Re: State of the Union, Perpetuation of the Wage Slave System byBoth the Left and the Right

["Norman G. Kurland" <thirdway@cesj.org>]

Lynn,

Right after Kennedy was elected, before I got involved with civil rights in Mississippi, the War on Poverty and then as Kelso's one-man lobbying "force" on Capitol Hill, I was a staff attorney at the Department of Health, Education and Welfare.  In my job I learned a lot about the whole array of welfare state programs, including Social Security.  What's clear is that no worker has a guaranteed stake in the system.  Social Security, sold as "insurance", has no assets behind the promises.  It is a pay-as-you-go system, and to the extent revenues exceed benefits, the excess is "invested" in budget deficits in the form of treasury paper to pay the costs of past and current wars and other government deficits for programs that the politicians (to stay in office) don't have the guts to raise from general taxation.  None of the excess helps finance the steel mills and other technologies and infrastructure the economy needs to remain competitive in global trade.  In 1940 Social Security had 42 workers paying in for every one retiree.  Today, 3 workers support each retiree.  And in a few years, 2 workers will carry one retiree on their backs.  According to a study by an economist at the Cleveland Fed and one at the University of Pennsylvania described in the January/February 2004 Atlantic Monthly, the current value of all projected deficits under Social Security and Medicare amounted to $45.5 trillion, or a "hidden debt" of $156,000 for each American.  After Medicare "reforms" that "hole" increased to $70 trillion or $237,000 for every American to make up in the future.  (What a wonderful "gift" parents hand off to a newly born kid!)  Lynn, in other words, the system stinks.

I agree with you in opposing the President's privatization scheme.  It is a handout of trillions to Wall Street, will not finance growth of productive assets or be invested in newly issued securities, and will artificially bloat up the price of existing securities far above their true value.  And it will take away unnecessarily revenues needed to meet to fund the present pay-as-you-go Social Security and Medicare systems, as well as welfare costs paid for from temporarily "excess" payroll taxes.

As you know, I think the wage system is the cancer of the global economy.  Marx was right, if the worker has only his labor to sell in a free and open market, he, as a wage slave, is competing against technology that is displacing his labor and/or workers in other labor markets willing or forced to accept lower wages for the same work.

When I worked under Walter Reuther as the Director of Planning for the Citizens Crusade Against Poverty, Reuther, after learning about Kelso's ownership system alternative, began advocating the transformation of the overall economic system to connect workers to ownership sharing, profit sharing and participative management.  In my conversations with you, you too understand the need to move to an ownership system.  Unfortunately, most labor leaders in the US and around the world are still shackled to the cancerous and dehumanizing wage system that blocks most of humanity from becoming empowered through capital ownership.  As such, modern labor leaders, I hate to say, have become more reactionary and unimaginative in their ideas than Wall Street money and stock peddlers.  That's why their unions have shrunk their membership from 35% of the work force in the for-profit sector that produces our marketable goods and services, to less than 10% today.  This cancer in America is exacerbated as financial globalization brings about what Bill Greider calls "wage arbitrage."

Is there a way out?  Yes there is, and it is described in the first 10 pages of our book, Capital Homesteading for Every Citizenship: A Just Free Market Solution for Saving Social Security.  Since you have a copy of this book, don't you see the merits of our approach over that of Bush and the "head-in-the sand" approach of the Democrats and the ridiculous tinkering with more redistributive tax policies by most liberals?  To remind you, Capital Homesteading is an add-on benefit (it would keep all Social Security and Medicare promises), opening the key to ownership through the Federal Reserve discount window under section 13 of the Federal Reserve Act.  It is a radical centrist, bottom-up approach for getting money power and capital credit power to every citizen from birth to death.  A child born today would accumulate $200,000 in assets, producing $30,000 in annual dividends on retirement and $750,000 in dividends during his working career.  And it doesn't depend on redistributing wealth or income from present owners, which is one of the political flaws of classical socialism and the New Deal.  (See http://www.cesj.org/publications/capitalhomesteading/whatif-flyer.pdf)  All other alternatives keep power concentrated.  All other alternatives keep the wage slave system in place.

Lynn, you should be marching arm-in-arm for the Just Third Way (http://www.cesj.org/thirdway/comparison3rdway.htm) and the Capital Homesteading Revolution.  You might consider joining the gathering on Friday, April 15th at the Fed, the "Bunker Hill" of the Second American Revolution.

Norm Kurland
www.cesj.org

LynnRWilliams@aol.com wrote:

 

Marc -

 

I am sure that you know, but should there be any confusion, the labor movement is unalterably opposed to the privatization of the social security system.  It has been and is by far the most important and effective antipoverty program in the United States.

 

The "crisis" is being engineered by those who want Wall St. to have an enormous opportunity to move into the system for its own enrichment, and those in the U.S. to whom the Administration has been giving back their taxes and who have lost whatever sense of social responsibility they may once have had.

 

There are many ways to solve the "crisis".   Removing the income cap on those who contribute is one direct way.  Seeing what happens with economic growth is another.  Those who make the dire predictions do so on the basis that there will be little or no economic growth but economist Paul Krugman has pointed out this week that the same people, in predicting the great succes of private accounts, use estimates of stock market growth that have never been remotely achieved.  If those same growth rates are used in predicting the future of the present system, Krugman says, there will be no "crisis" for generations to come.

 

The wealth being generated by dramatic increases in productivity is being distributed far too inequitably.  Were it being shared more equally, the present level of payroll taxation would obviously provide a much more substantial income for the social security system.

 

I do not think we should be looking to the destruction of social programs as the basis on which to build an emloyee ownership based economic structure.

 

Lynn