Leave No Generation Behind

GatesSr111614

In Washington State, Bill Gates, Sr. advocates for funding education for future generations. He proposes using inheritance taxes.

On November 16, 2014, Chuck Collins writes in Nation Of Change:

Over a decade ago, I got a call from Bill Gates.

Not the Bill Gates you’re probably thinking of. It was Bill Gates Sr., the Microsoft founder’s dad. He was eager to speak out in support of the federal estate tax, our nation’s only levy on inherited wealth.

He called it the “gratitude tax.” If you were fortunate enough to make millions, he believed, then you should “recycle your opportunity” for the next generation.

How might that work?

Bill Gates Sr. served in the Army in World War II. When he returned, the GI Bill enabled him to attend college and law school for free. His debt-free education propelled him to a career as an attorney and allowed him to provide excellent educational opportunities to his three children — one of whom is one of the two richest people on the planet.

For today’s college-age youth, talk of a debt-free education sounds like science fiction. Over 40 million Americans owe student debt. The average student borrower graduated last year with $33,000 worth.

There’s no public benefit served by saddling the next generation with astronomical amounts of student debt. Research shows that student debtdelays homeownership, discourages public service careers, and reduces entrepreneurial risk-taking.

Over the last three decades, staggering inequalities of income, wealth, and opportunity have emerged. As Federal Reserve Chairwoman Janet Yellenobserved recently, the U.S. households in the bottom 50 percent lost half their net worth between 1989 and 2013, while the top 5 percent saw their net worth double.

This inequality is hitting the rising generation hard, as today’s students graduate into a much tougher job market than their parents did.

We need a GI Bill for the next generation. It would be a game changer for equality of opportunity.

That’s where the “gratitude tax” comes in.

Back in Washington State, Gates Sr. championed something called the Legacy Education Trust Fund — a dedicated education account capitalized by the state’s estate tax.

A similar fund at the national level — call it the Education Opportunity Recycling Fund — could provide debt-free or low-cost tuition for all American students, financed by revenue from the federal estate tax.

Access to funds could be linked to completion of two years of national service, either in the military or in community service programs such as AmeriCorps. The current benefits for both of these forms of national service are woefully insufficient to expand college opportunity.

The “recycling fund” would be the mechanism through which America’s millionaires and billionaires would pay back the society that made their wealth possible, thanks in part to public investments in education, infrastructure, property rights protections, and so much more.

The fund would have at least three major benefits.

First, it would boost college access while reducing student debt.

Second, it would put a brake on the growing concentration of wealth and power that’s corroding our democracy.

And finally, it would help reweave the social fabric of our communities, as young people in national service programs work side-by-side as teacher aides, elder care workers, and protectors of our natural areas.

The Greatest Generation after World War II was created not only by their own grit, but also through major public investments in their prosperity.

A similar investment is required for the next generation to rise to their full potential. Why should our greatest generation be behind us?

http://www.nationofchange.org/2014/11/16/leave-generation-behind/

Remember that this was over a decade ago when this conversation took place. NOTHING has since transpired.

The Center For Economic and Social Justice (www.cesj.org) advocates new justice-committed leaders, especially those who want to end the corruption built into our exclusionary system of monopoly capitalism––the main source of corruption of any political system, democratic or otherwise. They advocate the need to radically overhaul the Federal tax system and monetary policies and institute proposals to get money power to the 99 percent of American citizens who now only rely on their labor worker earnings. Under The Just Third Way more just and simple tax system, access would by provided to ownership of the means of production in the future to every child, woman and man by requiring the government to lift all existing legal and institutional barriers to private property stakes as a fundamental human right. The system was made by people and can be changed by people. Guided by the right principles of economic justice, “we the people” can organize and demand that the system be reorganized to make true economic democracy the new foundation for true political democracy.

The following is proposed:

  • Eliminate all tax loopholes and subsidies,
  • Provide an exemption of $100,000 for a family of four to meet their ordinary living needs,
  • Encourage corporations to pay out all their profits as taxable personal incomes to avoid paying corporate income taxes and to finance their growth by issuing new full dividend payout shares for broad-based citizen ownership,
  • Eliminate the payroll tax on workers and their employers, but
  • Pay out of general revenues for all promises for Social Security, Medicare, 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.
  • The tax rate would be a single rate for all incomes from all sources above the personal exemption levels so that the budget could be balanced automatically and even allow the government to pay off the growing unsustainable long-term debt, but the poor would pay the first dollar over their exemption levels as would the hedge fund operator and others now earning billions of dollars from capital gains, dividends, rents and other property incomes which under some tax proposals would be exempted from any taxes.
  • As a substitute for inheritance and gift taxes, a transfer tax would be imposed on the recipients whose holdings exceeded $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.
  • The Federal Reserve would 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 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 on 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 newly added technology, renewable energy systems, plant, rentable space and infrastructure 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 our only legitimate social monopoly –– the State –– and whatever elite controls the coercive powers of government.

 

The Hard Truth About Americans’ Retirement Options

Alicia H. Munnell discusses retirement economics

On November 14, 2014, Michael Hiltzik writes in the Los Angeles Times:

Alicia H. Munnell has some gloomy words for Americans about retirement.

“There are only three options,” she writes in her new book, “Falling Short: The Coming Retirement Crisis and What to Do About It.” “The first is to simply accept that we are going to be poor in retirement. The second is to save more while working, which means spending less today. The third is to work longer, which means fewer years in retirement. Those are our only options.”

Munnell should be heeded, for as director of the Center for Retirement Research at Boston College she is one of our leading scholars of retirement economics. “Falling Short,” she told me in an interview, “brings together everything I’ve been writing about for 15 years.” The book, co-written with her BC colleague Andrew D. Eschtruth and investment consultant Charles D. Ellis, is aimed at the general public and fashioned as an assemblage of home truths.

The most important is that our traditional retirement sources aren’t up to the task of providing for an adequate post-career lifestyle.

“Social Security replacement rates (the portion of pre-retirement income it provides) are being gradually reduced,” she writes. “On the private employer side, traditional pensions are rapidly disappearing, replaced by 401(k) plans.” These “shift all risks and responsibilities from the employer to the individual, and most of us are not well prepared for this burden.”

So what are the solutions? One is to make the most of the 401(k), despite its rotten design. Munnell observes that 401(k)s originally were viewed as supplements to employer defined-benefit pensions. Workers were given broad discretion over whether to contribute and how to invest.

But they’ve taken over as the main pension offering. In 1983, 62% of workers had defined benefit pensions, 12% had 401(k)-type plans, and 26% had both; now only 17% have traditional pensions, 71% have 401(k)s, and only 13% have both. Workers who reject the option are seriously jeopardizing their retirements. Munnell lauds the 2006 federal law that encouraged employers to make 401(k)s an automatic choice unless a worker opted out. But participation is still poor, as only 80% of eligible workers have 401(k)s and only 10% contribute the maximum permitted (up to $17,500 this year, or $23,000 for those 50 or older).

Munnell advocates shoring up Social Security, but not by cutting benefits. “It always sounds ‘fair’ that you’re going to solve the problem half with revenue increases and half with benefit cuts,” she told me. But given how strained Americans’ retirement resources will be, “no cuts is absolutely the way to go.” She calculates that a payroll tax increase of 2.88 percentage points, split between employers and employees, would make the program solvent for the next 75 years. She also says that allowing the system to invest some of its surpluses in equities — by law, they can be invested only in Treasury securities — is “worthy of a thoughtful conversation.”

One of Munnell’s most interesting ideas concerns Social Security’s “legacy debt,” which is perhaps the least-understood but weightiest factor in the program’s long-term financing. This is the debt the system incurred by paying the first generations of covered workers more in benefits than they had earned by their contributions. It still exists, and every subsequent generation has been paying it down, resulting in a slightly poorer return on their contributions.

Congress made the deliberate choice in 1935 to cover a reasonable retirement for those first generations. They had fought in World War I and been ruined by the Depression (and would shoulder the burdens of World War II). Based on their meager contributions, workers earning the median family wage of about $100 a month would be entitled to a risible pension of 48 cents a month, Edwin Witte, the Social Security Act’s drafter, advised Congress. Instead, the act provided for pensions worth 15% of their annual wage.

We’re still paying the bill — but not all of us at a fair level. Wealthier workers get a pass to the extent their wages surpass the payroll tax cap ($117,000 this year). But there’s no reason they shouldn’t pay their fair share of a debt to America’s parents and grandparents. Munnell advocates transferring the legacy debt cost to the federal income tax. That would “shift the burden to the general population in proportion to the ability to pay.” The shift would require an increase in the average income tax rate from 19% to about 23.6%, which she acknowledges would be “extremely difficult in today’s political environment.” But the debt has to be paid somehow.

In a couple of respects, “Falling Short” may be too narrow a treatment of the retirement crisis. I would have liked a serious discussion of the most visionary idea for Social Security being advocated in Washington, which is to expand benefits, not merely keep them stable.

Nor does the book focus on the macroeconomic factors that have made it so hard for the working class to keep up, mainly the stagnant or declining share of economic growth for middle- and lower-income workers. Income inequality not only deprives them of the resources to save, but cheats Social Security of a fair share of the national income. (In 1983, fully 90% of all wages was subject to the Social Security payroll tax; by 2012, the sharp rise in income collected by the wealthy had reduced that ratio to about 83%.)Plainly, rising wages during their working years would alleviate at least some of the threat of a poverty-stricken retirement.

In reality, many workers’ retirement choices are dictated by employers. Munnell advocates, properly, that those who can work longer do so, but she doesn’t pay enough heed to the fact that not even the able-bodied and mentally fit can make this choice unilaterally: It requires willing employers and an accommodating economy.

It’s right to advise that we “keep our skills up to date and be responsive to the needs of our employer.” But many businesses large and small don’t value the skills and experience of mature workers as much as they detest the wages and benefits they shell out to keep them on the job. Age discrimination and the experienced and knowledgeable worker forced into retirement by a cheeseparing corporation aren’t myths.

Still, “Falling Short” is a primer on the choices confronting Americans in today’s world rather than an economic tome. Americans have not been facing up honestly to their prospects in retirement. “Falling Short” will help them do so.

http://www.latimes.com/business/hiltzik/la-fi-hiltzik-20141114-column.html#page=1

Neither Alicia Munnell or Michael Hiltzik offer any concrete solutions to the train wreck that is ahead of us as a society.

I’ve said it before and I’ll say it again: It’s great to be unemployed and retired if you can afford it!

There have been numerous proposals, including President Obama’s  MyRA program and senator Tom Harkin’s proposal for the Universal, Secure and Adaptable (USA) Retirement Funds Act of 2014, to address eroding retirement security.

Both proposals are yet more attempts to address the fact that Americans are not saving enough for retirement. But the proposals fall far shot by “trillions” of dollars.

The plain truth is that more than four in five older Americans expect to keep working during their latter years, a sign that traditional retirement is out of reach for vast swaths of society. According to a new survey poll conducted by the Associated Press-NORC Center for Public Affairs Research, among Americans ages 50 and older who currently have jobs, 82 percent expect to work in some form during retirement.

In other words, “retirement” is increasingly becoming a misnomer.

For those who have been dependent on employment and/or welfare, the problem is that financially sustainable retirement is and will no longer be a reality. Even with Social Security, which is funded through payroll taxes called the Federal Insurance Contributions Act tax (FICA) and/or Self Employed Contributions Act Tax, (SECA), one must have had a job to be eligible for the entitlement––and the amount of Social Security is based on the income level generated from one’s employment record of payroll tax contributions.

Employer-provided pensions continue to decrease and personal savings is not the norm among the vast majority of American households who must spend virtually every earned dollar on living expenses. While increasingly individuals are finding it necessary to continue working in retirement to supplement their income, most older Americans discontinue full-time career work and struggle to meet obligations with minimum-pay part- and full-time jobs. A proportion of retirees also receive income from welfare programs, such as Supplemental Security Income and other life-support services funded through tax extraction and government debt.

This perspective should serve as the “reality” from which to explore prospects for effectively dealing with eroding retirement security.

Senator Harkin’s proposal has all the downsides of the “MyRA” and nothing to recommend it. It claims it offers lifetime income security funded out of current savings, meaning further reductions in consumption out of already inadequate incomes. It also aggregates everything into a “private sector” institution that is custom designed to be “too big too fail.”

As with President Obama’s MyRA proposal, Senator Harkin’s proposed Universal, Secure and Adaptable (USA) Retirement Funds Act of 2014 will not succeed in providing any real, substantial retirement security for the majority of Americans whose jobs do not earn more than substance week-to-week and month-to-month wages. Both plans are designed to encourage Americans to save for retirement and require personal savings and denial of consumption. This is unrealistic given that the Americans with the least opportunity must reduce what is inadequate consumption income in order to accumulate savings for retirement, which for most Americans will be inadequate.

Does anyone really believe that the interest rate to be paid under these programs will be sufficient and able to avert the decline in the value of the money as the government continues to flood the economy with increasingly non-asset-based debt?

Both proposals rely on the requirement to reduce consumption in the economy at a time when what is needed is expansion of the economy supported by increased consumption.

As my colleague Michael Greaney at the Center for Economic and Social Justice (www.cesj.org) states, “under the prevailing Keynesian paradigm, of course, ‘saving’ is always defined as the excess of income over consumption. If you want to save, then, the iron assumption of Keynesian economics is that you must consume less.”

The American consumer is being put into an impossible situation of being asked to consume more to drive the economy and reduce saving, and at the same time are being told they must reduce consumption dramatically in order to accumulate sufficient savings for retirement.

Of course, the whole problem would go away if we financed both retirement and wealth-creating, income-producing physical productive capital needs out of “future savings,” thereby increasing the capacity to consume and support the economy while simultaneously building financial security for every American citizen.

A far better and productive approach would be to create a new way for working and non-working Americans to start their own retirement savings: MyCHA. CHA stands for Capital Homestead Account. It would be a super-IRA or asset tax shelter for citizens. The Treasury should start creating an asset-backed currency that will enable every child, woman and man to establish a CHA at their local bank to acquire a growing dividend-bearing stock portfolio comprised of newly-issued stock representative of viable American growth corporations to supplement their incomes from work and all other sources of income.

We can create new asset-backed money for investment through the existing but dormant Section 13(2) rediscount mechanism of each of the 12 regional Federal Reserve banks that would be backed by “future savings” (that is, future profits from higher levels of marketable goods, products, and services).

The CHA would function as a savings and income account that effectively would build a nest egg over time, using interest-free, insured capital credit loans. A CHA would be offered to EVERY American, whether employed or not. Of course, those employed may also have additional opportunities to acquire personal ownership in their companies using an Employee Stock Ownership Plan (ESOP) trust financial mechanism.

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 on credit wholly backed by projected “future savings” in the form of new productive capital assets as well as the future marketable products and services produced by the newly added technology, renewable energy systems, plant, rentable space and infrastructure added to the economy. Risk of default on each stock acquisition interest-free 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. There would be no prerequisite requirement to qualify for an annual set capital credit loan other than American citizenship.

This idea to stimulate economic growth and provide retirement security for EVERY American is based on the premise that what is needed is for the system to facilitate spreading the ownership of productive capital more broadly as the economy grows with full payout of dividend earnings, without taking anything away from the 1 to 10 percent who now own 50 to 90 percent of the corporate productive capital wealth assets. In doing so, the ownership pie would desirably get much bigger and their percentage of the total ownership would decrease, as ownership gets broader and broader.

This would benefit the traditionally disenfranchised poor and working and middle class, who are propertyless in terms of owning productive capital assets. It would also result is tremendous economic growth, which would benefit everyone including the already wealthy ownership class, and create opportunities for real jobs, not make-work as an expanded economy is built that can support general affluence for EVERY American citizen. Thus, as productive capital income is distributed more broadly and the demand for products and services is distributed more broadly from the earnings of capital, the result would be the sustentation of consumer demand, which will promote economic growth. That also means that over time, EVERY child, woman and man could accumulate a diversified portfolio of wealth-creating, income-producing productive capital assets to provide economic security in retirement and not be dependent on having to work during retirement or rely on government-assisted welfare.

One might ask how we failed to grasp the significance of productive capital’s input and the necessity for broad private sector individual ownership? Unfortunately, ever since the 1946 passage of the Full Employment Act, economists and politicians formulating national economic policy have beguiled us into believing that economic power is democratically distributed if we have full employment––thus the political focus on job creation and redistribution of wealth rather than on full production and broader productive capital ownership accumulation. This is manifested in the belief that labor work is the ONLY way to participate in production and earn income. Yet, the wealthy ownership class knows that this notion is idiotic.

In real productive terms, productivity gains are the result of tectonic shifts in the technologies of production, which consequently eliminates the need for human labor, destroys jobs, and devalues the worth of labor.

One should ask what form would the structural reforms take. Employment in this new enlightened age would start at the time one enters the economic world as a labor worker, to become increasingly a productive capital owner, and at some point to retire as a labor worker and continue to participate in production and to earn income as a productive capital asset owner until the day you die. As a substitute for inheritance and gift taxes, a transfer tax would be imposed on the recipients whose asset holdings exceeded $1 million. This would encourage those owning concentrations of productive capital assets (effectively the 1 to 10 percent) 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.

Other stipulations for the structural reform would entail tax policy reform to incentivize corporations to pay out all profits to their owners as taxable personal incomes to avoid paying stiff corporate income taxes and to finance their growth by issuing new full-dividend payout shares for broad-based individualized employee and citizen ownership with full-voting rights.

We need to encourage the insurance industry to expand their product lines to market Capital Credit Insurance to cover the risk of default for banks making loans to Capital Homesteaders under the proposed Capital Homestead Act. Under the provisions of the Act, risk of default on each stock acquisition loan would be covered by private sector capital credit risk insurance and reinsurance issued by a new government agency (ala the Federal Housing Administration concept), but would not require citizens to reduce their funds for consumption to purchase shares.

The end result is that ALL American citizens would become empowered as owners to meet their own consumption needs and government would become more dependent on economically independent citizens, thus reversing our country’s trend where all citizens are becoming more dependent for their economic well-being on the “state,” our only legitimate social monopoly.

Implementing the Capital Homestead Act would significantly empower ALL Americans to accumulate over time a viable, diversified ownership portfolio in our nation’s growth companies and create a truly unique, global-leading just and environmentally responsible Ownership Society that fosters personalism, creativity and innovation. Embarking on a new path to prosperity, opportunity and economic justice will expand growth of our market economy in ways that democratize future ownership opportunities, while building a future economy that can support general affluence for EVERY American.

In conclusion, both President Obama’s MyRA and Senator Harkin’s USA programs would be completely unnecessary if we had Capital Homesteading. President Obama, Senator Harkin and other elected representatives should instead advocate for the passage of the Capital Homestead Act.

See two references to the proposed Capital Homestead Act at http://www.cesj.org/homestead/index.htm and http://www.cesj.org/homestead/summary-cha.htm.

For more on how to accomplish such structural reform, see  “Financing Economic Growth With ‘FUTURE SAVINGS': Solutions To Protect America From Economic Decline” at NationOfChange.org http://www.nationofchange.org/financing-future-economic-growth-future-savings-solutions-protect-america-economic-decline-137450624 and “The Income Solution To Slow Private Sector Job Growth” at http://www.nationofchange.org/income-solution-slow-private-sector-job-growth-1378041490.

22 Statistics That Prove The Middle Class Is Being Systematically Wiped Out Of Existence In America

Back on July 15, 2010, Michael Snyder wrote in Business Insider:

The 22 statistics that you are about to read prove beyond a shadow of a doubt that the middle class is being systematically wiped out of existence in America.

The rich are getting richer and the poor are getting poorer at a staggering rate.  Once upon a time, the United States had the largest and most prosperous middle class in the history of the world, but now that is changing at a blinding pace.

See proof of the Middle Class extermination –>

So why are we witnessing such fundamental changes?  Well, the globalism and “free trade” that our politicians and business leaders insisted would be so good for us have had some rather nasty side effects.  It turns out that they didn’t tell us that the “global economy” would mean that middle class American workers would eventually have to directly compete for jobs with people on the other side of the world where there is no minimum wage and very few regulations.  The big global corporations have greatly benefited by exploiting third world labor pools over the last several decades, but middle class American workers have increasingly found things to be very tough.

The reality is that no matter how smart, how strong, how educated or how hard working American workers are, they just cannot compete with people who are desperate to put in 10 to 12 hour days at less than a dollar an hour on the other side of the world.  After all, what corporation in their right mind is going to pay an American worker ten times more (plus benefits) to do the same job?  The world is fundamentally changing.  Wealth and power are rapidly becoming concentrated at the top and the big global corporations are making massive amounts of money.  Meanwhile, the American middle class is being systematically wiped out of existence as U.S. workers are slowly being merged into the new “global” labor pool.

What do most Americans have to offer in the marketplace other than their labor?  Not much.  The truth is that most Americans are absolutely dependent on someone else giving them a job.  But today, U.S. workers are “less attractive” than ever.  Compared to the rest of the world, American workers are extremely expensive, and the government keeps passing more rules and regulations seemingly on a monthly basis that makes it even more difficult to conduct business in the United States.

So corporations are moving operations out of the U.S. at breathtaking speed.  Since the U.S. government does not penalize them for doing so, there really is no incentive for them to stay.

What has developed is a situation where the people at the top are doing quite well, while most Americans are finding it increasingly difficult to make it.  There are now about 6 unemployed Americans for every new job opening in the United States, and the number of “chronically unemployed” is absolutely soaring.  There simply are not nearly enough jobs for everyone.

Many of those who are able to get jobs are finding that they are making less money than they used to.  In fact, an increasingly large percentage of Americans are working at low wage retail and service jobs.

But you can’t raise a family on what you make flipping burgers at McDonald’s or on what you bring in from greeting customers down at the local Wal-Mart.

The truth is that the middle class in America is dying — and once it is gone it will be incredibly difficult to rebuild.

 

Joseph Stiglitz “How Inequality In Today’s Society Endangers Our Future”

Published January 23, 2014

Unfortunately Joseph Stiglitz fails to provide solutions that will do any about the concentration of capital asset wealth, sticking to describing conditions and problems.

Spend another hour reading the references below for solutions.

The solutions can be found in the platform of the Unite America Party, the proposed Capital Homestead Act and the Just Third Way.

Support the Unite America Party Platform, published by The Huffington Post at http://www.huffingtonpost.com/gary-reber/platform-of-the-unite-ame_b_5474077.html as well as Nation Of Change at http://www.nationofchange.org/platform-unite-america-party-1402409962 and OpEd News at http://www.opednews.com/articles/Platform-of-the-Unite-Amer-by-Gary-Reber-Party-Leadership_Party-Platforms-DNC_Party-Platforms-GOP-RNC_Party-Politics-Democratic-140630-60.html.

Support the Capital Homestead Act at http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-a-plan-for-getting-ownership-income-and-power-to-every-citizen/ and http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-summary/.

Support the Agenda of The Just Third Way Movement 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/.

Economist Dean Baker: Many Americans Have Waved Goodbye to Their Nest Eggs

On November 14, 2014, Dean Baker writes on Money News:

Many Americans are nearing retirement with only Social Security to support them and a mortgage that is far from paid off — and the situation might be getting worse.

According to Dean Baker, co-director of the Center for Economic and Policy Research, the nest egg that many could once rely on when they sold their homes and downsized has now vanished in a lot of cases.

In a column for Fortune, Baker noted that because home prices are still considerably below their 2007 peaks, the U.S. middle class has had no comparable gains in their household wealth during the current recovery.

“This is a bad picture for the country as a whole, but it is especially bad news for those at the edge of retirement,” he wrote.

“These families do not have time for an economic turnaround to improve their situation. They must rely on the wealth they have accumulated to date to support them in retirement, and that is it. This is not a pretty picture.”

Federal Reserve data show that if a typical U.S. family in the 55 to 64 age group took all their savings and used it to pay off their mortgage, they would still owe more than $50,000 on the median house.

Baker said that the middle quintile of Americans in that age group has only 54.6 percent of their home paid off on average. “By comparison, in 1989, this group on average had equity equal to 81 percent of their house price, meaning that many could look forward to a retirement in which their mortgage was already paid off.”

What’s more that same middle quintile had an average of $169,000 in wealth in 2013 — down an alarming $150,000 from the group’s peak wealth in Fed data from 2004.

Baker said Americans in the 55 to 64 age group who are below the middle quintile in wealth have done even worse in recent years.

“As a result they will be overwhelmingly dependent on Social Security and Medicare in their retirement years. Those who envision a population of affluent elderly who can easily get by with cuts in these programs are not looking at the data,” he concluded.

According to the National Institute on Retirement Security, 45 percent of working households have no retirement savings at all, according to U.S. News & World Report. In fact, among people 55 to 64, average — as opposed to median — household retirement savings total only $12,000.

The problem is that the average Social Security payment for retired workers in 2014 is approximately $1,300.

“The rule of thumb for retirement accounts is that you should withdraw no more than 4 percent a year. If you have $100,000 in savings, that means $4,000 a year, or about $333 per month,” U.S. News said.

Even among those Americans who do have savings, they are keeping much of it in cash instead of stocks or related investments, which ensures their holdings barely grow at all at today’s interest rates,

CBS Moneywatch reported.

“So the longer that they are holding cash, the further and further they are getting behind in saving for their future,” Robert Kapito, president of BlackRock, told CBS News.

http://www.moneynews.com/StreetTalk/retirement-savings-Social-Security-Americans/2014/11/10/id/606418/?ns_mail_uid=14578862&ns_mail_job=1595350_11142014&s=al&dkt_nbr=u2dtjyn5

I’ve said it before and I’ll say it again: It’s great to be unemployed and retired if you can afford it!

There have been numerous proposals, including President Obama’s  MyRA program and senator Tom Harkin’s proposal for the Universal, Secure and Adaptable (USA) Retirement Funds Act of 2014, to address eroding retirement security.

Both proposals are yet more attempts to address the fact that Americans are not saving enough for retirement. But the proposals fall far shot by “trillions” of dollars.

The plain truth is that more than four in five older Americans expect to keep working during their latter years, a sign that traditional retirement is out of reach for vast swaths of society. According to a new survey poll conducted by the Associated Press-NORC Center for Public Affairs Research, among Americans ages 50 and older who currently have jobs, 82 percent expect to work in some form during retirement.

In other words, “retirement” is increasingly becoming a misnomer.

For those who have been dependent on employment and/or welfare, the problem is that financially sustainable retirement is and will no longer be a reality. Even with Social Security, which is funded through payroll taxes called the Federal Insurance Contributions Act tax (FICA) and/or Self Employed Contributions Act Tax, (SECA), one must have had a job to be eligible for the entitlement––and the amount of Social Security is based on the income level generated from one’s employment record of payroll tax contributions.

Employer-provided pensions continue to decrease and personal savings is not the norm among the vast majority of American households who must spend virtually every earned dollar on living expenses. While increasingly individuals are finding it necessary to continue working in retirement to supplement their income, most older Americans discontinue full-time career work and struggle to meet obligations with minimum-pay part- and full-time jobs. A proportion of retirees also receive income from welfare programs, such as Supplemental Security Income and other life-support services funded through tax extraction and government debt.

This perspective should serve as the “reality” from which to explore prospects for effectively dealing with eroding retirement security.

Senator Harkin’s proposal has all the downsides of the “MyRA” and nothing to recommend it. It claims it offers lifetime income security funded out of current savings, meaning further reductions in consumption out of already inadequate incomes. It also aggregates everything into a “private sector” institution that is custom designed to be “too big too fail.”

As with President Obama’s MyRA proposal, Senator Harkin’s proposed Universal, Secure and Adaptable (USA) Retirement Funds Act of 2014 will not succeed in providing any real, substantial retirement security for the majority of Americans whose jobs do not earn more than substance week-to-week and month-to-month wages. Both plans are designed to encourage Americans to save for retirement and require personal savings and denial of consumption. This is unrealistic given that the Americans with the least opportunity must reduce what is inadequate consumption income in order to accumulate savings for retirement, which for most Americans will be inadequate.

Does anyone really believe that the interest rate to be paid under these programs will be sufficient and able to avert the decline in the value of the money as the government continues to flood the economy with increasingly non-asset-based debt?

Both proposals rely on the requirement to reduce consumption in the economy at a time when what is needed is expansion of the economy supported by increased consumption.

As my colleague Michael Greaney at the Center for Economic and Social Justice (www.cesj.org) states, “under the prevailing Keynesian paradigm, of course, ‘saving’ is always defined as the excess of income over consumption. If you want to save, then, the iron assumption of Keynesian economics is that you must consume less.”

The American consumer is being put into an impossible situation of being asked to consume more to drive the economy and reduce saving, and at the same time are being told they must reduce consumption dramatically in order to accumulate sufficient savings for retirement.

Of course, the whole problem would go away if we financed both retirement and wealth-creating, income-producing physical productive capital needs out of “future savings,” thereby increasing the capacity to consume and support the economy while simultaneously building financial security for every American citizen.

A far better and productive approach would be to create a new way for working and non-working Americans to start their own retirement savings: MyCHA. CHA stands for Capital Homestead Account. It would be a super-IRA or asset tax shelter for citizens. The Treasury should start creating an asset-backed currency that will enable every child, woman and man to establish a CHA at their local bank to acquire a growing dividend-bearing stock portfolio comprised of newly-issued stock representative of viable American growth corporations to supplement their incomes from work and all other sources of income.

We can create new asset-backed money for investment through the existing but dormant Section 13(2) rediscount mechanism of each of the 12 regional Federal Reserve banks that would be backed by “future savings” (that is, future profits from higher levels of marketable goods, products, and services).

The CHA would function as a savings and income account that effectively would build a nest egg over time, using interest-free, insured capital credit loans. A CHA would be offered to EVERY American, whether employed or not. Of course, those employed may also have additional opportunities to acquire personal ownership in their companies using an Employee Stock Ownership Plan (ESOP) trust financial mechanism.

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 on credit wholly backed by projected “future savings” in the form of new productive capital assets as well as the future marketable products and services produced by the newly added technology, renewable energy systems, plant, rentable space and infrastructure added to the economy. Risk of default on each stock acquisition interest-free 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. There would be no prerequisite requirement to qualify for an annual set capital credit loan other than American citizenship.

This idea to stimulate economic growth and provide retirement security for EVERY American is based on the premise that what is needed is for the system to facilitate spreading the ownership of productive capital more broadly as the economy grows with full payout of dividend earnings, without taking anything away from the 1 to 10 percent who now own 50 to 90 percent of the corporate productive capital wealth assets. In doing so, the ownership pie would desirably get much bigger and their percentage of the total ownership would decrease, as ownership gets broader and broader.

This would benefit the traditionally disenfranchised poor and working and middle class, who are propertyless in terms of owning productive capital assets. It would also result is tremendous economic growth, which would benefit everyone including the already wealthy ownership class, and create opportunities for real jobs, not make-work as an expanded economy is built that can support general affluence for EVERY American citizen. Thus, as productive capital income is distributed more broadly and the demand for products and services is distributed more broadly from the earnings of capital, the result would be the sustentation of consumer demand, which will promote economic growth. That also means that over time, EVERY child, woman and man could accumulate a diversified portfolio of wealth-creating, income-producing productive capital assets to provide economic security in retirement and not be dependent on having to work during retirement or rely on government-assisted welfare.

One might ask how we failed to grasp the significance of productive capital’s input and the necessity for broad private sector individual ownership? Unfortunately, ever since the 1946 passage of the Full Employment Act, economists and politicians formulating national economic policy have beguiled us into believing that economic power is democratically distributed if we have full employment––thus the political focus on job creation and redistribution of wealth rather than on full production and broader productive capital ownership accumulation. This is manifested in the belief that labor work is the ONLY way to participate in production and earn income. Yet, the wealthy ownership class knows that this notion is idiotic.

In real productive terms, productivity gains are the result of tectonic shifts in the technologies of production, which consequently eliminates the need for human labor, destroys jobs, and devalues the worth of labor.

One should ask what form would the structural reforms take. Employment in this new enlightened age would start at the time one enters the economic world as a labor worker, to become increasingly a productive capital owner, and at some point to retire as a labor worker and continue to participate in production and to earn income as a productive capital asset owner until the day you die. As a substitute for inheritance and gift taxes, a transfer tax would be imposed on the recipients whose asset holdings exceeded $1 million. This would encourage those owning concentrations of productive capital assets (effectively the 1 to 10 percent) 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.

Other stipulations for the structural reform would entail tax policy reform to incentivize corporations to pay out all profits to their owners as taxable personal incomes to avoid paying stiff corporate income taxes and to finance their growth by issuing new full-dividend payout shares for broad-based individualized employee and citizen ownership with full-voting rights.

We need to encourage the insurance industry to expand their product lines to market Capital Credit Insurance to cover the risk of default for banks making loans to Capital Homesteaders under the proposed Capital Homestead Act. Under the provisions of the Act, risk of default on each stock acquisition loan would be covered by private sector capital credit risk insurance and reinsurance issued by a new government agency (ala the Federal Housing Administration concept), but would not require citizens to reduce their funds for consumption to purchase shares.

The end result is that ALL American citizens would become empowered as owners to meet their own consumption needs and government would become more dependent on economically independent citizens, thus reversing our country’s trend where all citizens are becoming more dependent for their economic well-being on the “state,” our only legitimate social monopoly.

Implementing the Capital Homestead Act would significantly empower ALL Americans to accumulate over time a viable, diversified ownership portfolio in our nation’s growth companies and create a truly unique, global-leading just and environmentally responsible Ownership Society that fosters personalism, creativity and innovation. Embarking on a new path to prosperity, opportunity and economic justice will expand growth of our market economy in ways that democratize future ownership opportunities, while building a future economy that can support general affluence for EVERY American.

In conclusion, both President Obama’s MyRA and Senator Harkin’s USA programs would be completely unnecessary if we had Capital Homesteading. President Obama, Senator Harkin and other elected representatives should instead advocate for the passage of the Capital Homestead Act.

See two references to the proposed Capital Homestead Act at http://www.cesj.org/homestead/index.htm and http://www.cesj.org/homestead/summary-cha.htm.

For more on how to accomplish such structural reform, see  “Financing Economic Growth With ‘FUTURE SAVINGS': Solutions To Protect America From Economic Decline” at NationOfChange.org http://www.nationofchange.org/financing-future-economic-growth-future-savings-solutions-protect-america-economic-decline-137450624 and “The Income Solution To Slow Private Sector Job Growth” at http://www.nationofchange.org/income-solution-slow-private-sector-job-growth-1378041490.

Unequal… And We Don’t Even Know It…

On November 14, 2014, Thomm Hartmann writes on the Thomm Hartmann Program”

The United States is the most unequal society in the developed world, but most Americans don’t even know it. According to a new article by Les Leopold over at Alternet, most Americans think that the ratio of CEO to employee pay is about 30 to 1, despite the fact that it’s more than 10 times that amount.

For every dollar that an average worker earns, a CEO rakes in more than $350 dollars – and that number just keeps rising. Yet, in two different polls, when Americans were asked about the wealth gap between workers and CEOs, most people believed that the ratio was 30 to 1 – regardless of their political ideology or education level. It’s no wonder that we’re not doing more to fight inequality.

One study called “How Much (More) Should CEOs Make?”, which surveyed more than 55,000 people in 40 countries, found that people in the United States think a fair pay ratio would be about 7 to 1. But, how will we ever reach that goal if most Americans don’t even realize how wide the pay gap has become?

Extreme inequality slows our economy, increases demand on our social safety net, and allows the corporate elite to control our democracy. A small few control the vast majority of wealth and power in our nation, and it’s up to us to take back control. To solve this problem we must acknowledge it, and that starts by making everyone aware.

CEOs aren’t 350 times more valuable than their average workers, and billionaires don’t deserve more political power than the average voter. Let’s make sure that everyone knows how wide the wealth gap really is, and how it stands in the way of us taking back control of our democracy. – See more at: http://www.thomhartmann.com/blog/2014/11/unequal-and-we-dont-even-know-it#comment-293235

Talking about the problem is NOT enough, Thomm Hartmann needs to adopt and promote a new economic paradigm.

The JUST Third Way is a radical overhaul of the economic system (i.e., the Federal tax system, Federal Reserve policy, inheritance law, welfare and entitlement system, etc.) that will achieve genuine economic democracy, based on the Platform of the Unite America Party and its links and the proposed Capital Homestead Act. Our Platform is a call for a vision of political economy that can unite the left and the right, based on Louis Kelso’s ownership-based paradigm. Now is the time to cure America’s political cancer (Crony Capitalism) and restore America to again becoming a model for global citizens in all countries.

For a new vision see http://www.foreconomicjustice.org/?p=12331 and www.facebook.com/uniteamericaparty

http://www.thomhartmann.com/blog/2014/11/unequal-and-we-dont-even-know-it#comment-293235

Bill Gates: Yes, Robots Really Are About To Take Your Jobs

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Bill Gates: Yes, robots really are about to take your jobs

On March 14, 2014, Brad Reed writes on Yahoo.com:

Microsoft cofounder Bill Gates isn’t going to sugarcoat things: The increasing power of automation technology is going to put a lot of people out of work. Business Insider reports that Gates gave a talk at the American Enterprise Institute think tank in Washington, DC this week and said that both governments and businesses need to start preparing for a future where lots of people will be put out of work by software and robots.

“Software substitution, whether it’s for drivers or waiters or nurses… it’s progressing,” Gates said. “Technology over time will reduce demand for jobs, particularly at the lower end of skill set… 20 years from now, labor demand for lots of skill sets will be substantially lower. I don’t think people have that in their mental model.”

As for what governments should do to prevent social unrest in the wake of mass unemployment, the Microsoft cofounder said that they should basically get on their knees and beg businesses to keep employing humans over algorithms. This means eliminating payroll and corporate income taxes while also scrapping the minimum wage so that businesses will feel comfortable employing people at dirt-cheap wages instead of outsourcing their jobs to an iPad.

And it’s not just “low-skilled” workers who will have to worry about automation. As Business Insider points out, The Economist earlier this year predicted that high-paying jobs such as accountants, real estate sales agents and commercial pilots would all lose their jobs to software within the next 20 years.

Can you believe Bill Gates stated: “…[people] should basically get on their knees and beg businesses to keep employing humans over algorithms. … scrapping the minimum wage so that businesses will feel comfortable employing people at dirt-cheap wages instead of outsourcing their jobs to an iPad.”

What is upsetting about Bill Gates’ views is that he completely ignores the issue of OWNERSHIP concentration of wealth, yet he knows very well that the reason he is wealthy––the second wealthiest according to Fortune––is because he is an OWNER of a massive diversified capital asset portfolio, including Microsoft.

Gates also knows from first-hand experience that increasing concentration of wealth (the ownership of valued assets) feeds on itself, assuring that the already wealthy will just get wealthier.  Gates  fails to focus on the necessary policies to broaden OWNERSHIP participation in the economy. even while the  bottom 90 percent struggle to make ends meet on stagnant incomes. It is impossible for them to accumulate savings. which sadly is the requirement for being able to invest and benefit from a growing portfolio of wealth assets. 

Gates needs to realize that the problem of income inequality and wealth inequality is rooted in the archaic notion that savings are required to finance economic growth and attain ownership of valuable productive capital assets.  Bill Gates, Chris Matthews,  Federal Reserve Chairwoman Janet Yellen, other Federal Reserve Board members, influential economists and business leaders, as well as political leaders, should read Harold Moulton’s “The Formation Of Capital, ” in which he argues that it makes no sense to finance new productive capital out of past savings. Instead, economic growth should be financed out of future earnings (savings), and provide that every citizen become an owner.

The Federal Reserve is the instrument that can abate wealth inequality by providing capital credit loans at zero “0” percent interest to local banks who would in turn lend this interest-free money (at no additional cost, except for minimum administration fees) for the specific purpose to finance the creation of new wealth-creating, income-producing capital assets to grow the economy. Who should benefit from such interest-free capital credit should be EVERY child, woman and man, who would then be empowered to acquire over time significant portfolios of self-liquidating capital asset investments in the American economy with the capital credit loans repaid out of the FUTURE earnings of the investments.

Broadening capital ownership would “increase the pay of the least advantaged workers” (and non-workers) who would be contributing their productive capital to the expansion of the the economy.

Gates is focused on consumption taxes to encourage savings and investment and redistributive policies such as higher taxes  on inheritances.   He completely ignores the necessity to broaden capital OWNERSHIP as part of an incentive package that eliminates corporate and capital gains taxes in exchange for creating new owners and, as a substitute for inheritance and gift taxes, imposes a transfer tax on the recipients whose holdings exceeded $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.

As the economy continue to grow, even at present-day anemic rates, people are going to OWN the non-human factor––tools, machines, robotics, computerization, etc–– of any economic expansion, which as time progresses will continue to be the MAJOR input factor in ANY economic expansion. Gates knows this. His recommendations will not abate wealth inequality.

What Gates should be advocating is the passage of the Capital Homestead Act. That would enable every child, woman and man to gain equal access to capital credit for generating their own earned ownership income to engage in what Aristotle called “leisure work.” Saez and Zucman and other academics and politicians should take the time to study seriously the Louis Kelso-Mortimer J. Adler paradigm as presented in the free down-loadable books and articles on the Center for Economic and Social Justice “virtual library” at http://www.cesj.org. Then hopefully Saez and Zucman will come to understand that a growing percentage of every citizen’s income and wealth accumulation could conceptually result from the Just Third Way’s reforms to democratize personal opportunities to participate as an owner of future capital growth and non-coercive transfers of existing capital’s ownership opportunities. The Just Third Way strategy would enable a growing number of citizens to be educated, participate in and thus earn a sufficient and increasing capital income. As the market economy continues to become increasingly capital-intensive, more and more citizens would become economically liberated to engage voluntarily in the unpaid and unlimited work of civilization. This would also reduce the cost of education at all levels, and certainly, when implemented increase family choices over education and health benefits.

What is needed and necessary is a new policy direction specifically aimed at creating new capital owners simultaneously with the growth of the economy. The financial mechanisms used MUST NOT REQUIRE past savings and instead be available as a unique and exclusive opportunity for American citizens to access insured, interest-free capital loans for the specific purpose of acquiring newly issued full-dividend earnings payout stock in corporations growing our economy. In other words, we need to use a credit mechanism by which the loans are paid for with the future earnings generated by the creation of new capital assets, which result in products and services needed and wanted by Americans, which then further propels the economy’s growth. Such a policy program is what the Capital Homestead Act would achieve.

The Federal Reserve, which has been largely responsible for the powerlessness of most American citizens, should set an example for all the central banks in the world. Chairwoman Yellen and other members of the Federal Reserve need to wake-up and implement Section 13 paragraph 2, which directs the Federal Reserve to create credit for local banks to make loans where there isn’t enough savings in the system to finance economic growth. We should not destroy the Federal Reserve or make it a political extension of the Treasury Department, but instead reform it so that the American citizens in each of the 12 Federal Reserve Regions become the owners. The result will be that money power will flow from the bottom up, not from the top down––not for consumer credit, not for credit that doesn’t pay for itself or non-productive uses of credit, but for credit for productive uses to expand the economy’s rate of growth.

The Federal Reserve needs to stop monetizing unproductive debt, and begin creating an asset-backed currency that could enable every child, woman and man to establish a Capital Homestead Account or “CHA” at their local bank to acquire a growing dividend-bearing stock portfolio to supplement their incomes from work and all other sources of income. Steadily over time this will create a robust economy with millions of “customers with money” to purchase the products and services that are needed and wanted.

Our leaders need to put on the table for national discussion this SUPER-IRA idea and the necessary reform of our tax policies that would incentivize corporations to pay out fully their earnings in the form of dividend income and issue and sell new stock to grow. 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 on credit wholly backed by projected “future savings” in the form of new productive capital assets with future marketable products and services produced by the newly added technology, renewable energy systems, plant, rentable space and infrastructure added to the economy.

Risk of default on each stock acquisition loan would be covered by private sector capital credit risk insurance and reinsurance (ala the Federal Housing Administration concept), but would not require citizens to reduce their funds for consumption to purchase shares.

Essentially, the pressing need is for everyone in a position of influence to encourage President Obama to raise the consciousness of the American people by making his NUMBER ONE focus the introduction of a National Right To Capital Ownership Bill that restores the American dream of property ownership as a primary source of personal wealth.

This is the solution to America’s economic decline in wealth and income inequality, which will result in double-digit economic growth and simultaneously broaden private, individual ownership so that EVERY American’s income significantly grows, providing the means to support themselves and their families with an affluent lifestyle. The Just Third Way Master Plan for America’s future is published at http://foreconomicjustice.org/?p=5797 and the platform of the Unite America Party is published by The Huffington Post at http://www.huffingtonpost.com/gary-reber/platform-of-the-unite-ame_b_5474077.html as well as Nation Of Change at http://www.nationofchange.org/platform-unite-america-party-1402409962 and OpEd News at http://www.opednews.com/articles/Platform-of-the-Unite-Amer-by-Gary-Reber-Party-Leadership_Party-Platforms-DNC_Party-Platforms-GOP-RNC_Party-Politics-Democratic-140630-60.html.

The Capital Homestead Act (http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-a-plan-for-getting-ownership-income-and-power-to-every-citizen/ and http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-summary/) would grow the U.S. economy faster in a non-inflationary way, create new private sector jobs, finance new productive capital and provide capital incomes for all Americans from the bottom-up by enabling them to own trillions annually in new capital formation and transfers in current assets . . . without taking private property rights away from billionaires and multi-millionaires over their existing assets.

https://news.yahoo.com/bill-gates-yes-robots-really-jobs-180449215.html

The Richest 0.1 Percent Is About To Control More Wealth Than The Bottom 90 Percent

On November 13, 2014, Inae Oh writes on Mother Jones and Moyers & Company:

While a complex web of factors have contributed to the rise in income inequality in America, a new research paper says most of the blame can be largely placed in the immense growth experienced by the top 10th of the richest 1 percent of Americans in recent years. From the report:

“The rise of wealth inequality is almost entirely due to the rise of the top 0.1 percent wealth share, from 7 percent in 1979 to 22 percent in 2012, a level almost as high as in 1929. The bottom 90 percent wealth share first increased up to the mid-1980s and then steadily declined. The increase in wealth concentration is due to the surge of top incomes combined with an increase in saving rate inequality.”

So, who are the 0.1 percent among us? According to Emmanuel Saez and Gabriel Zucman, the paper’s researchers, the elite group is a small one, roughly composed of 160,000 families with assets exceeding $20 million, but their grip on America’s wealth distribution is about to surpass the bottom 90 percent for the first time in more than half a century.  Today’s 0.1 percent also tend to be younger than the top incomers of the 1960s, despite the fact that the country as a whole has been living longer — proving once again, that there has truly never been a more opportune time to be rich in America:

income_richmegarich-wm

http://billmoyers.com/2014/11/13/richest-0-1-percent-control-wealth-bottom-90-percent/

 

BURGER FLIPPING ROBOT WILL PUT FAST-FOOD WORKERS OUT OF A JOB!

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On August 11, 2014, Dylan Love writes on Americas Freedom Fighters:

A company called Momentum Machines has built a robot that could radically change the fast-food industry and have some line cooks looking for new jobs.

The company’s robot can “slice toppings like tomatoes and pickles immediately before it places the slice onto your burger, giving you the freshest burger possible.” The robot is “more consistent, more sanitary, and can produce ~360 hamburgers per hour.” That’s one burger every 10 seconds.

The next generation of the device will offer “custom meat grinds for every single customer. Want a patty with 1/3 pork and 2/3 bison ground to order? No problem.”

Momentum Machines cofounder Alexandros Vardakostas told Xconomy his “device isn’t meant to make employees more efficient. It’s meant to completely obviate them.” Indeed, marketing copy on the company’s site reads that their automaton “does everything employees can do, except better.”

This directly raises a question that a lot of smart people have contemplated: Will robots steal our jobs? Opinion is divided of course. Here’s what Momentum Machines has to say on the topic:

The issue of machines and job displacement has been around for centuries and economists generally accept that technology like ours actually causes an increase in employment. The three factors that contribute to this are 1. the company that makes the robots must hire new employees, 2. the restaurant that uses our robots can expand their frontiers of production which requires hiring more people, and 3. the general public saves money on the reduced cost of our burgers. This saved money can then be spent on the rest of the economy.

If we are to undertake the lofty ambition of changing the nature of work by way of robots, the fast-food industry seems like a good place to start, considering its inherently repetitive tasks and minimal skill requirements. Any roboticist worth his or her salt jumps at tasks described as repetitive and easy — perfect undertakings for a robot.

Here’s a schematic of what the burger-bot looks like and how it works. It occupies 24 square feet, so it’s much smaller than most assembly-line fast-food operations. It boasts “gourmet cooking methods never before used in a fast food restaurant” and will even deposit your completed burger into a bag. It’s a veritable Gutenberg printing press for hamburgers.

burger robot diagram

http://www.businessinsider.com/momentum-machines-burger-robot-2014-8

This is yet another story about the realities of productive capital instruments––human-intelligent machines, super-automation, robotics, digital computerized operations, etc.––replacing the need for human labor. While this productive technological capability has been evolving for over a century, and initially made us better at our jobs. Now it is becoming so sophisticated and prevalent that it is making many workers obsolete.

Given that there is no question that robotic technology will continue to expand the productivity and in large measure destroy jobs and devalue the value of human labor, the question that SHOULD be urgently addressed is WHO SHOULD OWN THE FUTURE TECHNOLOGY ECONOMY? Will ownership continue to concentrate among the 1 percent wealthy ownership class who now OWNS America, or will be reform the system to provide equal opportunity for EVERY child, woman, and man to acquire personal ownership in FUTURE non-human capital assets paid for with the FUTURE earnings of the investments in our technological future?

The reality is that increasingly EVERY human is having more and more interactions with machines and fewer with human beings. If you’ve lost your white collar job to downsizing, or to a worker in India or China you’re most likely a victim of what economists have called technological unemployment. There is no escape as much more is to come.

The field of robotics is at the vanguard of this new wave of automation. The broad universal definition is a machine that can perform the job of a human. Robots can be mobile or stationary and hardware or software, but ALL are instruments of productive capital and ALL are OWNED.

Business investment in machine and robotic super-automation hardware and software is more than it’s ever been. What’s not back is the jobs.

The percentage of Americans with jobs is at a 20-year low due to tectonic shifts in the technologies of production. In every industry, we are witnessing fewer interactions with other human beings. Everyone should be aware of robotic kiosks––providing bank teller services via ATMs, sales customer services via e-commerce, and switchboard support services via voice recognition technology. Super-automation is transforming commerce. There are heavily automated warehouses where there are either very few or no people around. Increasingly jobs, especially those that involve relatively structured tasks, are being replaced by human-intelligent robotic computerization and physical entities other than humans.

While conventional economists, academia, and political leadership has called upon education as the solution, the changes are coming so quickly it will be difficult for workers to retrain themselves. They are disadvantaged to compete with supercomputers which can program themselves to improve their performance. Even if the entire American population was college educated, there still would not be the need in the private sector to create jobs in numbers that match the pool of people willing and able to work due to human work constantly being eroded by physical productive capital’s ever increasing role. Technology increasingly is demonstrating skills on a par with and even surprising human skills.

Technology’s impact is rapidly automating the information age using e-discovery software, which will significantly lessen the need for a human workforce that earns income by gathering and analyzing information. Such technology is now used to gather intelligence and fight wars.

While entrepreneurs will continue to create new business opportunities, the reality is that they will not be hiring large numbers of people. Public companies such as Apple, Amazon, Facebook and Google, for example, represent in total about $1 trillion in market capitalization value. Yet together they employ fewer than 150,000 people––less than ALL the new entrants into the American workforce monthly.

Annual investment by U.S. manufacturers in new technology has increased almost 30 percent since the “Great Recession” ended, and research institutions and robotics companies, funded by venture capital, are constantly searching for innovations.

Technological invention and innovation is the ONLY means to effectively return manufacturing to the United States. But realistically, the global competition will be intense as other teams of engineers and scientists in other countries compete to create ever more sophisticated human-intelligent machines, super-automated processes, robotic workers, digital computerized operations etc. Thus, even if offshore manufacturing returns to the United States, most of the jobs will go to “robots.”

We are at the horizon of a new technological frontier and the capabilities of computerization and robotics are projected to exponentially expand whereby the work in a new FUTURE economy that can support general affluence for EVERY citizen will be largely done by “machines.”

For an insightful look further into this challenge, I recommend viewing the “60 Minutes” which appeared on CBS January 13, 2013 (http://foreconomicjustice.org/?p=5699). The subject of this program, this article and others previously published, is and will impact your future livelihood and that of your children and grandchildren!

While no solutions are put forth, the obvious solution is to connect EVERY American with individual ownership in the FUTURE corporate productive capital assets represented by “robotics and digital computerized operations” so that they can benefit from the income derived as Americans become the future “customers with money” to purchase the products and services that the “robotics and digital computerized operations” produce.

This and ALL the other articles on the subject have failed to outline a comprehensive master plan for accomplishing broaden private, individual ownership of FUTURE productive capital. Yet such has been in development for 55 years but faced with willful ignorance and obliviousness on the part of our leaders, academia and the national media.

The master plan for this paradigm shift in the structure of the American economy can be accomplished with the adoption and implementation of the the Capital Homestead Act at http://www.cesj.org/homestead/index.htm and http://www.cesj.org/homestead/summary-cha.htm

Please see my article “Democratic Capitalism And Binary Economics: Solutions For A Troubled Nation and Economy” at http://foreconomicjustice.org/11/economic-justice/ or follow me on Facebook at http://www.facebook.com/pages/For-Economic-Justice/347893098576250 and http://www.facebook.com/editorgary

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 see “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.

 

Labor Unions Are Anti-Labor

Message of a worker despair for the failure of his factory, now abandoned.

On July 28, 2014, George Reisman writes on the Ludwig von Mises Institute Web site:

Many Americans, perhaps a substantial majority, still believe that, irrespective of any problems they may have caused, labor unions are fundamentally an institution that exists in the vital self-interest of wage earners. Indeed, many believe that it is labor unions that stand between the average wage earner and a life of subsistence wages, exhausting hours of work, and horrific working conditions.

Labor unions and the general public almost totally ignore the essential role played by falling prices in achieving rising real wages. They see only the rise in money wages as worthy of consideration. Indeed, in our environment of chronic inflation, prices that actually do fall are relatively rare.

Nevertheless, the only thing that can explain a rise in real wages throughout the economic system is a fall in prices relative to wages. And the only thing that achieves this is an increase in production per worker. More production per worker — a higher productivity of labor — serves to increase the supply of goods and services produced relative to the supply of labor that produces them. In this way, it reduces prices relative to wages and thereby raises real wages and the general standard of living.

What raises money wages throughout the economic system is not what is responsible for the rise in real wages. Increases in money wages are essentially the result just of the increase in the quantity of money and resulting increase in the overall volume of spending in the economic system. In the absence of a rising productivity of labor, the increase in money and spending would operate to raise prices by as much or more than it raised wages. This outcome is prevented only by the fact that at the same time that the quantity of money and volume of spending are increasing, the output per worker is also increasing, with the result that prices rise by less than wages. A fall in prices is still present in the form of prices being lower than they would have been had only an increase in the quantity of money and volume of spending been operative.

With relatively minor exceptions, real wages throughout the economic system simply do not rise from the side of higher money wages. Essentially, they rise only from the side of a greater supply of goods and services relative to the supply of labor and thus from prices being lower relative to wages. The truth is that the means by which the standard of living of the individual wage earner and the individual businessman and capitalist is increased, and the means by which that of the average wage earner in the economic system is increased, are very different. For the individual, it is the earning of more money. For the average wage earner in the economic system, it is the payment of lower prices.

What this discussion shows is that the increase in money wages that labor unions seek is not at all the source of rising real wages and that the source of rising real wages is in fact a rising productivity of labor, which always operates from the side of falling prices, not rising money wages.

Indeed, the efforts of labor unions to raise money wages are profoundly opposed to the goal of raising real wages and the standard of living. When the unions seek to raise the standard of living of their members by means of raising their money wages, their policy inevitably comes down to an attempt to make the labor of their members artificially scarce. That is their only means of raising the wages of their members. The unions do not have much actual power over the demand for labor. But they often achieve considerable power over the supply of labor. And their actual technique for raising wages is to make the supply of labor, at least in the particular industry or occupation that a given union is concerned with, as scarce as possible.

Thus, whenever they can, unions attempt to gain control over entry into the labor market. They seek to impose apprenticeship programs, or to have licensing requirements imposed by the government. Such measures are for the purpose of holding down the supply of labor in the field and thereby enabling those fortunate enough to be admitted to it, to earn higher incomes. Even when the unions do not succeed in directly reducing the supply of labor, the imposition of their above-market wage demands still has the effect of reducing the number of jobs offered in the field and thus the supply of labor in the field that is able to find work.

The artificial wage increases imposed by the labor unions result in unemployment when above-market wages are imposed throughout the economic system. This situation exists when it is possible for unions to be formed easily. If, as in the present-day United States, all that is required is for a majority of workers in an establishment to decide that they wish to be represented by a union, then the wages imposed by the unions will be effective even in the nonunion fields.

Employers in the nonunion fields will feel compelled to offer their workers wages comparable to what the union workers are receiving — indeed, possibly even still higher wages — in order to ensure that they do not unionize.

Widespread wage increases closing large numbers of workers out of numerous occupations put extreme pressure on the wage rates of whatever areas of the economic system may still remain open. These limited areas could absorb the overflow of workers from other lines at low enough wage rates. But minimum-wage laws prevent wage rates in these remaining lines from going low enough to absorb these workers.

From the perspective of most of those lucky enough to keep their jobs, the most serious consequence of the unions is the holding down or outright reduction of the productivity of labor. With few exceptions, the labor unions openly combat the rise in the productivity of labor. They do so virtually as a matter of principle. They oppose the introduction of labor-saving machinery on the grounds that it causes unemployment. They oppose competition among workers. As Henry Hazlitt pointed out, they force employers to tolerate featherbedding practices, such as the classic requirement that firemen, whose function was to shovel coal on steam locomotives, be retained on diesel locomotives. They impose make-work schemes, such as requiring that pipe delivered to construction sites with screw thread already on it, have its ends cut off and new screw thread cut on the site. They impose narrow work classifications, and require that specialists be employed at a day’s pay to perform work that others could easily do — for example, requiring the employment of a plasterer to repair the incidental damage done to a wall by an electrician, which the electrician himself could easily repair.

To anyone who understands the role of the productivity of labor in raising real wages, it should be obvious that the unions’ policy of combating the rise in the productivity of labor renders them in fact a leading enemy of the rise in real wages. However radical this conclusion may seem, however much at odds it is with the prevailing view of the unions as the leading source of the rise in real wages over the last hundred and fifty years or more, the fact is that in combating the rise in the productivity of labor, the unions actively combat the rise in real wages!

Far from being responsible for improvements in the standard of living of the average worker, labor unions operate in more or less total ignorance of what actually raises the average worker’s standard of living. In consequence of their ignorance, they are responsible for artificial inequalities in wage rates, for unemployment, and for holding down real wages and the average worker’s standard of living. All of these destructive, antisocial consequences derive from the fact that while individuals increase the money they earn through increasing production and the overall supply of goods and services, thereby reducing prices and raising real wages throughout the economic system, labor unions increase the money paid to their members by exactly the opposite means. They reduce the supply and productivity of labor and so reduce the supply and raise the prices of the goods and services their members help to produce, thereby reducing real wages throughout the economic system.