Posted by: John-Paul | June 19, 2013

The Problem with Today’s Economy and a Capitalist Solution

PROBLEM

Most people in the US (especially those who wished to occupy Wall Street) would agree that our present economy has a vast disparity in the possession of wealth. One percent of people – they say – own most of the wealth and thus enjoy most of the quality goods of life.

They eat quality foods, live in quality homes in secure environs, receive quality health care, education, and legal protection.

These goods are enjoyed even by “undeserving” family scions, who “live off the labor of others”. The rich are able to indulge in expensive tastes and avoid various punishments.

The poor and needy, of course, live much less well. They are unable to buy many or most of the quality goods listed above. They have lower standards of living and cruder, less secure environs, much less education. Jobs that pay less well – if available at all – give much more incentive to crime with much less legal protection.

Why is there such a vast disparity in the power to earn income?

CAUSE

Wealth is created by applying labor to assets. The owners of assets receive more income than those who apply the labor. (Though Marx and his followers say this is unjust, it is nonetheless true.)

The control of assets brings greater wealth. The concentration of control of assets concentrates the earning of wealth. This leads to the vast disparity of incomes and enjoyment of wealth.

So, how is the enjoyment of wealth to be justly distributed among more people? Is it even just to redistribute wealth more equably? Socialists, of course, say, “Yes! Redistribute income earned so the poor and needy can have more wealth for their needs.”

SOCIALIST SOLUTION

Their solution to economic disparity is to tax people’s income disproportionately with progressive income tax rates. The higher the income, the higher the percentage of income taxed. The tax monies are then distributed through government bureaucracy to the needy so all may enjoy quality goods.

This started in 1935 with Social Security, which was meant to supplement – not replace – income for the elderly and disabled. Unfortunately, instead of being stockpiled like the grain of seven good years in Egypt, the Social Security monies were put to other uses (theft by Congress). And it’s impossible to reform the system. Benefits to the elderly and disabled are a political third rail – an untouchable sacred cow.

In the 1960s, President Johnson declared a War on Poverty. What resulted was a war on the impoverished. Minimum wages became a bar to employment of the most needy. Public welfare became opportunities for sloth. Entitlement programs led to attitudes of being entitled. This has resulted in worse poverty, a greater disparity between the haves and the have-nots.

CAPITALIST SOLUTION

I offer a solution put forth in 1958 by Louis Kelso and Mortimer Adler. They showed that wealth is created by those who own assets – not just those who labor. This is how the rich obtain their riches.

Thus, rather than robbing – I mean, taxing – people of the income they have justly earned, even by capital gains, distribute some of the wealth-producing assets to the most needy. Then, whether they work or not, these people would earn incomes from those investments.

Certainly, it would be as undeserved as by non-working scions. Certainly, they would need qualified, private managers to handle these assets. So do many wealthy families at present.

Just as with Social Security, grant assets to the elderly and disabled, people either past working for income or unable to do so. Continue with the most needy. Finally, provide assets to people of higher and higher income levels, thus raising everyone’s standard of living.

Of course, such a radical notion of redistributing assets would not gain much popularity. Meanwhile God Almighty has given His people another solution, the distribution of charity.

CHARITY SOLUTION

Yahweh God has called His people – not the state – to care for the poor and needy. He has given specific instructions how to help them justly without the coercion of taxes. In fact, there is no coercion in this. No punishment was specified for non-compliance with these laws. Blessing was simply withheld from those who refused this voluntary duty.

First, portions of people’s tithes (10% of their increase in wealth) were to be kept in storehouses for the purpose of helping the poor.

Second, farmers were instructed to leave the corners of their fields unharvested and to leave any stalks that fell on the ground. This gave opportunities for the able-bodied poor to glean the stalks for themselves. The grain wasn’t fully harvested and some given to the poor without their effort. (Ruth, an ancestor of King David and the star of her own book of the Bible, was commended for her hard work in gleaning during the harvest.)

Finally, Jubilee laws required the returning of assets to poor families who had been forced to sell them. Those sold into bondage for debts to rich landowners were to be released after seven years. In all this, freedom was maintained or restored after a prescribed amount of time.

PROBLEMS WITH EACH SCENARIO

Socialism is contrary Yahweh’s specific instructions and amounts to government-sponsored theft. It gives disincentives to work, is rife with bureaucratic inefficiency and power politics, and requires government interference in and harm to the economy. It results only in the loss of freedom and greater poverty.

The capitalist way requires that assets be taken from those who own them and given to people who are undeserving and not inheriting. It breaks up family legacies. The assets are given to people uneducated and untrained in using them – to people unable to appreciate and hold on to them.

Charity from the faithful would be – at present – inadequate to meet needs. It would require people to change their thought processes and heart loyalties.

POSITIVES OF EACH SCENARIO

Socialism seeks to help the poor and needy, which is encouraged by Bible. It grants them some of rich people’s wealth. However, this is not done Yahweh’s way and is intrinsically evil.

Capitalism is also encouraged by the Bible (See Proverbs). It grants just earnings to those who own assets and use them. It simply requires more equal distribution of the earning power of assets.

Charity from God’s faithful is specifically required by Yahweh’s Law. Gleaning upholds the recipients’ self-worth. Done according to the Law, it would bring blessings to the givers as well as the recipients.

CONCLUSION

In economics as in so many other areas of our society, we Americans must return to the freedom of Yahweh’s Law. I mean this not for individual salvation; that is through faith. However, Yahweh’s blessings will return to our nation if we put faith in Him and obey the stipulations of His Law.

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