Would this work as Distributism?

[johnmann]

That comment indicates that you understand neither distributism nor the mechanics of capitalism.

Distributism is incompatible with free markets insofar as it gives preference to ownership over employment. Distributism is NOT merely distribution of anything through any means. It’s distributed ownership of the means of production.

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We don’t tax capital gains at the same rate as wages because capital gains, unlike wages, are already taxed at the corporate level. An alternative to taxing cap gains differently, is to tax them the same BUT to eliminate the corporate tax. That would achieve the same thing but give the appearance of more fairness.

BTW what you believe is irrelevant. Even the most left-wing economists recognize that you can’t take capital gains at the same rate as wages.

What you described with Wal-Mart is called economies of scale and we want it. Dealing in volume reduces the cost of business and lowers prices. We don’t want to encourage inefficiency and extraordinary profits for suppliers. The legislation you propose would raise prices.

Tax incentives for businesses to locate in your jurisdiction aren’t always bad. It depends on the details of the deal. They’re often structured as at least revenue neutral. The sports team gets a tax break but it’s paid for by a tax increase on nearby hotels and restaurants who are more than happy to paid the extra tax in exchange for the increased business.

The problem with the estate tax is its effect on incentives. Again, what you believe is irrelevant. It’s the facts that are relevant. The biggest effect of the estate tax is not on work incentives but on spending incentives. If I can’t pass on my wealth, instead of investing it wisely for the next generation, I’m going to splurge on luxuries while I’m still alive.

I share your goal, not your methods. Among the legitimate grievances that can be addressed are the carried interest rule, excessive intellectual property protection, and income tax deductions like the charitable deduction, home mortgage deduction, and health insurance deduction. But even simpler than that is just raising tax rates and redistributing the proceeds more widely.

 

[manualman]

That comment indicates that you understand neither distributism nor the mechanics of capitalism.

Distributism is incompatible with free markets insofar as it gives preference to ownership over employment. Distributism is NOT merely distribution of anything through any means. It’s distributed ownership of the means of production.

Distributism, unlike socialism does not envision government seizure of the “means of production” and subsequent distribution of it. That is what dishonest or ignorant critics of it constantly claim. The distributed ownership of productive assets is the end goal, not the means. Improving the legal, regulatory and tax framework is a better means of achieving that end that is very much in line with Rerum Novarum (have you read it?) and the rest of catholic moral teaching.

The problem with the current capitalist version of free market economics (those two words are not synonymous) is that the system is clearly rigged to favor the investor, not the entrepenuer. This is why we have an exponential concentration of wealth in the hands of the very few.

I’ll agree with one thing you said. Neither your opinion nor mine establishes the facts. They are what they are. Not my fault you’re chosing wrongly!

 

[Ridgerunner]

This sentence indicates you don’t understand the word. Distributism is 100% compatible with free market economics. It just calls for a recognition of the fact that massive consolidation of wealth ownership creates dehumanizing conditions not present when wealth is more evenly spread. Lots of ways to address this if we really tried at it.

For example, why not tax capital gains at the same rate as wages? The system we have now structurally accelerates the concentration of wealth in the hands of those who already have lots to invest. I refuse to believe that Bill Gates is going to stuff his money into mattresses if he has to pay the same tax rate as Joe the Plumber. I call Baloney.

Here’s another idea: Why not enact legal reforms that offset some of the economic bully power corporations like Walmart have over Fred’s corner market? We’ve all heard the stories of how Walmart (for example) runs up sales for its suppliers and gets them addicted to the volume, then demands successive cuts in cost that the supplier makes almost nothing and charges Walmart far less than it does other retailers for the same thing. That could be stopped with some sensible legislation on open book pricing for large volume products and requirements that suppliers decide what they will charge and then charge everybody the same. Wouldn’t YOU shop at Fred’s corner store if the prices were the same as Walmart’s? I would!

I’d like to see an outright ban on ALL tax breaks governments often use to entice sports teams and big corporations to relocate to their jurisdiction. This is always a give-away of local small guy taxpayer money to the already rich and powerful. Ban it and make the jerks pay their own way.

My most controversial idea is simply the estate tax. Dead guys own nothing by definition. They’re dead. You both enter and leave this world with nothing. Given that governments DO require funding to do the things we all want them to, the best way for taxes to be levied is in an equitable manner and one that puts the least damper on growth. Estate taxes fit that perfectly. The guy that earned it pays nothing. The guy that otherwise stood to inherit it did nothing to earn it. Set a minimum threshold, abolish the trust loophole and put a hefty tax on the rest of inheritances. I refuse to believe that people will be discouraged from working hard because their estate will be taxed heavily after they are dead. Only the most brainwashed dittohead could believe such a thing.

The above are samples only. They show how would could keep our free market system in a manner that did more to reward the guy who works hard, takes risks and innovates rather than the guy who simply already had a ton of money to invest (virtually the definition of capitalism).

I very much agree that the conditions for Distributism are already here, but could perhaps use some tweaking.

Your “even pricing” for Walmart and Fred’s store is intriguing. I am sure it would be a godsend to domestic manufacturers. But there’s that China thing. I’m not sure how much of anything sold at Walmart is NOT made in China. But you’re absolutely correct in saying that Walmart achieves a lot of its pricing by squeezing its vendors. And it does it in more ways than simply squeezing the prices. It also “upstreams” all risk by requiring vendors to keep the inventory and bear those costs and provide “just in time” delivery only as products are sold.

I disagree about capital gains tax, at least below some threshold level. Most capital assets in individual hands are owned by the elderly, and I am not sure I see much merit in taxing grandma at ordinary income rates when she sells her ATT to pay her utility bills. For that matter, I can’t see making Farmer Jones pay huge capital gains on the farm he bought in 1962 at 1/10 of its current price. Jones wouldn’t have a pension or anything and has to live off the sale of the farm.

I would agree about the estate tax, but only to a degree. I think (and so did Pope Leo XIII) that inheritability is an important aspect of motivation in acquiring assets and aids in family formation for the young. Right now the “lifetime exemption” is $5 million. You are correct in saying trusts allow couples to double that to $10 million. One of the problems with the estate tax is that it’s taxed at the source, not to the recipient. So, a sx million dollar estate pays the same tax whether there is one recipient or twenty.

One thing I would like to see changed is the “billionaire tax break” for those who set up foundations. Let’s say “X” wants to cash out some investment in which he has a fortune. Well, if he simultaneously sets up a private foundation to, say, promote suppression of fossil fuels and citizen ownership of firearms, and endows it with a similar amount, he pays no tax on the first money at all. But he can install his kid or girlfriend as an executive in the foundation at a grand salary. And I would like to see private foundations pay income tax in the same way any corporation does.

And, of course, I would like to see offsets in pension benefits to discourage double and triple dipping into the public trough.

 

[johnmann]

Distributism, unlike socialism does not envision government seizure of the “means of production” and subsequent distribution of it. That is what dishonest or ignorant critics of it constantly claim. The distributed ownership of productive assets is the end goal, not the means. Improving the legal, regulatory and tax framework is a better means of achieving that end that is very much in line with Rerum Novarum (have you read it?) and the rest of catholic moral teaching.

The problem with the current capitalist version of free market economics (those two words are not synonymous) is that the system is clearly rigged to favor the investor, not the entrepenuer. This is why we have an exponential concentration of wealth in the hands of the very few.

I’ll agree with one thing you said. Neither your opinion nor mine establishes the facts. They are what they are. Not my fault you’re chosing wrongly!

I never said anything about seizing the means of production. If all you want is a level playing field, distributism adds nothing to simple free market capitalism. If distributism is to have any meaning, it is to advance policies which rig the system in favor of ownership.

You expressed policies based on what you “believe.” I expressed the fairly universally accepted economic theories. Of course you can dispute them but it’s your feelings versus the economic profession.

 

[Zoltan_Cobalt]

The goal of distributism is an equal distribution of the means of production to eliminate any economic distinction between various classes. A wonderful concept but an impossibility in any economic system other than a tyrannical dictatorship or monarchy.

A rudimentary form of distributism existed before the Industrial Revolution. It was suited to agrarian enterprises (Farming) and failed.

At the start, all the farmers began with the same amount of land. But some land was more fertile than other land. Some had better access to water. Some farmers were better suited to farming and produced more crops. Soon there were productive farms (successful) and nonproductive farms (losers). Distinctions in fortune quickly brought about class distinctions. It wasn’t long before the nonproductive farmers were starving and went to work for the more productive farms.

To solve this the distributists would have to regulate the accumulation of things such as crops and cattle and grain as well. They would have to redistribute cows and corn if one farmer did better than another with the land he was given. Sound familiar? If you said Russia in the 1920’s & 30’s go to the head of the class.

With the rise of Capitalism during the Industrial Revolution came the salvation of those who did not have a farm or a trade. Men could now survive by working for others and earning a living.

 

[SuperLuigi]

SuperLuigi: I don’t understand your closing quote.
Free market does bring prosperity; government involvement via regulations and laws hamper freedom of the people. When the government tell private citizen what to make, they by default force you to consume what is made. That is not freedom.

Oh. Well, I was making a reference to distributism…and that fact that numerous fellow Catholics are just looking for a way to support the cool, in, hip liberal ideologies.

I agree with everything you’ve said.

 

[manualman]

A rudimentary form of distributism existed before the Industrial Revolution. It was suited to agrarian enterprises (Farming) and failed.

A rudimentary form of distributism existing in America during the 1800’s in the form of land grants for those willing to homestead. That government policy was one of the primary drivers of America transforming from a second rate former colony on the world stage to being ready to step forward as the global superpower after a couple world wars. Without those land grants America’s economic history would look more like Argentina’s than what we actually experienced. The distributist policy of land grants created an enormous middle class and opportunities for commercial and industrial expansion so vast that the oligarchs were simply overwhelmed and couldn’t horde it all. Unfortunately, they’ve done a bang up job of catching up since then and the golden age of widespread prosperity is rapidly coming to a close because we didn’t recognize what we accidentally had and failed to take structural steps to encourage stability in that status quo of widespread distribution of wealth. Not command measures, but structural and self-correcting measures.

 

[manualman]

When the government tell private citizen what to make, they by default force you to consume what is made. That is not freedom.

This is true enough. What is left out is that when oligarchs conspire to fix pricing and limit innovation investments to lower production costs, they also are forcing the consumer to buy what is made and that’s not freedom either. Look up the era of the trusts in American economic history.

The problem is the same either way: too much power in the hands of too few will always produce tyranny. The only solution is to try to identify ways to cultivate a broad distribution of power, which requires a broad distribution of wealth.

 

[manualman]

Have a look at the facts here on the distribution of wealth and income in America. (Note that I don’t necessarily agree with all his opinions, but the facts are quite startling!)

www2.ucsc.edu/whorulesamerica/power/wealth.html

As I said before, I actually agree that government control and dictation over the economy is a bad thing. But when the facts clearly show that a smaller and smaller group of people controls more and more of the total assets of the country, isn’t it obvious that we’ve got a problem?

Does it not startle folks to learn that 20% of the population owns 89% of the wealth?
How about hearing that the combined total worth of the lowest 40% of the population has 0.3% of the total wealth??

Is the solution to take it away and spread it around? Nope.
Had we better get off our complacent behinds and look for ways to reform the system to create more opportunity for people to prosper? YES! And that may involve looking for avenues in which the already rich exploit their position to keep others out of competition with their own revenue streams.

 

[Zoltan_Cobalt]

Have a look at the facts here on the distribution of wealth and income in America. (Note that I don’t necessarily agree with all his opinions, but the facts are quite startling!)

www2.ucsc.edu/whorulesamerica/power/wealth.html

As I said before, I actually agree that government control and dictation over the economy is a bad thing. But when the facts clearly show that a smaller and smaller group of people controls more and more of the total assets of the country, isn’t it obvious that we’ve got a problem?

Does it not startle folks to learn that 20% of the population owns 89% of the wealth?
How about hearing that the combined total worth of the lowest 40% of the population has 0.3% of the total wealth??

Is the solution to take it away and spread it around? Nope.
Had we better get off our complacent behinds and look for ways to reform the system to create more opportunity for people to prosper? YES! And that may involve looking for avenues in which the already rich exploit their position to keep others out of competition with their own revenue streams.

Interesting article. Sounds familiar.

Sure income inequality exists. But I say: “So what?” As long as opportunity exists a person’s income is his choice.

The only way the rich exploit their position and keep others out of competition is through government influence ($$$ = votes = favors) If government had no control of business, the free market would correct itself through open competition. Companies would have to survive on the demand for their product or services rather than government intervention.

This is the “crony capitalism” we have today.

 

[Ridgerunner]

Interesting article. Sounds familiar.

Sure income inequality exists. But I say: “So what?” As long as opportunity exists a person’s income is his choice.

The only way the rich exploit their position and keep others out of competition is through government influence ($$$ = votes = favors) If government had no control of business, the free market would correct itself through open competition. Companies would have to survive on the demand for their product or services rather than government intervention.

This is the “crony capitalism” we have today.

I think it’s more than that, though. I recall reading some of the early Distributist writing, and one of the things it most condemned was a “corporate attitude”. People whose only resource is their wage have a tendency (mightily encouraged by business) to spend it on consumer goods…much of which they don’t need.

It’s a sort of vicious circle, and one spoken of by Pope Leo XIII.

I still think the core of true “Distributism” (despite all the variants people offer) is in the mind, or perhaps more correctly, in the soul. The real key to acquiring productive, inheritable assets is living below one’s means. That’s just as true today as it was when Pope Leo XIII encouraged widespread ownership of land. Of all the people in at least our own economy who tend to live below their means, are farmers and ranchers. They have to or they would go under.

One of the things I do for a living is close loans for banks. They send me the whole package, so I get to peek at peoples’ applications, which i do. It’s absolutely astonishing how much ABOVE their means many or most people live. It amazes as well, to see people with high incomes and no significant assets. They just blow it as they get it. Their income-to-obligation ratios are relatively high. I sometimes get to see people who have low incomes who nevertheless have assets too. Typically, their income-to-obligation ratios are low.

Some of my favorite people are the young people who haunt the country livestock sales. They’ll pick up a few bottle calves for next to nothing, raise them on rented land and save every nickel until they can buy land of their own. I am particularly reminded of a young lady who works at a feed mill. With her earnings, she was able to buy some used haying equipment. She “moonlights” doing custom haying for people. I don’t doubt she’ll own her own ranch someday.

To me, those kinds of people bespeak a “Distributism” that’s in the mind or heart.

It’s very possible to acquire productive assets in this society, but you can’t simultaneously be consumption-oriented and do it.

 

[manualman]

Interesting article. Sounds familiar.

Sure income inequality exists. But I say: “So what?” As long as opportunity exists a person’s income is his choice.

The only way the rich exploit their position and keep others out of competition is through government influence ($$$ = votes = favors) If government had no control of business, the free market would correct itself through open competition. Companies would have to survive on the demand for their product or services rather than government intervention.
…

Turn off the republican rhetoric and actually think about this for a minute. I’m going to give you one example, but the reality is that this is going on everywhere. 100 years ago, you could go to school to become a pharmacist, learn the ropes as an employee somewhere while saving up some money, then open your own pharmacy / general store and make a respectable living. Today, that’s impossible because large corporations have learned how to rig the supplier situation such that small guys often can’t even buy wholesale product for what the big box places charge retail. In short, the opportunity DOESN’T exist anymore in that field because the rich and powerful have found ways to close it off to ordinary folks. So the Walton family goes from being millionaires to billionaires while the privately owned pharmacy goes extinct.

Right now, it’s happening to doctors, auto mechanics, bookstores and so on ad nauseum. Even farming has gone corporate to a large extent. You correctly note that when only a few people in government control the economy everybody suffers. What you appear to be unwilling to face is that when just a few people in the private sector control the entire economy, the exact same problems occur: competition is stunted and market forces are warped due to manipulation to favor the few.

 

[Zoltan_Cobalt]

Turn off the republican rhetoric and actually think about this for a minute. I’m going to give you one example, but the reality is that this is going on everywhere. 100 years ago, you could go to school to become a pharmacist, learn the ropes as an employee somewhere while saving up some money, then open your own pharmacy / general store and make a respectable living. Today, that’s impossible because large corporations have learned how to rig the supplier situation such that small guys often can’t even buy wholesale product for what the big box places charge retail. In short, the opportunity DOESN’T exist anymore in that field because the rich and powerful have found ways to close it off to ordinary folks. So the Walton family goes from being millionaires to billionaires while the privately owned pharmacy goes extinct.

Right now, it’s happening to doctors, auto mechanics, bookstores and so on ad nauseum. Even farming has gone corporate to a large extent. You correctly note that when only a few people in government control the economy everybody suffers. What you appear to be unwilling to face is that when just a few people in the private sector control the entire economy, the exact same problems occur: competition is stunted and market forces are warped due to manipulation to favor the few.

What you are failing to realize and admit is that the private sector has no authority or control without a government in it’s pocket.

 

[Zoltan_Cobalt]

I think it’s more than that, though. I recall reading some of the early Distributist writing, and one of the things it most condemned was a “corporate attitude”. People whose only resource is their wage have a tendency (mightily encouraged by business) to spend it on consumer goods…much of which they don’t need.

Consumption is a human trait. It has nothing to do with economic systems.

Do you infer that distributism will eliminate evil consumerism? Perhaps reduce the availability and choice of products to a bare minimum so everyone can be equally miserable???

 

[Ridgerunner]

Turn off the republican rhetoric and actually think about this for a minute. I’m going to give you one example, but the reality is that this is going on everywhere. 100 years ago, you could go to school to become a pharmacist, learn the ropes as an employee somewhere while saving up some money, then open your own pharmacy / general store and make a respectable living. Today, that’s impossible because large corporations have learned how to rig the supplier situation such that small guys often can’t even buy wholesale product for what the big box places charge retail. In short, the opportunity DOESN’T exist anymore in that field because the rich and powerful have found ways to close it off to ordinary folks. So the Walton family goes from being millionaires to billionaires while the privately owned pharmacy goes extinct.

Right now, it’s happening to doctors, auto mechanics, bookstores and so on ad nauseum. Even farming has gone corporate to a large extent. You correctly note that when only a few people in government control the economy everybody suffers. What you appear to be unwilling to face is that when just a few people in the private sector control the entire economy, the exact same problems occur: competition is stunted and market forces are warped due to manipulation to favor the few.

There are family-owned pharmacies in small towns, and the appear to compete with Walmart quite well. I am not sure why unless the wholesale cost of the drugs is so low that they’re profitable even when heavily discounted.

Of course, lots of people have no idea what drugs actually cost because their insurers pay all or part of it.

But in general, I agree with you.

 

[Ridgerunner]

Consumption is a human trait. It has nothing to do with economic systems.

Do you infer that distributism will eliminate evil consumerism? Perhaps reduce the availability and choice of products to a bare minimum so everyone can be equally miserable???

I did not say any particular economic system causes consumerism. I agree the tendency is a universal human trait. But then, so are a lot of negative attributes.

I believe consumer goods of all sorts should be available to people. The real thing is the human mind, even human mores. We are reminded by the Church that we should resist excessive consumerism. The Popes have written about it. I do not propose somehow altering the economic system at all, but the human soul. It is my belief that the U.S. economy is quite well suited to Distributism if we would only just follow the teachings of the Church and have a little human good sense about us.

 

[manualman]

What you are failing to realize and admit is that the private sector has no authority or control without a government in it’s pocket.

Again, using my single example of local pharmacies / general stores. How did the government assist Walmart in this anti-competition business practice:

1. Walmart contracts with new supplier for product.
2. Sales volume for that supplier ramps up due to high Walmart sales.
3. Walmart tells supplier he must cut his prices 15% or be cut off. This stage is only reached when the supplier has already expanded production to the point where he will go bankrupt quickly if he loses the Walmart account.
4. Supplier’s choice is either to go bankrupt or accept the Walmart demand and try to make profits on products sold elsewhere instead (thus raising or keeping prices to other retailers high).

Walmart can only exercise this power because they individually control so much of the market. The end result is that small retailers close and their former upper middle class owners become lower middle class Walmart employees. (A simplification, but accurate on the big picture level).

Where in there did Walmart have the government in their pocket? Nowhere. Wealth is a power all its own. Unchecked, that power works to grow itself at the expense of everybody else.

For sure local pharmacies still exist, but by their fingernails. And I certainly haven’t seen a NEW one open in decades.

 

[Ridgerunner]

For sure local pharmacies still exist, but by their fingernails. And I certainly haven’t seen a NEW one open in decades.

This probably depends on where one is located. I am aware of the net earnings of two of them, one only a few years old, and they do very, very well.

Again, it’s probably due to insurance. If the insurance payment gives a significant profit all by itself, it hardly matters how low the stated price goes. So, Walmart does that $4.00 prescription thing, the proprietors follow suit and they both make money.

I will say there is another difference around here. The private pharmacies all have their little delivery cars and their drive-up prescription pickup windows. Walmart has neither.

But I’ll agree that Walmart drives other kinds of small businesses out. Lowes does too; perhaps even more so than Walmart for certain things like hardware, plumbing supplies, electrical fixtures and appliances. Around here, anyway, the only ones who survive that competition are the 'rent to own" outfits. Lowe’s demands cash, the “rent-to-owns” don’t.

 

[Zoltan_Cobalt]

I did not say any particular economic system causes consumerism. I agree the tendency is a universal human trait. But then, so are a lot of negative attributes.

I believe consumer goods of all sorts should be available to people. The real thing is the human mind, even human mores. We are reminded by the Church that we should resist excessive consumerism. The Popes have written about it. I do not propose somehow altering the economic system at all, but the human soul. It is my belief that the U.S. economy is quite well suited to Distributism if we would only just follow the teachings of the Church and have a little human good sense about us.

Distributism could work if the U.S. GNP were farming and small individual workshops. Face it… General Electric. Exxon, and Ford Motor Company cannot operate as collectives.
China is a perfect example. In the 1970s and 80s most of China’s exported products were built in millions of small “mom & pop” shops or homes. As demand increased, factories and assembly plants were built. The “mom & pops” became employees.

The concept of cooperative production simply cannot work in modern times.

 

[Zoltan_Cobalt]

Again, using my single example of local pharmacies / general stores. How did the government assist Walmart in this anti-competition business practice:

1. Walmart contracts with new supplier for product.
2. Sales volume for that supplier ramps up due to high Walmart sales.
3. Walmart tells supplier he must cut his prices 15% or be cut off. This stage is only reached when the supplier has already expanded production to the point where he will go bankrupt quickly if he loses the Walmart account.
4. Supplier’s choice is either to go bankrupt or accept the Walmart demand and try to make profits on products sold elsewhere instead (thus raising or keeping prices to other retailers high).

Walmart can only exercise this power because they individually control so much of the market. The end result is that small retailers close and their former upper middle class owners become lower middle class Walmart employees. (A simplification, but accurate on the big picture level).

Where in there did Walmart have the government in their pocket? Nowhere. Wealth is a power all its own. Unchecked, that power works to grow itself at the expense of everybody else.

For sure local pharmacies still exist, but by their fingernails. And I certainly haven’t seen a NEW one open in decades.

Firstly, I worked for two very successful companies that dealt with “mass merchandisers” like Wal-mart as well as the hundreds of thousands of smaller operations world wide.
As smart manufacturers we knew how much production our facilities could provide. We could supply all of our small customers and one “Wal-mart” type customer but not “Costco”. One or the other. Sure they beat us down in price, but we had a limit. When one of our competitors became very aggressive towards our “mass merchandiser” we met their low-ball price to keep the business. The competitor made a better offer and we chose not to meet it. We knew what a dangerous profit margin the competitor was at and we knew what his production capabilities were. We lost the account. Within 30 days the competitor could not supply his smaller customers…they began to buy from us. Within 90 days our competitor could not supply the mass merchandiser at a profit. They had to renegotiate their prices. The mass merchandiser was not happy. They approached us to become a supplier again. At some very heavy meetings we explained that our prices HAD to be at a level that covered costs and made a profit. Volume had nothing to do with it. We were ready to deliver product NOW or they could wait another 30 days at which time we had projected our competitor to fail. They did not want to lose sales by not having product on their shelves so we won back the contract at higher prices than we last bid.

The point is that smart suppliers know how to service the Walmarts and Costcos. Like wise the Wal-marts and Costcos cannot afford lost sales due to a lack of specific products.

So,How does the government assist Wal-mart in this anti-competition business practice??

Simple! One example is the fact that Walmart is now supporting Obamacare and moving employees from part-time to full-time. Are they doing this because they are unfettered capitalists? No…they are doing it because they can afford it and their small competitors cannot. This is “crony capitalism”. Using the government to limit your competition.

Costco supports the minimum wage. Why? Because they can afford it and their small competitors cannot. Companies like Costco probably influenced politicians to introduce minimum wage bills. Again…crony capitalism.