On Sunday, March 27, 2022, President Zelenskyy of Ukraine gave an interview to Russian journalists . . . which the Kremlin has banned from viewing in Russia. From the Just Third Way point of view, the most interesting part of the interview was when Zelenskyy invited Russians to bring themselves (and their money) to Ukraine to help them rebuild.
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| No. We don't need it, and neither does Ukraine. |
This is a great propaganda coup and may be one of the reasons the Kremlin has banned the interview from being shown in Russia . . . yuh think? Still from the Just Third Way perspective, however, it is a wise move to invite in Russians or anyone else who wants to help rebuild into the country and even offer them Ukrainian citizenship . . . but Ukraine doesn’t need their money. It needs a sound plan and a financial and monetary reform that will empower every person in the country with direct ownership of the country.
The goal is to provide a social, economic, and political environment within which all people can meet their material needs through their own efforts and resources. This would empower them to develop more fully as human persons and become virtuous. Those who are unable to meet their material needs themselves can be assisted by private charity or public welfare as long as necessary in a way that respects their dignity.
Specifically, we propose a free market system that vests each person with democratic access to money and credit so everyone can become an owner of income-producing capital. It is based on the pillars of an economically just society. These are, one, a limited economic role for the State. Two, free and open markets within a strict juridical order as the best means for determining just wages, prices, and profits. Three, restoration of the rights of private property, especially in corporate equity. Four, widespread direct ownership of capital.
The Just Third Way embodies the three principles of economic justice. These are, one, participation: all have an equal right to work and to own capital. Two, distribution: from each according to his abilities and resources, to each according to his inputs. Three, social justice: when the system inhibits or prevents people from becoming virtuous, everyone has the right and duty to organize and correct the system.
Legal and institutional changes may be required. Depending on the legal system, these may include, but are not limited to,
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| "If this gets out, I'm screwed." |
· Reform of the personal tax system, merging all personal taxes into a single rate income tax, with an exemption sufficient to meet common domestic needs adequately.
· Permit every person to acquire capital on a tax-deferred basis up to a level sufficient to generate an income adequate for common domestic needs, including housing, education, and healthcare.
· Tax deductibility of dividends at the corporate level, to be treated as ordinary income at the personal level, unless used to acquire capital on a tax-deferred basis.
· Raising the corporate income tax rate to encourage full payout of earnings as tax-deductible dividends and financing growth through the issuance of new shares instead of retained earnings or debt financing.
· Reform of the central bank to phase out monetizing government deficits and shifting to creating a reserve currency backed with private sector hard assets in ways that create new owners of capital.
· Retire the national debt and discourage future borrowing except for short-term from existing savings to cover temporary shortfalls in tax revenue.
· Establish and maintain a fixed standard for the reserve currency, e.g., the kilowatt hour.
· Institute capital credit insurance and reinsurance to substitute for traditional forms of collateral for the purchase of qualified capital.
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| Ownership for All |
The idea is that everyone would have a tax-deferred asset account at a financial institution to accumulate a pre-determined amount of qualified equity shares, i.e., voting, fully participating, full dividend payout. Total new capital needs of the economy, both public and private, would be determined, preferably on a quarterly basis, and the amount divided by the total population.
Each person would then have the right to purchase up to that amount of newly issued qualified growth shares. This would include capital previously owned by government, such as the incredible amount of infrastructure destroyed by the Russians, as government should not own productive capital, and there are ways that all citizens can own it directly and democratically.
To finance the purchase without redistribution, inflationary money creation, or the need for past savings or foreign investment capital, once someone has selected his investments, usually with the help of a financial professional, a commercial bank backed up by the central bank of Ukraine (and possibly guaranteed by the World Bank or a consortium of the European Union, the United States, or even the United Nations) would create money to purchase the shares and collateralize the loan with capital credit insurance. The borrower would purchase the shares, repay the loan with future tax-deferred dividends, and when the loan is fully paid, receive dividends as ordinary income.
To illustrate, in the United States today there is approximately US$12,000 in new capital formed per person each year in the public and private sector. If each citizen was given the right to purchase $10,000 of that new capital every year, by the time someone reached age 21, he would have $210,000 in capital and $31,500 in gross capital income, assuming a conservative 15% pre-tax return on invested capital. By age 65, this would grow to $650,000 of capital and $97,500 in gross income.
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| We have a better way. |
The benefits of economic personalism, described in much more detail on the website of the interfaith Center for Economic and Social Justice than is possible here, should be apparent from the first announcement of the program. It is anticipated that an economic turnaround will begin almost immediately after the total withdrawal of Russian troops as confidence is restored, people begin understanding the proposal, and rebuilding begins. In the short run prices will stabilize as the Keynesian presumed tradeoff between inflation and employment, and assumption that labor is the sole factor of production are shown to be mistaken.
Rebuilding should take place rapidly as funds that would otherwise be reserved for rebuilding are instead paid out to avoid corporate taxation. Payout — and demand — should increase as corporations shift to equity financing instead of using debt or retained earnings. This would also increase tax revenues as the funds circulated within the economy in accordance with Say’s Law. Full employment, while not the ultimate goal, should be achieved almost immediately. Given the vast amount of rebuilding to be carried out, within ten to thirty years most people would have accumulated a capital stake sufficient to eliminate the bulk of social welfare and transfer payments, greatly reducing government expenditures.
As government debt is phased out as the backing of the reserve currency, the value of the reserve currency will appreciate without deflation, and people can buy more with less money. As the tax base is restored and government social welfare expenditures decreased, the national debt can be paid down, possibly as soon as fifty years with a concerted effort.
Only a broad idea of the concept can be given in this posting. It should, however, be enough to let President Zelenskyy know that there is a plan that would not only allow Ukraine to rebuild, but to come back stronger than ever before.
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