"The rich are going to continue to gobble up a greater share of income, and our current system will do nothing to reverse that trend."

#Money

Wed, Mar 26th, 2014 20:00 by capnasty NEWS

The New York Times looks at Arizmendi Bakery, located in San Francisco, a worker-owned cooperatives where none of the profit "ends up in the hands of a faraway investor," and goes, instead, right back to the workers. This gives them wages they can live on, "health insurance, paid vacation and a share of the profits." Surprisingly, eventhough this model of running a business is toted as "a possible antidote to some of our most persistent economic ills, [...] co-ops remain largely relegated to boutique status in the United States."

Returns to investors are ever-increasing compared with the returns to labor. For most economists, there’s little question that the former is squeezing the latter.

The blockbuster economics book of the season, Thomas Piketty’s “Capital in the Twenty-First Century,” argues that the great equalizing decades following World War II, which brought on the rise of the middle class in the United States, were but a historical anomaly. Armed with centuries of data, Piketty says the rich are going to continue to gobble up a greater share of income, and our current system will do nothing to reverse that trend.

The oft-proposed remedy for this state of affairs is redistribution — namely, taxing the rich to benefit the poor. Piketty, in fact, proposes a global tax, one that can’t be avoided by private jet. Others want to raise the minimum wage. In contrast to those Band-Aids, worker co-ops require no politically unpalatable dictates. And by placing workers’ needs ahead of profits, they address the root cause of economic disparity. “If you don’t want inequality,” says Richard Wolff, the author of “Democracy at Work: A Cure for Capitalism,” “don’t distribute income unequally in the first place.”

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