On July 25, 2015, Gar Alperovitz and Thomas M. Hanna write in The New York Times:
THE great 20th-century conservative economist Joseph Schumpeter thought the left had overlooked a major selling point in pressing the case for public — i.e., government — control over productive capital. “One of the most significant titles to superiority,” he suggested, was that public ownership produced profits, which means not having to depend on taxes to raise money.
The bulk of the left never took up Schumpeter’s argument. But in an oddly fitting twist, these days the mantra of public control in exchange for lower taxes has been embraced by a surprising quarter of the American political leadership: conservatives.
The most well-known case is Alaska. The Alaska Permanent Fund, established by a Republican governor in 1976, combines not one, but two socialist principles: public ownership and the provision of a basic income for all residents. The fund collects and invests proceeds from the extraction of oil and minerals in the state. Dividends are paid out annually to all state residents.
Texas is another example of conservative socialism in practice. Almost 150 years ago the Texas Permanent School Fund took control of roughly half of all the land and associated mineral rights still in the public domain. In 1953, coastal “submerged lands” were added after being relinquished by the federal government. Each year distributions from the fund go to support education; in 2014 alone it gave $838.7 million to state schools. Another fund, the $17.5 billion Permanent University Fund, owns more than two million acres of land, the proceeds of which help underwrite the state’s public university system.
Similar socialized funds — sometimes called sovereign wealth funds — are common in other conservative states. The Permanent Wyoming Mineral Trust Fund, with a market value of more than $7 billion accumulated from mineral extraction, is almost a direct expression of Schumpeter’s doctrine: Socialized ownership has helped to eliminate income taxes in the state.
Such “socialism, American style,” can produce odd reversals of conservative-liberal political alignments. One of the largest “socialist” enterprises in the nation is the Tennessee Valley Authority, a publicly owned company with $11 billion in sales revenue, nine million customers and 11,260 employees that produces electricity and helps manage the Tennessee River system. In 2013 President Obama proposed privatizing the T.V.A., but local Republican politicians, concerned with the prospect of higher prices for consumers and less money for their states, successfully opposed the idea.
Although state forms of public ownership have not been a major goal of the modern left, activists have begun to pick up on the idea that owning wealth in ways that benefit local communities is important. In Boulder, Colo., climate-change activists have helped win two major victories at the polls in a fight to municipalize the current utility owned by Xcel Energy. Publicly owned utilities also commonly return a portion of their profits, socialist style, to the city or county to help supplement local budgets, easing the pressure on taxpayers.
There are, in fact, already more than 2,000 publicly owned electric utilities that, along with cooperatives, supply more than 25 percent of the country’s electricity, now operating throughout the United States.
In one of the most conservative states, Nebraska, every single resident and business receives electricity from publicly owned utilities, cooperatives or public power districts. Partly as a result, Nebraskans pay one of the lowest rates for electricity in the nation.
The list goes on. More than 450 communities have also built partial or full public Internet systems, some after significant political battles. Roughly one-fifth of all hospitals are also currently publicly owned. Many cities own hotels, including Dallas — where the project was championed by the former Republican mayor Tom Leppert. Some 30 states directly invest public funds in promising start-up companies.
Moreover, contrary to conventional opinion, studies of the comparative efficiency of modern public enterprise show rough equivalency to private firms in many cases. (They aren’t perfect, of course: Many public agencies, boards and corporations that control enterprises are not fully accountable or transparent in their operations.)
With skepticism about capitalism growing among minorities and young voters, will we see more such endeavors in the future? Pendulums have a way of swinging, sometimes very sharply, when big economic tsunamis hit. It is possible that in the next big crisis, both sides might see the wisdom and practical benefits of public ownership, and embrace Joseph Schumpeter’s point even more boldly than they do today.
http://www.nytimes.com/2015/07/23/opinion/socialism-american-style.html?_r=0
Norman Kurland, President, Center for Economic and Social Justice (www.cesj.org) comments:
This was sent to me today by Gar Alperovitz. He clearly supports mobilizing “people power” to advance “democratic socialism” and ownership of productive capital by the State or some other “collective.” He also opposes monopoly capitalism, even when it is called “social or compassionate capitalism,” where ownership power is and will remain concentrated in a tiny elite who control money and ownership control and profits from productive enterprises.
CESJ, on the other hand, opposes all forms of “Socialism” and “Capitalism” and advocates “The Just Third Way,” a system based on the binary theory of economics conceived by Louis O. Kelso and Say’s Law of Markets, a theory rejected both by Karl Marx and John Maynard Keynes.
Both Keynes and Marx blindly advanced the labor theory of production, arguing that labor is the only source of what’s produced for human consumption, while Kelso realistically saw that ever-advancing technology, robotics, advanced information and management systems, land and other non-human resources were displacing humans in almost all forms of economically productive work.
Marx, Keynes and socialists like Gar Alperovitz do not support private property and a just, free and competitive market system as important elements that must be included within any set of systemic and legal reforms that promote a free, just and democratic society, as proposed by the the Just Third Way. These reforms are critical for lifting existing barriers to enabling every child, woman and man to enjoy the equal opportunity to share ownership of several trillion dollars in newly created growth assets in the U.S. private and public sectors and transfers of existing assets . . . without redistributing property rights from existing owners. These reforms are already existing under existing laws for millions of American private sector workers through 100% leveraged democratically managed S-Corp Employee Stock Ownership Plans (ESOPs).
Note that in Gar’s article he favors the current system where citizens of Alaska receive profits but have no ownership stake in the revenues from oil produced by the State. Former Senator Mike Gravel, a member of CESJ’s Board of Advisors and a strong supporter of Kelso’s binary economic vision, had a plan in which those dividends would come from ownership of assets by every citizen. It was called a “General Stock Ownership Corporation” or “GSOC” passed in 1971 by Congress as chapter U of the Internal Revenue Code for a 5-year period. Alaskan conservatives won and the Senator and the people lost a potential major advance in economic democracy. Compare this article in the American University Law School Review and Senator Gravel’s letter with Gar’s article and decide which approach is more empowering to all citizens.
Under CESJ’s Just Third Way and proposed Capital Homestead Act reforms to the monetary, finance, tax and inheritance laws all citizens. This would include workers in the public and non-profit sectors, the unemployed, underemployed, homekeepers, those unable to work, in fact every child from birth to death. Each citizen, from the poorest to the richest, would begin receiving growing independent incomes and retirement accumulations from conservatively estimated $7,000 in each future year’s new ownership stakes at today’s slow capital growth rates, as well as labor earnings from new jobs needed to finance and build assets and infrastructure for a sustainable and environmentally sound growth economy. This would make the State, our only legitimate social monopoly, economically dependent on the citizens, as America’s Founders intended, reversing today’s dangerous socialistic trends to a few holding concentrated power in all existing national economies.
Under the Just Third Way all families would have their own independent incomes and freedom and private property rights to choose and pay for their own education, health, housing and other subsistence needs, reducing their increasing dependency over time from State welfare redistribution, charity, and high-interest consumer credit. Government deficits could be eliminated by a simpler single-rate tax system on all non-exempt personal incomes. $16 trillion in existing debt and over $56 trillion in hidden debt from entitlement programs could be gradually reduced as all citizens begin to accumulate their own assets for retirement.
All these reforms are described for casual readers at http://www.cesj.org/learn/ and in more detail in articles, videos and free downloadable books athttp://www.cesj.org/resources/
Consider writing a short note to Gar at garalper@gmail.com and the New York Times at http://www.nytimes.com/2015/
In Peace through Justice,
Norm
Gary Reber Comments:
In the case of the Alaska Permanent Fund, the Texas Permanent School Fund, the Permanent Wyoming Mineral Trust Fund and the Tennessee Valley Authority, a better structure would be to create a Citizens Land Bank (CLB) entity, owned by EVERY individual citizen with the state or territory.
A CLB is a for-profit, professionally-managed, citizen-owned-and-governed community land planning and development enterprise, designed to enable every citizen of a community of any size to acquire a direct ownership stake in local land, natural resources and basic infrastructure.
A CLB is a social vehicle for every man, woman and child to gain, as a fundamental right of citizenship, a single lifetime, non-transferable ownership interest in all the Bank’s assets, share equally in property incomes from rentals and user fees from leases or use of the Bank’s assets, accumulate appreciated equity values from enhanced land values, and gain an owner’s voice in the governance of future land development.
A CLB is an innovative legal and financing tool empowered to borrow on behalf of all citizen-shareholders and service the debt with pre-tax dollars to meet the land acquisition, capitalization and operational needs of the Bank. The CLB shelters from taxation the equity accumulations of citizen-shareholders and protects the outside assets of the citizens in the event of loan default or if the enterprise fails.
A CLB is a social tool designed to encourage a just, free and non-monopolistic market economy. It applies the democratic principles of equal opportunity and equal access to the means to participate as an owner as well as a worker. It demonstrates that anything that can be owned by government can and should be owned, individually and jointly, by the citizens.
A CLB is a major feature in a proposed national economic agenda known as “Capital Homesteading for Every Citizen,” which is designed to reform existing monetary, credit and tax barriers to provide every American an equal opportunity to share in the governing powers and profits from new entrepreneurial ventures, new technologies, new structures, and new rentable space built upon the land. Capital Homesteading offers a “Just Third Way” of reversing unsustainable federal deficits and debt, and revitalizing and growing the American free enterprise system in a sustainable and environmentally sound way.
State forms of public ownership and cooperatives, while intended to benefit local communities, such as publicly owned electric utilities, do not provide DIRECT individual OWNERSHIP sharing by the citizens they are intended to benefit. Again, a better structure would be a Citizens Land Bank, wherein EVERY citizen is an individual OWNER. By vesting power and control directly among the citizens, not an elite “State” governing body, there would be far greater accountability and transparency in their operations.
Now with respect to some specific so-called “democratic socialist” policies, while I have been a strong advocate for over 40 years for practicing binary economics and policies that broaden individual OWNERSHIP of wealth-creating, income-producing capital assets simultaneously with the growth of the economy, in the case of public education at the college and university level, I believe this is a viable policy, as long as the cost is offset by reducing the military-industrial complex budget. Implementing the proposed Capital Homestead Act, whose ultimate result is to create financial independence and security for EVERY child, woman, and man, will not create an instant result, but realistically will develop over the course of the next generation, if enacted in 2016. Thus, we should invest in the higher education of our children and make public colleges and universities tuition-free in order to have our youth become educated and thereby develop more fully as persons.
Likewise, with respect to health care and medical costs, there should be a public option to compete with the private insurance corporations.
As for infrastructure, there needs to be public spending on building new and improving old infrastructure, with the stipulation that EVERY corporation competing for the government contracts be fully employed-owned. This should be the stipulation no matter what the taxpayer expenditure is for.
Such policies should be enacted and pursued while the “big picture” policies and programs of the Just Third Way take effect and eventually result in a citizenry in which all families would have their own independent incomes and freedom and private property rights to choose and pay for their own education, health, housing and other subsistence needs, reducing their increasing dependency over time from State welfare redistribution, charity, and high-interest consumer credit.
