Letters to the Editor

Change how capital spent to fix economy

Fact: Almost all of America's income gains since 1980 have gone to the richest 1 percent, who are the supposed job creators.

Question: With that accumulation of capital among supposed job creators, why doesn't the jobless rate fall?

Here's one possible explanation: Much of that capital is now invested in various derivatives (for example, an investment in the right to buy euros at a future date at a specified price; or an investment whose value rises or falls with the price of a commodity, such as oil or soybeans). The total worth of these derivatives may now exceed that of all stocks and bonds in the world.

These derivatives create no tangible products and very few jobs.

Back to that accumulated capital: Some of what remains after buying derivatives goes into conspicuous consumption. The rest goes into actual productive investments, but despite the rhetoric about "job creators," it produces very few American jobs. That's because this capital usually flows into one of these two investment streams -- offshoring, which creates low-paying jobs in places like Bangladesh, or robosourcing, which introduces robots to replace workers in the U.S. and elsewhere around the world.

The resulting dearth of jobs destroys the lives of millions of people. Too few workers earning decent wages also cripples our consumer-driven economy.

Here's one possible solution: Redistribute some of that increased income at the top by taxing capital gains at the same rate as other income, and use the revenue to stimulate hiring.

Raymond Dominick