Friday, December 27, 2019

News from the Network, Vol. 12, No. 52

It’s time again for our annual news roundup, the first part of which we posted last week, and the second part today.  Again, there is such a volume of material that for once we decided to forgo illustrations:

• (July) Gene Gordon.  Gene Gordon, a CESJ member and founder of Descendants of American Slaves for Economic and Social Justice (DAS/ESJ) based in North St. Louis, Missouri, reports that he is making headway reaching out to millennial leaders in his community. On Saturday, June 29, 2019, Gene organized and manned an informational booth at the Black Wall Street Festival hosted by Young Voices With Action.  Working with CESJ, Gene developed a banner, posters and handouts that he used to present the ideas of the Citizens Land Development Cooperative (CLDC) and the Capital Homestead Account.  His booth drew in many different people, including community and youth leaders. Braving high humidity and blazing sunshine for nearly seven hours, Gene answered a lot of questions by the almost constant stream of people visiting his booth. He especially stressed the need to go beyond “programs” to deal with consequences of poverty, and to “repair the system” in order to empower every person with capital ownership.  Many people commented that they had never heard about CESJ’s ideas of the Just Third Way and Capital Homesteading for every citizen. Gene plans to follow-up with some of the people who showed strong interest, and organize to build community councils with citizen representatives of all ages. DAS/ESJ’s objective will be to build a base of people power to demand an expanded capital ownership redevelopment strategy and model CLDC. He also plans to set up his DAS/ESJ booth at other community gatherings – except this time he’s going to bring a tent.  Those interested in helping Gene Gordon with his project in St. Louis can contact him at
• (July) German Outreach.  CESJ Australasia has shared information about economic personalism with a representative of the SPD, Sozialdemokratische Partei Deutschlands, the German Green Party.  Two members of the Party are planning an informational meeting and discussion for party youth groups.  A member of the European Parliament from the SPD has become a supporter of the Just Third Way.  This is significant, because the SPD has made tremendous gains in the last couple of years, becoming the single most powerful party in Germany, largely in reaction against Angela Merkel’s Christlich Demokratische Union Deutschlands (CDU), the interfaith successor of the old Catholic Center Party (Deutsche Zentrumspartei), which destroyed itself by joining the coalition granting emergency dictatorial powers to Hitler following the Reichstag fire.  (Hitler used his power to make the Nazi Party the only legal one in Germany.)
• (July) Gold Standard Push.  Just Third Way proponents are, arguably, among the strongest advocates for a stable reserve currency by means of which all economic values in an economy can be measured.  This could even be on a global scale, simply by pegging every country’s national currency to a single global reserve currency, and having all contracts specify that consideration is measured in terms of the global reserve currency instead of, or as well as, the relevant national currency.  This is all the easier because in a broad sense, “money” is a means of measuring what goes on in a transaction, as Louis Kelso noted in Two-Factor Theory (1967).  That is why we have antonymous feelings about the current push for a return to “the gold standard.”  Yes, measuring all values in terms of gold would give a stable measure to a reserve currency.  Keep in mind, however, that what is being measured is value . . . and the value of gold can change relative to everything else.  It’s not like an inch or an ounce, which once having been set stays the same forever.  Yes, an ounce of gold is always an ounce of gold, but an ounce of gold doesn’t always translate into the same value of fourteen or fifteen ounces of silver (a burning question when an economy is on a bimetallic standard).  There is also the problem in that some of the people tossing around the term “gold standard” aren’t precisely clear on what they mean by it.  1) Do they mean that gold is the only “real money” and that nothing is or could ever be money?  2) Do they mean that gold is the only reserve currency, and that all other forms of money must be convertible into gold on demand?  3) Or do they simply mean that all money is valued in terms of gold?  Historically, #1 has never been the case, either for gold or any other standard.  Usually what has been meant by “gold standard” is a combination of #2 and #3, with all (other) values expressed in terms of gold, with occasional convertibility.  Thus, in order to discuss a stable currency intelligently, whether the standard is gold, silver, or anything else, two questions must be answered, neither one of which is being addressed by either side in the debate: 1) What do you mean by “money”? and 2) What do you mean by “standard”?  First answer those questions, then and only then will it be possible to decide on what standard to use . . . and the best one may not be gold.
• (July) Reparations.  In a Wall Street Journal piece, there is a commentary comparing the latest demand for reparations for slavery with Edmund Burke’s reflections on the French Revolution, the two-hundred and thirtieth anniversary of which is coming up this weekend.  In “Reparations and the Spirit of 1789” (07/12/19, A-15), Liam Warner of the Wall Street Journal quotes Burke: “To take the fiction of ancestry in a corporate succession, as a ground for punishing men who have no relation to guilty acts, except in names and general descriptions, is a sort of refinement in injustice belonging to the philosophy of this enlightened age.”  Interestingly, Burke put his finger on the problem that still plagues us today, and not merely in the demand for reparations.  That is the essential philosophy of two kinds of liberalism imposed over a third.  European/French liberalism that assumes the sovereignty only of the collective and was the philosophy of the French Revolution, has combined with English liberalism that assumes the sovereignty of an élite, to displace American liberalism that assumes the sovereignty of the individual human person.  All three are “liberalism,” but the first two simply assume that ordinary people don’t count; that their rights may be overridden at will or that they never existed in the first place.  Burke was clearly of the American variety of liberal, but he was locking horns not only with the French type liberals across the Channel, but the English type liberals in his own country, and whose activities would lead to the development and spread of socialism, modernism, and New Age thought.
• (July) Reparations, Part II. One possibility that no one seems to be considering as an acceptable form of reparations for currently unjust social structures that affect everyone adversely, is removing barriers that prevent full access to the common good by everyone.  This, as thoughtful people throughout the ages have noted, requires capital ownership.  That being the case, it makes sense that the best and most effective form of reparations for current injustice is to figure out a way to make everyone a capital owner — without taking anything away from existing owners except a monopoly over future ownership opportunities.  This can be done with a Capital Homesteading program.
• (July) Retirement Strategy.  There has been a flurry of news articles in financial sections and websites about how Americans are not saving enough out of their paychecks to finance retirement.  While these articles are no doubt well-intentioned, they are approaching the problem from the wrong angle.  The real problem is not that Americans are not saving enough for retirement, but that they are not investing enough for retirement.  True, that is rather hard to do when personal debt is at an all-time high, but the right investment strategy — as opposed to saving strategy — can take care of that.  Shifting from the savings to the investment mentality means going from asking yourself, “How much money do I need to set aside now to have enough after I can no longer earn?”, to “How much do I need to invest now to generate a living income when I can no longer earn?”  Yes, “savings = investment,” but it has to be your investment and savings, not your savings and someone else’s investment, and that means shifting from past savings to future savings to finance investment, as outlined in CESJ’s Capital Homesteading proposal.
• (August) Hudson Institute Event.  Yesterday, the Hudson Institute hosted an event, “Countering Emerging Economic Threats.”  The speaker, Anthony Vinci, an adjunct senior fellow at the Center for a New American Security, talked about the dangers represented by China, and proposed the formation of a new government agency, the National Economic Defense Center.  While interesting, the presentation was clearly an example of the thinking that comes out of the existing economic paradigm.  An increasing role for the State, money manipulation, reliance on past savings, and so on — the Just Third Way has a better answer, and a more effective one in Capital Homesteading.
• (August) Brazilian Pension Deal.  In a rather surprise move, Brazil is trying to solve some of its fiscal problems by reducing public pensions.  (“Big Pension Deal Signals Power Shift in Brazil,” Wall Street Journal, 08/02/19, A-16)  This is a step in the right direction, but only a step.  To solve the immediate problem, it is not simply enough to cut costs.  There must be a program to replace the lost income — and something along the lines of a Capital Homestead Act would supplement or replace the income from a pension, and at the same time encourage people to be productive in a way that also builds consumption power.  Both widespread productive power and widespread consumption power are essential for a sound economy.
• (August) The Increase of Debt Slavery.  Although the burden of consumer debt is nothing new, the bill is starting to come due at a time when wage income levels are remaining static or actually falling in real terms.  (“Record Debt Swamps Middle-Class Families,” Wall Street Journal, 08/02/19, A-1, A-9.)  The idea that static or declining wage income can be supplemented or replaced by ownership income simply doesn’t seem to occur to the powers-that-be, despite the fact that Louis Kelso and Mortimer Adler published their two books outlining an alternative more than half a century ago, The Capitalist Manifesto (1958) and The New Capitalists (1961).
• (August) More on the Debt Crisis.  In ancient Rome, it was illegal to sell yourself into slavery for debt or to be sold to satisfy a debt.  That was all well and good, but it didn’t address the underlying problem of inadequate income.  That is why the move to restrict consumers’ ability to tap into their home equity for cash is another move in the right direction, but it does nothing to solve the problem of inadequate income.  (“Tapping Homes for Cash Gets New FHA Limitations,” Wall Street Journal, 08/02/19, A-9.)  Not to keep playing the same tune, but a Capital Homestead Act would help . . . as would something along the lines of a Homeowners Equity Corporation, one of the features of which would allow shareholders/homeowners to cash out some of their shares without risking losing their homes.
• (August) Understanding of Private Property. Although we’ve known for some time that many people have an inadequate understanding of property, it was made especially evident this past week when we ran Mr. Geoff Gneuhs’s rebuttal of an article that appeared in America magazine, a Jesuit publication.  Geoff, a founding member of CESJ, was Chaplain to Dorothy Day and the New York Catholic Worker, and gave the homily at Dorothy Day’s funeral.  Geoff’s letter startled many people who assumed that Dorothy Day was against private property and in favor of massive government welfare often erroneously referred to as “social justice.”  She was also opposed to the wage system, minimum wage legislation, and many of the things so many people today take for granted as integral to Catholic social teaching.  She actually sometimes seemed to go too far in the opposite direction, taking positions that some think are libertarian, emphasizing the role of individual virtue and — like many people with an intense focus on their particular mission in life — seeming to relegate institutions, essential tools to help people realize their political nature, to a secondary or non-essential role.  That, however, takes nothing away from Dorothy Day’s tremendous work in awakening people’s individual (as opposed to social) conscience.  Geoff’s letter made it evident that the Catholic Worker movement and the Just Third Way are not opposed, but are complementary, one individual, one social.  To do as some do and claim that they are in conflict is to misunderstand both Dorothy Day and CESJ.
• (August) • The Good of International Trade.  On Thursday, the day after the latest stock market plunge, Alan Blinder in the Wall Street Journal (“Three Political Truths the Democrats Can’t Handle,” 08/15/19, A-15) declared that the Democrats (and Republicans) don’t see that international trade is a good thing.  Blinder is half right.  International trade is a good thing . . . as long as it is actual trade, viz. production for production, not U.S. cash backed by government debt (which you would call counterfeit if it wasn’t the government issuing it), for production.  It’s only a trade if both parties actually trade something, not if one of them just promises something it may or may not be able to deliver.  That’s what government debt is, after all, a promise the government makes that it hopes somebody else down the road will be able to make good on.
• (August) Anti-Collectivism is Anti-Socialism?  Evidently, according to the English writer G.K. Chesterton, who expressed his distaste for socialism once or twice, and made a declaration published in the Bismarck Tribune of August 3, 1921 (page four).  Although the push to equate having a social conscience with being a socialist is still in full force, it is evident from the evidence that at least two icons of the “Well-There-Is-Good-Socialism-And-There-Is-Bad-Socialism-And-Good-Socialism-Is-Good-Socialism-And-Bad-Socialism-Is-Bad-Socialism” school of thought — Dorothy Day and G.K. Chesterton — turn out not to support any kind of socialism, and are definitely against the intrusion of the State into people’s lives more than is absolutely necessary.  Hopefully, this will cause some rethinking of positions and reevaluations of some rather equivocal modern idols, such as R.H. Tawney (England’s greatest modern socialist, according to his biographers, and a leader of the Fabian Society from 1920 to 1933), and Tawney’s Fellow Fabian, E.F. Schumacher, whose “New Age Guide to Economics,” Small Is Beautiful (1973) has supplanted the Bible for some people.
• (August) Century Treasury Bonds.  Evidently under the impression that government debt is an investment, today’s Wall Street Journal opined that 100-year Treasuries might be a good idea.  There are so many problems with the idea that it is hard to know where to begin.  The idea is just a twist on the idea of “consols,” short for “consolidated annuities,” which are perpetual debt instruments redeemable only at the option of the government that issued them.  Both the British government and the United States government have issued consols, and they have never been a good idea, as they aggravate the all-too-common belief that “money” is a non-redeemable debt the nation owes itself, and it is somehow acceptable to back currency with government debt that has nothing but the government’s power to tax other people’s wealth behind it.
• (August) Democratic Wealth Taxes.  A number of the Democratic contenders for the U.S. presidency have suggested several forms of a wealth tax intended to confiscate some of the trillions of dollars held by the rich for the benefit of the non-rich . . . or, at least, that is the theory.  These range from taxing unrealized gains on assets of all kinds to taxing the wealth itself over a certain amount.  At the heart of the proposals is the fixed belief that the rich have the stuff in sackfulls just lying around.  People forget that most of the wealth owned by the wealthy is in the form of productive assets.  In order to pay a wealth tax, it usually involves liquidating (“selling”) all or a portion of the wealth to have enough cash to do so.  Forced sales of that sort tend to drive down the values of assets, and almost never generate the anticipated revenue.  Plus, liquidating capital assets means finding a buyer, and today that usually means (you guessed it) China, which is buying up foreign capital by overleveraging debt instead of increasing domestic capacity.  A wealth tax would not generate enough revenue to justify it in the first place, and would lead to further shifts of capital ownership overseas, with probable job loss as the Chinese begin cutting costs to make the new capital recoup its purchase price.  It would be a much better idea to stop using the tax system for anything except raising revenue, and turn from trying to get more taxes out of fewer people, to getting fewer taxes out of more people, as proposed in CESJ’s Capital Homesteading reforms.
• (September) Puerto Rico Recovery Financing.  Illustrating the problems associated with using outdated assumptions about money and development to guide thinking, Puerto Rico’s recovery is being put on a back burner due to funds being diverted to the wall to keep out illegal immigrants.  This is a triple tragedy, because, one, Puerto Rico occupies a position that gives it ready access to North, Central, and South America, and it could easily become a financial and economic hub of two continents.  Two, development and recovery can be financed with the expansion of bank credit in ways that creates new owners instead of being a cash drain on existing money.  Three, by showing how to revive an economy in a way that benefits everyone, Puerto Rico could lead the way and make staying in your own country far more attractive than making a dangerous trip to the United States.
• (September) Concentrating Ownership Further.  Companies like Disney, Apple, and Deere and Co. are financing expansion with cheap capital credit.  This, of course, ensures that ownership of these and other companies using the same financing technique will become even more concentrated than before.  Of course, if they wanted to make certain they had a customer base in the future to purchase their products, they would finance by issuing new shares, and pay out all earnings as dividends.  New shareholders could then have shares that paid for themselves with future dividends and thereafter yield consumption income.
• (September) U.S. Bishops Statement on Ownership.  In commemoration of the 1919 U.S. Bishops program for social reconstruction, the United States Conference of Catholic Bishops issued a statement on Labor Day that mentioned ownership in a positive manner, notably ESOPs.  While this is a nod in the right direction, neglected was any mention of the qualifications and cautious nature of the rather mild endorsement in the 1919 program as well as the 1986 Pastoral Letter on the Economy, Economic Justice for All.  Of the 1919 program, Dr. Franz Mueller, a student of Fr. Heinrich Pesch, S.J., had this to say: “It is hard to understand why neither [Monsignor John A.] Ryan nor the Catholic War Council realized, or so it seems, the ‘corporatist’ [i.e., Fascist] implications of this statement.” (Franz H. Mueller, The Church and the Social Question. Washington, DC: American Enterprise Institute for Policy Research, 1984, 107.)  Expanded ownership is all very well, and a desirable goal, but not if ownership is redefined in such a way as to turn it into de facto socialism.  As Mueller noted, Ryan trivialized concerns about his program that the bishops adopted by sneering that anyone who questioned him was not worthy even to be spoken to. (Ibid., 106.).
• (September) Warren’s Social Security Solution.  Elizabeth Warren wants to raise the Social Security tax and increase the wage income subject to the tax.  This, she believes, will make the program solvent for a few decades and permit an increase of $200 per month in benefits.  A few problems, however.  It would be better to merge the separate Social Security tax into the general tax rate, thereby exempting the very poor and automatically taxing the rich at a higher rate. As it is, the poor pay Social Security tax from the first dollar they earn with no exemption and only on wage income. The income of most wealthy people is not in the form of wages anyway, which exempts them from Social Security tax regardless how high the rate is. It's a stupid system and badly needs reform in the form of Capital Homesteading.
• (September) Backwards Money Problems.  Lack of understanding about money can result in some very odd conclusions, such as the idea that “money” should have a cancellation date, as described in this article.  Anyone who understands money will instantly respond, “What?  Money DOES have a cancellation date: the date the obligation backing the money matures and must be redeemed!”  All money has this feature whether the money is backed by government debt (not a good thing) or private sector assets (preferred in a rational system).  The problem is that many people confuse money and currency, and don’t realize that currency is fungible, that is, one unit is legally the same as all other units of the same currency.  A debt may be cancelled, but the currency used to cancel the debt is not.  It keeps getting reused so that new currency doesn’t have to be issued for each transaction.  That can be done, of course.  Before the invention of currency, every single transaction was designed to create money when initiated and cancel money when completed.  Once in a while the money created would be “negotiable,” that is, used in other transactions, but by and large, most transactions before the invention of currency and even today use “one-use money” that does not involve currency, but are measured in terms of the monetary unit.  Money with a cancellation date would only hurt people whose wealth was held in the form of cash, which most rich people don’t do: cash doesn’t make money, while cash used to purchase capital assets makes lots of money.  The little saver would work all his life to save a tiny bit of money, only to have all his savings wiped out by cancellation, while the rich man sits in his mansion with his stocks and bonds making more money for him every day that he doesn’t save, but spends or reinvests in more capital.  The problem is that people who talk about money that gets cancelled get everything backwards: production of marketable goods and services does not come from money.  Money comes from producing marketable goods and services.
• (September) Misunderstanding Social Justice. Some years ago CESJ was referred to the late Father Gerry Creedon as the individual with whom CESJ should be in touch on matters of Catholic social teaching.  After making some follow-up efforts, the attempt was dropped as Fr. Creedon expressed no interest in CESJ’s work.  Recently, friends and follows of Fr. Creedon established the “Gospel Advocacy and Leadership Foundation” (GALF) to continue his work, which they characterize as “social justice.” While the work the foundation is doing is good and necessary, however, it is not social justice as defined by Pope Pius XI and analyzed by CESJ co-founder.  Fr. Creedon’s concept of social justice was to meet individuals wants and needs directly, while Pius XI’s concept of social justice as a particular virtue (based on Father Aloysius Taparelli’s principle of social justice) is to direct organized efforts to the institutions of the common good to restore the functioning of individual justice and charity.  This is the understanding of social justice found in CESJ co-founder Father William J. Ferree’s doctoral thesis, The Act of Social Justice (1942, © 1943), and pamphlet, Introduction to Social Justice (1948).  Assuming that social justice pertains to the individual order is to turn Catholic social teaching into a rather vapid and flabby variety of Fabian socialism.
• (September) Questions on Credit.  Many people today are still confused about the different kinds of credit.  Capital credit and consumer credit are two very different things. Capital credit is credit used to purchase productive assets that pay for themselves out of their own future earnings and then yield income for consumption. Consumer credit (credit cards) is credit used to purchase goods that are consumed, and that do not pay for themselves. Consumer credit must be paid for out of other income, not income generated by what was purchased.
• (October) Article Newman.  Dr. Robert A. Gervasi, President of Ohio Dominican University in Columbus, Ohio, has published an article on the upcoming canonization of John Henry Cardinal Newman.  The article, “The Idea of a University,” appeared in the September 8, 2019 issue of The Catholic Times, “The Diocese of Columbus’ News Source.”  In addition to explaining a little about Newman’s importance (necessarily very little, as conveying the true import of Newman and his career is virtually impossible in a one-page article, even one with small print), the article points out a small problem in Catholic Academia, that also seems to afflict other Catholic institutions including parishes and social clubs (and which we suspect other denominations and organizations deal with as well): the belief that anyone who deviates from a particular party line, or even fails to express sufficient enthusiasm for the party line, is not a Real Catholic™.  Self-appointed inquisitors on both sides of the socio-political aisle somewhat misleading labeled “liberal” and “conservative” are fond of making lists or declarations that, e.g., “90% — or even 99.9999999999999% — of ‘Catholic’ (‘people’ who ‘disagree’ with ‘you’ are ‘always’ put in ‘quotes’) Colleges and Universities Are No Longer Catholic, and What’s More Never Were.”  Somewhere along the way the question of whether or not something is true got misplaced.
• (October) “Cancel Billionaires”?  The Atlantic recently ran an article in which the author, Annie Lowrey” (a Staff Writer), bemoaned the fact that a miniscule number of people own vast wealth, while others subsist on a pittance or not at all.  As Lowrey argued in “Cancel Billionaires: Wealth Inequality Hurts Society,” great disparities in wealth and income are bad for society, therefore wealth should be taken from the wealthy and redistributed to the poor.  She does not claim that people like Jeff Bezos or Bill Gates, both of whom are “worth” (in dollar terms, not human) in excess of $100 billion, got their wealth illegally or immorally.  Rather, that being wealthy is in and of itself wrong, and they must be punished (although she carefully refrains from using that or similar terms) by having their wealth confiscated for the greater good; “[I]t is expedient for us, that one man should die for the people, and that the whole nation perish not.” (John 11:50.)  The problem, of course, is that simply confiscating every cent of Bezos’s and Gates’s wealth and redistributing it would only make the situation worse.  It also sounds a bit like a Mafia Don suggesting to his minions that a rival be “cancelled.”  Redistributing Bezos’s and Gates’s wealth would give each person in the world around $25, which is hardly the solution to anything other than how to pay for tonight’s dinner.  The problem is not that Bezos and Gates are wealthy, but that other people are not productive.  The only real solution to poverty and disparities in wealth is not redistribution, but to make non-productive people productive, and that can be done by helping them become owners of the capital that displaced their labor and made people like Bezos and Gates wealthy.  One possibility is Capital Homesteading.
• (October) Federal Reserve Changes to Crystal Balls.  Shifting from Tarot Card readings to a crystal ball, the Federal Reserve announced it will be relying less on confusing existing data and trying to force results via other means, such as risk assessment . . . based on confusing existing data. . . .  In other words, instead of trying to interpret data, the Federal Reserve is shifting to risk management . . . which relies on interpreting data. . . .  Of course, all this would be moot if money creation were carried out only in response to feasible projects being monetized, and the whole Keynesian money manipulation strategy abandoned, but that would require governments to give up control of the money supply, which might mean prying it out of their cold, dead hands, as the saying goes.  Or, there could be a program of expanded capital ownership that takes power out of the hands of the politicians and puts it in the hands of the rest of us, letting the currently wealthy retain their current wealth, and politicians can start doing their jobs instead of ending up swinging from lamp posts.
• (October) Negative Interest Rate Frenzy.  Greece has become the latest country to fall for the illusion that “negative interest rates” will force commercial banks to start lending to businesses and stimulate economic growth.  The idea is that charging a fee to commercial banks for reserves will make loans to businesses more attractive.  Unfortunately, it doesn’t work that way.  First, of course, loans aren’t made out of reserves.  That cash is called “reserves” because it is, well, “reserved,” i.e., set aside to meet outstanding obligations of the bank that are presented for payment.  Commercial banks don’t lend existing money, they create new money by accepting bills and notes for businesses purposes.  When a bank has “excess reserves,” it used to be restricted to making more, less secure loans.  These days, with the repeal of legislation prohibiting commercial banks from owning any securities other than government bonds and their own stock (and that only in treasury), commercial banks will invest their “excess reserves” in speculative securities, driving up the price of shares on the secondary market, and still leaving business starving for credit.  It’s not merely a bad strategy to charge negative interest rates, it’s actually destructive of economic growth.
• (October) Saving Social Security.  Yet another proposal has been put forth to “save” the Social Security system, again without considering the underlying flaws in the system itself.  In “How to Save Social Security?  Some Candidates are Looking at Your Capital Gains,” Yahoo Finance takes a look at attempts to bolster Social Security revenue by broadening the base of people paying in and the types of income subject to the tax.  The problem is that if the number of people paying in is increased, then the number of people eligible for benefits also increases, and the same problem remains: how to meet increasing demands on the system?  We, of course, advocate returning the Social Security system to its original purpose: a pay-as-you-go safety net, not a retirement savings plan (which it legally is not; no one owns what is in his or her account; what is paid in is a tax, not a contribution).  We advocate merging the Social Security tax into the general tax rate (thereby automatically broadening the tax base), keeping current promises, but making future qualification for benefits need-based, and instituting an intensive program of widespread capital ownership, such as Capital Homesteading.
• (October) A Nod in the Right Direction.  Bernie Sanders has announced a proposal to broaden the base of worker ownership in the United States.  As reported on the NCEO blog and in the mid-monthly bulletin of the National Center for Employee Ownership, Sanders wants workers to have up to 20% ownership of the companies that employ them.  When we first heard of this, there was no mention of paying for the shares, just a distribution to some kind of trust of newly issued shares that would grant beneficial (not direct) ownership.  As fleshed out in the NCEO blog, there is mention of a fund to assist workers in purchasing shares, so we are not talking direct redistribution, just veiled redistribution through the tax system.  Sanders gets points for supporting worker ownership and not forcing direct redistribution.  That being said, here in no particular order are the major problems with his proposal from the Just Third Way perspective: 1) It is still “past savings based.”  That is, the proposal covers only existing wealth, not future wealth. 2) Only workers are affected.  What about people who don’t work for private sector companies, can’t work, or don’t work?  Don’t they also have the right to own capital?  3)  Why only 20%  Why not 100%?  4) Why not direct ownership with the full rights of control and enjoyment of the fruits, i.e., full dividend payout, voting of shares, and right of free sale?  There are doubtless more, but we think that is enough to suggest to Sanders that he might want to modify his proposal to be more just and democratic.
• (November) Have Ye Seen the Great White?  Much to our surprise, the posting we put up this past Wednesday to mark the 3,000th blog posting was one of the more commented on, liked, and shared for quite some time.  This is surprising, for it was presented as a way of tying in the development of the idea of social justice with what was happening in the early nineteenth century in the United States and its portrayal in semi-fictional form in one of the contenders for the Great American Novel, Herman Melville’s Moby Dick, or, The Whale (1851).  It turns out that, considered as a satiric social commentary, Moby Dick just might give a better “feel” for the period than more modern and popular treatments.  It is at least something to think about.
• (November) CESJ International Fellows.  As a result of attending an event for Hubert Humphrey Fellows at American University a short time ago, CESJ has been talking to a number of individuals interested in becoming Fellows at CESJ.  In particular, three people from Morocco, Afghanistan, and Pakistan who expressed interest in Just Third Way monetary and financial reform along the lines recommended in CESJ’s Capital Homesteading proposal are currently exploring the possibility of doing “distance Fellowships” (i.e., over the internet), thereby carrying out a project as a team without having to be physically in the same location.
• (November) Fight for $15.  Although they are working very hard to muffle the downside, the New York Times has come very close to admitting that the push to raise the minimum wage to $15.00 nationwide might not be such a good thing.  While in the short term border businesses in New York state, especially the Pennsylvania border area, are not seeing too much of a downturn in restaurants and other businesses in the service industry (and some claim business is booming), those engaged in production are reporting decreased profits and loss of business in response to the higher cost of doing business, and business owners overall are certain that in the mid- to long-term they will see a flight of businesses and jobs to places like Pennsylvania and North Carolina.  What the whole movement to increase the minimum wage to increase real income does not take into account is that the people most hurt by rising costs of wages are the people it is intended to help.  No one appears to appreciate what the labor statesman Walter Reuther stated in his testimony before Congress, that raising fixed costs like wages hurts everyone, but that taking increases out of profits as owners increases real income without increasing costs.
• (November) Social Security COLA. While the usual rhetoric about Social Security almost always includes the mantra, “It’s my money, I paid it in,” the fact is that in 1960 in Fleming v. Nestor the Supreme Court of the United States upheld the original Social Security Act of 1935 as passed by Congress that gives Congress the right to adjust benefits at any time.  The Supreme Court specifically ruled that participants in the Social Security system do not, repeat, do not have ownership of what is credited to their accounts.  If you look closely, you will also notice that the money you pay into the system is a tax and not a “contribution.”  You do not continue to own the taxes you pay to government.  You do own any contributions you pay into a qualified retirement plan.  The reason for bringing this up is that many people are becoming upset that Congress might not increase Social Security benefits to adjust for the rising cost of living, the now-expected “Cost Of Living Adjustment” or COLA, and they are irate.  It’s “their money,” they argue, and Congress is a thief for withholding it . . . forgetting that in many cases most people receive more out of Social Security than they paid in.  The only real solution, of course, is to return Social Security to its original purpose of a social safety net — after keeping all current promises — but make the proposed Capital Homestead Act the core around which to build individual savings and investment, not only for retirement, but for everyday consumption income.
• (November) EWTN Interview. CESJ’s Director of Research has been invited to appear on EWTN Live with Father Mitch Pacwa, S.J., to talk about his book, Ten Battles Every Catholic Should Know (2018).  The next day a segment of EWTN’s Bookmark with host Doug Keck will be taped.  EWTN — “Eternal Word Television Network” — is international in scope, and reaches 70 million households in the United States.  It is the largest religious media network in the world, and it claims to reach 250 million people in almost 150 countries.  The show — which is, of course, filmed live — is scheduled for January 8, 2020.
• (November) Noriko Arai on a New Learning.  After seeing a short segment featuring Dr. Noriko Arai on Direct Talk (a show on NHK World, the Japanese public television channel), we did an internet search and found this “Ted Talk” by her presenting her findings from her “Todai Robot” and her concerns about current education.  In most countries today (although she was focusing primarily on Japan), students memorize vast amounts of data — which any computer can do better, e.g., “Watson” on the “Jeopardy Challenge” — but often fail to understand meaning, that is, they do not really comprehend what they “learn” in any meaningful sense.  Applying Dr. Arai’s findings to the difficulties experienced with getting people to accept the Just Third Way of Economic Personalism, we can suddenly understand why, when they are presented with (for example) the principles of binary economics as explained by Louis Kelso and Mortimer Adler, or the laws and characteristics of social justice as explained by Pope Pius XI and CESJ co-founder Father William Ferree, people either look blank, run away, or attack.  Confronted with something that is outside of their store of accumulated “knowledge” of the way things are that they have memorized, they do not have the intellectual tools they need to comprehend anything outside their current frame of reference.  It is not enough to demand that they tell us what is wrong with what we are saying.  “What’s wrong” as far as they are concerned is that the Just Third Way is simply incomprehensible to them and they necessarily react as they do to any other threat, triggering the “fight or flight” mechanism.  What needs to change — and change soon, as Dr. Arai noted — is how young people (and anyone else) are educated.  Without a Justice University to teach fundamental principles of reason and understanding from the earliest years, beginning with parents teaching their infants, the world is heading toward an intellectual Armageddon, not to exaggerate.
• (December) Rand Paul on Student Loans. Rand Paul has come out with a proposal that people be allowed to pay off their student loans by taking money out of retirement savings without incurring the usual penalty for premature distributions.  This makes a little bit of sense in one way, for it hardly pays anyone to be saving on one hand while he or she has unpaid debts bearing interest that keep getting larger and larger — and that can’t ordinarily be discharged in a bankruptcy.  Since retirement savings are also ordinarily exempt in bankruptcies, it (sort of) makes sense to get rid of one obligation that is only going to get bigger and bigger with a more or less offsetting asset.  The problem is that as long as saving and investing for retirement is based on past savings and reducing current consumption income, it is slanted heavily in favor of early savers, whose tax-free earnings on the investments are reinvested.  Example: given a 10% average ROI on mutual funds in an IRA, and a $5,000 annual contribution, take twin brothers, one of which goes to work right after high school and the other goes to college and graduate school.  The first brother immediately opens an IRA in a conservative mutual fund and puts in $5,000 every year for ten years, then gets married and has children and finds he can’t afford to contribute any more.  The second brother starts contributing to his identical IRA at the same time his brother stops contributing to his.  Come retirement age and the time to start taking distributions, the brothers are astounded to discover that even though he has not contributed for decades, the first brother has more in his IRA than the second brother!  Why?  Because after ten years the first brother’s IRA was generating more in income that was reinvested than his brother was contributing each year!  Everything else being equal, it’s better to invest early than often.  Thus, taking money out of retirement investments to pay down debt can completely destroy a retirement plan.  The whole question would be moot, of course, under Capital Homesteading, as a Capital Homestead Account would generate income from the beginning that could be used to pay for education, or to make payments on student loans without touching the principal, leaving a retirement program intact.
• (December) Fulton Sheen and the Scandal.  As many people are aware, Abp. Fulton J. Sheen, the author of Freedom Under God (1940) that CESJ has republished in a “Just Third Way Edition,” has had his “cause” for canonization in process for a while.  Canonization is an official declaration by the Catholic Church that an individual is — according to Catholic belief — in Heaven and may be officially termed a “saint.”  Canonization does not, contrary to popular belief, “make someone a saint.”  It simply recognizes what the Catholic Church believes to be true.  Sheen’s “cause” has been subject to a measure of religious politicking that need not concern us (except to note that having a recognized and popular saint buried (or “enshrined”) in your town or church can be quite financially rewarding.  We only bring this up because the Vatican announced last month that Sheen would be “beatified” — the next step to canonization — in December.  Naturally, a large number of people were outraged when at the request of some U.S. bishops the beatification was put on hold until a matter regarding Sheen’s role in the reassignment of a priest identified as a sexual pervert is settled.  It does not appear that Sheen did anything inappropriate or improper, especially since his tenure as Bishop of Rochester, New York, was too brief to do anything except upset a lot of people due to his lack of administrative experience (he all but admits in his autobiography he was not a good administrator), but since Sheen was named in an official investigation, it is clearly prudent that his beatification be held up until the matter is completely resolved.  Had Catholic authorities acted with equal prudence in other instances, finding out the truth before acting (or failing to act), much of the scandal currently shaking that institution could probably have been avoided.
• (December) Jobs Report and Finance.  What possible connection is there between how many people are employed in wage system jobs and the prices of shares on the stock market?  None — unless the only way most people gain their income is from wages and welfare.  The employment rate then becomes a “leading economic indicator,” for if people have “jobs,” they will have income, and with income will have consumption power.  Since consumer demand drives the demand for new capital, then a “good” jobs report within the past savings paradigm that restricts most people to wages and welfare means that the economy should do well.  Of course, if new capital were financed out of future savings in ways that create new owners instead of increasing the wealth of current owners, and most people got increases in income from dividends of ownership instead of wages for labor, the Jobs Report would be pretty much meaningless.  What would matter would be the “Ownership Report” that gave a breakdown of capital ownership patterns, how many people had a level of capital ownership sufficient to meet consumption needs and how many still had to rely on wages and welfare, and so on.  With income going to consumption instead of reinvestment, an Ownership Report would be a much more solid leading economic indicator than a jobs report could ever be.
• (December) Teacher Retirement Costs.  According to an article in the Wall Street Journal, advisors to teachers for investing their retirement savings may be taking more than their due — or at least more than the traffic can bear.  Most teachers require additional savings to supplement their pensions, many of which are local or state government run and are chronically underfunded.  The higher the fees charged for investment services, the less there is for retirement.  This is a double whammy that would not be seen in Capital Homesteading.  First, unlike savings programs like 401(k)s and IRAs, Capital Homesteading would be funded using self-liquidating loans to purchase pre-vetted, full payout shares.  In other words, a Capital Homesteading Account does not require the “Capital Homesteader” to save by cutting consumption, but by increasing production.  Not everyone can cut consumption, but by participating in ownership of capital anyone can participate in increased production.  Second, instead of paying someone an additional fee to advise on selection of investments for a Capital Homesteading Account, that is covered by the lender’s fee up front, which also covers risk (using capital credit insurance and reinsurance to satisfy the demand for collateral) and a just profit.  Unique among retirement savings programs, Capital Homesteading is designed and intended to pay out income from the first year of participation, which can start at birth.  In Capital Homesteading what accumulates is not cash to be paid out in the future, but assets that generate income that is paid out to the participant, after using part of it to pay for the assets, i.e., the program is self-liquidating.
• (December) Federal Reserve and Interest Rates.  Much to no one’s surprise, the Federal Reserve is standing pat and leaving things as they are.  After all, we’re in the middle of the greatest economic recovery in history . . . judging from the level the stock market has reached.  On the other hand, a more rational explanation is that we are actually in the middle of one of the greatest gambling fevers in history, something on the order of the Dutch Tulip Mania, the South Sea Bubble, the Mississippi Scheme, or any of the other frenzies that seem periodically to grip the human race.  The only thing that seems to stop the fever is a crash or tragedy that demonstrates the obvious illogic of the obsession.  Anyone who doubts this should take a glance at Charles MacKay’s 1841 classic, Extraordinary Popular Delusions and the Madness of Crowds.
• (December) The Xed-Mass Bonus.  It all depends on how you look at it.  If you’re an investor, an activist, or a politician running for office or in management, the economy is booming.  If you’re unemployed, don’t own anything, an activist, or a politician running for office or on the shop floor, the economy is on the skids.  Nowhere is this more evident than in the Christmas bonus game.  According to the Wall Street Journal (“Rejoice! It’s Christmas Bonus Season. Or, Uh, Not.” 12/13/19, B1, B5), the number of companies giving Christmas bonuses is dropping, and those that still offer them tend to give something along the lines of a fruit basket or the “Jelly of the Month” that triggered Chevy Chase’s psychotic meltdown in National Lampoon’s Christmas Vacation.  So, if you’re in the upper echelons of income and wealth already, the economy is doing great.  If not, well, tough luck.  Of course, Capital Homesteading would eliminate the problem by and large, but so far people aren’t listening as they wait breathlessly for their Christmas bonus.
• (December) Shinzo Abe and Health Care.  Japan’s now longest-serving Prime Minister, Shinzo Abe, wrote an op-ed piece that appeared in the Washington Post in favor of health care for all (“All Nations Should Have Universal Health Care,” 12/13/19, A21).  This is interesting, as Abe is considered somewhat conservative, being president of Japan’s Liberal Democratic Party, described as “a right-of-center conservative party.”  Abe, however, has been facing fading popularity for a number of his positions, and may be touting universal health care in an effort to bolster his political position.  How wise this might be is not clear, as it contradicts his previously conservative economics.  Frankly, Japan’s economy — nor any other economy — might not be able to sustain universal health care, at least as long as the existing Keynesian framework keeps the world in economic bondage.  The only thing that has the potential to deliver the wherewithal for universal health care or even general economic sanity is Capital Homesteading, which Japan needs at least as much as does the United States.
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 70 different countries and 52 states and provinces in the United States and Canada to this blog over the past week. Most visitors are from the United States, United Kingdom, India, Canada, and Thailand.  The most popular postings this past week in descending order were “Happy Christmas Eve,” “Nothing Is Impossible in Social Justice,” “Good Upon ’Change,” “A Tale of Two Machines, I: The Cotton Gin,” and “News from the Network, Vol. 12, No. 51.”
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.”  Due to imprudent language on the part of some commentators, we removed temptation and disabled comments.