Last week we took a look at a book with a hook in a nook with a cook. That in itself is not unusual, even without a visit from Dr. Suess. We read a lot of books. We even write a lot of books.
The unusual thing about this particular book was that although it was published ninety years ago, it reads like it was written in the past couple of years. We refer, of course, to Sinclair Lewis’s satiric take on the rise of dictatorships in the 1920s and 1930s, It Can’t Happen Here (1935). The problem Lewis addressed was how a homegrown version of fascism could take root in the U.S., fueled by economic despair, nationalism, and the exploitation of fear.
Lewis argued democratic institutions are vulnerable to demagoguery. An engaged and informed citizenry, therefore, is crucial for their survival. A critical component of an engaged and informed citizenry — according to Lewis — is a free press. Finally, a major cause is the failure of mainstream political and economic elites to recognize the threat of fascism, dismissing warnings until it is too late.
What Lewis left out was that a viable political democracy — consistent with the principles of the Just Third Way — can only be built on a solid foundation of economic democracy. People who are empowered — and power (as Daniel Webster observed) naturally and necessarily follows property.
So, what is the solution — according to proponents of the Just Third Way? Pope Leo XIII presented the solution in his 1891 encyclical, Rerum Novarum, “On the Rights and Duties of Capital and Labor”, “We have seen that this great labor question cannot be solved save by assuming as a principle that private ownership must be held sacred and inviolable. The law, therefore, should favor ownership, and its policy should be to induce as many as possible of the people to become owners.” (§ 46.) Nor was Pius XI far behind in reiterating this program to counter the rise of dictatorships. As he noted in passages in Quadragesimo Anno which must be read in the context of what Leo XIII said if it is to make sense:
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| Pope Pius XI |
58. To each, therefore, must be given his own share of goods, and the distribution of created goods, which, as every discerning person knows, is laboring today under the gravest evils due to the huge disparity between the few exceedingly rich and the unnumbered propertyless, must be effectively called back to and brought into conformity with the norms of the common good, that is, social justice.
59. The redemption of the non-owning workers — this is the goal that Our Predecessor declared must necessarily be sought. And the point is the more emphatically to be asserted and more insistently repeated because the commands of the Pontiff, salutary as they are, have not infrequently been consigned to oblivion either because they were deliberately suppressed by silence or thought impracticable although they both can and ought to be put into effect. And these commands have not lost their force and wisdom for our time because that “pauperism” which Leo XIII beheld in all its horror is less widespread. Certainly the condition of the workers has been improved and made more equitable especially in the more civilized and wealthy countries where the workers can no longer be considered universally overwhelmed with misery and lacking the necessities of life. But since manufacturing and industry have so rapidly pervaded and occupied countless regions, not only in the countries called new, but also in the realms of the Far East that have been civilized from antiquity, the number of the non-owning working poor has increased enormously and their groans cry to God from the earth. Added to them is the huge army of rural wage workers, pushed to the lowest level of existence and deprived of all hope of ever acquiring “some property in land,” and, therefore, permanently bound to the status of non-owning worker unless suitable and effective remedies are applied.
The big question for our day, of course, is what can be done about it, and — fortunately — we have a possible solution. It’s called the Economic Democracy Act (EDA). And that is?
The proposed EDA offers a private property and just, free market-oriented national policy to foster “capital self-sufficiency” as a supplement to wage incomes and as a basis for all Americans to achieve personal power, lifetime prosperity, and economic independence — and the ultimate defense against politicians like Buzz Windrip.
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| Abraham Lincoln |
The EDA follows the precedent of U.S. president Abraham 1862 Lincoln’s Homestead Act which democratized ownership of the limited frontier land. As for the EDA, this new economic policy would universalize access to newly created asset-backed money in the form of insured capital credit. These loans would be repaid with “future savings” from each year’s profits from the new capital added that year. This 21st century equivalent of 160 acres would be extended equally to every citizen every year, providing the means to accumulate a lifetime ownership stake in the high-tech frontier.
The EDA would launch the United States of America as the first nation to promote the fundamental human right articulated in the “Universal Declaration of Human Rights” at the formation of the United Nations on December 10, 1948. Article 17 of the UDHR stated:
(1) “Everyone has the right to own property alone as well as in association with others.
(2) No one shall be arbitrarily deprived of his property.”
This would encourage other countries, including those led by socialists or monopoly capitalists, to adopt America’s “Just Third Way” model for a more democratic and prosperous future, and a truly free and just, global market system.
The Economic Democracy Act is based on four pillars of a just free market economy —
(1) expanded capital ownership,
(2) limited economic power of the state,
(3) restoration of free and open markets, and
(4) restoration of the full rights of private property for every person from birth until death.
The EDA would strengthen the political constituency for linking supply-side with demand-side economic policies. It would add social justice to free market principles and reduce the political pressures for redistributive, anti-growth and protectionist policies.
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| Louis O. Kelso |
The Economic Democracy Act would introduce reforms into the monetary and tax systems geared toward maximizing sustainable private-sector growth without inflation, while systematically building a nation of citizen-owners. Along with shifting from a debt-backed to an asset-backed currency, a simplified tax system would be introduced to encourage corporations to finance their growth more democratically.
The EDA would reduce the pressure of increasing Social Security and Medicare costs, leaving in place a social safety net for individuals whose capital and labor incomes are insufficient to meet their basic needs.
The Federal Reserve would revive its existing powers under Section 13(2) of the Federal Reserve Act. This opens the discount windows of its twelve regional Federal Reserve banks to create through local commercial and cooperative banks sufficient asset-backed money and insured capital credit every year to finance the new plant and equipment, renewable energy, green technology, new rentable space, and new infrastructure. Rather than flowing only to the already wealthy, the new money and credit would be channeled through financing mechanisms such as individual Capital Ownership Accounts (COAs), creating new owners of new capital without violating property rights of current owners.
Five central banking innovations would be introduced:
(1) Qualified new industrial, commercial, and agricultural capital investment would be financed with newly created, private sector, asset-backed money and insured, no-interest (but not no-cost) self-liquidating credit extended through the commercial banking system and rediscounted at regional Federal Reserve Banks in ways that create new owners.
(2) Monetization of government deficits and speculative securities would be phased out.
(3) Open market operations would be limited to dealing in qualified private-sector securities once all government debt is retired.
(4) 100% reserves would replace today’s fractional reserve banking by immediate rediscounting of all qualified new capital investment.
(5) Private sector insurance and reinsurance companies would offer capital credit insurance and reinsurance to replace reliance on traditional forms of collateral.
For more detail, see “Overview of the Economic Democracy Act” at https://www.cesj.org/learn/economic-democracy-act/overview/
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