RADICAL NEW ECONOMIC SOLUTIONS
Is the ideal of FREE EDUCATION for all attainable within the near future? In our present day man made economic system the answer is a resounding NO. In a STEADY STATE NEW ECONOMICS paradigm the answer is a resounding YES - YES – YES
LAND OWNERSHIP PROBLEM
The monopoly control of land can be identified as a major root cause of many of the economic problems of the present time. The capitalist system of western democracies gives absolute property rights in land to the individual land owner.
MONEY CREATION SOLUTION
The National Mutual Trust Fund (NMF) is proposed to accomplish a more equitable distribution of interest. The NMF would be a semi private investment corporation. Like any mutual fund it would earn dividends by investing money in stocks and shares, with the following differences...
A STEADY STATE ECONOMIC SYSTEM
The essential elements of a new paradigm ECONOMIC SYSTEM that will bring true FREEDOM, EQUALITY and DIGNITY to all citizens of South Africa and the world, utilizing the Quantitative Easing Principle, can be briefly summarized as follows...
It will take radical change
The promotion of the idea that we are living in A FREE MARKET system needs to be seriously questioned. It is in fact the most cunning SLAVERY system ever devised and only radical change will lead to the removal of the existing MONOPOLIES over:
Labouring in the interests of the Financial Elite 1% of the world’s population.
Eliminating the 3 major monopolies and establishing a STEADY STATE ECONOMIC SYSTEM as described below is one of a number of possible ways which will counter the falsehood that growth will solve all our economic woes.
The monopoly control of land can be identified as a major root cause of many of the economic problems of the present time. The capitalist system of western democracies gives absolute property rights in land to the individual land owner. This is contrary to the principle that the land and all its natural resources are the common heritage of the whole of humanity.
This is recognized in the preamble to the South African Constitution which states "The Land of South Africa belongs to all its people."
Deep thinking and far sighted men like Adam Smith, Leo Tolstoy, Henry George, Albert Einstein and Winston Churchill all saw very clearly the possibility of another option; a system which would retain stewardship, together with the incentives of capitalism but at the same time remove the bad effects of absolute ownership of land by private individuals. This is a system of synthesis emerging out of the creative tension engendered between capitalism and socialism.
In this system, ownership (stewardship) of the best land will be vested in the most competent and enterprising individuals or companies who in exchange render back to society a Rental Value of the Land, in direct proportion to the advantages which society bestows on them. In return society protects their security of tenure, property and lifestyle. Having paid to society the Annual Rental Value of the Land, governed by free market conditions, without state or bureaucratic interference, the landowner (steward) is still left with sufficient economic incentive to encourage optimum production.
There are numerous examples in history that have shown the dire effects of the current system. The near collapse of the Russian economy provided a passionate review of the flaws with the current system in which 30 American Economists implored Gorbachev to reform land ownership to establish economic stability.
The following extracts from an open letter to Gorbachov, give a clear outline of a possible Land Value Taxation Policy.
“It is important that the rent of land be retained as a source of government revenue. While governments of developed nations with market economies collect some of the rent of land in taxes, they do not collect nearly as much as they could, and they therefore make unnecessary great use of taxes that impede their economies – taxes on such things as income, sales and the value of capital.
Social collection of rent of land and natural resources serves three purposes.
First, it guaranties that no one dispossesses fellow citizens by obtaining a disproportionate share of what nature provides humanity.
Second, it provides revenue with which governments can pay for socially valuable activities without discouraging capital formation and work effort, or interfering in other ways with the efficient allocation of resources.
Third, the resulting revenue permits utility and other services that have marked economies of scale or density to be priced at levels conducive to their efficient use.
The rental value of land arises from three sources.
The first is the inherent natural productivity of land, combined with the fact that land is limited.
The second source of land value is the growth of communities;
The third is the provision of public services.
All citizens have equal claims on the component of land value that arises from nature.
The component of value that arises from community growth and the provision of services is the most sensible source of revenue for financing public services and for raising the value of surrounding land. These services include roads, urban transit networks, parks and public utility networks for services such as electricity, telephone, water and sewers.
A public revenue system should strive to collect as much rent of land as possible, allocating the part of the rent derived from nature to all citizens equally, and the part derived from public services to the governmental units that provide those services.
Users of land should not be allowed to acquire rights of indefinite duration for single payments. For efficiency, for adequate revenue, and for justice, every user of land should be required to make payments to the local government, equal to the current rental value of the land that he or she prevents others from using.”
See Wikisource for the complete letter dealing with complex technical issues which also lists the thirty contributors three of whom are Nobel Prize winners.
MONEY CREATION SOLUTION: A NATIONAL MUTUAL TRUST FUND
The National Mutual Trust Fund (NMF) is proposed to accomplish a more equitable distribution of interest. The NMF would be a semi private investment corporation. Like any mutual fund it would earn dividends by investing money in stocks and shares, with the following differences:
It would be inclusive of the entire adult population. Every citizen would be a shareholder by virtue of his or her citizenship.
The NMF would not obtain its investment funds directly from its shareholders, but, instead, it would be granted the necessary investment capital, interest free, from the central bank of the nation. Each year the NMF would be authorised, by an act of parliament, to receive, interest free a specified amount for its investment operations.
The NMF would:-
Concentrate its investments in areas of long term productivity growth.
Attempt to promote the diffusion of advanced technology into civilian industries as to achieve the most efficient use of resources.
Finance the modernisation of technically backward industries and the building of new automated factories.
Provide supplemental workers compensation and retraining incentives where these would be necessary and useful in accomplishing its goals.
4. The MNF would distribute the profits from its investments directly to the citizens of the country:
This would form part of a Citizens’ Income. Every citizen over eighteen years of age would receive regular dividend payments.
NMF profits would represent wealth created by public capital invested in private firms, distributed equally to all citizens.
The only exception would be that payments would not be distributed to minors so as to prevent generating new incentives for having large families. Minor citizens would have their share of the dividends held in trust until they reach the age of eighteen.
The NMF would thus make every citizen a capitalist interested in the efficient and effective use of capital
CREATING A STEADY STATE ECONOMIC SYSTEM
The essential elements of an ECONOMIC SYSTEM that will bring true FREEDOM, EQUALITY and DIGNITY to all citizens of South Africa can be briefly summarized as follows:-
Using the Quantitative Easing principle a Government Institution will create NEW MONEY which will be channelled into the lower end of the economy in 3 ways:-
To pay out a CITIZEN’S INCOME.
To finance essential services such as EDUCATION and HEALTH.
To finance infrastructure development
Note – In present circumstances in South Africa all EDUCATION could be made FREE thus meeting the demands of UNIVERSITY STUDENTS.
2. All owners of land will be required to pay back to society the true RENTAL VALUE of the land which they occupy.
3. The establishment of a NATIONAL MUTUAL TRUST FUND which would make decisions, authorized by Government Policies as to how NEWLY CREATED MONEY, together with collected LAND RENTAL is distributed in the 3 ways referred to above.
4. A STEADY STATE ECONOMY will be achieved by maintaining inflation as close to zero as possible by periodically increasing or decreasing the monthly CITIZEN’S INCOME.
5. DEMAND REGULATION POLICY
The formula W = I X M /A
Applied to the monthly citizen’s basic income dividend would aim to maintain inflation as close to zero as possible.
W = Monthly withholding from each adult citizen.
I = Increase in the Consumer Price Index for the previous period for which statistics are available.
M = The Nations liquid Money Supply
A = The total adult population
If there is a decrease in the Price Index the I in the above formula would be replaced by D and the W replaced by P.
D = Decrease in Price Index
P =Monthly Payment Increase
The formula P = I X M /A
NOTE – There are a number of other ways of establishing a NEW PARADIGM ECONOMIC SYSTEM which could be considered.