accumulations of savings, with ALL economic growth dependent on past savings “invested” to further concentrate productive capital ownership. This will leave the vast majority, or the so-called 99 percent, who are property-less as related to ownership of productive capital assets, unable to save sufficiently and instead struggling to sustain their livelihood month to month, as they fear for job loss and having to rely on taxpayer-supported government welfare.

To change the rules and reform the system, the outcome of FUTURE policies must be to facilitate financing economic growth with “FUTURE SAVINGS,” and simultaneously create new capitalist owners of wealth-creating, income-generating productive capital assets. “FUTURE SAVINGS” are profits used to repay loans for new capital formation and acquisition of existing productive assets by new owners.

Critically, we must recognize that Americans and the world’s people do not have to end up desolute and bereft as the FUTURE unfolds due to fundamentally flawed assumptions in modern economics and finance: that new capital formation is impossible without first cutting consumption, saving, then investing. The result has been that the “supply of loanable funds” derived from past savings determines the “production possibilities curve” or rate at which economic growth can be sustained.

If we are to achieve the goal of general affluence for every human being, the first requirement is to increase progressively the total amount of the income to be shared. This requires increased production, not redistribution, in order to generate incomes that would be distributed according to market principles. This is the ONLY means to promote a fuller utilization of our productive facilities and a consequent progressive increase in the aggregate income to be available for distribution, and to which increasing quantities of newly created products and services would become available to everyone.

“Distribution is the trouble” said Dr, Harold G. Moulton, President of Brookings Institution, in his 1935 book The Formation Of Capital. Said Moulton, “The way our income is distributed provides an inadequate purchasing power for our full production.”

The problem that needs to be addressed is threefold: 1) how to increase production, 2) how to distribute the income from production according to relative inputs of human labor and non-human productive capital, and 3) how to distribute that income to people who will use the increased income for consumption, not reinvestment (to further concentrate ownership of wealth-creating, income-generating productive capital assets).

In today’s economic world, economic progress and the financing of FUTURE growth is subject to a reliance on existing accumulations of savings that result from cutting current consumption. Income, instead of being spent on consumption to keep production and consumption in balance, is diverted into savings. With fewer customers purchasing what is produced, the financing of FUTURE productive capital used to produce new products and services becomes less financially feasible.


As is noted in the forward to the “new edition” of Moulton’s The Formation Of Capital, written by Norman G. Kurland, Michael D. Greaney and Dawn K. Brohawn, my colleagues at the Center for Economic and Social Justice (www.cesj.org):

“Financial feasibility refers to the ability of new capital investment to pay for itself out of the future earnings of the new capital. This is an application of Adam Smith’s observation that the purpose of production is consumption. A standard test to determine whether a company should invest in new capital is whether there is sufficient consumer demand to support the marketable good or service to produced. In other words, why add a new productive asset or tool if no one is going to buy (consume) what it produces? Thus, as Moulton emphasizes in this book, demand for capital is derived from consumer demand.

“Worse, from the standpoint of political and social stability, using past savings to finance growth accelerates, and provides a rationalization for maintaining and even increasing, concentrated ownership of the means of production. It also leads to expanding the role and powers of the State in a desperate effort to stabilize the economy. The rights of private property (i.e., the rights to the fruits of, and control over, what one owners) are taken from individual citizens and transferred to the State.”

The resulting problem is that to the extent that the savings investment approach increases production, the economic benefit accrues to the current owners, who re-invest to acquire more productive capital wealth rather than consume a growing portion of their capital incomes. This concentrates ownership even further.

What historically empowered America’s original capitalists was conventional savings-based finance and the pledging or mortgaging of assets, with access to further ownership of new productive capital available only to those who were already well capitalized. As has been the case, credit to purchase capital is made available by financial institutions ONLY to people who already own capital and other forms of equity, such as the equity in their home that can be pledged as loan security––those who meet the universal requirement for collateral. Lenders will only extend credit to people who already have assets. Thus, the rich are made ever richer, while the poor (people without a viable capital estate) remain poor and dependent on their labor to produce income. Thus, the system is restrictive and capital ownership is clinically denied to those who need it.

The conventional approach relies on savings for additional investment in new productive capital assets, instead of providing the means to satisfy people’s material needs and wants. The result has been to create a global ownership class of very rich people who reinvest most of their capital incomes to further their concentrated wealth ownership.

Supporters of this economic paradigm argue that no income generated by capital should be used for consumption. Instead, all capital income should be reinvested in ways that create new capital, thereby providing jobs for the masses until full employment is reached. Thus, most economist today assume that there is virtually no other means whereby most people can earn an income except in the form of wages paid for their labor.

Moulton summarized the results of his investigation:

“We find no support whatever for the view that capital expansion and the extension of the roundabout process of production may be carried on for years at a time when consumption is declining. [i.e., when saving is taking place.] The growth of capital and the expansion of consumption are virtually concurrent phenomena.”

Of course, the supporters of the arcane economic paradigm ignore and are oblivious to the reality that tectonic shifts in the technologies of production are destroying jobs and devaluing the worth of labor as increasingly the non-human productive capital factor is replacing the need for labor in the production of products and services needed and wanted by society.

Understanding Moulton is absolutely necessary in order for us to set out on a path to prosperity, opportunity, and economic justice. The question that Moulton poses is what should be the source of financing for capital formation?

Moulton answered the question as follows:

“A new and even more dynamic factor has come into the process of capital formation through the evolution of modern commercial banking. The development of the banking system, with its ability to manufacture credit, has served to render funds immediately available for the purposes of capital creation without the necessity of waiting upon the slower processes of accumulating funds from individual savings. The result is to sustain productivity at a higher level and to facilitate the growth of new capital at a more rapid rate than would otherwise have occurred.”

In other words, as noted in the forward to Moulton’s new edition:

“New capital formation can be financed by using money created by the commercial banking system. It is not necessary (and even counterproductive from the standpoint of economic equilibrium and sustainable growth) to rely on cutting consumption to generate the savings necessary to finance new capital formation.

“Following Moulton’s reasoning, the remedy to an economic downturn is thus not to manipulate the money supply by increasing government debt or bailing out failed speculation (which, among other problems, distorts the operation of the market and places a debt burden on future taxpayers). Nor is it an effective, long term solution to stimulate demand by subsidizing artificial job creation, legislating higher minimum wages, ignoring market forces in collective bargaining negotiations, imposing price controls or supports (especially on interest rates), or redistributing existing wealth. Such measures may be necessary at times as expedients, but are ultimately self-defeating. Instead, what is needed is to:

“1) Increase production by financing new capital formation through the extension of bank credit backed by the present value of the future stream of income to be generated by the new capital.

“2) Get the profits generated by the new capital into the hands of all workers and citizens who will use it for consumption, not reinvestment in additional new capital.”

In reading The Formation Of Capital, Moulton fails to list as a possible solution widespread, direct private ownership of the means of production. As noted by my colleagues at CESJ in the forward to the new edition:

“A broad base of owners and diversity in the forms of productive capital owned would ensure that all workers and as many people as possible, including the disabled and poorest of the poor, would receive income generated by many forms of advancing technology, and would use the income from their capital for consumption rather than reinvestment.”

Moulton’s omission was addressed by Louis Kelso and Mortimer J. Adler in their 1958 book The Capitalist Manifesto. Kelso, a successful corporate lawyer and self-schooled economist, was also an expert in finance who later formed a leading investment banking firm specializing in his financial mechanism, the Employee Stock Ownership Plan (ESOP) and other methods for financing worker and broader citizen individual ownership in productive capital. In the late 1960s, I had the privilege to form with Kelso Agenda 2000 Incorporated, a consulting firm, whose advocacy mission was to provide financial mechanism for economic development based on the Kelsonian principles underlying the binary economic or two-factor model of economic reality.

The Capitalist Manifesto made the moral and economic case for widespread ownership of the means of production. How to finance widespread productive capital ownership was spelled out in the assertive subtitle to The New Capitalists: A Proposal To Free Economic Growth From The Slavery Of Savings. (Both books are available as free downloads at http://www.kelsoinstitute.org/pdf/cm-entire.pdf and http://www.kelsoinstitute.org/pdf/nc-entire.pdf, respectively.)

Not surprisingly, the source that Kelso and Adler referenced most often in The New Capitalists is Moulton’s The Formation Of Capital. Moulton showed how the extension of commercial bank credit can be used to finance capital formation without requiring existing accumulations of savings. What Kelso and Adler argued as the solution to the income distribution problem was to democratize access to direct, private ownership of new capital formation.

Over the past century there has been an ever-accelerating shift to productive capital––which reflects tectonic shifts in the technologies of production. Advancing technology continues to rapidly take over the vast bulk of production from human labor.

As pointed out in the forward to the new edition of The Formation Of Capital, Moulton demonstrated that the chief means by which capital formation is financed in a modern industrial and financial economy is commercial bank credit backed by the present value of the future stream of income to be generated by the newly formed capital assets themselves with the collateralization requirement of existing accumulations of savings (already owned assets). To this Kelso added that 1) the ownership of the new capital financed with what he called “pure credit” must be broadly owned, and 2) the universal collateralization requirement could be met by using capital credit insurance and reinsurance in place of existing accumulations of savings.

Kelso’s refinements of Moulton’s work underpin a comprehensive national economic program called “Capital Homesteading” (http://www.cesj.org/learn/capital-homesteading/, http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-a-plan-for-getting-ownership-income-and-power-to-every-citizen/http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-summary/ and http://www.cesj.org/learn/capital-homesteading/ch-vehicles/), developed by the Center for Economic and Social Justice. The “Capital Homestead Act,” which gives a legislative framework to the program is a way to implement both Moulton’s insights and Kelso’s solution to the income distribution problems of a modern economy. It would empower every American man, woman and child, including the poorest of the poor, with equal opportunity and the social tools to acquire, control and enjoy the fruits of productive corporate capital assets. Based on a new socio-economic paradigm that some have called the “Just Third Way” (as the moral alternative to traditional capitalism and socialism), Capital Homesteading also offers a template that can be tailored to eradicate poverty and economic powerlessness in the poorest of nations around the globe. (see the Agenda of The Just Third Way Movement at http://foreconomicjustice.org/?p=5797.)

The means by which Capital Homesteading proposes to achieve its goals involve major restructuring of America’s tax system and Federal Reserve policies (see abridged http://foreconomicjustice.org/?p=8942). These are designed to lift artificial barriers to more equitable distribution of FUTURE corporate capital and stimulate faster growth rates of private sector investment. Capital Homesteading would shift primary national income maintenance policies from inflationary artificial wage increases and unproductive income redistribution expedients, to market-based ownership sharing and dividend incomes.

The proposed Capital Homestead Act would reform monetary institutions and tax laws to democratize access to capital (productive) credit. By universalizing citizen access to direct capital ownership by making available “interest-free” productive credit and new, asset-backed money for increasing production, Capital Homesteading would close the power and opportunity gap between today’s haves and have-nots, without taking away property from today’s owners.

As my colleagues conclude in the forward to the new edition:

“Moulton’s insights in The Formation Of Capital suggest a practical and morally sound basis for restructuring the financial system to enable money to be created as needed to finance sustainable economic growth. World poverty can be eradicated, something not possible within the current economic paradigms, which rely on existing accumulations of savings to finance capital formation. With the specter of another economic depression looming over today’s world, and with the widening gap between “haves” and “have-nots” threatening social harmony, there is no real justification for delaying the implementation of a program of Capital Homesteading to establish and maintain a free, prosperous and just economy for all.”

For other related articles, please see my article “Economic Democracy And Binary Economics: Solutions For A Troubled Nation and Economy” at http://foreconomicjustice.org/11/economic-justice/.

Also please see my article “The Absent Conversation: Who Should Own America?” published by The Huffington Post at http://www.huffingtonpost.com/gary-reber/who-should-own-america_b_2040592.html and by OpEd News at http://www.opednews.com/articles/THE-Absent-Conversation–by-Gary-Reber-130429-498.html

Also see “The Path To Eradicating Poverty In America” at http://www.huffingtonpost.com/gary-reber/the-path-to-eradicating-p_b_3017072.html and “The Path To Sustainable Economic Growth” at http://www.huffingtonpost.com/gary-reber/sustainable-economic-growth_b_3141721.html.

Also see the article entitled “The Solution To America’s Economic Decline” at http://www.nationofchange.org/solution-america-s-economic-decline-1367588690 and “Education Is Critical To Our Future Societal Development” at http://www.nationofchange.org/education-critical-our-future-societal-development-1373556479. And also “Achieving The Green Economy” at http://www.nationofchange.org/achieving-green-economy-1373980790. Also see it complete with the footnotes at http://foreconomicjustice.org/?p=9082.


Pfizer And Allergan’s $160-Billion Pharmaceutical Merger Puts New Twist On Tax-Avoiding Inversions


On November 24, 2015, Jim Puzzanghera and Samantha Masunaga write in the Los Angeles Times:

More than 65 years ago, a Los Angeles drugstore owner installed a laboratory above one of his shops to make a product that would discourage children from sucking their thumbs.

The operation quickly changed focus to an antihistamine eye drop called Allergan. Renamed after that drug, the firm moved to Irvine and grew into a global pharmaceutical giant.

Now, the Allergan name is being retired as part of a $160-billion merger with rival Pfizer Inc. that would create the world’s largest drugmaker.

The long-expected stock-and-debt deal — the second-biggest ever — already is drawing fire for being the most creative attempt yet at avoiding U.S. corporate taxes. It also is raising fears of higher drug prices for consumers.

Although Pfizer is the larger company, the deal unveiled Monday is structured so that Allergan, now an Irish company, is technically the buyer.

The move is a twist on a controversial tactic known as inversion, in which a U.S. firm buys a smaller foreign competitor in a lower-tax nation and shifts the merged company’s headquarters there to reduce taxes.

The White House and the two leading Democratic presidential candidates quickly blasted the Pfizer-Allergan tie-up as a corporate tax dodge.

“This proposed merger, and so-called inversions by other companies, will leave U.S. taxpayers holding the bag,” said Democratic front-runner Hillary Clinton.

The new firm would be called Pfizer and would be led by its current chief executive, Ian Read. Although its global operational headquarters would be in New York, the merged company’s principal executive offices would be in Dublin to take advantage of Ireland’s low corporate tax rate.

Pfizer and Allergan said the effective tax rate of the new company would be 17% to 18%, well below Pfizer’s effective tax rate last year of 25.5%.

U.S. companies have stepped up their use of inversions in recent years as foreign countries have been lowering their tax rates to lure corporate headquarters.

New Treasury Department regulations, including ones issued just last week, have made the tactic somewhat more difficult. But the Pfizer-Allergan deal is structured as a foreign acquisition to avoid those rules, said Larry Harding, vice chairman of Radius, a firm that helps U.S. companies operate overseas.

“It’s definitely an interesting inflection point and has ratcheted up the issue,” Harding said.

Lowering Pfizer’s taxes wasn’t the only motivation in the merger, which Read said would give the company more “financial flexibility” to invest in research, development and manufacturing.

“I want to stress that we’re not doing this transaction simply as a tax transaction,” he told investors on a conference call.

Later, on CNBC-TV, Read called the merger “a great deal for America,” where the new firm would have 40,000 employees.

Allergan has about 2,100 employees in Irvine and 300 in Corona out of a worldwide workforce of 30,000.

“We will continue to pump in $9 billion globally into research, mostly in the United States,” Read said. “These sort of resources are being brought together to cure major illnesses for humanity.”

Pfizer is known for the cholesterol-lowering medication Lipitor and the male erectile dysfunction drug Viagra.

Allergan was acquired in March by the Irish drugmaker Actavis in a $66-billion deal that thwarted a takeover attempt by Valeant Pharmaceuticals International Inc. The new company kept the Allergan name.

The Pfizer deal values Allergan at $363.63 a share, about 30% more than its price when reports of a deal first surfaced last month.

Allergan shareholders would get 11.3 shares of the new company for each of their shares. Pfizer shareholders would get one share of the new company’s stock for each of their shares, but have the option of receiving cash, up to a total of $12 billion, for some or all of their shares.

After the deal closes, Pfizer shareholders would own 56% of the combined company. U.S. and European regulators must approve the transaction.

The stock of both companies dropped Monday. Allergan fell $10.76, or 3.4%, to $301.70. Pfizer shares dropped 86 cents, or 2.7%, to $31.32.

Jamie Court, president of advocacy group Consumer Watchdog, worried that the consolidation of two pharmaceutical giants would lead to higher drug prices because of decreased competition.

“Certain patients are going to not only see elevated prices, but potentially a loss of choice,” he said.

On the campaign trail, Sen. Bernie Sanders, the Vermont independent seeking the Democratic presidential nomination, called on the Obama administration to block the deal.

“The Pfizer-Allergan merger would be a disaster for American consumers who already pay the highest prices in the world for prescription drugs,” Sanders said. “It also would allow another major American corporation to hide its profits overseas.”

But industry analyst Richard Purkiss, managing director at investment banker Piper Jaffray, said he thought the merger would have little effect on consumers.

“Pricing is mainly a function of what competition there is, and this doesn’t give the company any greater power in most of its categories because they’re not particularly overlapping businesses,” he said.

Purkiss didn’t think there were many barriers to the deal’s completion. But as the largest inversion-type merger so far, Pfizer and Allergan could face regulatory hurdles in Washington, said Maxim Jacobs, an analyst at Edison Investment Research.

Rep. Sander M. Levin (D-Mich.) said inversions have cost the U.S. government tens of billions of dollars in tax revenue and that the Pfizer-Allergan deal should spur lawmakers to take action.

President Obama believes “it is not fair for companies to essentially renounce their citizenship [and] seek to, at least on paper, relocate themselves somewhere else so they can pay a lower tax rate,” White House Press Secretary Josh Earnest said.

Obama and Democrats have sought to change the tax law to prohibit inversion-type deals, but bills proposed in the House and the Senate last year still have not gone to hearings in the Republican-controlled Congress.

Meantime, the administration has tried to make inversions more difficult. Last week, the Treasury Department added to prior restrictions by issuing technical rules that would limit the ability of U.S. companies to merge with foreign firms to avoid corporate taxes.

Clinton said she would propose specific steps in the coming weeks to stop inversions.

Some Republicans also have criticized inversions but said the solution is to lower the U.S. corporate tax rate significantly to reduce the incentive to reincorporate overseas. Ireland has a 12.5% corporate tax rate. The U.S. rate is 35%, the highest of any developed economy.

Rep. Charles Boustany (R-La.) called the latest deal “a sad reflection of our broken tax code, which is driving businesses away from the United States instead of encouraging them to grow here at home.”

The Business Roundtable, a trade association of chief executives at major corporations, said inversions were “a self-help solution to compete in the global marketplace” and predicted they would continue until the corporate tax code is overhauled.

But with bipartisan attempts at tax reform efforts stalling, legislation is unlikely until after next year’s presidential election.

Besides the tax benefits, the companies expect to save $2 billion in the combination. Pfizer executives had talked about splitting their company in two soon, one focused on developing new products and the other focused on established drugs. But they said Monday that they won’t be in a position to consider that option until the end of 2018.

The deal has a breakup fee of as much as $3.5 billion, which either company has the right to exercise.



Presidential Candidate Template – Talking Points For Candidate Campaign

This is a template of talking points for Presidential candidates by the Center for Economic and Social Justice (www.cesj.org).

To win the White House, a candidate must appeal beyond the top 0.5 percent or even the top 10 percent of Americans who today have a secure proprietary stake in the future of the U.S. economy.

Otherwise an appeal to redistributive or “Robin Hood” populism can increase the Welfare State’s already dangerous foothold in Presidential politics. To assure a landslide victory in November of [YEAR], [CANDIDATE] should embrace a concept of “free market populism” and genuine “economic and social justice for all,” where the poor can become owners of new wealth-creating, income-producing property without taking old property away from the already wealthy.  Free market populism assures that the American Dream is accessible to all.


1. How can [CANDIDATE] support change for America without abandoning traditional American values?

2. How can [CANDIDATE] offer a free enterprise, private property version of “economic and social justice” that would directly address the conspicuous and growing disparities of opportunity between America’s most affluent citizens and our hungry and homeless and others at the bottom of our economic ladder?

3. How can [CANDIDATE] offer a new vision and a comprehensive growth strategy to stimulate increased global competitiveness of the U.S. productive sector, without inflation and with maximum opportunities for all voters to earn and share in the ownership and profits in the new growth pie?

4. How can [CANDIDATE] offer “a more just labor deal” for working Americans that is based on solid and timeless principles of Lincoln and the Founding Fathers, which all Americans could rally behind — rich and poor, workers and owners, young and old, people of all races and religions — because it would lift existing tax and credit barriers to “the means of acquiring and possessing property” as called for in George Mason’s Virginia Declaration of Rights?

The Answer

Just as Lincoln made access to our land frontier under the Homestead Acts his economic key to the Oval Office in the 1860 campaign and Ronald Reagan in 1975 called for (but never delivered) “an Industrial Homestead Act,” [CANDIDATE] should campaign on and deliver “The Capital Homestead Act” as a means of providing every family with rising property incomes from an expanding equity stake in a future high-tech and more dynamically growing American industrial frontier.

What Makes This Different from the Wage/Welfare System?

In sharp distinction from classic socialism and in contrast to the confused and contradictory principles of the welfare state, the four interdependent policy pillars of the Capital Homestead Act are:

  1. Free and Open Markets. Restoration of the freely competitive market for determining just prices, just wages and just profits, for more efficient allocation of resources and for decentralizing economic choices.
  1. Private Property. Restoring the original rights of private property in the means of production, particularly for corporate shareholders, as a means for securing people’s economic choices and property incomes, for decentralizing corporate power, and for increasing management accountability.
  1. Limited Government. Radically reducing the power of the government at all levels over economic decision-making.
  1. Expanded Capital Ownership. Adding expanded capital ownership as a new pillar for the future of U.S. income maintenance policy, equivalent to the goal of full employment.

What is lacking in Most Conservative Economic Reforms?

Conservatives correctly focus on private sector growth and resist redistributive tax and welfare policies. However, most tax and credit incentives advocated by conservatives lack populist appeal because they fail to broaden the ownership of our free enterprise system and therefore are at best “trickle-down” rather than “percolate-up” supply-side policies. The Capital Homestead Act would correct this fatal omission.

What is the Political Foundation for the Capital Homestead Act?

President Reagan was a strong advocate of expanded capital ownership. On August 3, 1987, he commended the report of the Presidential Task Force on Project Economic Justice, chaired by Ambassador J. William Middendorf II, which advocated Employee Stock Ownership Plans (ESOPs) for privatizing state-owned enterprises in the Caribbean Basin region. The Presidential Commission on Privatization also endorsed the ESOP as a means for privatizing the postal service and other Federal Activities.

On Capital Hill, ESOP supporters have ranged from Senator Russell Long to Richard Lugar, from Paul Laxalt to Chris Dodd, from Phil Crane to Mike Barnes and Charles Rangel.

In its 1976 Report, the Join Economic Committee advocated broadened ownership of new capital as a major new economic policy.

As a result of [19] ESOP laws passed by Congress since 1974, over [8,000] U.S. companies with over [8] million workers are gaining an ownership stake in their companies. Over [18] states have passed legislation encouraging ESOPs. Governors Dukakis and Cuomo have established special agencies on employee ownership and participation.

Some Features of the Capital Homestead Act

Among reforms to the Federal tax system:

  • Adopt a single rate tax for incomes from all sources, with no deduction (except for business expenses, health care and education and possibly for charitable donations) and exemptions only for basic subsistence and for incomes channeled into tax-exempt broad-based equity accumulation vehicles such as Capital Homestead Accounts (CHAs), IRAs and ESOPs (up to $1 million in accumulated equity per person). A family of four would not be taxed until their incomes exceeded $110,000. All incomes above that, no matter how high, would be taxed at the same rate.
  • Balance the Federal budget each year and gradually pay down the Federal debt by automatically adjusting the single rate to whatever percentage is required from all anticipated non-exempt incomes, regardless of source.
  • Phase out [special] employee and employer payroll taxes and integrate the costs of promised benefits under the Social Security System under the single rate income tax.
  • Reduce capital gains taxation by inflation-indexing of gains from the transfer or sale of investment property.
  • Allow corporations to deduct dividend payouts (as now permitted for employee shares held by ESOPs), making dividends taxable at the individual level and eliminating the discriminatory double tax on corporate profits.
  • Further broaden citizen access to capital credit for leveraged acquisition of income-producing property by allowing tax incentives similar to leveraged ESOPs for leveraged CHA’s, IRAs, consumer stock ownership plans for utilities, and Community Investment Corporations (for -profit resident-owned land planning and development corporations).
  • Require all citizens to fill out a simple one-page income tax form, showing income and benefits from all sources, so that even the poor and handicapped would qualify for a “negative income tax” (as originally suggested by Milton Friedman) to provide all Americans with a “social safety net” in the event of misfortune.

Among reforms to the Federal Reserve Act

  • Aim at a zero inflation rate, maximum productivity increases, green growth, renewable energy systems and universal citizen access to low-cost capital credit.
  • Move toward an asset-backed currency (not necessarily gold), which would reflect real productivity increases and be supported by tangible real estate, structures, machines and other productive assets in the U.S. economy.
  • Sell Treasury paper on the open market, ban any future monetizing by the Federal Reserve of Federal deficits, phase out all present holdings by the Federal Reserve of Treasury paper, and force government to borrow from the market to discourage future Federal deficits.
  • Allow the competitive marketplace to determine lender transaction fees, including loan default risk premiums, above their “cost of interest-free money” supplied under the section 13 powers of the Federal Reserve.
  • Reinstate the Federal Reserve’s discount mechanism as an instrument for increasing liquidity (i.e., lending ability) of our commercial banks, so that local banks, rather than foreign lenders, will meet America’s future credit needs for rebuilding our infrastructure, modernizing the Rust Belt and other basic industries, and for accelerating sustainable and environmentally sound expansion of agriculture, energy and high-tech industries.
  • Allow savers to receive market interest rates for “old money” and existing savings to loan out for non-productive uses like consumer loans and government loans or ownership-concentrating uses of credit.
  • Reduce transaction costs for ownership-expanding private-sector productivity growth, by establishing a special discount rate for “new money” at 1 percent or less (to cover actual service costs of administering and regulating the U.S. monetary system) to be charged to member banks which makes loans at competitive mark-ups to farm families and to commercial and industrial enterprises which offer widespread individual access to ownership sharing through Capital Homestead Accounts for their workers, customers, and citizens generally. Just by reducing bank prime rates down to 3 percent or less for farms and enterprises using leveraged ESOPs, IRAs, and other broadened ownership vehicles, this “lowered-tiered” reform to the costs of capital credit would:

*            Cut a major cost of production without taxpayer subsidies,

*            Provide all citizens with a means to acquire capital incomes to supplement wages and incomes from other sources, thus systematically balancing expansion of consumer demand with increases in demand for new capital formation.

*            Make U.S. industry more competitive in global markets,

*            Increase private sector savings and investment, jobs and family incomes,

*            Reduce public sector costs and increase taxpayer rolls, and

*            Eliminate our trade deficit globally.


Access to capital credit largely determines who will share in the ownership of America’s productive wealth. The Capital Homestead Act is designed to democratize access to capital credit and thus ensure widespread citizen participation in basic economic decisions and property incomes. It is the key to creating a broad popular constituency in favor of free market, property-oriented policies and against excessive government growth.

Footnote: This is a comprehensive reform package, which requires ALL policies to be simultaneously implemented.


Signs Of A Dying Society


This work is licensed under a Creative Commons Attribution-Share Alike 3.0 License.
On November 23, 2015, dkmich writes on the Daily Kos:

While Edward Snowden and Chelsea Manning and John Kiriakou are vilified for revealing vital information about spying and bombing and torture, a man who conspired with Goldman Sachs to make billions of dollars on the planned failure of subprime mortgages was honored by New York University for his “Outstanding Contributions to Society.”

This is one example of the distorted thinking leading to the demise of a once-vibrant American society. There are other signs of decay:

1. A House Bill Would View Corporate Crimes as ‘Honest Mistakes’

Wealthy conservatives are pushing a bill that would excuse corporate leaders from financial fraud, environmental pollution, and other crimes that America’s greatest criminals deem simply reckless or negligent. The Heritage Foundation attempts to rationalize, saying “someone who simply has an accident by being slightly careless can hardly be said to have acted with a ‘guilty mind.'”

One must wonder, then, what extremes of evil, in the minds of conservatives, led to criminal charges against people apparently aware of their actions: the Ohio woman who took coins from a fountain to buy food; the California man who broke into a church kitchen to find something to eat; and the 90-year-old Florida activist who boldly tried tofeed the homeless.

Of course, even without the explicit protection of Congress, CEOs are rarely charged for their crimes. Not a single Wall Street executive faced prosecution for the fraud-ridden 2008 financial crisis.

2. Unpaid Taxes of 500 Companies Could Pay for a Job for Every Unemployed American

For two years. At the nation’s median salary of $36,000, for all 8 million unemployed.

Citizens for Tax Justice reports that Fortune 500 companies are holding over $2 trillion in profits offshore to avoid taxes that would amount to over $600 billion. Our society desperately needs infrastructure repair, but 8 million potential jobs are being held hostage beyond our borders.

3. Almost 2/3 of American Families Couldn’t Afford a Single Pill of a Life-Saving Drug

62 percent of polled Americans said they couldn’t cover a $500 repair bill. If any of these Americans need a hepatitis pill from Gilead Sciences, or an anti-infection pill fromMartin Shkreli’s company, they will have to do without.

An AARP study of 115 specialty drugs found that the average cost of a year’s worth of prescriptions was over $50,000, three times more than the average Social Security benefit. Although it’s true that most people don’t pay the full retail cost of medicine, the portion paid by insurance companies is ultimately passed on to consumers through higher premiums.

Pharmaceutical companies pay competitors to keep generic drugs out of the market, and they have successfully lobbied Congress to keep Medicare from bargaining for lower drug prices. The companies claim they need the high prices to pay for better medicines. But for every $1 they spend on basic research, they invest $19 in promotion and marketing.

4. Violent Crime Down, Prison Population Doubles

FBI statistics confirm a dramatic decline in violent crimes since 1991, yet the number of prisoners has doubled over approximately the same period.

Meanwhile, white-collar prosecutions have been reduced by over a third, and, as noted above, corporate leaders are steadily working toward 100% tolerance for their crimes.

5. One in Four Americans Suffer Mental Illness, Mental Health Facilities Cut by 90%

According to the National Alliance on Mental Illness, 25 percent of adults experience mental illness in a given year, with almost half of the homeless population so inflicted. Yet from 1970 to 2002, the per capita number of public mental health hospital bedsplummeted from over 200 per 100,000 to 20 per 100,000, and after the recession state cutbacks continued.

That leaves prison as the only option for many desperate Americans.

There exists a common theme amidst these signs of societal decay: The super-rich keep taking from the middle class as the middle class becomes a massive lower class. Yet the myth persists that we should all look up with admiration at the “self-made” takers who are ripping our society apart.


 This dire scenario is the result of the deterioration of  society that results from the absence of inclusive prosperity, inclusive opportunity, and inclusive economic justice. Bottom line is that it is increasingly becoming a depressing challenge for a vast majority of Americans to earn a decent, livable income, because they are totally dependent on low-paying jobs and decaying job opportunities that would offer far better wages.
While the vast majority of Americans suffer financially with worry and lack of opportunity to better their incomes and their family well-being, the rich continue to further concentrate wealth-creating, income-producing capital asset ownership, aided by a rigged system which they have created to enhance their ownership interests and ensure that they will OWN the future of America.
Until Americans WAKE UP and reform the system to empower EVERY child, woman, and man to acquire personal ownership stakes in the future capital asset growth of the American economy, and demand that the focus of our political discourse be on creating an OWNERSHIP CULTURE, our society will continue on its steady projectory to death, with turmoil and upheaval, if not revolution, the result.
The Unite America Party platform was created to address this crisis, with the hope that politicians across  all political spectrum would adopt the platform and build a society of inclusive prosperity, inclusive opportunity, and inclusive economic justice. A society in which technological progress is OWNED by EVERY citizen, as individuals, and acquired simultaneously with the growth of the economy, as our human and non-human inputs build a future economy that can support general affluence for EVERY citizen.

Want Innovation? Try Raising Minimum Wages


On November 23, 2015, Noah Smith writes on Bloomberg View:

I’ve spent some time talking about the downsides of minimum-wage laws. But there is a big possible upside that I haven’t mentioned, in part because it’s pretty speculative. It’s the idea that minimum wages improve productivity and innovation over the long run.

Usually, it’s detractors of the minimum wage who talk about the long term. Minimum-wage hikes tend to have only small or negligible effects on employment levels, but critics of setting pay floors have said that they slow long-term employment growth. But I’m now thinking about the even longer term, and about the effect of minimum wages on productivity rather than employment.

Minimum Wages

In the long term, productivity comes from technology. Economists often treat technology as if it just appears out of nowhere, but in fact it comes from the innovative efforts of companies and researchers.

Why do companies innovate? You might think that companies invent any technology that will make them more productive, but this isn’t actually true, for a number of reasons. First of all, innovators don’t know ahead of time which things they will be able to create — trying to innovate is risky, and companies are usually risk-averse. Second, companies may be focused on the short term, and may thus be unwilling to shell out cash for research and development that would only pay off years later. Finally, companies may simply get comfortable with what they have, and fail to engage in innovation unless they feel sufficiently intense pressure to do so.

So what happens if a company suddenly finds that it has to pay higher wages? It might just take the hit to its profit margins and continue operating as before. It might decide to downsize, laying off workers and shrinking its operations.

Or, it might decide to invest in labor-saving technology.

Forbes writer Adam Ozimek pointed this out back in 2013, in an articleentitled “Doubling McDonald’s Salaries A Great Way To Get Workers Replaced By Machines”:

“We’re hearing more and more about machines replacing workers and there are some obvious contenders for replacement within a McDonald’s…[Automated payment kiosks are] just the most obvious way for machines to replace workers. One company…is already working on robots to replace the cooks too…In the long-run such technological change makes us better off on average[.]”

In the two years since then, Ozimek’s prediction has come true. McDonald’s is installing a line of automated kiosks where people can create their own burgers.

Of course, Ozimek is a dogged minimum-wage opponent, and is trying to make workers worried that minimum wages will cost them their jobs. But I am not sure that workers should be so afraid of being replaced by this kind of technological improvement. Ultimately, it may make them more productive, and actually help them earn more.

In the past, when companies implemented labor-saving technology — whether assembly lines or computers — their workers didn’t simply go on the unemployment rolls. They became more productive than before, and commanded higher wages. If they got laid off, they eventually found jobs at other companies — and since the economy overall was more productive because of the innovation, more new companies were started. In the past, automation has always complemented human beings instead of making them irrelevant. That might change in the future, but so far the old pattern is still holding.

For workers to become more productive in order to take advantage of new technologies, they often have to improve their skills. Workers have always been able to do this quite successfully. When the Industrial Revolution demanded that people learn to read, they learned to read. When the Information Revolution forced people to use computers, they learned how. Low-skilled workers might have skimped on education because they were focused on the short term; the pressures of a technologically advancing workplace may force them to think longer term and develop new skills.

So minimum-wage laws, by forcing us to abandon low-skilled labor, might actually increase technological innovation. Some people even speculate that this effect might have started the Industrial Revolution itself! Economic historian Robert Allen has argued that the Industrial Revolution began in Europe, rather than in China, because European employers were forced to pay more for labor. Since labor was more expensive, companies invested in technology, which then raised productivity so much that it boosted wages even higher, forcing companies to invest more in technology, even as their increased incomes allowed them to make those investments. A 1987 theory by growth economics pioneer Paul Romer operated on a similar principle — expensive labor causes an upward spiral of technological improvement.

So in the very long term, minimum-wage laws might force companies to do what they otherwise wouldn’t do — make risky bets on new technologies. And as workers raise their own skill levels, that new technology would raise their wages as well. The entire economy, including any workers who temporarily lost their low-wage jobs, would benefit in the long run. Of course, this theory is fairly speculative — theories that play out over years or decades are hard to test with real-world data. But it’s a potential benefit of the minimum wage that is worth thinking about.


“So what happens if a company suddenly finds that it has to pay higher wages? It might just take the hit to its profit margins and continue operating as before. It might decide to downsize, laying off workers and shrinking its operations.

“Or, it might decide to invest in labor-saving technology.”

Which, in turn, eliminates jobs no longer necessary.

Anyone with any ability to reason should deduce from the beginnings of mankind, picking up the first stick or stone, that most changes in the productive capacity of the world since the beginning of time can be attributed to technological improvements in our capital assets, and a relatively diminishing proportion to human labor. 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 and innovation.

Technology is about reducing the necessity for human input, particularly human toil and enabling otherwise impossible production, all the while increasing efficiency of production at lower costs. The reason the economy is stalled, despite the never-before-seen extent of technological prowess, is not because technology is failing us, but instead because there is not enough “customers with money” necessary for creating demand for products and services. To expect that as technological invention and innovation excels that the human input should earn more as labor workers assumes wrongly that non-human capital “enhances” labor productivity (labor’s ability to produce economic goods). In fact, the opposite is true. It makes many forms of labor unnecessary. The result of technological invention and innovation has created tectonic shifts in the technologies of production, which is rapidly spreading throughout the world, destroying jobs and devaluing the worth of labor as more and more people must compete for fewer and fewer decent paying jobs. Wages have been slashed in many areas and in other cases entire industries have been outsourced to countries where corporations can pay workers pennies on the dollar.

What needs to be addressed 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. But because the ownership of productive capital assets are vastly concentrated among a tiny minority of wealthy people, the vast majority of Americans are finding it increasingly more challenging to earn decent wages from a job to be able to afford the products and services they need and desire.

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). The technology industry is always changing, evolving and innovating. The result is that primary distribution through the free market economy, whose distributive principle is “to each according to his production,” delivers progressively more market-sourced income to capital owners and progressively less to workers who make their contribution through labor.

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 equal opportunity to produce, full production and broader capital ownership accumulation. This is manifested in the myth that labor work is the ONLY way to participate in production and earn income, and that individual talent and effort are what distinguish the wealthy from the non-wealthy. Long ago that was once true because labor provided 95 percent of the input into the production of products and services. But today that is not true. Physical capital provides not less than 90 to 95 percent of the input. Full employment as the means to distribute income is not achievable. When the “tools” of capital owners replace labor workers (non-capital owners) as the principal suppliers of products and services, labor employment alone becomes inadequate. Thus, we are left with government policies that redistribute income in one form or another.

If we postulate that if both labor and capital are independent factors of production, and if capital’s proportionate contributions are increasing relative to that of labor, then logically 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. Yet, sadly, the American people and its leaders still pretend to believe that labor is becoming more productive, and ignore the necessity to broaden personal ownership of wealth-creating, income-producing capital assets simultaneously with the growth of the American economy.

To put this in context, it is important to briefly note that throughout history, man has endeavored to overpower the time constraints of physical and biological processes. It is now an accepted fact that accelerated scientific and technological innovation has directly led to a speeding up of all physical and social processes in the name of progress. The competitive drive has led to a frantic national and international chase for more efficient methods of production and distribution. In the process, humanity has pushed to develop even more powerful technologies, on the assumption that such technologies would accomplish more and more useful functions in less time. The results have been a dramatic acceleration of change and concentration of wealth ownership.

The solution is to create a democratic growth economy, wherein the ownership of productive capital assets would be spread more broadly as the economy grows, without taking anything away from the 1 to 10 percent who now own 50 to 90 percent of the corporate wealth. Instead, the ownership pie would desirably get much bigger and their percentage of the total ownership would decrease, as ownership gets broader and broader, benefiting EVERY citizen, including the traditionally disenfranchised poor and working and middle class. Thus, productive capital income, from full earnings dividend payouts, 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 and more profitable enterprise. That also means that society can profitably employ unused productive capacity and invest in more productive capacity and green technologies to service the demands of a growth economy. As a result, our business corporations would be enabled to operate more efficiency and competitively, while broadening wealth-creating ownership participation, creating new capitalists and “customers with money” to support the products and services being produced.

“Hoggism,” today’s capitalism, is about the ability of greedy rich people to manipulate the lives of people who struggle with declining labor worker earnings and job opportunities, and then accumulate the bulk of the money through monopolized productive capital ownership. Our scientists, engineers, and executive managers who are not owners themselves, except for those in the highest employed positions, are encouraged to work to destroy employment by making the capital “worker” owner more productive. How much employment can be destroyed by substituting machines for people is a measure of their success––always focused on producing at the lowest cost. Only the people who already own productive capital are the beneficiaries of their work, as they systematically concentrate more and more capital ownership in their stationary 1 percent ranks. Yet the 1 percent are not the people who do the overwhelming consuming. The result is the consumer populous is not able to earn the money to buy the products and services produced as a result of substituting machines for people. And yet you can’t have mass production without mass human consumption made possible by “customers with money.” 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.

Top 10 Energy Sources Of The Future

These are ten most promising alternative energy sources of tomorrow.

It’s a really exciting time to be alive. We have a front row seat to the only known transformation of a world powered by dirty fossil fuels, to a planet that gets its energy from renewable, clean sources. It’s happening just once, right now.