Why So Few American Economists Are Studying Inequality

French economist Thomas Piketty at a conference in SwedenJanerik Henriksson / AP

On September 13, 2016, Alana Semuels writes in The Atlantic:

Wealth at the top of the income distribution is skyrocketing, leading to growing inequality. This trend is especially pronounced in the United States. But much of the leading research on the topic isn’t coming from American economists.

… “In general, the [American] economics profession has avoided the subject of class conflict. All issues of distribution have been regarded as less pertinent than ideas of growth,” Arthur Goldhammer, a senior affiliate at Harvard’s Center for European Studies who studies French and American politics and history, told me. “Distributive questions in economics just raise hostility, and ultimately, growth is the important issue.”

… It may not be surprising, then, that in a 2013 issue of the Journal of Economic Perspectives dedicated to income inequality and the top 1 percent, it was Atkinson, Saez, Piketty, and Facundo Alvaredo of the Paris School of Economics whoauthored a paper on how the share of wealth going to the top has skyrocketed in America but not in European countries, while it was an American economist, N. Gregory Mankiw, who published a paper called simply “Defending the One Percent.”


Sadly, academic economists are not studying the mechanisms of how wealth-creating, income-producing capital asset OWNERSHIP becomes concentrated. After all, the root cause of economic inequality is the rich OWN productive capital assets and the vast majority of people do not. Further, the monetary system has been rigged to ensure that the already wealthy OWNERSHIP class will continue to concentrate OWNERSHIP of all FUTURE capital asset formation projects.
Nor do academic economists offer any instruction on financial mechanisms that would empower EVERY child, woman and man to acquire individual OWNERSHIP interest in the formation of FUTURE productive capital assets, without the requirement of past saving, having a job, or having any income whatsoever. Nor do they offer instruction on how to use INSURED, INTEREST-FREE capital credit to broaden capital asset OWNERSHIP in the FUTURE.
Our education system is sadly lacking. Academia is failing the American people. The ONLY solutions they come up have to do with some manner of taking from those who are productive, through their OWNERSHIP of productive capital assets, and redistributing to those who are not OWNERS of productive wealth assets.

Immigrants Don’t Steal Jobs Or Wages. Billionaires Do.

On September 27, 2016, Richard Eskow writes on Moyers & Company:

… Economically vulnerable populations are often told that immigrants “take our jobs” and drag down wages.

Is it true? The National Academies of Sciences, Engineering and Medicine appointed an interdisciplinary task force to look at that question. It found that, on the contrary, “immigration has an overall positive impact on long-run economic growth in the United States.”

Immigration, the report says, has “little to no negative effects on overall wages and employment of native-born workers in the longer term.” Native-born teenagers who have not finished high school may work fewer hours, at least in the short term. (They won’t lose jobs.) …

Immigrants Don’t Steal Jobs or Wages. Billionaires Do.

Of course, jobs can be “stolen” if enough immigrants enter the country. That is why the governments sets quotas.  We have a legal immigration system whose mission is to “promote a highly talented workforce and a dynamic work culture” -U.S. Citizenship and Immigration Services (USCIS) (https://www.uscis.gov/aboutus). The mission does not support illegal immigration, which is the REAL issue.
But the REAL reason American jobs are being “stolen” (replaced is a more accurate term) is: Technologies that result in efficient non-human substitutes for humans and the globalization of manufacturing at low wage and tax levels is what steals jobs. We need to start focusing on OWNING the “machine” assets (the non-human factor of production) that will exponentially replace humans, and abate the further concentration of OWNERSHIP among the already wealthy OWNERSHIP class.

Three Fallacies That Make You Fear A Robot Economy


On September 12, 2016, Branko Milanović writes on Evonomics:

Recent discussions about the “advent of robots” have some rather unusual features. The threat of robots replacing humans is seen as something truly novel possibly changing our civilization and way of life. But in reality this is nothing new. Introduction of machinery to replace repetitive (or even more creative) labor has been applied on a significant scale since  the beginning of the Industrial Revolution. Robots are not different from any other machine.

The obsession with, or fear of, robots has to do, I believe, with our fascination with their anthropomorphism. Some people speak of great profits reaped by “owners of robots”, as if these owners of robots were slaveholders. But there are no owners of robots: there are only companies that invest and implement these technological innovations and indeed they will reap the benefits. It could happen that the distribution of net product will shift even more toward capital, but again this is not different from the introduction of new machines that substitute labor—a thing which has been with us for at least two centuries.

Robotics leads us to face squarely three fallacies.

1. The first is the fallacy of the lump of labor doctrine that holds that the new machines will displace huge numbers of workers and people will remain jobless forever. Yes, the shorter our time-horizon, the more that proposition seems reasonable. Because in the short term the number of jobs is limited and if more jobs are done by machines fewer jobs will be left for people. But as soon as we extend our gaze toward longer-time horizons, the number of job becomes variable. We cannot pinpoint what they would be (because we do not know what new technologies will bring) but this is where the experience of two centuries of technological progress becomes useful.  We know that similar fears have always existed and were never justified. New technologies ended up creating enough new jobs, and actually more and better jobs than were lost. This does not mean that there would no losers. There will be workers replaced by the new machines (called “robots”) or people whose wages will be reduced. But however these losses may be sad and tragic for individuals involved they do not change the entire society.

2. The second “lump” fallacy which is linked with the first, namely our inability to pinpoint what new technology will bring, is that human needs are limited. The two are related in the following way: we imagine (again, looking only at any given moment in time) that human needs are limited to what we know exists today, what people aspire to today, and cannot see what new needs will arise with a new technology. Consequently we cannot imagine what will be the new jobs to satisfy the newly created needs. Again history comes to the rescue. Only ten years ago we could not imagine the need for an intelligent cell phone  (because we could not imagine it could exist) and thus we could not imagine the new jobs created by the iPhone (from Uber to ticket sales). Only 40 years ago, we could not imagine the need to have our own computer in every room and we could not imagine millions of new jobs created by the PC.  Some 100+ years ago we could not imagine the need for a personal motor car and thus we could not imagine Detroit and Ford and GM and Toyota and even things like Michelin restaurant guide.

Even best among the economists, like Ricardo and Keynes (in “The economic prospects of our grandchildren”) thought that human needs are limited. We should know better today: the needs are unlimited and because we cannot forecast the exact movements in technology, we cannot forecast what particular form such new needs will take. But we know that our needs are not finite.

3. The third “lump” fallacy (which is not directly related to the issue of robotics) is the lump of raw materials and energy fallacy, the so called “carriage capacity of the Earth”. There are of course geological limits to raw materials simply because the Earth is a limited system. But our experience teaches us that these limits are much wider than we generally think at any point in time because our knowledge of what earth contains is itself limited by our level of technology. The better our technology, the more reserves of everything we discover. Yet accepting that X is an exhaustible energy source or a raw material and that at the current rate of utilization it will run out in Y years is only a part of the story. It neglects the fact that with the rising scarcity and price of X, there will be greater incentive to create substitutes (as inventions of sugar beet, synthetic rubber or fracking show) or to use a different combination of inputs to produce the final goods that now use X.  Indeed, the cost of the final good may go up  but here again we are talking about a change in some relative prices, not about the a cataclysmic event. Earth carriage capacity which does not include development of technology and pricing in its equation is just another “lump” fallacy.

Some famous economists like Jevons who collected tons of paper in the expectation that the trees would run out entertained the same illogical fears. Not only did it turn out that, with many thousand (or milion?) times greater use of paper, the world did not run out of trees—Jevons simply, and understandably, could not imagine that technology would enable recycling of paper and that electronic communications would substitute for much of what paper was used for. We are not smarter than Jevons because we too cannot imagine what might replace fuel oil or magnesium or iron ore, but we should be able to understand the process whereby these substitutions come about and to reason by analogy.

Fears of robotics and technology respond, I think, to two human frailties. One is cognitive: we do not know what the future technological change will be and thus cannot tell what our future needs will be.  The second is psychological: our desire  to get a thrill from the fear of the unknown, from that scary and yet alluring prospect of metallic robots replacing workers in factory halls. It responds to the same need that makes us go and watch scary movies. When we do not go to a movie theater we like to scare ourselves with the exhaustion of natural resources, limits to growth and replacement of people by robots. It may be a fun thing to do but history teaches us that it is not the one that we should rationally fear.

Economist Branko Milanović: Three Fallacies That Make You Fear a Robot Economy

The author states that “But there are no owners of robots: there are only companies that invest and implement these technological innovations and indeed they will reap the benefits.” What? The companies (corporations) are OWNED by individuals, and that OWNERSHIP is concentrated among a relative few who OWN the bulk of the stock (title). As technological development continues, as it has since the Industrial Revolution, the non-human factor will continue to obsolete jobs affecting far more workers than the new jobs resulting. The solution is to institute financial mechanisms that simultaneously create new capital asset OWNERS simultaneously with the growth of the economy. In other words, EVERY CITIZEN AN OWNER. This can be accomplished by using INSURED, INTEREST-FREE capital credit, repayable out of the FUTURE earnings of the investments, without the requirement of past savings, have to have a job or having any income at all. See the Capital Homestead Act (aka Economic Democracy Act) at 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/.

Self-Driving Trucks Threaten One Of America’s Top Blue-Collar Jobs

On September 25, 2016, Natalie Kitroeff writes in the Los Angeles Times:

Trucking paid for Scott Spindola to take a road trip down the coast of Spain, climb halfway up Machu Picchu, and sample a Costa Rican beach for two weeks. The 44-year-old from Covina now makes up to $70,000 per year, with overtime, hauling goods from the port of Long Beach. He has full medical coverage and plans to drive until he retires.

But in a decade, his big rig may not have any need for him.

Carmaking giants and ride-sharing upstarts racing to put autonomous vehicles on the road are dead set on replacing drivers, and that includes truckers. Trucks without human hands at the wheel could be on American roads within a decade, say analysts and industry executives.

At risk is one of the most common jobs in many states, and one of the last remaining careers that offer middle-class pay to those without a college degree. There are 1.7 million truckers in America, and another 1.7 million drivers of taxis, buses and delivery vehicles. That compares with 4.1 million construction workers.

While factory jobs have gushed out of the country over the last decade, trucking has grown and pay has risen. Truckers make $42,500 per year on average, putting them firmly in the middle class.


This is just one other example of how robotization and computerized automation is eliminating the necessity for masses of human labor. Such technological evolution will continue to accelerate, destroying all manner of jobs. This acceleration is driven by business corporations who seek to produce at the lowest cost possible to dominate markets, both domestically and internationally, and increase profits for their OWNERS. The vast majority of Americans, and other citizens of the world, will be further deprived of the opportunity to work at jobs to earn a significant income, thus causing increasing societal unrest and mayhem.

Some are advocating, as the solution, a guaranteed income, but that means income would become politicalized and determined by the OWNER MASTERS who control the State’s political systems, and who would agree to “hand-out” a portion of their earnings to quell social unrest, yet still maintain total OWNERSHIP of their capital asset wealth.

The alternative solution that I have been advocating in my writings since the late 1960s is EVERY CITIZEN AN OWNER! Most people have no idea of what this means because our education institutions do not teach the fundamental of enterprise structure and the logic of corporate finance, both used to empower the 1 percent to become productive capital asset OWNERS and create wealth and earn income from the capital asset portfolios they OWN.

Additionally, the vast majority of Americans, and other world citizens, ONLY know that a JOB is necessary to earn an income. They know nothing about becoming a capital asset OWNER. Or if they do, they realize that they are not in a position to become an OWNER because the system requires past savings to pledge as security for capital credit loans to invest in launching a new business or to invest in buying previously-owned stock in corporations, both of which are prone to risk.

What the vast majority of Americans do not know is that there are financial mechanism that can be used to empower EVERY child, woman and man to acquire wealth-creating, income-producing individual OWNERSHIP stakes in new capital asset formation projects, without the necessity for past savings or, in fact, not even a requirement to have a job or other other source of income. Such financial mechanisms use the logic of corporate finance, which EVERY wealthy person understands and uses to acquire OWNERSHIP of more and more capital assets, without using their own money.

The solution is to use INSURED, INTEREST-FREE capital credit to acquire OWNERSHIP of FUTURE capital asset projects whose formation has been determined, by bankers and return-on-investment studies, to generate FUTURE income to pay for the capital credit loan, and once payed, to continue to produce income for the OWNERS.

Unfortunately, our politicians and so-called leaders today NEVER educate the electorate nor advocate for economic policies that will transform our job-ONLY culture into a culture in which EVERY CITIZEN IS AN OWNER. Instead, every new project is justified on the basis of JOB CREATION, not OWNERSHIP CREATION, which the project backers know is the real interest.

What is needed is for people to educate themselves to the possibilities and opportunities presented in the proposed the Capital Homestead Act (aka Economic Democracy Act) at http://www.cesj.org/learn/capital-homesteading/, http://www.cesj.org/…/capital-homestead-act-a-plan-for-get…/, http://www.cesj.org/…/capita…/capital-homestead-act-summary/and http://www.cesj.org/learn/capital-homesteading/ch-vehicles/.

As a primer please read “Economic Democracy And Binary Economics: Solutions For A Troubled Nation and Economy” athttp://foreconomicjustice.org/11/economic-justice/

Hillary Clinton: My Plan For Helping America’s Poor

CreditLuba Lukova

On September 21, 2016, Hillary Clinton writes in The New York Times:

Nearly 40 percent of Americans between the ages of 25 and 60 will experience a year in poverty at some point. The best way to help families lift themselves out of poverty is to make it easier to find good-paying jobs. As president, one of my top priorities will be increasing economic growth that’s strong, fair and lasting. I will work with Democrats and Republicans to make a historic investment in good-paying jobs — jobs in infrastructure and manufacturing, technology and innovation, small businesses and clean energy. And we need to make sure that hard work is rewarded by raising the minimum wage and finally guaranteeing equal pay for women.

Unfortunately, while job creation is a noble goal, it will not be enough in the face of advancing, job destroying and labor devaluation technology (the non-human factor of production) radically transform the nature of producing products and services.

What is required is a fundamental reform of the system to empower EVERY child, woman and man to acquire personal OWNERSHIP stakes in FUTURE non-human means of production, as embodied in the capital assets of corporations advancing the growth of the economy. This can be accomplished by using financial mechanism that extend INSURED, INTEREST-FREE capital credit to EVERY American citizen, repayable out of the FUTURE earnings of the investments.

People who put reliance on past savings as the sole source of financing for new capital asset formation do not understand money, credit, banking, or finance. They don’t realize that banks of issue and of discount (commercial banks) were invented to turn contracts — promises — into money to purchase capital today to repay out of future profits tomorrow: “future savings.”  Past savings (which equals investment) is more often used for collateral to secure such “pure credit” loans and not for direct purchase of capital. Relying on past savings for financing means that, as a rule, only the rich can own, because they by definition own the past savings. The only way the non-rich can get around this in the past savings paradigm is for the rich to divest themselves of their wealth voluntarily (which falls under the “ain’t gonna happen” heading), or to re-define private property to permit redistribution . . . thereby restoring property by destroying it.

For solutions to remove the barriers that inhibit or prevent the non-rich from acquiring and owning capital on the same terms as the rich see the Capital Homesteading proposal (aka Economic Democracy Act) at 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/.

Also see “Perpetual Unemployment And Underemployment” at  http://www.huffingtonpost.com/gary-reber/perpetual-unemployment-an_b_4516814.html.


The Progressive Case For Replacing The Welfare State With Basic Income

On September  10, 2016, Scott Santens writes on Crunch Network:

It appears some establishment voices have picked up on a way of opposing the idea of the monthly citizen dividend of about $1,000 per month, known as universal basic income (UBI), in a way that successfully leaves some progressively minded people afraid.

The fear inspired is that those with the greatest need may be left worse off with UBI compared to the existing status quo of more than 100 government programs that currently comprise the U.S. safety net that UBI has the potential to entirely or mostly replace.

The argument goes that because we currently target money to those in need, by spreading out existing revenue to everyone instead, those currently targeted would necessarily receive less money, and thus would be worse off. Consequently, the end result of basic income could be theoretically regressive in nature by reducing the benefits of the poor and transferring that revenue instead to the middle classes and the rich. Obviously a bad idea, right?

The progressive case for replacing the welfare state with basic income


Wolf Blitzer Is Worried Defense Contractors Will Lose Jobs If U.S. Stops Arming Saudi Arabia

On September 9, 2016, Jaid Milani and Alex Emmons write on The Intercept:

SEN. RAND PAUL’S expression of opposition to a $1.1 billion U.S. arms sale to Saudi Arabia — which has been brutally bombing civilian targets in Yemen using U.S.-made weapons for more than a year now — alarmed CNN’s Wolf Blitzer on Thursday afternoon.

Blitzer’s concern: That stopping the sale could result in fewer jobs for arms manufacturers.

“So for you this is a moral issue,” he told Paul during the Kentucky Republican’s appearance on CNN. “Because you know, there’s a lot of jobs at stake. Certainly if a lot of these defense contractors stop selling war planes, other sophisticated equipment to Saudi Arabia, there’s going to be a significant loss of jobs, of revenue here in the United States. That’s secondary from your standpoint?”



Yes, indeed, we have built our society upon a humongous make-work-by government- (taxpayer) debt policy to sustain our military-industrial complex, comprised of government-employed people and those working in jobs provided by government contracts to narrowly-owned large armament corporations, which are economically and politically powerful, and the smaller sub-contractors they contract with, who also are narrowly owned as well as employing people.
We are sadly steeped in an economic system that at its core is military-industrial-founded.
We need to reform the system to propel PRODUCING actual products and services that people need and want for their daily lives, that are not related to military-industrial subsidies and that EVERY child, woman and man can become an OWNER of the corporations producing these needed products and services, using INSURED, INTEREST-FREE capital credit, repayable out of the FUTURE earnings in the investments to build a FUTURE economy that can produce general affluence for EVERY citizen.
For solutions see the Agenda of The JUST Third Way Movement (not the Third Way) at http://foreconomicjustice.org/?p=5797, http://www.cesj.org/resources/articles-index/the-just-third-way-basic-principles-of-economic-and-social-justice-by-norman-g-kurland/, http://www.cesj.org/wp-content/uploads/2014/02/jtw-graphicoverview-2013.pdf and http://www.cesj.org/resources/articles-index/the-just-third-way-a-new-vision-for-providing-hope-justice-and-economic-empowerment/.
Support Monetary Justice at http://capitalhomestead.org/page/monetary-justice.
Support the Capital Homestead Act (aka Economic Democracy Act) at 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/.

The “Middle Class” Myth: Here’s Why Wages Are Really So Low Today

The "middle class" myth: Here's why wages are really so low todayEnlarge(Credit: AP/Darron Cummings)

On December 30, 2013, Edward McClellan writes on Salon:

…The argument given against paying a living wage in fast-food restaurants is that workers are paid according to their skills, and if the teenager cleaning the grease trap wants more money, he should get an education. Like most conservative arguments, it makes sense logically, but has little connection to economic reality. Workers are not simply paid according to their skills, they’re paid according to what they can negotiate with their employers. And in an era when only 6 percent of private-sector workers belong to a union, and when going on strike is almost certain to result in losing your job, low-skill workers have no negotiating power whatsoever….


If we are to truly and significantly raise the economic status of the vast majority of Americans, then we must attain parity with the already wealthy capital asset OWNERSHIP class in attaining capital asset OWNERSHIP. Through economic policy reform, which includes the role of the Federal Reserve Bank, we need to empower EVERY child, woman and man to acquire individual OWNERSHIP participation in the formation of FUTURE wealth-creating, income-producing capital assets using INSURED, INTEREST FREE capital credit, repayable out of the FURURE earnings of the investments in our economy’s growth, without the requirement of past savings or any reduction in wages or benefits if one is employed. In other words, creating new capital OWNERS can be achieved using INTEREST FREE capital credit financing based on the logic of corporate finance, which is investments in new capital asset projects MUST pay for themselves in a reasonable period of time, typically 3 to 7 years.
The reforms necessary to achieve this economic equality in opportunity are embodied in the proposed Capital Homestead Act or Economic Democracy Act.

Funny Money Accounting—-Why Social Security Will Be Bankrupt In 10 Years

On August 12, 2016, David Stockman writes on Contra Corner:

Social Security—–Trust Fund Confetti And The Coming Insolvency

……Here follows a deconstruction of Rosy Scenario. It underscores why the nation’s entitlement based consumption spending will hit the shoals in the decade ahead.

In their most recent report, the so-called “trustees” of the social security system said that the trust fund’s near-term outlook had improved. So the stenographers of the financial press dutifully reported that the day of reckoning when the trust funds run dry has been put off another year—-until 2034.

The message was essentially take a breath and kick the can. That’s five Presidential elections away!

Except that is not what the report really says. On a cash basis, the OASDI (retirement and disability) funds spent $859 billion during 2014 but took in only $786 billion in tax revenues, thereby generating $73 billion in red ink.

By the trustees’ own reckoning, in fact, the OASDI funds will spew acumulative cash deficit of $1.6 trillion during the 12-years covering 2015-2026.

So measured by the only thing that matters—-hard cash income and outgo—-the social security system has already gone bust. What’s more, even under the White House’s rosy scenario budget forecasts, general fund outlays will exceed general revenues (excluding payroll taxes) by $8 trillion over the next twelve years.

Needless to say, this means there will be no general fund surplus to pay the OASDI shortfall.