A New Economics
To endure, free societies must foster access to wealth, there must be democratization of wealth. Everyday people must prosper. Their ability to secure the means to achieve their human needs must be available.
At the American founding, wealth for everyday people came from farming. The continent presented a vast supply of essentially free, never-tilled land. Political rights and national sovereignty were priorities. Industrialization was not foreseen.
As available land was taken up, farming was less and less a means for acquiring wealth. The civil war led to industrialization, and mechanization decimated farm labor. In The Grapes of Wrath, John Steinbeck, portrays dispossessed farm laborers, watching, as they leave town for California, one tractor, in one morning, do the work that used to take all of them together weeks to do. The Great Depression followed. The industrial era had not advanced enough to take up for the loss of farm labor employment.
The New Deal subsidized employment, directly hired millions, created public work projects, and strengthened worker’s rights. This was successful, for a time, because economic output was labor intensive. Enterprises used hands and backs much more than machines. Building roads utilized thousands of workers. Today, however, economic output has become capital intensive. With stunning engineering advancements, capital – knowledge, resources, technology, machines – has become the vital input. Increasing production does not require commensurate increase in labor and wealth flows increasingly to capital. Employment is failing to provide for democratization of wealth.
Ironically, attempts to increase the value and opportunity for labor – such as with direct government employment, government subsidy, mandated higher wages and benefits – only serve to accelerate the process of shrinking labor value, because they increase the incentive to produce with less labor. The entitlement society, by progressively redistributing income from the employed to the non-employed, accelerates this further as the employed sector is pressed to ever greater efficiency – to use less labor – to pay for the ever growing non-employed sector. In a feedback spiral, the non-employed sector fights for political influence and increases its taxation demands, further pressuring the employed, tax paying sector to produce greater labor saving efficiency.
And so, a new economics is needed. This new economics will somehow have to democratize wealth by democratizing capital. In some new way, individual citizens will need to automatically accumulate capital as they normally perform their life cycle. This capital must be their property, their new kind of seed corn, and it must be unavailable to politicians to use for cultivating their own political popularity. But the state must ensure that it is measuredly utilized rather than consumed. It must accumulate, somehow sequestered to grow, and yet also be available for key life needs.
Capital will be the earner of the future, everyone will have to have capital. It may require a crisis to democratize capital and not labor, and that crisis may be neigh.
