A strategy for reducing income inequality

It’s no secret that income inequality has been on the rise in the United States over the past generation. But it has been increasing in most other affluent countries too. This is not a product of cuts in taxes or social programs; it’s due mainly to rising inequality of market income.

Suppose we think it would be good for countries to try to maintain or move toward relatively low levels of inequality, something akin to the levels in contemporary Denmark or Sweden. What is the best way to do that?

My attempt at an answer is in the September-October issue of Challenge.

4 thoughts on “A strategy for reducing income inequality

  1. I will copy a portion of a letter from Norm Kurland of the Economic Group CESJ – Center For Economic and Social Justice- which Norm posted on his website regarding the Kelsonian solutions to your observations, which these have been pushing for for 40 years…
    ___________________________________________________

    I suggest that (Moore) he receive Michael’s /In Defense of Human Dignity/ and /Capital Homesteading for Every Citizen/, plus Father Ferree’s pamphlet “Introduction to Social Justice.”

    You can suggest that he visit the website of the Center for Economic and Social Justice at http://www.cesj.org to learn of our accomplishments since we formed in 1984, especially our rallies for the last 5 years at the Fed, as well as being able to download the two Kelso-Adler books from our homepage.

    If you send him an email, cut and paste this quote from Walter Reuther, who I served as director of planning for the Citizens Crusade Against Poverty chaired by Reuther from 1965-68, before Kelso and I teamed up:

    *Walter P Reuther*. (President, United Auto Workers) “*Profit
    sharing in the form of stock distributions to workers would help to
    democratize the ownership of America’s vast corporate wealth which
    is today appallingly undemocratic and unhealthy*. The Federal
    Reserve Board recently published data from which it is possible to
    estimate the degree of concentration in the ownership of publicly
    traded stock held by individuals and families as of December 1962.
    Preliminary analysis of these data indicates that, despite all the
    talk of a “people’s capitalism” in the United States, little more
    than one percent of all consumer units owned approximately 70
    percent of all such stock. Fewer than 8 percent of all consumer
    units owned approximately 97 percent—which means, conversely, that
    the total direct ownership interest of more than 92 percent of
    America’s consumer units in the corporation-operated productive
    wealth of this country was approximately 3 percent. Profit sharing
    in a form that would help to correct this shocking maldistribution
    would be highly desirable for that reason alone.… If workers had
    definite assurance of equitable shares in the profits of the
    corporations that employ them, they would see less need to seek an
    equitable balance between their gains and soaring profits through
    augmented increases in basic wage rates. *This would be a desirable
    result from the standpoint of stabilization policy because profit
    sharing does not increase costs. Since profits are a residual, after
    all costs have been met, and since their size is not determinable
    until after customers have paid the prices charged for the firm’s
    products, profit sharing as such cannot be said to have any
    inflationary impact upon costs and prices*.” [Testimony before the
    Joint Economic Committee of Congress on the President's Economic
    Report, February 20, 1967.]

    And here are six of the 20 reforms we are advocating under the proposed Capital Homestead Act, which Walter Reuther would have backed if he had not been killed in a 1968 plane crash but which his successors at the United Auto Workers ignored at the expense of UAW members since Reuther’s death:

    *
    (10 Democratize Ownership of the Federal Reserve. *Provide every
    citizen a single, lifetime, non-transferable voting share in the
    nation’s central bank and in one of the 12 regional Federal Reserve
    banks. This will ensure that the Fed’s board of governors is broadly
    representative of all groups affected by Fed policy, and that power
    over future money creation is spread widely among all citizens.

    **

    *(11) Discourage Monopolies and Monopolistic Ownership.* Link all
    economic reforms to methods that discourage privileged access to
    monopolistic accumulations of private property ownership of the
    means of production. Enforce anti-trust laws by providing access to
    interest-free capital credit to encourage broadly owned new
    competitors to enhance and sustain market-oriented growth.

    *(12) Introduce a Market-Driven Wage and Price System.* Gradually
    eliminate rigid, artificially-protected wage and price levels and
    other restrictions on free trade that afford special privileges to
    some industries, businesses and workers at the expense of American
    and foreign customers of US products. Replace subsidies with
    interest-free credit incentives to farmers who wish to associate
    voluntarily in cooperatives and in enterprises jointly owned by
    farmers and workers, including integrated agribusinesses. The income
    generated by farmer-owned enterprises would supplement farm incomes
    and reduce the need for subsidies.

    *(13) Restore Property Rights in Corporate Equity.* Restore the
    original rights of “private property” to all owners of corporate
    equity, particularly with respect to the right to profits and in the
    sharing of control over corporate policies. Preserve traditional
    powers of professional managers held accountable by Justice-Based
    Management corporate governance structures.

    *(14) Offer a More Just Social Contract for Workers.* A top priority
    during the next decade would be developing a more just “social
    contract” for persons employed in the private sector. This would be
    geared toward establishing maximum ownership incentives. Instead of
    inflationary “wage system” increases, employees would begin to earn
    future increases in income through production bonuses, equity
    accumulations, and profit earnings. These “bottom-line” rewards
    would be linked to workers’ individual contributions, and to the
    productivity and success of their work team and the enterprise for
    which they work.

    *(15) Encourage More Harmonious Worker-Management Relations.*
    Promote the right of non-management workers to form democratic
    unions and other voluntary associations. Instead of promoting the
    traditional “conflict model” of industrial relations, however,
    “labor” unions would be encouraged to transform themselves into
    democratic “ownership unions.” These ownership unions could become
    society’s primary institutions for promoting a free market version
    of economic justice, while continuing to negotiate and advance
    workers’ economic interests, including worker ownership rights and
    Justice-Based Management policies.

    Under Capital Homesteading, unions could expand their role in a free
    market system by educating and expanding their membership to include
    all citizen-shareholders. Ownership unions would enhance the
    property rights of all shareholders by enhancing management
    accountability and transparency, and protecting against unjust
    executive compensation schemes.

    Guy, Michael Moore, if he reads these points and then our books, should get a deeper understanding of why America’s basic industries are going down the tube and ending up in countries where foreign wage slaves can take the jobs of unemployed American wage slaves. Michael Moore can not only help in our goal to democratize future ownership of the 12 regional Feds but also begin advocating the workers themselves organize to persuade their leaders to transform labor unions into “ownership unions.”

  2. I’m having a lot of trouble downloading the linked paper. Is it just me or are others having trouble too?

  3. Hmph. After putting up my previous comment I tried again and succeeded. Weird but problem seems fixed.

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