The Rich Get Even Richer
by Gary Reber
“Government has also played a role, particularly the George W. Bush tax cuts, which, among other things, gave the wealthy a 15 percent tax on capital gains and dividends. That’s the provision that caused Warren E. Buffett’s secretary to have a higher tax rate than he does.
As a result, the top 1 percent has done progressively better in each economic recovery of the past two de…cades. In the Clinton era expansion, 45 percent of the total income gains went to the top 11 percent; in the Bush recovery, the figure was 65 percent; now it is 93 percent.
Just as the causes of the growing inequality are becoming better known, so have the contours of solving the problem: better education and training, a fairer tax system, more aid programs for the disadvantaged to encourage the social mobility needed for them escape the bottom rung, and so on.”
To make sense of the complexities of an economy that is rapidly progressing to greater and greater productive capital utilization through superautomation, automated factories, and computerized operations, a certain amount of education is required in order to grasp the vision for broadening private individual ownership in these productive means. Lowering tax rates or even eliminating tax rates, while spurring temporary growth of the economy, will further the economy’s problems because if the “system” is not reformed, the rich will keep on getting richer by accumulating more and more productive capital ownership, the earnings of which they will not spend on consumption, and instead reinvest to acquire even more concentrated ownership. All this will continue to systematically occur at the loss of the 99 percent capitalless who are dependent on fewer and fewer jobs and must rely on government redistribution in the form of make-work, boondoggle military build-up and maintenance, and welfare. This is all coming about because we have severely mismatched the power to produce with the possession of unsatisfied needs and wants. Those capital workers who have unsatisfied needs and wants have ready access through conventional finance to get as much or more capital as they want. Our tax laws are designed to further benefit the 1 percent by providing enormous write offs and credits to producers (corporations) who are owned by the few, who already produce more than they can consume. Those who have only their labor power and its precarious value held up by coercive rigging and who desperately need capital ownership to enable them to be capital workers as well as labor workers to have a way to earn more income, cannot satisfy their unsatisfied needs and wants. With only access to labor wages, the 99 percenters will continue, in desperation, to demand more and more pay for the same or less work, as their input is exponentially replaced by productive capital.
The government led the way out of the Great Depression with investment, which resulted in a growth economy and better paying jobs. Today’s world is much different, with exponentially productive capital growth. Private sector job creation in numbers that match the pool of people willing and able to work is constantly being eroded by physical productive capital’s ever increasing role. Over the past century there has been an ever-accelerating shift to productive capital––which reflects tectonic shifts in the technologies of production. The mixture of labor worker input and capital worker input has been rapidly changing at an exponential rate of increase for over 235 years in step with the Industrial Revolution (starting in 1776) and had even been changing long before that with man’s discovery of the first tools, but at a much slower rate. Up until the close of the nineteenth century, the United States remained a working democracy, with the production of products and services dependent on labor worker input. When the American Industrial Revolution began and subsequent technological advance amplified the productive power of non-human capital, plutocratic finance channeled its ownership into fewer and fewer hands, as we continue to witness today with government by the wealthy evidenced at all levels.
The solution is investment with the requirement that productive capital ownership be broadened, so that ALL Americans, can over time build a viable capital estate and earn income through their capital worker contribution as well as their labor worker contribution, as the rich minority does now and has always done.
This is a message that needs to become a part of the national discussion with the result that people will come forth with specific policies and programs to achieve the goal of broadening productive capital ownership simultaneously with the growth of the economy. I and others have advocated using insured credit loans with payback out of the earnings of the future new capital formation investments. Perhaps President Obama should be urged to create a Capital Ownership Commission to study the problem and hear and discuss testimony on solutions.