There has been a great deal of activity this week as the CESJ Core Group works to surface door openers and prime movers who can advance the Just Third Way, both within the current legal and institutional system, and organize to bring the efforts of the expanded ownership movement to fruition and obtain the passage of a Capital Homestead Act.
As can be seen from the news items gathered from the major media (below), however, there are a number of fixed ideas and attitudes that must be addressed effectively if we are to make progress:
• Monica W. in Cleveland arranged a telephone meeting for the CESJ Core Group with Father Robert Begin, the "Rebel Priest" noted for his championing of the poor and downtrodden. In a good display of the effectiveness of the door-opening strategy, Father Begin gave a number of very valuable leads to potentially key people on which Monica is following up.
• The first issue in the new series of Litir Scéala an tSIG Gaelach, the newsletter of the Irish Special Interest Group (SIG) of American Mensa, is scheduled for publication on Sunday, June 17, 2012. Because the newsletter will include short pieces on Éire from a Just Third Way perspective, readers of this blog might want to subscribe and forward the newsletter and the quarterly publications flyer to their network.
• The wild swings in the stock market suggest that the Kelsonian approach might be a better analytical tool for understanding fluctuations than the Keynesian or the Monetarist. As of this writing (and it will probably change significantly up or down by the end of the day, if not in the next hour), the Dow is down by almost 60.
• The analysis of "Market Watch" is exactly backwards. In article that appeared today, "U.S. Debt Load Falling at Fastest Pace Since 1950s," reporter Rex Nutting claims that the increase in public sector debt is more than offset by the decline in private sector debt. This is wildly misleading. Private sector non-productive consumer debt is still increasing, according to the Federal Reserve along with the massive amount of non-productive government debt. What is decreasing — and what signals a disaster in the making — is debt incurred to finance new and replacement plant and equipment, i.e., to form capital. The bulk of financing for new capital is coming from existing accumulations of savings that came from cutting consumption. This decreases effective demand for what the new and replacement capital is expected to produce, resulting in a greater potential for business failure.
• Nobel Laureate Joseph Stiglitz's new book, The Price of Inequality, accurately pinpoints the growing gap between rich and poor as a serious situation. Unfortunately, as a Keynesian, Dr. Stiglitz has gotten things backwards, confusing cause and effect. According to an article on "The 'American Dream' is a Myth': Joseph Stiglitz on 'The Price of Inequality'," Dr. Stiglitz believes that inequality in education, healthcare and nutrition (among other things) causes income inequality rather than being the result of income inequality. His solution is consistent with his past savings-based Keynesian orientation: equalize opportunity for education, healthcare and nutrition (among other things) — which usually means provision by the State. This will allegedly equalize income opportunity and solve the problem. As has been shown by decades of attempting to force equality of results by government action (the New Deal, the Great Society, etc.), putting the cart before the horse only makes matters worse.
• The Kelsonian prescription for addressing the "opportunity gap" is more straightforward: act directly on the problem by equalizing income opportunity first through democratic access to capital credit, thereby allowing propertyless people to supplement or replace inadequate wage and welfare income with capital income. They can then afford the education, healthcare and nutrition for which prosperity pays. As Pope Leo XIII pointed out, "We have seen that this great labor question cannot be solved save by assuming as a principle that private ownership must be held sacred and inviolable. The law, therefore, should favor ownership, and its policy should be to induce as many as possible of the people to become owners." (Rerum Novarum, § 46.)
• Correlating our analysis of Nutting's and Stiglitz's claims shows us how the "ultimate economic meltdown" could happen. Increasing non-productive debt at the expense of productive debt redistributes existing wealth without making adequate provision for future production of marketable goods and services. Viewing State welfare as a way of life instead of the emergency measure to which Leo XIII referred (Rerum Novarum, § 22) puts the State in place as the primary source of material sustenance — a role the State was never intended to fill: "There is no need to bring in the State. Man precedes the State, and possesses, prior to the formation of any State, the right of providing for the substance of his body." (Rerum Novarum, § 7.) Since the State produces nothing and thus can only redistribute what others produce, governments are going bankrupt, just as labor economist Goetz Briefs observed in the 1930s (The Proletariat: A Challenge to Western Civilization, 1937). As the private sector reduces investment in new and replacement capital, and consumer and State demands on a smaller pool of wealth increase, the strain has the potential to trigger a stock market meltdown that would dwarf that of 1929 — at a time when America's capacity to produce has been almost fatally eroded.
• As of this morning, we have had visitors from 62 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, India, and Australia. People in Syria, Egypt, Belgium, the United States, and Qatar spent the most average time on the blog. The most popular postings this past week were "Thomas Hobbes on Private Property," "Aristotle on Private Property," "The Global Debt Crisis VII: A Permanent Solution." "Stimulus, Part II: An Alternative to Keynesian Economics" and "The Situation in Greece."
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.