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Economic Recovery: The Homestead Act of 1862 VS the Economic Democracy Act of 2021

by Rick Osbourne April 15, 2021

The largest economic expansion in American history by far occurred in the wake of the Civil War after President Abraham Lincoln signed The Homestead Act of 1862 into law. This legendary piece of legislation GRANTED citizens 160 acres of public land with the understanding that they live on it for 5 years, improve it (i.e. build a home), and pay a small registration fee. In all the US government GRANTED more than 270 million acres to 1.6 million homesteaders who collectively opened up America west of the Mississippi.

As brilliant and impactful as it was however, the Homestead Act of 1862 had its limitations. For example, land was and always will be, FINITE. That is to say, there’s only so much of it. Second, the act explicitly excluded Native Americans, people younger than 21, and those who had taken up arms against the Union army in the recently concluded war. It also excluded people who lacked agricultural/construction skills/knowledge or the financial capacity to endure several years of the almost income free existence required to develop the land being offered to them.

But interestingly enough, there’s currently a small, not for profit group of “outside the box” thinkers who are really excited about the all-new technology frontier and the similar, but MUCH LARGER OPPORTUNITY that it presents to Americans today. Yes, Joe Biden and Kamala Harris need to hear about The Economic Democracy Act proposed by the Center for Economic and Social Justice (CESJ.ORG/headquartered in Arlington, VA). CESJ contends that, unlike land, technological developments are relatively INFINITE! Yet these developments can be approached in much the same way that Lincoln approached land back in 1862.

Furthermore, they invite people of all races, genders, religions, and political persuasions (330 million people) to become owners of wealth producing capital assets. Nobody picks up and moves anywhere. And because their developmental strategy is based on FUTURE EARNINGS not PAST SAVINGS, the financial constraints that prevented many people from participating in1862 are ELIMINATED. Check out the following FACTS and see for yourself the almost unlimited potential for economic expansion built into the Economic Democracy Act of 2021.

$4 Trillion Dollars Annually…

On average, the American economy grows at the rate of $4,000,000,000,000 (yes that’s 4 trillion dollars) annually. That translates into about $12,000 for every man, woman, and child in America. But generally speaking, the beneficiaries of this annual growth are currently limited to those people who can afford to buy the stocks, bonds, real estate, and technological developments that account for this growth.

More specifically we’re talking about less than 10% of Americans who have the means to take advantage of this relatively predictable growth, and 90% who lack the opportunity to participate. Thus, we now have a 21st century wealth gap that is wider and more toxic than any time since the stock market crash of 1929 and the Great Depression which followed in its wake.

To make matters worse, this was the case long before the current pandemic oriented economic crisis raised its ugly head. In response to millions of workers losing their incomes and healthcare due to the virus, the Federal government increased unemployment benefits for several months, and issued so called “stimulus checks” to millions of people in an effort to artificially jump-start demand and to prevent the ship of state from sinking into oblivion.

Unpalatable But Necessary Steps

In taking these unpalatable but necessary steps the government has significantly increased the already massive debt load, which means it’s a short-term not a long-term solution. The hope of course is to artificially resuscitate demand, which in turn should recreate jobs and get we the people back to work and lead us all back to where we were before the virus struck.

The problem is that, even before the virus struck, we the people were not in a very good place. Even before the virus erupted over half of Americans were living paycheck to paycheck, unable to afford a $500 bump in the road without having to borrow money in order to pay for it. Things are dramatically worse than they were several months ago before the virus. But the place we were is still not the place to which we the people are longing to return. So, what can we do?

The $4 Trillion Dollar Idea That Creates No Debt!

Now let’s recall that on average, the American economy grows at the rate of $4 trillion dollars annually. Once again, that translates into about $12,000 annually for every man, woman, and child in America. But the beneficiaries of this annual growth are those who can afford to buy stocks, bonds real estate, and new technology. This generally excludes we the people.

The question I want to raise now is, how can we make sure the average American has systematic access to the ownership side of the economy, where MOST OF THE NEW WEALTH IS BEING GENERATED? How can the average Joe gain access to that $4 trillion dollars of predictable growth in order to generate a second stream of investment income, while eliminating the fear and instability that so many Americans suffer from in today’s incredibly imbalanced economy?

Consider the Following Possibility…

• What if the Federal Reserve, through local banks

• issued $12,000 of FULLY INSURED CAPITAL CREDIT LOANS

• to every single American citizen (man, woman, and child regardless of race, gender, religion, sexual orientation, or economic status) annually

• at 0% interest, and…

• allowed the capital credit loan to be repaid via PRE-TAX, FUTURE EARNINGS /DIVIDENDS – NOT FROM PERSONALSAVINGS

• along with a stipulation that these funds could only be used to purchase shares of new and transferred capital assets that were predicted to generate enough future profits to pay for their purchase and to create predictable, stabilizing, residual incomes for their owners?

This strategy, known as ECONOMIC DEMOCRACY (a.k.a. Capital Homesteading) would cost American taxpayers NOTHING. It creates NO GOVERNMENT DEBT! It creates NO CONSUMER DEBT! And, rather than government debt-backed currency, the purchase would be backed (collateralized) by real, productive, private-sector assets

And it WOULD NOT BE INFLATIONARY. All money created would be instantly backed (collateralized) by the full value of private sector assets that citizens would receive insured loans in order to purchase. Production and consumption (supply and demand) would be systematically balanced. Citizens would actually be purchasing newly issued, full dividend payout, voting shares of companies that need new capital assets in order to grow.

What Economic Democracy Will Do However Is…

• Give every American systematic access to the ownership side of the American economy, where most of our nations’ new wealth is being generated.

• Create a stream residual of income for all Americans thru ownership – not labor

• END AMERICAN POVERTY AND HEAL THE RACIAL DIVIDE

• Stabilize family life,

• Minimize the mental illness known as GREED that so poisons American culture

• In the long run it will help democratize our free market,

• Create millions of new taxpayers, thereby DILUTING and REDUCING the TAX BURDEN on those who actually pay taxes

• Minimize the growing threat of artificial intelligence in Americas’ job market

• Balance the national budget,

• And yes, pay off our massive and ever-growing national debt, etc.

One Simple Example

Here’s one simple example of how Economic Democracy would benefit the next generation of Americans. If implemented immediately, by age10 every child would have had $120,000 (10 times $12,000) invested on their behalf and paying out dividends. By age 18 well over $200,000 would have been invested and generating dividends that would easily pay for a debt-free college education along with all the benefits that would follow in its wake. Talk about a win/win!

In this moment of political division and strife Economic Democracy literally pays all Americans to pull together, at the same time, in the same direction, towards the same goals! It translates mere political talk (such as…we’re all in this together) into real live, results driven action!

It Systematically Counteracts Concentrated Wealth/Greed!

Over time, each American citizen will accumulate more equity, more residual income, and benefit from their investment income in a way that only the wealthy can today. As the result, the need for federally backed social safety net programs (i.e. Social Security, Medicare, Medicaid, food stamps) will gradually fade into the sunset. More people will be able to pay taxes, which in turn decreases the burden on those among us who still pay taxes. It systematically counteracts concentrated wealth/greed as it gradually democratizes America’s free-market economy!

Yet This Free Market, Trickle-Up, Non-Socialistic Solution Has Been Totally Ignored!!!

If any previous administration had implemented Economic Democracy, today’s COVOD 19/Unemployment crisis would not be such a crisis. We the people could afford stay at home and still have sufficient income to weather a much less severe storm. But to date this Copernican revolution in economics has been completely ignored. But then, desperate times call for desperate measures. It’s high time we seriously consider innovation!

Economic Democracy In Detail

I confess, this commentary has been a generalized portrait in dire need of more detail. So, for a full and detailed explanation of how this strategy could be implemented, go to CESJ.ORG and check out the concept that Dr. Norman Kurland calls the ECONOMIC DEMOCRACY ACT. It’s an ingenious idea whose time is long overdue. And it’s one very good thing that could actually come to fruition as the result of this horrific, COVID 19 crisis.

Addendum…

UBI vs. Economic Democracy Comparison

Stimulus checks are effectively a short-term form of Universal Basic Income (UBI), an idea which has been advocated by among others, former presidential hopeful and serial entrepreneur Andrew Yang, as well as Mark Zuckerberg of Facebook, and Elon Musk of Tesla. Although the suggested annual amount of money issued ($12,000 annually) is the same as Economic Democracy, that’s where the similarity ends. Check out the differences.

  1. Since it issues insured capital credit loans that are paid back via pre-tax future earnings, and can only be used to buy wealth producing capital assets, Economic Democracy creates NO GOVERNMENT DEBT and NO COMSUMER DEBT! UBI and stimulus checks create government debt that will eventually be paid back by we the people (not the 1% who are spectacular at avoiding taxes) in the form of higher taxes.
  2. Economic Democracy systematically creates universal capital ownership opportunity and access to the means of acquiring wealth producing capital assets. UBI does not.
  3. Economic Democracy systematically finances predictable and sustainable growth of the economy. UBI does not.
  4. Economic Democracy systematically enables individual citizens to become economically empowered and liberated through capital ownership. UBI does not.
  5. Economic Democracy systematically enables citizens to become economically independent of the government. UBI does not.
  6. Economic Democracy systematically generates mass purchasing power through ever-broadening citizen ownership of income producing capital. UBI does not.
  7. Economic Democracy systematically creates new owners of advanced technologies and green growth assets UBI does not.
  8. Economic Democracy systematically creates a growing tax base to pay the costs of government, thereby eliminating deficit spending and eventually paying off the currently massive government debt. UBI does not.
  9. UBI/Stimulus checks are simple and immediate. That’s their strength.
  10. Economic Democracy requires some time (probably a full decade) in order for benefits to accumulate. That’s why UBI should start immediately and be phased out over time in favor of Economic Democracy.

Rick Osbourne is a former public school teacher who has spent the past 20 years of his life writing for a living. His primary interests include politics (he’s an independent), psychology (in particular Dr. Erich Fromm), economics (a Center for Economic and Social Justice/CESJ.ORG board member), and childhood obesity prevention (www.pullyourownweight.org). He’s married and resides in Naperville, IL with his wife of almost 48 years, Pamela. He can be reached via email at osbourne.rick@gmail.com

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Walt Alexander

Walt Alexander

Walt Alexander is the editor-in-chief of Men of Value. Learn more about his vision for the online magazine for American men with the American values—faith, family & freedom—in his Welcome from the Editor.

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