The high rate of prolonged unemployment is a symptom not an essence of the problem, which will lead to civilizational failure. Personalism, which is based on new economic paradigm is an answer.
Dr. Norman Bailey belongs to a small group of economists, who warned against the current financial crisis. He does not argue that the economy is self-stabilizing and neither as their other colleagues promotes excessive state interventions to achieve a full employment equilibrium. Recently Dr. Bailey made an assessment that the current financial crisis was misdiagnosed: - “This is not at all a problem of liquidity but sovereignty”. Thus increasing the liquidity of financial institutions may serve only as a short term measure. Economist pointed at a need for addressing the long-term impact on growth “resulting from the short-term measures by governments when they attempt to steer how markets behave”. As economic history has proven, growth has never been stable - it has moved through booms and busts. But this is not a historical necessity.
The Growing Problem of Prolonged Unemployment
September of 2013 is the 38th month after the greatest recession America has faced since the late 1930s ended. The unemployment rate is still high, 7.3 percent but the number of Americans whom the US Department of Labor counted as “not in the civilian labor force” was a record high of 88,921,000. The labor force participation rate (those who either had job or were looking for one) dropped to a 30 year low of 63.5 percent. The last time this rate was so low was in September 1981. Similarly in June unemployment rate at EU was high, at 10,9 percent (although down from 11.00 percent in May). The highest increase was registered in Cyprus, Greece, Slovenia and Estonia. Jobless numbers increased also in Latin America, Asia and moderately even in Australia which is being perceived as a safe haven for the economic crisis.
Politicians and decision makers should not be surprised with these results of their economic policies. But even more than their policies an automatization and advanced technologies are the main factor of growing of unemployment. In January of this year the report by International Labor Organization predicted “that global unemployment could further increase in 2013”. “An uncertain economic outlook, and the inadequacy of policy to counter this, has weakened aggregate demand, holding back investment and hiring,” explained ILO Director-General Guy Ryder.
Dr. Bailey argues however that “economic activity become more and more capital-intensive (and thus less and less labor-intensive) productivity surges as more and more human being become redundant, resulting in gigantic income-disparities and the formation of a new class of helots, dependent in whole or in part on government handouts.” The owners of productive capital, in contrast, become wealthier and wealthier. This is the prescription for civilizational failure.
Both Socialism And Capitalism Ignore The Need For Building Economic Sovereignty into Each Citizen. Personalism Recognizes It
It is this problem solvable? The founder of Center for Just Third Way, a private think tank focused on an economic personalism, Dr. Norman Kurland, together with late American lawyer and economist Louis Kelso, have been promoting alternative economic plan for more than five decades. For those readers, who are familiar with economic reforms based on the idea of so-called shock therapy (from post-tyrannical states), it will be probably sufficient to tell that Dr. Kurland prepared policies, which are humane substitute. Those readers, who have lived under central bank controlled economies (Western world) it can be stated that Dr. Kurland sees necessity to change economic paradigm (in Chinese). The result of old economic paradigm were two economic systems: capitalism and socialism. Neither combines maximum justice with maximum efficiency adequate for building successful economy. Why? Both ignore the need for building economic sovereignty into each citizen. Both leave ownership and control of modern technology, natural resources and business enterprises to a ruling few. The old paradigm was based on, as it turns out, dogmatic, often false assumptions. One of them treats dogma as a fact, that for majority of the population labor is the only source of income and only small percentage, extremely affluent individuals, can enjoy ownership incomes from technological advances.
“It can change and it should change. It is matter of justice to escape the wage system” - emphasizes Dr. Kurland. “We are in trouble if we put machines, capital before people as the name ”capitalism“ suggests. We need human-centered system that is, as late John Paul II argued, personalism” - he adds. People should legitimately create economic value through two factors of production: labor and yes, also capital. This is the essence of binary economics (economic personalism), which helps to create a more free and just market economy, with all consumers sharing the profits from direct ownership stakes (their own capital) in the firms that employ advanced technologies.
To achieve that goal the access to money and credit should be democratized. “Capital credit and credit insurance would become instruments of inclusion, not exclusion, and the means for ”procreative“ financing of whatever capital the economy needs to move toward prosperous lives for all members of society”. These are necessary macroeconomic reforms, which will allow to implement policies based on this new economic paradigm. Microeconomic reforms are also designed to implement economic personalism.
Profits From Direct Ownership Stakes for Every Citizen under Personalism
They are being named by its authors a “Capital Homesteading for Every Citizen”. What is it? It is a set of policies, which will help every citizen of the United States to become an owner. It is crucial to emphasize that this solution does not require “to take nothing away from present owners, but would link every American (including the poorest of the poor) to the profits from sustainable economic growth.” But the Just Third Way, economic personalism, concept can be implemented in every country under the sun. In fact, Dr. Kurland together with his team from the Center for Economic and Social Justice prepared reforms for transition of Polish economy from centralized model to the market one. Months ago Dr. Kurland explained in his special letter to Solidarnosc how the idea of wide ownership can be implemented under the current economic system. His think-tank prepared also policies “peace through justice” to root and stabilize Iraqi democracy through ownership of free oil shares to every citizen of Iraq. (According to this plan each “Iraqi man, woman and child would automatically receive free, as a right of citizenship from birth to death, a single non-transferable share in the new corporation). Core of this solution was concept of the Abraham Federation, an economic-based peace plan for the Middle East.
When almost no economist could think of the financial crisis, which would be prompted by the home loan banks and Fannie Mae and Freddie Mac, Dr. Bailey advised to change the policy of easy access to cheap credit. “a house lived in by the owner is not an income-producing asset. On the contrary, it is a substantial financial drain on the owner/occupant”
“Imagine a Federal National Capital Credit Association (FNCCA), supplemented perhaps with a Federal Capital Credit Insurance Corporation (FCCIC), both federally-chartered with all the Fannie-Mae characteristics as to taxes, bonds, and so on. Such an institution could purchase (discount) loans to all kinds of expanded capital asset associations, such as employee stock ownership trusts, consumer stock ownership trusts, community real estate investment trusts, etc. These loans would reflect productive private sector investment rather than government debt. The FCCIC would insure (or reinsure) such loans, which would be repaid from the earnings of the stocks or bonds acquired by the trusts, unlike home mortgages that must be repaid from earnings from sources external to the asset being financed.”
The effect of such a policy? More home-owners would be able to live from asset earnings, supplementing or even replacing their labor-based wages or salaries.
Dr. Bailey and Dr. Kurland have been advocates of expanded capital ownership plans and programs for many many years. They have been involved in crafting such programs in various countries. They are convinced that ownership and not an increase of liquidity is the long term strategy to avoid civilizational failure. To implement true personalism instead of capitalism.
Tomasz Pompowski - journalist, publicist
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