Economic Wall That Must Be Torn Down
Global leaders who begin the World Economic Forum debate in Davos should seriously consider strategies that would demolish Economic Iron Curtain that like its political predecessor divides and impoverishes nations, but in much larger scale.Seventy-one years ago Soviet Russia cut European continent annexing one third of its population beginning what would become over four decades of military occupation. “From Stettin in the Baltic to Trieste in the Adriatic, an iron curtain has descended across the Continent,” Winston Churchill stated in 1946. Although material Iron Curtain would close off Soviet occupied nations only five years later, the captive nations were already isolated.
Unbounded tyranny in a fast speed spread poverty, control and backwardness along the Berlin Wall. The almost completely demolished industry was never recapitalized and wealth remained in the hands of occupants.
Political Iron Curtain results in backwardness and isolation
At the other side of a political Iron Curtain the globalization linked markets with peoples around the world and emphasized weaknesses of rival political projects that were imposed on one third of European nations.
Foundation of the Western peaceful order was shared markets, borderless states and common security at first the European Community and later the European Union, innovative political project guaranteed.
It came almost unnoticed that the economic strategy of prosperous West reduced its value system to the competitiveness, innovation and efficiency gradually dehumanizing its market approach. Optimism of the anonymous markets measured economic growth, and cost cutting became a solution for almost every problem of a company. Such logics of economic system had to result in the increase of lay-offs since the main cost of production will be always remuneration for the worker. What is even worse, the economic model was based on the redistribution model of incomes, through the taxation and safety net programs facing reality of the increasing concentration of wealth.
These symptoms were not detected in 1989 when after a few decades; justice was served to nations abandoned to genocidal tyranny of Kremlin by part of the West including the United States.
Economic problems reached levels of high wall that divided small elite of super rich from the rest of the populations. Although political Iron Curtain was falling a new Economic Iron Curtain soon divided societies not only in the old but also new West. It would eventually close off poor, excommunicated and deprived of wealth sectors of populations.
Western politicians under the leadership of Washington administered justice only to a certain degree knocking down political Iron Curtain in 1989, but allowing former oppressors to preserve unlawfully gained wealth, economic privileges and leaving populations of the nations at the mercy of such capitalists. The most demoralized elements of Western business world ignored the social situation of Central Europe eagerly joining new capitalists in trade. The domestic economic policies of the nations were also the major factor for the failed economic revival.
After Central Europe joined European Union the once abandoned nations could contribute to and share in subsidies to impoverished regions, sponsorship for infrastructure and equal voice in the European affairs. The membership in EU proceeded by years of meticulous changes in legal, economic and administrative systems in the post-Soviet states helped to experience civilizational leap. But the Economic Iron Curtain stood untouched only the redistributive policies were extended to new members of European Union.
Free market economy can grow faster without inflation if all consumers enjoyed more equal opportunity to participate as owners of labor-displacing technologies.
Dr. Norman Kurland “ESOP inventor”, collaborator of Louis Kelso, and Senator Russell Long. Dr. Kurland prepared the meeting Kelso and sen. Long when the first time, a major political power became excited about Kelso’s concept of how to expand ownership of productive assets and agreed to champion those ideas in legislation. (Photo Courtesy of CESJ).
Economic Iron Curtain stops growth and increases unsustainable debts
Unfortunately the economic model of the West failed its test when Global Financial Crisis almost sank the Eurozone in 2009 forcing Brussels to increase help for its weakest links including Portugal, Spain, Hungary and the Baltic states. When the pressure on Euro currency increased also dissenting voices for its liquidation became loud.
Elusive economic growth, widespread unemployment and unforeseen changes in the political landscape of West increased anxiety and apprehension in a scale unobserved since the end of World War in West and from 1989 in the new West.
Some analysts could describe and even diagnose the problem. None of them proposed a remedy that would address three problems of global economy that are three pillars of the Economic Iron Curtain.
Disruption caused by technological revolution, lack of a new capital for modernization, and unsustainable debts of households affected by structural unemployment.
Political leaders, CEOs and top bankers who make their annual trek up the Swiss Alps to the World Economic Forum in Davos, desperately look for such solution.
Thin layer of optimism cannot hide anxiety about increasingly toxic political climate and a deep sense of uncertainty surrounding the U.S. presidency of Donald Trump, who will be inaugurated on the final day of the forum.
Participants of the Forum were in vanguard of global elites convinced about the infinite stability of Western political system that would reject populists demanding Brexit and Trump. It is clear that post-Cold War order has been threatened by a new strain of populism that is a strategy of impoverished people to demolish a new Economic Iron Curtain.
Although Davos discussion will touch the topics as diverse as terrorism, artificial intelligence and wellness, it may never reach the crux of current problem: the economic model’s inadequacy to less and less labor-intensive economic growth that strengthens Economic Iron Curtain.
This where the revolutionary discovery made by financier and economist Louis Kelso comes into the picture. Kelso observed that in the colonial years 95 percent input in production came from labor power because it was a nature of the original source of economic power. Founding Fathers who bound economic power with democracy understood that democratization should transform not only political but also economic power. They assumed that economic power would be broadly diffused, but instead a minority accumulated it.
The strategy to demolish Economic Iron Curtain
Full employment policy would be perfect for Stone Age, Kelso observed.
Industrial Revolution developments in the sphere of capital ownership offer a good lesson for our troubled times. The meaning of Industrial Revolution is the change the people does the work from working exclusively to their labor power to working to their labor power and their capital. At the beginning there was an economic democracy because labor power provided for 95 percent of input, but today the labor power provides at most 5 percent. The remaining gap fills capital input.
The answer must be a widespread program for making every child, woman and man an owner of productive capital, thus ending the wage slavery on global scale. Why? Kelso explained that during the concentration of the ownership of productive capital during the Industrial Revolution after introduction of Homestead Acts between 1860 and 1900 in the still agrarian age the productive capital that was concentrated in hands of 5 percent was diffused onto labor workers and their families for few decades. It is this that can halt the cycles of economic ups and downs that impoverish wider circles of populations.
The precariat relies largely on money wages, without non-wage benefits, rights-based state benefits or informal community benefits. But its real wages have been falling, in a context in which average real wages have stagnated for the past three decades in the United States, France, Germany, the United Kingdom and other OECD countries. And wages are increasingly volatile, with declining prospects of upward mobility and increasing risks of downward. (Guy Standing, Meet the precariat, new global class. WEF) [Photo: Slums nearby luxurious apartments in Hanoi, Vietnam]
This economic model based on the accumulated capital that is not accessible for global population resulted in debt bubbles, trade deficits and reached limits of redistribution. Accumulated capital in hands of few wealthy families is largely cornerstone of the Economic Iron Curtain.
The redistribution, as explained, is not a remedy but the economic and legal reforms that would eliminate barriers to capital ownership for every citizen.
If Louis Kelso provided part of intellectual and practical solution his colleague and collaborator Dr. Norman Kurland authored detailed proposals for legal and economic reforms including the Bill that is a logical consequence of Act by Founding Fathers.
Last week Dr. Kurland in his letter to Washington Post argued that some ideas for economic reforms promoted recently, are not appropriate for modern economy.
“Simply lowering tariffs and other impediments to free trade or raising tariffs to protect jobs will not allow for sufficient incomes to flow to workers. Robotics, artificial intelligence and information technologies are too rapidly replacing every form and level of human input.”
Dr. Kurland who co-established and leads a private economic think-tank Center for Economic and Social Justice, that researches new innovative economic strategies focused on justice, free market and private property is convinced that “there is no technical reason that a more just and free market economy would not grow faster without inflation.”
It would happen “if all consumers enjoyed more equal opportunity to participate as owners of labor-displacing technologies. “
“If everyone had equal access to insured capital credit, newly issued growth shares could be paid for with future profits, supporting a more advanced economic system advocated under the Universal Declaration of Human Rights, “ Dr. Kurland emphasized.
As discussants at World Economic Forum will be delving into the problem of appropriate reforms that address issue of precariat, a new class of workers and unemployed from industries disrupted by technological innovations, the solution based on the widespread ownership of productive capital must be emphasized.
Precariat needs economic system based on the Capital Homestead Act that removes “monetary and tax barriers that prevent equal access to the right (and means) to capital ownership by every citizen”.
The economic strategy, authored by Dr. Norman Kurland and his collaborators at his think tank, has a serious potential to became an instrument that would end unjust division inside the nations exactly like the political strategy of Ronald Reagan removed divisions between nations in Europe. Who will tear down this wall?