Why the Wealthiest 1 Percent Are So Much Richer Than You (Op-Ed)

Michael Kraus, University of Illinois, Urbana-Champaign   |   April 02, 2014 01:46pm ET

A study found that drivers of upper-class cars cut off other cars and pedestrians more often than those cars indicating lower socioeconomic status. Credit: Deklofenak | Shutterstock View full size image

Michael Kraus is an assistant professor of social-personality psychology at the University of Illinois, Urbana-Champaign, and director of theChampaign Social Interaction (CSI) laboratory. His research focuses primarily on issues of social hierarchy, economic inequality and economic mobility. Kraus contributed this article to Live Science's Expert Voices: Op-Ed & Insights.

Last December, U.S. President Barack Obama called the widening income gap between the richest and poorest in American society "the defining challenge of our times." This sudden turn in economic policy by the President surprised me — politicians rarely talk openly about income inequality, because fixing the problem is a complex and polarizing issue. So it was interesting to hear, in the 2014 State of the Union Address, President Obama detail several specific policy goals to help reduce the income gap in America — such as raising the minimum wage — that would, he claimed, "build new ladders of opportunity into the middle class."

Economic inequality between the wealthiest 1 percent of Americans and the rest of society has deepened since the 1970s, and government, since that time, has largely run in blissful unawareness of this widening gap between the rich and poor. This alarming political inaction when it comes to economic inequality should raise concerns for many Americans, because research indicates the rising income gap is measurably harmful to all Americans and not just the poorest sectors of society.

For example, large scale surveys conducted by Shigehiro Oishi and colleagues at the University of Virginia, and reported in the journal Psychological Science,show reduced reports of happiness and general trust in Americans during years where economic inequality is higher, relative to years when inequality is lower. As well, in a review of studies examining health in societies that differ in economic inequality, published in Social Science and Medicine in 2006, roughly 70 percent of studies suggested that societal health worsens as economic inequality deepens. When economic inequality rises, society suffers.

In the face of this compelling evidence suggesting that economic inequality is harmful to all Americans (including all voting Americans), why might economic inequality, somewhat paradoxically, continue to increase in American society, largely unchecked by government policy? While there are a number of economic forces at work that contribute to economic inequality in society, a still more powerful force for maintaining inequality might be the psychological motivations of individuals.

First and foremost, it is uncomfortable for many Americans to come to terms with the reality that we live in a society that rewards people unequally for their hard work, ability, and talent. Such realities fly against any beliefs individuals have about the promise of the American Dream of equal opportunity. This might be why, in a 2011 Perspectives on Psychological Science article, Mike Norton and Dan Ariely found that Americans are blissfully unaware of just how unequal America is in terms of wealth distribution.

A second barrier impeding reduction, or even acknowledgement, of widening economic inequality in society arises from the self-serving motivations of those at the top of society's hierarchy. Over the last decade, my colleagues and I have examined the influence of one's perceived social rank in society, relative to others, on beliefs about the structure of society. Across more than a dozen studies, we have found that high-ranking individuals, on average, choose self-preservation. Specifically, people who perceive themselves as having the most money, the best education and the best jobs tend to protect their own lofty positions in society at the expense of others they deem less deserving.

For example, in a 2009 study published in the Journal of Personality and Social Psychology (JPSP), we found that high-ranking individuals, when presented with an actual picture showing rising economic inequality between the wealthiest Americans and the rest of society, tended to blame this pattern on the hard work, talent and skill differences between those wealthy individuals and the rest of Americans. In more recent research, a study published with my colleague Dacher Keltner of the University of California, Berkeley, in JPSP just last year found that these same high-ranking individuals tended to believe that differences in social class were rooted in essentialist beliefs — that is, beliefs that social classes represent natural differences between individuals that are based in biology and genes. Rising economic inequality for high-ranking individuals seems to be the result of better genes expressing themselves in positive economic fortunes.

These findings should call into question any beliefs in noblesse oblige — elevated rank does not appear to obligate wealthy individuals to do good for the benefit of society. Rather, high-ranking individuals respond to their lofty positions, on average, by prioritizing self interest over the suffering and needs of those less fortunate. It is important for American voters to realize that our representatives in the U.S. Congress are not immune to these rank-based psychological patterns of economic self-interest: Earlier this year, Bennett Callaghan of the University of Illinois and I published a paper in the journal PLoS ONEexamining the legislative habits of members of the U.S. House of Representatives in 2012. We focused our analysis on legislation that directly increases economic inequality in society by, for instance, providing tax reductions for corporations, or that directly decreases inequality by raising the minimum wage, for example. We then compared these legislative habits to the reported average wealth of members of Congress from 2009 to 2011.

In these data, we found that members of Congress who were wealthier were more likely to act for the interests of the wealthy, by sponsoring legislation that increases economic inequality.

This result was particularly true of Democrats — whereas Republicans were uniformly likely to sponsor legislation increasing economic inequality, wealthy democrats were more likely to sponsor such legislation than their poorer counterparts. Moreover, these results were the same if we looked at other demographic characteristics of members of Congress that were related to social rank: Whereas all Republicans tended to sponsor pro-economic-inequality legislation, male and white Democrats were more likely to sponsor such legislation than their female and non-white counterparts. Even among these elite elected officials, whose job it is to specifically serve everyday Americans, we see that high rank elicits patterns of self-interest at the expense of people at the bottom of the economic ladder.

Combating the rising tide of economic inequality promises to require members of Congress — whose median wealth hovers near $5.5 million annually — to work against their own self-interest for the benefit of all Americans. I don't know if economic inequality is really the "defining issue of our time," but if it is, I'm glad our political leaders are (finally) starting to pay attention.

Michael Kraus blogs regularly about links between psychological science, current events and pop culture at Psych Your Mind and regularly argues (usually respectfully) with other scientists on twitter (@mwkraus).

Follow all of the Expert Voices issues and debates — and become part of the discussion — on Facebook, Twitter and Google +. The views expressed are those of the author and do not necessarily reflect the views of the publisher. This version of the article was originally published on Live Science

Economic Cleansing in America

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Economic Cleansing in America

Paul Stiles 

New Orleans


Detroit

As we all sit in dismay watching the bodies float through the streets of New Orleans on TV, it may seem like the free market bears no real connection to this weather-driven event. And yet what we are watching is the ultimate product of our market-driven society: the eradication of the lower class -- in this case poor African Americans -- by economic cleansing. While a hurricane may be the agent, Katrina is shining a spotlight on the reality of what America has become, a society that has traded in its moral principles for market principles.

The free market is not just an economic theory, it is an entire belief system based on the principle of competition, i.e. me vs. you. This system cannot survive, however, unless it is restrained by a framework of higher values based on the principle of unity, i.e. us. The tremendous success of America has always been the product of the delicate balance between these two belief systems, one emanating primarily from the world of business, and the other from the Judeo-Christian tradition. However, for diverse reasons -- technological and cultural -- market forces have become extraordinarily strong in recent decades, to the point where the market belief system now permeates all aspects of American life. The result is that we no longer care about "us" the way we once did, with devastating results.

As the principle of me vs. you has taken over, we've become a winner-takes-all society. The income gap between rich and poor has been rising steadily since 1967. This is especially true in cities like New Orleans, a predominately black city where one in four residents lived below the poverty line. Among the financial winners, noblesse oblige is dead, e.g. you don't see the upper class fighting in Iraq. Instead, our elite use an economic draft to fill the ranks, while hoarding their wealth like a corrupt oligarchy. Moreover, that wealth is often from ill-gotten gains, as the past four years of corporate scandals decisively proves. Together, the Tyco and Hollinger scandals alone represent over $1 billion that the few at the top stole from the many below. Others cleverly manipulate the tax code to achieve the same end.

In this market-driven age, our society has grown increasingly Darwinian. The aftermath of Hurricane Katrina proves it. One of the instruments of that immoral selection is health care. Forty million Americans, most of them at the lower rungs, live at mortal risk due to a lack of health insurance. According to the Harvard School of Public Health, the medical care provided the lower 5% of Americans is on par with that of West Africa. This is a very efficient way of economic cleansing. Another is our affection for imprisonment. As the winner-takes-all society intensifies, it is only natural that those at the bottom turn to crime, particularly when those at the top have as well, in highly public ways. The prison population in America is now around 2.1 million people, the largest per capita of any industrialized nation. That is, incredibly, the equivalent of putting the entire populations of Boston, Seattle, Denver and Washington D.C. behind bars.

A Me Society will never build a great civilization and it is folly to promote any theory that maintains otherwise. We need to understand that the market belief system is only part of our society, and the lower part at that. Without those values that promote social unity, be they cultural, familial, religious, aesthetic, moral, or democratic, the water will continue to rise.

Capitalism, the Bear Market and the Dynamics of Economic Cleansing: Culling the Human Herd in the 21st Century

Culling the Human Herd in the 21st Century

The Savage Sorting

by John Stanton / April 9th, 2014

There is a de facto redefinition of “the economy” when sharp contractions are gradually lost to standard measures. The unemployed who lose everything…easily fall off the edge of what is defined as “the economy” and counted as such. So do small shop and factory owners who lose everything and commit suicide. And so do the growing number of well-educated students and professionals who leave…all together. These trends redefine the space of the economy. They make it smaller and expel a good share of the unemployed and poor from standard measures. Such a redefinition makes “the economy” presentable, so to speak, allowing it to show a slight growth of GDP per capita.

The reality at the ground level is more akin to a kind of economic version of ethnic cleansing in which elements considered troublesome are dealt with by simply eliminating them. This shrinking and redefinition of economic space so that economies can be represented as being “back on track” holds for a growing number of economies in the European Union and elsewhere [like the United States]… One indication of a people’s economic despair is a sharp rise in suicide. This trend is evident in several countries worldwide from India to the United States…

The channels for expulsion vary greatly. They include austerity policies that have helped shrink the economies of Greece and Spain, environmental policies that overlook toxic emissions from enormous mining operations in Norilsk, Russia and the American state of Montana…if our concern is environmental destruction rather that interstate politics, the fact that both these mining operations are heavy polluters matters more than the fact that one is in Russia and the other in the United States…The diverse processes and conditions I include under the notion of expulsion all share one aspect: they are acute. While the abjectly poor worldwide are the most extreme instance, I do include such diverse conditions as the impoverishment of the middle classes in rich countries, the evictions of millions of small farmers in poor countries…Then there are the countless displaced people warehoused in formal and informal refugee camps, the minoritized groups in rich countries who are warehoused in prisons and the able bodied unemployed men and women warehoused in ghettos and slums…Some are new types of expulsions, such as the 9 million households in the United States whose homes were foreclosed…

Saskia Sassen’s forthcoming book Expulsions: Brutality and Complexity in the Global Economy (Harvard-Belknap Press, May 2014) begins its sobering journey with an Introduction titled, The Savage Sorting. The Savage Sorting seems destined to become the short-form description of 21st Century to be remembered, if at all, in some distant future by a genetically reengineered humanity (and biosphere).

Most television watchers are familiar with programming on National Geographic or Animal Planet that depicts “life in the wild” for non-human animals. Typical scenes from “nature” programming include lions and hyenas hunting down young, old and infirm wildebeests or zebras. Ultimately successful, they engage in a feeding frenzy. Sometimes the prey is still alive as it is being disemboweled by the predators. Chimpanzees attack, kill and eat rivals whilst emitting screams that unsettle the viewer’s nerves. Aging grizzly bears are observed losing their prized hunting spots to the young and are left to feed on scraps, themselves destined to be prey for creatures large and small. As the “nature” show goes on, the soothing voice of the human narrator assures the audience that it is all part of the “natural order of things.”

That “natural order of things” also includes human-on-human expulsion and extermination. But before touching a bit on the 21st Century culling of the human herd, it is worth noting that human-on-non-human carnage continues into this “modern” century. One of the practices of this new age of enlightenment is “Canned Hunting” in South Africa. European, North Americans and Chinese big game hunters, according to the Guardian newspaper, sometimes sit on the back of pickup trucks and wait for lions—bred for a “guaranteed kill”– to run by or walk up to the truck. In theGuardian’s “The lions bred for slaughter: Canned hunting is a fast-growing business in South Africa, where thousands of lions are being bred on farms to be shot by wealthy foreign trophy-hunters,” the reader is confronted with a repulsive picture of a happy hunter gloating over a dead lion.

Humans Don’t Discriminate, They Eliminate Non-Humans and Humans Equally

Then there is the case of the Gray Wolf in the United States. According to The Wolf that Changed America:

Wolves have been feared, hated, and persecuted for hundreds of years in North America. Before the arrival of Europeans, Native Americans incorporated wolves into their legends and rituals, portraying them as ferocious warriors in some traditions and thieving spirits in others. European Americans, however, simply despised wolves. Many, including celebrated painter and naturalist John James Audubon, believed wolves ought to be eradicated for the threat they posed to valuable livestock. This attitude enabled a centuries-long extermination campaign that nearly wiped out the gray wolf in the continental United States by 1950.

Now that Grey Wolf populations are increasing—thanks to the work of some bright humans–denizens in American states like Idaho, Wyoming and Michigan want to get back to the way things were in the good old 1950s. Killing a wolf and taking a “selfie” with the fur that once adorned its body is still an acceptable practice in some quarters. Those quarters are typically dominated by weekend warriors (take another look at the canned hunter on display in the Guardian for the classic “smirk”). Then again American hunters assisted in the near elimination of the America’s mascot: the Bald Eagle.

But it is not just Americans that seek the death penalty for the Gray Wolf (or are crushing the biosphere that supports life on Earth). It is the same story, for example, in France. According to the Telegraph, UK, “Conservation groups are furious. To return to wolf hunts as if we were in the Middle Ages is scandalous. That the local authorities are organizing them is even worse, said Jean-François Darmstaedter, president of Ferus, who threatened to challenge their legality in the European courts.

We call them ‘political killings’ as their only aim is to allow farmers to let off steam but they will solve nothing. Blindly shooting wolves will have no effect other than to exacerbate the problem. If you kill the alpha male, you can split up a pack, which will cause far more damage. The only solution, he said, was to protect flocks properly by using fierce Pyrenean Patou mountain dogs, penning sheep inside high electrified fences at night and firing warning shots if wolves approach. These measures can reduce predation to almost nil, he insisted.

Just Like the Wolves: Humans Negated, Written off, Warehoused, Displaced

There is a statement in the comment section on PBS’ The Wolf that Changed America. It serves as a brutal reminder of the willingness of humanity to expel through genocide, war, and economic/statistical cleansing many collections of human and non-human beings. Those expulsed rarely have the honor of even being lost to recorded history. America’s Native Americans provide an example.

The context omitted by this film [The Wolf that Changed America] is the conquest and colonization of New Mexico by the United States and the subsequent ethnic cleansing of the indigenous Americans to make way for cattle ranching, to which the wolves were a threat. Now we speak of the conservation of the “wilderness” and its wild inhabitants. But why are the human inhabitants denied and negated?

According to the Internal Displacement Monitoring Center (IDMC), there are nearly 30 million internally displaced people (IDP’s) around the globe who are, essentially, homeless. War is a primary cause. Making war is a conscious decision by politicians and military leaders who rarely consider the destructive consequences for the indigenous population, culture and infrastructure. As Sassen has pointed out, expulsions are “made” and war may be the ultimate form of expulsion. For example, America’s covert actions in the Syrian civil war and its two invasions of Iraq have contributed significantly to the IDP numbers. Remarkably, as a consequence of US war-making the Christian cultures of Iraq and Syria have nearly vanished.

IDMC notes that IDP’s are the result of “conflict, generalized violence, human rights violations and natural hazard-induced disasters. It should be noted that these figures do not include all IDP situations by other causes, such as development projects. Furthermore, while the figures have been presented separately here, our analysis shows that conflict, disasters and resulting displacement have multiple and often overlapping root causes and impacts. Over half of the countries affected by conflict since 1970 were also affected by disaster-induced displacement in the last five years alone. This is an important consideration for those tasked with policy-making, protection and assistance.” IDMC reports that there are another 37 million IDP’s due to “disasters”. The USA accounts for 900,000 of that number. Where do they go?

If You Want a Good Job, Commit a Crime and Go to Prison

The invisible laborers in America’s prisons reduce the costs for goods and services offered by many large US corporations. Skilled and captive prison labor is used by business and state governments on a regular basis ostensibly to cover the costs of incarceration. There is irony here: What does it say about a society that allows government and business to hire prisoners rather than employing law abiding citizens who are equal to the task? What’s the point of being a “good citizen” when there is little reward in playing by the rules of the State-Corporate designed system of life?

Sassen notes that:

Mass incarceration has long been present in extreme dictatorships. But today it is emerging as inextricably linked to advanced capitalism…Most of the people who are being incarcerated are also the people who do not have work and from whom work will not be found in our current epoch…today’s prisoners in the United States and United Kingdom are increasingly today’s version of the surplus laboring population common in the brutal beginnings of modern capitalism…many transnational corporations have set up satellite factories inside prisons…Available evidence suggests that the majority of corporations profiting [in some form] from prison labor [include] Chevron, Bank of America, AT&T, Starbucks and Walmart…the profits of private prisons are represented are represented as a positive addition to a country’s GDP even as they are a government cost; in contrast, government run prisons are only represented as government debt.

The State-Corporate Complex consciously makes decisions that “expel” one collective group and incorporates another. According to Sassen:

One familiar example in the West that is both complex and extreme is the expelling of low income workers and the unemployed from government social welfare and health programs, as well as from corporate insurance and unemployment support…These expulsions are made. The instruments for this making range from elementary policies to complex institutions, systems and techniques that require specialized knowledge and intricate organizational formats.

Fight the Power! OK! But Where is It Located?

“People as consumers and workers play a diminished role in the profits of a range of economic sectors… This tells us that our period is not quite like earlier forms of capitalism that thrived on the on the accelerated expansion of prosperous working and middle classes…What is next? Historically the oppressed have often risen against their masters. But today the oppressed have mostly been expelled and survive at a great distance from their “oppressors”. Further, the oppressor is increasingly a complex system that combines persons, networks and machines with no obvious center” notes Sassen.

The worst elements of capitalism/globalization are everyone’s problem. Destruction of the biosphere and much of human and non-human life, and expulsion from society and the record books is a transnational matter. Someone has to care and someone has to remember. It is no coincidence that wherever on the planet one finds one of the tentacles of the globalized State-Corporate System, Expulsions of every kind take place.

Culling the human herd is, of course, best accomplished through a regional or global conflagration pitting one state, or proxy, versus another. In such a conflict everything “is game” (non-humans too).The preeminent warring power on the planet, the United States, is—in a case of acute irony– threatening military action and stiffer economic sanctions on Russia if it proceeds under the “responsibility to protect” doctrine to “save” Russian speakers in Eastern Ukraine. And for good measure the US recently warned China not to look to Russia’s annexing of the Crimea as a model for an invasion and occupation of the disputed Diaoyu Islands that Japan claims.

How About a Canned War with Humans?

So is the State-Corporate System, designed and led by the USA, gearing up for a shooting/economic war against both Russia and China? Can you say tactical nuclear weapons? The reality is that there are too many people in the world. A large number of them are a drag on economic performance. Many of them are “old” and blocking opportunities for the young. There simply is not enough work and the State-Corporate System does not want to pay “living wages.” Why should they when prison labor is widely available.

Odd that the centenary of World War I takes place in 2014.

Humans can only hope that the mystical deity “God” does not become a reality. Worse still would be the appearance of an extraterrestrial species that arrives and demands an accounting of humanity’s stewardship of the Earth and the life it supports.

Being expelled from the planet would be quite painful.

John Stanton is a writer from Virginia. His latest book is Media Trolls, Technology Shamans. He can be reached at: captainkong22@gmail.com. Read other articles by John.

This article was posted on Wednesday, April 9th, 2014 at 12:09am and is filed under Africa, Capitalism, China, Corporate Globalization, Incarceration, Iraq,Japan, Labor, Life/Animal Rights, Russia, Syria, Ukraine.

THE EVIDENCE KEEPS POURING IN: CAPITALISM JUST ISN’T WORKING

AUGUST 24, 2015 GARY REBER LEAVE A COMMENT

Everything is a potential market to the capitalist, but it’s time to end the suffering of ordinary Americans, which is very good for the profit margins, and make human life a top concern.

ON AUGUST 24, 2015, PAUL BUCHHEIT WRITES ON NATION OF CHANGE:

TO FOLLOWERS OF AYN RAND AND RONALD REAGAN, AND TO ALL THE BUSINESS PEOPLE WHO DESPISE GOVERNMENT, ‘COMMUNITY’ IS A FORM OF ‘COMMUNISM.’ EVEN TAKING THE TRAIN IS TOO COMMUNAL FOR THEM. AMERICANS HAVE BEEN LED TO BELIEVE THAT ONLY INDIVIDUALS MATTER, THAT EVERY PERSON SHOULD FEND FOR HIM/HERSELF, THAT “WINNER-TAKE-ALL” IS THE ULTIMATE GOAL, AND THAT THE WINNERS HAVE NO RESPONSIBILITY TO OTHERS.

TO THE CAPITALIST, EVERYTHING IS A POTENTIAL MARKET. EDUCATION, HEALTH CARE, EVEN THE RIGHT TO WATER. BUT WITH EVERY MARKET FAILURE IT BECOMES MORE CLEAR THAT BASIC HUMAN RIGHTS CAN’T BE BOUGHT AND SOLD LIKE CARS AND CELL PHONES. THE PURSUIT OF PROFIT, WHEN ESSENTIAL NEEDS ARE PART OF THE PRODUCT, MEANS THAT NOT EVERYONE WILL BE ABLE TO PAY THE PRICE. SOME WILL BE DENIED THOSE ESSENTIAL NEEDS.

GLOBAL FAILURES

CAPITALISM HASN’T BEEN ABLE TO CONTROL RUNAWAY GLOBAL INEQUALITY. FOR EVERY $1.00 OWNED BY THE WORLD’S RICHEST 1% IN 2011, THEY NOW OWN $1.27. THEY OWN ALMOST HALF THE WORLD’S WEALTH. JUST 70 OF THEM OWN AS MUCH AS 3.5 BILLION PEOPLE.

CAPITALISM HAS NOT BEEN ABLE — OR WILLING — TO CONTROL THE “RACE TO THE BOTTOM” CAUSED BY“FREE TRADE,” AS MID-LEVEL JOBS CONTINUE TO BE TRANSFERRED TO LOW-WAGE COUNTRIES.

NOR HAS CAPITALISM BEEN ABLE TO CONTROL GLOBAL ENVIRONMENTAL DEGRADATION, WITH TRILLIONS IN SUBSIDIES GOING TO POLLUTERS THAT DON’T EVEN PAY THEIR TAXES, AND WITH CORPORATIONS IGNORING ANY SEMBLANCE OF SOCIAL RESPONSIBILITY AS THEY SEEK WAYS TO PROFIT FROM GLOBAL WARMING.

JOB CREATION FAILURES I

WITH OR WITHOUT GLOBALIZATION, MIDDLE-CLASS JOBS ARE DISAPPEARING, EVEN HIGHER-END POSITIONS IN FINANCIAL ANALYSIS, MEDICAL DIAGNOSIS, LEGAL ASSISTANCE, AND JOURNALISM. ARTIFICIAL INTELLIGENCE IS MAKING THIS HAPPEN. MILLIONS OF AMERICANS HAVE HAD A ROLE IN THE GREAT AMERICAN PRODUCTIVITY BEHIND THIS TECHNOLOGICAL TAKEOVER, BUT CAPITALISM ALLOWS ONLY AN ELITE FEW OF US TO REAP THE DISPROPORTIONAL PROFITS.

REPORTS OF JOB RECOVERY ARE BASED ON LOW-INCOME JOBS, MANY OF THEM PART-TIME. LAYOFFS ARE CUTTING INTO THE MILITARY AND TECHNOLOGY. GALLUP DISCOUNTED WALL STREET’S JOB-CREATING ABILITY. AS NOTED BY FORMER WALL STREET JOURNAL ASSOCIATE EDITOR PAUL CRAIG ROBERTS, THE US RATE OF UNEMPLOYMENT IS 23 PERCENT WHEN LONG-TERM DISCOURAGED JOB-SEEKERS ARE INCLUDED. THAT’S CLOSE TO THE UNEMPLOYMENT RATE OF THE GREAT DEPRESSION.

JOB CREATION FAILURES II

CLOSELY RELATED TO EMPLOYMENT WOES IS THE COLLAPSE OF CORPORATE INVESTMENT IN NEW PRODUCT R&D, FROM 40 CENTS PER DOLLAR IN THE 1970S TO 10 CENTS NOW. CEOS ARE CHOOSING INSTEAD TO SPEND ALMOST ALL OF THEIR PROFITS ON BUYBACKS AND DIVIDENDS TO ENRICH INVESTORS.

HEALTH CARE FAILURES

THE CAPITALIST PROFIT MOTIVE ALLOWS THE COST OF A HEPATITIS PILL THAT COSTS $10 IN EGYPT TO SELL FOR $1,000 IN THE UNITED STATES, AND THE COST OF A BLOOD TEST TO RANGE FROM $10 TO $10,000 IN TWO CALIFORNIA HOSPITALS (A 100,000% MARKUP AT THE SECOND HOSPITAL).

PATENT ABUSE IS ONE OF THE FACTORS MAKING THIS POSSIBLE. PHARMACEUTICAL COMPANIES CAN TWEAK A DRUG WITH A MINOR CHANGE TO CREATE A “BRAND NEW” DRUG WITH A NEW PATENT.

ANOTHER HEALTH-RELATED SCAM THAT AFFECTS MOST OF US IS BOTTLED WATER. ACCORDING TO FOOD & WATER WATCH, ABOUT HALF OF IT IS FILTERED TAP WATER WITH FANCY NAMES, AS EVIDENCED IN ONE CASE BY AN ACTUAL “TAP WATER” LABEL ON A COMPANY’S PRODUCT. YET WITH THE DEMISE OF COMMUNITY WATER FOUNTAINS, AND THE BARRAGE OF ADVERTISING FOR “SAFE AND PURE” DRINKING WATER, UNSUSPECTING AMERICANS PAY DEARLY: FOR THE PRICE WE PAY FOR A BOTTLE OF WATER WE WOULD BE ABLE TO FILL UP THAT BOTTLE A THOUSAND TIMES WITH TAP WATER.

HOUSING FAILURES

BECAUSE OF THE “INVISIBLE HAND” OF THE FREE MARKET, IN JUST 35 YEARS THE INVESTMENT WEALTH OF THE SUPER-RICH HAS GONE FROM 15% OF MIDDLE-CLASS HOUSING TO ALMOST 200% OF MIDDLE-CLASS HOUSING.

EDUCATION FAILURES

A REMARKABLE STORY OF PRIVATIZATION FAILURE IS TOLD IN THE STORY OF CHARTER SCHOOLS IN FLORIDA, WHERE JEB BUSH STILL HOLDS DEAR TO HIS DELUSIONS OF FREE-MARKET EDUCATIONAL SUCCESS.

THAT’S JUST ONE EXAMPLE. IN GENERAL, CHARTERS ARE RIDDLED WITH FRAUD AND IDENTIFIED WITH A LACK OF TRANSPARENCY THAT LEADS TO EVEN MORE FRAUD. SINCE 2001 NEARLY 2,500 CHARTER SCHOOLS HAVE BEEN FORCED TO CLOSE THEIR DOORS, LEAVING OVER A QUARTER-MILLION SCHOOLCHILDREN BETWEEN ONE BAD BUSINESS DECISION AND THE NEXT. A REPORT FROM PR WATCH SUMMARIZES THE BILLIONS OF DOLLARS SPENT ON CHARTERS WITHOUT ACCOUNTABILITY TO THE PUBLIC.

DISPOSABLE AMERICANS

CHRIS HEDGES WROTE: “HUMAN LIFE IS OF NO CONCERN TO CORPORATE CAPITALISTS. THE SUFFERING OF THE GREEKS, LIKE THE SUFFERING OF ORDINARY AMERICANS, IS VERY GOOD FOR THE PROFIT MARGINS OF FINANCIAL INSTITUTIONS SUCH AS GOLDMAN SACHS.”

PEOPLE BECOME MEANINGLESS IN A SUCCESSFUL CAPITALIST SYSTEM.

HTTP://WWW.NATIONOFCHANGE.ORG/2015/08/24/THE-EVIDENCE-KEEPS-POURING-IN-CAPITALISM-JUST-ISNT-WORKING/

Paul Buchheit, a college teacher, pretty much accurately identifies the failure of monopoly greed capitalism, which, for a long time, I have termed “Hoggism,” propelled by greed and the sheer love of power over others. “Hoggism” institutionalizes greed (creating concentrated capital ownership, monopolies, and special privileges). “Hoggism” is about the ability of greedy rich people to manipulate the lives of people who struggle with declining labor worker earnings and job opportunities, and then accumulate the bulk of the money through monopolized productive capital ownership. Our scientists, engineers, and executive managers who are not owners themselves, except for those in the highest employed positions, are encouraged to work to destroy employment by making the capital “worker” owner more productive. How much employment can be destroyed by substituting machines for people is a measure of their success––always focused on producing at the lowest cost. Only the people who already own productive capital are the beneficiaries of their work, as they systematically concentrate more and more capital ownership in their stationary 1 percent ranks. Yet the 1 percent are not the people who do the overwhelming consuming. The result is the consumer populous is not able to earn the money to buy the products and services produced as a result of substituting machines for people. And yet you can’t have mass production without mass human consumption made possible by “customers with money.” It is the exponential disassociation of production and consumption that is the problem in the United States economy, and the reason that ordinary citizens must gain access to productive capital ownership to improve their economic well-being.

But Buchheit offers no solutions to reform the system. If only Buchheit could grasp the economics of reality wherein fundamentally, economic value is created through human and non-human contributions. NOTE, real physical productive capital, which is what Buchheit implies as “money owned,” isn’t money; it is measured in money (financial capital), but it is really producing power and earning power through ownership of the non-human factor of production. Financial capital, such as stocks and bonds, is just an ownership claim on the productive power of real capital. In the law, property is the bundle of rights that determines one’s relationship to things. As binary economists Louis Kelso and Patricia Hetter put it, “Money is not a part of the visible sector of the economy; people do not consume money. Money is not a physical factor of production, but rather a yardstick for measuring economic input, economic outtake and the relative values of the real goods and services of the economic world. Money provides a method of measuring obligations, rights, powers and privileges. It provides a means whereby certain individuals can accumulate claims against others, or against the economy as a whole, or against many economies. It is a system of symbols that many economists substitute for the visible sector and its productive enterprises, goods and services, thereby losing sight of the fact that a monetary system is a part only of the invisible sector of the economy, and that its adequacy can only be measured by its effect upon the visible sector.”

Buchheit needs to expand his thinking to address concentrated capital asset ownership and how the pursuit of the lowest cost production of production of products and services has led to and will continue to lead to globalization of production and replacement of human labor with “machines” that will replace work. And without work, under the present capitalist system, there will be  hordes of citizens of zero economic value, unable to earn enough money to support themselves or their families and become “customers with money” to support the system. Thus, once the wealthy ownership class has completely acquired the OWNERSHIP of the non-human means of production there will be no “customers with money” to pursue as the vast majority of the worlds population will simply be economically enslaved, dependent on what welfare and charity the wealthy ownership class and their puppet politicians decide to extend.

Of course this does not have to be the case when ONLY measured by work, a majority of people will cease to provide a means to earn an income.  The economic and political alternative is to reform the system to empower EVERY citizen to acquire ownership in FUTURE wealth-creating, income-producing capital assets resulting from technological invention and innovation.

In the larger picture, globalization is enabling multi-national corporations (those that produce not only in the United States but in other countries as well to produce and sell products and services internationally using the cheapest labor rates, as well as non-human productive capital. In real growth measures, productive capital is increasingly the source of the world’s economic growth and will continue to be so at an exponential rate, resulting in far less need for people to work. Because globalization and tectonic shifts in the technologies of production will accelerate the end of work by destroying jobs and devaluing the worth of labor, it is imperative that productive capital assets become the source of added property ownership incomes for all. The reality is if both labor and capital are independent 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. 

The question that Buchheit should be raising that requires an answer is now timely before us. It was first posed by Kelso in the 1950s but has never been thoroughly discussed on the national stage. Nor has there been the proper education of our citizenry that addresses what economic justice is and what capital ownership is. Therefore, by ignoring such issues of economic justice and capital ownership, our leaders are ignoring the concentration of power through monopoly ownership of productive capital, with the result of denying the 99 percenters equal opportunity and access to become capital owners. The question, as posed by Kelso is: “how are all individuals to be adequately productive when a tiny minority (capital owners) produce a major share and the vast majority (labor workers), a minor share of total goods and services,” and thus, “how do we get from a world in which the most productive factor—physical capital—is owned by a handful of people, to a world where the same factor is owned by a majority—and ultimately 100 percent—of the consumers, while respecting all the constitutional rights of present capital owners?”

Those seriously interested in exploring non-conventional solutions need  to read the article A New Look at Prices and Money: The Kelsonian Model for Achieving Rapid Growth Without Inflation at http://www.cesj.org/wp-content/uploads/2013/11/pricesandmoney.pdf. In this paper, a case is made for a major transformation of any nation’s monetary system so that in the future new money would be created in ways that would unharness the full productive potential of society, while closing the growing wealth gap between the richest 10 percent and the rest of society — and to do so voluntarily without the need to redistribute existing wealth. Prices, wages and interest rates would be controlled under the proposed model of development completely by competitive market forces, not by the whim of central bankers, politicians or organized power blocs.

It is imperative that we address  the structural problems of the system and reform the system to result in forward-looking growth.

Each year our national public debt has become harder to service because pretend-and-extend policy making has created a depression in real, capital asset investment and consumption (not the gambling casino stock market trading second-hand [owned] stock, because the extent of all productive capital asset OWNERSHIP is concentrated.

In concentrated capital ownership terms, roughly 1 percent own 50 percent of the corporate wealth with 10 percent owning 90 percent. This leaves 90 percent of the people scrambling for the last 10 percent, with them dependent on their labor worker wages (saving from denial of consumption) to purchase capital assets. Thus, we have the great bulk of the people providing a mere 10 percent or less of the productive input. Contrast that to the less than 5 percent who own all the productive capital providing 90 percent or more of the productive input, and who initiate and oversee most of the technological advances that replace labor work by workers with capital work by the owners of productive capital assets. As a result, the trend has been to diminish the importance of employment with productive capital ownership concentrating faster than ever, while technological change makes physical capital ever more productive. Corporate decision makers know this, whether in the United States or China, or anywhere organized assemblies of people engage in production. Technology is an easier and faster way to get a job done. Because technology increases the profitability of companies throughout the world, technology always has the advantage over human labor when the costs of them are the same. But because this is not well understood, what we as a society have been doing is to continually shift the work burden from people labor to real physical capital while distributing the earning capacity of physical capital’s work (via capital ownership of stock in corporations) to non-owners through make-work job creation, minimum wage requirements, and welfare programs. Such policies do not function effectively.

Even with historically low interest rates when the federal government borrows, say to repair obvious deficiencies in roads, rails, water systems and more and to upgrade such or finances the military-industrial complex, which perpetuates continuous war, only the people who already own productive capital are the beneficiaries of debt through contract work sold in the name of job creation, but in reality systematically concentrates more and more capital ownership in their stationary 1 percent ranks. Yet the 1 percent are not the people who do the overwhelming consuming, and instead “re-invest” to further accumulate ever more capital wealth ownership. The result is the consumer populous is not able to earn the money to buy the products and services produced as a result of substituting machines for people. And yet you can’t have mass production without mass human consumption made possible by “customers with money.” It is the exponential disassociation of production and consumption that is the problem in the United States economy, and the reason that ordinary citizens must gain access to productive capital ownership to improve their economic well-being.

The ever-growing trillions of dollar debt liability will come due on the heirs of today’s Americans.

Nor is the suggested solution by Reich and others to spread wealth by extracting a more heavy tax on the growing share of wealth accumulated by the owners of wealth-creating, income-producing capital to redistribute as a “universal basic income” viable and sustainable. Those who are productive, either through their labor or through the application of the productive capital assets they own will object to taxing their productive input to subsidize the idleness of millions of “takers.”

Under this proposed scheme, there would still be OWNERS of private property, and the productive, wealth-creating, income-producing private property OWNERS would be taxed to support a substantial REDISTRIBUTION of wealth in order to provide a “basic income” to EVERY citizen. This is the very essence of socialism.

The outcome is that the wealthy ownership class will still be the OWNERS of America’s productive capital assets and essentially, as OWNERSHIP LORDS, dominate the vast majority of citizens, who through a powerfully political government elite will be their “slaves”––”slaves” as in welfare and charity slaves, which the advocates of this proposal refuse to acknowledge.

The ONLY way out of the deepening economic inequality and the national debt hole is not to pursue austerity and cut spending (consumption), especially since there is a level below which you cannot go, but to increase income (production).

This is “Say’s Law of Markets.” It is based on Adam Smith’s first principle of economics, articulated in The Wealth of Nations: “Consumption is the sole end and purpose of all production.” The obvious corollary, of course, is that you can’t consume what hasn’t been produced — which is exactly the United States’ problem as well as other debt-ridden countries.

In short, you can mint, print, or borrow all the money you want, but if you’re not producing a marketable good or service for consumption, even if you have a mountain of gold, silver, or government debt paper backing your currency, you are trying to get out of a hole by digging it deeper.

If something doesn’t exist, you can’t consume it. the only thing that’s going to get the United States and other debt-ridden countries out of the hole they are in is to increase production dramatically, not cut consumption and pursue austerity.

Rather than focus on Job Creation that holds back technological invention and innovation, our economic policies should focus on wealth-creating, income-producing capital Ownership Creation, whose result will be REAL job creation where necessary to support rapid technological and societal development as we build a future economy that can support general affluence for EVERY citizen and provide inclusive prosperity, inclusive opportunity, and inclusive economic justice.

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 10 percent wealthy ownership class who now OWNS America, or will we reform the system to provide equal opportunity for EVERY child, woman, and man to acquire personal ownership in FUTURE productive capital assets paid for with the FUTURE earnings of the investments in our technological future?

The article asks that you ask yourself: “How is anyone going to make any money when there is ever less opportunity to work?” This is manifested in the myth that labor work is the ONLY way to participate in production and earn income, and that individual talent and effort are what distinguish the wealthy from the non-wealthy.

A sounder solution is to empower EVERY child, woman, and man to acquire personal OWNERSHIP stakes in America’s future productive capital assets by providing equal opportunity for EVERY citizen to OWN and to have access to acquiring wealth-creating, income-producing capital wealth (the whys and hows of becoming rich). And to ensure at death, using a transfer tax, that concentrated wealth estates are dispersed so that no “family” stays permanently wealthy and politically powerful.

The financial mechanism required must provide EVERY citizen an equal annual amount of newly issued money to be specifically used to form new productive assets determined by feasibility analysis using the logic of corporate finance––that the investments will produce earnings out of which to pay for the initial investment and provide the asset value for the new money issued for the extension of capital credit. The actual capital credit loans also must by interest-free as there is no conventional borrowing involved from people who have denied themselves consumption and saved in order to invest. This is all new money essentially issued by the Federal Reserve. The capital credit also must be insurable using private capital credit insurance or a government reinsurance agency (ala the Federal Housing Administration concept). Thus, no citizen would ever be exposed to a reduction in their wages, if they are employed, or any other extraction of their personal equity wealth.

This solution, which upholds the principles of private property that our nation was founded upon and abates the further concentration of capital wealth ownership by providing equal opportunity to acquire and OWN future capital asset wealth, in which EVERY citizen becomes an OWNER and is thus a productive contributor to our societal development through “tools” they OWN, is the essence of the proposed Capital Homestead Act. See  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/. See http://cesj.org/learn/capital-homesteading/ and http://cesj.org/…/uploads/Free/capitalhomesteading-s.pdf.

The whole discussion on reforming the money and credit system leads to defined policy actions, as does tax reform. Let’s take taxes first.

Four principles must guide the tax reform. 1) Efficiency: the tax system raises enough money to run the government without giving too much disincentive to produce. 2) Understandability: people should be able to pay their taxes without having to become an expert. 3) Equitability: people must be taxed in accordance with their ability to pay. 4) Benefit: people who receive the benefit should pay for it.

Thus, the fairest tax given these principles is a single rate imposed equally on all income above an exemption sufficient to enable people to live in reasonable comfort. In addition, the tax laws must permit a tax deferral on income used to purchase capital assets, up to an amount sufficient to generate an adequate and secure income.

Thus, every citizen should have a Capital Homestead Account (CHA) or Economic Democracy Account in which he or she can accumulate a reasonable ownership stake of income-generating assets on a tax-deferred basis. A CHA (a super-IRA or asset tax-shelter for citizens) would be available at their local bank to purposely acquire a growing dividend-bearing stock portfolio to supplement their incomes from work and all other sources of income. Now — how do they buy the assets in the first place on which to defer the taxes?

That’s where the necessary money and credit reforms kick in. Obviously, if a rich person or a corporation can finance new capital without using past savings, so can everyone else — and it’s better for the economy. The fact is, the more people who are productive, the more income there is, and the more income there is, the more demand there is, and the more demand there is, the more people can produce and sell ad infinitum.

Thus, every child, woman, and man can open up a Capital Homestead Account or Economic Democracy Account in which every individual can accumulate up to, let’s say, $1 million on a tax-deferred basis.  And at a ROI (“Return On Investment”) of a conservative 20 percent (in direct new asset-based new stock issues), would generate taxable income of $200,000 every year.

Further, companies can be encouraged to pay out all earnings as dividends by making dividends tax-deductible by the corporation — and substantially raising the corporate tax rate to give more encouragement. That way a corporation has a choice: avoid all taxation of income by paying it out to the shareholders (who can pay taxes on their dividends the same as any other income), or pay even more taxes than they do now.

Besides, if they finance growth by selling new shares instead of retaining earnings, the new shareholders are going to need the full stream of profit attributable to their shares to pay for those shares. Issuing shares instead of retaining earnings to finance growth will create a lot of new shareholders, and create a lot of new demand to justify more growth and jobs.

Thus, if everybody has the right to borrow money to purchase new shares that pay for themselves out of future dividends — and all profits are paid out as dividends — ordinary people can become capital owners without risking anything they might have at present, which for most people in the United States is not a risk because they don’t have anything to lose at present as it is. If the money is created using interest-free capital credit, there will always be enough money for new capital formation — and for creating new owners without taking anything from anybody else.

What about security for the capital credit loans? What if the borrower defaults, i.e., doesn’t make the loan payments?

There’s an entire industry that already exists to help people handle risk. It’s called “insurance.” Using the risk premium on all loans as an actual insurance premium (ala the Federal Housing Administration concept), a borrower or lender can take out a capital credit insurance policy that pays off in the event of default.

Instead of tax, monetary and inheritance policies favoring the top 1 percent at the expense of the 99 percent, these comprehensive policy and program reforms should become national policy as a necessary solution to correct the systemic injustices of monopoly capitalism. The current system perpetuates budget deficits and unsustainable government debt, underutilized workers, a lack of financing for financing advanced energy and green technologies, and outsourcing of U.S. industrial jobs to low-wage countries, trade deficits, shrinking consumption incomes among the poor and middle class, and conventional methods for financing productive growth that increase the ownership and power gaps between the top 1 percent and the 90 percent whose combined ownership accumulations are already less than the elite whose money power is widely known as the source of political corruption and the breakdown of political democracy.

The unworkability of the traditional market economy is evidenced by the diverse and growing deficits––federal budget deficit, trade deficit, city, county and state budget deficits––which are making it increasingly impossible for governments at every level to function. The increasing deficit burden is the result of the growing numbers of people who cannot earn, from legitimate participation in production, enough income to support themselves and their families. Thus government is obliged to “redistribute” to starve off economic collapse. The key means of redistribution is taxation––taking from the legitimate producers and giving to the non- or under-producers––to make up the economy’s ever wider income and purchasing power shortfalls.

The fact is that political democracy is impossible without economic democracy. Those who control money control the laws that foster wage slavery, welfare slavery, debt slavery and charity slavery. These laws can and should be changed by the 99 percent and those among the 1 percent who are committed to a just and economically classless market economy, true equality of opportunity, and a level playing field in the future for 100 percent of Americans. By adopting economic policies and programs that acknowledge every citizen’s right to contribute productively to the economy as a capital owner as well as a labor worker, the result will be an end to perpetual labor servitude and the liberation of people from progressive increments of subsistence toil and compulsive poverty as the 99 percent benefits from the rewards of productive capital-sourced income.

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