Episode VII: The Return of Common Sense

In our last episode, we saw the distributist economist whom we have been calling “Tom Steele” (“Joe Wide” was, perhaps, sufficiently “broad” in his outlook to remain silent and be thought a fool rather than to open his mouth and remove all doubt) give us a piece or two of his mind.  Judging from the amount he shares, he has a great deal of mind to spare.  We hope. . . .

It would have been a better advertisement for distributism, of course, had the distributist economist given us something more substantive, for example, showing where we misstated something, rather than to go off on a series of tangents claiming we hadn’t said anything in over 7,000 words (especially when it can be checked), but we have yet to receive a critique from Steele or his select group of fans and confreres that addresses the actual items or areas of disagreement rather than the personalities of those who disagree.

"There is only ONE reason anything is right: I SAID SO!"

That is not to say we have not received some intelligent criticisms and insightful comments from some distributists (quite a few, actually, and more all the time), or that adherents of other schools of economics are always polite and respectful . . . or even civil.  For example, take a gander at Nobel Laureate Dr. Milton Friedman’s rather “odd” (we’re being polite) response to an invitation to debate the ideas of Louis Kelso.

Okay, okay — this was before Friedman was awarded his Nobel Prize, and (we blush) it was something of a set-up for Friedman.  A few years before this exchange, Dr. Norman Kurland had been given a seat next to Friedman at a luncheon following a presentation on military conscription in which Norm agreed with Friedman (for the record, both were opposed to it).

"By dodging the waiter and ducking through the cloakroom, Friedman exited here."

When Friedman showed up and sat down before his yummy rubber chicken, Norm asked Friedman what he thought of the ideas of Louis Kelso.  Friedman got up from the table and walked away without saying a word, and never came back.  When a (future) Nobel Laureate sets the bar that low, who are we to expect even the most admired and prominent distributist economists do any better?

In any event, here is the rest of the distributist economist’s response to Deacon John.  As we warned last Thursday, it starts to get a little . . . personal, possibly even a trifle off the topic.  Still, as Steele has repeatedly claimed that we silence him and refuse to let him speak (and then deletes his comments to that effect so that people wonder what the heck we’re talking about), it is clearly our duty to ensure that free enquiry is not muzzled, that trigger words and micro- or macro-aggressions do not stifle freedom of the press, and no thought of Tom Steele, however trivial or irrelevant, remains unexpressed.

Again, Steele’s words are presented exactly as he wrote them, with only some names changed to protect Chestertonians and distributists from terminal embarrassment:

Sorry, Steele, an estimate is a guess, not an absolute certainty.

As to the third point, he actually concedes what I am saying: that the purchase price must be lower the then actual cash flows, or the scheme won’t work. [Untrue.  We said no such thing.  We carefully specified that the purchase price must be lower or equal to the present value of the estimated, not actual, future cash flows or no one would make the purchase.  Demanding that actual cash flows be used requires certain knowledge of future events. — ed.] Now, the ideal market price of an income producing asset is always the NPV of all the future income streams. [Untrue.  One, there is no such thing as “the ideal market price.”  This was discussed at length.  Two, it’s not the net present value, but the present value.  Three, the future income stream is an estimate, as we explained in some detail, not the absolute certainty Steele assumes.  Four, “always”?  There is never any other reason for having a different price? — ed.]   But since these concern the future, the actual price always varies from the ideal price. [“Ideal price” is a Platonic concept that assumes ideas (such as value) have an existence independent of the human mind.  The world, however, is Aristotelian, going from the particular to the abstract, not from the abstract (the ideal) to the particular. — ed.]   And indeed, all financial speculation [We were not talking about speculation, but investment. — ed.] depends on this point, on locating assets which have significant differences between the actual and ideal market price, and going long if the price is too low and short if it is too high. [There is no such thing as an “ideal price” in the sense Steele uses the term. — ed.]

One form of financial speculation [investment. — ed.] is called a Leveraged Buy Out, and depends on finding significantly higher values than those reflected by the sales price; this is the common feature of all LBO’s. And an ESOP, as described by the CESJ literature, is just an LBO in behalf of the workers.  Hence, there must be a big difference between the actual and ideal market price, and Greaney concedes as much in his reply. [Untrue.  Steele’s comments rely on his own acceptance of the concept of an ideal price, and confusion between ROI, the discount rate, and the interest rate, all of which were addressed at some length, and that Steele ignored. — ed.]

"Hi. I'm CESJ Counselor Francis Bacon, Earl of Oxford."

I am not the first former member of their Board of Advisors who gave them advice they didn’t like and so were excommunicated. [Untrue.  Steele left of his own accord after accusing the president and Director of Research of CESJ of lying and after refusing to state what the alleged lies were and present his evidence.  Thinking that he might come back after apologizing, he was retained on the Board of Counselors for many years after this until it became obvious he was disparaging CESJ at every opportunity. — ed.]  Indeed, their two biggest authors were kicked out: Stuart Speiser [Untrue.  Stuart Speiser has never been a member of CESJ, much less a member of the Board of Counselors. — ed.]  (Ethical Economics and the Faith Community: How We Can Have Work and Ownership For All) and Rodney Shakespeare [Untrue.  Rodney Shakespeare is still on the Board of Counselors. — ed.] (Binary Economics: The New Paradigm). Both men tell tales about trying to get along with Kurland/Greaney, [Untrue.  Norman Kurland met with Stuart Speiser and disagreed with some of what he said, none of which he expressed to Speiser.  The interaction, according to Kurland, was amicable.  Kurland did not endorse Speiser’s book because there were things in it with which he disagreed.  Michael Greaney has never met Speiser nor interacted or communicated with him in any way.  Shakespeare has made a number of assertions, but has, in common with Steele, failed to substantiate his claims or been proven wrong, e.g., his announcement that he had been “kicked off” the CESJ Board of Counselors. — ed.] but they are not men who tolerate any honest discussion; they have a “my way or the highway” approach to things. Moreover, there are any number of organizations working on expanding worker ownership, but CESJ will work with none of them, and none of them have found it possible to work with the CESJ. [Untrue.  Norman Kurland helped start the National Center for Employee Ownership in Berkeley, California, and enjoys a good relationship with the retired director, Corey Rosen, who is a member of CESJ.  He has spoken at the annual ESOP Association conference and has attended Mid-Atlantic Chapter meetings, participating in the discussions.  Michael Greaney attends the conference every year, and Dawn Brohawn most years.  Dawn Brohawn edited their compendium, Journey to an Ownership Culture.  CESJ worked closely with the Northeast Ohio Employee Ownership Center on a number of projects, notably the worker buyout effort of Ogleby Norton, and received a grant from them.  We also work with the National Cooperative Business Association, an organization with global outreach. — ed.] It has all the earmarks of a personality cult.

CESJ highly recommends Stack's program.

Deacon, I think it admirable that you are interested in expanding worker ownership.  I am with you solidly on this point. But I can recommend other sources. Jack Stack’s A Stake in the Outcome is a must read. If you don’t know Jack Stack, see this PBS story on him [A piece by Stack is in Curing World Poverty (1994), a CESJ publication, and we recommend his program to people interested in Justice-Based Management. — ed.] .https://archive.org/details/WETA_20100428_230000_PBS_NewsHour/start/1620/end/1680

Another approach is given by Ricardo Semler of Semco in The Seven-day Weekend. You can see Semler here: https://www.youtube.com/watch?v=vLtpdtGJ3Dw

By the way, these two books are also the best books on management I have ever read. Both are by people who have actually accomplished greater ownership and productivity for their employees/owners and their communities. And if you haven’t learned of their great work thru CESJ, you have to ask yourself, “why?”
[Why? Because you haven't read CESJ's materials? — ed.]

I have no objection to ESOPs; they are part of my books and the class I teach. I don’t think they are the best way, but in the USA they are practically the only legal framework available, [Steele appears to be unaware of the cooperative movement; cooperatives in the United States far outnumber ESOPs.  Their drawback is that they often require participants to put up savings or take reductions in pay to buy in, and sometimes do not give voting rights in proportion to ownership stakes, the latter a flaw in most ESOPs as well. — ed.] so you go with what you got. But the current law makes them too easily a tax-doge [sic] on one hand and a way to cheat employees out of an actual pension fund on the other. [Untrue.  Most ESOPs, defined contribution plans, are installed in companies that otherwise would have no retirement plan at all, not being able to afford the standard defined benefit plan, many of which have gone bankrupt in recent years, leaving participants with reduced benefits or nothing at all. — ed.] So I would be very careful about putting all your social justice eggs in this one basket.  [The expanded ownership movement is individual justice, not social justice.  Working on the institutions to permit or expand worker and citizen ownership is social justice. — ed.]

"I'm a socialist?  Did I miss another memo?"

The bottom line?  Neither the original statements by Steele and Wide, nor Steele’s response to our analysis of his claims really address the fundamental issue: to what extent does any principle, belief, system, or application of any theory of economics protect or enhance the sovereignty and dignity of the human person under God?

Specifically, Steele avoids the key importance of private property in capital (the very heart of distributism!), claiming in a rather spiteful message to Deacon John that he, Steele, is a socialist after the manner of Pope Benedict XVI(! . . . something that no doubt surprises the pope emeritus!), and re-defining private property and the natural law in such a way as to put Collective Man at the center and relegate God to second place, as Venerable Fulton Sheen explained in his first two books, God and Intelligence in Modern Philosophy (1925) — introduction by G.K. Chesterton — and Religion Without God (1928).

By constantly nitpicking about technicalities concerning which they lack adequate knowledge or expertise, engaging in ad hominem attacks, inventing accusations that prove to be without foundation, and raising straw men arguments, Steele and a number of other prominent distributist economists and apologists do distributism no favors.  While it is admittedly not fair, many people will judge distributism and even Chesterton and Belloc on the basis of such antics, concluding that if what supporters like Steele advocate is distributism, they want no part of it.

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