by Ric Osborne November 10, 2021

Does this sound impossible? Inconceivable? Totally nuts? If so, check out the following scenario. And when you’re done reading see if you’ve changed your mind about what’s possible and what’s impossible.

According to a Federal Reserve 2018 estimate, the American economy, on average, creates $4,000,000,000,000 (4 trillion dollars) worth of wealth producing capital assets 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 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 all 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 now than they were 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 Long-Term Debt!

Now let’s recall that on average, the American economy creates $4 trillion dollars of wealth producing capital assets annually. Once again, that translates into about $12,000 every year for every man, woman, and child in America. But the beneficiaries of this relatively predictable, annual growth are those who can afford to buy the patents, copyrights, stocks, bonds, real estate, and new technology that account for this growth. 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 ZERO PERCENT INTEREST, and…

• allowed the loan to be repaid via FUTURE, PRE-TAX EARNINGS/DIVIDENDS – NOT FROM PERSONAL SAVINGS

• 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 themselves and to create predictable, stabilizing, capital incomes for their owners?

This strategy, known as “Economic Democracy,” would cost American taxpayers NOTHING. It creates NO LONG-TERM GOVERNMENT DEBT! It creates NO LONG-TERM CONSUMER DEBT! And, rather than government debt-backed currency, every transaction is instantly backed (collateralized/secured) by capital credit insurance, productive, private-sector assets, and is systematically repaid in an average of three to seven years!

And it WOULD NOT BE INFLATIONARY? Inflation happens when too many dollars are chasing too few goods and services. But in the EDA scenario income/demand is tied directly to production/supply. When production/supply occurs, income/demand automatically follows. Thus production/supply creates income/demand and in the process, EVERY CITIZEN is suddenly in a position to become a PRODUCTIVE MEMBER OF SOCIETY. So, there’s an automatic balance built into this strategy that avoids inflationary imbalances.

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’ wealth is being generated.

• Create a stream of income for all Americans thru ownership – not thru 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 systematically democratize the 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 systematically PAY DOWN our massive national debt, etc.

But that $4 Trillion of growth is destined to happen. The only real question is, HOW WILL IT BE FINANCED? If the billionaires finance it from past savings, they’ll own and control it. If the government finances it through taxation or debt creation, they’ll own and control it. But if we the people finance it, WE THE PEOPLE will own, control, and benefit from our ownership. And under these conditions a genuine political democracy is actually possible!

One Simple Example

Here’s one simple example of how Economic Democracy would benefit the next generation of Americans. If implemented, by age10 every child would have had $120,000 (10 times $12,000) invested on their behalf and paying 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. Absolutely a win/win for everyone!

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 capital 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. Millions more will be able to pay taxes, which in turn decreases the burden on those among us who currently pay taxes. It systematically counteracts concentrated wealth/greed as it gradually democratizes America’s free-market economy!

Economic Democracy In Detail

I confess, this commentary has been a generalized portrait and is 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 Capital Homesteading, 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 LONG-TERM GOVERNMENT DEBT and NO LONG-TERM 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 a little time (generally 3 to 7 years) in order for benefits to begin accumulating. That’s why UBI should start immediately and be phased out over time in favor of Economic Democracy (a.k.a. Capital Homesteading).

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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