Cargo Cultists expend enormous energy building fake airplanes without engines in the hope of obtaining Spam, Coke and Hershey Bars. Keynesians use up vast resources printing money with nothing behind it that undermines economic growth and redistributes existing wealth in the hope of bringing full employment. While both groups are obviously sincere and convinced of the truth of the systems they espouse, the fact is that nothing they are doing is guaranteed to or even reasonably certain of bringing about the desired results. It is as dangerous to apply faith to matters of reason, as it is to try to force reason into a framework determined by faith alone. In desperate situations, it changes the basic orientation from hoping for miracles, to relying on them.
This sounds pretty grim, but there is a way out — the Just Third Way. A proposal like Capital Homesteading, while it relies on people being inspired by their faith to work for justice, does not try to force economics or any other science into a predetermined box — any more than science (even Keynesian economics) can be used to dictate purely religious beliefs or doctrines, or "re-edit the dictionary" to change the precepts of the natural law, despite Keynes's declaration.
Through restructuring our institutions, especially our money and tax systems, Capital Homesteading has the potential to make it possible for every child, woman and man to acquire a capital stake sufficient to generate income to meet normal living expenditures. This becomes critical as advancing technology eliminates increasing numbers of wage system jobs, and those with wealth become increasingly resistant to redistribution. Further, current methods of financing new capital formation not only maintain the current position of the wealthy and shut out virtually everyone else from the chance of acquiring and possessing private property in capital, they operate to concentrate ownership of almost all new capital in fewer and fewer hands.
The solution is to establish a national economic policy based on the binary growth model, designed to lift barriers in the present financial and economic system and universalize access to the means of acquiring and possessing capital assets — a "Capital Homestead Act." The Capital Homestead Act would allow every child, woman and man to accumulate a target level of capital assets. Using a tax-deferred "accumulation vehicle" similar to an IRA, the amount would be sufficient to generate an adequate and secure income for that person without requiring the use of existing pools of savings or reductions in current levels of consumption.
Each capital homesteader's account would be able to receive annual allocations of interest-free (but not cost-free), productive credit. This would begin the process of creating new asset-backed money through the central bank, administered by local commercial banks by investing in feasible private sector capital formation and expansion projects of businesses that would issue new shares to be purchased and sheltered in the citizen's Capital Homestead Account. After the "future savings" (future profits) generated by the productive assets paid off each year's Capital Homestead investment (loan) and canceled the money, the citizen would continue to receive in the form of dividends the incomes generated by those capital assets.
There is, of course, much more to it than that. An overview can be found on the website of the Center for Economic and Social Justice under "Capital Homesteading." Take a look at the proposal, and if you like it, join us Friday of next week at the Federal Reserve Board of Governors Building in Washington, DC, at a rally to be held starting at 11:30 am and going until 1:30 pm.
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