Last
Thursday we took a look at the biggest problem any contender for the White
House in 2016 faces: no vision and no specific proposal except some form of
jobs and welfare, or an arrangement where some benefit at the expense of
others. Frankly, we think Santorum can
do better than that. Heck, we think
Obama can do better than that. All it
takes is an open mind and a willingness to listen to something genuinely new
instead of rehashing the Same Old Thing.
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| Does this really need a caption? |
Thus, whatever his good intentions, if Santorum is operating
within the current flawed paradigm that some people only benefit at the expense
of others, he’s not sending the right message — or, perhaps more fairly, isn’t
being heard. If “the rich” hear him,
what filters into their brainpans is “I’m going to take from the deserving rich
and give to the undeserving poor.” What
“the poor” hear is similar: “I’m going
to take from the undeserving rich and give to the deserving poor.”
Again, that might not be what Santorum will say.
It’s what people will hear.
Fortunately, there’s a way out, or we wouldn’t have brought
this up. There’s a way that everyone can
have an equal opportunity to participate in economic growth without taking
anything from anyone, not even the bloated rich or the slack-off poor.
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| Maybe a little more up-to-date ... but don't the dog look happy? |
If you’re a regular reader of this blog, you know exactly
where this is going: Capital Homesteading.
A Capital Homestead Act would give every child, woman, and man equal
opportunity and access to the means to participate in economic growth as a
capital owner, not merely a wage-worker or welfare recipient. It would expand Lincoln’s concept based on
the limited land frontier to the virtually unlimited commercial and industrial
frontier.
The key is in financing.
If we assume that the only way to finance new capital formation is to
cut consumption and accumulate the surplus as money savings, we restrict ownership
of all new capital formed to those who are already rich and can afford not to
consume all of their income.
If, however, we take the present value of future increases
in consumption and turn it into money to finance new capital, then repay and
cancel the new money out of the profits generated by the new capital when it
becomes profitable, the problem solves itself.
Instead of financing economic growth out of what has not been consumed
in the past, we can finance growth out of what can be produced in the future —
and it won’t be either inflationary or deflationary.
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| From this . . . |
All we have to do is make sure that all new capital is
financed in ways that create new capital owners, and the frantic search for new
ways to finance artificial “job creation” can end. People will be too busy producing things for
which there is a genuine demand to worry about doing make-work just to get an
income.
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| . . . to this (or maybe it would just seem like this once you own). |
Given all the pent-up demand just in the United States, if
income, both labor and capital, were spent on consumption, there would be a
tremendous amount of real job creation because employers would desperately need
workers. Our rough estimate is that the
economy would reach full employment within 18 to 24 months — which is about
what it took during World War II, when full employment was reached in 1943/44.
And the debt? If we
limit it to the “official” booked debt, a very conservative estimate is that
the $18 trillion or so could be entirely paid down within 60 years without
austerity or imposing higher taxes.
That’s conservative. Given an
all-out effort (which would require a massive increase in exports and decrease
in imports to make up for the decrease in demand domestically resulting from
higher taxes), the debt could conceivably be repaid within twenty-five
years. (We don’t recommend that, but it
is conceivable.)
There are a lot of details that would have to be worked out,
and this gives just the barest outline of Capital Homesteading. More can be found in Capital
Homesteading for Every Citizen (2004).
If Santorum wants to walk into the White House in 2016, he
might want to consider implementing a radical new idea as old as Lincoln. And, while this is not a consideration for
many people, what we’re talking about has received the personal encouragement
of Pope St. John Paul II. It’s fully
consistent with Catholic (and Jewish and Islamic) social teaching. We’ve got the pictures to prove it.
#30#