Yes, we were all set to run with Guy's suggestion . . . until we read this morning's Wall Street Journal, and the op-ed by Alan S. Blinder, an economics professor at Princeton, "Our Dickensian Economy." (Wall Street Journal, 12/17/10, A19.) Pitting alleged Republican greed against Democratic envy, Dr. Blinder-Than-Thou tried to juxtapose the Murdstones of the GOP with the Democratic David Copperfields. He was clearly attempting to take the high road of concern for the working poor by urging more monetary expansion by the Federal Reserve and “hinting” that employers need to pay workers more. After all, Dr. Blinder points out, productivity in nonfarm business is up 86% since 1978, while real compensation per hour is up just 37% . . . "Is that fair?" he complains.
A Binary Economist would respond with an "Absolutely not!" Where is the fairness in compensation to labor going up 37% when the increases in productivity are due almost exclusively to advancing technology, i.e., capital? How is it "fair" that labor gets what capital has earned, and which goes by natural right to the owner of capital?
Abraham Lincoln had something to say on that score. In the debate with Stephen Douglas on October 15, 1858, Lincoln declared that taking for one's self what another earns is nothing less than slavery: "It is the eternal struggle between two principles, right and wrong, throughout the world. It is the same spirit that says 'you toil and work and earn bread, and I'll eat it.' No matter in what shape it comes, whether from the mouth of a king who seeks to bestride the people of his own nation, and live by the fruit of their labor, or from one race of men as an apology for enslaving another race, it is the same tyrannical principle."
Two wrongs don't make a right. It's no more fair for "capital" to rob "labor" by withholding a just wage, than it is for workers to demand increases in pay for work done by capital owned by others. Would a black slaveholder who kept his former white master in involuntary servitude somehow be less despicable for doing what he, better than anyone, knew to be wrong?
The solution in Binary Economics, of course, would be to open up democratic access to money and credit so that owners of labor could also become owners of capital, thereby sharing in productivity growth by right rather than as the result of coercion. Dr. Blindly-Stumbling doesn't stop with hinting that what belongs to owners of capital should be redistributed to owners of labor, however. After declaring, "Our biggest problem today is the shortage of jobs" (and how, exactly, does raising the price of labor encourage job creation?), Dr. Blinder asserts,
The Federal Reserve is trying to do something about it. But having fired so much ammunition already, it is down to pretty weak weaponry. Yet the Fed's announcement that it would purchase $600 billion worth of Treasury bonds was greeted by thunderous protest from the right, which frets over inflation even as we teeter on the brink of deflation.Uh, yeah, Kingfish . . .
Dr. Blinder does not explain how or why pumping trillions of dollars worth of fiat money into the economy, backed only by toxic, overvalued "assets" and government debt, constitutes "teetering on the brink of deflation." Huh? A few weeks ago Reuters reported that American companies have cir. $1 trillion with which they plan to buy back shares, driving up prices on the secondary market. The financial services industry has reported record profits at a time when the Obama administration has been moaning that banks are stuffed with cash that they refuse to lend. Prices of items carefully omitted from the Consumer Price Index — food and energy — continue to rise. The claim that "we teeter on the brink of deflation" could only come from the mind of an economist who accepts Keynes's re-editing of the dictionary with regard to "inflation." As the Great Defunct Economist explained,
When full employment is reached, any attempt to increase investment still further will set up a tendency in money-prices to rise without limit, irrespective of the marginal propensity to consume; i.e. we shall have reached a state of true inflation. Up to this point, however, rising prices will be associated with an increasing aggregate real income. (General Theory, III.10.ii)In plain English, according to Keynes, "inflation" is not a rise in the price level due to more money "chasing" the same or fewer marketable goods and services. Rather, "true inflation" is a rise in the price level after full employment has been attained. By twisted Keynesian logic, then, since we clearly do not have "full employment," even by the distorted figures coming out of the Bureau of Labor Statistics, we cannot possibly be suffering from inflation. Since we're not suffering from inflation, egad! We're teetering on the brink of deflation!(!!)[!!!]{! x 10!!!} The solution is obvious, at least to a Keynesian: CREATE MORE MONEY! SPEND, SPEND, SPEND!
Really? Dickens understood quite well what happens when you spend without producing. As he had Mr. Micawber instruct Master Copperfield,
"My other piece of advice, Copperfield," said Mr. Micawber, "you know. Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery. The blossom is blighted, the leaf is withered, the god of day goes down upon the dreary scene, and — and in short you are for ever floored. As I am!"Whatever Keynes's and Blinder's delusions, inflation hurts the wage earner. Even Keynes admitted that his "forced savings" theory puts the wage earner into the position of never being able to catch up, and robs the poor for the benefit of the rich. (General Theory, II.7.iv) Labor earns more in aggregate, but Keynes (as von Hayek rather astutely pointed out) neglected to take into account the individuals who make up those aggregates . . . individuals who are worse off by being forced to reduce consumption to put greater profits into the pockets of producers who presumably reinvest the "forced savings," or which are taxed away to fund redistribution.
The poor are effectively taxed to support the poor. Dr. Blinder was right. This is truly a Dickensian economy. The problem is that Dr. Blinder is not a Deus ex Machina author, setting everything right in the end by chance and coincidence. Rather, he bears a startling resemblance to Uriah Heep, who honestly thought he was being a friend to David Copperfield, while engaged in doing the worst possible things to everyone for his own benefit. Frankly, rather than spending our collective heads off and end up being sent to the international equivalent of the Marshalsea debtors' prison — effective loss of national sovereignty — we'd be much better off doing what some conservative fatcats propose: shut down the Federal Reserve, stop spending, balance the budget, allow the rich to accumulate sufficient savings to finance new capital investment and create jobs, and so on.
. . . . or we could do something that actually makes sense: implement Capital Homesteading. So what have we been doing this week to advance the case for a Capital Homestead Act by 2012?
• This past Saturday, December 11, 2010, the "Fed Rally Task Force" had a telephone conference, with another scheduled for tomorrow. This may sound like a rather intensive round of "meetings, bloody meetings," but the effort is starting to build some momentum. In particular, the networking efforts of the CESJ National Field Secretaries are starting to bear fruit. Of special note are Russell Williams and his continuing efforts to reenergize the NAACP to get the venerable organization behind Capital Homesteading as the next logical step in helping all people of all colors to secure their civil — and natural — rights to life, liberty, property, and the pursuit of happiness.Those are the happenings for this week, at least that we know about. If you have an accomplishment that you think should be listed, send us a note about it at mgreaney [at] cesj [dot] org, and we'll see that it gets into the next "issue." If you have a short (250-400 word) comment on a specific posting, please enter your comments in the blog — do not send them to us to post for you. All comments are moderated anyway, so we'll see it before it goes up.
• Adding to the impression that we do nothing but have meetings, on Wednesday we had the monthly Executive Committee meeting. Seeing the movement toward the establishment of the Just Third Way on a daily basis gives you a slightly distorted perspective on progress. It isn't until you see it all in one place (such as these news items) that you realize the momentum that is building up to reach the goal of Capital Homesteading by 2012.
• Russell Williams has been making great strides with the university system in Connecticut, and has opened the door there for Norman Kurland in a number of venues. Russell also has been offered a weekly radio show on the Just Third Way for six months. He still needs to find funding, but he doesn't think that will be a problem. Of course, we're morally certain that if anyone wanted to contribute something to offset production costs, it would be graciously accepted. This has not been discussed, but if the station is not a non-profit, it might be possible to make contributions to CESJ, which has 501(c)(3) status.
• A meeting (meetings, again!) has been scheduled in January with Mr. John Dondanville of Detroit (and a graduate of Notre Dame) and Mr. Robert Colangelo, Executive Director of the National Brownfield Association in Chicago, to discuss the application of the principles of the Just Third Way to the financing of the right-sizing of cities in light of the ongoing economic downturn.
• Norman Kurland has been scheduled for an interview on the "Unlock Your Wealth" radio show, hosted by Heather Wagonhals and produced by the Unlock Your Wealth Foundation, to be broadcast live on Saturday, February 19, 2011. Norm was most recently featured on "Money America" out of Cambridge, Massachusetts, to rave reviews (or as rave as you can get, talking about economics). If you know of a local (or national, or international) show, radio or television, even a local newspaper or magazine that is looking for dynamic, effective, and interesting (yes, it's possible to be interesting about economics) person to interview, put them in touch with us. We're working on a one-sheet handout describing Norm as a guest. It's a great way to spread the word about the Just Third Way, and Norm has the unique ability to turn "the dismal science" of economics into something that has the potential to deliver hope to everyone through Capital Homesteading.
• Dave Kelly (another graduate of Notre Dame), who is spearheading the Harris Neck effort to recover land taken from its owners during the Second World War, has been making many significant contacts. He has also invited Norm to speak before the boards of advisors and directors of the Harris Neck initiative in February.
• Michiel Bijkerk, an attorney in the Netherlands Antilles, is running for a seat in the legislature. He hopes to sponsor an initiative to implement the Citizens Land Bank concept as far as possible within existing legal structures. The interim vehicle would be called a "Community Investment Center."
• Pollant Mpofu, a CESJ friend in London (originally from South Africa) has been making great strides in his efforts to introduce religious and political leaders in England, Ireland, and South Africa to the ideas of the Just Third Way and its potential to revitalize the global economy. He hopes to have Norman Kurland and Michael Greaney invited to meet with David Cameron, as well as the Anglican Archbishop of Canterbury and the Catholic Archbishop of Westminster. He has also reached out to Jimmy Kelly, a Regional Secretary in Ireland of the Unite trade union. Pollant is also working on having Norm invited to meet with the president of South Africa.
• As of this morning, we have had visitors from 53 different countries and 49 states and provinces in the United States and Canada to this blog over the past two months. Most visitors are from the United States, the UK, Canada, Brazil, and Ireland. People in Japan, Canada, Pakistan, the United States, and Venezuela spent the most average time on the blog. Possibly due to the growing perception that something is wrong with the basic assumptions of Keynesian economics (as well as other schools of economics based on the Currency School of finance), the most popular posting by far is one from a while back, "Thomas Hobbes on Private Property," that briefly explains the similarities in the way Keynes and Hobbes abolish private property. This is followed by "Aristotle on Private Property," Norman Kurland's tribute to Bob Woodman, "Part I" of "How to Save the Global Economy" from last month, and "Keynes, Bernanke, and Private property," also from last month.
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