This op-ed in the New York Times by David Brooks appeared on May 7, 2012. Brooks states:
“The recession grew out of and exposed long-term flaws in the economy. Fixing these structural problems should be the order of the day, not papering over them with more debt.”
“There are several overlapping structural problems. First, there are those surrounding globalization and technological change. Hyperefficient globalized companies need fewer workers. As a result, unemployment rises, superstar salaries surge while lower-skilled wages stagnate, the middle gets hollowed out and inequality grows.”
“Then there are the structural issues surrounding the decline in human capital. The United States, once the world’s educational leader, is falling back in the pack. Unemployment is high, but companies still have trouble finding skilled workers.”
“Then there is political sclerosis. Over the decades, companies and other entities have implanted a growing number of special-interest deals into the tax and regulatory codes, making it harder for politically unconnected, new competitors, making the economy less dynamic.”
“But you can only mask structural problems for so long. The whole thing has gone kablooey. The current model, in which we try to compensate for structural economic weakness with tax cuts and an unsustainable welfare state, simply cannot last. The old model is broken. The jig is up.”
David Brooks, who identifies himself as a “structuralist,” as with other commentators and conventional economists continues view the world in terms of one-factor economics. “Workers need to move to more productive WORK”––meaning labor work as in a job. While they acknowledge that “running up huge deficits without fixing the underlying structure will not restore growth,” they believe that what matters most is advancing the creativity, skill and productivity of the work and the openness of the system they inhabit.
While education is a key factor to the success of our future, structurally we need to recognize that there are two factors in the production of products and services, and that to sustain consumer demand for the economy’s output requires that ALL Americans participate in the production of the products and services either through both their labor and private ownership of the productive capital that is replacing the need for their labor or through the private ownership of the productive capital exclusively, allowing them to free themselves from non-preferable labor tasks and open themselves to new opportunities for creative work that benefits their fellow citizens.
While in the short term government stimulus can help to restore demand quickly it will never be enough to get the global economy back on track. As Brooks states, make no mistake, the old economic and welfare state model is unsustainable.
But the question is what structural substitute will put us on the path to prosperity, opportunity, and economic justice? The answer is that the structural foundation of the new economy must empower ALL citizens to acquire private, individual ownership in new productive capital formation, facilitated by financial mechanisms that extend insured capital credit to ALL with pay back provided by the future (savings) earnings of the productive capital investments.
Modern commercial and central banking make it possible to turn the present value of future marketable products and services into money that can be used to finance the formation of the productive capital that produces the marketable products and services. Productive capital is thus inherently “self-financing,” as binary economist Louis O. Kelso and philosopher Mortimer Adler explained in their second book, The New Capitalists (1961). The subtitle of this second collaboration is profound: “A Proposal To Free Economic Growth From The Slavery Of [Past] Savings.”
We call this the Just Third Way. The Just Third Way is based on the three principles of economic justice explained in Chapter 5 of The Capitalist Manifesto (1958), and applied in the four pillars of an economically just society. The three principles of economic justice are:
1. Participation. Every person has the right to participate in the production of marketable products and services both as an owner of labor and as an owner of productive capital.
2. Distribution. Every person has the right to share in profits or suffer losses in direct proportion to the market-based relative value of his or her inputs to production.
3. Harmony (formerly “Limitation”). This is the “feedback” or “social justice” principle. When participation and limitation are out of sync, people must organize to correct our institutions so that equal opportunity can be reestablished.
The four pillars of an economically just society are:
1. A limited economic role for the State,
2. Free and open markets within a strict juridical framework as the best means of determining just wages, just prices and just profits,
3. Restoration of the rights of private property, especially in corporate equity and other forms of business organization, and
4. Widespread direct ownership of productive capital.
http://www.nytimes.com/2012/05/08/opinion/brooks-the-structural-revolution.html?smid=fb-share
