A Bailout for the People: Dividend Economics

Richard C. Cook is a former U.S. federal government analyst. He can be contacted through his website at www.richardccook.com.

The lack of individual and family income security in the midst of a highly-developed economy is a travesty under any circumstances, but the basic contradiction of "poverty in the midst of plenty" that has plagued the world since the start of the Industrial Revolution is becoming much worse in the early years of the 21st century as the Recession of 2008 picks up speed.

Winston Churchill spoke on the subject when giving the Romanes Lecture at Oxford University on June 19, 1930, a few months after the crash of the U.S. stock market that started the Great Depression. He said:

"Who would have thought that it would be easier to produce by toil and skill all the most necessary or desirable commodities than it is to find consumers for them? Who would have thought that cheap and abundant supplies of all the basic commodities would find the science and civilization of the world unable to utilize them? Have all our triumphs of research and organization bequeathed us only a new punishment: the Curse of Plenty? Are we really to believe that no better adjustment can be made between supply and demand? Yet the fact remains that every attempt has failed. Many various attempts have been made, from the extremes of Communism in Russia to the extremes of Capitalism in the United States. They include every form of fiscal policy and currency policy. But all have failed, and we have advanced little further in this quest than in barbaric times. Surely it is this mysterious crack and fissure at the basis of all our arrangements and apparatus upon which the keenest minds throughout the world should be concentrated."

Evidently we’ve learned nothing since Churchill spoke. Isn’t it shameful – or just surprising – that since the proponents of "post-modern" economics restructured the U.S. economy around the concept of a deregulated financial sector over the past 30 years, income and wealth disparities between rich and poor have become much worse?

Perhaps we are finally ready to reopen the question of whether human beings have a right to a sufficient income to keep body and soul together... Today it is not difficult to see that implementation of a Basic Income Guarantee (BIG), had it been put in place when the concept still had political life in the 1960s and early 1970s, would have gone a long way toward ameliorating human distress from poverty along with assuring a degree of economic justice. And we would clearly be much better off today. (...)

Yet even in the midst of massive government bailouts for the banks and the as-yet-to-be-implemented economic stimulus proposals for the people, a BIG is never mentioned, not even by progressives. One problem with BIG is that its proponents always presented it as a transfer-of-wealth program, where a portion of the earnings of people with earned incomes would be diverted to support those in need. (...)

But there are other ways to look at the problem. One way is that of the Social Credit movement, where a regular dividend payment to individuals is seen not only as fair but is viewed as a necessary balancing force within a developed economy.

I call this program, based on dividend-type approaches, a "Bailout for the People," as opposed to the bank bailouts that are adding trillions of dollars to the national debt. I have presented it previously in articles on the internet as "The Cook Plan." (Richard C. Cook, "How to Save the U.S. Economy," globalresearch.ca.)

The Failure of Economics

So what is really wrong with the economy? What is puzzling is (the economic commentators’) apparent failure to recognize the role of collapsing consumer purchasing power as a principal cause of the freezing of the markets. Individuals can no longer get loans because they can’t afford to repay them. Businesses can’t get loans because consumer income is insufficient to buy their products. Within the U.S., consumer purchasing power has fallen not only because of the export of so many manufacturing jobs to low-paying overseas labor markets like those in China, but also because workers have not shared in the benefits of constantly rising productivity.

As stated, for commentators like Stiglitz, or like Paul Krugman, another Nobel Prize winner who writes for the New York Times, the debt-based monetary system run by the banks is a "given" as the unchallenged centerpiece of the world economy.

But even as Krugman and others argue for more government spending to prime the economic pump and restore employment – a few more trillion added to the national debt can’t hurt, they say – such spending can only take place through deficit financing funneled through the banking system. So their answer to a crisis marked by overwhelming public and private debt is more debt. (…)

Cancer

What we are seeing is a rapidly metastasizing case of terminal cancer. The host of this cancer is the population of the U.S., and the cancer of debt is deadly. The progressive prescriptions of people like Stiglitz and Krugman, and even those of president-elect Barack Obama, are like offering a pair of crutches to a cancer patient so ill he can no longer even stand up.

The international empire of usury has a long pedigree. It goes back to ancient Sumeria, when debtors first began to be sold into slavery. Excessive debt ruined many of the Greek city-states and helped wreck the Roman Empire. During the Middle Ages, usury was such a scourge that the Catholic Church outlawed it.

The current phase of the empire dates to the creation of the Bank of England, which was a privately-owned banking institution that made its money by lending to the British government so it could fight its wars. The Bank of England was cloned on American soil when the Federal Reserve System was created by Congress in 1913. The bankers had previously tried take control of the U.S. through the First and Second Banks of the United States but had been defeated by democratic forces led initially by President Thomas Jefferson (1801-09) and later Presidents Andrew Jackson (1829-37) and Martin Van Buren (1837-41).

Since the founding of the nation, there has been a struggle within the U.S. between pro-and anti-bank forces. After a dramatic see-saw battle lasting two centuries, the banks finally saw complete triumph in the 1970s when the philosophy of monetarism took over and assured that a chronic insufficiency of real money in the economy would be answered by an exponentially growing amount of bank-generated debt. The flood of petrodollars overseas was paradoxically mirrored in reverse by a growing shortage of consumer purchasing power at home.

Monetarism was not directed solely by figures within the U.S. Rather it was part of a worldwide financier conspiracy. The "Reagan Revolution" which facilitated it was matched by "Thatcherism" in the U.K. and similar pro-bank regimes around the world.

Revolution

The bankers’ takeover of the world economy that gained a complete triumph in the 1970s cannot be undone by President Barack Obama’s economic stimulus program or any other progressive nostrum. Even the goal of creating millions of new jobs, should it succeed, is not likely to compensate in the long run for the enormous amount of debt the productive economy is carrying. But then again, Obama does not intend to overthrow the Empire of Usury. After all, a main source of campaign funds for the Democrats in 2008 was Wall Street bankers and financiers.

Bailouts financed by the government must be repaid with interest by the taxpayers. But the taxpayers are already overburdened by debt. Because the bankers are so untrustworthy and motivated by self-interest, they must be removed from power. This requires a political revolution that may already have begun.

The attack on the bankers’ power must be broad, persistent, and far-reaching. Today they control the political process in the U.S. and around the world. Their power is guarded by the laws and regulations of the Western nations. They control international agencies such as the International Monetary Fund and the World Trade Organization. They also influence the Western military and intelligence machines, with NATO now being sworn to protect Western "neoliberalism," which means the bankers’ Empire.

What Must be Done: Dividend Economics

The way to generate income security is not to give someone a job. It is to put money – cash – in his pocket. If we began with this simple fact, the economy would soon generate far more jobs than people could fill. Of course some of these jobs would be low-paying or even volunteer jobs, which would be acceptable provided that people still had enough to live on and had opportunities to earn more.

For the world economy to function, and for there to be enough goods produced to support everyone at a decent standard of living, not everyone has to work. In fact too many workers get in each other’s way.

The productivity of a modern industrial economy is phenomenal. It surpasses the wildest dreams of generations past. The problem today is not a shortage of goods and services. It is too many goods and services. There is a worldwide glut of automobiles. The same goes for most consumer products. This does not mean that threats like climate change or resource depletion should be ignored. The reason these threats are not being faced is that industry must work so hard to cut costs and keep prices down in the face of the catastrophic shortage of consumer purchasing power.

So why do we need more jobs? Only because we are too cheap and so poorly informed that we fail to realize that a cash payment to everyone, at least at a subsistence level, should be viewed as a dividend. It’s something everyone should receive as the benefit of our incredible producing economy. It should be treated as a HUMAN RIGHT.

But the situation does not require that someone else should be taxed in order for that dividend to be provided. A BIG does not have to be a transfer payment or a share-the-wealth scheme. Rather it should reflect an acknowledgement by the economic system that the universe is bountiful and abundant. Modern industry has tapped into that abundance.

Today the abundance is being stolen by the bankers and their debt-based monetary system. This is what must be taken back by on behalf of "We the People." This can be done by payment of a BIG as a dividend. It would not be inflationary, because it would not result in "more money chasing the same amount of goods." Rather it would replace money borrowed from the banks or would generate new production.

If you want to read the history of dividend-economics, study the history of the worldwide Social Credit movement. I am not going to repeat that history here. I have written about it in many articles over the past two years, most of which can be found at www.GlobalResearch.ca. It’s one of the basic themes in my new book, We Hold These Truths: The Hope of Monetary Reform (Tendril Press, 2008).