As we noted
yesterday, we will be posting the original “strategy paper” that led to the
Presidential Task Force on Project Economic Justice, “Project Economic Justice:A Beachhead for Regional Infrastructural Reform,” to be followed by President Reagan’s speech to the Task Force. Today
we post Part I of the paper in its entirety:
Project Economic Justice
A Beachhead for Regional
Infrastructural Reform
(Excerpted
from a paper prepared by Norman G. Kurland at the request of the Chief
Economist for International Economic Affairs, National Security Council, April
19, 1983.)
PART
I
The Ideological Framework for Expanded Capital Ownership
The Ideological Framework for Expanded Capital Ownership
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| Dr. Norman G. Kurland |
In the past, most
of America’s responses against Marxist aggressions have been defensive, our
military actions in response to their military initiatives, our nuclear build-up
in response to theirs. On the ideological level, calling our strategy defensive
would be a compliment.
Calling for
“Freedom and Democracy” without building structures for “Economic Justice” is
naive. There is no meat on the message. We should not repeat this disastrous
error in the future.
Our Foreign
Assistance Act of 1963 stated the overall objective of American foreign aid:
“To create conditions in the world under which free societies can survive and
prosper.” Twenty years and billions of dollars later our foreign aid programs,
as executed, have not impeded Marxism’s global reach.
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| Puerto Rican slums |
Indeed, American
foreign aid may have helped to pave the way for many of the Marxist revolutions
and expropriations of privately owned enterprises that have occurred throughout
Asia, Africa, and Latin America since World War II. Handouts by themselves do
not deliver justice or help create a more just social order. They often widen
the gap between the rich and the poor. They alienate the people we should be
helping. They magnify the obvious difference between the rich and the poor: the
rich derive their incomes from the ownership of capital and the poor lack
effective access to capital ownership.
Thus, handouts
create breeding grounds for Marxist-Leninism. Like military aid, they are at
best temporary expedients, useful for buying time to attack the social and
economic causes that lead to revolution. By not providing the poor in
developing countries with the means to become partners in free enterprise
growth, we have wasted resources and lives to revolutions that could have been
avoided.
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| President John F. Kennedy |
In the words of
President Kennedy, “By making peaceful revolution impossible, we make
violent revolution inevitable.”
Farmers, workers,
technicians, and businessmen in the developing countries now need more direct
access to the finest talent and the most advanced technology, ideas, and
institutional structures developed within the American free enterprise system.
With access to the best tools and talent of our private sector, for mutual profit,
the people of developing countries can create for themselves a freer and more
just economic future. We can prove to the world that maximum justice and
maximum profits can go hand-in-hand.
The time is now
ripe for America to reach out to a broadened global constituency, the poor and
oppressed of the many countries from which our ancestors fled. By taking the
ideological high road against Marxist collectivism, we can now beat the Soviet
Union, not with empty words or deadly weapons but with bold private-sector
initiatives that all Americans could support. Through a radical extension of
the American free enterprise system, economic justice can be brought to the
poorest of the poor in developing countries. In a sense, it would be a
Space-Age version of the original American Revolution.
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| Charles McNary, G.O.P. Senate Minority Leader, 1938 |
Broadened equity
ownership was included in the 1938 Republican Party Platform. It was also
called for in the 1976 and 1980 conventions of the Republican Party. Within the
last 8 years Congress has passed 15 laws encouraging employee stock ownership
plans (ESOPs) and over 5,000 companies are gradually spreading equity ownership
among their several million workers. [Note: Figures are for 1983.] In 1976 the
Joint Economic Committee of Congress declared broadened ownership of new capital
as a major priority of American economic policy. While some academics and labor
spokesmen have voiced skepticism and concern, citing a few cases where ESOPs
were abused, even this resistance is diminishing. Several books and hundreds of
articles have appeared in recent years favoring expanded ownership policies.
A labor statesman
who recognized that the twin problems of productivity decline and cost-push
inflation were unsolvable through the traditional wage system was Walter
Reuther, the late head of the United Automobile Workers. Speaking before the
Joint Economic Committee of Congress in 1967, he stated, “Profit sharing in the
form of stock distributions to workers would help to democratize the ownership
of America’s vast corporate wealth. If workers had a definite assurance of
equitable shares in the profits, they would see less need to seek . . .
increases in basic wages.”
Even John D.
Rockefeller III called for such a plan in his book, The Second American Revolution (1973).
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| Hubert H. Humphrey |
In a letter to The Washington Post not long before his
death, Senator Hubert Humphrey explained why he supported broadened capital
ownership:
“[C]apital, and the question of who owns it and
therefore reaps the benefit of its productiveness, is an extremely important
issue that is complementary to the issue of full employment. . . . I see these
as twin pillars of our economy: Full employment of our labor resources and
widespread ownership of our capital resources. Such twin pillars would go a
long way in providing a firm underlying support for future economic growth that
would be equitably shared.”
The expanded
ownership concept, purely on its merits, enjoys broad bipartisan support on
Capitol Hill. The first to publicly support the concept was populist Senator
Fred Harris in 1972. The first to introduce ESOP legislation aimed at
comprehensive reform of the U.S. tax system was conservative Senator Paul
Fannin in early 1973.
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| Senator Russell B. Long |
The main champion
of employee stock ownership in Congress is Senator Russell Long, who first
learned of the ESOP as a result of Senator Mark Hatfield’s initiative to
convert the Conrail system into a 100% employee-owned railroad. Other sponsors
of ESOP legislation have covered the ideological waterfront, from Robert Byrd
and Alan Cranston to John Towers and Mac Mathias, from Jesse Helms and William
Roth to Gary Hart and Paul Tsongas, from Phil Crane, Jack Kemp and Bill Frenzel
to Parren Mitchell, Don Edwards and Ron Dellums.
Rep. Michael
Barnes, Chairman of the House Foreign Affairs Subcommittee on Inter-American
Affairs, reacted to a proposed expanded ownership initiative for El Salvador,
by recalling the words of former Salvadoran President Duarte:
“If my people believed that tomorrow would be better
than today, that their children would have a better life than they have had,
then the communists could ship in all the guns they want. There won’t be anyone
to pick them up and use them.”
Rep. Barnes added
his own footnote, “There’s more wisdom in that single statement than in
everything our government has had to say on the issue in the past two years.”
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