|
Norm responding to Ed's note of 7/26/03 . . .
EJDodson wrote:
Ed
Dodson responding...Norman
Kurland wrote (7/23/03):
I regret that I don't have more time to devote to the COG discussions,
but this exchange between Michael Bindner and Ed Dotson is a simple challenge
that binary economists cannot ignore.
I
disagree with both Michael and Ed for reasons covered in the Kelsonian
tax philosophy section of my paper, "Beyond ESOP: Steps Toward Tax Justice"
... Ed is clearly more of a populist, but his advocacy of Henry George's
single tax on land rents is on the same slippery slope of the neo-Welfare
State ideas advocated by Michael.
Regarding rent from land, why not structure land ownership (e.g., through
the use of a "community investment corporation" or "CIC") so that all citizens
own equity shares in the land and other natural resources, as Kelso proposed?
Then "rent" from development would take the form of appreciated equity
values and dividend incomes that would be connected directly through private
property stakes to all citizens of a community, region or nation, depending
on the nature of the natural resource owned by the CIC. This would
build economic power and ownership incomes directly in the people, from
the ground-up, rather than allowing the rents to flow automatically into
the hands of the politicians and bureaucrats.
Ed here:
The idea of a community investment
corporation in which all citizens are equal shareholders is a good one.
The implication, as I interpret it, is that leaseholds would replace fee
simple ownership.
Norm here: Fee simple title would reside in the CIC, which would
put people in the community in a position as shareholders to influence
the planning of the use of land and share directly in development profits.
The CIC could lease the land (including physical infrastructure) for residential,
commercial, industrial, agricultural, conservation, and public sector and
non-profit purposes, using a competitive bidding process to establish lease
prices. If the community (i.e., as CIC shareholders) decided to make
certain parcels available free for certain public sector and/or non-profit
uses, they would have the power to do so without getting permission of
any establishment elite.
As indicated in my paper, land now owned by government could and should
be transferred free to the people in a designated community. This
goal is based on the rationale that the state is a social tool whose laws,
following democratic ideals, should support the sovereignty, well-being
and empowerment of its citizens and that a sustainable economic democracy
can be best achieved by a constitution and laws that encourage the broadest
distribution of private property stakes in wealth-producing assets among
the people.
Land held privately that a CIC might want to aggregate for more efficient
planning and development would have to be purchased by the CIC (ideally
supported by the government's powers of eminent domain.) The funds
to enable the CIC to purchase private parcels would come from individuals
investing in newly issued CIC shares needed to capitalize the private sector
land acquisition costs. Where would that money come from for the
poor and others without existing assets or savings who could not afford
those new shares? As you undoubtedly know, Kelso proposed an omnibus
legislative package (named the Industrial Homestead Act and which we call
the Capital Homestead Act) designed to lift the tax, monetary, inheritance
and other legal barriers to implementing a Kelsonian version of economic
democracy. Under our version of his proposal each man, woman and
child would be eligible to establish a Capital Homesteading Account (CHA)
(Kelso called this an ISOP) at his or her local bank and receive an equal
allotment of low-cost, non-subsidized capital credit annually to invest
among various options (including a CIC) in the capital growth pie of the
American economy. Under the section 13 discount powers of the Federal
Reserve Act, the banks would take the CHA loan paper to one of the 12 regional
Feds and it would create new money (i.e., monetize that loan paper) at
a mere service fee to that the bank would provide the funds with which
the citizen could purchase the new shares, collateralized by the land or
whatever other growth capital assets the citizen chooses to invest in,
including the newly issued full dividend payout shares of the CIC in his
community. Like an ESOP the feasibility of the share acquisition
loan would be subject to scrutiny by the bank lenders and capital credit
insurers and reinsurers and would be expected to be repaid wholly out of
projected future pretax dividends on the CIC shares that flow from the
land development process. (The logic of the system is explained in
much greater detail in various papers that appear on the CESJ web site
at www.cej.org.) My projections is that roughly $3,000 per American
citizen could be loaned for investment purposes (not for speculation or
consumer loans) each and every year at present U.S. growth rates through
personal Capital Homestead Accounts.
Ed continues . . .
Here
is where justice as well as economic efficiency benefit by an application
of competitive bidding for contorl over specific locations and natural
resource laden lands. The fees collected can be fully distributed to each
citizen as a dividend. The community can then bill citizens for community-provided
goods and services (i.e., impose user fees).
Norm responds . . .
All your points are totally consistent with the logic and moral principles
underlying binary economics.
Ed continues . . .
Public
goods economics reminds us, however, that not all public goods and services
are easily or best paid for by user fees.
Norm responds . . .
Ed, please give me some examples. Under a binary growth model
people people could afford to pay for the public goods and services they
wish to use. But I suppose access to the political ballot, access
to a court system and to a representative form of government, and the protection
of lives and property by the military and police are examples of public
goods and services that do not easily lend themselves to user fees.
Many other public goods and services could, however, be delivered efficiently
by competing worker-stakeholder-owned private sector delivery systems,
including conservation areas, national parks, worker-subcriber-owned comprehensive
health care systems, etc. The point I was trying to make in my Tax
Executive article is that the simplest and most just tax for meeting the
legitimate costs of government at any level is a direct and proportionate
rate income tax on all forms of income above the poverty level -- it will
radically improve the accountability of the politicians and bureaucrats
to the people they are supposed to serve. User fees, inheritance
and gift taxes and corporate income taxes might remain in a binary economy,
but mainly to encourage and sustain the democratization of capital ownership
and sustainable, non-inflationary and environmentally friendly growth.
Norman
wrote:
To the ordinary citizen a consumption income from rent and other natural
resources is no different from that received from other forms of capital
(assuming, as under Kelso's binary economic theories, that we define "capital"
to include natural resources as well as all other non-human factors of
production.) Once the rent and other binary incomes flow into the
pockets of citizens universally, as would automatically happen under the
proposed "Capital Homestead Act", the government would then be forced to
go to the people to meet the public sector's legitimate budgetary needs
and not simply have a "pot" from land rents to play with to continue to
make decisions from the top-down.
Ed here:
My only comment is to stress what I have come to see as the fundamental
observation that nature is not produced by human labor or by human-produced
capital goods.
Norm responds . . .
This is true. However, that which nature provides is only meaningful
in the economic sense when the resources and energies of nature
are harnessed and used by human beings (not plants or other animals) and
by human-produced capital goods co-operating with human beings, to meet
the subsistence and other material needs and wants of human beings.
When human beings and human-produced capital goods use the resources and
energies provided by nature, new human wealth is created and that new wealth
in a just society is owned automatically by those whose human efforts or
whose personally owned productive assets contributed to the productive
process. Under a competitive market economy, the ownership of that
new wealth becomes allocated according to the relative market-based values
of all of the productive inputs contributed to the process. As a
shareholder in a CIC, each human being would receive his or her proportionate
equity share of the value added by the CIC's land and other natural resources
as well as the value added by the CIC's physical infrastructure to the
creation of the new wealth. To deny the owner of the value of his
human or non-human property contributions to the wealth production process
is the equivalent of stealing the fruits of his labor or his capital.
John Locke dealt with this point from a labor-centric point-of-view, reflecting
Ricardo's labor theory of value, a view that has been implicitly or explicitly
accepted by most economic theorists prior to Kelso's binary theory of economics.
Ed continues . . .
Henry
George argued (persuasively, I believe, from a moral perspective) that
nature is the source of wealth but not wealth itself. This distinction
is extremely important in the discussion over what ought to be protected
under law as private property. Kelso and Adler took a very different view,
writing in *The Capitalist Manifesto* (p.49) "In a free society ... wealth
is anything that is regarded as wealth by a significant number of persons.
Anything which is prized for its exchange value and which is bought, sold,
exchanged, or systematically collected and exchanged among collectors,
is thereby empiracally determined to be wealth." For Mortimer Adler to
have come to this conclusion is strange, indeed, because it ignores the
"ought," it ignores the moral imperative. Henry George set down what I
would describe as a labor and capital goods theory of property, defining
wealth as material goods produced by labor and capital that has exchange
value and satisfies some desire or desires.
Norm responds . . .
I think I answered Henry George's point above. I don't agree with
Henry George that "nature is THE source of wealth." I see nature
as one source of wealth. Under a higher source of all creation, nature
as well as humanity were somehow created. Naturally creative human
beings, after studying and understanding what nature had to contribute,
designed from the energies and resources of nature physical and non-physical
tools and systems, in the words of Bucky Fuller, "to-do-more-with-less"
human effort. Consistent with Occam's Razor, Kelso divided all sources
of wealth into two sweeping categories -- people and things, and I see
no compelling reason to exclude land and other natural resources from the
category of "things" that human beings manipulate co-operatively to create
new wealth.
I think it is too harsh to think that Mortimer Adler ignored "the moral
imperative", but you're entitled to accept this conclusion. I obviously
don't, for reasons already explained above and I think even more clearly
by Kelso in his outstanding 1957 critique in the American Bar Association
Journal of Das Kapital. (See http://www.cesj.org/thirdway/almostcapitalist.htm)
What specific statement by Kelso in this article do you disagree with?)
I see nothing in the writings of Henry George and other moral philosophers
that surpass the brilliance, clarity and profundity of Kelso and Adler
in chapter 5 of The Capitalist Manifesto on "Economic Justice and Economic
Rights." Its a cultural tragedy that these insights are not taught
in the best law schools, which teach the law but not justice.
Norman wrote:
I think Henry George's critique of the current system was brilliant,
even if I disagree with the political wisdom of his single tax reform.
Attached for those interested is a paper I delivered to a Georgist conference
several years ago on a new "post-scarcity" synthesis of the best of Kelso,
Buckminster Fuller and Henry George.
Here is a brief excerpt from a note explaining the similarities and
differences between Kelso and George, as well as other great economic theorists:
...While Kelso attacked economic monopolies and plutocratic
concentrations of capital assets as the cause of the purchasing power gap
that Douglas was rightfully concerned with, Kelso's approach would redistribute
future ownership opportunities (i.e. new assets and assets transferred
by deaths and sales). Kelso thus avoids the class conflict that is associated
with the charitable or government-imposed redistribution of previously
accumulated assets (as implied by distributism) or involuntary redistribution
of incomes through taxation. While Kelso would end the monopoly of
access to future ownership, he would do so without deriving anyone of what
they own, mainly by growing the asset pie and spreading the ownership and
profit distributions to all citizens. Ed
here:Well, I ask, is this
justice, or simply more of what we have had in the social democracies since
the beginning of liberalism; namely, what political scientists refer to
as "disjointed incrementalism"?
Norm responds . . .
I think this is an unfair charge.
None of the post-eighteenth century social democracies dealt directly with
the growing maldistribution of ownership and the dehumanizing nature of
the modern wage slave system. Most social philosphers treat capital
ownership as irrelevant as a critical means for distributing consumption
incomes, despite the obvious fact that procreative capital becomes increasingly
the more productive source of the added wealth in the world. Marx
did not. Henry George did not. Major Douglas did not. Keynes
did not. Kelso was the first to offer a comprehensive system of political
economy based on traditional moral values about property rights, free markets,
free trade and limited government, all directed at abolishing artificial
monopolies over the means of access to future ownership and capital incomes.
If the Capital Homestead Act does not propose an array of fundamental structural
changes focused on a more efficient, more free and more just future distribution
of capital ownership (assuming you believe this is an important goal),
then what proposals to broaden capital ownership do you think are less
"disjointed incrementalism"? Yes, I think Kelso's ideas are the most
revolutionary ideas I've been exposed to. And I think that implementation
of his ideas, even under the Capital Homestead Act, will necessarily be
evolutionary but in a positive direction. It would be fair to describe
our proposals as "structured incrementalism", only because changing the
social order is like reversing the course of an aircraft carrier.
Ed continues . . .
We already have a high degree of class
conflict, growing worse. The source of this conflict is monopoly privilege.
And, as Winston Churchill wrote long ago, land monopoly is not the only
form of monopoly but it is the mother of all monopolies and the mother
of our most serious societal problems.
Norm responds . . .
I totally agree with you that the source
of class conflict is monopoly privilege. But the mother of all monopolies
is not the land monopoly. It is the monopoly over the creation of
money and capital credit -- both "social goods." With this monopoly,
those who control the creation of money and credit can control those who
make the laws, the media, academia, the professions, the teachers, the
military, etc. They can also dictate who will own and control land,
and who will share capital ownership and economic power in the world.
Break up the monopoly over the creation of money and capital and deliver
money power to the people and the class conflict will vanish. That's
the essence of the Kelso revolution.
|