Thursday, August 21, 2014

Votes, Jobs, and Welfare

We missed it, but that’s nothing unusual.  On August 18, 1920, Tennessee ratified the Nineteenth Amendment, guaranteeing women the right to vote.  (And, as we might expect, there was a flurry of cartoons showing women refusing to state their ages in order to prove they were of age. . . . 1920s humor.)  Of course, Wyoming had extended the franchise to women decades before, but that was the Wild West, where men were men and women were glad of it, so it didn’t count.

Let’s get serious, though.  The vote is a good first step . . . but only a step, and only the first in a series of necessary follow up steps.  Stop with the vote, or anything short of the Just Third Way, and you end up nowhere.  Like the civil rights movement, you end up more or less satisfied with the vote, jobs, and welfare.

The problem is that if all you have is a vote, you have a tendency to vote for the wrong things.  People who have made a great gain tend to want to maintain the status quo thereafter, and not keep going.  They forget why they wanted the vote, or why it is important.  The vote, jobs, and welfare became the end, rather than the means to an end.

A job?  If that's all you're after, where are you when the machine takes your job?  What do you do?  Vote to eliminate machines, or wreck them in a Luddite frenzy?

Welfare?  The government produces nothing.  Contrary to Adolph Berle and other Keynesian New Deal experts, governments do not produce wealth.  They take from those who have wealth by various means, and either use it to cover legitimate expenses of government, or redistribute it for "social purposes" — illegitimate, except in an emergency when the common good is otherwise endangered.  And what happens when the government can no longer fund welfare?

You see this sort of short sightedness today in the interpretation of Catholic social teaching.  Many people see only the emergency aspect: redistribute wealth to keep people going.  Thus, they demand wage raises, welfare, redistribution, healthcare, etc., etc., etc., which, necessary as it may be for government to supply at times, are not, and can never be a solution.  People must produce in order to consume ("He who does not work, neither shall he eat"), and redistribution discourages, even prevents production.  The well eventually runs dry, and not all the shrieking condemnations of greedy (other) people can force them to produce so that others may consume — it's called "slavery."  As Lincoln pointed out in his debates with Stephen Douglas,

"That is the real issue.  That is the issue that will continue in this country when these poor tongues of Judge Douglas and myself shall be silent.  It is the eternal struggle between these two principles — right and wrong — throughout the world.  They are the two principles that have stood face to face from the beginning of time; and will ever continue to struggle.  The one is the common right of humanity and the other the divine right of kings.  It is the same principle in whatever shape it develops itself. It is the same spirit that says, 'You work and toil 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."

So what is the solution?  Catholic social teaching has two "prongs," so to speak.  First, take care of people now.  Second, restructure the system so that people can take care of themselves through their own efforts.

How?  "Power," as Daniel Webster said, "naturally and necessarily follows property."  If you want power over your own life, meaning control, income, and so on, you must own capital.  You are otherwise under the control of those who do own capital.  It's not votes, it's not jobs, it's ownership.  As Leo XIII put it,

"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.)



Baseball Billy said...

Dear Michael, I agree, "... it's called slavery." But, I think, many "free-market" Americans, those that are free-market in name only, strongly disagree with this perspective. They are not concerned about the concentration of ownership of productive assets. They have not been convinced that this concentration is the root cause of our economic crises. They seem to think that if the government had not interfered in the economy everything would be fine. They just want to compare their approach to the much-worse socialism, and declare success. What history lesson can you provide, or refer me to, to beef up my argument with the free-market-in-name-only folks, that capitalism, as we have experienced it in the USA, has failed?

Michael D. Greaney said...

I agree with your agreement. The so-called "free market capitalists" pay a lot of lip service to the first three of the four pillars: 1) A limited economic role for the State, 2) Free and open markets as the best means of determining just wages, just prices, and just profits, and 3) Restoration of the rights of private property, particularly in corporate equity. They get a little muffled, however, when it comes to recognizing systemic barriers that inhibit or prevent most people from realizing the fourth pillar: 4) Widespread direct ownership of capital, individually or in free association with others. Most of them simply don't realize that our tax and monetary systems work to prevent most people from owning capital on any terms.

They also tend to "over-sell" the limited economic role for the State, assuming that the State has no legitimate role in the economy. It does, although nowhere near as great as the other side would have us believe.

Offhand, I think the best arguments against capitalism would be the Panics of 1873 and 1893. The first was triggered by rapid expansion of transportation capital without a corresponding increase in demand. The Homestead Act brought the country out of the Great Depression of 1873-1878. The second was triggered by the effective end of free land, and the shift to the wage system as the primary way in which people participated in production. Crop failure in Europe and bumper crops in 1897 and 1898 brought the country out of that Great Depression. Judge Peter S. Grosscup predicted in a series of articles from 1903 to 1914 that things would only get worse as capital ownership continued to concentrate, and called for "people-ization" of America's corporations by making it easy for ordinary people to purchase shares that paid dividends and carried the vote.

Problems: 1) Grosscup's proposal was for a federal program, and corporations were and are chartered at the state level, 2) It relied on existing savings instead of monetizing the present value of future increases in production, and 3) He and Roosevelt quarreled over Grosscup's overturning the decision in the Standard Oil Rebate case, and they didn't speak for four years, at which time it was too late to implement Grosscup's reforms.