Workers deserve to share in the productivity they create...

[kentuck]

Since the late 70's or early 80's, this has not been the case. Employers have taken the productivity and kept it all to themselves. Workers have gradually slipped out of the middle class and we now find ourselves with over 46 million people below the poverty line. (The poverty line is considered to be $22,000 for a family of four)

Many employers have been greedy bastards. They did not share in the productivity. They took their huge profits and moved their operations to China and elsewhere where they could make even more profits. In their quest for cheaper labor, they deserted the American middle class. They are not to praised. They are to be condemned. As labor unions diminished, workers wages decreased as well.



We now learn that 22% of the children in America live in poverty. This is the natural direction for unbridled capitalism. That is what we have been experiencing since the beginning days of Ronald Reagan. We see the results. Greed has no moral compass.

For many decades, the Democratic Party had been the guard dog on duty to prevent such thefts. But somewhere along the way, they became friends with the corporate elite that has screwed the American workers and the middle class. They are no longer represented by the Democratic Party. That is an uncomfortable truth for many to accept.

You can fight or surrender. There is no middle ground. There is no compromise. There is no bi-partisanship. You either get the people on your side and get them to the polls to vote or you will lose everything. You cannot do that by arguing or debating on their terms. You must set the parameters of debate.

[SammyWinstonJack]

1. K&R

[Sirveri]

2. Something happened in 1969, all the charts show it.

Looking at wage changes you see a bend point, almost every time, in 1969. The question we need to ask is WHAT happened? Then once we figure that out, find a way to undo it.

Can't see a change to the top marginal tax rate. There was an increase to the capital gains tax rate in 1969, but I don't think that's it. It might have been a free trade bill passed in 1968 that takes effect in 1969 but I'm not sure. Maybe it's just the resurrgance of the European and Asian economies after world war 2. Maybe it's we we first started to see oil peak.

[kentuck]

3. Was that the year of the wage and price controls by Nixon?

I do recall there were serious concerns about inflation after the Vietnam War...

[robdogbucky]

4. Thought I would add to this important discussion....

1975
Louis Kelso and the ESOP are featured on "60 Minutes," with Mike Wallace, broadcast over the CBS television network:

Mike Wallace: "For years, Kelso has been hopping around the country like an itinerant preacher delivering his sermon. He tells anyone who'll listen what he told the economic leaders assembled by President Ford: that proposals for more tax cuts and more welfare will never solve the economic mess we're in. They don't go to the root of the problem.

"Americans," says Kelso, "are a nation of industrial sharecroppers who work for somebody else and have no other source of income. If a man owns something that will produce a second income, says Kelso, he'll be a better customer for the things that American industry produces. But the problem is how to get the working man that second income."

The Tax Reduction Act of 1975 introduces the TRASOP or Investment Tax Credit ESOP...


http://www.kelsoinstitute.org/important-dates.html






...Kelso long believed that he had not originated a new economic theory but only discovered a vital fact that the classical economists had somehow overlooked. This fact was the key to understanding why the private property, free market economy was notoriously unstable, pursuing a roller coaster course of exhilarating highs and terrifying descents into economic and financial collapse.

This missing fact, which Kelso had uncovered over years of intensive reading, research and thought, drastically modifies the classical paradigm which has dominated formal economics since Adam Smith. It concerns the effect of technological change on the distributive dynamics of a private property, free market economy. Technological change, Kelso concluded, makes tools, machines, structures and processes ever more productive while leaving human productiveness largely unchanged. The result is that primary distribution through the free market economy, whose distributive principle is “to each according to his production,” delivers progressively more market-sourced income to capital owners and progressively less to workers who make their contributions through labor.

Differential productiveness over time concentrates market-sourced income in the hands of those who will not recycle it back through the market as payment for consumer goods and services. They already have most of what they want and need so they invest their excess in new productive power. This is the source of the distributional bottleneck which makes the private property, free market economy ever more dysfunctional. The symptoms of dysfunction are capital concentration and inadequate consumer demand, the effects of which translate into poverty and economic insecurity for the majority of people who depend entirely on wage income and cannot survive more than a week or two without a paycheck. And since, as Adam Smith laid down, economic demand begins with the consumer and consumer purchasing power, the production side of the economy is under-nourished and hobbled...

http://en.wikipedia.org/wiki/Louis_O._Kelso



US was still very involved in Nam in '69 and stayed that way until about 1975 when they pulled out.

[robdogbucky]

5. And maybe bump it back to first page for more readers and input

Here's more Kelso:


1976
The Tax Reform Act of 1976 provides further tax incentives for the ESOP.
The Joint Economic Committee of Congress holds hearings on Employee Stock Ownership Plans at which Louis Kelso, among others, testifies.

The Joint Economic Committee of Congress endorses broadened capital ownership as an economic goal for America in its 1976 Joint Economic Report:

"To provide a realistic opportunity for more U.S. citizens to become owners of capital, and to provide an expanded source of equity financing for corporations, it should be made national policy to pursue the goal of broadened capital ownership. Congress also should request from the Administration a quadrennial report on the ownership of wealth in this country which would assist in evaluating how successfully the base of wealth was being broadened over time."


http://www.kelsoinstitute.org/important-dates.html




"The Roman arena was technically a level playing field. But on one side were the lions with all the weapons, and on the other the Christians with all the blood. That's not a level playing field. That's a slaughter. And so is putting people into the economy without equipping them with capital, while equipping a tiny handful of people with hundreds and thousands of times more than they can use."

--Louis O. Kelso in Bill Moyers: A World of Ideas, (1990)




Hope this helps the discussion.

[blindpig]

6. A sucker's game

When persons of modest means put their savings in the stock market they effectively bolster the big players who have the connections and savy to bail when trouble comes leaving the small investors holding the bag. We've seen this time and again, small fry wiped out while it's a bump in the road for the heavy hitters. What a racket.

[Broderick]

7. And if the big players get in trouble at all

Federal tax dollars are trucked in to make sure they don't suffer.

[closeupready]

9. Yup.

That's essentially it.

[robdogbucky]

8. Russell Long and Louis Kelso

The creators of ESOP


http://dept.kent.edu/oeoc/OEOCLibrary/RussellLongReprint.pdf



"...employee ownership would bolster capitalism..."




Imagine, bankers and professional economists do not like Kelso. Imagine that?



ESOP Analysis and Evaluation

David Ellerman

[e-mail]



The Ideology of the ESOP Movement

ESOPs are certainly touted as "worker capitalism"—although the reality is interestingly different from the advertisements. But first we should consider the ideologies surrounding ESOPs.

The originator and popularizer of the leveraged ESOP is Louis Kelso. Kelso's "two-factor theory" is particularly bizarre. When today's economists talk about "productivity," they are referring to labor productivity. Kelso apparently inferred that capitalist economists think that labor is the only productive factor (never mind over a century of criticism of the labor theory of value by the same capitalist economists). Kelso has discovered another productive factor, capital, so there are really two productive factors, labor and capital. Kelso announced this discovery in a book Two-Factor Theory (Kelso and Hetter, 1967), and, to this day, he refers to his theories as "Binary Economics" (see Kelso, 1988a).

How does all this relate to ESOPs? Kelso claims that capital is much more productive than labor, and that if labor was really paid according to its productivity, the workers would not receive a living wage. Thus the economy is askew; labor is being paid more than it is worth so that workers can survive, and capital is underpaid. Kelso's solution is to give workers a capital income, to make them "capital workers" in addition to labor workers. Then labor and capital can each be paid what they are worth, workers will do well on their two incomes, and the economy will finally be set aright.

To professional economists, Kelso's theories have all the earmarks of a self-taught credit-crank, and they treat him accordingly...

http://cog.kent.edu/lib/ellerman.html


WorldBank.org, no surprise there. Don't workers know their place? Don't forget that Kelso is a dummy because we said so.




Read and enjoy

[treestar]

10. How would this redistribution take place?

Via government or within the companies? Putting it in terms of the productivity the worker creates makes me wonder if there's an issue here of having people make more than others because they work for companies that do better.

[kentuck]

11. You will notice...

that pay raises were more or less tied to productivity gains up until the late 70's. Then it just stopped? Businesses continued to make huge profits but they no longer shared them with their workers.

[FreeJoe]

12. How does automation fit in?

Let's say that you are cutting down trees with a hand saw and producing $1,000 of lumber a day. Then I, as the logging company owner, spend $2,000 on a chainsaw and you start producing $2,000 of lumber a day. Should your income double? What if I invest $500,000 in a super logging machine and you use it to produce $20,000 of lumber a day. Should your pay go up proportionally?

I'm not sure that the relationship between labor income and productivity is fixed. I get paid a much lower percentage of the income of my company than most people, but that's because I work in an extremely capital intensive industry.

[kentuck]

15. When unions were stronger...

Businesses tended to give workers much better raises, tied to the productivity of the company. If the productivity increased by 20% in one year, the employees would get a 20% pay raise. If productivity only increased by 1%, they would get a 1% raise. As union support declined, so did businesses inclination for decent pay raises.

[Duct Tape]

13. K&R

Great thread. :thumbsup:

[Starry Messenger]

14. Workers are the source of wealth.

Capitalism is the method to scrape as much of that wealth away from workers as possible. History has shown that any political party that is beholden in any way to capital will sell out the people to capital every single time. All we have is each other from here on out.

[TBF]

16. Great post - workers should own the means of production,

they are the ones who do the work.

[Starry Messenger]

17. Exactly!

And they do it well! If the bosses all disappeared tomorrow, I doubt anyone would even notice.