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I have been calling for it for years, but I did not see it coming these last few months. Donald Trump's victory heralds the arrival of a new type of revolution, a revolution from the center.
It seems I have some "esplaining" to do. First, why did I not see a Donald Trump's victory coming? The reason is a bit sad. I fixated on the negatives. I fixated on Donald Trump, the bully, eventually doomed to act like Mussolini and Hitler, first alienating friends, then gradually ruining the country, and finally being subject to a horrible end.
I thought it was up to me to avert this tragedy, for the good of the country and the good of The Donald.
How presumptuous.
Now that the people have spoken - vox populi, vox Dei - now is the time for me, not to renege on the past (my worries are as valid today as they were the other day). I need to reassess, because the positives are so much more realistic than the negatives: This is America, the good, after all; it is neither vainglorious Italy, nor Germany, the terror of the world.
With some necessary updates, this is what I wrote just last February. Yes, Max Borders is right. If we do not want to be submerged by the red-shirts of the left and/or the brown-shirts of the right we need to stand up and call for a revolution of our own (Freeman, Winter 2015).
I must assume Mr. Borders was calling for a revolution of "free marketers." This is largely a center-right revolution, the revolution inspired by the Tea Party movement. Being so one-sided against the government, this "revolution" has not succeeded so far and it is unlikely to succeed in the future.
Instead, I call for a revolution from the true center.
Some heavy intellectual lifting to establish the characteristics of this revolution has already been done in a series of scholarly papers, many of which were collected in a book and others are being published or re-published at Mother Pelican, A Journal of Solidarity and Sustainability and at Econintersect.com. Econintertsect is one of the Top 100 Sites for Enlightened Economists.
Allow me to summarize the main points here. Keynes and Hayek, under whose intellectual hegemony the world is still living today, were locked in a strenuous battle to the finish. We are still assuming that, if one wins, the other must lose.
Not so. What they could not recognize in the heat of the battle ought to be self-evident to us now. They were both right. (This is the deep tragedy of today's ideological wars.) As soon as we recognize that their positions are complementary, we can declare them both winners (International Journal of Applied Economics and Econometrics, March 2012).
And the hard work starts right there. We should determine what is the role of the government and what is the role of the market; in a properly ordered society we need them both. Clearly, the government must determine the rules of the road, and it must stop there. It is up to the market to determine all practical modalities for the use of the roads.
More to the point, we need to accept what is right and good in the positions of the political right (efficiency, for instance?) and fuse it with what is right and good in the positions of the political left (compassion, for instance?). We need to create what is just; we need to create what is our common good.
Generalities are helpful; specifics are essential.
Most economists today know economic theories; they know not the economic process. They have even lost the perspective of Classical economists who specified that, in order to produce not just "wealth" but things that sustain life, one needs these factors: land, labor, and capital - an item that today is better split into financial capital and physical capital. Accordingly, one needs to have access to allfour factors to be an active participant in the economic process. There are four economic rights accompanied by four corresponding responsibilities (Rs&Rs) that we need to exercise to reach our private - and public - goals.
1. We all have the right of access to land and natural resources; we all have the responsibility to pay taxes for the exclusive use of resources that are under our command. Since natural resources are a common good, paying taxes is a way of compensating the community for the exclusion of others from the personal use of land and natural resources. The Georgist Movement has proved it time and again: If we do not tax the land appropriately, the entire social and economic fabric comes apart.
2. We all have the right of access to national credit for capital formation; we all havethe responsibility to repay such loans. We need to Mend the Fed - not End the Fed. Three moorings will suffice: (1) new money in the form of loans has to be created only for the creation of real wealth (not to fund financial operations); (2) loans have to be issued at cost (not at arbitrary interest rates); (3) loans have to be issued to benefit everyone, by extending loans only to individual entrepreneurs, co-operatives, corporations with ESOPs and CSOPs, and governmental units with taxing powers, so that loans can be repaid. National credit is the second and last great common good. It needs to be used for the common good. Implementing this right and responsibility will accomplish a large number of goals: It will especially foster entrepreneurship and innovation; it will create a stable monetary system; it will free us from our tether to international behemoths; it will free the "animal spirits" of mankind from vain regulations. William Jennings Bryan knew it well; "When we have restored the money of the Constitution, all other necessary reforms will be possible, but until this is done there is no other reform that can be accomplished." We have lost more than a century in hot pursuit of ephemeral goals; and we have dropped the prize that counts most: control of the process of creation and distribution of money.
3. We all have the right to the fruits of our labor; we all have the responsibility to offer services of value equivalent to established compensation. Beyond a "living wage," and, of course, "equal pay for equal work," the duty of the employer is to share with the worker the value of capital appreciation of the firm. Only then will the reward between labor and capital be equalized. An employer who cannot afford a living wage and a fair division of the capital appreciation of the firm among all employees in accordance with the value of their participation in the production of wealth has no right to be in business. The anti-capitalistic bias of many economists and most media has degenerated into a disparagement of profits and property ownership. We neglect that political freedom requires economic freedom - or it is a farce.
4. We all have the right to protect our wealth; we all have the responsibility to respect the wealth of others. This right is fully understood and practiced today, except in the area that matters most, the area of mergers and acquisitions of entire firms. Only one point can be made in this context. The "trustification" process - the process through which the Robber Barons robbed the world of the fruits of the Industrial Revolution - ought to be brought under public control, because if the public does not control the large corporations, the large corporations will control the public interest. What needs to be controlled is, not the process of internal growth, but the process of growth-by-purchase of entire corporations, the bully way, the Pac Man Way. The suggested policy will not impinge upon the freedom of the firm. Internal growth can reach the sky.
As a careful extension of Concordian monetary policy, let us Defuse the Bomb, the harrowing specter of the oncoming financial catastrophe, by systematicallyreducing those automatically tumbling zeros in all personal, national, and international accounts in such a way that creditors' positions of relative wealth remain unchanged. There is no economic substance behind those zeros. The IMF, revisiting its idealistic original conception by Keynes, can have a pivotal role in the implementation of this policy. Indeed, the times are ripe for it: China, one of the major creditor nations, is open to such a solution. This proposal is nothing new, nothing revolutionary at all. This is the seven-years Jubilee Solution that ancient Israelites invented and seem to have applied to generate such effective results that their country was constantly coveted by powerful neighbors. No other small country in history seems to have had a similar experience. Small countries would certainly be conquered, but once conquered they would not be able to get back, and back so quickly to their ancient splendors. I read of King David's riches (I Chronicles 22:14, 29:1-9); I read of King Solomon's riches (2 Chronicles 9:13-29) and I am astonished.
Some might think that this program of action will not see the light of day because the opposition is too strong. But where is the opposition? Who are the powerful people who should object to the proposed program of action? When all is said and done, the four presumed antagonists are supposed to be (1) landowners who do not want to pay taxes on the value of their land; (2) central bankers who do not want to serve the public interest; (3) employers who do not want to offer full compensation for services received; and (4) business people who want to gobble up the fruit of other people's effort.
Where are they? Anomalies abound and give ample justification to the suspicion that there will be opposition to the implementation of the suggested four Rs&Rs. In truth, however, in the vast reality of daily life, they turn out to be phantasms. They exist only in the imagination of fearful people who do not find the moral fortitude to speak truth to power. Nothing new under the sun. This is surrender to the inclination to sell one's inheritance, one's moral and intellectual integrity, for "a mess of pottage."
To believe in the existence of those four phantoms is like believing in irredeemable evil. Those four phantoms are transformed into four horsemen of the Apocalypse. Just like in the Samson story of old, these Philistines are supposed to be ready to be buried alive under the rubble of the economic system falling apart all around them.
Many years ago I was tagged as an "incorrigible optimist." I still am. But my faith is not blind. The policy that I recommend as an integrated whole has been applied piecemeal all throughout history and the entire world with incredible success. Just read all you can by and about Benjamin Franklin, Henry George, Louis D. Brandeis, and Louis O. Kelso. You will become an optimist, too.
Ours is the land of the free and the brave. Forget about Keynes; forget about Hayek. This is an All-American economic policy.
President-Elect Donald Trump is presented with a unique historic opportunity. In order to implement the spirit of his program of action, he might truly want to pursue the dictates of a revolution from the center. This reconstruction might assume a hundred different forms, but at its core it ought to transform both the Democratic and the Republican party, which he both defeated at the polls, from parties of bickering and discord, to parties of Concord. Or he will have to create a whole new Party of Concord. For the revolution from the center to become a reality, it must control the extreme right and the extreme left. And both will fall in line if they are held to the need to share the common goal of solving societal problems with "common" sense, as The Donald says. But this is not to be a nonsensical common sense. The ancients seem to have known it better than we do, their common sense was a sense of justice - justice for all.
Author's note: Many beautiful minds have contributed many beautiful things over many years to the construction of this Concordian social, economic, political, and cultural paradigm. Most notable are: Vittorio de Caprariis at the University of Naples, Italy, Robert A. Mundell at the Bologna Center of the Johns Hopkins SAIS, Franco Modigliani at MIT,, Buckminster Fuller, William J. Baumol, Michele Boldrin, Michael Emmett Brady, Peter J. Bearse, Mitchell S. Lurio, Norman G. Kurland, David S. Wise, and my beautiful wife, Joan. To all - and many others, some of whom prefer to remain anonymous - thanks.
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