Thursday, August 3, 2017

How to Become an Owner

’Way back in Ancient Times, about 1922 or so, the irascible George Bernard Shaw (1856-1950) and the genial Gilbert Keith Chesterton (1874-1936) got into a . . . discussion.  Anybody else would have called it a knockdown, drag-out fight, but Shaw and Chesterton were old friends who managed to stay that way by not agreeing on anything except that they irritated each other.

"GILBERT! Will. You. Just. Say. HOW?!?!?"
And what were they . . . discussing?  The fact that Chesterton, who advocated widespread ownership of productive assets, refused to tell Shaw how he planned to bring about this happy state of affairs.  Shaw kept insisting that Chesterton wasn’t saying anything, and Chesterton infuriated Shaw by agreeing with him.
Shaw finally ended the . . . discussion by stomping out of the house in frustration.  He had been leaving, anyway, when by chance Chesterton had showed up, so Shaw didn’t really avoid continuing the fight.  He left because he considered it over and a waste of time to keep trying to argue with someone who refused to argue and. was. just. so. agreeable.  (Shaw afraid to continue a fight?  Not likely.)
Shaw did have a good point, though.  What good is it to keep yammering on about how nice it would be to have widespread capital ownership when you aren’t prepared to say how to do it?  Why not be reasonable, and do it the Fabian socialist Shaw’s way, i.e., by abolishing private property and putting everyone to work at a wage system job?
Chesterton, however, had a better point.  If you don’t know how to do something without committing an injustice, why do it?  That’s not to stop anyone else from coming up with a way to establish and maintain what Chesterton called “the Distributist State,” but he, Chesterton, was not going to endorse or advocate anything that went contrary to the natural law, what he called “common sense.”
"The 'New Age' Guide to Economics"
No, not even to ensure that everybody had an adequate income and was taken care of . . . which was not what Chesterton was talking about, nor the reason for advocating “distributism.”  Chesterton defined distributism as a policy of widely distributed private property, with a preference for small, family-owned farms and businesses.  Not that G.K. was into the “Small is Beautiful” shtick.  He added that if enterprises must be large, the workers should own them on shares.  No, really.  It's right there.
The Just Third Way refines Chesterton’s distributism a bit.  Instead of “family owned,” we advocate “family members owning.”  We think that’s what Chesterton actually meant, anyway, but some latter day distributists have taken it to mean a kind of domestic syndicalism, where the family really does own, and family members as individuals have no defined rights of property, and can’t take anything with them if the family disowns them.
That’s rather like the situation on many Indian reservations, where the casino or oil money goes to the tribe, not to the tribal members, and someone loses everything, cutting all ties with the family, tribe, and culture (as well as the money) if he or she leaves the reservation.  Can you say “incentive to cultural suicide”?
As for the preference for small, family member-owned farms and businesses . . . sure, why not?  If the market has determined that the optimal size of an enterprise is “small” (whatever that means; it’s kind of relative), then let it be small.  If large, let it be large.  Smallness or largeness per se is meaningless.  As long as ownership is spread out, and the owners have their rights of private property, they have control, and the enterprise is automatically in “human scale,” regardless of its objective size.
The problem is — how are you going to do it?
Quite easily, actually.  Here’s how.
First, reform the monetary system and the tax system.  Not one or the other.  Both at the same time.
"That little old mess-maker . . . ME!"
Why?  Because the way John Maynard Keynes screwed things up, you’ve got the tax system doing what the central bank is supposed to be doing, and the central bank doing what the tax system is supposed to be doing.  The tax system is supposed to raise money to run the government, while the central bank is supposed to make certain that the private sector has enough money for the needs of commerce, industry, and agriculture.
Once those reforms are in place, then immediately give everyone the right to borrow newly created money to purchase newly issued shares in “blue chip” companies (actually, it's borrowing for a financially feasible project that creates the money; you don't first create money, then lend it; that would be purely inflationary).  If dividends are made tax deductible to the corporation, and full payout of earnings is mandatory on the new shares, the shares should “pay for themselves” out of their own future earnings (five to ten years) and thereafter provide dividend income to live on.  Allowing a tax deferral on all income used to purchase the new shares would speed up the process.
In the end, what you’d have is a society in which most people own enough capital to generate a basic income, that can be supplemented with wages, instead of the other way around as at present.  You would also have a money supply backed by private sector assets instead of government debt, a more fair tax system, a way to provide for retirement income that is better than Social Security (although you’ll need to keep that as a “safety net”), and a way to get rid of the national debt.
If that’s not enough, how about making politicians accountable to the taxpayers?  As long as politicians can create money to spend, the taxpayers who will be stuck with the bill — i.e., future generations — don’t have any say-so.  If the politicians can only get their money from current taxpayers, however, the taxpayers will keep a very close watch on how much is being spent, and do everything possible to minimize it.
Is that everything?  No, but it’s enough to give a broad outline.  For more, got to the Capital Homesteading page at CESJ, or get the book, Capital Homesteading for Every Citizen.  It’s available as a free download, or from bookstores.

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