A week or so ago, Washington
Post columnist Harold Meyerson gave his opinion of the current economic
situation and what should be done about it in “Owner-take-all” (The Washington Post, 08/28/14, A17). On looking through our records, we realized
that we had written a number of similar letters to the Post regarding similar
opinions expressed by Mr. Meyerson in previous, also similar columns.
We realized that we were getting dangerously close to
perfecting a standard template to send automatically in response to anything
Mr. Meyerson writes. That being the
case, we didn’t just whip out our now usual letter, but actually put some
thought and time into it. Since it
didn’t get published anyway (nor did Mr. Meyerson respond to the cc.), we’re
taking this opportunity to fill the gap in our blog posting schedule with a
slightly rewritten piece.
Mr. Meyerson’s point was that the greedy corporations should
use more of their profits to pay workers more, create jobs, and invest in new
capital to create jobs instead of enhancing shareholder value or paying
dividends. Thus, Mr. Meyerson’s point was valid only if we accept that 1) owners
have no right to the fruits of ownership, i.e.,
income and control, 2) human labor is the sole factor of production, and 3)
existing accumulations of wealth are the only source of financing for new
capital formation.
The solution to the problems Mr. Meyerson bemoaned is not to
turn owners into non-owners by stripping them of their rights. As Louis O. Kelso and Mortimer J. Adler
pointed out more than half a century ago, the solution to powerlessness is
power — and “Power,” as Daniel Webster observed, “naturally and necessarily
follows property.”
All dividends should be tax deductible at the corporate
level to encourage companies to pay out all earnings and give owners their
rights, and the tax system should favor the accumulation of capital assets by
ordinary people on a tax-deferred basis.
Full payout of earnings in the form of dividends tax deductible to the
corporation, not artificial government stimulus, would increase consumer
demand, and thus the demand for new capital and job creation, raising wages
naturally as the demand for labor increases.
All growth should be financed in ways that create new owners
of the wealth, not keep it concentrated so that the State has to step in and
redistribute the benefits of ownership to non-owners. Meyerson should advocate that non-owners be
helped to purchase newly issued growth shares using non-recourse credit obtained
from commercial banks at low cost and collateralized with capital credit
insurance and reinsurance, and rediscounted at the Federal Reserve, to be paid
for with dividends on the shares purchased.
An aggressive program of expanded capital ownership financed
by expanding private sector bank credit would spread out capital ownership and
supplement or replace wage income with ownership income, thereby reducing the
upward pressure on wages and benefits.
It would also replace the present unstable debt-backed currency with a
stable asset-backed currency — as the Federal Reserve was originally intended
to do.
The role of the State is to remove barriers to full
participation in economic life, not put more in place. By refusing to acknowledge barriers that
inhibit or prevent propertyless people from owning capital on easy terms, and
by advocating that capital ownership be penalized, Meyerson only succeeds in
promoting a wage and welfare slave system in place of the free society he, like
most of us, clearly desires.
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