Detroit is the hole that Mike’s Steam Shovel Dug

Who here remembers the story about Mike Mulligan and his steam shovel? Detroit’s problem is like Mike’s. Mike’s steam shovel, Mary Anne, wasn’t as nifty as new diesel shovels, just like land-locked Detroit auto plants were not as nifty as new, single story automated ones. But Mike vowed to work hard building a basement hole for city hall, so he and Mary Anne got the job. They dug a great big hole but with no way to get out of it.

Detroit dug a big hole with no way out too! Everything Detroit did to help herself didn’t slow the hole getting deeper, and her city hall was left with a dilapidated steam shovel in its basement. Detroit’s impossible hole is that it needs good paying jobs for its illiterate citizens….period. It’s that simple and that difficult.

As auto jobs left, whites left with them. Blacks could not qualify for federal housing loans because of federally supported racism and could not enter communities built up around the new plants because of restrictive covenants. So the low level jobs that the auto manufacturers allowed them to have went away.

Now, they were left in the city with poorly supported schools with few good paying jobs. Crime got worse. Family situations got worse. Home values plummeted. City revenues dropped. And as the city blight worsened while the outer suburbs improved, new businesses chose to build in growing, safer areas rather than in the city. Dig, dig, dig…

The diesel shovel jobs that competed with Mary Anne steam shovel, those jobs that illiterates in the inner city of Detroit, 47% of her citizens by some accounts, could qualify for, they are growing at 10% per year in Eastern countries but paying well less than the mandated minimum wage in Detroit.

America created an economic infrastructure that produced generations of illiterate Detroiters. Our failure to face institutional racism kept our most oppressed of citizens corralled in the city. Our elites took away jobs that illiterates could have worked. Now, our latest generation of Detroiters sit in a basement hole with no chance at earning a living wage as an alternative to crime and dysfunctional communities.

In the story, “Mike Mulligan and His Steam Shovel”, because he was stuck in the hole, he created a living wage in the hole by converting his steam shovel into the new city hall furnace, making a living wage to provide the city hall with heat.

America, having created this impossible hole, must now create living wages for our tens of thousands of illiterate unemployed, and we must vow to create a future economic infrastructure that does not dig such impossible holes. Political intransigence must now make way for a willingness to fix the problem.

I wrote an article in 2011, explaining the mechanisms of job transfer to Asia that is worth reading, Called How China Ate America’s Lunch…

http://www.zerohedge.com/contributed/how-china-ate-americas-lunch

China was ready to take back its world leadership in 1978 after “150 years of shame” and America’s elite were all too willing to sell out our posterity to help them. Detroit’s bankruptcy was foretold by the decimating our middle class to fund China’s emergence.

Yet, just as was seen in the Arab Spring, it is the fringes of society that break first. While the whole of our middle class is having its life slowly drained, those poor souls on the outer edges, such as our citizens in the inner city of Detroit, are the ones whose life supply of economic blood is the thinnest. They die first.

Detroit is America’s problem to fix.

America Should Put All Assets on the Table for Taxation

I wish for society to be as free of government as is can be, that government be limited to those functions enumerated in the Constitution such as providing for the national defense.

National defense – what is it? America is a group of people clustered together by geography under a common set of laws that we have crafted over time for the protection of our rights from attacks by outsiders and insiders. We have a common economy that provides for our people and a common military that protects us from state led, organized attacks. We have a judiciary that protects us from overt abuses of our laws by our executive and legislative branches. We have a common legislative branch that should strengthen our other institutions through commonly agreed upon laws of engagement for the national defense of our people and an executive branch that acts upon these laws fo our common defense.

How well is our government performing its duties of national defense? Our defense of state organized attack is from another era. Our defense of terrorism has overtaken our liberties. Our defense of attacks on our infrastructure, such as against nuclear and cyber attacks, is in its infancy and struggling for balance. Our three branches of government have been commandeered by America’s elite to provide for their defense against interference from the rest of our society.

Is the middle class defended? Is the working class defended? Are our unemployed and underclass? What is the balance that must be obtained in a defended society?

Some argue that Government is too big, that it takes too much of our money to manage this leviathan. Certainly, our government has too many people and assets and these are costly. But cutting the size of government is only a drop in the bucket compared to the excessive costs of our programs and regulations, and thus cutting the size of government will do very little to curb our deficits and lessen our debt. It is not the size of government that is at issue but the size of expenditures that have been agreed to by past legislators and that have been enacted by past executive branches. It is the size of our agreements that is bankrupting our country. More than anything, we must prioritize cost reductions and government must not be cut to the point of disfunctionality in the process of cutting costs.

Once America’s spending priorities have been readjusted to fit our abilities to pay and our government has been resized to manage those priorities, those priorities and the new size of our government still has to be paid. We still have to agree how each of us will contribute to the funding of our government. Each of us has assets that can be taken to pay for government. We have assets that were purchased in previous years and assets that have been acquired in the current year. We have assets that have been made through investments and assets that have been given to us as compensation for our labors. Some of our assets are liquid and some are hard assets not so easily converted to money.

Government must now come together to represent the people in deciding which of these assets will be assessed for taxation. The best we can hope is that our legislators are balanced in their representation of the people. Who of us believes that regarding economics, our legislature is balanced in representing all classes of people?

The largest of our nation’s costs are military and social safety nets. Both of these costs were agreed to by past federal legislators as the best compromise, given the structure of our society at the time. Our military was structured for hegemonic offense, to thrust America’s economic interests abroad. Our social safety nets were structured to care for those of our citizens whose labor was set aside to maximize the profits of capital owners.

Fast forward to today. Our elite’s financial interests are in even more need of hegemonic military protection, as a much greater percentage of their assets are abroad. Even more of our citizens’ labor has been left idle by their decision to invest abroad, and now our social safety net program costs are excessive. We now balk at having such high government program costs, yet we are unwilling to cut or hegemonic military or to bring back investment to employ our citizens. So instead, we sit stupefied watching our legislature do what we expect them to do, stall on our behalf.

Now, our elite wants to cut the costs of social safety nets that are caused by foreign investment and our poor want to cut the costs of our hegemonic military that exists to protect those foreign investments. And if neither will budge on cuts, then each wants the other to pay for the excessive government program costs that we will incur.

However, the economics of America are driven by the investments of our elite. If America’s elite choose to situate their assets in foreign lands rather than in domestic businesses that will employ our people and that will minimize safety net and defense costs, who then should be responsible for covering these costs? Are my words socialist or are they simply recognizing that every economic choice has cost consequences?

I am not advocating going back to the days of kings, back to the beginnings of our nation, when America’s lands were given to the elite families of America by the crown, and restructuring them to give all an equal share, nor of reconfiguring the lands taken from indigenous peoples and given to the governors, financial, and political elite of the time. I am not advocating correcting these historical manmade injustices.

However, all men should have a living wage and our national defense calls for maximizing the outputs of all in our society through the investments of our elite that have been given the blessings of historical circumstance as well as those that have made their fortunes nurtured within the defensive infrastructure of the United States.

The elites’ assets are mostly in excess stores of value, above what are required to live and to consume. The middle class have assets that were mostly created through their labor, 0-3 years worth of labor in liquid assets and a house, maybe two. The working class might have a home and few liquid assets, plus current assets from recent labor. The underclass have few assets to speak of. Which of these assets will be taken to pay for the requirements of government?

The vast majority of assets that America owns are left untouchable by government. Why is that? Is land that has been in a family since it was bestowed upon them by the King of England any more valuable than a dollar that was made by the sweat of labor in 2013? If a working class man has no assets but $5,000 in a bank made by his labor this year, why are those assets what should pay the bulk of the nation’s governmental costs while the assets of land in a 50,000 acre estate are deemed off limits?

Do I want the government touching any of my assets, or those of the laborer with $5,000, or the American lord with 50,000 acres? Well I realistically know it must to function. If it must, are any of these assets more sacred than another? Why is it that we have conditioned ourselves to accept that recently acquired assets are acceptable to tax but those that have been in a family for centuries are not?

The argument has been structured so as to only compare recently acquired assets, for to look at all assets would be to see how amazingly imbalanced ownership of assets is in America. My proposal of taxing only assets that are not being productively used in the economy, while impossible to enact, is intended to break through this manufactured paradigm. Whether America has a flat tax, a fair tax, or a progressive tax, we should compare all assets, not just those recently acquired. And we should not create false paradigms that differentiate between that were acquired through investments, those acquired as payment for the use of capital, or those handed down through generations from the King.

Divine Law requires Private Land to Be Placed in Highest Use Toward Full Employment

The idea of land ownership, capitalism, and money all tie back to Divine Law. In the progress of man, nomadic cultures were replaced ultimately with communities that stayed in placed to work communal land. These cultures eventually developed into kingdoms typically governed in the physical realm by kings that derived power from the spiritual realm governed by priests.

Feudal systems developed in which land ownership was deemed the divine right of kings. These concepts were similar from Polynesia to Europe. In many societies, the use of land was partitioned off to lords under kings. Yet property rights came from gods through kings to their minions. The idea was that the minions required enough land to provide for their families and to provide tribute to rulers to be used in governance and in defense. These earlier forms of land use supported the idea of divine law.

In the 17th century, this idea of property rights was challenged in Europe. John Locke’s ideas of property, expounded in his Two Treatises of Government, written in 1690, were as basis of modern property rights. His ideas were of God given rights to property that were not derived through the king but were derived directly from God.

His idea was that man’s cultivation and improvement of land was what intertwined the divine nature of land with man’s improvement to make ownership of that land his. Locke’s ideas that land use must be in accordance with God’s permissible use of land were then developed into the modern land ownership laws we have today.

America, and most other countries, have land ownership which is not allodial, or complete. Instead, we have fee simple land, or land that is owned by us at the pleasure of the state. Our land is not completely ours but is ours as long as we submit to the dictates of the state, pay taxes for instance. The concept was derived from Locke’s concept that land held in private should be able to produce for the good of society or be turned back to the state.

Nonetheless, great estates were created both in England and later in America, as governors of lands seized from the indigenous peoples of America were first given in fee ownership to governors and other high ranking originating families of America’s colonies. And taxation of land, the justification of holding land for higher use, became highly differentiated between owners of vast estates and those of small plots.

Examine taxation of private lands owned by vast land owners versus those small plots in town for instance. Why is it that small home owner plots owe vastly more per acre than huge land holdings owned by elites? In order to maintain such small fee simple plots then, the owner of such plots must provide a much greater land use to pay the land taxes or subsidize those taxes from other sources in order to maintain ownership of their paltry estate. Yet the same is not true for the vast land owners of land that is not developed.

This inequity in land taxation then is a means by which wealth is acquired, kept, passed on to heirs. Land, minerals, metals, raw energy, and other resources derived from the land such as lumber, these are true wealth. Money is simply a place holder in the distribution of true wealth and transitory wealth such as that added by mans labor to combine with the offspring of land into products.

Our elite then aspire to acquire and maintain true wealth, including vast acreage of land. Much of this land held as assets then is not tilled or developed and thus could not be held for long if it were not for inequitable taxation. This concept of excess land holdings went against Locke’s concepts of inalienable rights to land.

It is the development of raw materials that spring from land, combining them with man’s labor, that create transitory assets such as cars and houses, those assets that eventually return to the earth.

Capitalism is the combining of assets in equity, land, raw materials, and their place holders of money, with funds borrowed on the promises of future labor to create transitory assets such as automobiles. This system relies on owners of real wealth to provide it as a guarantee of the success of enterprises that develop transitory assets.

Owners of real assets then are paid a portion of the transitory assets, or their place holder of money, for use of their real assets in the venture. Generally, this portion of transitory assets or money is then retransferred into the acquisition of more real assets, thereby increasing the holdings of land and other real assets by the real asset owners. This is how capitalism concentrates wealth.

Since at the start of the American revolution, we had a concentration of real wealth by just a few land owners, with more than 60% of Americans at the time non-land owners, this capitalism system then continues to concentrate wealth. Then every three decades or so, economic crises occur that redistribute wealth somewhat and the process begins again.

If, as Locke suggested, land, capital should be in the hands of those that will develop it for the good of society, why then are we subjecting our nation to the whims of vast capital that sits dormant while millions suffer in idleness?

Modern capitalism then should consider how owners of real assets within a nation put those assets to highest use for the benefit of a nation.