Outsiders Aren't Alone In Pushing Good Ideas
Big Banker -- Give Free Money to Everyone
It's good to report good news, news of people taking strong stands on sound ideas that would benefit everyone. We excerpt four 2013 articles from: (1) Reuters, Feb 7, on a big banker by A. Kaletsky; and (2-4) a three-part series from Salon, Mar 21 on private sector parasites, Mar 22 on how rich “moochers” hurt America, and Mar 25 defeating useless rich people by M. Lind (author of Land of Promise: An Economic History of the United States and co-founder of the New America Foundation).
by Anatole Kaletsky and by Michael Lind
A breakthrough speech on monetary policy
Adair Turner, chairman of Britain’s Financial Services Authority and one of the most influential financial policymakers in the world, argues that a virtually surefire method of stimulating economic activity exists today and that politicians and central bankers can no longer treat it as taboo: Newly created money should be handed out to the citizens.
The idea of distributing free money to end deep recessions has been promoted theoretically by serious economists since the 1930s.
At present the Fed prints $85 billion of new money monthly buys government bonds, not always from the Treasury but also from banks and Wall Street investors who're selling their. Suppose instead that the Fed divided its $85 billion monthly money production into 300 million checks of $283 each and sent these to every man, woman and child in America. And the Fed would increase the checks to $1,500 or $2,000 if $1,000 monthly proved insufficient.
To read more
JJS: From an insider with a friendly idea to an outsider with similar ideas.
Private Sector Parasites
Profits should be distinguished from rents. “Profits” from the sale of goods or services in a free market are different from “rents” extracted from the public by monopolists in various kinds. Unlike profits, rents tend to be based on recurrent fees rather than sales to ever-changing consumers. While productive capitalists — “industrialists,” to use the old-fashioned term — need to be active and entrepreneurial in order to keep ahead of the competition, “rentiers” (the term for people whose income comes from rents, rather than profits) can enjoy a perpetual stream of income even if they are completely passive.
Land or apartment or rental-house rents flow to landlords. Royalty payments for energy or mineral extraction flow to landowners. Interest payments on loans flow to bankers and other lenders. Royalty payments on patents and copyrights flow to inventors. Professions and guilds and unions can also extract rents from the rest of society, by creating artificial labor cartels to raise wages or professional fees. Tolls are rents paid to the owners of necessary transportation and communications infrastructure. Last but not least, taxes are rents paid to territorial governments.
If we want a technology-driven, highly productive economy, we should encourage profit-making productive enterprises while cracking down on rent-extracting monopolies, whether they are natural products of geography and geology (real estate and energy and energy and mineral deposits) or artificial (chartered banks, professional licensing associations, labor unions, patents and copyrights). This is a valid distinction between “makers” and “takers.”
The greatest triumph of the rentier interests has been to redefine “capitalist” to mean, not productive entrepreneur or successful industrial company executive, but “anybody who makes money” — a category that includes not only investors in productive enterprises but also rentiers, somebody who makes payday loans at usurious interest rates, gouges businesses with high insurance rates, or gets paid tolls from a privatized toll road.
The Rentier Agenda has three broad components: low taxes on rentiers, privatization of natural monopolies, and a macroeconomic policy driven by fear of inflation.
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How Rich “Moochers” Hurt America
That’s the Rentier Agenda, then — low tax rates on unearned income flowing to passive investors, replacing public utilities with private toll-charging monopolies, and pursuing policies that deter inflation. It is no exaggeration to say that the private sector rentiers are not only the real “moochers” and the real “takers” but also are the greatest threat to productive industrial capitalism, in the United States and the world.
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Defeating Useless Rich People
Left and right alike are confused by a failure to distinguish productive businesses that sell innovative goods and services from “rentier” interests — landlords, lenders, copyright holders and others — which use their natural or artificial monopoly power to extract excessive tolls, fees and other recurrent payments from the rest of society, including productive businesses. The fees or rents extracted by these interests constitute a kind of “private taxation” which — rather than public taxation — is the greatest threat facing America’s productive economy.
Today America’s powerful rentier interests, particularly those in the FIRE (finance, insurance and real estate) sector, are mobilizing campaign contributions and paid propaganda to promote what I called the Rentier Agenda: low taxes on those whose income is derived from capital gains; the privatization of public infrastructure and the deregulation of regulated private utilities, to generate windfall profits for investors in privatized or deregulated agencies; and a macroeconomic policy that serves the interests of creditors, at the expense of slow growth and mass unemployment, rather than productive businesses and workers. Similar observations have been made by many on the left and some mavericks on the right.
Government can and should minimize passive rent extraction and unproductive speculation or gambling. The methods for minimizing excessive rents are as various as kinds of rentier interests. Windfall real estate profits should be taxed away by property taxes or “land value” taxes. Severance taxes or superprofits taxes should be levied on energy and other resource windfalls determined by geography rather than human effort. Banks should be low-profit, publicly-regulated utilities and laws against usurious interest rates, struck down in the U.S. in the late twentieth century, should be restored. Infrastructure assets—water systems, electricity, roads, airports and airlines, rail, inland waterways—may be privately-owned utilities, but their prices need to be regulated in the public interest. While there are legitimate roles for both professional associations and labor unions, they should not be allowed to act as predatory labor cartels at the expensive of the economy.
The Anti-Rentier tax agenda would seek to raise capital gains taxes on rentiers while lowering the tax burden on American workers and the profits of productive businesses. The Anti-Rentier policy reform agenda would involve increasing public ownership or utility regulation of infrastructure. Instead of cutting Social Security and Medicare to force the elderly to buy more products from parasitic private-sector monopolies and oligopolies, the Anti-Rentier coalition would favor expanding Social Security and other public social insurance, while phasing out tax subsidies for private health insurance and private retirement products.
Cutting off excess rents would not only shrink the rentier elite’s share of the U.S. economy, it would also alter the membership of the exclusive club of rich Americans, which would have a much greater percentage of “makers” who got rich by selling new goods and services and a much smaller proportion of “takers” from finance and real estate. The typical rich American should be an innovative industrialist or technologist, not a Wall Street financier or a guy with a parking-meter monopoly. Super-rich bankers would be as rare as super-rich public utility executives.
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JJS: While one could disagree with some of the above, a lot of it also makes a lot of sense. Too bad more people aren’t thinking along similar lines. Life on Earth could be so much friendlier!
Editor Jeffery J. Smith runs the Forum on Geonomics and helped prepare a course for the UN on geonomics. To take the “Land Rights” course, click here .
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