Paul Buchheit
NationofChange / Op-Ed
Published: Monday 22 April 2013
Some wealthy and uninformed individuals have referred to the lowest-income, 47 percent of Americans, as the “takers,” who enjoy government benefits at the expense of the high-earning one percent, but their claim is meaningless.

How Capitalism is Dismembering America

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Too many Americans are unaware of the extreme disparities that have been caused by the unregulated profit incentive of capitalism. Our winner-take-all system is flailing away at once-healthy parts of society, leaving them like withered limbs on a trembling body, even as the relative few who benefit promote the illusion of opportunity and prosperity for all. Concerned citizens armed with facts are not fooled. Instead, the more they learn the angrier they get. And as in revolutions of the past, discontent leads to change.

Hacking Off the Poor Half of Society

Some wealthy and uninformed individuals have referred to the lowest-income, 47 percent of Americans, as the "takers," who enjoy government benefits at the expense of the high-earning one percent. But their claim is meaningless. The total amount paid out in 'welfare' (Temporary Assistance for Needy Families) is less than the investment income of just three men in a single year.

The monthly TANF income for a family of four is less than what the average member of the Forbes Top 20 made in one second at the office.

The 47 percent don't own stocks. They don't own anything. The so-called 'takers' have ZERO wealth. The value of any assets owned by nearly half of the country is surpassed by their debt.

Slashing the Security of the Elderly

Recipients of 'entitlements' are accused by the uninformed of getting something for nothing. The opposite is true. According to the Urban Institute, the typical two-earner couple making average wages throughout their lifetimes will receive less in Social Security benefits than they paid into; same for single males and almost the same for single females.

Getting something for nothing? Yes, the rich are. Tax expenditures, which are deductions and exemptions that primarily benefit the highest-earning individuals, cost about 8 percent of the GDP, the same percentage that goes to Social Security and Medicare.

If just one of the tax breaks for the rich, the $113,700 cap on Payroll Tax, were eliminated, Social Security would be almost entirely funded for the next 75 years.

Slicing Up Justice

In the last few months American citizens, some of them children, have been arrested for:

Meanwhile, not a single banker was arrested for these actions:

  • HSBC Bank laundered money for Mexican drug cartels.
  • Goldman Sachs designed and sold mortgage packages that were meant to fail.
  • Bank of America and Lehman Brothers hid billions of dollars of bonuses and loans from investors.

Severing the Head from the Global Body

If you could gather together the world's 200 richest individuals, ask each one his or her net worth, get the actual numbers from Forbes, and then add it all up, the total would be more than the total wealth of half the population of the world, 3.5 billion people.

The U.S. is one of the greatest contributors to this shameful disparity. It's no coincidence that we're both the third least taxed developed country and the fourth highest in wealth inequality among all nations. It's also no surprise, with so little revenue going to the general public that our country is the fourth worst in the overall well being of its children.

Castrating the Taxman

Corporations have doubled their profits and cut their taxes in half in ten years. The burden of taxes, which Oliver Wendell Holmes called the price of a "civilized society," has been shifted to workers. For every dollar of employee payroll tax paid in the 1950s corporations paid three dollars. Now it's 22 cents.

Globalization has allowed U.S. corporations to stop paying for national defense and infrastructure and all the benefits of the U.S. legal and educational systems. All of the following companies had sizable U.S. revenues, but they claimed losses here while declaring billions of dollars of profits overseas.

  • Bank of America, with 82 percent of its revenue in the U.S., declared $7 billion in U.S. losses and $10 billion in foreign profits.
  • Citigroup, with 42 percent of its revenue in North America (almost all U.S.), declared a $5 billion U.S. loss and a $28 billion foreign profit.
  • Pfizer, with 40 percent of its revenues in the U.S., declared almost $7 billion in U.S. losses to go along with $31 billion in foreign profits.
  • Abbott Labs, with 42 percent of its sales in the U.S., declared a $256 million U.S. loss and $12 billion in foreign profits.
  • Dow Chemical, with 32 percent of its sales in the U.S., declared a $15 million U.S. loss against foreign profits of over $5 billion.

Conclusions

If there's anyway capitalism will work it has to be regulated. Otherwise greed takes over. Blind greed. The sneering head at the top of the body watches limbs being chopped off, but it doesn't seem to recognize that we're all bleeding to death.



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ABOUT Paul Buchheit

Paul Buchheit is a college teacher with formal training in language development and cognitive science. He is the founder and developer of social justice and educational websites (UsAgainstGreed.org, RappingHistory.org, PayUpNow.org), and the editor and main author of "American Wars: Illusions and Realities" (Clarity Press). He can be reached at paul@UsAgainstGreed.org.

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37 comments on "How Capitalism is Dismembering America"

Grant Martin

April 29, 2013 6:46pm

Complications why ?
The Earth is a Perfect Place to Live
The problem with the USA and the world is it's filled with Stupid People.
There is a technology 6 thousand years old that will fix this problem it is called
TM
see

http://www.davidlynchfoundation.org/
Give Until it Bleeds !

http://www.youtube.com/watch?v=TfIqvZLIZz8

http://www.youtube.com/watch?v=z2UHLMVr4vg&NR=1&feature=endscreen

study everything on these sites - watch all the videos
cough up the money to learn TM properly & sit twice a day in silence for 20 minutes
nature will come to save us

Eat only organic food. Preferably food you have grown yourself.

Protect yourselves and let the dumb ones go off eating Stupid Food

If you live in the USA travel to Fairfield Iowa - see their plans
for the future of our dear world ... the light glows bright there.
Good luck !

Quinn

April 25, 2013 7:04am

"If just one of the tax breaks for the rich, the $113,700 cap on Payroll Tax..."

WAIT, WHAT???? Social security CONTRIBUTIONS are for a future benefit and are NOT A TAX BREAK! Good heavens! Yes, it has been subtly mislabeled the "payroll tax" over the years but that is just so people can then say howlers like "it's a tax break for the rich!"

And if you want to take almost 13% of my income, then I should get a HIGHER amount when I retire. As it is, you want more and in addition, people demand means tests!

And if $113,700 is your dividing line for who is "rich," and anyone making over that is stealing from people by getting an undeserved "tax break", I invite you to raise kids in most of the Northeast!

GreenInCA

April 29, 2013 9:47am

Social security contributions are indeed for a future benefit, but it works like a tax in that a percentage of your wages (not dividends, interest or capital gains!) is taken off the top. It's regressive in that it's (A) a flat tax, which hits hardest those whose wages are so low that every penny they get goes for necessities, and (B) it has a limit, so that those who could best afford to keep paying it see it suddenly disappear from their withholding statements toward the end of the year (or in mid-January if your income is high enough). I have no problem with having high-end contributors get higher benefits, nor do I have a problem with making retirement benefits taxable. The combination of removing the cap and making SSI taxable would be a reasonable reform, IMO. This chained CPI thing is an attempt to cut the benefits that have already been paid for, while pretending it's just an accounting change.

And if you are concerned about the impact on those who get maybe one or two checks, late in the year, with no FICA withheld, and count on that year-end "bonus" to fund holiday expenses, consider the possibility that the base rate could be lowered if the cap were removed. In other words, use some of the money now not being paid by those who've hit the cap to subsidize everyone, so that the area under the curve would be somewhat greater (more annual contributions to the SS Trust Fund) but the slope of the line (which currently goes flat after X = 113,700) would be lower (but constant, rather than going to zero past X = 133,700). THAT would be progressive.

Brian Glennie

April 24, 2013 10:47am

Can modern civilization survive monopoly capitalism?
Free enterprise is on life-support!
A little ditty heard on Wall St, many corporate and Washington offices:
'The Middle Class can kiss my ass(terix),
I'm hangin' with the Upper Class at last"

Psl10

April 23, 2013 10:13am

It's so very un-thoughtful to blame the simple term "capitalism" in a discussion of what is wrong with our society. There is nothing wrong with primarily private ownership of business and a profit motive. The opportunity engine of capitalism has improved the lives of the more people than any other system ever has. But it's no more perfect than any other system, and is vulnerable to the character of its participants, as with any other system. Greed, selfishness, insatiable appetites for wealth and power in what has transformed into a status and consumption economy are issues that have nothing to do with capitalism itself and everything to do with the collective atmosphere we allow. The corporate-state-banking alliance is a huge part of the problem, as is the government's massive monetary expansion which has created unreasonably cheap credit, monstrous bubbles which inevitably burst and harm the 99%, discourage savings and self-control, and lured Wall Street into full casino mode.

And if anyone thinks that turning all of this over to regulation and control by an expanded version of our increasingly fascist government will help, then you are amazingly naive of world history. Let's put aside the blanket labeling of capitalism as an evil and discuss the real problems. Throwing out capitalism is not an option for the majority of us who know that traveling the road to serfdom accelerates as one rejects capitalism for centralized state control. We're considerably down that road already.

greggerritt

April 23, 2013 1:45am

Ecological collapse makes a lot of this meaningless as there will be no more real economic growth.

robertcoss

April 22, 2013 10:57pm

A lot of good tidbits in this article.
Regulation just gets evaded; it hasn't been working (see Wolfe on Moyer & Co.) I think, not until money gets out of the way of our politics, regulation won’t work. Lessig’s plan (rootstrikers) I think is the way to eventually get regulation to work again. It turns the power of our government back to the people.

Norman123

April 22, 2013 6:37pm

The lust for power/wealth has been dismembering the world since time immemorial as the pursuit of riches have been the lure for many scoundrel heros (those who succeeded). The present nature of Capitalism has become myopic: it is killing the goose that has been giving them golden eggs through centuries. The blind pursuit of profit is poisoning the air, water, land; killing life in the oceans and land alike with no alternatives or sustainability. The blind pursuit of power and money seems to have robbed the senses of those who are in the position to change course to avoid extinction of life on planet earth. It seems unbelievable but it is happening. All profit systems full speed towards self-destruction....

BozoAdult

April 23, 2013 6:29am

http://www.youtube.com/watch?v=qOP2V_np2c0&feature=player_embedded

Grant Martin

April 29, 2013 7:10pm

Talking about information overload, thanks for posting the video.
The only solution is for us is to get smarter.
The only proven way to increase the size of your IQ is to practice TM

see http://www.tm.org

Good Luck we all need it !

Peter Burgess's picture
Peter Burgess

April 22, 2013 5:52pm

Paul Buchheit gave us a good summary of the problem, but there have been hundreds, if not thousands of summaries of the problem. On the other hand there have been little discussion about what to do about it.

Several decades ago there was a fear that Communism might be the alternative to Capitalism, but Communism demonstrated that it was not a sustainable economic idea, at any rate in its Soviet version. This concern vanished in the early 1990s with the implosion of the Soviet economy.

But Capitalism is also in trouble, and a big part of this is the way the monetary mechanism works and the terrible trio of money metrics: (1) money profit for business; (2) stock prices in capital markets for investors; and (3) GDP growth for politicians and pundits. When decision makers use these metrics to assess performance, the results are bound to be bad for everyone except the investor class, C-level executives and enabling politicians.

Adam Smith concluded that a market based laissez faire system would deliver the optimum outcomes in the economy of his day. But this was a low productivity and shortage world. 200 years later the economics changed significantly because of amazingly high productivity which produced a surplus of production. The bye-product of this is a surplus of labor, increasing shortage of resources, increasing damage to the environment from solid waste, carbon pollution, etc.

Bluntly put, since the 1970s the quality of life for workers in industrialized countries has been going down while the owners of capital have appropriated all the benefits of increased productivity. Quality of life to most of the world's poor remains scandalously low.

My contribution to the needed change is to promote metrics that are more meaningful. I call this TrueValueMetrics. The concept is simply that in addition to the accounting and reporting of money flows, there should be equally rigorous reporting of value flows. There should be rigorous money and value analysis for all economic activity and the data from economic activity then aggregated both into the implementing organization AND into the community. Based on this, there can be optimization of the economic activity so that BOTH the implementing entity and the community (place) are both winning.

When this is applied to the energy sector, the big integrated oil companies will have to account for the depletion of the petroleum resource in their value analysis which makes their operations far less profitable and makes renewable energy way more competitive.

When this is applied to the implementation of outsourcing, the increase in money profit for the business has to be offset by the value destruction that happens in the community. The numbers work a bit like this. Firing the individual in the community and outsourcing increases the profit by (say) $20,000 but the person and the family and the community no longer has incoming income of (say) $40,000. But that $40,000 has a 'multiplier' that may be 2.5 or maybe 10 ... but (say) 2.5 so the community impact is $100,000.

Profits up $20,000 ... community down $100,ooo does not sound like a good deal for the society as a whole. But it is worse ... if this generates long term unemployment, the loss of value gets to be continuous.

At the moment there is not a CFO in the corporate space that is required to think in these terms. I was one some time ago. Our work was to figure out how profits would be increased for the entity ... impact on the community is not in the figuring.

Anyone that watches sport knows that when you change the way the game is scored, you change the way the game is played.

Let's change the scoring system in the economy, and then we will change the behavior in the economy.

Related to this is the need for reform of the money regime. Specifically, there should be ubiquitous local currencies to complement the out-of-control fractional reserve money that is abundant where it is not needed and scarce where it is needed.

With more meaningful metrics and complementary currency, the modern economy can deliver on its promise. The promise is huge. Science and technology ... knowledge ... is better than at any time in history. More youth around the planet are better educated than at any time in history. The opportunities exist and huge the needs exist ... but the money profit titans of the banking and business community do not know how to engage in a way that will deliver on the potential because the only dimension they are working with is money profit, stock prices and GDP growth!

Jeff Lewis

April 22, 2013 10:29pm

Good points.

I especially appreciate your paragraph about Adam Smith. I think we all need to recognize how much the economic environment has changed over time. In Adam Smith's time, it was all about individuals figuring out how to be self-sufficient, and maybe figuring out how to tap some local resource. The closest thing to a CEO was a slave owner; the closest thing to a corporation was a large sailboat filled with sailors (paid mostly with rum) contracted to serve the queen; disputes were settled brutally, with a dagger or otherwise.

Today we have legions of lawyers who happily get rich creating documents to shield accountability and delay any justice; we have a majority of corrupt politicians who cannot see the tip of their own nose past the ink on a dollar bill; and we have convoluted laws and a broken judicial system that only accelerates the present orgy of greed.

Both Capitalism and Communism were 'invented' centuries before the current program, which is filled with complicating workarounds. As such, it is frankly silly and ineffective for any of us to bog down too much on the two 'C's'. Hell, our grandparents and parents wasted far too much effort on this debate, which was folly then, too.

GreenInCA

April 29, 2013 10:07am

This reply is for both Jeff and Peter.

You both mention communism as the (deservedly) failed alternative to capitalism. In today's global economy, those (mostly young) people who know they're being exploited but don't understand how, and are desperate for an alternative, aren't turning to communism. They're listening to the Wahhabist imam at their local mosque, and turning to radical Islam.

Think about what Osama bin Laden said he was fighting. It wasn't Christian missionaries, or Hindus in India, or even Shiites (though he was Sunni). It was capitalism. He didn't target the Vatican; he targeted the World Trade Center. No wonder he's viewed as a martyr by millions outside this country who see him as the 21st-century Che Guevara.

Two sad ironies here: first, he, and the aforementioned madrassas, were and are supported by Saudi oil money--provided by short-term-damn-the-pollution-let's-burn-it capitalism; second, he permanently alienated from his anti-capitalist cause all those Americans who today are being exploited by the new colonialists. Those colonialists are multinational corporations, not national governments any more. The 19th century is over, but colonialism is alive and well. Go try to get Monsanto to permit labelling of GMO foods, or meat packers to quit killing and maiming their (largely undocumented) workers.

And those would be minor efforts compared to trying to break up the "too big to fail" casinos masquerading as banks. IMO that will be a struggle on the scale of Gandhi's efforts to get England out of India.

greghilbert

April 22, 2013 5:53pm

Commenter Ed B below chides others for not grasping the math of SS, and proceeds to demonstrate he himself does not understand it, because he does not want to. In fact, eliminating the ceiling on withholding would keep SS fully funded without any other significant change for another 75 years. And still it would be the case that people with incomes over $250,000 -- including those with tens of millions or even billions in wealth, and incomes of millions or even a billion in a single year -- would still be paying a lower aggregrate tax rate than they did until Reagan's election in 1980 brought us trickle-down economics and trickle-up tax welfare for the elite. Such commenters as EB speak from the perspective of self-interested elites and wannabees who do not remotely understand the deteriorating situations of the vast majority of working Americans, nor do they care. In his mind he could do better investing 10% of his income in some other way, and would be happy to accept the risks. He could care less about the vast majority who could not, and who simply want something modest they can count on, the cost of which they themselves help pay in full or large part, chiefly depending on how long they live after retiring. Fie on the greedy elites who feel no moral obligation to contribute. Show such blood-sucking predators something they will understand, pitchforks.

mamabashums

April 22, 2013 5:27pm

GARY REBER can you say that in english it is just that the competion for what you suggest makes it less valuable. Maybe it is time to tell the 1% to start their own city and state and move there we could move out and they can move in.
Start your own goverment your own police, schools and other infrastructure
you may need and then decide how they will pay for it with their own money.
Seems like they want to be rid of us anyway and start their own army with the 1% s children they can fight hard look how hard they fight to not pay taxes.
Maybe they can invade korea thats a good place to start.Yeah the 1 % dont need us do they but I dont need them either.

Ed Bradford

April 22, 2013 3:35pm

Social Security comments in this post are inaccurate and demonstrate
a lack of understanding of the math of Social Security.
To wit: Eliminating the cap won't solve the problem. The Cap
also limits the size of the benefit. If you eliminate the cap and
limit the size of the benefit to be based on $113,500 you fundamentally
change Social Security to a welfare program. Very few people who
work for a living would support that. Today, Social Security is the
worst of all possible things people can do with 12.4% of their life
time income. However, all are forced to pay payroll taxes or go to jail.

Social Security screws everyone and fiddling with it like the gentleman
in this article suggests screws even more people. Fix it or leave it alone.

Grinder Monkey's picture
Grinder Monkey

April 22, 2013 4:54pm

Your comment betrays your age. I have paid into SS all my life and now it keeps me alive. Reread your comment when you reach 65, your hair is falling out and you need a $40,000 surgical procedure.

frigate

April 22, 2013 2:29pm

What good are taxes if we give the revenue to bought politicians to give to their oligarchy owners? Without direct democracy, how can we have tax fairness? I would not mind paying taxes if I could decide where my tax revenue would go.

Grinder Monkey's picture
Grinder Monkey

April 22, 2013 4:56pm

A tax by definition is unfair and so is life.

Saturn66

April 22, 2013 1:45pm

It's not true that very wealthy people do not believe in redistributing wealth. Statistics from the last 30 years show that they are redistributing it to themselves. Look at the average income graphs. Their line looks like a jet taking off, while the graph line for almost all other people looks more like the horizon line of a placid lake.

Everyone who has a job works hard, so I'm not buying the notion that income and hard work are somehow correlated. Watch the man doing your gardening, or the woman cleaning your hotel room or the woman teaching your children for peanuts. How about first-responders, police officers, military people? It wasn't the hedge fund managers running toward the victims of the Boston bombs.

So who works hard? One of my relatives was an airline pilot--cool gig. He retired at 52 with $100,000 per year benefit and full health care. Or my cubicle mate's brother who, barely out of college, worked on Wall Street during the 90s, freaked because he didn't really know what he was doing. Nevertheless, he made several million a year and then went searching for just the right wrist watch to spend a little of it on.

I don't care who you are or how much money you make, in the private recesses of your mind, you know this inequality is criminal and cannot be sustained. The other name for the 99% is "customer."

Grinder Monkey's picture
Grinder Monkey

April 22, 2013 5:02pm

Your comment is far ranging and somewhat disjointed. Try working as a dealer in Vegas for six months.

anono

April 22, 2013 12:44pm

The problem we're facing is that the richest people in the world only have about half of the wealth of the world. They want it all, and won't stop til they get it all.

Jeffrey Hill

April 22, 2013 12:09pm

Tax Evasion by and Income Inequality for the Filthy Rich (billionaires, millionaires, and Fortune 500 corporations) destroys nations.

Obama, Congress, and Holder are their enablers -- they are domestic enemies of the US.

Jeffrey Hill

April 22, 2013 12:05pm

Corporatist Obama has deputized the US military to act as the national police pursuant to the National Defense Authorization Act to deal with any citizen public protest to the transformation of our representative democracy into a fascist oligarchy/corporate kleptocracy/idiocracy.

Gary Reber

April 22, 2013 11:49am

At the core of understanding America’s economic disintegration and seemingly intractable economic problems is the need to learn a new way of thinking that explains why the operation of our modern industrial economy is simply not working. Although tectonic shifts and advances in the technologies of production promise the increasing abundance of exponential growth in the economy's capacity to produce products and services with much less human effort, there is widespread poverty and a disintegration of middle class status. Even when the economy has experienced some degree of growth, too many people remain poor or are excluded from the resulting limited economic abundance. The notion that the economic benefits flowing to a wealthy class will "trickle-down" is a non-sensible theory and only results in "trickle" menial, low-pay jobs, private charity, and public taxpayer-supported welfare, in plain view and disguised.

What has and continues to escape the focus of conventional economists, and the politics of progressives, centralists and conservatives, is that the wealthy are rich because they own productive capital––non-human wealth-creating assets used to produce products and services. The reality is that in most economic tasks and in the overall economy, productive capital (not human labor) is independently doing evermore of the work that results in wealth-creating assets. It is productive capital's increasing productiveness and evolution, rather than human effort (productivity) that is the productive means most responsible for economic growth. Effectively, technological innovation and invention limits new higher productivity jobs to relatively fewer workers, leaving most other people willing and able to work with lower paying job opportunities or no jobs at all.

It is essential that people focus their thinking on the understanding of who and what creates wealth, in order to fully understand how to solve growing income inequality and the disintegration of the nation wherein the majority of citizens are regulated to low-pay job serfdom and public welfare.

The required new thinking must respect property rights, and the right of all citizens to acquire private and individual ownership of wealth-creating productive capital assets. This is the path to prosperity, opportunity, and economic justice––the ONLY path that will assure democratic and free market conditions.

The reality is that while increasingly productive capital growth is the means to achieving general affluence for all citizens, the practical opportunity to acquire productive capital is not accessible to everyone. The vast majority of citizens are unnecessarily excluded from effective participation in the property rights and earnings of productive capital wealth-creating assets. This is not to say that the opportunity to acquire productive capital does not exist, but that the opportunity is unnecessarily denied to the middle class and poor (the savings-poor capital-less and under-capitalized) and effectively limited to the few who are already well-capitalized and thereby wealthy. Even though the wealthy ownership class represents less than 10 percent of the population with the very rich representing 1 percent or less of the population, they all use the potent financial mechanism of capital credit to acquire productive capital assets, with virtually all assets acquired using the earnings of the productive capital to pay for their acquisition. Through this financial mechanism the rich effectively acquire more riches.

In the meantime, while the economy's technical prowess is capable of producing the products and services needed and wanted by ALL people, the poor and middle class are unable to realize their needs and wants no matter how hard they work, because they cannot earn enough through a job to consume what the economy can produce.

While ALL citizens have the right to earn an income through participating in production, ONLY a few are privileged to effectively participate in production beyond their own labor to include their productive capital wealth-creating assets.

When the right to participate in production through productive capital ownership is effectively denied, especially when tectonic shifts in the technologies of production destroy and degrade the worth of jobs, then the people affected become increasingly insecure in satisfying their and their family's basic survival. Such conditions force them to seek low-pay, low-security jobs, or either charity or welfare, or desperately engage in illegitimate means. Such disintegration tears at society's sense of fairness and justice.

The solution should be obvious––that is to eliminate what amounts to an effective monopoly on productive capital acquisition. This will unleash the economy's full potential to harness and employ productive capital to create wealth-producing assets broadly owned by ALL Americans, while respecting the full property rights of all and without taking anything from the wealthy who now own America. The effect would be to democratize both political power and economic power.

The solution is to employ capital credit mechanisms to facilitate the productive capital acquisition by EVERY citizen, whether poor or in the middle class. This can be facilitated on the basis of self-finance, whereby the productive capital assets, after returning its acquisition costs, begin to pay a fully-distributed capital earnings dividend to its new owners, thus initially supplementing their labor income and reducing their taxpayer-supported welfare dependence, and over time building income to replace their dependency on job earnings and secure their retirement as they age.

Significantly, by facilitating the acquisition of FUTURE productive capital wealth-creating assets by ALL Americans, everyone will increasingly be able to afford to purchase with their productive capital earnings (dividend income) what is increasingly produced by productive capital. This in turn will create the market conditions for sustainable economic growth, and as private, individual ownership spreads, the larger the economy will grow as people's incomes increasingly grow and they purchase more products and services to satisfy their needs and wants. Thus, the effect created would be a self-propelling economic engine of growth capable of producing general affluence for every American, and not limited to those few who now OWN America’s productive power and whose consumption needs are satisfactorily, if not overly met.

To reform the system and make universal productive capital ownership America's future reality requires limited government action. Traditionally, government programs for investment have produced jobs, but relatively few capitalist owners. Until the structural defects of the system are reformed to achieve effective individual ownership of FUTURE productive capital for ALL, the system will continue to perpetually benefit the well-capitalized wealthy, while everyone else is regulated to scarcer jobs and welfare dependency. The action that is required is to eliminate the financial mechanism barriers that effectively concentrate the ownership of productive capital wealth-creating assets, and establish an infrastructure necessary to protect the productive capital acquisition rights of ALL citizens.

Furthermore, ALL government incentives supported by taxpayer dollars and debt, to stimulate the economy with the object of providing more growth and jobs, need to have the stipulation that the corporations receiving the financial benefit demonstrate the creation of new owners, both employees and non-employees. Today, such stimulus does not effectively create new productive capital owners but benefits those who already OWN, in the name of job creation. But the jobs and corresponding wages, which actually result, are often short-lived and always insufficient to effectively assure financial security. The proposition that taxpayer dollars and debt stimulus be used to create new owners in FUTURE productive capital creation, acquired by using the earnings of productive capital, will enable people to harness for themselves the productive power of capital wealth-creating assets to pay for its own acquisition and restoration and thereafter to earn income indefinitely.

The wealthy ownership class understands and employs the strategy of investing in opportunities expected to pay for themselves in a reasonable period of time, typically 5 to 7 years, perhaps 10 in some circumstances. This is the fundamental logic of corporate finance couched in "return on investment" terms. This same logic is the personal investment strategy steadfastly followed by successful capitalized and under-capitalized investors. The rich further understand that once the acquisition cost is paid for out of the FUTURE earnings of the productive capital investment, the asset then continues to earn income indefinitely, or in perpetuity. This is precisely the process used by the rich to get richer.

Thus, rather than preach austerity and redistribution, we should seek prosperity through economic growth financed through capital credit and paid for out of the earnings of productive capital while simultaneously creating new capital owners. This new earnings source will enable ALL Americans to earn sufficient income to live well, and not rely solely on a job. This will also strengthen individualism and respect for equal rights and empower individuals to more fully realize their inherent potentials.

The end result will be to forge a true free market economy in which EVERY American privately and individually participates in the increasing utilization of productive capital to create wealth, and in turn uses this viable dividend income source to satisfy their consumer needs and wants. Collectively, this will fuel massive, sustainable economic growth.

This new paradigm is the subject of the Agenda of The Just Third Way Movement at http://foreconomicjustice.org/?p=5797 and is founded on the concept of Monetary Justice (http://capitalhomestead.org/page/monetary-justice).

A Petition to reform the Federal Reserve to provide capital credit to ALL Americans can be supported at http://signon.org/sign/amend-the-federal-reserve.fb27?source=c.fb&r_by=3.... The proposed Capital Homestead Act (http://www.cesj.org/homestead/index.htm and http://www.cesj.org/homestead/summary-cha.htm) would accomplish the necessary reforms.

Grinder Monkey's picture
Grinder Monkey

April 22, 2013 5:16pm

Capitalism by its very nature is divisive, cruel and unfair. Money, however, at its very core is the good faith of the American People, their promise to pay no matter what the circumstances or challenges. As the money dries up, which we know is coming very fast now, the promise of the American people will evaporate, they will be helpless to act and can only REACT. They will realize that they have been betrayed, bamboozled and defrauded of the ONE THING that bound them all together as a nation. This was achieved by a corrupt banking system with the help of some of the most trusted officials in government. Once it is gone good faith cannot be rekindled without rebuilding the banking system and jailing the perpetrators.

greghilbert

April 22, 2013 12:16pm

Paul B has given us an outstanding article that cites fact after fact to chronicle the outrageous blood-sucking of the 99% by the wealthy, thanks to corrupted Repub-Dem elites from Palin to Obama. May the 99% awaken to the need to march on Washington and Wall Street with pitchforks. Commenter Gary R has offered a thoughtful partial solution, but (I regret the need to say) has conveniently ignored the simple fact the the elites of Washington and Wall Street will ignore and thwart such proposals until compelled by citizen threat of force or their overthrow by revolution.

Individual Liberty

April 22, 2013 11:08am

This is the most asinine thing I have ever read. Really, capitalism, the industrial structure that has created the greatest economy and brought the most people out of poverty in the history of the world, is now destorying us?? Show me another system that works better in another part of the world. Communism? Socialism?? I think not. America has created the greatest chance for opportunity than any other place on Earth, hence my millions of people try to come here every single day. Yet you tear it apart because it does not distribute every asset evenly?

You can never guarantee equal outcome, only equal OPPORTUNITY. So what if someone has more than another person. If they worked hard their entire life for it, who are you to take it away? You think the person that works hard for 40 years building a business should have the same as the person who lays on a couch all day and refuses to provide for themselves and their family?? This is what's so wrong with the left in America. Humans are inherintly different, so naturally they will all want/have different things. Not everyone wants a mansion, but some do. Not everyone wants to be able to vacation 2 months a year, but some do. Not everyone wants to work 40 hours/week, but some do. Theft through the tax system is legalized plunder, and capitalism is not the cause for income disparity in the US - inherent differences in all of us is. Paul, you need to have your head examined.

pbillp65

April 23, 2013 6:12am

Actually if you look back at our history it wasn't the Laissez Faire Capitalism that is the flavor of the day that brought us the Worlds greatest economy and raised more people out of poverty and into the middle class, it was the NEW DEAL Capitalism or Regulated Capitalism and associated high income taxes on both profits, earnings and the biggest tax scam of all Capital Gains. That is what made the United States the greatest economy the world had ever seen. This Regulated Capitalism with it large powerful labor unions allowed people to move from poverty to the middle class.
If you look carefully, you see we have almost no regulation and Unions are all but extinct, and along with that we have the 4th largest wealth inequality in the world and a fast shrinking middle class and deteriorating infrastructure, all sacrificed at the altar of Profits and more Profits because Profit trump People.....

BozoAdult

April 23, 2013 4:31am

Apparently you missed how the tax system has changed entirely in the past several decades.

Read the article again, this time try to divorce yourself from Fox "News" preconceptions.

We know the tax rates during the nation's most prosperous period. And we know what it is now. And we know the excess wealth being created at the top today is not stimulating job creation.

"For every dollar of employee payroll tax paid in the 1950s corporations paid three dollars. Now it's 22 cents."

Today's tax rates could hardly be considered theft.

http://www.youtube.com/watch?feature=player_embedded&v=QPKKQnijnsM

Jeff Lewis

April 22, 2013 9:52pm

Just a gut feeling, in reply to your 'asinine' comment...

Capitalism serves us well when it is coupled with an effective regulatory structure so that greed cannot run rampant. That structure has all but disappeared in our Nation in recent years.

Also, Capitalism can outperform other systems, and does produce good returns in situations where natural resources are abundantly exploitable, so that each person can apply their wit and industry toward producing something new and of value. This was what we had in North America when the bulk of the white immigrants were along the eastern seaboard, and had enough new lands to conquer (and other humans to despoil, though we tend to look past that aspect of our past) to enable many generations of young Americans to "Go West!"

That is all gone. Done. Today's version of capitalism is the twinkle in Mitt Romney's eye while he ships jobs off to China, closes down local factories, forms new low-wage jobs that enslave, and rationalizes it all is good and in the service of God and tithing. Old capitalism was Constructive; new capitalism is Destructive.

Good article, Paul. Thanks for sharing your concerns.

Ambular

April 22, 2013 6:41pm

@Individual Liberty: The problem isn't that people who aren't willing to work don't have any money. It's that (a) people who want to work cannot find a job that will support them and (b) people who ARE working hard STILL don't have any money, even though they're being required to continually increase productivity in lieu of creating more jobs (and any that are created go to people in other countries,) all so that the corporate officers and stockholders can keep by far the lion's share of the profits that these hard workers are producing!

Capitalism can be a good system if there are some checks and balances in place to ensure that everyone who is willing and able, and who is trying to contribute, can do so and reap the benefits. There have been times in our nation's history and in living memory when this was the case, but currently for a growing number of our citizens, it is not.

Oh and by the way, there are a number of different ways in which the well-being of a country's people is measured by comparison to other countries, and while the U.S. consistently ranks in the top twenty, it's not number one in any of them. The socialist-leaning Scandinavian countries, and Norway in particular, tend to beat us pretty consistently. https://en.wikipedia.org/wiki/Standard_of_living_in_the_United_States

jfill99

April 22, 2013 12:42pm

INDIVIDUAL LIBERTY, you are talking in the extremes. There will always be some that cannot work or will not work - we will have to address them separately so that eventually they become a smaller fraction of society. We are talking about the wealth generated by the 99% that is systematically (by influencing lawmakers and laws, and controlling the media, the educational institutions, etc.) redistributed to a very narrow band of citizens. If you believe this is not happening you are either living in cave or simply refusing to see what is going on around you.

revzef

April 22, 2013 12:19pm

Do you really truly believe that those who own corporations actually work hard for their money? Do you place all of the poor on the couch in front of the TV? You are a victim of propaganda, my friend. This is what the corporation-people will have you believe, and since they own all of what comes through the TV, it is easy for them to get people like you to believe without question. You are right about OPPORTUNITY, but here in America, and actually everywhere in the world, no matter what the form of government, opportunity is NEVER equal. And, though it is the so-called "left" that can be thanked for the concept, it is the so-called "right" that takes it away and distributes it to those who already have plenty. And the capitalist system is designed to allow for this. Indeed, it may not be capitalism itself that is the problem, but it is capitalism, as defined in America, that allows corporations to create -- and I mean CREATE, as opposed to "earn" which they do not -- billions of dollars without paying a single penny in taxes. I say they create money, because all of their overhead is taken out of ordinary people, whose land, possessions, and lives are simply taken by them without permission or payment, leaving them to require government aid, which is called "entitlement" or "taking". The poor are being maligned for the very condition that the rich have left them in, via the crimes they have perpetrated upon them. And Holy Capitalism is the system through which they do it. Look this up if you dare. In short they have created a socialist system for themselves within which to distribute the wealth they take from the rest of us via capitalism. This is the truth of it all. Perhaps you should examine your own head, as it is being brainwashed by these corporations. If you were to do the smallest amount of investigation into the points you are attempting to make, you will find that, though this may have been (ever so marginally) true prior to the 40's, it is no longer. Laws have been enacted since then, through the workings of capitalism, that have allowed the land and the people to be literally robbed and stripped in order to enrich these corporations, and the ever increasing taxes are coming out of the poor, going into the pockets of the wealthy, and enlarging the ranks of the poor. This is unregulated capitalism at work. No, the poor are not lazy; THEY have WORKED their 40 years for their meager wealth, which is then stolen from them. Look it up. Educate yourself. I dare you to look the truth in the face.

Riconui

April 22, 2013 12:01pm

The most asinine thing you've ever read? May I suggest you go to Newsmax or some other equally wing-a-thon website. I can assure you, it's far more asinine than anything you'll find here. Or maybe not to you, huh?

Saturn66

April 22, 2013 10:46am

Some people at the top make as much as small countries! There is no number that's enough, because it's about power and strutting, not money. I've said for 20 years that Capitalism is not longer working as planned. I hate being right, but something has to be done. I'm encountering more and more Americans who are looking for another country. Subscriptions to magazines like International Living are up.

I wish I could see change coming, but I don't. The people in charge of change are the ones protecting their entitlements--entitlements like legal hiding of income, capital gains barely taxed, no-fee day trading, and ridiculous tax deductions. Even the way hedge funds operate--with millions of trades an hour done automatically by computers--is harming our country and our people, but that's okay. Profit in the moment is the name of the game. When the country is despoiled, the perpetrators will move on to Dubai or wherever the golden goose is currently laying. There is no partiotism, there are no values or principles, there is no compassion. They don't even bother to read articles like this one. We are the choir.

RIVietnameravet

April 22, 2013 10:25am

You could have mentioned the article in the NYTimes last week listing hedge fund managers who made over one Billion..yes Billion dollars last year..God forbid we tax them an extra 3 %!!