Election Thoughts 2018: Capitalism (Part 2)

This election is too important to ignore. So, I am writing a series of posts on topics to consider as you think about who to vote for in November. I am specifically staying away from Trump and social topics. This series is about serious issues and the congress members involved with them. That is the focus, congress. Topics include:

1. Religious Education
2. Capitalism
3. The Tax Bill (the part congress played in it)
4. Healthcare
5. SNAP
6. Government Assistance (Other)
7. Where Democrats Stand
8. GOTV and Nancy

 

I have been collecting these articles throughout the year. The part in green is a direct quote from the article in the link before or after it. I also very specifically stuck to reliable news sources. Actual fact based news sources like Politico, CBS News, The Washington Post, The New York Times, The LA Times and others.

Capitalism:

Definition of capitalism

: an economic system characterized by private or corporate ownership of capital goods, by investments that are determined by private decision, and by prices, production, and the distribution of goods that are determined mainly by competition in a free market

https://www.merriam-webster.com/dictionary/capitalism


This one is pretty simple. Yet, too many people are still confused by this. Trickle down economics doesn't work. Businesses today care more about their stock holders then their employees. So when they get extra money from the government, they take care of their stock holders. But, they aren't giving their employees raises. They aren't adding jobs either. But, it does give those a raise who's income includes stock options. Don't get your hopes up about that 401k. It too isn't doing what middle class employees hope.

That is what is so deceiving about the GDP and unemployment numbers. They are hiding that unemployment is low because jobs have been eliminated and not created. Fewer jobs to fill. Jobs that pay a living wage are quickly disappearing. Most jobs that have been created don't pay a living wage. Baby boomers have retired now that they qualify for social security. So there are a lot less people participating in the job market. These numbers are useless these days. What matters is the average household income and the average cost of living for each area. Prices are rising rapidly for gas and food. Income isn't rising. That leaves less money for non-essentials. Less money circulating in the economy.

 The Disaccumulation of Capital 

In May-June 1969, the journal Radical America published a long essay by Sklar entitled, “On the Proletarian Revolution and the End of Political Economy.” Sklar’s essay concluded with a call to the barricades: “Right now the duty of every person dedicated to making humanity prevail is to mount the class struggle. Capitalism, imperialism, the profit system, the exploitation of man by man, not some external Carthage—delenda sunt.” (Delenda sunt means “must be destroyed” in Latin.) In 1992, Sklar included the essay in his collection, but omitted the last sentence, and retitled the essay, “Some Political and Cultural Consequences of the Disaccumulation of Capital: Origins of Postindustrial Development in the 1920s.” That says a lot about how Sklar’s politics and the times had changed, but Sklar retained the provocative analysis of capitalism and the 1920s. As was the case with Sklar’s analysis of corporate liberalism, his historical insights can be extracted from his hopes and fears about the politics of the time.

https://newrepublic.com/article/118187/martin-j-sklar-and-search-usable-past

 From the link above, the article itself is about the life of Martin Sklar. This is towards the bottom.  Sklar is correct. Capitalism is a bad thing. Corporations care about profits not people. The tax bill put all their eggs in the capitalism basket. It’s a stupid move. Because nothing is trickling down. Republicans running for reelection know that. It's why they aren't using the tax bill on the campaign trail.

Capitalists hate socialists. That’s ironic because socialists are created as a result of capitalism. Basically, socialism is what came out of the Occupy Wall Street movement. It was based off of anger over too high college debt and not enough good paying jobs. Capitalism has ruined the economy.

https://www.nytimes.com/2018/08/05/opinion/what-are-capitalists-thinking.html

Ask yourself: If you’re 28 like Alexandria Ocasio-Cortez, the New York congressional candidate who describes herself as a democratic socialist, what have you seen during your sentient life?

You’ve seen the United States go from being a country that your parents — or if you’re 28, more likely your grandparents — described as a place where life got better for every succeeding generation to a place where for millions of people, quite possibly including you, that’s no longer true.

As that happened, you’ve seen the rich get richer, and you’ve perhaps noticed that the government’s main response to this has been to keep cutting their taxes (in fairness, President Barack Obama did raise the highest rate in 2013 to 39.6 percent from 35 percent, although for single filers, that rate didn’t kick in until earned income went above $400,000).

You witnessed the financial meltdown of 2008, caused by big banks betting against themselves. Capitalists might want to consider how all that looked to a young person who came from a working-class family and who probably knows someone who lost a job or even his house, while some of the bankers who helped create the mess walked away with golden parachutes, like that of Countrywide Financial’s Angelo Mozilo, which The Times valued at $88 million.

You’ve watched corporations hoard profits, buy back their stock and not reinvest in their workers the way they once did as they move jobs to Central America and Bangladesh. If you read a lot, you know that stock buybacks were permitted under the Securities and Exchange Commission’s Rule 10b-18, which dates to the Reagan era, and that since it’s just an S.E.C. rule, it can be changed without having to pass legislation, but no one in either of the Democratic administrations since then bothered.

https://www.forbes.com/sites/drewhansen/2016/02/09/unless-it-changes-capitalism-will-starve-humanity-by-2050/#77b1a8997ccc

 
 

The Increasing Importance Of Distributed Ownership And Governance

Fund managers at global financial institutions own the majority (70%) of the public stock exchange. These absent owners have no stake in the communities in which the companies operate. Furthermore, management-controlled equity is concentrated in the hands of a select few: the CEO and other senior executives.

On the other hand, startups have been willing to distribute equity to employees. Sometimes such equity distribution is done to make up for less than competitive salaries, but more often it’s offered as a financial incentive to motivate employees toward building a successful company.
According to The Economist, today’s startups are keen to incentivize via shared ownership:

The central difference lies in ownership: whereas nobody is sure who owns public companies, startups go to great lengths to define who owns what. Early in a company’s life, the founders and first recruits own a majority stake—and they incentivise people with ownership stakes or performance-related rewards. That has always been true for startups, but today the rights and responsibilities are meticulously defined in contracts drawn up by lawyers. This aligns interests and creates a culture of hard work and camaraderie. Because they are private rather than public, they measure how they are doing using performance indicators (such as how many products they have produced) rather than elaborate accounting standards.

 This trend hearkens back to cooperatives where employees collectively owned the enterprise and participated in management decisions through their voting rights. Mondragon is the oft-cited example of a successful, modern worker cooperative. Mondragon's broad-based employee ownership is not the same as an Employee Stock Ownership Plan. With ownership comes a say – control – over the business. Their workers elect management, and management is responsible to the employees.