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Economic Justice Manifesto
progress without legal thefts
by
Don Killoren
Economic Justice Manifesto
progress without legal thefts
Copyright April,2009
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Economic Justice Manifesto
progress without legal thefts
Contents
Have a Drink
5
Chapter 1:Cheers for Productive People
6
Chapter 2: Theft Factor: Land Speculation
10
Chapter 3: Theft Factor: The Monetary System 20
Chapter 4: Scams Team Up
31
Chapter 5: Theft Factor: Unjust Taxation
34
Economic Justice Manifesto
39
Chapter 5: Theft Adjustment Factor
40
Chapter 6: Plan for Change
58
Appendix: Productivity Equation
77
Epilogue: Peace and Justice
86
Renaissance for Mexico
1
90
Thoughts on Social Justice
93
After Thought: State Health Investment Plan
97
Dedicated to the memory of
Monsignor John Shocklee
1917 - 2003
60 years a parish priest in the Archdiocese of St. Louis
He thirsted for Social Justice
and lived out, in service to the poor,
what Scripture requires of each of us:
"What is good has been explained to you, man;
this is what Yahweh asks of you: only this,
to act justly,
to love tenderly and
to walk humbly with your God. "
Micah 6:8
Heartfelt Thanks
Lou N. Basso has my gratitude for providing insight into the first and third
theft factors. He showed the futility of 1960s era hopes to make a better
world by wealth redistribution. He gave me a better way based on solid
moral economics.
My thanks also to the late Merrill M. E. Jenkins, Sr.,
the Monetary Realist, who provided the basic tools
for understanding the second of the theft factors.
Without seeing the difference between
debt-based and asset-based currency
there is no way to solve economic woes.
Merrill provided essential distinctions,
and for these I shall always be grateful.
What’s a matter Mack?
You look down.
Lost my job. They fired me
‘cause I was drunk.
can I help?
Yea, pour me a drink.
Have a Drink
The economy is drunk with debt and we call for another drink.
2
Slurping from the bottle of cheap fixes may create dreams but it takes large
doses of reality to get on the path to recovery.
We drank a $9 trillion national debt and now call for a $4+trillion gulp to
cure the problem. Don’t try to drive home.
Insanity: “doing the same, expecting a different result.”
Using debt we built fake prosperity and now leaders are selling more debt
as a crisis cure. Real change begins with true causes. As President Obama
so eloquently said in the campaign, “change starts with me.” How am I
part cause and how must I change?
Long lasting economic systems are built on justice. Each person needs to
know what makes a system just and then require every transaction be based
on justice. We all must demand a system built on strict justice. Accept
nothing less than perfect justice.
The cause of the problem is larger than hands in the till taking unearned
perks, salaries and bonuses. It is more than the bill we are passing on to
future tax payers. The cause of the problem is much larger: the economic
system is built on thefts.
When a system permits non productive functions to reap rewards it steals
from producers as it destroys our integrity.
How do non-productive functions affect your dollar value? Do they cause
hard working folks to live at the poverty level? What is the effect on your
retirement or kids’ college education, health care for the country (to name a
few possible concerns)?
For causes, look at non productive functions. Justice starts there.
Turbulent economic waters
divide our town.
On one bank are loud cries,
On the other shore we hear
“its not fair to have more
than you can use in 100 life
times while others starve.”
“its very fair ‘cause we got it
the old fashioned way,
we earned it.”
Chapter 1
Cheers for Truly Productive People
Both sides of the economic divide share part of the truth but make the same
serious mistake in its analysis. Each begins the thinking process with what it
considers to be “fair.” But basing a reasoning process on “fairness” is like
building a house on swamp land. “Fairness” is a wimp word, lacking
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defined limits. It is an emotional concept that certainly will not stand up in
court. We need an idea that is factual, measurable.
We are not in a war with one side declared the victor. No, here is a true winwin opportunity to raise a system to new heights to everyone’s advantage.
The renovation needs to start with a basic, uncomplicated, change in our
focus. Seeing economic problems facing both ends of the spectrum we need
ask a better question. Remove “is it fair?” Replace it with, “is it just?” This
dynamic process answers serious questions about:
Mal-distribution
Unemployment
Underemployment
Bankruptcies
Inflation
Savings deficiencies Retirement savings erosions
and the list goes on. We are experiencing wonderful prosperity but at the
same time seeing an unacceptable poverty for many of our citizens and
depreciation of the currency. We can change that to the advantage of our
civilization.
History shows civilizations thrive when just rewards encourage creative
skills and hard work, and implode when the moral force of justice is
replaced by might makes right. Systems self destruct unless solid justice
principles guide their operating functions.
What is Justice?
Justice focuses on giving all their due.
It asks, “What truly belongs to each one?”
A system's success is totally dependent on its ability to assure justice by
certifying, and defending, what belongs to individuals, corporations and the
community-at-large.
The spectrum of premises assigning ownership runs from individual based
ownership to total community/government.
At one end of the spectrum people regard property as rightfully belonging
to individuals with the community taking title only when necessary to
achieve essential community requirements, and a community is seen as
nothing but a group of individuals.
On the other side is the belief that all property ownership resides with the
community with individuals allowed to hold property only to the extent that
ownership has a community advantage. Private property is allowed until
the community needs it for the common good.
The extremes are observed throughout history. In America and in western
Capitalist countries, there is a mixture of perspectives involving private and
community ownership. One side aims to privatize wherever possible selling
government owned property, such as forest lands, to private interests. The
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other tends in the opposite direction working to bring functions under
government ownership and control.
There is a logical way to define private and community property. That
definition will be the basis for quieting the animosity heard on the banks of
our turbulent economic river.
The ownership basis quite simply stated is:
“It is mine because I made it.”
“Whoever caused it to exist, owns it.”
And a corollary:
“If no human has made it,
or could make it,
then it belongs to whoever caused its usefulness potential”
And remember, it is not how much you have but how you got it.
Did you earn it, or did you take it unjustly?
With the axioms in mind watch the evening news. Reflect on our
international relations. Ask how we might conduct business differently. See
wonderful new opportunities for individuals,
our nation and the world.
*****
For a moment look in a mirror, congratulate yourself for the work you did
today and imagine how you made life better for the people you care about.
How did you make life better? “Let me count the ways.”
One, by working to produce goods or services,
two, by not consuming all you produced,
three, by investing in tools of production to create even more.
So you worked hard and made life better in the process. Now I guess you
expect to be rewarded for your effort. That’s the way with you producers.
You expect to get something in return. Yes! Right! Producing gives the
right to trade your production for that of other producers: justice - the only
basis for civilized behavior.
Producers rightfully expect a return for their contributions. What is right for
individuals is also right for the community. It has a right in justice to
rewards for what it caused to exist.
In the following chapters these axioms are applied to three operating
functions in our economic system showing how the justice axioms are
violated, how the system compensates for the violations and how the
compensation process takes its toll on all participants, but especially at the
economic scale’s lower end
5
Examining the functions, applying the justice axioms, you may wonder how
we can continue to allow these functions to operate as they do. Your
analysis of ownership justice might well solve some of the most perplexing
questions in America and on the international scene such as:
- why are so many jobs outsourced to foreign labor markets?
- why are natural resource rich countries impoverished?
- why adverse poverty exists alongside such prosperity?
- why do robots answer telephones?
- why are companies merging?
- why are companies setting up off shore?
- why the high bankruptcy rate with such prosperity?
- why are mortgage companies begging for borrowers while the country
drowns in debt?
- why are some banks refusing to lend even after they received the
‘bail-out’ money?
- why is the national savings rate sub zero?
- what brought the financial institutions to the brink?
- where are all the trillions going?
At the top of the giant productivity kettle can be seen producers of every
description depositing the fruits of their labor. There are brain and brawn
producers, things and ideas makers, consultants, sales folk, homemakers,
teachers, and C.E.O.’s. They have something in common: grins on their
chins imaging their take from the kettle in return for their input. But wait,
their ‘take’ has been reduced by non-producers taking while putting nothing
in the kettle. Something stinks. What has gone wrong?
Chapter 2
Theft Factor: Land Speculation
Did you pay the roofer who repaired the leak? Of course you did! You pay
for what you get. It is a matter of justice. No question.
Then why question payment to the community for making land under
homes and businesses more useful?
We have a right to what we produce and claim no right to what is produced
by another until we pay for that service.
The community expends energy to make land more useful and the Creator
provides natural resources, geographic and climatic advantages. Owners of
land do nothing to cause the benefits and can present no logical reason why
the values belong to owners of record without paying the community for
usefulness potential caused by the community’s interaction.
We have been raised with the mistaken notion that ownership of land
gives a right to value that 'seems to happen' to our land. “Its all luck” say
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the landowners. No, it is a matter of justice. We need to pay for what we
get or pay serious consequences.
Obviously, this idea contradicts fundamental beliefs about land ownership.
In order to correct problems we must not be afraid to rethink long held
ideas. We gave up the idea that women should not vote, or hold well paid
jobs, and changing our thinking has benefited our nation greatly. It is time
to realize that profiting from what others have created in land, without
repaying them for their effort, causes irreparable harm to the entire
economic system as well as the local community.
To achieve needed security individual home or business owners need to
have legal control over the land under the buildings. But that does not
change the justice reality. Paying for value received is essential to the
justice of the entire economic order. Real estate property taxation systems
in most states are confused on this issue. Most states require a property tax
on land and buildings. The tax on buildings amounts to unjustly taking what
properly belongs to the people who can rightly say “this building is mine
because I made it.”
At the same time, the taxing authority charges for the land’s location value
but at a rate far below what is required to obtain the full rent of land created
by the community. Owners of record
fail to pay the community for what
the community has caused.
Rates on land being far below full rent of land speculators pay a relatively
small price to hold land off the market awaiting those who need land for
development.
Fees paid to the land speculation function produce nothing and cause price
increases for all item and services. Bread, milk, gas, dress, shoes,
technology tool or toy, hotel stay and prescription, all services have in their
price a sizeable payment for land that is totally non-productive and
contributes nothing. If profit for land ownership disappeared today the
community would suffer nothing; in fact, we would make that day a
national holiday.
I confess. I am a land speculator. The land under my house was valued at
$30,000 in 1988 and is now $89,000. Many Americans are land speculators
or hope to be as soon as possible. Do we buy a home hoping the price will
decrease? Certainly not! We accept property price increases as a fact of life
and hope to cash in upon retirement. But what is the price increase based
on?
We are drawn into the scam by occasional 'profits' keeping us quiet as the
scam rips us off in the big picture. In all transactions we contribute a reward
for a totally useless function. While home owners think they are benefiting
from increased property values they fail to see their increase is quite small
compared to unjust profits large land speculators gain from the system. The
unearned increment causes prices on everything purchased to be higher in
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inverse proportion to how the property tax system fails to levy a full rent of
land charge on all locations within its jurisdiction.
The small profits gained with land price increases are caused by inflation
and land speculators who pay very small charges while holding land off the
market. Higher land prices are then reflected in prices of every item or
service purchased eating away 'profits' we may experience.
A zero change in location related property prices and a flat cost of living
would have large benefits for all, excepting professional speculators in land
of course. Wage increases would then reflect growth in one’s job and not to
a decrease in overall purchasing power.
The land speculation theft function has driven up prices, and the dream of
having a piece of America is gone for an increasing number of people.
Access to land is hindered in direct proportion to how much the system
rewards land speculation. Social Justice Advocates need to look at land
speculation’s role in the plight of the disadvantaged whom they are trying to
serve.
We need question the morality of rewarding land speculation, and question
the fiscal wisdom of continuing an insane practice. Owning legal title to
land insures access to the land for exclusive use. But we can do nothing to
bring land into existence and the community, not the land owner, gives the
location its usefulness potential by activity around that location. The owner
did nothing to effect that potential.
We have no right to claim ownership of that aspect of land ownership. Stop!
Wait a minute! That is a Communist idea. The Communists claimed land
belonged to the community and that is exactly what you are saying. Are you
a Communist? Justice principles certainly are not Communist. A distinction
is essential. Distinguish between right of absolute ownership and a right of
exclusive use. Communism states absolute ownership and right of exclusive
use belong to the “people’ or government as it sees fit. In such systems the
individual has no rights. He does not own or have the right of exclusive use.
Both belong to the community under the administration of the government.
In the Georgist system individuals own the land and have a right of
exclusive use of that location and pay the community only for what the
community did to make the locations useful: a quid pro quo return for value
received. This is true justice.
Question: Since you believe in the right of private property in land, don’t
you think people should profit from their land? Yes! Holders of land title
should profit from use of land. We depend on intelligent and efficient use of
land and there should be every reward, and no penalty in the form of taxes
on what people do with their land. But that is quite different from profiting
from the simple fact of owning land. Big time professional speculators have
little or no interest in profiting from land use. Their aim is
to hoard land until people need it for productive use.
8
Question: Do private property rights in land have advantages?
As pointed out frequently in Catholic Social Documents during the 20th
century, the right of private property is needed to assure access to the land
and this to safeguard the freedom we have as sons and daughters of Our
Father. Our dignity is closely tied to access to land. Governments must not
have absolute ownership as well as exclusive use of the land as that would
give it control of all aspects of human existence.
To insure access to land it is necessary to defend the right of private
property with all our might and integrity. But, at the same time, we must
affirm our duty to pay the community for what it has created. This is
nothing but perfect justice.
Question: Does land speculation actually work against the right of private
property in land and necessary access to the land? Yes. Where the land
speculation function hordes land to make prices increase, it causes land
shortages, reducing the amount of accessible land. Thus, land speculation
actually works against the real purpose of the right of private property in
land. Its absence would make more land available for homes, reduce
shortage of low cost homes, and make land available for business to
increase employment.
Question: Are not speculator/developers really responsible for the increased
value of the sites? One might argue that a mall owner/developer builds
location value into the land and earns a reward for the location value.
Location value is caused by the people coming to the mall. Owners earn
rewards by investing in buildings, equipment and supplies but shoppers
cause a mall’s increased location value. Proof is in the fact that rental value
disappears when people stop coming to shop. But they come because of
what the builder did to the location. Right! Therefore he deserves profit
from the buildings and services he provides. He deserves just rewards for
using the land well. The community deserves benefit for the traffic and all
the ways it has increases the usefulness potential of the area.
Question: Should not people be rewarded for taking risks? We pay for
benefits provided and not the risk taken separate from the benefit. If it was
the risk that was rewarded, operators of the thrill rides at the amusement
park would pay us for taking the trip. less
Question: with no profit in owning mineral rights will less silver, gold,
copper, oil, be available? Extracting, refining, changing and delivering
natural resources deserve profits but rent of land charges bring the benefit of
ownership back to the community.
Profit from use belongs to the land owner-user.
Profit from ownership goes to the cause of the land’s value.
Land as natural resources deserves special consideration. The Creator gave
natural resources for use by all people on earth. Resources get their value
from people. People increase the value of natural resource, mineral, climatic
and geographic advantages. That value cannot belong to individuals unless
9
they continually purchase the current location value from the rest of
mankind. Survival depends on abundant resources given by the Creator. We
cannot survive by permitting some to say, “Pay us for the right to exist.”
Location value and natural resource users must pay the rest for exclusive
use of community created value and this on a timely (annual?) basis.
This fact raises very important questions for consideration on the
international scene. A country’s natural resources should benefit its people.
We need give serious thought to the horrific poverty caused by multinational companies (from the United States??) making deals with corrupt
local officials to permit extraction of natural resources without
compensating the people. American companies involved in this theft blight
our country’s integrity. Stockholders in companies taking foreign resources
need to look closely at their company’s compensation methods.
Question: What harm does land speculation do to the economy? Consider
the retail part of the economy. Sellers go where there are buyers, and buyers
create location value. The key word is value, and store operators’ success is
limited to current location value. Speculators buy land where they predict
buyers will shop, then wait for creators of shopping opportunities and put
land on the market at a price predicting its future location potential.
Land is priced at future location potential but actual production is limited to
current location potential. In other words pizza parlors pay a price for
locations based on future potential but are limited to their current location
potential. To succeed, operators need make significant adjustments in the
budgets. Obviously, retail establishments are succeeding all across the
country and land speculators are operating everywhere. Either the
speculation presents no problem or the system has ways to compensate for
this totally non-productive function.
The chapter on Theft Adjustment Factors shows how retail store operators
raise prices, cut wages and/or eliminate jobs to make up for non-productive
functions. Note the difference between value and cost. Speculators raise
land costs but cause no increase in land value.
Question: If land speculation is totally non-productive, why is it legal? If so
bad, why do we accept it being unconscious as to its damage to the
economy? Why are we not correcting this legal blight?
Reason #1: We are busy earning a living and do not question assumptions
and premises until some outrageous person says “there’s something
wrong here.” Then changes might begin.
Reason #2: In a way it is like the lottery. Players put their money in the pot
and one participant hits it big. With land speculation, landowners, large and
small, buy ground (either ground under their homes or investment) hoping
to make a profit if they are lucky. (Typical example: a home purchased in
1964 for $30,000 sold for $200,000 in 1994. The owners thought they
made a nice profit until they moved to a little better home for $350K.
10
At present the system is unchallenged since almost everyone participates, or
hopes to be involved, in ‘benefits’ of the system. Residence owners plan on
a nice profit when they sell and move to a Florida retirement villa, or hope
their parcel is in the way of a shopping mall. Small landowners protect the
scam as they hold hope close to their hearts.
Reason #3: Land ownership has a mystique for American people. When our
forefathers arrived they were intoxicated with the notion that every family
could have its own plot of land. Either immigrant, or a descendant of
someone from a country with land scarcity, they quickly believed that
heaven on earth was tied to owning land. This was the national destiny.
Land speculation is dispelling this dream as available land becomes more
scarce.
These empty hopes insulate against change installing speculative land
ownership as part of our mutually shared illusion, accepted by most, from
the nation’s start to the present. In the past the harm was not as great since
more land was available to the west.
As acreage becomes less available land prices are escalating beyond
acceptable limits: employment cutbacks are happening as we speak =
outsource.
To estimate the cost of land speculation, compare the CPI in different
locations. The low to high percent difference between locations provides the
approximate increase in price due in great part to land speculation.
Example: compare prices of similar housing units or hotel rooms in New
York verses Littletown, Missouri or in one section of town with another. If
an area was able to collect land rent based on location, the difference
between the low and high valued properties would reduce the tax burden.
Consumer prices would tend to be lower since location charges are not
passed on to consumers, and the theft function would receive no reward for
standing in the way of effort.
Question: What will change our attitude about land speculation? Seeing
advantages in replacing labor and investment taxes with a simple location
value charge people’s attitude on unconditional land ownership will change.
“Plan for Change” gives ways to remove this harmful function and
safeguard private property in land, in fact, make it possible for people at
affordable prices.
In no way do we attack people who speculate in land. Function, and not
person, is the target. When a function is an assumed part of a culture, few
people have an occasion to think through the damage caused by a legal nonproductive function, but seeing what is involved, they become adamant
voices for removing the harmful function. Will funding government by
location value charges ever happen?
Don’t ask if it will happen?
Ask only if it should happen.
11
The source of true ownership is causality. God made everything and
everything belongs to Him, and we are co-owners when we participate in
the causality of an idea, item or service.
Location Value Charges for Community Created Potential: Advantages
Urban Sprawl
Location Value Charges cause lower property prices prompting better closein development.
Environmental concerns
Close-in utilization of land serves the environment better than dispersion =
Location Value Charges to the rescue!
Rental Property
Under the one rate real estate taxation system landlords gain no
advantage from well maintained rental property. Units are priced first on
location and then construction, decoration and amenities. But removing
taxes from structures, charging only for location, rental property owners
benefit from building maintenance and amenities. Location Value Charges
reward rental property enhancement.
Slums and Housing Shortages - Affordable Housing
As rental property owners are rewarded for better units, more affordable
housing becomes available. Paying the community for its effort and
rewarding rental property owners causes better housing.
Spiraling Housing Costs
All three of the non-productive functions have an impact on housing costs.
Land speculation has a large impact. Land costs increase with every
positive economic indicator and dip as long range prospects are pessimistic.
Short range indicators seldom result in a price drop since the cost of holding
land off the market is low when land taxes are below a just compensation
for the community’s efforts.
Big time land speculators profit from low location charges.
High location charges improve housing.
Outsourcing
As land costs spiraled after World War II manufacturing moved to rural
settings where low land costs made expansion feasible. At the same time,
prospective workers required lower wages due to the lower cost of living.
When movement to rural areas became widespread the general trend for all
land prices was upward. This, along with the other non-productive factors,
caused manufacturing to move off shore to even lower cost areas. Now, outsourcing to foreign labor markets is the rule, not the exception. See the
chapter on Theft Adjustments.
Summary of Inescapable Facts:
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- Community around a location causes its potential, high or low.
- Land owners do nothing to cause value of their own locations.
- Taking from the productivity pot without making an equal or
greater
return steals from producers.
- Deriving profit from owning land takes from producers without putting
back equal or greater value.
- Profits derived from using land belong entirely to the user and
must not
be taxed in any way.
- Public revenue derived from the rent of land due to community
created usefulness potential is a charge for value
received – not a
tax.
Chapter 3
Theft Factor: The Monetary System
At the Scam Artist convention discussion centered on reasons for their bad
reputation. It seems people are angry after trading their assets for
completely worthless paper. It was suggested, as a way to cure the bad
reputation, they con the public into passing the paper on to other people for
their assets. This was rejected since ordinary people could not con anyone
to accept bogus paper. A perfect answer to the problem was offered: the
Government will declare the worthless paper legal tender and require its use
as the official exchange medium in all commercial transactions.
Another artist of deception proposed a way to charge interest on all the
worthless paper in existence. It passed with no dissenting votes. With
adoption of the plans the scam artists were received as first class members
of country clubs across the nation.
*****
Where are you?
Has the economic crisis hurt you directly, made you fearful about your
possible losses, very concerned because so many people are suffering, or
nervous for the country’s future? All of the above?
Evening news talking heads present jargon filled descriptions of how the
latest government solutions will stimulate the economy but none seem to
address problem causes. They all talk about the billions government is
borrowing to create jobs in this and that sector of the economy. But why
does the economy require such borrowing in the first place? Causes,
Please!! Get to the causes!!
We need to learn what path brought us to this crisis and chart a new route to
an effective system based on justice involving all from the least to the
highest skilled participants. We need a route that leads to an even higher
standard of living. What got us here?
What new route must we take? Map Quest sent me to Economics 101 text
books for the route to our present crisis and said a route to solutions will
be found by using our creative thinking.
13
Monetary Systems and Development of Tools
Throughout history people worked the land with tools to make their effort
more efficient and effective. While land’s richness is important we see rich
land producing little without the clever use of tools. Workers scratching the
earth with bare hands sew seeds with small hope but using tools on natural
resources industrious workers produce abundance.
Producers refraining from consuming all they produced save
the excess,
lend to others, or invest in their own or in another’s production. The key is
the excess production now available for savings or investment to enhance
output. Again note the actual physical presence of unconsumed output
available to secure tools to improve efficiency and effectiveness.
Unconsumed production saved in stable forms eventually become a
community’s accepted exchange medium.
How that time and place chooses to exchange its production says
a lot about its ideas about justice. The Medium of Exchange is that
economy’s blood system. If the culture requires exchange of actual
production it long endures. If it finds ways to scam its participants it
eventually self destructs.
At this point examine the three major exchange media:
1. Asset-based monetary system.
2. Fiat or straight paper monetary system.
3. Credit or debt-based monetary system.
Asset-based Money
Asset-based money is a certificate of ownership stating that something
useful belongs to the certificate holder. Payable to bearer upon demand
tells the whole story: whoever holds this certificate is the owner of what is
conveyed by the currency. The issuer may be a bank, an individual, an oil
company, a dentist, grocery store, you name it. The certificate conveys
ownership: a contract. In a real sense asset-based money is a modern form
of barter: willing and informed trade of assets.
Fiat Money
Fiat money is merely paper (or electronic entries in our day) conveying no
ownership right to anything in itself. It is not ‘backed’ by anything. It is a
medium of exchange because the government says it is legal tender to be
accepted in transactions unless another payment method is announced in
advance. This type of currency has been used many times throughout
history and is defended even today by some who believe the only thing
needed to ‘make it work’ is government restraint in printing no more money
than necessary. The French Franc during the 1787 French Revolution, the
Continental in our Colonial times and German Marc in the early 1920’s
were fiat money exploding as government’s perceived needs exceeded tax
revenues.
Debt-based Money
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In the debt based system banks reserve a percent of deposits and lend out
the rest. When the borrowed money is deposited in a bank it then becomes
potential loan money (less the reserve percentage). The new borrower, in
turn, deposits that money in a bank and it becomes loan potential. Thus, it is
obvious that the original money deposited has generated loan potential far
in excess of the original deposit. In a very real sense this additional loan
potential has come out of thin air. It certainly is not 'backed' by anything
substantial.
The newly created money is spent in the marketplace obtaining goods and
services but conveying actual ownership of nothing. The money is legal
tender because government says so and continues to facilitate commerce as
long as citizens put trust in the currency which is actually a trust in their
government.
*****
It is a monetary system’s job to facilitate trade and encourage savings to be
lent to producers to improve their productivity.
Our economy operates under the debt based monetary system.
It may seem that our system is working just fine. Since 1913 it has caused
the greatest economic standard of living in history.
How does this monetary system facilitate trade and savings?
What went before the change in 1913?
At the end of the 19th century industrial capacity of the United States was
growing due to inventions and countless applications of steam, electricity,
radio and telegraph. The economy was on the verge of a massive expansion.
At that time gold or silver was the usual way unconsumed production was
maintained at banks.
Bankers violated the 100% reserve requirements printing more certificates
than the amount of gold or silver on deposit. Runs on banks followed
causing gold and silver to be hoarded and this caused insufficient quantities
of unconsumed production to be available for manufacturing expansion.
Imagine the plight of a tool maker stuck with new tools because
manufacturers lacked resources needed to purchase tools to expand their
operations. Gold coin in a mattress was hardly available for investing in
production.
The standard of living could grow no more than industry limited by the
amount of savings available for expansion.
The Federal Reserve Solution
In 1909, on Jekyll Island, SC, bankers provided a ‘solution’. The system
would not depend on savings of unconsumed production and certificates of
ownership of silver or gold on deposit in banks or warehouses. The new
medium of exchange would be notes payable for all debts public and
private. Producers would not be paid with ownership certificates but would
receive indebtedness certificates. The new certificates would circulate as
15
United States currency, printed as greenbacks to encourage the same usage
as before. They circulated along with commodity backed currency.
As a result, manufacturers expanded operations to provide tools and
supplies needed by businesses. People were happy. Since adoption we
experienced countless inventions, development of manufacturing processes
making conveniences available for all economic levels and classes, medical
advances increasing life expectancy, decreasing travel and transportation
costs, and more available education and recreation opportunities.
From 1913 to 1964 un-backed currency was loaned gradually in the
economy. In 1933 gold backing was removed. In 1964 silver backing was
dropped. In 1971 gold was removed in international transactions. In 1964
credit cards expanded private debt to cause an increase in money supply
sufficient to pay the interest on the rapidly growing debt. This caused a
massive expansion of the money supply which boosted U. S. retail
economy and what most considered an improvement in the standard of
living.
Something for Nothing
Wanting something for nothing is a human trait showing itself in the glee
felt when finding a coin on the sidewalk, “buy one, get one free” coupon, or
the windfall experienced as a stock price soars unexpectedly.
Throughout human history systems have been devised to gain greater
benefit than the effort expended. That is the human trait played out on a
system wide level. Where that hope employs just means it is a sign of
intelligence and is perfectly moral, but when it steals the rightful property of
others or steals freedom from other humans, it is totally immoral, unjust and
self-destructive.
It may seem that something has been obtained without cost but eventually
someone had to pay the price. The cost is to be paid by the recipient at a
later time or by an uninformed participant. In every case someone pays the
price for the increase gained by the other. The lost coin belonged to a
person. The beverage seller hoped to gain sales by the free offer and the
stock price increase occurred when an unforeseen situation caused an
unexpected change in the pricing structure. Someone pays the cost.
Justice demands that the recipient pays the price, or if it is passed on to
another, that payer understands clearly the cost and why he is the one
paying the price. Otherwise, justice has been violated.
*****
The Fed and Something for Nothing
It would seem the Federal Reserve System with its 15,000 plus banks
franchised by the United States government for lending to borrowers has
achieved the unachievable: it has shown a way to get something for nothing.
Under the old asset based system all progress was due to producers
refraining from consuming all they have produced and then reinvested the
16
extra in ways to improve production. Thus the standard of living improved
only to the extent producers were savers and willing to invest.
.
With the Federal Reserve System production improvement could be
enhanced almost with total independence from the savings function and
additionally purchasers would not be limited to what they produce in the
present. Now it seems that everyone could have something for zero.
But there is no such thing as a free lunch: someone has to pick up the tab.
Who are the lucky people stuck with the tab? Hurry up, our waiter wants
payment!
1. Inflation is the first cost. The lending bank can lend out what it has on
deposit less the required reserve amount. As the borrowed amount floats
through the system it causes additional amounts to come into existence
when lent. Obviously, this increase in the money supply increases the
purchasing capacity of the nation.
While an increased purchasing capacity might seem positive and the cause
of our standard of living, it is the reason inflation is continually increasing.
We think of inflation as price increase but it is the total amount of unbacked currency in existence and that total money supply is purchasing
power in excess of production. Inflation: a high cost paid by everyone,
especially the poor and those on fixed incomes. (Examine how inflation
affects your own savings, retirement plans and present day purchases.)
2. Interest. While interest and inflation are interconnected it helps to
consider separately how interest in the debt based economic system forces
the continual expansion of the money supply (that is, it forces the
exponential expansion of inflation).
Since 1964, as silver backing was withdrawn and 1971 with removal of
gold in international transactions, every dollar in existence is borrowed
money and has interest owed on it. Since all money has been borrowed the
interest must be borrowed by someone before it can be paid to the money
creator. Someone must go to a bank and borrow money, spend it into the
system so previous borrowers can gain what is needed to pay the interest on
debt. Thus, the money supply must increase in every period by at least the
amount of interest owed on all debts both public and private.
Before 2008 the United States government owed some eight trillion dollars
and 54+ trillion in unfunded liability requiring loans of at least 500 billion
to be made each year. That does not address the interest owed on private
debt.
With the fiscal collapse in late 2008, trillions of dollars created
(borrowed from whom?) for the still unaccounted for bail-outs,
total national debt is completely and totally indefinable.
the
With the stimulus plan adopted in 2009 another $ trillion+ will be taxed or
borrowed from future participants.
17
Interest as a cost to be paid:
In asset based systems unconsumed production loaned at interest does not
increase the money supply. The asset’s owner transfers the unconsumed
production to the borrower who shares what is gained from having the asset
to improve production. The interest is a redirection of the benefit derived
from use of the asset. It is not a creation of new money. In a debt based
system the interest charged is a payment for non existent productive
capacity, a charge for increasing the money supply and needs to be created
before it can be paid: thus the need for continued inflation. Each
new money creation increases the total money supply: inflation.
These costs are paid in every transaction with no exception. Recall any
item’s price years ago and consider its price now.
Assume annual interest @ 5% and compound price for 35 years.
1974
gas at $ .39 would be $2.37 in 2009. $ .29 bread becomes $1.79 today. A
$57,000 home then would be $250,000 today.
The cost of the debt based system is in view constantly.
Some item costs have decreased due to production efficiency, outsourcing
to cheaper labor areas and market expansion. True, some prices have
decreased but the overall inflation costs are present even though mitigated
by adjustment methods.
(cf. Adjustments Chapter)
Remember inflated money is first spent among high end users with prices at
then current levels. As currency volumes trickle down causing increased
prices people at the low end make purchases at inflated prices long before
any wage increases.
Granted: our standard of living has improved exponentially with enactment
of the Federal Reserve System. Every citizen of these United States can
describe the benefits of our debt based system. But nagging questions
persist:
1. Are the underlying methods, according to which the
system
operates, based on justice?
2. Are these methods/premises causing the present crisis?
3. Did the fake money make it possible for people at the top to
make off like bandits?
4. Are the trillions in bailouts needed because debt based money is
built on thin air, not on true assets?
5. How can we learn who else has their hand in the till?
The future of a system can be no greater than
the fundamentals upon which that system is built.
Justice
Justice is built on the premise that causing something to exist is the basis of
ownership. It follows that if it does not exist it can’t be used in trades. An
asset based monetary system is just since it transfers production between
informed participants. If either has been duped the transaction is not just.
18
For example, if the bank
inflates the number of certificates over the
amount of silver coin on deposit transaction is not just. Asset based
currency demands honesty on part of the one issuing the ownership
certificates.
In the debt based monetary system the participants lack clear information as
to the exact nature of the medium of exchange. They are led to believe the
money is the same as the silver/gold backed currency of the past, or they
use money with no thought not realizing implications of what would
happens if it is a scam, not based on solid principles of justice.
If the currency is not an ownership certificate for anything of value why do
people give it so much value?
What Gives Money Its Value?
Quite simply, money has value because people value it, and it becomes
worthless when people refuse to accept it in exchange for their effort or
their goodies. This says value is subjective, capricious, transient, here today
and gone tomorrow. What does this have to say about economics in these
United States? In this country, and even across the globe, people thought U.
S. dollars were a safe harbor for their assets. Why the trust? And is there
something happening that is causing that trust to erode?
The basic underlying assumption is that money is a medium of exchange
because it has value. It is a storehouse of value. It is a unit of account
because it provides a relatively consistent way to measure value. The word,
concept, central to money’s success is its value.
Economics books refer to how strange things throughout history have
served as money, usually concluding that “beauty is in the eye of the
beholder” making very little difference what is used as money as long as
people ascribe value to the current favorite exchange medium.
Well now, if it makes little difference what is used as a medium of
exchange, as long as people accept it, is it a fair question to ask what causes
people to accept that medium of exchange for long periods and why did
people stop finding value in seashells? What drained confidence from 1787
French Francs? What made Deutsch Marcs explode? And those who know
more monetary history might ask what caused the demise of the other
monetary systems in the dustbin of history.
Defenders of fiat and debt-based monetary systems show how
all value
is relative saying there is nothing objective or certain in anything that is
used as money. The greenback has value since people value it. Gold has
value because people value it. And there is nothing to prevent people from
turning away from gold in favor of whatever catches their eye or feeds their
hope of receiving something for nothing.
Workers willingly accept money in exchange for their work because they
predict the mortgage company, the grocer, gas station and school will
19
accept the money as valid payment.
Each of these establishments then
takes the money predicting their vendors will also accept the money.
One person’s evaluation is a statement of how he predicts the next person
will regard his money. Is he sure he can get what he wants for the money? If
he is sure, he values the money highly.
When confidence is based on the physical, tangible, measurable, there is
less opportunity for governments or individuals to play with the medium of
exchange. Trust based on mere promises is short lived.
While value is subjective, the key question always remains:
“If a monetary system falls apart and you are stuck
with that medium of exchange,
which of your needs or wants will that medium satisfy?”
If the medium is copper you can make water pipe.
If the medium is silver it will make a beautiful tray.
If the medium is gasoline you can drive your car.
If the medium is gold it will make a nice ring for your wife.
If the medium is groceries, enjoy supper.
If the medium is paper, light a bar b que, if you have a match.
If the medium of exchange represents non-existent assets, make sure you
are not the last one accepting that medium.
Apt description of our monetary system:
After taking my goods, the robber benevolently said,
“here, you take the gun. Now you have the right
to take what belongs to someone else to make it even.”
After taking my products, the customer benevolently said,
“here, you take the money. Now you have the right
to take someone else’s stuff to make it even.”
To make up for the non productive content in our currency producers are
adopting adjustment methods or go out of business.
Refer to the Chapter on Theft Adjustment Factors.
To more completely understand the impact of this nonproductive
function examine its interaction with the next theft function:
land speculation. The marriage between debt-based money and land
speculation thefts follow the chapter on land speculation.
Chapter 4
20
Land Speculation & Monetary Scams Team Up
The two functions caused problems way back but the reciprocal
effects seem to have come together in the present crisis.
Late 19th Century industrial expansion and population increases raise land
prices and local banks print more gold certificates than gold on deposit
causing a run on the bank. People hoard gold reducing assets available
for industrial equipment purchases.
1913 Federal Reserve Bank is established permitting issuance of debt-based
money not backed by assets to make more money available for industry
and war efforts. Land prices increase with industrial expansion and greater
westward movement.
1920's see vast expansion due to growing money supply which caused
rapidly increasing land prices which in turn tends to slow industrial
expansion. Crash of 1929 follows. President Hoover’s attempt to ward off
crash with infusion of money fails.
1930's Depression follows. Injection of un-backed money into economy
aims at blocking home foreclosures and providing jobs through public
works projects. Gold backing removed from currency in 1933. WWII
buildup ends Depression.
1940's war effort is financed in great part by expansion of debt-based
money. Wage and price controls prevent wage and retail
price
increases. Land price increases are slowed as well.
1950's removal of wage and price controls increases land prices making
industrial expansion difficult. Home building increased for returning
veterans but size of homes reduced greatly due to increased land prices.
Land prices close-in caused beginning of urban sprawl and industrial
movement to rural areas.
1960's Vietnam War increased debt-based money in economy inflating
retail and land prices. National debt increased. Since all debt has interest
owed on it, it is necessary to increase amount of borrowing to have interest
for payment on existing debt. Credit cards made widely available to create
more borrowers. Prosperity makes land price increase leading to
development slowdown.
Retail credit cards sales have an added transaction cost.
1970's rising land prices causes industrial movement to south. Oil prices
increase with Arab oil boycott. Inflation increases due to excessive
borrowing/inflated money supply cause expansion reduction. ‘Stagflation’
describes home interest rates around 18%, unemployment around 9% and a
CPI over 10% per year.
21
1980's Federal borrowing to build up military to answer 'Cold War' causes
national debt to soar. Reduced tax rate helps expand industry. Land prices
increase. Decade is period of prosperity but large debt causes recession in
the '90's.
1990's Dependence on foreign oil increases with shutdown of domestic oil
production. Iraq War I increases military spending and national debt.
Internet bubble causes upsurge in stock market in late 90's. Expansion of
credit card use gives appearance of prosperity.
Congressional programs to give 'disadvantaged' workers an opportunity to
buy homes along with expanded credit and other 'prosperity' indicators
causes land prices to soar again. As land close to population centers
increase urban sprawl spreads and this increases land prices even more.
As this escalation continues the finance markets adjust by making hedge
funds and derivatives the place to make a quick profit. Large numbers of
loans are packaged into funds as market evolves to insure viability of assets.
Insurance protecting lenders
against defaulting borrowers becomes
current ‘go to’ product.
2000's with the 9/11 attack, military buildup and protracted involvement in
Iraq cause very large deficits. Oil prices soar, land prices increase,
development becomes more expensive and increasing numbers of jobs are
outsourced overseas to adjust for increasing finance costs. At same time
housing bubble expands with portfolios packaging mortgages for sale across
the globe.
Home prices continue to increase but employment slows and wage
increases disappear. Nation is indebted far beyond prudent budget limits
and bankruptcies and foreclosures increase yearly in commercial and
residential loans. Banks discover assets when valued by the 'Mark to
Market' method are undervalued due to falling market prices for homes.
Investors pull back leaving financial markets ready to implode.
The federal government stepped in with billions in bail-out cash but a
seeming lack of accountability plagues the whole effort.
January 20, 2009 the Inauguration of President Barack Obama brings hope
to a nation looking for creative ways to solve the seemingly impossible
financial problems amid the international threats to our nation.
*****
The term TARP, or troubled assets relief program, illustrates how the two
thefts relate. Land speculation and easy financing brought home prices to
record highs but at the same time caused jobs to go overseas and science
workers to come to take jobs from American workers resulting in escalating
unemployment rate. This caused an increase in foreclosures and the fall in
home prices. Derivative and Hedge Fund company portfolios crashed and
brought the Mortgage Insurance companies down. Investors across the
22
globe are ruined when GTI and Mortgage Insurance companies are forced
to pay on the Mark to Market method as foreclosures occurred.
Now we are expected to “Bail them out with more debt-based money and
more tax payer dollars.” And surprise, surprise, there is no talk whatever
about cutting the land speculators’ take.
“Don’t steal. The government hates competition.”
Chapter 5
Theft Factor: Unjust Taxation
“We the people of the United States, in Order to form a more perfect
Union, establish Justice, insure domestic Tranquility, provide for the
common defense, promote the general Welfare, and secure the Blessings
of Liberty to ourselves and our Posterity, do ordain and establish this
Constitution for the United States of America.”
- Preamble to
our Constitution
Justice must be the focal point of all government operations if it would
insure domestic Tranquility. Absent justice it cannot work for the
common defense, promote the general Welfare or secure the Blessings of
Liberty for the citizens of these United States.
With government involved in so many areas people wrongly assume
government is part owner and has no need to respect their property rights.
Government is not part owner of what we produce. Government is a service
provider and is to be paid for functions according to justice principles. And,
in the same way as other service providers, government has a legitimate
right to charge for the work it does.
The justice of a tax depends on whether taxpayers benefit from the services
funded by the taxes. This benefit can be an indirect or direct benefit.
Obviously not all government activities directly affect each and every
taxpayer. Most functions affect individual payers only by causing changes
in the overall community. This is an indirect, yet real, benefit to the tax
payer.
How is Government to be paid for its Services?
Presently, governments, with their multiple jurisdictions, levy taxes on
citizens using a wide variety of methods, such as sales, property taxes on
buildings, charges for land value, value added, tariff, excise, income,
graduated, progressive and regressive, sin, death or inheritance, to name a
few.
Direct Services Paid by Direct Charges
Some fees are charges for direct services rendered. For example, motorists
pay for roads as they pay a tax at the gasoline pump. Campers approve a tax
as they enter a park. Fees pay for water and sewer services. Pay parking
23
meters if you park. Tolls, tariffs and fees are designated for specific
services.
Some taxes are less direct but fully accepted by most. Fire and police
protection are services needed by all. Protection from foreign invaders: who
would oppose that? These charges respect private property rights as they
explicitly or implicitly address the actual needs of the paying citizen. These
charges are just.
The least just tax is a tax that aims at redistributing the wealth by taking
citizens’ property and giving it to other citizens under the mandate "from
each according to ability and to each according to need." This violates
justice.
The income tax provides Congress with resources to dispense handouts for
those disadvantaged by unemployment, sickness, social status, age, and
other conditions and situations. Here, the question is not whether they
should be helped. Ask the right questions. First ask what caused the
problem? Has injustice in the system caused the problems, and what can be
done to correct the injustices such as land speculation causing
unemployment by inhibiting development and out-sourcing jobs?
When people are in need the cause must be corrected. Three legal thefts are
disabling by taking from the production equation and leaving many people
in a disadvantaged condition. Correct the legal theft situation and many
disadvantages will be corrected.
When the system eliminates the non-producers there will be far more ways
for the real producers to become involved in genuine acts of concern and
community enhancing activities.
Fewer handouts are needed when family living wages are paid.
Indirect Services
The majority of government functions are not direct services.
Most income tax is not directly related to particular services or products.
The tax money is thrown into the general revenue and
‘omnibus bills’
are written by which representatives fulfill every possible lobbying group
priority. Citizens have little say about how the money is to be used. There
can be no full and complete informed consent. With government involved
in every aspect of life, funding is too complex for justice to be attained
completely.
Most bills moving through Congress have more than 500 pages. It is
impossible for representatives, and certainly for citizens, to know what
perks are given the well connected.
Citizens need ask government where the money is going. Aside from the
direct services, we need ask how tax money is being spent on indirect
‘services’ provided. For tax money to be spent justly on indirect services it
must truly provide value for the community in general and not to
24
individuals with power. This principle applies to a wide array of hand outs
such as TARP, bail-out, stimulus. Are the trillions going to CEO’s perks
and bonuses, to particular corporations, to stockholders? Question if the
help will stimulate job growth and economic renewal.
Government services, paid by a variety of taxation methods, are just only
when they provide genuine community benefits. We seldom make
conscious reference to the many indirect services made available by our
taxes. We benefit from these indirect services and should willingly pay the
price.
Really great news: the unjust taxation problem will be solved by collecting
revenue needed to pay for these indirect benefits from charges based on
values caused by the same indirect benefits.
The community has a right to receive rent of land charges based on location
value from natural resources and community created usefulness potential.
There are two main reasons why these charges (formerly called taxes) are
actual payments for what belongs to the community.
1. Community is the interaction of its people. If its chemistry is positive it
creates and if negative it destroys the usefulness potential of locations.
No land owner has ever increased that potential for his own location.
The community causes the usefulness potential of locations
justice dictates that it is to be paid for its work.
and
2. The Creator put vast amounts of resources in the world: air, water,
geographic and climatic advantages, minerals, gems, gold, silver,
broadband radio waves to name a few.
The community gives location value to natural resources by it
productive activity. Owners create no natural resources. They receive
the usefulness potential of resources caused by the community.
Justice dictates that the community has a right to be paid for the
creative activity that caused the usefulness potential of those natural
resources.
In this public revenue system the community receives revenue from just
charges based on community effort. This is a quid pro quo transaction
totally in line with strict justice, as individuals and moral persons trade what
they have created for the work of other individuals or moral persons. By
their efforts in using and maintaining their property to its greatest economic
advantage each community member renders value to all other community
locations. In turn, his location is enhanced by the activity of other
community members.
Land owners then receive the total value of their work. In this way no one is
penalized for contributing value to the community. They are charged only
for value received from the community. Revenue from this trade adequately
25
funds government functions
considered important. It is just, productive
and even welcomed by the payer since charges are payments for value
received.
The rent of land charge is not a tax but is a charge for services rendered.
The community or government provides services in
a wide variety of
functions as infrastructure, education, roads, hospitals and fire, police and
military protection and the list goes on and on. And add to this the work of
citizens enlivened by the chemistry of a nation thriving on justice and
integrity.
Limiting government means lower probability of unjust taxes and having
to pay for what is considered immoral. The closer taxing authority is to
voters the more likely it represents voter ideals.
Solve Unjust Taxation with the Constitution’s 10th Amendment:
“The powers not delegated to the United States by the
Constitution, nor prohibited by it to the States, are reserved to
the States respectively, or to the people.”
and
The Subsidiary Principle
“No function should be handled by a larger government agency
that can be handled adequately by one closer to the people.”
This reduces government’s involvement in social engineering and will
enable the Federal government to downsize and operate with a balanced
budget and no unjust taxes.
"Plan for Change" outlines a way to reduce government size.
The Economic Justice Manifesto
Basic Principles of a Just Economic System
An economic system will endure only if based on justice.
Justice demands respect for ownership rights.
Ownership rights derive from causing something to exist.
“It is mine because I made it.”
God truly owns everything since God ultimately caused all. Mankind
participates in ownership by sharing in causality.
Natural resources, geographic and climatic advantage are not caused by
human endeavor and belong to the entire community. They are to be used
privately only after the community has been reimbursed annually according
to just rent-of-land assessments.
Land location has usefulness potential caused by community effort can be
used privately after the community is paid for its work by way of just rentof-land assessments.
26
Having paid the community on a timely basis for its rightful interest in
natural resources and locations the owner of record can utilize to its best
advantage without penalties such as use or improvement taxes.
Monetary systems are just when the money conveys ownership. Unjust
monetary systems employ legal tender conveying nothing.
This legal tender obtains value when accepted in the next trade.
Taxation is based on fraud when it takes property and returns no equal or
greater value as agreed by participants clearly informed as to the tax’s
purpose and giving or refusing approval.
Rent-of-land charges based on natural resources and community created
usefulness potential in locations is a just source of revenue for funding
legitimate government operations.
Got a problem? Change it into an opportunity.
Chapter 6
Theft Adjustment Factor
The Theft Adjustment Factor has caused a bittersweet fact of life in these
wonderful United States. Adjusting for non productive functions the system
became more efficient. This expanded the economy, but then adjustments
increased causing very serious displacements for significant segments of the
population.
*****
A vital activity of successful enterprises is alchemy: converting problems
into opportunities. Theft factors ruin some companies while the clever ones
change problems into advantages by using the Theft Adjustment Factor.
An editorial cartoon illustrates this truism in a split cartoon, first side
showing 1929, and the second 1996, Wall Street investors react to
newspaper headlines. In 1929 the headlines told of high unemployment and
investors call out "sell, sell." The 1996 headlines speak of layoffs and
investors gleefully yell out, "Buy. Buy"! In 2009 investors are holding
their heads waiting to hear what the alchemist will advise.
The Theft Adjustment Factor is the percentage of additional production
needed to restore output lost to theft factors.
Many successful managers do not know fully what is making their task
difficult. But all, without question, know well the old adage, "not increasing
production by a magical percentage is the same as going backwards." Don’t
know who said it but the idea is right on “the wise know how to swim with
the sharks without being eaten.” They increase production one way or
another.
Successful leaders use productivity drains as a way to surge
ahead of competition. These are paid handsomely for their plans, devises,
schemes, methods, inventiveness and savvy, making them the envy of their
peers. The less astute settle into oblivion.
27
The Theft Adjustment Factor explains that magical percentage.
Serving the community, businesses make profits and earn returns on
owners’ investment (ROI). Without investments workers are not able to
create the products and services determining how we live. The standard of
living is no better than the sum of products and services provided by
community investors and producers. Without ROI there is no investment
and then no production. Fact of life: if a company is unable to earn a profit,
the owners move resources into more profitable ventures. Non productive
factors prevent ROI from being a good barometer of the living standard.
We need to make an essential distinction. The ROI is just when it is earned
by delivery of goods and service. ROI is unjust when it is due to
participation in thefts condemned in previous chapters.
As theft factors take from productivity companies make changes to adjust
for losses. In truth, it must compensate for what is taken by the theft factors
or it ceases to exist.
The culprits are the non-productive factors and not the company as it strives
to stay in business. However, let it be said that some companies have turned
the theft adjustment factors into a way to enhance profits far beyond what
has been taken by the thefts. This gives credence to what neo-socialists are
saying about some companies, “they care only about investments” and, “to
them, people do not matter.”
The chapters on the theft factors showed how the culprits are not investors
but those who are taking production without returning equal or greater
value. The theft adjustment factor explains how companies compensate and
in the process turn the problems into opportunities for themselves and their
investors.
Speaking of theft factors, we aim at functions. People can be involved in
perfectly ethical functions in one part of their lives, and disastrously
unethical, destructive functions in another. Look at functions, make
judgments, and proceed accordingly.
Even while the three major legal theft factors are taking quite sizable
portions of the production, return on investment must continue or the
business ceases. Adjust or perish. Forget not, there will be no work or
investment of resources without a return. Unless effort is rewarded,
investors consume excess production, and ‘live high on the hog’ rather than
‘throw money down a rat hole.’
If the theft factors deplete investments people will not continue investing,
and production will cease. Quite simply, we cannot continue without
investment. Thus the Theft Adjustment Factor must be employed to
compensate adequately for what has been taken by the non-producers.
*****
The Adjustment Factor accomplishes its function by:
28
raising prices, cutting costs, expanding sales,
and manipulating finances.
Neglect not the “if you can’t beat 'em, join 'em” factor. Many legitimate
businesses suffering losses to non-production opt to invest a percentage of
resources in those same functions to insure profit for their companies. This
is part of the reason why reform of the system is difficult: many ethical
people are drawn into the legal theft functions without realizing what they
are doing. “This is reality, this is the way the system works” is the mantra.
The ‘join them’ idea runs through the home building industry. As high land
prices cut into builders’ profits, they buy tracts of land ahead of population
shifts. This is one reason why no effective answer to urban sprawl was
devised. There is far too much profit in urban sprawl. Besides, do not forget
that homebuilders and real estate companies are very large advertisers in
newspapers. You seldom see editorials speaking against land speculation.
Corporations are major shareholders in banks to get a piece of the action as
they borrow money. Wal-Mart recently bought a bank. The Rockefellers
started Chase Manhattan Bank for the same reason. Oil companies have
owned a major share of domestic oil fields ever since the automobile’s
invention.
Caution! Do not allow the size of the opposition make you think reform is
impossible. Keep imagining the benefits of an honest system where we no
longer pay functions to stand in the way of progress. Milk and bread prices
declining while wages increase is something we can learn to live with. Extra
rooms on homes for less money would not be so bad. It can happen. This is
the new American Dream. But it will take changes in the system.
*****
Theft or Non-productivity Adjustment Factor (TAF)
Seeing the economy through the Theft Adjustment Factors tells why and
how the three production factors, labor, capital and land are being
rearranged. Seeing the economy through this lens gives new insights into
what is happening at virtually every place of employment and causing such
unrest across the nation.
This brief outline explains why capital investments are usually
investments in ways to reduce the work force to retain profits in the stock
market in spite of the non productive theft factors.
Theft Adjustment Factor: Raise Prices
As theft factors raise operating costs, the first line of defense is to pass the
cost on to consumers by increasing prices.
Across the economy, from the simplest food product to the most
sophisticated piece of equipment, the legal theft cost is hidden in the base
price. Compare food costs or rents in various parts of the country or look at
similar homes in diverse neighborhoods. Land speculation is obvious. Land
speculation costs make prices of all items increase beyond earning power,
but buyers accepts higher prices as regrettable, a fact of life. But should it?
29
Price increases caused by the legal theft factors are cumulative. For
example, appliance prices are a sum of raw material costs, wages,
manufacturing and transportation, land and building rentals, advertising,
legal fees. Each suffers from involvement with land speculation, credit
scam, or unjust taxation or all three.
Often theft costs cannot be passed on to consumers since the competition
has already discovered new ways to compensate without increasing prices.
The company must cut costs, increase sales, 'cook the books', or have a
'going out of business' sale.
Theft Adjustment Factor: Cut Costs
Cost cutting methods receive the greatest notoriety as they have a serious
impact on the lives of workers. This is only an outline. Reader-thinkeropportunists will apply the principles to their situations where theft factors
and theft adjustment factors are affecting their lives. By analyzing
situations, they can turn their problems into opportunities or discover ways
to change a system for everyone's benefit.
Cost cutting methods combine three types:
a. Cost cutting focused on labor
b. Cost cutting focused on buildings, equipment and supplies
c. Cost cutting focused on nature, infrastructure, location.
Cost Cutting Focused on Labor
Wages tend toward subsistence rather than higher pay since the
market
sets rates at those levels. As resources are more available it causes healthy
competition for workers. Now, companies have resources limited by
payments to non productive functions which force them to cut corners
wherever possible. This usually starts with those who are least able to go
elsewhere, viz. workers in less skilled jobs. Absent payments to theft
factors, companies across the scene would be able to spend more if it helped
them improve quality, quantity, customer service and whatever else was
helpful to increase their ROI. This would cause the market rate for wages to
increase.
Cut Labor Costs
Companies cut costs in various ways: reduce wages or negotiate lower
increases and require more work per unit. Utilizing part-time workers
causes significant cost savings since employees with an average of 19 hours
per week may receive no benefits covered by ERISA (Employee Retirement
Income Security Act). Profitable companies control costs by using part-time
workers.
Business lobbies the government to have fewer workers covered by
overtime rules of the Wage and Hour law. Then the work is
realigned so employees exempt from the provisions of the Wage and Hour
Laws perform work since their hours are not limited as are non-exempt
employees.
Frequently, employees with the title of manager on fixed salaries work 60
plus hours a week for tasks performed by one and a half hourly employees.
30
Titles pay no heating bills. The use of salaried personnel in 60 hours per
week functions is increasing at a rapid rate. Sales reps spend their own time
doing work once assigned to administrative staff. Salaried workers use
vacation time on administrative leftovers.
Merger
Wages are reduced significantly as companies employ mergers,
acquisitions, spin-offs, buyouts, and other consolidation methods to
compress the workforce. Under consolidation one employee accomplishes
what two or more performed previously.
Outsource
To reduce labor costs companies are sending work to lower wage countries.
They out-source data processing, accounting, word processing, payroll,
assembly, and routine functions admitting of standardization. They avoid
higher wages and benefits by having companies with higher volume
standardize functions using lower skilled workers. Labor pools and
consultants multiplied with the need for greater efficiency and labor law
compliance.
Standardize
Sizable cost reduction is gained by shaping work to emphasize different
labor factors. Workers with less ability do certain tasks. Standardizing
functions, and ‘hiring down’ to pay for no more ability than needed to get
the job done cuts labor costs. This is a major reason why entry-level jobs
are abundant in some labor markets. Fast food was among the first
examples of standardized methods. Inexperienced help successfully
performs operations with easily understood methods. Standardize to cut
costs.
Writers of manuals and software developers detail the essentials required to
operate profitable ventures. This opens opportunities at higher levels in all
management areas, personnel, training, development, administration, and
software development where companies hire people to standardize
functions to control costs.
Labor cost cutting is quite significant, and perhaps receives the greatest
publicity. Almost daily the newspaper business pages report the downsizing
or merger of two or more companies with outplacement (read 'firing') of
many employees. The productivity index is a key economic indicator: “how
well did we get more from employees to compensate for theft factors?”
By now, it should be obvious that Theft Adjustment is the key word for
making a neat profit in this land of opportunity. Fresh ways to overcome
theft factors reap rewards, evidenced by the high salaries paid CEO’s and
all functions helpful in containing costs. At low levels workers gain notice,
and are promoted to responsible positions, for finding ways to cut costs.
*****
Wait a Minute! Management's job is to maximize profits. If legal theft
factors are eliminated totally, the adjustment negative effects will continue.
31
Companies always try to maximize profits so they will continue sending
jobs to whatever location provides the cheapest labor. Theft factors have
nothing to do it.
Consider: the company's production is 10; after paying operation costs of 7
there is 3 for investors (owners). Wait, before paying investors, the legal
theft factors must be paid 2 (20%) and this leaves only 10% for investors.
To make up for the totally non-productive thefts taking from the operation,
management uses
various adjustment tactics and returns the ROI to its 3
level. This is necessary for company survival.
So what happens if the country wakes up and employs intelligent reforms to
eliminate the three legal thefts? Since management’s job is to maximize
profits, won’t it use the least costly labor force available? Yes, but this is
not as obvious as management will always choose higher short term ROI
and neglect longer-range possibilities. Maximization of profits is a complex
question in which short range and long range are a continuum with many
varied factors considered.
Consider: in our example, Theft Factors took 2 from the pot. If the system
removes the Theft Factors 20% of production is now available to invest,
wages, efficiency and quality improvement. With 20% more available,
managements will consider many options. Some will choose higher wages
for more qualified people to improve the market share, other companies will
choose higher dividends, or combine possibilities. In the long run, the
company with the best combination for that time and place will come out
ahead: attain the highest ROI. Therefore, it is not correct to say companies
will always choose short range profits at the expense of workers. Smart
competition changes the obvious into a far more complex and interesting
game.
TAF: Cost Cutting Focused on Capital
The largest labor cost savings come in capital combinations (buildings,
equipment and supplies). Henry Ford’s use of the assembly line is classic
efficiency at work. Why have the worker go ‘to the work’ when it is more
efficient to have work ‘come to the worker’. Building assembly lines
involved huge capital costs, but production increases quickly repaid
investors with larger dividends.
Material handling showed some of the earliest and most efficient cost
saving methods in industry. These efficiencies relieved workers from some
of the heaviest and most monotonous work, but it eliminated scores of jobs
on which many folk relied to feed their families. It is hard to conceive of
work without a conveyor belt, elevator, forklift truck, ditch digger, plows,
and combines. Add to this, industry's cybernetic revolution and witness a
giant leap forward in the national standard of living and at the same time a
huge loss of jobs at the lower skill levels.
The cost of compensating for the Theft Factors usually comes from the
labor factor as it is the more vulnerable. Elimination of these theft costs
32
brings benefits for investors and improves the
prospect of profit sharing
with all employees who helped create
the profit.
With this in mind it is imperative to rid the equation of legal thefts so
technological advances point to a better standard of living for all, and not
only the upper end of the economic ladder.
*****
As companies struggled to compensate for legal thefts by reducing labor
costs, unions organized to protect workers from harmful changes. As a
union laid claim to its share of production the business developed new ways
to cut costs. The unions were blamed for increasing costs but they were
responding to how the companies were adjusting to the legalized thefts
taking large parts of the production. Management and labor were/are
regarded as conflicting functions when they are both victims of a larger
problem. The problem’s answer lies in labor and management joining forces
to eradicate legal thefts:
Labor and Management Unite! Save jobs by
removing legal thefts from the economic equation.
It used to take a plumber and a laborer 2 days to lay pipe to water golf
course greens. Now: plumber pulls PVC from truck, applies cleaner/resin,
joins to next section, drops in ditch, repeats as fast as truck can move. One
plumber and truck in less than ½ day.
The methods and materials revolution is retold in every industry in the
country. But making labor more efficient is not sufficient to keep pace with
the Theft Factors operative in the industry. At increasing rates jobs must be
done away with entirely. Robots require no workers' wages, medical
benefits, vacations, sick time retirement, OSHA, ERISA and EEOC, and
other standard labor costs. (By the way, they also buy no products.)
Stores use UPC and have customers check out their purchases. Fast food
restaurants are doing the same. ATMs are on every street corner. And who
has not suffered the indignity of the person-less telephone system? Medical
services soon will be ‘manned’ by an all-knowing diagnostic computer?
Just kidding! Whenever possible, ‘Just in Time’ methods replace costly
inventory warehousing. ‘Quality Control’ replaces ‘Quality Assurance’ to
minimize unnecessary quality.
Application of scientific technology accelerates exponentially as business
finds ways to compensate for theft factors. Obviously computers
standardize complex manufacturing operations with significantly smaller
labor forces. The benefits of technology are undeniable but detrimental
effects of workforce displacements increase to adjust for what theft
factors unjustly take from ROI.
Financial Manipulations
33
In speaking of TAF Cost Cutting Focused on capital do not neglect the area
of Financial Manipulations. In finance there is no distinction between
money and capital. Failure to distinguish between assets and credit permits
all sorts of manipulations that
bring our system to the point of complete
destruction. 2009 may spell the end of our Monetary System because of the
pretense that money is capital when the money we use is not assets at all but
is evidence of debt. That is nothing but a scam.
Financial manipulations occur in every area of business and huge rewards
are paid anyone who can work the system, as long as he stays inside the less
than stringent legal limits of the Securities and Exchange Commission. But
the SEC is not always able, or not interested in staying ahead of those who
diligently work the system to adjust for Theft Factors using them to their
advantage.
Continually Congress is asked for laws to control the financial
manipulations. It would be smarter to start with analysis of legal Theft
Factors making manipulations necessary. This is a prime area where
government size would be reduced, given the absence of Theft Factors
making the financial manipulations a necessity.
The float is basic financial manipulation. Banks ‘hold’ checks for days to
provide extra use of money. What other reason would medical insurance
companies have to refuse paying charges that are obviously covered and
paid when challenged? Could it be that the delay provides free use of
money or a significant number of people will pay the bill without
complaint? Executives earn big money for finding new ways to stonewall,
stall, reinvest, route, and make money the ‘new fashioned way.’
Recent events have shown new ways to manipulate company finances.
Treating operating expenses as if they were capital investments makes it
look like they are less a drain on the profit picture. A company’s offshore
partners carry negative aspects of company’s debt picture or losses
showing the company to be in better condition. Exaggerating income makes
bottom line look more attractive as well. All this translates into better stock
prices.
Lobbying Congress to support sub-prime loans to lower income workers
expanded housing sales which in turn pumped up land speculators’ take.
The resulting housing bubble caused massive expansion of hedge funds
and derivatives with historic bonuses and perks to top executives. But the
bubble, like all bubbles, was filled with air and the resulting “pop” may
bring the system down. In the meantime the executives are still getting
bonuses out of the $700 billion “bail-out” money from the government.
The IRS code has thousands of pages with loopholes designed to make
financial manipulations possible by the well connected. The system would
be far better with a just method of collecting charges based on services
received rather than taxing production.
34
If productivity stood on its own, not skimmed by legal thefts, there would
be no real need for such financial manipulations. Profits would attract
investors. Absent the Theft Factors, profits would enable the healthy
reinvestment in buildings, equipment and supplies, and increase employee
wages and benefits.
In the Theft Factor economic system in which we currently operate
successful businesses hire financial manipulators skilled in ways to 'cook
the books' in new imaginative, and if possible, legal ways. These are not
always ethical and can spell disaster for a company, the employees and the
economy as a whole.
*****
TAF: Cost Cutting Focused on Land
Companies adjust for the Land Speculation Theft by investing more in
buildings and equipment, and succeed in maintaining productivity. But
their success causes neighboring ground cost to increase making future
expansion more expensive.
Imagine a relatively successful chemical company operating in a city's
industrial area. Empty adjacent land tracts sell at modest prices. As the
company becomes more prosperous, somehow neighboring tracts take on
new value and prices increase. If the company wants to expand, it will be
difficult due to higher land costs that it helped cause by its own success. A
different location, possibly out of town, must be considered.
Mid-20th century northern cities saw industry's exodus to nearby rural areas
and even more distant southern communities. Cost of ground, along with
cost of living due to higher land and wage scales, made expansion
unprofitable at present locations. Low land cost away from population
centers was too good to forego.
Now, at the end of the 20th century, a combination of labor and land costs is
driving industries overseas to seek TAF benefits.
To keep companies communities employ lobbyists to secure tax
abatements, tax increment financing or development funds, lest they move,
taking jobs with them. The companies cannot be blamed for compensating
for the land speculation theft robbing productivity: ‘adjust or die’. Most
observers make no connection between cost of land and cost of labor. They
blame 'greedy' corporations for moving operations to lower wage areas.
Elimination of land speculation will result in so many more jobs that we
will be sending work overseas due to worker shortages, rather than as a way
to cut labor costs.
Eliminating the land speculation theft and working on other theft factors
will help the United States benefit from participation in the global economy,
and help Third-world nations prosper. It would be a true win-win situation
35
for all. We could unilaterally remove tariffs and other hindrances to total
free trade.
*****
TAF: Increasing Sales
Population increase has potential for large profits due to higher demand for
goods and services from alert companies. However a larger population of
productive people causes more speculation in land resulting in higher
operating costs. Companies then need
to compensate by cutting
costs, but that is not enough. They need additional sales for the company to
‘keep up’. This causes theft factors to increase proportionately and then, to
compensate for the reciprocal escalation, sales must increase again.
Increasing sales is accomplished by convincing the public it cannot possibly
exist without having at least one of this item for home, one for son or
daughter at college, and how about one for a game room and the SUV.
Every product is a ‘must have’. Credit cards to the rescue!
Products are to be replaced again and again if they do not last too long, so
planned obsolescence is employed. Handle razor blades? Create throwaway razors. Throwaway cigarette lighters and do not forget disposable
diapers.
It is laughable how the public thinks it made the supplier produce what it
wanted. Advertising is a most influential attitude shaper. Junk mail,
newspaper and TV ads, Saturday morning cartoons and even parking meters
sell everything from beef and beer to
homes and cars and getaway
vacations to help with the stress.
Meanwhile environmentalists decry conspicuous consumption claiming
Americans use up the world’s resources faster than other nations. Sadly
true. But address what causes the excessive consumption: business cannot
survive the Theft Factors unless production theft is compensated by raising
prices, increasing sales, cutting production costs and plying financial
schemes.
Controlling cost and increasing sales combined as companies developed
new retailing methods. Packaging extended shelf life and Universal Product
Code technology enabled lesser trained personnel to handle larger numbers
of transactions more quickly.
Customers are attracted to outlets where speed and lower prices replace
quality, convenience and personal service. Giant retailers drive out the
smaller. Factory direct methods, warehouse sales, mega stores (the ‘boxes’)
concentrating on all facets of a single segment (as building supplies, food,
appliances, apparel, office supplies, computers) generate sufficient sales to
compensate for the drain by Theft Factors. Insuring consistent quality (not
too much quality) helps control costs as well.
36
Problems are opportunities in waiting. TAF makes opportunities for
business and employee. Business must adjust for theft factors or die, and
some use the TAF to such an advantage they earn far more than when theft
factors were less onerous. Employees who understand, and discover ways to
achieve efficiency with cost reduction methods soon climb to the top of the
pecking order.
*****
Conservatives claim automation and robotics create more jobs than they
eliminate, and most think we gain from technology. Indeed, for many it is
true, the standard of living is better for the technology, and the number of
workers displaced by automation is made up by job creation in technology
fields. But the upward spiral caused by technology is slowed next by the
connection between Theft Adjustment Factor and increasing Theft Factors.
The connection between TF and TAF causes more technology advances,
which cause even more labor displacements.
Technological Development is an advantage for society’s living standards
only when Theft Factors have been disarmed. Paying the totally nonproductive theft factors in every transaction is insanity. To benefit from
technological development we must disarm the three thefts.
While employers are struggling to meet pressures of their own, investors
make demands based on the need for a higher ROI. They do not sit still if
managers neglect corporate accountability: "Unless you are a good steward
and show a return on our money, you can be steward no longer."
Management had better show a healthy ROI via the Theft Adjustment
Factor (TAF).
People work entire lives trying to build retirement nest eggs. The recent
decline in 401k retirement accounts due to the monetary system scam points
to the crying need for reform.
*****
Following World War II, the Theft Adjustments compensated for the Theft
Factors using automation to reduce manual work. Then computer
technology changed white-collar work and knowledge component became
king.
But new technology still uses the same three production factors: labor,
capital and land. No matter how it is sliced, the three are essential. If it is
super-symbolic work or strictly muscle work, or if the tool is a high priced
mega gig computer or a four pronged pitchfork, it takes capital to create and
slice the production pie.
And finally, they can talk all they want about not needing land as much now
that we are high tech. Are workers suspended in air, not tethered to the
ground in some way? And land speculation is making that ground more
expensive as we speak.
37
Ways to compensate for legalized thefts stealing from production change
daily but the three productions factors remain. Thinkers claiming land and
capital are one and the same make a mistake with disastrous consequences
since tax on capital increases its cost and makes it less available. But a land
charge reduces the price of land and makes it more available: an essential
difference.
It is essential for every worker, business manager, and investor to
understand the Theft Factors and Theft Adjustment Factors at work in their
own business, and the economy taken globally. Clear recognition helps
prepare for changes.
Until the system makes necessary corrections dominance in the economic
order will belong to those who either control theft factors (TF) or organize
the theft adjustment factors (TAF).
Rewards await the astute in factors management. Functions with advantage
in these factors change continually but center on:
- land speculation - banking and finance - tax design-lobbying
- cost
accounting - time study & efficiency management
- human resources: position analysis, training, standardization,
management & development - methods & materials design
- sales management & training; motivation - marketing: product &
demographics analysis - advertising: creating needs
- distribution method, design, implementation
- and neglect information technology at your peril.
Opportunities abound for anyone able to assist the movers and shakers raise
prices, cut costs, increase sales, manage financial games, and oh yes, don’t
forget, invent ways to steal more efficiently with the theft factors.
In the functions, pendulums swing between extremes. Example: earlier, the
tendency was toward expansion of low-end markets. TAF functions had
value for the economy by standardizing functions, making low wage
positions capable of performing tasks once reserved for higher paid people.
The vast increases in lower wage jobs made discount shopping the norm. It
seemed the last place for a startup business was in unique, high quality,
limited quantity products. However, it is becoming obvious that adjustment
designers are well paid for their work, and salaries in positions with this
responsibility are growing rapidly. The number of employees at pay scale
extremes has increased, while well paid positions in the lower middle are
diminishing.
Because of these changes a market is now open for higher priced items once
thought to be the province of the very rich. As Theft Factors’ impact on the
economy increases Adjustment Factors will dominate the labor market.
Expansion of the upper-end pay scale will open up opportunities to satisfy
wants of the new rich.
38
While the extremely rich are still a small percentage the number of those in
the high-middle income strata is increasing, as well as high-tech positions
born of the technology explosion.
Word of caution: the 2009 crisis may cause the very wealthy to cut
spending to appear as if they are ‘tightening the belt’ for a time but those in
control will assume their rightful position as the crunch reestablishes the
inflationary markets in their favor.
*****
Reviewing Theft and Theft Adjustment Factors consider how they
interrelate: corporations adjust for added costs in raw materials and land
rent due to the Theft Factors by investing in labor saving equipment, and
buying more advertising. Then, due to adjustment efforts, businesses
enjoyed success, which in turn, caused rent of land to increase along with
other tax rates. Then, Theft Factor increases require greater Adjustment
increases, causing additional Theft Factor costs.
The interdependence of Theft Factors and consequent Theft Adjustments is
illustrated in an Appendix by a model called
The Production Equation.
While not an equation in the strict sense used by professional
mathematicians it shows how we are sucked into a whirlpool of negative
economic forces.
The equation or model shows how three accepted and legal functions add to
the cost of production, and then require the producers to compensate to
make a legitimate profit. In every transaction consumers are required to give
non-producers a sizeable reward for their thievery.
Financial Manipulation to the Max
Frequent complaints about health care are heard and with good reason.
Insurance companies control costs with any means possible including
payment delays, red tape and excessive restrictions. They gain cash flow
interest advantage delaying payments and in some cases even cause
justified recipients to forego payments rather than continue the battle.
The situation with some health benefit companies is becoming so intense
that it is possible government will seize the opportunity to eliminate the
health insurance industry and establish a single payer plan (socialized
medicine).
Examine the Health Care proposal in After Thought
Final thought before proceeding to Plan for Change:
Attempts to level the playing field by taxing income make things worse.
Those in control of Theft and Adjustment methods simply increase
adjustments to the disadvantage of those who need help.
Eliminating causes is the only effective way to correct problems.
39
The needed corrections are straight ahead.
Serving the community in one function
while destroying it in another,
‘they know not what they are doing’.
Chapter 7
Plan for Change
Interdependent problems need interacting and self-correcting solutions.
Short of the ideal, most well-intentioned solutions cause deeper, more
extensive problems, requiring even more radical solutions: the "law of
unintended consequences."
Federal solutions to economic problems increase reliance on government,
requiring even more government action. Even those who might agree with
this premise insist on government answers to economic problems thinking it
is the only way. Many Social Justice Thinkers are of this mind. Hopefully,
discovery of justice based answers will make government’s answers less
appealing.
Just solutions to complex problems need resemble interacting and selfcorrecting gyroscopes and cantilevers.
The gyroscope’s spinning mass around a fixed axis provides ships or
spacecraft with constant reference points. The spinning mass’ momentum
resists change providing ‘memory’ of a craft’s planned direction.
Solutions to problems require targets with built in momentum to maintain
community focus as interacting factors toss the body politic to and fro in the
storms of daily living. Example: war on poverty tried to free people from
poverty. Instead of freeing, it tied several generations to debilitating
dependence: a negative gyroscopic solution.
Needed was an eradication of poverty by a healthy economy, enabling every
able-bodied person to work for family living wages. This has positive
momentum - a gyroscope guiding the community in a positive direction.
Effective problem solutions imitate cantilevers. They involve the problem
in its solution. In ordinary fulcrum levers, weights (problems) are lifted by a
force separate from targeted weights, whereas in the cantilever, targeted
weights are simply redirected to serve the process of maintaining the weight
at the same height. The weight can be said to support the weight. Thus,
effective problem solutions redirect or reshape problems to participate in
their own or related problem solutions.
People tend to satisfy wants with the least effort possible. They like getting
something for nothing. This natural tendency is the motive behind good and
40
bad human activity. Certainly it is the motive power behind the three legal
thefts in our economic system. The Federal Reserve sold the idea that it
could give the people something for nothing. We believed it to our
detriment.
An important derivative of this principle: we repeat actions with rewards,
and avoid actions with penalties. This provides a way to redirect problems
and involve them in their own solution.
Chapters 2, 3 and 5 identified three legal theft factors to be
causes of our most costly economic problems:
Land Speculation Bogus Money Creation
Unjust Taxation.
How now to involve the economic problems in their solution?
We tend to satisfy wants and needs with the least possible effort. Thieves
are no different. With imagination and resolve, we can harness that
motivation to satisfy wants with the least effort to work to community
advantage rather than that of nonproductive thieves. Doing so will cause
problems to participate in their own solution, or at least, work to solve
related problems.
Employ cantilevers and gyroscopes!
An economic system built on a solid foundation of justice
The plan provides a solution to the Land Speculation Theft that solves the
Unjust Taxation Theft and in the process provides the backing needed to
end the Monetary System Theft.
Thanks!
Workers benefit
Honest money returns
Assets back new money
Savings make assets available
Reduced debt inspires savings attitude
Greater production capacity reduces need for debt
Rent of Land location charges removes need for unjust taxation
Improved location usefulness increases revenue for government
Creative community activity causes increased location usefulness
41
Removing taxes from effort stimulates community productivity
Charges for natural resources & location value funds government
Funding government with location charges
provides revenue to eliminate unjust taxes
and in the process
secures hard assets needed for justice based money
Review the three legal thefts and have them solve each other.
*****
Legal Theft: Unjust Taxation.
Income taxes take citizens' property to answer wants of groups and
individuals not connected to the property owners. Their property is taken
without informed consent to answer wants of people who have exerted no
effort in that context. An attempt is made to justify the tax by using the
image of a giant kettle into which we pay according to ability and take out
according to need. Families operate out of the kettle principle as members
freely help each other, confident their needs will be met if and when the
time comes.
The early Christians used this principle in community with all held in
common. It was motivated by love, not justice.
The Pilgrims first applied the ‘all held in common’ principle as law but
what works in a family does not work under force of law. Communal farms
nearly destroyed the Pilgrim experiment. When the community was
reestablished on the basis of private farms and businesses they thrived. The
1623 Thanksgiving celebration was recognition of private initiative’s
superiority over communal ownership of the means of production.
The Soviets attempted to require by law what can only be done freely
motivated by love. Both the Soviets and the United States answer needs of
some individuals by taking property belonging to others. Unjust taxation is
theft: legal, unrealized, unintended, but theft all the same.
*****
Legal Theft: Land Speculation
Land Value is due to community activity causing the usefulness potential of
locations and natural resources. Owners did nothing, and can do nothing, to
create, increase, or decrease usefulness potential. All location value belongs
to the community causing that potential.
The land speculation function attempts to derive benefit from
42
value it did nothing to cause. This function is unnecessary, has no purpose,
and is totally counterproductive. With no land speculation there would be
no less land; in fact, there would be more land available for use. Therefore
profit derived from the function is unearned and is theft, albeit legal,
unrealized, unintended, but theft all the same.
*****
Legal Theft: Bogus Money Creation Function.
Commercial banks have a legal franchise to create money for lending at
interest to all borrowers in the economic system. The banks create marks in
the book as borrowers provide collateral, or a promise to give up their
future production, in exchange for the opportunity to participate in the theft
system. Legal tender laws require everyone to accept only the bogus
instruments in return for goods and services. Since the money comes into
existence effortlessly, conveys actual ownership of nothing, and has the
legal right to take goods and services from all system participants, it is theft,
albeit legal, unrealized, unintended, but theft all the same.
*****
Elimination of the Theft Factors
It is unlikely the Theft Factors will be eliminated in the very near future
since too many people are thriving in the system presently operating and
‘who will kill the goose that lays. . .' However, while many are enjoying the
prosperity from the operative theft system, remember the present prosperity
certainly is not for all Americans. In addition, as Theft Factors take larger
amounts of this great nation’s productive capacity, the harmful effects are
felt by those who are fired, downsized, outsourced, standardized and
reduced to marginalized existence.
As this process increases the wealth at the upper end and reduces lower end
buying power, hopefully there will develop a sense of urgency to discover
how strict justice has been wounded.
I said strict justice has been wounded. I do not refer to the meaningless
rhetoric about single payer health plans, rights to shelter, rights to
employment and all the other rights proposed by demagogues as well as
serious thinkers who espouse ways to help the victims of the theft riddled
system.
Hunger for justice will eliminate the theft functions that make it virtually
impossible for many to afford food, shelter, health care, education and all
that is needed to achieve a dignified life.
When the process of eliminating the theft factors begins, it must be gradual
and build on public understanding and acceptance of the basic principles of
justice, recalling the difference between justice and fairness.
Gradualism will insure the least displacement and confusion, and
people in the solution of the problems harming them
43
involve
Understanding thefts and developing insight into the solutions used to
eliminate the problems is essential in order that future generations will not
easily relinquish the new just system. The thieves will most certainly
attempt to steal the system back from the people. Thieves are not known to
be gracious losers.
Ask not whether these changes can be made.
Ask, “should the changes be made?
Then ask, “when and how do we start?"
Eliminate the three Theft Factors in four phases:
Phase 1: Begin eliminating the land speculation theft
by funding
local government with Location Value Charges
to pay the community
for its work.
Phase 2: Eliminate other unjust taxes, (sales, local earnings, personal
property and more) as Location Value Charges increase local government
revenue.
Phase 3: Repeal Income Tax amendment & Amend Constitution to have
Federal Government obtain revenue by billing the states which are then
funded from Location Value Charges.
Phase 4: Establish a Just Monetary System
*****
Phase 1: Eliminate the land speculation theft.
Before any reform is possible the community has to understand how land
speculation violates its sense of justice. To achieve this, we need public
information programs to show the advantages of funding government
functions with location value charges which pay the community for its
important work.
Academic, religious, civic and neighborhood associations will help share
the good news about the better way when they see the economic
advantages of a way that is built on justice
As people express interest and enthusiasm for advantages of the new system
politicians will begin to see how the Land Value Charge is in the best
interests of their constituents because
a. it is progressive: location value charges are proportionate to one’s
ability to pay since most valuable land is owned by the more wealthy.
b. it reduces government size since increased development and
employment reduces need of government programs.
c. it rewards community-helpful behavior: location charges put profit back
into functions considered valuable.
d. it is not avoidable through loopholes: location charges are on the
ground and not on the person, making avoidance virtually impossible.
44
No one has found a way to send land off shore to avoid taxes like they
do with the income tax.
e. it is not passable to the consumer: land economists agree the location
charges are paid by the owner of record and are can not be passed on to
renters or consumers.
How is the Location Value Charge to be enacted?
1. Amend State constitutions enabling local taxing jurisdictions to levy
different property charges on land and improvements.
2. Have annual publication of jurisdiction’s assessed values for citizen
comparison and appeal. Federal Property Assessment Review process
would be within functions mandated by the Federal constitution pertaining
to domestic law enforcement.
3. Begin gradual process of lowering taxes on buildings while increasing
charges on land location value (for example, over period of ten years). As
taxes on buildings decrease and charges on location value increase the
community becomes aware that using property to its economic advantage
serves the community and property owners. Higher rates on location value
and no taxes on improvements will be demanded.
4. As revenue collection over the period changes to land value charges
higher cost of keeping land off the market will cause the price of land to
decrease in the area. This stimulates development and encourages property
maintenance. Market upgrades brings
prosperity and with it higher rentof-land revenue. The increased employment causes higher retail sales
leading to possible sales tax reductions.
5. As revenue collection moves to location value charges need for tax
abatement and tax increment financing to stimulate new developments will
be completely gone. This will be an advantage for all taxpayers now the
victims of the tax abatement scam.
6. Owner occupied residential property with elevated taxes can make
payment of increased charges at time of property sale if the owner is
retired and elects to make payment by way of interest free deferred
payment.
7. The community is to receive payment for increasing the value of natural
resources, geographic and climatic advantages by the increasingly
productive effort of its expanding population.
8. Family farms will be able to compete as the cost of farmland looses its
speculative price and is not taxed on productivity. They will pay location
charges based on natural fertility and value of land created by community
effort. All farms, large and small, will realize a benefit from not being taxed
on productive work.
*****
45
Phase 2: Eliminate other unjust taxes.
As a state converts to obtaining public revenue from charges on location
value, it can eliminate other unjust taxes such as sales, earnings or income
taxes, inventory, merchants & manufacturers, personal property, value
added, excise, sin, pleasure, and other taxes that are not charges for services
rendered.
This achieved, the foundation for other reforms is in place. As public
revenue is derived from combined community productive activity local
jurisdictions will begin to experience surpluses. The surpluses can be
distributed to citizens on a per capita basis
or made available with
health care debit cards. After Thought presents a possible health care plan
called SHIP or State Health Investment Plan.
*****
Phase 3: Repeal Income Tax Amendment –
Enact Amendment enabling the Federal Government
to bill states for necessary revenue.
Since the 16th Amendment to the Federal Constitution enacts tax laws that
confiscate citizens’ property without their informed consent it must be
replaced with methods for collecting revenue from what belongs to the
Federal Government according to the principles of justice.
This will be accomplished by the Federal government billing the states for
services agreed to by the states. Receiving the annual Federal Bill “for
services rendered” the state will be inclined to claim it can no longer afford
the ‘services’ provided and call on the feds to reduce the size and scope of
their bureaucracies. Then the state will construct answers tailored to its
particular needs.
The state will bill counties for revenue needed to operate and pay the
federal bill. The counties will collect revenue according to its
assessment procedures. This causes each jurisdiction to become more
responsive to constituents, this restore the 10th Amendment to its important
position:
"The powers not delegated to the United States by the Constitution, nor
prohibited by it to the States,
are reserved to the States respectively, or to the people."
Presently federal and state governments are too removed from the bill
payers to be truly answerable to constituents excepting the most vocal. The
propose method restores local accountability.
States have unequal community created value and natural resources. States
with lower location values have lower rent of land and lower charges on
locations. This fact will attract many in search of reduced operating costs.
*****
Phase Four: Eliminate the bogus money theft
by making currency redeemable in physical assets.
46
Justice is achieved in transactions when informed participants mutually
agree to the terms of a transaction, and just payment
requires ownership
conveyance of something of actual value and not a bogus medium of
exchange required as legal tender.
For an economic system to be established on justice it needs a medium of
exchange that conveys ownership of commodities with stable use value.
Anything less than actual conveyance of ownership builds the system on
systemic fraud.
Secure the Specie & Establish the Currency
Secure the Specie
As states levy charges based on location rental value mineral owners could
receive a discount by paying with the physical minerals extracted. As
minerals are used to pay state charges the states in turn pay the federal tax
bill using physical commodities.
The Federal Government maintains commodity stockpiles for defense and
other vital operations. The strategic reserve can be expanded to collect,
audit, warehouse, and protect commodities paid the government from
charges levied upon the states. The collection and warehousing of
commodities will be similar to the warehousing of gold at Fort Knox prior
to the Federal Reserve takeover.
Upon adoption the reserves of gold and silver becomes the specie for the
new United States redeemable currency.
Establish the Currency
Establish a Common Currency for the United States, redeemable in physical
commodities of gold and silver as required by United States Constitution
Article I, Section 10.
Essential to the establishment of the asset-based currency is the predication
of currency in standard units as troy ounce, pound, cubic centimeter, ton,
kilogram and so forth.
Markets need currency that is a convenient medium of exchange and a
trustworthy storehouse of value. Unless accepted by the general public it
matters not how worthwhile and correct the medium. Point to justice in a
currency that is at once a medium and actual ownership transfer vehicle: it
serves no purpose, if the people have no confidence in its trustworthiness.
On the other hand, if the medium is accepted, it does not matter that
everyone has been duped to believe that it is backed by the production of
the people. Public acceptance is critical. A nation’s currency is in trouble
when the people begin to doubt its value.
The present medium of exchange, the debt-based currency, is a theft but it
works because the people still believe. In the new asset-based, 100%
redeemable system, herein proposed, each party in the transaction receives
47
certifiable ownership of actual use value; 100% honesty, free of fraud. No
fractional reserve, no illusion.
But success depends on public acceptance. Therefore, transition is to be
implemented gradually, allowing the public to utilize new currency, along
with the old, as it feels appropriate. The present system came into full use
over a 50 year period from 1913 to 1963, continuing to change to this day.
Corrective action needs to be put into operation in stages as well.
*****
Stage 1: Federal Reserve Notes remain in circulation.
The retail function continues to price everything in dollars and cents just as
it has since 1913. However, the federal strategic reserve is growing with
receipt of state payments in physical commodities for their share of the
Federal Government expenses.
Legal tender law remains in effect. Loan payments are made in Fed Notes.
The Federal Government continues to make interest payments on the
national debt in Fed Notes.
The public continues making checking and savings deposits in Fed Notes.
As the public becomes aware of the changes, it can make deposits in
physical commodities of gold and silver. This will require entries by
categories such as dollars & cents, gold ounces, silver ounces. Computers
will make this problem workable as banks and financial institutions
discover ways to turn a profit (profit is not a dirty word) in the process. Fees
may be charged for converting or exchanging commodities similar to fees
presently charged in making foreign currency exchanges.
Social Security and other entitlement checks will continue to be paid in Fed
Notes.
Citizens can still use Federal Reserve Notes to pay state location value
charges. States also can use Fed Notes to pay their federal bill. But States
will receive a discount if they send physical gold or silver as payment for
federal charges.
During Stage 1 the Federal Treasury will issue relatively small quantities of
100% redeemable silver and gold certificates predicated in ounces of .999
fine silver (1 OS, = 1 ounce silver) or gold (1 OG = 1 ounce gold). These
are spent into the market as payments to suppliers. Payments are made
according to current commodity exchange rates with Fed Notes. Recall that
silver and gold certificates are always in quantities of gold or silver - never
in dollars worth of gold and silver. NOTE! This is important, critical and
essential.
At the same time, Treasury mints gold and silver coins to sell, purchasable
with Fed Notes. The purpose of this move is to increase desirability of gold
and silver redeemable certificates. This stage is analogous to the production
of gold Kruggerands by South Africa.
48
Stage 2: Silver certificates begin to surface.
Silver certificates received in government's payments to suppliers will begin
to surface. As the public becomes more aware of their presence and value
some retailers may prefer silver certificates in payment for products and
services. To accomplish the transition three levels of involvement will
become appropriate.
1. More redeemable currency for government employee wages.
2. Private enterprise issues gold and silver debit cards, predicated in
standard quantities, as ounces, pounds and so forth.
3. Retailers price items in dollars and cents and when asked give price in
silver certificates. Current exchange rates will be used in giving prices in
silver. Gold will be used only in large purchases.
The public will continue to use Fed Notes in retail purchases whenever
possible. But stashes of old silver coin ("junk" silver, as opposed to
numismatic coins) will surface as confidence in the new redeemable
certificates increases. Completely eliminating Fed Notes will depend on
when the public begins to prefer commodity certificates and request wages
in the new certificates.
Commercial banks must accept payments in old Fed notes as long as old
loans exist. New loans will be in either Fed Notes or the new commodity
certificates, as mutually agreed, and are to be repaid in that medium.
The public is likely to test the redeem-ability of commodity certificates. It is
not expected that every location would have all commodities needed to
redeem all certificates in existence. Thus it is to be stated at the outset that
certificates are redeemed at bonded warehouses across the nation by
appointment.
Stage 3. Public expects payment in redeemable certificates.
As new commodity certificates become more common the public will
expect to be paid in these certificates. Trades will be made almost
exclusively in commodity certificates by anyone fully cognizant of Fed
Notes’ true value. Resulting Fed Note prices will appear as inflation but
actually the price of silver and gold will not be increasing but Fed Notes
will be tending toward their true value: zero.
At this latter stage, few retail establishments will accept Fed Notes, and
transactions in asset-based currency will have become common.
Most private investments, domestic and foreign, are predicated in Fed
Notes. What will happen to these? Will the transition cause a panic worse
than the 1929 crash occur? Stages outlined show how to move from Fed
Note to commodity instruments over a period of time. The gradual
changeover will make the transition less dramatic. However, the present
investment scene is built on Fed Notes. These came into existence as the
49
Federal Government issued the notes to pay for programs it lacked adequate
revenue.
Commercial banks were the major players in the scam and will be required
to continue accepting Fed Notes. The Government will redeem outstanding
bonds held by commercial banks using Fed Notes collected as tax
payments.
Additionally, the Federal Government will sell gold and silver certificates
for Fed Notes. The Fed Notes will then be used to retire bonds covering the
national debt.
Non-banker civilians holding bonds will have the opportunity to receive
payment in redeemable commodity certificates for a percentage of the
bonds’ face value. That percentage amount will be a negotiated percentage
of the current inflation rate.
Commercial banks will be useful in providing bank services such as
warehousing commodities, savings and loan, check clearing and
monitoring. The Treasury will pay banks for these necessary functions so as
to maintain the banking system, without present money creation.
Repeal of the Legal Tender Laws
When appropriate the Legal Tender Laws will be repealed as an essential
step in the total reform. It can be expected the common currency of the U.
S., redeemable in standard quantity units of gold and silver, will be the most
accepted currency throughout the world. However, a main strength of the
new system will be the involvement and accurate certification of free
enterprise providers who stand to make a profit from the new system.
American Express, Discover, MasterCard, Visa and other gold and silver
debit cards will be accepted along with paper currency. Investments,
retirement plans and capital formation ventures not yet invented will be
made available. It is possible that companies could have large accounts in
other commodities such as copper, aluminum, diamonds, and you name it.
Oil companies may issue negotiable certificates for barrels of crude oil to
circulate in small circles of investors in the gasoline, petrochemical,
fertilizer, or related industries. Like advantages may exist in other
industries: let imaginations run. Asking disparagingly, "Would you return to
the barter system?" "Yes", he said proudly, "that is exactly what it would
be, a return to that ancient method of commerce: Barter in the Electronic
Era.
Debit cards are now used extensively in retail establishments. Nothing
would prevent oil companies from issuing debit cards predicated in gallons
of gasoline, oil, mechanical services or other products. If a profit is to be
made, the service will appear.
One can hear the cry "but what will be the common measure of value. A
workable system must have a common unit of value: dollar, Euro, Ruble - something." What could be a better unit of value than a Troy ounce of
50
silver, .999 fine. Let everything be referenced to that measure and let that
measure float related to other commodities. But let no one state the value of
one ounce of silver, .999 fine is worth so many dollars or euros. One ounce
of silver is a valuable commodity useful in many functions. That is value
enough.
Banks will make loans in commodities. Customers will deposit physical
commodities, or certificates for long periods, and banks will lend them for
shorter periods. Small investors, interested in saving for retirement, will
make deposits similar to CDs for 20, 30, 40 years. There is no limit to the
possible variations between immediate liquidity and long-range security.
Without the IRS looking over every citizen-activity, investors need not be
concerned with income tax dodges or loopholes. Investment products can be
more varied and profitable. The system will make use of cash, checks,
plastic, electronic entries.
Federal Government, as the defender of justice,
Bank examiners in the present system accomplish the important function
of monitoring reserve requirements and existing Federal Reserve
regulations. They do an excellent job. They are to be retained and
empowered to monitor the assets backing currency
and internet transactions predicated in specie. All debit cards predicated in
U. S. currency are subject to monitoring in same way as banks empowered
by the United States central bank.
As private financial opportunities issue electronic ‘swipe’ cards predicated
in commodities available for redemption they need to be authenticated so as
to maintain the public confidence. This
process can be managed in various ways. Bond and credit rating
organizations now give information to make sound investment decisions.
The same services will become available for knowing which products
deserve credence
Decals on store windows show which cards are accepted. The same will be
true under a commodity-based system and cards with a reputation for
responsibility will be accepted. Merchants will be required to accept only
cards or currency based on U.S. specie certificates in daily over-the-counter
transactions.
*****
Essential Monetary System Elements:
- all systems are subject to monitoring by the monetary authority.
- transactions are in standard measurement quantities as ounces, kilos,
(not fictions such as $’s, or Euro’s).
- transactions convey actual commodity ownership
- federal monetary authority exercises strict review of actual 100% redeemability.
- alternative commodity currency (warehouse receipts) are
51
permitted but subject to federal review.
*****
Summary:
Legal tender laws will be repealed. The Federal banking system will operate
only with certificates redeemable in troy ounces of gold and silver, but
private individuals, corporations and state banks can issue commodity
certificates they and their customers consider worthwhile. Existence of
private or local certificates in commodities will provide the substitute
potential needed to keep the federal system honest. The substitution
potential provides leverage needed to prevent manipulation by private
individuals. Since the commercial banks brought the old bogus money into
existence, only the commercial banks will be required to accept that
currency in payment for debts written in that currency.
*****
It is the considered opinion of some fine thinkers that ending the fractional
reserve system will harm the economic system. They think current
prosperity is due mainly to the liberal credit system. And it is feared that
replacing the fractional reserve system with 100% redeem-ability will make
insufficient capital for business loans causing inadequate turns in the money
supply.
This fear is dispelled by a review of the three theft factors, the theft
adjustment factor, and process of production, consumption and
reinvestment. Working on natural resources in a suitable location, we make
products and services. After payments for the community’s work, labor
costs and tools and supplies used, there is excess production for
reinvestment in process changes.
But in the present order of things we must pay a large part of the excess
production to three theft factors that did nothing to make the production
more efficient or effective. They receive payment or cause production to
cease.
We must then adjust for the thefts by raising prices, cutting costs,
expanding sales or cook the books. Then the more successful the theft
adjustment techniques the more the theft factors increase in the next cycle: a
truly vicious cycle.
The Theft Factors reduce the amount of production available for loans to
homebuyers and businesses. The answer is to create, out of nothing, what
looks like ‘capital’. In reality, what is borrowed is not a resource at all: it is
the legal right to take the seller’s
resources under the guise of expanding
capital. The answer to the problem lies in being rid of the theft factors,
making excess production truly available for investing in business
expansion.
With theft factors eliminated, production is not consumed by theft
functions. Absent the theft charges, an abundant supply of commodities as
52
gold, silver, copper, oil, iron and more, will be available for use in
producing goods and services.
The bankers want us to think we cannot make it without their brand of
magic: creating money out of nothing, with only a fraction actually on
deposit. But this kind of voodoo comes at a cost to the present day standard
of living and a price for future generations charged with paying the bill.
It is hard to imagine a world where plentiful land is available for only a use
value charge in lieu of other taxes; where money is a claim check for actual
wealth; and where the government does not penalize people for working.
It is time to reinstall justice as the basic foundation of prosperity by
expelling the three legal theft factors: land speculation, bogus money, and
unjust taxation.
We can solve the problem using the cantilever approach:
eliminating the land speculation theft we have
resources for eliminating the unjust taxation theft
which makes available the backing needed to
eliminate the monetary theft.
Employ Gyroscopes and Cantilevers
We can learn to live with this positive economic momentum.
Appendix
The Production Equation
The ‘Production Equation’ is a macro economic model, not an equation in a
mathematics or economics sense. Showing how theft factors affect production of
one worker for an hour the equation illustrates what a company needs to
accomplish lest it die.
Classical economists say productivity comes about from the interaction of labor,
capital and land. To call attention to what is truly productive in the process and
avoid some of the misunderstandings associated with the classical terms let’s
rename them:
MAT, BES and NIL
MAT, (Motivation * Ability * Time) amply describes all people who work.
Everyone involved in production and service is included ‘MAT’. This includes
everyone from unskilled workers to the most highly trained professional with great
responsibility and 3rd Wave pros of the techno-information age putting a company
on the Internet with its own web-site for online selling. There is no such thing as
working class. All producers are workers and included in the acronym 'MAT'’;
productive members of the capitalist system.
MAT is labor = motivation * ability * time.
Motivation: all the psychological intangibles included in the worker’s
productivity: confidence, enthusiasm, diligence, drive, willingness to learn,
take/give orders, responsibility; concern for outcome, interest in customers, and
other attitudes adding to the product or service's value.
Abilities relevant to the position: strength, endurance, coordination, experience,
intelligence, professional or technical skill and knowledge, imagination, and
qualifications needed to perform work in the position.
53
Time expended in the production process.
Units of production (UP) are in MAT equivalents. An UP is one MAT, or one hour
by worker with entry level skills, healthy work attitude, but no special motivation
or need to overcome unusual working conditions and using simple tools. One
MAT is one hour in a basic entry-level position. How many UP's a position is paid
depends on how a function affects the product. A function may add value to the
quality/quantity of a limited number of products or multiply the value of a
company's performance for long periods. CEO’s decisions require considerable
knowledge/experience seriously affecting employment prospects and a company’s
community image. Functions operating between lowest to top salary are paid
according to how they affect productive capability.
BES = buildings + equipment + supplies.
Buildings: improvements to land to produce goods and services.
Equipment: all tools/equipment used in production.
Supplies needed to provide a product or service.
BES is used because ‘capital’ carries erroneous and harmful baggage. Capital is
the actual physical buildings, equipment and supplies used to create wealth not
money. Today, the words ‘capital formation’ is the process of getting ‘money’ to
finance a venture. This is false as money is not a claim check on production but a
legal tool to take the property of another without informed consent. Incorrectly
using ‘capital’ causes one to believe currency conveys ownership. That is not the
truth.
Also ‘capital’ is incorrectly used to include land and buildings. Both Communism
and Capitalism treat them as the same even though they react differently to the
same stimulus. Taxing buildings, equipment and supplies causes their price to
increase and they become less available. Taxing land causes its price to decrease
and it become more available.
NIL: Nature: includes all undisturbed natural resources and fertility, natural
topography, climatic and geographical advantages.
Infrastructure: proximity to structures created by members of the
community whether public or private: includes churches, schools, roads, libraries,
hospitals, rails, ports, water, sewers, fire and police protection, utilities, satellites,
commerce, retail businesses, industry, culture and recreation opportunities, and
anything man-made affecting the value of a property’s location. Whatever makes
it attractive.
Location: the factor which when multiplied times the sum total of
Infrastructure and Natural resources gives value to a certain specific piece of
property different from its neighbors. For example, a parcel may have limited
access while a neighbor is unrestricted.
Totally abstracting from what is on the land, the three factors in NIL are what give
site value to a parcel. Adjacent parcels of land may have identical NIL value
completely aside from what is on the properties. The NIL is an essential factor in
production of every good or service. Included in NIL are all natural resources such
as the air we breathe, oil, gas, copper, gold; includes natural fertility of farmland,
and radio frequencies; the location of highways for distribution and retail outlets;
availability of schools and churches, and proximity to shopping in residential
neighborhoods. NIL includes all that nature and the community-at-large have done
to give a site its location value.
*****
MAT, BES and NIL interact to produce Units of Production (UP). After paying
production costs UP is available for trade.
54
Production Equation without Theft and Theft Adjustment Factors:
The equation shows how the factor values relate to one worker. Note! When
referenced in narratives the terms are written MAT, BES, NIL. In equations they
are MAT, [B+E+S], [N+I] L.
The Basic Production Equation:
Process Value (v)
- Process Cost (c) = Output
{MAT * (B+E+S) * (N+I) L} - {MAT+ (B+E+S) } = UP
Where: * = multiplied by
v = value of production factors
c = cost of production factors
MAT = Motivation times Ability times Time
(B+E+S) = Buildings + Equipment + Supplies
(N+I)L = [Nature + Infrastructure] times Location Factor
UP = Units of Production: result of operation.
Arbitrary amounts are used to show factor interactions for one worker:
(v)
-(c)
= UP
v[{MAT * (B+E+S) * (N+I) L}] – c[{MAT+( B+E+S)}] = UPn
{6 *
2
* 1 }
- { 6 + 2 }
= UPn
12
8
= UPn
4 = UPn
4 Units of Production result from labor (MAT) using capital (BES)
to arrange land (NIL) and paying for cost of labor and capital.
The cost of land is not included in this equation as the land (NIL) cost only comes
into play later when it is included under Theft Factor (TF)
taking from the production equation. Ideally the NIL expense should cover the
charge for government services provided in lieu of all taxes.
Including Theft Factors in the Equation
Value (v)
Cost (c)
* TF = UP
v [{MAT*(B+E+S)*(N+I) L}] - c [ {MAT+( B+E+S)}] * TF = UP
TF = Unjust Taxes + Inflation + Land Speculation
For example: taxes 10% of productivity; inflation (money) 2% annual inflation rate
divided by 365 divided by 24 hours = hourly inflation rate of .0000022. Land
speculation or location costs = 1
Where Theft Factor (TF) is derived:
Taxes
Inflation
Land Speculation
TF = 1- {(UPn-1*Tax Rate)+[(v)n*Inflation Rate]+[(v)(N+I)L)n*(1)]}
(v)n - (c)n
TF = 1- { 4 * .10} + { 12.0 * .00000228} + {1 * 1}
4
TF = 1 - { .40 + .0000264 + 1} = .65
4
This shows the effect of three Theft Factors reducing one hour of productivity
from 4 UP to 2.6 UP.
{ MAT* [B+E+S]* [N+I L ]} - { MAT+( B+E+S)} * TF = UPn
{ [6 *
2 *
1 ] } - { [ 6 + 2 } * .65 = UPn
12.0
8
* .65 = UPn
2.6 = UPn
55
Whereas prior to inclusion of the TF this worker’s output was 4, after the TF’s the
output was reduced to 2.6 UP’s. This is a 35% reduction. The company cannot
tolerate these non-productive costs for long. Some method must be employed to
compensate for the non-productivity, or the company will be forced into
bankruptcy.
*****
Equation with the Theft Adjustment Factor (TAF)
The company pays expenses for functions causing its productivity and pays
expenses for functions contributing nothing. To compensate for the non productive
theft expenses, it works more efficiently. As thefts increase the company must be
more aggressive. The illustration shows TFs reducing productivity from 4UP to
2.6UP. To adjust for thefts business increases production by 53.8%. To do this it
realigns labor and capital (MAT and BES) plus utilizes different ways to use land
(NIL).
The percentage efficiency increases needed to compensate for the thefts is
computed as follows:
UPn
TFn- 1 - TFn-2
TAF = TFn * UPn * 1 +
TFn-1
= (W+X+Y+Z)
TAF = (W+X+Y+Z)
changes in value (v) and/or cost (c) of MAT
changes in (v) and/or (c) of BES
changes in (v) and/or (c) of NIL
changes in product price, quantity & quality.
*****
W increases MAT (v) while keeping same (c)
- by requiring more time for same pay exploiting wage and hour
laws and/or
‘encouraging’ workers to increase productivity.
-lower MAT(c) by standardizing position to require lower skills.
-lower MAT(c) by out-sourcing functions, sending operations to lower pay rate
areas of this country or overseas.
X increases BES (v) and (c) to reduce overall MAT unit costs by a variety of
methods:
-materials and methods changes
-automation and robotics
-packaging and distribution
Lower unit costs through automation and robotics (lower (v) & (c) MAT with
higher (v) & (c) B+E+S
Y: Reducing (c) of NIL by relocating functions to lower land cost areas. Often this
is accomplished by purchasing land ahead of population trends to beat
speculators at their game. Companies have entered the land speculation
business to offset this TF.
W=
X=
Y=
Z=
56
Z: Raise prices for products, reducing the size at same price, or lowering the
quality of product by reducing (v) of MAT & BES. Increase product price by
increasing total (v) of MAT, BES, NIL.
In the illustration to compensate for the 1.4 UP taken by TF the TAF method ‘W’
was chosen. The 1.4 adjustment was accomplished by workers producing 10%
more, from 6 to 6.7UP without pay increases. Resulting output returned production
output to the 4UP level.
TAF = W: increase (v) MAT from 6 to 6.7; (c) MAT stayed at 6.
Value (v)
Cost (c)
- TF = UP
{(MAT+W)*(B+E+S)*[N+I]L]}- {(MAT+ (B+E+S) )} - TF = UPn
6.7 *
2 * 1)
(6 + 2)
- 1.4 = UPn
13.4
8
- 1.4 = UPn
5.4 -1.4 = UPn
4.0 = UPn
As enterprises compensate for the TF by way of TAFs, and the system-at-large
does the same, it causes higher inflation and location costs. Government, in turn,
extracts more in taxes to pay for an expanded role in meeting the myriad crises
caused by Theft Factor reductions in the economy. Taxes increased to 12%, and
Inflation Rate increased to 3%. The company then bought more equipment to
improve efficiency.
(v)
(c)
{MAT+W*[B+E+S]+X*[N+I*L]}-{(MAT+(B+E+S)+X}*TFn-1= UP
{(v) [6.7 * 2.1 * 1 ] } - { [ 6 +
2.1 } * .752 =UP
14.07
8.1
* .752 =UP
5.97
* .752 =UP
4.489 =UPn
Where TF is derived:
Taxes
Inflation
Land Speculation
TF = 1 - [{UPn-1*Tax Rate}+{(v)n*InflationRate}+{(v)(N+I)L)n*(1)]
(v) - (c)n
= 1- { 4 * .12} + { 14.07 * .0000034} + {1 * 1+.0000034}
{5.97}
TF = 1 – 24..8% = .752
In the first production run the business made 4UP per man hour, but the TF took
1.4 leaving 2.6UP. Theft Adjustment returned productivity to 4 by increasing labor
output. Then, to stay ahead of the TFs, the business used the TAF method 'X',
increasing investment in BES to make work more efficient.
By improving methods the company reduced the percentage taken by the theft
factors. It increased production from 4.0 to 4.489 UP per man-hour. Then more
bad news struck. The land owner raised land rent by 20% when he realized how
well the company was doing. Productivity dropped to 4.18 UP per man-hour.
The reader is invited to use the model to project the vicious cycle: as Theft
Adjustments are made Thefts Factors increase which in turn require additional
Adjustments.
*****
Healthy Economy without Theft Factors
How owners actually use the excess production depends on their view of the
company’s future, vis-à-vis the health of the present economy. In robust
economies good workers are scarce and are attracted by additional wages and
57
benefits. Companies vie for workers by adding fringes. As the economy tightens,
benefits are downplayed.
Enlightened self-interest prompts owners to invest excess in production to increase
operation's efficiency and reduce cost per unit to increase demand with lower
prices.
As other businesses follow, more jobs are created to produce required buildings,
equipment and supplies. As employment grows there is greater demand for
products and businesses raise wages to attract competent workers.
Since the operation properly belongs to the owners it is perfectly just for them to
consume production as they see fit. However, excessive consumption is not
rewarded. Competing companies reinvest in worker advantages, equipment and
new designs to improve performance and will squeeze him out of the market. Just
as farmers who eat the seed corn are out of business the following year, an
imprudent owner discovers he has fallen into bankruptcy by eating all the profits.
Reinvestment in worker benefits, new buildings, equipment and supplies helps
business and community as well; excessive consumption by owners is a disservice
to everyone as it reduces resources available for investment in BES. (Remember,
that’s the new word for capital.)
Consider how absence of Theft Factors relates to Family Living Wage.
Summary
Legalized non-productive functions claim a share of production as if they were
productive.
To compensate, or adjust for theft factors, businesses employ a variety of defensive
means: increase prices, cut costs, expand sales, manipulate finances, or give in and
join the theft functions.
However, as businesses use theft adjustment methods, the wide variety of
consequences outlined in preceding chapters occur: government growes (higher
taxes or increased budget deficits), land costs increase with resulting higher debt
service expenses. This in turn results in more theft adjustments - bringing
additional changes - and again, a need for more adjustments - a very vicious cycle.
*****
Reading any economics text book leads one to take it as fact that the present
system is the way it ought to be. Young minds are lulled with assumptions like
“money is nothing but a medium of exchange, a store of value and unit of account,
and barter is a dirty word (“totally Neanderthal and unworkable, you know”). They
are told “all is well – it just needs fine tuning.”
Illustration Components: Hourly Averages
In the example MAT, BES and NIL are given in single hour unit averages (@ 2080
hours per year). The company has 10 executives and directors paid 46UP/hour,
(UP = unit of production), 20 middle managers at 19UP/hour, 70 lead personnel at
8 UP/hour and 400 line people averaging 4 UP/hour.
The company average wage used in the equation is computed: annual company
payroll of 6,240,000 UP/2080 hours = 3000 UP annual per hour payroll divided by
500 employees = 6 UP per hour average wage.
58
All values and costs are predicated in Units of Production (UPs) so as to focus
attention on physical production and not on abstractions such as money or
currency. Recall that an UP is equivalent to one hour of labor by an entry-level
worker with ordinary motivation. Thus the benchmark is a very concrete hour of
entry-level labor, not dollars, marks, or francs, or other abstractions.
In the illustration, computations assume everyone works at the average pay level,
is of average value to the operation, utilizing average amounts of buildings,
supplies and equipment, natural resources and location value doing the work to
accomplish the required results.
In the illustration's first phase, the total annualized investment budget (including
equipment, buildings, and supplies utilized in the production process) for the entire
company is 2,080,000UP worth of BES. The investment value, when broken down
and allocated to each unit of time (1 hour of MAT) is computed: 2,080,000UP
divided by 2080 for 500 employees = 2 UP.
The natural resources, infrastructure, and location factor (NIL) in the illustration
begin with 1,040,000 UP for a computed average per man-hour of 1UP.
Epilogue
If You Would Have Peace, Work for Justice
Without Economic Justice, Peace Is Temporary, at Best
Economic systems cannot last unless they are built on justice.
Justice will be served in the global market place when products are freely
traded among informed participants with all receiving actual ownership of
actual value. Obviously, receipt of currency declared to have value by
governments, and reputed to have value by duped participants does not
satisfy requirements of true justice. Actual conveyance of ownership is
required.
Global market place justice is served as each nation’s resources, geographic
and climatic advantages become the source of public revenue for that nation
and not under the private control of any private individual or group to the
disadvantage of people of that nation. Obviously, private ownership and/or
control by foreign individuals or corporations do not satisfy requirements of
true justice. True benefit to the nation as a whole is required.
What is thought to be behind a door matters less than what really takes
place when the handle is turned. What is considered a road to prosperity is
not what counts. What actually works in the long run matters. History has
shown that economic systems must be established on true justice if they are
to endure. Solid justice is the only basis for enduring economic systems.
The Roman Empire based its success on its military might to steal gold and
human labor. Medieval kingdoms used serfdom to build its prosperity.
Early America enjoyed varying degrees of prosperity by using slaves to do
the hard work. The French Revolution and 1920s Germany used fiat money
until hyper inflation said “halt”.
59
History is replete with injustice and eventual collapse. It is each
generation’s duty to analyze and assign its own justice quotient.
Another way to look at the same thought is to consider the Hebrew word
sedaqah, or divine righteousness. The word captures God’s plan for all
reality. Sedaqah shows how all the parts are meant to work together. If it is
not centered on sedaqah, it self destructs.
It makes no difference what you think is behind that door. As you open the
economic door the only thing that counts is whether the system truly
conforms to God’s plan or sedaqah. Operating contrary to the principles of
justice will certainly send the system to the junk heap of history. Be rid of
the injustices or go belly up.
*****
Third World nations, replete with natural resources, geographic and climatic
advantages are impoverished? How can that be? It is reasonable to ask how
justice is violated. Ask if the leaders are rewarded for selling out the
people’s birthright; ask if foreign companies are stealing.
Natural resources, geographic and climatic advantage cannot be caused by
human endeavor. Thus they belong to the community, and can be used
privately only if the community is reimbursed on a timely basis according
to just rent-of-land assessments. If the system falls short of this it is theft
and must be condemned by the international community.
To employ the people in extracting natural resources upgrading of the
nation’s infrastructure is needed. To accomplish this, the leaders arrange
sizeable loans with the International Monetary Fund and World Bank at
substantial interest.
The infrastructure building is done by multi-national companies at a cost so
great it reduces the nation to poverty as it repays the loans. The only ones
coming out on the plus side are the bankers, construction companies, private
companies extracting resources and one might assume the country’s leaders
lose no sleep over the deals.
Noted in the chapter on Monetary Theft, money loaned to poor nations is
total fraud. The money conveys no ownership right to anything of value.
The money is fiction: government mandated legal tender. It gives the legal
right to take other people’s goods and services without giving anything of
real value in exchange. This is fraud, albeit legal.
With this series of unjust transactions the international global economy is
established on an immoral foundation. As we know from history, nations
operating on unjust principles eventually collapse. The United States is
involved as the major partner in the global scheme to have all nations under
one economic system utilizing the same monetary system. Since the
monetary system, whether we are speaking of the dollar or euro, is built on
the same fraud, it will self destruct due to the weight of interest owed on the
money created as it is borrowed from the banks.
60
Texas Congressman Ron Paul speaks forcefully about the United States
issuing bogus currency, spending it internationally to bring products here to
make us the most prosperous nation in the world. Visit his Website at
http://www.house.gov/paul/ to hear the full speech on the new American
Empire.
Just as the Romans built their empire by sending armies across the then
known world to subdue other nations and forcing them into the Roman
system, so the United States is sending our worthless money across the
globe buying people’s work, and products and giving them nothing but the
“legal” right to try to get something of value for the bogus currency when
they are able to find another uninformed trading partner.
In the book “Confessions of an Economic Hitman” John Perkins explains
how the United States is empire building. It is must reading to understand
the part our nation is playing on the global scene.
This is pointed out as a devoted patriotic supporter of these United States of
America. I want my nation to last long after I am dead and gone. But I
know that a nation operating on basic injustice principles cannot long
endure. Continuing as we are is one sure way to see our nation destroyed.
God Bless America and may God set us straight. We need help, and it
begins with each of us!
*****
All nations will benefit from a true justice economic order. So much is
written these days about the extent of poverty in third world nations, and it
seems that most of the writings end up begging for scraps from the table.
“Please, Mr. World Bank, be so kind as to give us a break on the interest we
owe.” Or: “We come on bended knees before you, oh illustrious
International Monetary Fund, asking to put off paying our debt for a short
time so we can obtain medicine for AID victims.” We Social Justice
Advocates are toothless tigers asking for fairness when we need to be
demanding true justice.
It is high time that Social Justice Advocates start fighting for justice in the
United State and internationally as injustice pushes millions of people
into poverty. Fight for quid pro quo justice.
We need to enunciate very definite charges against very specific functions.
This certainly will not be easy and will encounter definite pitfalls. The work
ahead is not to uncover a conspiracy where certain people get together in
secret to plan taking over the wealth of this or that third world nation. No,
we are pointing to the assumptions that permit our country and the
international economic order to operate in an unjust manner. Using these
functions the United States is building what amounts to an economic
empire.
61
Let us waste no time on conspiracy theories but expose the basic
assumptions that are permitting these functions to do their work throughout
the world, and determine in what ways the functions violate the solid
principles of justice.
*****
Renaissance in Mexico
Each year Mexico has countless citizens migrating, legally and illegally, to
the United States. Needless to say, its self-image is not enhanced by people
risking all to work in another country to have a better life for their families.
Value of natural resources, geographic and climatic advantages rightly
belongs to the community. This value does not belong to individuals or
companies. This value is the proper source of revenue to fund legitimate
community activities. On the other hand the tools of production do not
belong to government. Healthy economic activity results only when they
remain private property.
In the 1930’s Mexico’s natural resources were nationalized. To
gain optimum benefit from its natural resources Mexico needs only to make
these resources available to private operators after they pay the world price
for the raw natural resource without additional taxes charged on profits
derived from extracting, refining, configuring and delivering products to
market.
The same taxation method could be applied to all land ownership and use,
with the same advantages for developing property. Government would
collect the rent-of-land based on current market location value as caused by
community development.
Eliminating all taxes on buildings and improvement to land encourages
proper utilization of real estate and discourages non-productive holding of
land for speculation. The rent-of-land rate should be at a rate sufficiently
high to eliminate all profit in the buying and selling of land; but removes
taxes on improvements so productive use of land is rewarded.
Industrial and commercial development will cause employment sufficient to
answer the emigration crisis. The rent-of-land paid to government for the
natural resources and location value will be more than fund all government
services, and at the same time, will be such that business investors will
profit from utilization since they will pay no additional punitive taxes. This
will attract domestic as well as foreign investors.
Presently a shortage of investment resources is part of Mexico’s
unemployment problem. Ownership by foreign investors is restricted to
encourage Mexican business and this reduces the number of companies
utilizing the available workforce. NAFTA is causing some change in this
regard but not enough to reduce emigration.
62
Mexico is blest with geographic and climatic advantages better than most.
Charges based on these location values without any punitive taxes on
effective utilization will launch Mexico into
a wonderful period of
prosperity.
Using the revenue derived from the charges on location value and natural
resources the government might create worker training programs to assist
less qualified people achieve skills needed for employment in the new high
tech and manufacturing companies attracted to the country by the lower
operating costs.
Recall that as location value charges are implemented land price will
decrease as the resulting value increases. This, in itself, will cause a surge in
business establishment.
The government will soon discover it is unnecessary to have an income tax
as location value charges and charges for natural resource provide sufficient
income to fund government, and stimulate job creation for employing
available workers.
Mexico has abundant natural resources and geographic and climatic
advantages second to very few nations.
Mexico’s Future Could be Now
Mexico sits on a golden opportunity. Correction: it sits on a silver
opportunity. She has one of the largest caches of fine silver in the world. In
addition there is an abundance of other natural resources that could impact
the economy of the nation, if properly employed.
All that is needed is for mine operators to pay the government for raw silver
at the current world silver price silver less extraction costs without any
additional tax on profits achieved upon sales.
Silver mine operators could receive a discount by paying charges in raw
silver which could then be used to mint a .999 fine troy ounce silver coin.
The coin could be a .999 fine silver coin in one troy ounce, or fractions,
simply called Mexican Silver coins. The coins could circulate along with
the present Peso, but not valued or predicated in terms of the Peso, but
known only by their Troy ounce weight: .999 Fine Silver. Government
issued certificates predicated in .999 Fine Troy ounces of silver (“payable to
the bearer upon demand”) could circulate simultaneously with fiat Pesos.
Who knows! This might well become the world’s new reserve currency.
Watch out World Bank, there’s a new kid on the block.
Every nation could profit from close examination of how its natural
resources and geographic advantages are exploited. Are they serving the
people of that country, or feathering nests of foreign and local political
operatives?
63
Hello impoverished nations! Have any cantilevers lying around?
Appendix
Notes on Social Justice
In Bread and Justice, Dr. McGinnis states: "in simple terms, justice has long
been understood as giving each person his or her due. And what is due each
person is the fundamental right to live a full human life." And, "Justice
means the right of each person to basic human necessities, to dignity, to
control over their own lives, and a corresponding duty to promote these
rights with and for others."
Dr. McGinnis’ work is noteworthy because it is like the thoughts of many
secular and religious thinkers who can’t point precisely to what ails the
economic system. From the vantage point of the poor, lacking adequate
employment they see a dysfunctional economic system, and are searching
for ways to make it right.
We are indebted to them for focusing attention on the problems. And it is
important to have intense discussion of possibilities and publicize valuable
answers to today’s economic problems, or to discover where a train of
thought might cause less than adequate, and perhaps even harmful, answers
to problems such as:
1. Right to live a full human life: How can someone have a right to live a
"full human life”? What precisely is involved in a "full human life”? Is the
content of a full human life up to individuals? Does that vary from person to
person? What is the source of this ‘right’? Be there anyone who can spell
out this ‘right’ so that it can be honored and respected.
2. Corresponding Duty to promote these rights: Who has the duty to
provide all this entails? If the thinkers say it falls, for example, on this
writer to so provide, for whom exactly am I to provide it?: One person, one
family, ten families? And what exactly am I to provide? And to what level
am I to provide it? And by the way, while I am providing all this for this
unnamed person, or group of persons, who is going to provide all that is
needed for a ‘full human life’ for my own family?
3. Giving to Each Person His or Her Due: Where does this obligation end?
It is possible to state what I must not do with regard to other people’s rights.
I certainly am not to take his life, property, good name, car, or house, or
take away her opportunity for a job for which she is qualified. But in the
realm of the doing where does the obligation begin and where does it end?
The thinkers speak of society’s obligation under justice to provide all that is
needed to provide something for every living person: this is outside the
realm of possibility and is, therefore, without meaning.
64
These writers are fond of saying that people have a right to food, clothing
and shelter, health care and skills development, and conclude with a right to
dignity or esteem. The right to human dignity implies an obligation in
every person to do something. What precisely must each and every other
person do to give me human dignity?
It is impossible to state precisely which actions everyone is to perform so
that every other person on earth is guaranteed his/her human dignity. The
right to human dignity rather addresses what others must not do. This
distinction is essential and is the same as in all the other rights.
Social Justice is a paper tiger unless it speaks precisely about what
individuals are obligated to do for, or not do to, another particular
individual, or certain groups of people.
There is a workable answer to this problem.
To say the poor have a right to the means of livelihood says nothing.
Without pointing to the reasons why the poor are prevented from achieving
those means we are screaming in the wilderness. We need to point with
precision at non-productive thefts that are taking resources making it
impossible to pay legitimate wages to productive people.
Even as we grant that we must work to change institutions of society to
reflect the love and concern God our Father has for each and every one of
us, it does not say what must be done, and it is left to everyone to ride off in
his own aimless direction. We need specifics to get the job done.
We need eliminate three legal thefts if we would change the institutions of
society - i.e. change the system. The lack of precision prejudices a case. Use
of imprecise terms removes hope of pinning a specific crime of injustice
(theft) on any particular person or corporation.
To impugn an entire economic system, and accuse it of crimes because
there are poor people, without citing precisely how justice was violated is
irresponsible and bespeaks a non-specific ideological vendetta against a
prevailing system. Capitalism has its problems, but charges must be specific
if final convictions are to be handed down. When Karl Marx and Friedrich
Engel saw the problems of the poor in Germany and England and called the
situation unjust, what were they really saying? They saw a system, not
totally unlike ours, in which countless poor were without a job, and working
poor unable to support families even after working fourteen hours a day.
Marx and Engel observed in history how property and power are coexistent,
and how power was most often used to enslave rather than free up the
masses. This led to a condemnation of all private property ownership
without distinction. Their failure to make essential distinctions resulted in a
political philosophy, and economic system, responsible for the worst
horrors the world has ever known.
65
Like many thinkers today, they saw abundance in the hands of a few, and
labeled it injustice. They did not show how people or corporations (moral
persons) used legal thefts to steal what justly belonged to particular persons
or to the community. Because they saw bad effects they attacked the system
without the precise bills of particulars needed to cure the problems.
Our system is in drastic need of major repair. It requires invasive surgery on
three major organs, or it will surely die, and it must occur soon.
Thinkers, from social and economic disciplines, call attention to serious
problems. However, many times they fail to diagnose clearly the causes and
are prescribing inadequate and erroneous remedies due to a lack of essential
distinctions.
Planning methods to improve the economic system we need distinguish
between:
- the proper domain of private and communal property
- land and capital,
- money and capital.
- justice and fairness,
It is toward these goals that this effort is directed. As in medicine, an
accurate diagnosis of ailments and correct surgical procedures is required if
the patient is to survive.
It is time for all of us who are trying to secure Social Justice
be actively involved in eliminating the three legal thefts:
land speculation
debt-based monetary system
unjust taxation.
In the new system,
free of non-productive thefts,
and the resulting theft adjustments,
the operatives will discover the ROI advantages
newly discovered resources
to pay a family living wage.
to
in using
Press on: the goal is just and attainable.
Creative Curative Thought
Health Care and Location Charges
Individuals and families, not governments, have responsibility for health
care. Revenue derived from the income or other unjust taxes are not to be
used for health care or welfare needs under the mantra “from each
according to ability and to each according to need.” It violates the basic
axioms of justice.
66
The community and its members have every right to benefit from the
location usefulness potential caused by community activity and from natural
resources given by the Creator, and funding basic health care needs with
these revenues is in line with the axioms of justice.
Taxing jurisdictions in the states justly collect location value charges and it
is consistent with the Federal Constitution’s original intent to have
community needs and concerns retained under the prevue of the states. The
Federal government should not become involved in solutions to health care
situations.
An economic relationship exists between a state’s health care concerns and
its level of unemployment. States with higher unemployment have a higher
incidence of unanswered health care needs.
Problems frequently contain answers or at least partial answers to the
problems. Unemployment is related to underdevelopment which is tied to
excessive land costs and high taxes on effective land use. Land costs
decrease when land speculation rewards are removed by location value
charges. When taxes on land use are removed development is
encouraged; unemployment is reduced.
When the land or location value charges are increased the state’s revenue
increases. With the additional revenue it is possible to fund basic health care
needs for all its citizens. More people can afford better health care when
unemployment concerns decrease.
One problem’s solution often helps to answer other problems.
State Health Investment Plan (S H I P)
Health should be at the top of a state’s investments list since a declining
health situation causes problems from two directions: a. health care costs
increase overall state’s operating costs.
b. as levels of citizens’ health decline state becomes less able to compete
in attracting companies to locate and operate in state.
To address the relevant health care situation with the appropriate funding
mechanism states initiate a State Health Investment Plan or S H I P. This is
a financial structure totally under control of the state into which revenues
from locally administered location value charges are deposited and citizens
receive basic health care at levels made possible by current revenues.
Appropriate medical academies and associations, under direction of the
State Medical Review Board set the payment levels. To the extent the
charges collect accurately assessed location values the S H I P will be
sufficient to provide for basic health care needs of all citizens.
Not all states will choose to establish such a plan but those with this type of
comprehensive plan might initiate a reciprocal recognition plan similar to
the federal constitution’s reciprocal trade agreement. In this way, citizens of
67
the various partner states are covered in those states as they travel out of
their home state.
A state’s S H I P will cover all its citizens for basic health care.
With the S H I P state government causes citizen participation in charges
based on location and natural resources. S H I P cards pay the cost of basic
health care for individuals and families. Assuming responsibility for health
care individuals select the medical service provider meeting their perceived
needs. Health care providers will be paid for basic health care services. Any
additional charges are negotiated by the patient and provider.
Not all health care is created equal. Citizens have differing health care
needs, priorities and resources. Just health care systems respect these
individual needs, priorities and resources.
Three Tiers of Health Care
Tier One
All citizens will be covered for the basics under Tier One. Each has an
electronic health care payment card to pay basic rates at all facilities.
Providers ‘swipe the card’, enter applicable health care service code and
receive immediate electronic payment.
Tier One of the HealthCare Solution is funded by revenue derived from
mutually owned natural resources and community created location value.
These revenues go into the State Health Investment Plan (S H I P) to pay for
basic physical and mental health care: physicians, dentists, hospitals,
emergency rooms, drugs, lab tests, preventive screenings, counseling
services, home health care and other basic services needed to maintain
health.
The payment rates will be set for service codes established by the various
Academies for members providing the relevant services. Additions and
deletions to the code lists will reflect medical practice and budget revenues
from location value charges.
Each patient will select physicians, hospitals and drugs meeting their needs
and ability to pay. Tier One basic payment is made for all, to all providers.
Tiers Two and Three
Individuals are free to secure coverage beyond the basics as they
needs, priorities and resources.
see their
Patients desiring services from Tier Two or Three providers are free to
obtain services at any provider meeting their needs but the S H I P will pay
the Tier One Code amount. The patient pays the difference as arranged
between the patient and the provider.
68
When choosing hospital services some patients may be willing and able to
have private rooms and amenities at Tier Two or Three. This is a personal
choice to be made according to one’s priorities and ability to pay.
Organ transplants and other procedures which are presently considered
extraordinary will not be covered under Tier One but at a later date may be
included as scientific advances are made. The various medical academies
will work to include procedures according to medical and budget
constraints.
Individuals requiring prescription drugs above the generic will pay the
difference between generic and brand or preferred.
Tier One Preventive Care
Preventive Screening and Tests shall be available for all at Tier One cost.
Medical cost savings will be achieved by a schedule of rewards for
particular tests as set by an academy’s estimation of test relevance for
each age group. For example prostate tests (PSA) at age 20 to 30 may only
receive 1 point, 31 – 50 gets 10 and 51+ years receives 30 points per year
(whatever reflects the Academy’s expected danger level for the age group).
Cholesterol screenings, mammograms and other preventative services will
receive rewards points according to various academy norms. As medical
research discovers preventive tools these are included in the Tier One
payment codes. For example, it is conceivable that Tier One would pay for
nicotine patches or methadone treatment under the direction of trained
therapists. Drug or alcohol rehab could be covered under Tier One.
Whatever would reduce overall health care costs in the long run will be
considered under Tier One payments.
Utilizing these preventive methods gains reward points. The points from
preventive health care go into members’ Health Savings Account (described
later) and convert into cash either at retirement or as Tier Two or Three
payments in the event of a catastrophic illness. It may be advantageous to
make the health preventive points available as cash in other ways. Reward
for prevention is the aim – the method needs to be devised.
Health Savings Account (H S A)
Everyone is eligible to have a totally tax free Health Savings Account (H S
A) to which they enter whatever amount they consider appropriate to their
medical needs. From the H S A they pay any medical costs deductibles
and premiums for additional health insurance they consider appropriate.
Since health care is a personal responsibility it may be desirable that all
employer health care coverage be discontinued with benefit costs carried
into wages and salaries as negotiated with employees. If the employee
wishes, the benefit amount can be deducted from wages and applied to the
totally tax free Health Savings Account.
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Catastrophic Illness Insurance Premiums are paid from the H S A and
selected so as to satisfy perceived needs for services and at the cost deemed
feasible for that individual. It is the individual’s responsibility to decide on
the level of care appropriate to that person and family. One family may
choose a very low deductible paying a high premium while another chooses
an extremely high deductible with a very low premium.
The H S A is private property and remains tax free when used for medical
payments throughout lifetime. If used for non-medical costs the withdrawn
amount becomes taxable. Upon reaching the current actuary established life
expectancy it becomes untaxed retirement income.
The community is the rightful owner of the value due to the usefulness
potential caused by the community’s creative activity and the natural
resources given by the Creator. It is right and perfectly just for health care
provided equally to members of the community be funded by these
revenues. What is even more wonderful is that using location value charges
stimulates the land use which increases employment which stimulates the
economy which improves health care which then improves land value. . .
and the value goes on . . . & on . . . & on . . . .
$$$$$$
What Can We Do About It?
We can be involved positively in solving the problem:
by adjusting our own mindset.
As a nation we have adopted a debt based mindset instead of one
built
on assets. We have become a nation of borrowers instead of a nation of
savers. How many people do you know who own a house or car outright?
How many do you know with little or no credit card debt?
The most effective way to help move the nation in the direction of
becoming a saving nation instead of a debt nation is to become a saver. That
is easier said than done. But starting is step one.
Adopt a symbol that speaks to you frequently throughout the day.
An effective symbol is turning off a light. It is such an easy move and yet it
communicates “I am a saver” to my own psyche and it propels me to look
for savings in other ways.
As saving actions multiply in our lives small benefits are noticed. It might
be a lower electric or gas bill, less at grocery check-out.
If at all possible take those small savings and put them in a fund.
Give it a creative name – “I’m a saver fund” or . . . . . . . . . . . . .
Shopping to fulfill needs and wants with the saving mindset will present
new challenges and enjoyment as conserving puts new assets in the fun
fund.
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Have you noticed that since you started saving you have added almost
nothing to your credit card?
Along with building the savings fund the credit cards will begin
to starve from a lack of feeding.
By the way paying off credit cards is very unpatriotic according to the
banking system. It needs us to build more debt.
As more people take on the savings mindset the nation will turn away from
our conspicuous consumption attitudes and start to amass the true assets
needed for investing in production.
Long range prosperity is built on people with motivation and ability
spending time working with buildings, equipment and supplies on natural
resources at community created locations to produce goods and services
needed to satisfy needs and trade with other producers with the system
refraining from consuming all it produces so as to have something left to
create additional means of production.
As you refrain from consuming all you produce you are moving the system
in the direction needed to solve the economic crisis.
The system must wake up and return to asset money or die.
You did what you could in working to become asset based.
Our children and grandchildren thank you for your effort.
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Enjoy Hillaire Belloc’s satire on land ownership:
“Distinguish carefully between these two,
This thing is yours, that other thing is mine.
You have a shirt, a brimless hat, a shoe
And half a coat, I am the Lord benign
Of fifty hundred acres of fat land
To which I have a right. You Understand?
“I have a right because I have, because,
Because I have - because I have a right.
Now be quite calm and good, obey the laws,
Remember your low station, do not fight
Against the goad, because, you know, it pricks
Whenever the uncleanly demos kicks.
“I do not envy you your hat, your shoe.
Why should you envy me my small estate?
It’s fearfully illogical in you
To fight with economic force and fate.
Moreover, I have got the upper hand,
And mean to keep it. Do you understand?
Source: Hilaire Belloc, Complete Verse
Gerald Duckworth, London, 1970, p.147
Quoted in Land & Liberty, Summer 1999
Sir Winston Churchill:
“Land monopoly is not the only monopoly, but it is by far the greatest of
monopolies - it is a perpetual monopoly, and it is the mother of all other
forms of monopoly.”
Abraham Lincoln:
"The land, the earth God gave to man for his home, sustenance, and support,
should never be the possession of any man, corporation, society or
unfriendly government, any more than the air or water, if as much."
Herbert Spencer:
"equity does not permit property in land. . . The world is God’s bequest to
mankind. All men are joint heirs to it."
Psalm 95:5
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"The sea belongs to him, he made it,
so does the land, he shaped this too."
Psalm 9:4
Yahweh is going to judge the world with justice,
and pronounce a true verdict on the nations.
Leviticus 25:23.
"Land must not be sold in perpetuity,
for the land is mine, and to me
you are only strangers and guests."
Isaiah 42:1
"I have endowed him with my spirit
that he may bring true justice to the nations."
Think:
‘sedaqah’
It’s the righteous way to go!
Inside back cover
Ready for tough questions?
Not much gets done if everything is questioned
before putting on shoes each morning.
And financial advisors, investors and economists don’t sit around
questioning what their work is built on either - “See, we applied
the
accepted research to current situations and made a buck - truth is what
works.”
In the near term accepting false premises may work well for anyone able to
take advantage of the situation. But people at the lower end of the economic
order are victimized by what is happening as the system continues to adjust
for false premises.
And how predictable are the outcomes when it comes to planning
for retirement, health care or children’s education?
Perhaps it is time for a few pointed questions.
This book questions the professionals’ basic operating premises:
Premise #1: Money is nothing but a medium of exchange,
a
measure of value and a storehouse of value.
They say, “If it works, it is valid.”
73
Premise #2: Land and capital are one reality: subject to private
use and
ownership. “If it sells like capital – it is capital.”
Premise #3: Invested money is capital.
“If it bears interest it must be capital.”
The long range prospects for a system built on false premises is nothing
short of . . . . . . . . . . . . .
Back Cover
Economic Justice Manifesto by Don Killoren
Seeing the great depression’s tail-end
over a water and jelly-bread supper,
cutting wisdom teeth in the Korean War,
degreeing in Philosophy-Theology to know answers,
and any job to feed the belly so used to eating…
Don brings insights forced on him
in the school of hard knocks,
pampered by consumerism attitudes,
he questions our brand of economics.
High school teacher/counselor turned blue-collar
employee relations and benefits manager,
they outsourced him in an economy belch
stuffed with bogus money borrowed
to feed well-intentioned government programs.
It crawled along waiting for the next up-flight
with new fed borrowings.
He asked, “is
this roller coaster ride really necessary?
Morphed into salesman and retail route builder received an advanced degree
in pizza delivery at retirement.
Looking at economics with Joe and Tashia Workaday’s eyes he shed
professional economist assumptions and lo and behold,
he saw who/what had hand in the till.
Not a conspiracy novel – just a self expose’ about us:
what makes us delight so
in the hope of something for nothing?
A blueprint for stealing legally or,
a model for seeing through the games we play,
and perhaps, God willing,
a prod to get us moving toward remedies.
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