Saturday, May 21, 2016

Creators of Poverty; Creators of Jobs

(Re) published at

The Creators of Poverty,
a Complementary Truth, and Sundry Consequences

Carmine Gorga 

November 2015

Key points:

  • The rich are not the creators of poverty; it is the wicked who create poverty, not the rich.
  • The rich are not the creators of jobs; it is the entrepreneur who creates jobs.
  • The rich do not have the numbers to consume the Gross National Product; it is the poor who by their numbers perform this essential function.
  • Giving tax deductions, grants, and subsidies to the rich in order to create jobs is a waste of money. Yet, the money is not really wasted; it compounds the weight of today's economic problems--it does great damage by being a significant source of inequality. Hence we increase the level of poverty in the nation.
  • Some solutions for unfair economic inequality: Employee Stock Ownership Plans (ESOPs); Consumer Stock Ownership Plans (CSOPs); give loans to entrepreneurs who produce real wealth, not to financial speculators; cancel unduly inflated debts.

Some time ago I published this piece [1] in which I recognized that the rich are not the creators of poverty. I found that to be a powerful discovery that freed me from many an error.

Ever since the publication of this piece I have discovered a complementary truth: the rich are not the creators of jobs.

This is also a liberating verity that has freed me from many an error. The generous offer by the editor of Mother Pelican to republish this piece gives me the opportunity to briefly highlight the complementary verity that the rich are not the creators of jobs.

I can hardly contain myself. After years of studying the issue at a not inconsiderable depth, I have found in an unsuspected source an insight that clears up the issue of the cause of poverty in a definitive and powerful way. The source of this insight is neither a treatise in economics, nor a work in sociology, nor a tome in the theory of justice. The source is a paper published in “Spiritual Life,” — a periodical of Carmelite spirituality — in the Fall of 1997. The author is Suzanne Mayer. The title is: “Songs of the City of God: Merton, Social Justice, And the Psalms.”

The author prefaces her essay with this quote from Thomas Merton’s “Bread in the Wilderness”: “The Psalms are the songs of (the) City of God.... Singing them, we become more fully incorporated into the mystery of God’s action in human history.” Recalling that the Psalms are the “ancient prayers of Israel” ascending “like incense before the altar of God,” she proposes to “explore ‘the mystery of God’s action in human history’ through the vision the Psalms give of divine justice and through the covenant call to all humanity to enter into this process.”

These are some of the Psalms she quotes. Ps. 10:2: “In arrogance the wicked hotly pursue the poor...” Ps. 37:14: “The wicked draw the sword and bend their bows, to bring down the poor and the needy...” How do you read these Psalms? I read them in this way: Poverty is created, not by the rich, but by the wicked. What a liberating thesis.

So often repeated, most of us have assumed it to be true. We have assumed that poverty is caused by the rich. Even I who, as those who have worked with me, ever listened to my words, or read any of my writings can attest, has never used one word against the rich, even I had never penetrated the issue as through this reading. In fact, most of my efforts were unfocused and must have seemed quixotic to many just because I have always refused to point the finger at “the rich.”

Let us be honest. We have all assumed that poverty exists because of the rich. Indeed, have not many rich people themselves assumed that to be true? Certainly, society as a whole in its organized political effort has trained all its guns in that direction — and the reaction from the rich has, of course, been to resist that effort.

That most political discourse and action has for centuries been dominated by that assumption is not worth discussing at length. Much more interesting is another question. What is a fair assessment of the result of all that effort?

Do we not find that every now and then one faction wins a few painful battles, but that the war is constantly lost by all?

Are we not, generation after generation, faced with the same age-old problem of poverty? There are times when we become so exhausted by this burden that we refuse even to discuss it any more. But the problem remains stubbornly there. And it gnarls our soul. Not much joy, not much enjoyment of what we possess can be had, if we somehow keep in the back of our minds the suspicion that we have not done nearly enough to alleviate the pain and suffering of men and women who unwillingly live in poverty.

How can we tackle such an endemic condition? Is the situation hopeless? I believe that the first ray of light, and hope, can be grasped if we really try to learn about poverty, starting with splitting the problem into absolute and relative poverty. This is an important distinction. Relative poverty is the existential condition for which there will always be someone richer than others. The feast is a movable feast, indeed. That does not matter at all. Not one iota. What matters is that those who have less be not deprived of the conditions for a dignified and free life. When poverty of material conditions impinges on our freedom and our dignity, then we are suffering from absolute poverty. Then the quality of life of society as a whole is impoverished. Freedom and dignity are absolute qualities. No one can be deprived of them or we are all deprived of them — to say the least, we are all deprived of the joys of a guiltless life.

What changes when we distinguish between relative and absolute poverty? What changes when we make the wicked culpable for the existence of absolute poverty? Everything changes — and the problem becomes abruptly soluble. Let us look only at a few effects on us, through the lenses of some of the effects on the political stump and the religious pulpit.

Our political discourse changes. Our eyes are no longer focused on the behavior of the rich and the behavior of the poor. That polarization in our political life, with people taking sides between the two poles and making the other the enemy, vanishes. We all know the hatred generated by the “undeserving poor.” How many pieces of legislation are passed on the strength of that hatred! How many punitive agencies exist in the vain attempt at enforcing those laws!

Though less spoken about, how much hatred is directed against “the undeserving rich”? Is not most of our tax code written on the assumption that the rich have taken something away from others? The wicked rich are most certainly engaged in those practices. But are all the rich wicked? And are there not poor people who are wicked? Our political discourse is purged of many impurities, and our political action becomes much more pointed, if we keep those two basic distinctions in the back of our minds. Our finger is pointed in only one direction, the proper direction.

The religious pulpit and the political stump can finally become allies — on an equal footing. The split that has plagued society, it seems forever, is healed. Ultimate goals remain different. One is concerned more with the metaphysical life and the other more with the physical life, but the struggle, in this life, on this earth, becomes one and the same: resistance against wicked actions.

Is it easy to identify the wicked? No. Absolutely not. As distinguished from the rich and the poor who can be easily identified, the wicked cannot be easily identified by others. But the wicked themselves know who they are. (At moments of deepest insight, we know that we are all wicked, at least sporadically, at least in part. In those moments we also know that some people do not know they are wicked: hence the need for moral and technical instruction, because without knowledge of good and evil, there is no “sin.”)

The root to the solution of the problem of poverty is no longer found in punishment of the rich or punishment of the poor, or both. The solution can be found only in that eternal prescription for happiness: love your neighbor; love your God; and if you love them both, you will eventually cease to be wicked and you will even love yourself.

Thus the schism within the very soul of the religious people as well as the soul of the political people and, ultimately, the soul of each citizen is healed. The religious people can be concerned only with affairs of the moral life and the eternal life: they can eventually get out of “the social action.” The political people can be concerned only with providing a framework for the “good government,” namely the just government, within which we can take care of all our earthly needs. And we will all succeed. The political people will no longer be dealing with wicked people in sheep’s skin coming out of the synagogues, the churches, and the mosques. The few — always few — vastly wicked people will no longer intermingle with the good people. They will isolate themselves; they will ostracize themselves. Only when self purged, will they come back. Without insurmountable obstacles posed by the wicked, the majority of the people will satisfy all the needs that can and must be taken care of.

Poverty is a moral issue. As such it can be solved. But, then, just because poverty is a moral issue, do we not run against the hard fact that wickedness is an intrinsic part of human nature? I was myself under this  impression until recently when, in a discussion with Father John Hughes of Fitchburg, MA, the issue was clarified for me. I pushed him to admit the inevitability of wickedness. But the goodness that is in him, resisted my push. He still declared himself optimistic that the human race will eventually shunt wickedness aside. It was then that it occurred to me. Yes, the potential for being wicked will always be with us. That is inherent in our human nature; otherwise we would not be free — free to choose between good and evil. But do we have to choose evil? Do we have to destroy ourselves in the process? Not at all. Our struggle will be to resist wickedness. Our millennium has committed more wicked acts than all other millenniums combined, perhaps. We have had our fill. We can now gain control of ourselves and mold ancient aspirations into a Movement Toward Goodness (MTG). This is a challenging task indeed. We need all our wits to succeed.

It is the entrepreneur who creates jobs. Not the rich. Financial capital is wholly passive; indeed, physical capital is equally passive, unless it is invigorated by the entrepreneur. There are plenty of apples on the ground that gradually disintegrate. It is the entrepreneur, who may also be rich, but the entrepreneur—as entrepreneur—who gathers them, and by bringing them to market, transforms a natural product into a useful product.

Much might also be said in relation to the size of the enterprise. Small and medium-size enterprises create jobs. Not to put too fine a point on it, but large corporations tend to destroy jobs. With their penchant for consolidation of two or more enterprises into one, they are bound to reduce rather than enlarge the number of jobs available on the market. Another way large corporations tend to reduce jobs is by chasing the lowest wage markets, no matter where they are located, even if they are located abroad.

There are innumerable consequences that flow from these two verities. We can look only at the most important ones here.

Tax Abatements, Grants, and Subsidies
Just remember this simple verity, the rich do not create jobs, and you know how to react when charlatans tend to convince you to give tax abatements, grants, and subsidies to large corporations, especially large financial, agricultural and maritime corporations, on the specious promise of the creation of jobs.
Will someone calculate the amounts? These are not empty words. They are words laden-full with dollars. If in doubt, just contemplate our financial landscape.

Is there any reason for the bail-outs and the ongoing bail-ins, at taxpayers’ expense, for failing corporations other than the vain hope of the purported preservation and creation of jobs? Is there any other reason for paying interest on reserves, cash hoarded actually, held at the Federal Reserve System (the Fed)? Indeed, is there any other reason for the oil depletion allowance?

Jobs, (Living) Wages, and Technology
Jobs as a talisman? Why does the discussion of jobs carry such weight in a modern society? Why is it presented as the solution to most, if not all, our economic ills?

The topic of “jobs” is generally discussed separately from the topic of wages—especially living wages—and the topic of technology. Let us try to avoid this pitfall. Let us link these three topics together. A new world opens up to sight.
Let us put it starkly. Wage increases are eaten up by rising prices; jobs are eaten up by technology. Wage raises followed by price increases make the world that much harder for the poor, those who are outside even the margins of the economics process; and the concentration of ownership of new job cutting innovations increases only income and wealth inequality.

This is a story that repeats itself. Remember Einstein’s definition of insanity ("doing the same thing over and over again and expecting different results") and ask yourself: Should the unions ever again demand higher wages and taxpayers demand jobs?

The answer is a resounding, no.

Is this a defeatist attitude? Far from it. Long story to be made short. Solutions are these: Taxpayers ought never to submit to the extortion of financial privileges on the promise of jobs; and unions should never push for higher wages. What are the real solutions?

Unions Should Push for Employee Stock Ownership Plans (ESOPs)
Employee Stock Ownership Plans (ESOPs) are growing by leaps and bounds. But more is to be done.

ESOPs will grow steadily when, as suggested in the petition to restructure the procedures of the Fed that is now circulating on the Internet, the creation of new money is pursued only if it benefits all citizens of a nation.

Once employees and workers become stockholders of the corporation in which they work, employees and workers can push for a fair distribution of profits: You see, wages are distributed before income is realized; profits, both as income streams and streams of capital appreciation are distributed after they are realized in the market.

And the Poor, What to Do with the Poor?
What is never realized is a third verity of the present train of thought: The poor are an essential component of the economic process. The rich get richer with the increase of production and consumption of the Gross National Product. The rich do not have the numbers to consume the Gross National Product; it is the poor who by their numbers perform this essential function.

Apart from compensating workers and employees fairly, what is there left to do? The best is perhaps left. This is the creation of Consumer Stock Ownership Plans (CSOPs).

Can you imagine the world in which McDonalds, Stop and Shop, and Macy’s at the end of the year distribute a fair portion of their income among the consumers who have been keeping them alive all year long?

An Analysis of Financial Wealth
This new world, the world of Concordian Economics, will not come about until we run a deeper analysis of financial wealth. The long story, again, must be cut short. Here is its gist.

You and Joe have one million dollar each. You are equally rich. Joe’s wealth eventually grows by leaps and bounds to 10 million dollars. Clearly, Joe is now ten times as rich as you are. But, by hook and by crook, you raise your financial wealth to 10 million dollars as well. You are now again as rich as Joe.

What has occurred—from a purely economic point of view—between the initial and the final position? Nothing has occurred. There has been only an accumulation of zeros. Hence my secondpetition on the Internet to avoid a cataclysmic reduction of financial wealth by financial crisis, rather than systematic reduction of zeros. This is nothing more than the application of the ancient Mosaic application of the Jubilee Solution.
Financial wealth is a pure accumulation of zeros. This is true for the global economy, not only the American economy.

[1] "The Creators of Poverty," Gloucester Daily Times, Symposium, December 18, 1998, p. A10.