Here is the second half of our annual news roundup. The second half (July through December) always ends up being longer than the first half because the evets seem more timely and less outdated than what happened during the first half of the year. To cut to the chase, however::
|One up on Wall Street?|
• (07/06/18) Worker Ownership Pays. According to a recent report from the National Center for Employee Ownership in Oakland, California, the first year of the “Employee Ownership Index” shows a return of 30.3%, compared to the Standard and Poors 500 with a return of 15.5%. The NCEO created the Index with 28 publicly traded companies (30 as of this June) that have both broad-based employee ownership and have won one of three major national employer rating awards, each of which puts a high emphasis on worker participation. Although the orientation of an index that relies on the performance of shares in what amounts to a gambling casino is somewhat equivocal, the fact remains that worker ownership and a participatory culture are of measurable economic benefit.
• (07/06/18) Independent British Panel Urges Government Support for Worker Ownership. Back in “the day” (meaning the nineteenth century), Cadbury Chocolate had a worker ownership program. Before that, William Cobbett, the “radical” politician, stressed the importance of widespread capital ownership — which incidentally went directly contrary to the European-style liberal and radical demands for socialism; Cobbett was an American-style liberal and radical, with a concern for natural law and the dignity of the human person instead of the collective. Now, according to the NCEO, a new report from an independent panel of leading business leaders in the UK urges the government to take steps to promote worker ownership, which the panel sees as crucial to improving the UK’s economy and creating a more equitable society. Nothing was said about non-workers, however, or people who work in the public sector.
|Orestes A. Brownson|
• (07/06/18) Socialism and “Free Love”. We recently uncovered an article from 1855, “The Free Love System” (Littell’s Living Age, Vol. 46, No. 592, September 29, 1855, 815-821, reprinted from the New York Times) in which the anonymous author analyzed the destructive effect of socialism of all kinds on society. In response to criticisms of various socialist programs, especially “free love” or the abolition of marriage and family, socialists began disguising their principles by concentrating on emotional causes that socialism would presumably ameliorate or eliminate, and downplaying or ignoring such things as the abolition of marriage and family, of private property, and of traditional morality. In this way, so the anonymous author argued (most of the articles from this period against socialism are anonymous, as the socialists had proven to be past masters at invective and calumny; only people such as Orestes Brownson who loved controversy, even thrived on it, typically signed their critiques of socialism), honest people would be persuaded of the benefits of socialism and permit it to be adopted, e.g., the founders of Brook Farm commune, whom no one would ever accuse of immoral behavior. Once socialism was adopted, of course (even if not by that name, but some euphemism, such as “New Christianity,” “Christian Socialism,” “Democratic Socialism,” or even in our day “Catholic Social Teaching”), then private property, morality, marriage and family, and so on, could all be abolished or redefined to conform to the new principles. In this way European or French style liberalism that vests sovereignty in the collective could be instituted without anyone realizing the significant difference between that and American style liberalism that vests sovereignty in the human person under God, not the State. Unfortunately, the truly American style liberal causes, such as the abolition of chattel slavery, got tarred with the same brush as the European style liberal causes, such as socialism, as we saw in another article we discovered last week from the same time period, “Whig Principles: What’s Left of Them,” The United States Review, Vol. 34, No. 12, December 1854, 465-477, and which we covered in “ .”
• (07/13/18) CESJ Internship. Sasha M., a student from the University of Alberta in Edmonton, Alberta (Canada), has completed her work for the CESJ Spring 2018 internship. Sasha, a political science major, chose as her main project a comparison of the various Universal Basic Income schemes, the position of the Austrian School of economics, and CESJ’s Just Third Way Capital Homesteading proposal. During the course of her internship, Sasha made a number of insightful comments regarding the Canadian social welfare system and some of the flaws that result from shifting the primary responsibility for individual welfare from the human person to the State. The overall conclusion was that while such things as making the State directly responsible for every individual’s material, mental, and spiritual wellbeing may be well-intentioned, it ends up as an egregious misuse of the specialized tool of the State, and almost inevitably ends up instituting and maintaining the very conditions it seeks to ameliorate.
|Fulton J. Sheen|
• (07/13/18) Fulton Sheen Surprises. A while back CESJ published the Just Third Way Edition of Fulton J. Sheen’s “long lost” classic from 1940, . A few — very few — commentators tried to make the case that CESJ’s understanding of Sheen’s position on, say, private property in capital is completely wrong, and that Sheen (despite a large number of clear and unequivocal statements to the contrary) was actually in favor of “democratic” or “religious” socialism, i.e., a variety of socialism allegedly consistent with Catholic social teaching and the precepts of the natural law. It turns out that there is a large body of evidence completely refuting this view, something we discovered completely by chance while doing some research into the career of John Henry Cardinal Newman. It turns out that Monsignor Ronald Knox, who was one of Sheen’s teachers and who introduced him to G.K. Chesterton (to such good effect that Sheen became known in some circles as “the American Chesterton”) greatly admired the work of one William Hurrell Mallock, of which Newman also approved. Mallock, who wrote a book titled Property and Progress in 1884 to refute the theories of the agrarian socialist Henry George as presented in George’s popular book, Progress and Poverty (1879), also wrote a book refuting positivism, “the religion of humanity” (which is consistent with the subject of Sheen’s first two books and his doctoral thesis), which Mallock titled, Is Life Worth Living? (1881). Fulton Sheen was sufficiently impressed with Mallock’s work that in 1954 he wrote his own book on the same theme, Life Is Worth Living, and also used it for his television show that ran from 1952 to 1957. George Bernard Shaw loathed Mallock, insisting that Mallock was stupid for not being a socialist and for daring to say things about socialism that the socialists could not refute, even writing a book about it in 1909, Socialism and Superior Brains: A Reply to Mr. Mallock. From a Just Third Way point of view, Mallock’s economics are grossly inadequate, but since the socialists were operating within the same general framework, it evidently did the trick.
• (07/20/18) Dave Hamill Appointed to CESJ Board of Directors. During the CESJ monthly board meeting on Monday, July 16, 2018, the CESJ Executive Committee’s appointment of Dave Hamill to the CESJ board of directors was moved and seconded, with the motion passing unanimously. During the discussion, CESJ Treasurer Dawn Brohawn noted that the board nominated Dave for his many years of contributions and his positive spirit.
• (07/20/18) Outreach to the COOP Movement. Consistent with CESJ’s emphasis on working for economic justice through capital ownership for every child, woman, and man, we are continuing outreach to the National Cooperative Business Association, which represents approximately half the coops in the United States and many outside of the country as well. Two CESJ members may get in on the effort to connect with the coop movement, having met with a key ESOP lawyer in Chicago. CESJ’s “selling point” to today’s business community is that we can put them in the way of a new source of financing through the Federal Reserve or any other country’s central bank.
|William Hurrell Mallock, the Missing Link?|
• (07/20/18) Missing Link Found. The “missing link” — or common denominator — joining together John Henry Newman, Robert Hugh Benson, Ronald Arbuthnott Knox, Gilbert Keith Chesterton, and Fulton John Sheen has been discovered. There was an individual who interacted with or influenced all five, but who is almost never mentioned by any biographer, historian, devotee, or fan . . . yet this particular individual ties them all together and explains a number of otherwise puzzling things. It’s rather astonishing that this person has been ignored, yet there are also ties to Charles Kingsley (whose attack on Newman led to his writing his Apologia Pro Vita Sua), the agrarian socialist Henry George, and even George Bernard Shaw. This discovery casts light on some things that many people today try to cover up or brush aside, especially advocates of socialism of all forms.• (07/27/18) Democratic Socialism on the Rise. Most “democratic socialists” seem to have a rather vague idea of what it’s all about, but acceptance of the concept has been spreading rapidly, and not just among actual socialists who took a page out of the handbook of the Fabian Society, which broke with H.G. Wells over the best way to implement socialism. For the record, Wells thought the best way was to be straightforward, convince enough people that socialism is right, and socialism will be established. In contrast, the Fabian Society’s way (which Wells seemed As George Bernard Shaw noted over a century ago, the greatest strength of the Fabian Society is that people outside the Society have no idea what they are promoting, other than a loose adherence to the principles devised by the agrarian socialist Henry George . . . which is also the Society’s greatest weakness. (“The Fading Fabians,” The Boston Evening Transcript, November 27, 1908, 10.) Evidently, many people now believe that it is “too late” to turn back the clock and avoid socialism. Consequently “democratic socialism” is the wave of the future and is the new form of Church and State. The irony, of course, is that early nineteenth century socialism was first propounded as “the democratic religion” directed toward establishing and maintaining a new form of Church and State. The rise of democratic socialism is therefore not really looking toward the future but turning back the clock two hundred years for another go at a system that could never be made to work in the first place. to think underhanded or dishonest, un-British, in fact) is to be as vague as possible, infiltrate established organizations in Church and State, and burrow from within, never saying anything definite, converting institutions to socialism without anyone realizing what was going on until it was too late.
|A bit over the top, but, yeah.|
|Cardinal Ratzinger (Benedict XVI)|
• (08/10/18) Do Data Run the Economy? In the Wall Street Journal of August 10, 2018, Erica Groshen and Robert Graves asserted that the U.S. economy runs on data. In explanation, Groshen and Graves said that the data from three key federal agencies allows the government to make the right decisions for the economy. On the contrary — data do not run the economy, consumer demand runs the economy. Government economic policy should not, therefore, be based on what is good in the aggregate to bolster statistical data, but on what will empower ordinary people with the ability to be productive and therefore have the power to consume..
Ironically, on the same page in the Wall Street Journal was another article, “The Myth of American Inequality” by Phil Gramm and John F. Early. This time the argument was that economic inequality is not as bad as reported because by redistributing the income accruing to productive citizens to the less fortunate, economic inequality is evened out. The problem of economic inequality, however, is not that people have unequal income, but that have unequal access to the means to become productive and thereby generate income. The inequality in productive capacity remains. The only solution is to promote true economic equality by removing barriers to ownership of the capital instruments that today account for the bulk of the production of marketable goods and services, not to redistribute what some produce for the benefit of others.
Not likely, given how many people are obsessed with the thought of getting control over the money supply out of the hands of central banks and governments, even though the crypto currency phenomenon is going from the frying pan into the fire if sound monetary theory along the lines of the Banking Principle is considered. Still, people may be catching on to the fact that crypto currencies are even more insecure than those issued by central banks and backed by government debt. After all, you can hold a government accountable to some degree, but not the issuer of a crypto currency. As noted in the Wall Street Journal, “Digital Currencies Tumble” (08/15/18, A-1, A-2), “[T]here is still virtually nothing holders of [crypto currencies] can do besides trade it. They have no practical utility in traditional markets and in daily commerce.”
Having slipped back into third place after artificially boosting its GDP with gigantic infrastructure projects financed with government debt, China is now urging its banks to lend for even more infrastructure projects and possibly institute some tax cuts and increase government spending to “shore up” their economy in anticipation of a long trade war with the United States. (Wall Street Journal, 08/15/18, A-18.). At the same time, Chinese debt seems to be slipping: “Missed Payment Renews Fears Over Chinese Debt” (WSJ, 08/15/18, B-12.) What China is planning is not a strengthening of its economy, but a serious weakening. China, Japan, and the U.S. would do better to work on people’s capacity to produce through capital as well as labor and thus bolster consumer demand that really drives economic growth.
|Fix the system, don't break the people.|
Alexis Tsipras, the Prime Minister of Greece, has declared the end of the bailout, proclaiming a “day of liberation.” In a sense it is, but the problems underlying the need for the string of bailouts continue and bode well (or ill) to cause more bailouts in the future unless corrected. And the chief problem is the fact that consumption for the average Greek far exceeds production for the average Greek, and the slack has to be made up somewhere . . . and that “somewhere” has been government debt, just as it has for almost every country on earth. In a collective sense, this doesn’t make any difference; Keynesian economics is built solidly on the assumption that there is no difference between the individual human person and the collective. As far as actual human beings are concerned, however, it makes a great deal of difference. If A produces twice what he consumes, and B doesn’t produce anything, collectively there is enough to go around. In the real world where actual people live, A can have all he wants and set aside something for tomorrow A produced it, so A owns it and can do with it what he likes) and B can go take a hike . . . unless A feels charitable or the government steps in and takes A’s presumed surplus and gives it to B. Of course, if the government does that, then A might decide not to produce that surplus for B’s benefit instead of his own, unless the government figures out a way to take from A to give to B without A catching on, at least too quickly. Unfortunately, the As in the Greek economy caught on, and stopped producing, leaving the Bs hanging out to dry. Of course, the real solution is to make B as well as A productive so that each produces for himself. Given the power of the ordinary person to be productive, it’s astonishing how productive they can be. For example, in France following the Franco-Prussian War the country produced its head off and paid off an indemnity specifically intended to destroy France economically forever in less than three years. Of course, ownership of the means of production in France was broadly owned so that ordinary people could be productive. If Greece instituted something along the lines of and put forth a comprehensive national effort to retire the debt — an all-out “war on debt” — it is entirely possible that the economy would be on a sound footing within three to seven years, and the debt be repaid without austerity in less than a century (with a great deal of pain, give it a generation, say less than a quarter of a century).
Yes, we’re tempted to ask, What rebuilding? but according to the Wall Street Journal of August 30, 2018 (“Puerto Rico Creditor Group Starts Talks,” B-10) the possibility of one of the major groups of creditors rescheduling the debt has raised the price from less than 25¢ on the dollar in January, to more than 50¢ on the dollar. Of course, a program of Capital Homestead would get the creditors $1 on the dollar, plus interest, as well as put the Commonwealth on a sound financial footing for the future. This would improve on a proposal Governor Luis Ferré made back in January 1972 which required people to put up cash to purchase special growth shares. Capital Homesteading would require that the assets pay for themselves out of future profits, thereafter providing consumption income and a restored tax base that would enable the government to pay off Puerto Rico’s debt in full.
• (08/31/18) Plummeting Currencies. The currencies of Argentina, Turkey, Brazil, and India continue to fall against the dollar. This underscores the problem of having currencies without any objective standard of value, such as cattle (common standard in the ancient world for thousands of years), silver (virtually the worldwide standard from 750 B.C. until the end of the eighteenth century), or gold (“king” of the nineteenth century . . . notice how they keep getting shorter and shorter for each standard as government takes over more and more control over money and credit?). Today’s “standard” of government debt depends solely on the ability of a government to make good on its debt to justify the value it puts on its currency. Maybe it’s time to look into R. Buckminster Fuller’s idea of the kilowatt hour . . . as soon as the world’s monetary and tax systems can be put into rational shape.
• (08/31/18) National Debt Slavery? Do unto others before they do unto you? China is turning Sri Lanka into a modern day “semi-colony,” the same way Great Britain and Portugal turned parts of China into semi-colonies in the nineteenth century. By getting into debt to China, Sri Lanka was forced to hand over economic control of its deep sea Hambantota port to “China Merchants Port Holdings” (CM Port). We recall that back in 1898 in his book, Public Debt: An Essay in the Science of Finance, Henry C. Adams warned that non-productive government debt (and ALL government debt is by definition non-productive) is the single greatest danger to national sovereignty.
. Or, more accurately, a continuation of the same debt crisis that has had the world in its grip since the near worldwide adoption of Keynesian economics and the fixed belief that governments can back currency with their own debt and somehow stay financially stable. According to an article in this past Tuesday’s Washington Post (“Global Debt Raises Red Flags,” Washington Post, 09/04/18, A-1, A-11) current government debt behind much of the global money supply stands at $169 trillion. On the eve of the so-called “Great Recession” (a euphemism that fooled no one at the time, and now sounds just plain silly. So, of course, the media continue to use it) total debt stood at $97 trillion. Some authorities believe the current troubles in Argentina, Turkey, and other “emerging markets” (another euphemism that means countries trying to grow their economies by consuming far more than they produce) are simply the harbinger of a global meltdown waiting to happen. Others, more Keynesian, continue to insist in the face of all experience for the past century or so that the size of a government’s outstanding debt is irrelevant because it just means existing wealth in the economy is being divided into smaller and smaller pieces. The only problem is that the government except in a socialist economy does not own that wealth. Currency backed by government debt is really backed by the government’s power to tax and collect that wealth — and that depends in turn on the citizens’ willingness and ability to pay the taxes needed to redeem the debt backing the currency. And the size of the public debt (as Greece and countries indebted to China have discovered) is the single greatest danger to the independence and sovereignty of a country, as Henry C. Adams pointed out exactly 120 years ago in his book, Public Debts: An Essay in the Science of Finance (1898). The situation is similar to that of the early nineteenth century when governments began issuing debt on a massive scale after discovering that a central bank could be turned away from the private sector and into a government money machine by monetizing debt instead of private sector productive assets. The new republics of Central and South America tried to spend their way into prosperity and only ended by kicking off the Panic of 1825, which financial historians consider the first of the “Boom and Bust” busts. What is needed is an intensive program to be implemented throughout the world that will at one and the same time restore an asset backing to the currency and the rest of the money supply, and build purchasing power into consumers, thereby restoring Say’s Law of Markets. One possibility is .
In a related story (“From Get Rich Quick to Wiped Out,” Washington Post, 09/04/18, A-6), although this one applies to private sector investment instead of public finance, China’s innovative — and unregulated — “Peer-to-Peer” investment loan houses have crashed, leaving investors, many of them low income workers and retirees lured by the chance to “get rich quick” speculating in the stock market, high, dry, and bankrupt. It turns out that many of the P2P loan houses were pyramid schemes or invested in startups that went under very quickly. Nor can the police or the government do anything, for there are no securities laws covering the industry, which sounds much worse than the wildest days of the wildcat stock jobbing on Wall Street just before the Crash of 1929. In fact, the closest thing we can see to what is happening right now in China was the Mississippi Scheme and the South Sea Bubble. During the latter, shares were floated for hundreds of new companies, virtually all of them ways to separate people from their money as easily as possible, described in Charles Mackay’s Extraordinary Popular Delusions and the Madness of Crowds (1844).
. Prison strikes are spreading (“Prison Jobs Shouldn’t Be Slave Labor,” Washington Post, 09/04/18, A-15). This isn’t the prison movie type of strike that leads to a riot after banging on the tables with tin cups. This is about genuine “slave wages” for work. Yes, technically convicts are slaves. They are bound absolutely to the will of others and cannot come and go as they please — the legal definition of slavery. Prior to American independence, British convicts were a prime source of labor for the American colonies and a profitable source of revenue for the Crown. One of the reasons they had the death penalty for so many crimes was so that sentences could be commuted to penal servitude for life and the convicts sold to people who needed cheap labor and didn’t mind the added danger. Today there is generally a rehabilitation aspect added to the punishment for a crime, but often ignored. It is, after all, quite expensive just to lock someone up without the added cost of rehabilitation. As for prison industries, the unions made certain that whatever was available to convicts were the dregs that no one else wanted, especially union members. Restitution to victims? Forget it. Of course, it might be time to look at something like the New Birth Project proposed some years ago, that would address many, if not all, the grievances of the convicts. Perhaps it is time to give it another look.
The Washington Post, CNN, and even the Philadelphia Enquirer have all run major stories on the bill.
• (09/07/18) Canny Scots Stereotype? Or just being humanly intelligent? Nicola Sturgeon, First Minister of Scotland, has announced the creation of “Scotland for EO” (“Employee Ownership”), a government-supported organization that will support the continued development of employee ownership in Scotland. As Sturgeon commented, “All the evidence tells us that employee ownership delivers benefits to business performance, the people who work in them, and the places in which they are located.” Now we just need the rest of the United Kingdom as well as the rest of the world to follow suit.
|All an illusion?|
In an article somewhat related to the one noted above (everything is kind of related, but we thought we’d point it out), Mary Anastasia O’Grady (who is usually more sensible) had a column in Monday’s Wall Street Journal suggesting that Argentina switch to using the U.S. Dollar. (“Argentina Needs to Dollarize,” WSJ, 09/10/18, A-15.) No, what Argentina — and the U.S. — need to do is switch from using a debt-backed currency to using an asset-backed currency, which is what central banks were in part invented to do. The fact that governments can back the currency with their own debt is the problem, not how much they issue. Eventually the politicians will give in to the temptation to start bankrolling everything with debt instead of taxes, which means the sky is the limit for how much debt will be issued. After all, when was the last time you heard of a politician who wanted less money to spend? If new money is only created in a way that it is backed by private sector assets, there is a natural limit imposed on the amount of money that can be created, and avoids both inflation and deflation. At the same time, if all new money is created in ways that turn people into owners of capital (i.e., that finance a program of widespread ownership), the consumer demand needed to sustain economic growth will be created naturally without having to force consumers to assume more and more debt.
. For a three-n-a-row roll, on Wednesday the Washington Post gave us the remarkable news that “U.S. Budget Deficit Swells as Economy is Humming” (09/12/18, A-1, A-15). Noting that “typically, the deficit shrinks during strong economic times” . . . which to anyone except a Keynesian or a politician would suggest that what we are experiencing are not “strong economic times,” but a bubble economy fueled by (guess what) U.S. budget deficits! Even worse, “there are signs the borrowing binge has only begun.” Is it possible that no one in authority can see what is happening? That unless drastic measures are implemented as soon as possible, the United States — and thus the world — is looking at an economic meltdown of epic proportions? And what should be done? First, reform the monetary system so that the banks and the Federal Reserve finance private sector development in ways that spread out capital ownership. This will restore the tax base and have the potential to fund government operations. Don’t use debt to finance government as the usual thing. Ever. Second, reform the tax system to restrict it to raising money to run government in the most efficient manner possible and favor widespread capital ownership. Don’t use the tax system to finance economic growth. Ever. Third, restrict government borrowing to emergencies and never, never, ever issue bills of credit to monetize government deficits. Ever. And if you’re wondering how to go about it, take a look at .
|"Do you want fries with that?"|
|Fr. Ferree: social justice is not what you think.|
|Kelso: economic justice is not what you think.|
• (10/19/18) Chinese Robber Barons. Unverified rumor has it that the Chinese Nomenklatura are making fortunes by picking up shares at bargain prices from ruined middle class investors who sank their savings and all they could borrow into speculative shares on the Shanghai Exchange, while the Chinese market is taking a hammering today. The government encouraged the middle class to invest, and then financed growth with increased government debt, creating a speculative bubble as cash flowed into the economy, and those with access to ready money are picking up the pieces.
• (11/02/18) Myth of the Independent Indian Central Bank. The Reserve Bank of India claims to be an independent central bank and is working at the present time to reassert its independence . . . which argues that they are not as independent as they claim. Of course, it is difficult for a central bank to be independent when the reserve currency is backed 100% by government debt, the government retains legal control and the right to “give such directions to the Bank as it may,” and the government appoints the head of the Bank. Independence of a central bank under those conditions as Dr. Harold G. Moulton of the Brookings Institution pointed out in the 1930s, is a myth. Only by backing the reserve currency with private sector hard assets as was the original theory of central banking is it possible to have a uniform, stable, elastic, asset-backed reserve currency and avoid both inflation and deflation. Only by having widespread capital ownership and universal citizen direct ownership of the central bank, limiting the government’s role to regulation and enforcement of contracts, and a tax system that raises sufficient revenue to run the government and pay down past deficits with only short term borrowing out of existing accumulations of savings to cover temporary shortfalls in tax collections will the system be sustainable.
• (11/09/18) Smithfield Foods, Inc. Smithfield Foods, Inc., for which some years ago CESJ proposed a worker buyout to keep the ownership in the United States, was purchased by the Chinese. According to a report in today’s Wall Street Journal, Smithfield Foods is receiving a subsidy from the United States government to offset the effects of the new tariffs. In other words,, the U.S. taxpayer is paying China to offset the effect of higher prices to the U.S. consumer.
• (11/09/18) Saudi Arabian Financing. According to the Wall Street Journal earlier this week, much of the money for new startups in Silicon Valley is still coming from Saudi Arabia. This may explain the reluctance in certain quarters to make too great a fuss about certain recent events . . . which would not be a problem if companies shifted to “future savings” to finance replacement capital and expand operations, freeing up “past savings” to finance startups and other risky ventures as well as for consumption, thereby also decreasing the demand for unserviceable consumer credit. There would be no need of foreign financing, especially if domestic consumer demand were to be enhanced by access to ownership income as well as wage and welfare income on the part of the average American through .
|Wants higher minimum wage.|
• (11/16/18) Global Economy Slowing Down? Today’s Wall Street Journal opined that the global economy was slowing down, although the growth in the United States was masking this for most people. Of course, when “they” say that the global economy is slowing down or that the U.S. is experiencing economic growth, it means in the aggregate, which in turn means that it isn’t real unless it affects you personally. Also, despite the numbers, few people realize that the so-called growth in the U.S. has been fueled by government debt instead of private sector future savings, meaning that eventually the U.S. taxpayer will have to pick up the tab.
• (11/16/18) McGill University Conference. Norman Kurland’s presentation to a group at McGill University went very well, with participants and audience pleased with the result. About a dozen or so people tuned in on the internet, and the presentation came across very clear. During the question and answer period a number of insightful questions were asked which, although they did not demonstrate a complete understanding of the Just Third Way, indicated a willingness to listen and dialogue on the ideas.
• (11/16/18) Catholic Internet TV (CITV). One of the participants tuning in to Norman Kurland’s talk at McGill was Stephen DeVol of Catholic Internet TV, a project of the Catholic Worker Movement. Steve expressed great interest in having Norm record a session for broadcast on CITV, with the result that a taping is scheduled for next week before Thanksgiving.
. A leading Chinese venture capitalist is Kai-Fu Lee, former president of Google China says that if relations continue to deteriorate between China and the U.S., he would begin reducing investment. That is very welcome news to anyone who understands the science of finance and the dangers of relying on foreign investment capital to run an economy. The Federal Reserve System was established primarily to provide the U.S. economy with sufficient liquidity to keep the economy running smoothly. If it were to be used to finance private sector investment instead of monetizing government deficits, there would be no need for foreign investment at all, and the U.S. could start paying down its debt. By adding Louis Kelso’s “Expanded Ownership Revolution” and turning every child, woman, and man into a capital owner, making dividends tax deductible at the corporate level, paying out all earnings, and financing growth using commercial bank credit backed up by the Federal Reserve (and, of course, forcing government to live within its means by imposing a balanced budget), there would be sufficient consumer demand to establish and maintain full employment. Further, the U.S. would again become a net exporter as widespread ownership encouraged greater efficiency and profitability. China threatening to cut back on investment in the U.S.? Please do..
|A socialist symbol? Yes!|
. In pursuit of a short term expedient that starts to border on the delusional when it becomes viewed as a permanent solution, the push to implement a $15 minimum wage is gaining force in response to the new ascendancy of the Democrats in the House of Representatives. The problem, of course, is that while paying people more than a free market determined wage rate may be essential at times as an expedient, it is not, and can never be, a permanent solution to inadequate income. As the late labor statesman Walter Reuther of the UAW noted, raising fixed wages and benefits only increases costs and raises prices for consumers . . . who are the same people who would get the increased wages. As a result, workers and consumers are trapped in a perpetual game of trying to catch up, with each round of cost and price increases leaving them worse off than before. After all, even if wages, costs, and prices go up by exactly the same amount, wage earners are no better off than before, but they pay more in taxes (income, sales, property, etc.), decreasing their purchasing power even if everything else stays in the same ratio! In reality, of course, it is inevitable that costs and prices increase faster than wages if only so that companies can maintain their profitability, inflation eats away the purchasing power of the increase, and transfer payments from workers to non-workers also decrease purchasing power. What Reuther pointed out was that if compensation increases came out of the bottom line, i.e., after costs, instead of increasing costs, workers’ incomes would rise but prices would fall, especially if the workers and consumers were owners and receiving dividend income out of profits instead of increasing costs by taking increases in the form of fixed wages. What is needed, then, is not a national minimum wage, but a national minimum ownership.
|A media superstar?|
The big news this week in the non-expanded capital ownership world is that General Motors, which just announced it was closing five plants in the United States and Canada and laying off a few thousand workers. This is after getting a rather large tax break to retain jobs, which the company apparently spent on a stock buyback and increasing executive compensation. For some reason we doubt whether the adage that what’s good for GM is good for the country. Also, we were wondering whether the plants would have been closed had workers owned shares and what was left was spread out among the public rather than a few capitalists. It would have been interesting to see what the reaction of, say, the late Walter Reuther would have been . . . Oh, wait, we already know. As Reuther said in his testimony before the Joint Economic Committee of Congress on the President’s Economic Report, February 20, 1967, “Profit sharing in the form of stock distributions to workers would help to democratize the ownership of America’s vast corporate wealth which is today appallingly undemocratic and unhealthy. The Federal Reserve Board recently published data from which it is possible to estimate the degree of concentration in the ownership of publicly traded stock held by individuals and families as of December 1962. Preliminary analysis of these data indicates that, despite all the talk of a ‘people’s capitalism’ in the United States, little more than one percent of all consumer units owned approximately 70 percent of all such stock. Fewer than 8 percent of all consumer units owned approximately 97 percent—which means, conversely, that the total direct ownership interest of more than 92 percent of America’s consumer units in the corporation-operated productive wealth of this country was approximately 3 percent. Profit sharing in a form that would help to correct this shocking maldistribution would be highly desirable for that reason alone.… If workers had definite assurance of equitable shares in the profits of the corporations that employ them, they would see less need to seek an equitable balance between their gains and soaring profits through augmented increases in basic wage rates. This would be a desirable result from the standpoint of stabilization policy because profit sharing does not increase costs. Since profits are a residual, after all costs have been met, and since their size is not determinable until after customers have paid the prices charged for the firm’s products, profit sharing as such cannot be said to have any inflationary impact upon costs and prices.”
. According to a report in yesterday’s Wall Street Journal, the Republic of the Maldives and a number of other countries have discovered a downside to Chinese largesse: creditor conquest. As has been known for a few thousand years or more, the easiest way to conquer or control another country is to get them in debt to you. This, incidentally, is also why it is a very bad thing when governments figure out ways to stay in power without taxation: it takes away the ability of the citizens to cut off the flow of funds by withholding taxes. That is also why Henry Carter Adams (1851-1921) noted, “The facts disclosed permit one to understand how deficit financiering, carried so far as to result in an interchange of capital and credit between peoples of varying grades of political advancement, must endanger the autonomy of weaker states unable to meet their debt-payments. Provided only that the interests involved are of sufficient importance to make diplomatic interference worth the while, the claims allowed by international law will certainly be urged against the delinquent states, and the citizens of such states may regard themselves fortunate if they succeed in maintaining their political integrity. (Public Debts, An Essay in the Science of Finance. New York: D. Appleton and Company, 1898, 28-29.) Just because Keynes said you could increase debt without danger doesn’t mean it’s true.
• (12/07/18) Bitcoin Bonanza Bottoms Out?. , the leading “crypto currency” in the world, are starting to proliferate. While “the experts” still have a foggy notion of the true nature of money (or they wouldn’t be experts, they’d be rich), they are starting to realize that a currency of any kind that costs more to obtain than it is worth is not sustainable. A Bitcoin is currently “worth” (the term is used advisedly here) $3,397.89 (we just checked), down from a high of $19,783.06 a year ago (a currency that loses more than 80% of its value in a year is good?), but “new” Bitcoins cost $4,758 to “mine” in the U.S., which seems to be about the average for a number of countries. It’s almost $10,000 a couple of places, while in Venezuela it’s $531, but there may be other reasons for not taking it away to South America. The “blockchain” technology appears to be useful, but the Bitcoin and similar cypto currencies, as they ignore the true nature of money, may be on the way out as people become more educated, or at least more wary.
Close, But No Cigar. This article, “ ” by Joseph Blasi and Maureen Conway, accurately points out that the real problem is not the income gap, but the wealth gap underlying and causing the income gap. Unfortunately, it tries to address the problem of how to get a better distribution of wealth by focusing on how to divvy up what already exists instead of making it possible for people to get their own. Specifically, instead of looking at tax and monetary reform to make ownership of newly formed capital open to everyone, the article looks at tax reforms to encourage existing owners to give up their ownership. Even in cases where both parties to the transaction benefit, there are some problems: 1) It only affects people who are employed by for-profit business entities. 2) It relies on existing owners choosing to give or sell productive assets to workers; it is no one’s right to obtain, even at a fair price, what belongs to someone else if the owner doesn’t want to sell or give it away. 3) It focuses on how people gain income instead of how people become productive. Specifically, the authors propose the following: 1) Reward businesses that offer profit and equity shares. Translation: the U.S. taxpayer picks up the tab. 2) Incentivize retirees to sell businesses to employees. Translation: the U.S. taxpayer picks up the tab. 3) Promote public-private citizens trusts. Translation: private property is abolished. A much better and sustainable solution would be to open up access to money and credit so that every child, woman, and man can become productive through ownership of capital as well as through labor. Something along the lines of should be considered.
It’s tempting to say it’s déjà vu all over again as rioting continues in France. This is actually nothing new: whenever economic conditions deteriorate, the French have a tendency to take to the barricades or the modern equivalent. It almost always signals a fundamental change in government, and usually not for the better. The Old Regime fell in this way, as did the Restoration, the July Monarchy, the Second Republic (indirectly; it’s complicated), and the Second Empire. Only the First and Second World Wars and the Welfare State stopped the cycle, and then only for a time when it became obvious that the level of entitlements could not be sustained. As a result, President Macron is fast losing what support he had, and the French can expect a brief Sixth Republic followed by some variety of Third Empire, although it would not be called that (although there is a group in Russia calling for Putin to become the Czar, so France just might end up with Napoleon IV, V, or , if things follow the usual pattern. Of course, if things don’t get out of hand too fast, Macron might have time to institute a , or whatever name would be acceptable to his constituents. This would not only help him out of a current difficulty but lay the foundation for a stable future for France.
Today’s Wall Street Journal it was reported that “The Supreme Court May Begin to Tame the Administrative State” (12/14/18, A-17). Government agencies have gone mad with power (in a sense), creating a vast body of regulations that have the force of law but that Congress never had a say in. The statistics are frightening, if you want a society in which ordinary people can understand and obey the law. Even if the regulations were consistent, however (which they are not), no human being on Earth could ever grasp, much less understand 100,000 laws. The irony is that people are looking to the Supreme Court to take away the legislative power assumed by government agencies . . . the same Supreme Court that has also usurped the power of Congress. . . .
Also in today’s Wall Street Journal is a piece on how New York State is requiring private schools “to offer a specific set of classes more comprehensive than what students in public schools must learn.” (“New York State Targets Jewish Schools,” WSJ, 12/14/18, A-15). While the authors are rightly concerned about the effect on Yeshivas (Jewish religious schools), it is clear that all religious schools are being targeted. This is consistent with Governor Cuomo’s comments about “extreme conservatives” not being welcome in New York state. Not only Jews, but Catholics and the Amish have been singled out at various times by the champions of diversity in New York who want everyone to march to their drum. Of course, it would be interesting to see just how long politicians like Cuomo and those controlling the New York State Education Department remain in office once people who are currently powerless or nearly so and dependent upon government largesse gain private property in capital and thus power to control their own lives.
• Shop online and support CESJ’s work! Did you know that by making your purchases through the Amazon Smile program, Amazon will make a contribution to CESJ? Here’s how: First, go to Next, sign in to your Amazon account. (If you don’t have an account with Amazon, you can create one by clicking on the tiny little link below the “Sign in using our secure server” button.) Once you have signed into your account, you need to select CESJ as your charity — and you have to be careful to do it exactly this way: in the space provided for “Or select your own charitable organization” type “Center for Economic and Social Justice Arlington.” If you type anything else, you will either get no results or more than you want to sift through. Once you’ve typed (or copied and pasted) “Center for Economic and Social Justice Arlington” into the space provided, hit “Select” — and you will be taken to the Amazon shopping site, all ready to go..
• Blog Readership. We have had visitors from 23 different countries and 35 states and provinces in the United States and Canada to this blog over the past week. Most visitors are from the United States, Canada, the United Kingdom, India, and Australia. The most popular postings this past week in descending order were “‘’,” “News from the Network, Vol. 11, No. 51,” “When the Chips are Down,” “Putting Pope Francis in Perspective,” and “Real Bills for Real Wealth.”
Those are the happenings for this week, at least those that we know about. If you have an accomplishment that you think should be listed, send us a note about it at mgreaney [at] cesj [dot] org, and we’ll see that it gets into the next “issue.” If you have a short (250-400 word) comment on a specific posting, please enter your comments in the blog — do not send them to us to post for you. All comments are moderated, so we’ll see it before it goes up.