The word “voucher” is pretty much a dirty word in Central and Eastern
Europe when connected with “privatization.”
It gets almost the same kneejerk reaction as “school voucher” does in
certain circles in the United States.
This writer recalls when he was in Moscow (Russia, not Idaho), he was
told that just mentioning “voucher” in a barroom was as provocative as wearing
an orange ribbon in certain areas of Chicago or Boston on March 17th.
That’s why we hastened to tell John that what we’re talking about is NOT the same as the voucher
scheme that was proposed in which people were to receive vouchers that could be
traded for existing shares directly, as was done in Russia. Capital Homesteading works by allowing people
to purchase new full
dividend-payout, voting shares on credit, and having the shares pay for
themselves out of future dividends tax-deductible at the enterprise level. If full payout of profits are encouraged at
the enterprise level to escape paying taxes on enterprise income, and profits
are tax deductible when received at the enterprise level but treated as
ordinary income when distributed at the personal level, most shares will pay
for themselves in less than ten years.
The key here is that as the old voucher scheme operated in Russia, the
vouchers themselves had value. That
meant that most people sold them for a quick profit because they needed money
right away. Vouchers that were worth
U.S. $200 were sold for as little as U.S. $6.
In contrast, a Capital Homesteading voucher would be absolutely
worthless to anyone except the person to whom it was given. The voucher would be exclusively to support
the right of every citizen to borrow money from local commercial banks to purchase
shares that had been properly investigated. In turn, the nation’s central bank
would (as in Section 13 of America’s Federal Reserve Act, be empowered to
rediscount the local bank’s loan paper by issuing currency backed by productive
assets. It would not give anybody the
shares for free, nor could the right be transferred. (See “A New Look at Prices and Money.”)
Depending on the rate of economic growth and starting from birth, it is
possible that by age 50 or 60 a child born today could accumulate enough shares
to generate an income sufficient to meet all reasonable needs, including
education and healthcare.