As we saw yesterday, disconnecting production from consumption is a sure recipe for disaster . . . if you define “disaster” as an avalanche of non-productive debt. Spending your way out of trouble doesn’t work, even if it looks as if it does in the short run. In the long run, of course, somebody has to pay the bill, or the system collapses.
Tuesday, May 23, 2017
Monday, May 22, 2017
Last Thursday we took a look at Representative Tom Snozzi’s proposal to restore the American Dream by creating jobs. And how are jobs created? By hiring people to work on massive public works projects; as infrastructure repair and maintenance has been lagging in the United States for some time, there is a great deal that needs to be done.
Friday, May 19, 2017
Perhaps not surprisingly, there are a couple of interesting items on the international scene that relate to the Just Third Way. Otherwise, this has been a rather quiet week as we wind down from attending the ESOP Association conference last week, and prepare for next week’s monthly CESJ meeting.
Thursday, May 18, 2017
We’ll not keep you in suspense. The rather forced pun in the title of this blog comes from the fact that the article that suggested it, “When the Welders Came to Capitol Hill” (Wall Street Journal, A19) appeared on May 15, 2017, the one hundred and twenty sixth anniversary of the issuance of Rerum Novarum, Pope Leo XIII’s encyclical “On Labor and Capital.”
Wednesday, May 17, 2017
Yesterday we reported that His Eminence Gerhard Cardinal Müller, Prefect of the Congregation for the Doctrine of the Faith, noted in his talk at St. Thomas More Cathedral in Arlington, Virginia, on Sunday, May 14, 2017, that restoring the Family, the basic unit of society, is a top priority.
Tuesday, May 16, 2017
This past Sunday, May 14, 2017, at the Cathedral of St. Thomas More in Arlington, Virginia, we had the privilege of singing for the Mass celebrated by Gerhard Cardinal Müller, Prefect of the Congregation for the Doctrine of the Faith. His Eminence was in the United States as the main celebrant and homilist for the Baccalaureate Mass at Christendom College in Front Royal, Virginia, on May 12. He was also the commencement speaker for this year’s ceremonies on May 13, where he received an honorary doctorate before delivering his address.
Monday, May 15, 2017
From 1934 to 1935 the Brookings Institution published a four-volume set, Distribution of Wealth and Income in Relation to Economic Progress, analyzing what needed to be done in a recovery program for the Great Depression. Unfortunately, FDR and his “Brain Trust” listened to John Maynard Keynes and went with the New Deal, rather than with something that made sense.
Friday, May 12, 2017
This is the week of the annual ESOP Association Conference. This year marks the fortieth consecutive conference. It has come a long way from its beginnings. Some of the top worker-owned companies and professional service providers attend the conference every year, which is often the highpoint of their efforts to build an ownership culture.
Thursday, May 11, 2017
In the early sixties, Louis O. Kelso and Mortimer J. Adler co-authored a book, The New Capitalists: A Proposal to Free Economic Growth from the Slavery of Savings (New York: Random House, 1961). Drawing largely on the work of Dr. Harold G. Moulton in The Formation of Capital (1935), Kelso and Adler presented Moulton’s answer to the “economic dilemma” we noted in yesterday’s posting.
Wednesday, May 10, 2017
To recap yesterday’s lesson in Keynesian finance, limiting the source of financing for new capital formation to past savings not only diverts funds away from consumption (thereby nullifying Adam Smith’s first principle of economics, that production is for consumption), but in order to have production that is not intended for consumption generate the savings necessary to finance new capital and create jobs, demand must be artificially added to the economy so that goods not intended for consumption can be consumed. Yes, we are fully aware that is a contradiction. Keynesian economics relies on such things.
Tuesday, May 9, 2017
One of the conundrums of a modern economy is how to restore Say’s Law of Markets so that consumption and production are in balance. What makes the problem worse is the fact that the mainstream schools of economics, Keynesian, Monetarist/Chicago, and Austrian, take for granted an assumption that flies directly in the face of Adam Smith’s first principle of economics stated in The Wealth of Nations: “Consumption is the sole end and purpose of all production.”
Monday, May 8, 2017
Every now and then we consider a question from a new perspective, usually because someone asks us a question that we answer . . . and then stop and wonder why someone asked the question in the first place.
Friday, May 5, 2017
This has been a pretty busy week for the Just Third Way. A number of projects have made significant advances, news ones have come in over the transom as it were, and a few “non-producers” were given up. In addition there have been some interesting meetings taking place, some of them rather surprising — after all, how often does Mark Zuckerberg drop in for dinner unexpectedly?
Thursday, May 4, 2017
A couple of days ago on FaceBook we reposted a piece from a few years ago on why central bank reform is so important. We tossed around a few specialized financial and banking terms (just to make us look important, of course), and didn’t think any more about it. Then one of our favorite readers asked a question:
Wednesday, May 3, 2017
Yesterday we looked into the arguments for and against a new Glass-Steagall act. We concluded that both advocates and opponents were missing the real point: that a well-designed system must include sound internal controls.
Tuesday, May 2, 2017
Ever since the full repeal of the Glass-Steagall act, there have been calls from some quarters that it should be reinstated. Naturally, this has sparked a number of responses from individuals and groups that were the ones to gain from the act’s repeal insisting that All Is Well. This is made all the easier by the fact that those demanding its reinstatement have no more idea of Glass-Steagall’s purpose than those who were instrumental in its repeal.
Monday, May 1, 2017
Last Thursday we started looking at some of the policy objectives of Capital Homesteading. Today we look at some more. Again, keep in mind that “cafeteria Capital Homesteading,” i.e., picking and choosing what to implement and what to leave out, would make the whole thing unworkable.
Friday, April 28, 2017
There were a number of interesting events this past week, including the CESJ Annual Meeting. It was scaled down from previous years due to a number of factors beyond anyone’s control, but was still a significant event in the history of CESJ. A gourmet dinner of tranches de radis brutes et trempette de Roquefort followed with le porc cuit à l'étouffée avec les coeurs d'artichaut sur le riz marron preceded the meeting. Other items of interest include:
Thursday, April 27, 2017
Yesterday we promised to start looking at some of the policy objectives of a “Capital Homestead Act.” Since there are more than a few, we decided to do some today, and the rest on Monday — with the caveat that a division of any kind might give the wrong impression that parts of the program can be separated and implemented piecemeal. No, the proposal is an integrated approach, and must be implemented as a unified approach, or there is a very good chance it won’t work.
Wednesday, April 26, 2017
One thing we’ve noticed about a number of proposed reform packages is that all too frequently the desired goal is stated as the means instead of the end. This tends to get almost simple minded at times. If you want something, just do it. How to do it is an unimportant detail.
Tuesday, April 25, 2017
Last Thursday we looked at how cutting consumption to accumulate savings, far from being the only way to finance new capital formation, actually throws the entire financial and economic system into a cocked hat and causes a failure of Say’s Law of Markets to operate . . . although why the hat has to be cocked instead of a gun remains a mystery. Either does the damage.
Monday, April 24, 2017
Last Thursday we noted that the ability to accumulate — “save” — while an aspect of money, is only peripheral to the principal function of money, which is to be spent, i.e., “consumed.” Money, which is anything that can be accepted in settlement of a debt, derives from the functioning of Say’s Law of Markets.
Friday, April 21, 2017
One of the things the news media have made clear this week — whether or not they meant to — was to underscore the fact that so many of what seem to be insoluble problems actually have some fairly simple solutions . . . if you bother to look for them:
Thursday, April 20, 2017
We’ve been getting into some interesting discussions on FaceBook about the similarities between the rather vague system that G.K. Chesterton and Hilaire Belloc called “distributism,” and the more specific proposal we call “Capital Homesteading” within the context of the Just Third Way.