A lot has been going on this week,
not the least of which is the annual conference of the ESOP Association in
Washington, DC (which we may report on next week, as it is still in
progress). The bottom line? Let’s cut to the chase and get to the news
items:
• Perth Herald Tribune. If
you want to get some non-U.S.-centric news that isn’t filtered through the news
agencies (not that there’s anything wrong with them, but they have different
ideas about what you might want to hear about), check out the online “Perth Herald Tribune.” An overview of the site reveals that the
small monthly subscription fee might be well worth it — and the Mission
Statement is derived in part from CESJ’s Core Values!
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| Jack Stack |
• Great Game of Business.
CESJ’s Director of Communications will be attending a “Great Game of
Business” conference in June. Of
particular interest to the Just Third Way is the focus on “Open Book Management,”
based on the unique idea that if people in an organization know what is going
on, they will be more likely to do the right thing. Secrecy may be good or necessary in some
situations, but if you want people to do the right thing, it’s probably a good
idea to one, let them know what the right thing is, and, two, tell them if
they’re doing something wrong. One
surprising thing about the Open Book Management approach for any organization
is that once in a while “higher ups” find out that they were doing
something wrong! Jack Stack, the
inventor of the Great Game of Business approach was motivated in part when he
discovered that a company policy intended to get people working together was
actually forcing them into conflict — a fistfight between managers alerted
Stack to the situation.
• Justice University. Plans are afoot to create a ten-session
series of classes to teach the basics of the Just Third Way. As currently envisioned, the course will
consist of nine classes of material, and the tenth will be an online test. Sessions will be recorded, with the idea
being students can go back as often as necessary for review, the goal being for
everyone to get 100% on the test, which can be taken as many times as
necessary. (There are ways to alter the
test every time a student takes it to avoid someone memorizing the correct answers
instead of learning the material!)
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| Jean-Baptiste Say |
• Congress Considers Retirement
Reform . . . Sort Of. Congress
appears to be getting ready to fiddle with retirement law for the first time
since 2006. While there are a number
of interesting features in the proposals, legislators are still avoiding the
elephant in the icebox: everything is still focused on (obsessed with,
actually), how to cut consumption and save more effectively. Frankly, consistent with Say’s Law of
Markets, the more people cut consumption to save, the less likely they are to
have anything to save! Given that
production equals income only if the production is consumed, if consumption
falls, production falls, and income falls, making it impossible to save! For example, if everyone in an economy cuts
consumption by 10%, income falls across the board by 10%, completely nullifying
the attempt to save. If, however, people
switch to future savings (buying income-generating capital on credit and paying
for it out of the income, then spending the income), the saving process does
not reduce consumption, but increases production, which increases income. It’s at least something to think about.
• Smith’s Travels. The educational and philanthropic worlds are
agog over the munificence (if not magnificence) of Robert F. Smith’s gift to
his fellow graduates: picking up the tab for approximately $40 million in
student debt. It is an astonishing act
of charity, and Smith is deservedly praised for it . . . but there is something
of a fly in the ointment. Backstory: in
the Preston Sturges film Sullivan’s Travels (1941), a film director
playing at poverty to get color for his next film cadges a free meal from
the owner of a diner, and then gives the
owner $100 (or some astonishing amount of money for a two-bit meal). As the film director and his friends are
walking out of the diner, one of them remarks that there’s one diner operator
who will now go broke handing out free meals in the hope of getting another
hundred dollars. The C-note didn’t fix
the underlying problem (people who couldn’t afford a meal), it just made it
easier for some to get free meals.
Similarly, Smith’s outstanding generosity didn’t fix the underlying
problem — the high cost of education — it only made it easier for a limited
number of his fellow students to get along within an increasingly unjust
system. A real solution would fix three
things: 1) make it possible for teachers to teach without having to worry about
money, 2) allow students to learn without having to worry about money, and 3)
shift Academia from training for jobs that don’t exist to actual education. This could be done with a Capital Homesteading
program — which is what Smith might want to consider
to make justice fulfill his charity.
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| Japan's economy is under attack from internal weaknesses |
• Japan’s Phony Growth. Reports coming out of Japan are that the
country exceeded growth projections for the first quarter of 2019 (The Wall
Street Journal, 05/20/19, A-9). At
the same time, however, capital expenditures continued to decline. This suggests that the “growth” Japan is
experiencing consists of spending accumulated savings, the result of past
economic growth that was saved instead of consumed. If that is, in fact, the case then the growth
is not true growth, but a timing difference that consists of recording past
growth in the present period. Another
possibility is that consumption is being financed by increased debt instead of
depleting past savings. This is worse
than simply playing games with recordkeeping, for an increase in consumption or
government debt creates a claim on future production without at the same time
creating the means to retire the claim, i.e., increase future
production. Only debt used to finance
new capital formation creates its own repayment, and only by financing in ways
that creates new owners of the new capital generates the consumption power to
make the investment feasible.
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| Scott Morrison |
• Australia’s Prime Minister
Re-elected. In a move that surprised everyone,
Australia’s “conservative” Prime Minister, Scott Morrison, was re-elected due
to widespread fears that it would mean a slowdown or even recession if he were
not retained in office. What this means
specifically is uncertain, although it is being taken as a sign of growing
“Trump-ish Populism.” The simple fact,
however, remains that fewer and fewer people are benefiting from economic
growth except as wage workers in jobs that disappear as soon as the growth spurt
is over or wages rise high enough to justify replacing workers with new
technology or shipping the jobs outside the country.
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| Ukraine doesn't need Chinese financing. |
• China Financially Invades
Ukraine. Duplicating the tactic that
has worked so well in Africa and other places, the Chinese have begun investing
in Ukraine, which by conventional Keynesian standards is starved for capital
financing. This gives China a secure
foothold in the country, already plagued with a war to repel the Russian
invasion. It is a classic case of what
Henry C. Adams (1851-1921) pointed out over a century ago as one of the most
serious dangers to national sovereignty: foreign indebtedness. The irony, of course, is that Ukraine has the
financial and industrial infrastructure in place right now to make foreign
investment completely unnecessary. By
financing capital investment by opening the discount window of the central bank
to asset-backed agricultural, commercial, and industrial paper accepted by
commercial banks (bills of exchange), Ukraine can self-finance all capital
investment. By having a program of
expanded capital ownership to make every child, woman, and man in Ukraine a direct
owner of the new capital, it can also generate the essential consumer demand,
and all without an infusion of foreign investment or expansion of government
debt. President Zalensky should be
giving this serious consideration.
Ukraine’s current low-wage and low-price economy can give it tremendous
leverage in the global market, but only if they implement sound monetary, tax,
and ownership reforms.
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| Medieval bankers had a better understanding of money. |
• Negative Interest Rate
Fiasco. Europe and Japan seem to
have gotten themselves into a mess over the use of “negative interest
rates.” To explain, allegedly to
encourage commercial banks to lend their reserves instead of depositing the
cash with the central bank, the central bank charges a fee to the depositor
instead of paying interest. All this
does, however, is encourage hoarding by conservative financial institutions,
and risky lending by less conservative institutions. The practice is rooted in the Keynesian dogma
that commercial banks lend out of reserves, which is not usually the case. Instead, commercial banks create the money
they lend by accepting bills of exchange and mortgage securities, and issuing
promissory notes to pay for them, the promissory notes being used to back new
demand deposits. If central banks (or
the governments that control them) want to encourage lending, they need to call
a halt to the practice of backing the money supply with government debt and
creating money for consumption and speculation.
Creating money by lending instead of to lend would ensure a sound method
of finance, while financing growth in ways that creates more owners of the new
capital being formed would ensure that the consumer demand essential to make
the new capital feasible and sustainable would be in place.
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| "I WANT SMILE NOW!" |
• 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 https://smile.amazon.com/. 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 35 different
countries and 46 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, Brazil, and India. The
most popular postings this past week in descending order were “Chesterton
and Shaw: How to Argue With a Socialist,” “Austrians
and Distributists,” “Chesterton
and Shaw: the Lost Debate,” “Chesterton
and Shaw: ‘A Reply to Mr. Mallock’,” and “News
from the Network: Vol. 12, No. 20.”
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.
#30#
