An Average Two-Income Family Is Now 15 Percent Poorer Than A One-Income Family Of 40 Years Ago
by Gary Reber
“Western wages have plummeted so low that a two-income family is now (on average) 15 percent poorer than a one-income family of 40 years ago.Using the year 2000 as the numerical base from which to “zero” all of the numbers, real wages peaked in 1970 at around $20/hour. Today the average worker makes $8.50/hour – more than 57 percent less than in 1970. And since the average wage directly determines the standard of living of our society, we can see that the average standard of living in the U.S. has plummeted by over 57 percent over a span of 40 years.”
People invented tools to reduce toil, enable otherwise impossible production, create new highly automated industries, and significantly change the way in which products and services are produced from labor intensive to capital intensive––the core function of technological invention. Binary economist Louis Kelso attributed most changes in the productive capacity of the world since the beginning of the Industrial Revolution to technological improvements in our capital assets, and a relatively diminishing proportion to human labor. Capital, in Kelso’s terms, does not “enhance” labor productivity (labor’s ability to produce economic goods). In fact, the opposite is true. It makes many forms of labor unnecessary. Because of this undeniable fact, Kelso asserted that, “free-market forces no longer establish the ‘value’ of labor. Instead, the price of labor is artificially elevated by government through minimum wage legislation, overtime laws, and collective bargaining legislation or by government employment and government subsidization of private employment solely to increase consumer income.”
Furthermore, according to Kelso, productive capital is increasingly the source of the world’s economic growth and, therefore, should become the source of added property ownership incomes for all. Kelso postulated that if both labor and capital are interdependent factors of production, and if capital’s proportionate contributions are increasing relative to that of labor, then equality of opportunity and economic justice demands that the right to property (and access to the means of acquiring and possessing property) must in justice be extended to all. Yet, sadly, the American people and its leaders still pretend to believe that labor is becoming more productive.
If we continue on our current non-workable path, the result will be further concentrated ownership of productive capital, which will require further redistribution through the tax system in order for the 99 percent to have income to create consumer demand.
Still, there are no leaders who are advocating a reform of our financial system that will end the monopoly the 1 percent now enjoys, which empowers them to continue to amass concentrated ownership of productive capital (represented in income through capital gains and dividends taxed at 15 percent). This unjust system must be reformed so that the 99 percent can acquire productive capital ownership simultaneously with the economy’s growth and pay for their acquisition out of the future earnings of the new capital formation investment. This is the Just Third Way that over time will empower the 99 percent to build viable capital estates, while simultaneously optimizing the application of technological innovation and invention and providing jobs as a result of far greater economic growth.
This should be the idea that has a strong political punch.
The current debate about a fairer tax code and ending the Bush tax cuts relates to what percent of Gross Domestic Product (GDP) should the federal government spend and what percent of GDP should be collected in taxes. Unfortunately, the current economy is growing at the Congressional Budget Office projected rate of less than 3 percent. This is pitiful, especially in light of the advances in technological production processes that are capable of producing a quality material lifestyle for ALL American citizens. The focus needs to be on growth with at least a 6 percent growth rate and a targeted 20 percent growth rate, which would allow the society to maintain promised health care and Social Security commitments to a growing elderly population, stabilize taxes at 15 percent of GDP, and balance the budget. With growth rates well over 6 percent, health care and Social Security benefits could be increased, taxes could be lowered, while achieving a surplus.
The path to such prosperity requires recharting the financial system to empower ALL citizens to acquire long term viable private, individual ownership portfolios representing assets of new productive capital (the non-human factor of production embodied in superatomated and computerized processes that require less labor worker or no labor worker input) and pay for their acquisition out of the future earnings of the productive capital investments financed by credit insured by the Federal Reserve.
The accelerated growth rate, due to the the infusion of credit into productive capital investment, would result in a majority of Americans earning additional income from wages and salaries and dividend, interest, and capital gains from other opportunities created beyond the dividend income payout from the productive capital investments. The accelerated growth rate would produce jobs that pay well and would significantly expand markets due to rising consumer demand, which in turn would generate greater business profits and opportunity for more productive capital investment. Everyone would benefit––rich and poor. There would be lower unemployment (making for the elimination of make-work), higher personal incomes, lower deficits due to greater tax revenues, lower tax rates, and better government services, with every citizen benefiting from a higher standard of living.
Such a path to prosperity would empower ordinary citizens, the majority of which are capitalless, to own a substantial percentage of the future productive capital formation creating the growth of the economy. The GOAL would be to assure that every man, woman and child would be able to accumulate a portfolio of productive capital assets large enough to provide a secure source of income. After a few decades, dividend income from the ownership of productive capital assets would become the primary source of income, though well-paying job opportunities would be plentiful for those who want to work for the satisfaction that can come from employment, whether in business, education, healthcare, science, and government or other self-rewarding contributions to society.