Would this work as Distributism?

[manualman]

Let me bluntly ask you. You really don’t believe that concentration of the vast majority of the wealth of this country in private hands is as dangerous as a similar control of that amount of wealth by politicians? Things would have been better had there never been a Teddy Roosevelt and a Sherman anti-trust act?

Before we engage further I want to see if we have any common ground at all.

 

[Zoltan_Cobalt]

Let me bluntly ask you. You really don’t believe that concentration of the vast majority of the wealth of this country in private hands is as dangerous as a similar control of that amount of wealth by politicians? Things would have been better had there never been a Teddy Roosevelt and a Sherman anti-trust act?

Before we engage further I want to see if we have any common ground at all.

Common ground will be difficult.

I do not see a vast concentration of wealth in private hands as dangerous. Wealth belongs in private hands.
I do agree that political control of wealth is extremely dangerous.

I do believe our Country would be stronger economically without a Teddy Roosevelt and an Sherman Anti Trust Act.

Teddy established the Crony Capitalism that engulfs our Country today. His tool the The Sherman Antitrust Act produced two significant unintended consequences.

One was that it pushed weak companies out of trusts and into either holding companies or vertical combinations. This actually strengthened business organization and made big business more powerful than ever before. Another important consequence was that instead of protecting consumers from monopoly, it protected less efficient businesses from superior competitors, which ultimately weakened the free market and harmed consumers. Both demonstrate the negative effects of political intervention in free enterprise, which continues to this day.

 

[Ridgerunner]

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.

Again, there are lots of views of what “Distributism” is, both philosophically and as an economic “system”.

Unfortunately, the early writers weren’t terribly clear in how their concepts would be applied concretely. The Social Encyclicals talk about objectives, not practical means of accomplishing them.

It has been awhile since I have read some of those writings. Some, particularly those of Belloc, are a bit more harsh on capitalism than I would think appropriate, but the way it worked in his time would not have been the same as it does in our time. Nor would agriculture have been the same. I recall that in Chesterton’s time, for example, there were vast tracts of unused land in England owned by absentees. Meanwhile, England was importing most of its food, obtained and distributed by large companies. Whether it was economically feasible or not, he felt that some method of purchase and resale should be worked out so that England could support individual farm families and England would not be dependent on foreign sources for food.

So, the economic system in England at the time (probably because of English history up to that time) did not allow for acquisition of land on any widespread basis. That’s not the case in the U.S. today, and probably not in England either. But it certainly is in a good part of the world, even now.

As to the Social Encyclicals, I think the emphasis is on economic conditions in which it is possible to acquire productive, inheritable assets. Nowhere do the Popes say it should happen by way of confiscation and redistribution.

But later Popes, while endorsing the concept, acknowledged that modern conditions called for different mechanisms, even different kinds of assets. But nowhere do they favor confiscation and redistribution.

 

[Zoltan_Cobalt]

Again, there are lots of views of what “Distributism” is, both philosophically and as an economic “system”.

Then let’s say for our discussion we define distributism thusly:

The distributist believes that the means of production should be spread out. Rather than a few people owning the means of production, we should have the means of production owned by many different people. We might envision an agrarian society in which each man owns the land on which he farms and no one works for someone else. This would be a distributist society. The goal of such an equal distribution of the means of production is to eliminate any economic distinction between various classes in society.

But later Popes, while endorsing the concept, acknowledged that modern conditions called for different mechanisms, even different kinds of assets. But nowhere do they favor confiscation and redistribution.

These “mechanisms” and “assets” are not defined. Rather than outright confiscation some have indicated a “mechanism” could be a confiscatory tax on a property owner in order to redistribute his holdings. Gross violation of individual and property rights.

Because of modern conditions, distributism could not be established without forceable confiscation and redistribution.

 

[Ridgerunner]

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.

Sometimes economics persuade large concerns that they ought to support smaller ones. Part of what I do is evaluate and close loans for banks; some of which are very large banks. Why do they do that? Because it’s cheaper for me to do it than for them to do it, even though I do charge a significant amount to do it. I won’t go into the ways in which it’s cheaper except to say that their overhead would be a lot greater than mine to do the same thing. I know how banks work, and I can do it more cheaply. For one thing, the regulators can only examine and critique the final file content, not every person and step in the process, wasting everybody’s time.

I am put to mind of the mega-giant Tyson Foods. It has tried having “company farms” for poultry and pork, but almost entirely quit doing it in favor of paying individual farmers to do it for them. Tyson’s “kisses the paper” of the loans it takes for farmers to build the facilities, provides the feed from its feed mills and other things. The farmer owns the farm the whole time. They went from being the biggest live hog producer in the U.S. to having essentially no hog production facilities of their own. They were losing a lot of money on those giant hog farms.

They now buy hogs from individual farmers instead. Certainly, Tyson’s controls the genetics, feed and healthcare regimen, specifies the market weight, and so on. But they don’t own the farms or the hogs. Interestingly, in another variation on the theme, I have a cousin who is a “custom hog farmer”. He doesn’t sell to livestock auctions or Tyson’s or anybody of that kind. He sells to individuals and takes the hogs to the processor for the buyers. The buyers pick up their packaged meat, custom cut and cured the way the customer wants it. The places where the hogs are butchered and packaged are all family-owned concerns.

Interestingly, all of those small processors buy hogs themselves and produce their own products; particular cuts, a variety of types of sausage, custom cure meats like prosciutto, etc, etc. Some of them produce and sell their own sauces, salsas, rubs, spices and so on. Chesterton would be proud.

I am familiar with a small manufactory nearby that makes electrical circuit boxes and components, installs computers purchased from another company, and resells them to a large company that programs the computers and resells the boxes and services related to them to oil companies. Those boxes control oil field equipment; drills, pumps, safety devices and so on.

So not everything is done by giant companies and, as I said, sometimes giant companies actually support smaller concerns when the smaller concern can do something less expensively than the big company can.

But possibly a lot of that stuff is not feasible in some places. And certainly it isn’t possible for some kinds of things.

 

[Ridgerunner]

Then let’s say for our discussion we define distributism thusly:

The distributist believes that the means of production should be spread out. Rather than a few people owning the means of production, we should have the means of production owned by many different people. We might envision an agrarian society in which each man owns the land on which he farms and no one works for someone else. This would be a distributist society. The goal of such an equal distribution of the means of production is to eliminate any economic distinction between various classes in society.

These “mechanisms” and “assets” are not defined. Rather than outright confiscation some have indicated a “mechanism” could be a confiscatory tax on a property owner in order to redistribute his holdings. Gross violation of individual and property rights.

Because of modern conditions, distributism could not be established without forceable confiscation and redistribution.

You and I do not have the same starting points at all. You think of Distributism as a system in which asset acquisition by many is compelled by state fiat. I think of it as a system in which opportunity for asset acquisition is widely available to all.

The Popes, at least, have never said the purpose of their version of “Distributism” (they don’t use that word) is to eliminate economic differences. Rather, it is to confer at least some degree of economic independence on a broad range of people, so people do not become “thought captives” to either government or the “wage slave/consumerist” mindset that big business tends to impose.

I think “Distributism” on an individual and family basis is widely available in this society, because the acquisition of productive, inheritable assets is widely available. But one has to avoid, on the one hand, the “Scylla” of government dependence or the “Charybdis” of excessive consumerism on the other.

 

[manualman]

Common ground will be difficult.

I do not see a vast concentration of wealth in private hands as dangerous. Wealth belongs in private hands.

It will indeed be difficult if you cannot envision a point at which almost all the wealth being held by a mere handful of people is innately unjust and exploitive. I’m guessing you’re not in the "might as well be “serf” class. I’m not either, but I manage to have a conscience anyways. Attitudes like yours are going to bring on the new Bolsheviks, not that I’ll be one of them. Perhaps we’ll be lined up and shot together.

 

[Ridgerunner]

It will indeed be difficult if you cannot envision a point at which almost all the wealth being held by a mere handful of people is innately unjust and exploitive. I’m guessing you’re not in the "might as well be “serf” class. I’m not either, but I manage to have a conscience anyways. Attitudes like yours are going to bring on the new Bolsheviks, not that I’ll be one of them. Perhaps we’ll be lined up and shot together.

There is certainly one reliable “redistributor”; death. Granted, the Walton heirs are very wealthy, but none is anywhere near as wealthy as Sam Walton was. Nor will their heirs be as wealthy as they,and so on.

The question is not whether some can become hugely wealthy, but whether they can maintain that position, generation after generation, to the exclusion of the up-and-coming.

In a good part of the third world, it does seem possible for an elite to own everything indefinitely. In this country, it doesn’t seem so. After all, Gates, who started from zero, is wealthier than any Rockefeller living today notwithstanding that the person who generated the wealth of the latter was far and away the wealthiest man in the U.S.

I’m no economist, but it has long seemed to me that there is a second barrier to total, unending, monopolization of wealth in this country, and that is a mild degree of inflation. Quite frankly, most of the wealth I personally have was generated by the passage of time more than anything else. Some was due to growth of companies in which i own stock, some was due to increased demand for certain things I believed in, but a lot of it was simply due to slow but steady asset inflation.

Those who do not generate the wealth they own tend to be conservative about dealing with it. They don’t take risky swings at things that might make or break them. That allows people who are more willing to take risks some opportunity to gain wealth.

 

[manualman]

In a good part of the third world, it does seem possible for an elite to own everything indefinitely. In this country, it doesn’t seem so. After all, Gates, who started from zero, is wealthier than any Rockefeller living today notwithstanding that the person who generated the wealth of the latter was far and away the wealthiest man in the U.S.

I do suspect that property taxes are an unintentionally distributist policy that has greatly helped America. In countries with little to no property tax, the mega rich use surplus wealth to purchase one of the few assets for which there will never be an increase in supply: land. This leads to the absurdity you mentioned above of starving people and excess fallow ground. Because we have fairly heavy property taxes, buying land and doing nothing productive with it is a very bad investment.

I’m sure our pal ZC thinks those are nasty, evil government crimes too.

 

[Ridgerunner]

I do suspect that property taxes are an unintentionally distributist policy that has greatly helped America. In countries with little to no property tax, the mega rich use surplus wealth to purchase one of the few assets for which there will never be an increase in supply: land. This leads to the absurdity you mentioned above of starving people and excess fallow ground. Because we have fairly heavy property taxes, buying land and doing nothing productive with it is a very bad investment.

I’m sure our pal ZC thinks those are nasty, evil government crimes too.

You could be right, and that’s an interesting take on property taxes. When it comes to commercial property, “letting it sit” can be ruinous over time.

With farm land it would depend on locale, of course. Around here, property taxes on farm land (mostly ranch land, actually) are incredibly low, almost laughable if there’s no house on it. So one might be tempted to speculate with land. However, prices are variable. Right now they’re very high historically, and probably won’t go significantly lower. Could go a lot higher if beef prices stay high or go higher still. But it’s chancey and while inflation does improve prices greatly over time, there can be dips that frustratingly persist.

That’s ranch land, which doesn’t vary much on the downside, or around here. But there are places where it’s more volatile. Row crop land can go down a lot, depending on grain prices.

But I’ll add this about the very best row crop land, at least here in Mo. Here in the Ozarks, there’s almost none. But along the Mississippi and Missouri Rivers, the western edge of the state and almost everything north of the Mo river is excellent crop land. However, in some of those places, land doesn’t change hands very much. The original farmer gets old and dies and the land is inherited by children who often don’t even live in this state. They rent it out, year to year, and don’t sell. Now and then the ever more distant heirs will, but often they don’t.

The farmers who actually work the farms often don’t own any of it. They own the equipment and do the farming on contract. Of course, the distant owners can’t really afford to let it lie fallow, so to some degree the “working farmer” who doesn’t own the land has an advantage over the distant relative in, say, California, who does own it.

But in my own area (SW Mo Ozarks) it’s almost entirely owner-occupied-and-operated.

 

[Zoltan_Cobalt]

I don’t understand the “Property Tax” discussion.

Hilaire Belloc wanted a “differential tax”.

““The principle of the Differential Tax is that a different proportion of taxation, as well as a different amount, may be applied to men in different circumstances. For instance, if you apply an** income tax** of zero to incomes under $2,000, of 5 per cent between $2,000 and $5,000 of 10 per cent between $5,000 and so on, that is a differential tax.”

Belloc goes so far as to say that “the aim of all sound social reform” should be “the wider distribution of property” and that the differential tax is “a tax specially aimed against excessive accumulation.” (As if that is a bad thing…)

I would first point out that a “differential tax” stifles progress and holds society back. It may cause a more even distribution of property, but the “excessive accumulation” that Belloc wishes to prevent is the motivation of entrepreneurs. The vast majority of things which have helped to better society and raise the living standards of all men were things things that can be attributed to nothing but the motivation for “excessive accumulation.”

The would-be innovator in Belloc’s world has two options:

1. he can put in a lot of effort and create some new thing that will benefit society, knowing that he will not be allowed to accumulate too much additional wealth as a result of his additional toil, or
2. he can continue in the labor that he already does without being an innovator and accumulate roughly the same amount of wealth that he would under the first choice as well.

 

[ThomasJMullally]

I do suspect that property taxes are an unintentionally distributist policy that has greatly helped America. In countries with little to no property tax, the mega rich use surplus wealth to purchase one of the few assets for which there will never be an increase in supply: land. This leads to the absurdity you mentioned above of starving people and excess fallow ground. Because we have fairly heavy property taxes, buying land and doing nothing productive with it is a very bad investment.

I’m sure our pal ZC thinks those are nasty, evil government crimes too.

Manualman, you are absolutely correct throughout this thread. In the real world there is not one ounce of difference between corrupt, oppressive bureaucracy whether in the public or private spheres. What Zoltan always fails to remember, is that anytime we permit robber-baron capitalism, egregious practices take place which then finally cause people to use force against the oligopolists. E.g. he forgets why we have the regulations to begin with: after the Civil War workers were increasingly displaced, abused, murdered etc, on behalf of concentrating wealth in the hands of “experts”. And in the the 1870’s and 90’s the nation suffered two very deep Depressions, until T.R. and his coalition stepped in to draw the line.

We are in such a stage now, with the banks recently having seized more land and other assets, than they can effectively manage. The 2008 crisis and subsequent Depression was precipitated by greed and errors of top capitalists, but it is the common man who is expected to work harder, to dig us out.

 

[Zoltan_Cobalt]

Manualman, you are absolutely correct throughout this thread. In the real world there is not one ounce of difference between corrupt, oppressive bureaucracy whether in the public or private spheres. What Zoltan always fails to remember, is that anytime we permit robber-baron capitalism, egregious practices take place which then finally cause people to use force against the oligopolists. E.g. he forgets why we have the regulations to begin with: after the Civil War workers were increasingly displaced, abused, murdered etc, on behalf of concentrating wealth in the hands of “experts”. And in the the 1870’s and 90’s the nation suffered two very deep Depressions, until T.R. and his coalition stepped in to draw the line.

We are in such a stage now, with the banks recently having seized more land and other assets, than they can effectively manage. The 2008 crisis and subsequent Depression was precipitated by greed and errors of top capitalists, but it is the common man who is expected to work harder, to dig us out.

Like an elephant…Zoltan never forgets.

I am recommending you, Tom, for this year’s Revisionist History Award.

 

[manualman]

The 2008 crisis and subsequent Depression was precipitated by greed and errors of top capitalists, but it is the common man who is expected to work harder, to dig us out.

In fairness, the common man has some culpability for willingly applying for loans he could not afford to repay. The deep shame is that while said common man has indeed paid dearly for his blunder, the complicit bankers who ALSO knew he could never repay that loan did NOT suffer the consequences. Instead, they all too often were labeled “too big to fail” and the common man got burdened with that penalty as well via federal bailouts to banks.

This is precisely why we must not HAVE banks “too big to fail.” If the ownership of banks were more widespread, then the failure of some would punish those who ran them poorly, but not affect the taxpayer via bailouts. Instead, we’ve gone the opposite way and federal policy since 2008 has lead to possibly the greatest consolidation of bank ownership since the Great Depression. Nice work, guys…

 

[manualman]

…The would-be innovator in Belloc’s world has two options:

1. he can put in a lot of effort and create some new thing that will benefit society, knowing that he will not be allowed to accumulate too much additional wealth as a result of his additional toil, or
2. he can continue in the labor that he already does without being an innovator and accumulate roughly the same amount of wealth that he would under the first choice as well.

That’s just bad faith argumentation. Nobody here has remotely proposed anything approaching a tax of the magnitude described in #2 above.

There’s rather a difference between punching a time clock and being Warren Buffet. Heck Warren Buffet himself is on record as noting that the tax structure is screwy in that it puts him in a lower tax bracket than his secretary (though I suspect his secretary does NOT get a normal secretary’s salary…).

 

[ThomasJMullally]

In fairness, the common man has some culpability for willingly applying for loans he could not afford to repay. The deep shame is that while said common man has indeed paid dearly for his blunder, the complicit bankers who ALSO knew he could never repay that loan did NOT suffer the consequences. Instead, they all too often were labeled “too big to fail” and the common man got burdened with that penalty as well via federal bailouts to banks.

This is precisely why we must not HAVE banks “too big to fail.” If the ownership of banks were more widespread, then the failure of some would punish those who ran them poorly, but not affect the taxpayer via bailouts. Instead, we’ve gone the opposite way and federal policy since 2008 has lead to possibly the greatest consolidation of bank ownership since the Great Depression. Nice work, guys…

Hmmm-- appealing to the avarice of the common man is the basis for capitalism. As Adam Smith warned us, the attempt for gain will always be for naught, canceled out by market forces e.g. the interest on the other side to save his money. Or in this case, the interest of the Bankers to cut their losses in multi-billion-dollar trades among themselves… losses which never come out of their own million-dollar paychecks.

You see, if the economy had continued to grow and employment had stayed the same, many foreclosures would have been avoided. The little guy, having put his meager savings already into his home, would have been able to honor his most important obligation, his mortgage, even if ultimately defaulting on credit cards. Either way you look at it, he was essentially living off of credit. But now, tens of millions are simply indentured, and worse, they are driven into the underground economy.

 

[manualman]

You see, if the economy had continued to grow and employment had stayed the same, many foreclosures would have been avoided. The little guy, having put his meager savings already into his home, would have been able to honor his most important credit obligation, the mortgage, even if ultimately defaulting on credit cards. Either way you look at it, the common man was essentially living off credit. But now he is simply indentured, and worse, driven to the underground economy.

And my point is precisely that the common man can be as guilty of greed as the oligarch. Original Sin applies to us all. I highly suspect that this is the lesson often forgotten by the Liberation Theology / Social Justice faction within the church. They seem to perceive evil as being purely an outside force rather than an affliction inside us all, rich or poor.

Those who got mortgages that they couldn’t afford presuming that the home value would appreciate enough to turn a profit before the ARM changed up to a high rate bet the farm and lost. People forgot that losing can happen! That’s why you shouldn’t treat your home as a leveraged investment. Those are for funds you can afford to lose. It’s not entirely unjust that such people lost everything. What is unjust is that too many of the people who enticed them into it lost nothing.

 

[ThomasJMullally]

And my point is precisely that the common man can be as guilty of greed as the oligarch. Original Sin applies to us all. I highly suspect that this is the lesson often forgotten by the Liberation Theology / Social Justice faction within the church. They seem to perceive evil as being purely an outside force rather than an affliction inside us all, rich or poor.

Those who got mortgages that they couldn’t afford presuming that the home value would appreciate enough to turn a profit before the ARM changed up to a high rate bet the farm and lost. People forgot that losing can happen! That’s why you shouldn’t treat your home as a leveraged investment. Those are for funds you can afford to lose. It’s not entirely unjust that such people lost everything. What is unjust is that too many of the people who enticed them into it lost nothing.

Correct, so if you have a system where the big guy loses nothing and the little guy loses (what little) he has, then it means that the Liberationists (including our Pope) are correct about what needs to be redressed. Everyone may be equally greedy, but the little guy can only impact the world a little bit. The managers are all shuffling papers and surfing the net, perhaps a privilege of higher schooling… In any event the system is structured so that they are riding on the backs of little guys who must produce real wealth through the sweat off their brows… Too many Chiefs, not enough Indians.

 

[Zoltan_Cobalt]

That’s just bad faith argumentation. Nobody here has remotely proposed anything approaching a tax of the magnitude described in #2 above.

No, it is an excellent argument.

Belloc, himself proposed such a tax. It would be the only way to appropriate an individual’s property without forceable eviction .

There’s rather a difference between punching a time clock and being Warren Buffet. Heck Warren Buffet himself is on record as noting that the tax structure is screwy in that it puts him in a lower tax bracket than his secretary (though I suspect his secretary does NOT get a normal secretary’s salary…).

I like Warren Buffet.

Recently he went on record as supporting Burger King’s decision to relocate its home office to Canada. Warren said that it was an excellent way to reduce federal taxes.

 

[ThomasJMullally]

There is certainly one reliable “redistributor”; death. I’m no economist, but it has long seemed to me that there is a second barrier to total, unending, monopolization of wealth in this country, and that is a mild degree of inflation. Quite frankly, most of the wealth I personally have was generated by the passage of time more than anything else. Some was due to growth of companies in which i own stock, some was due to increased demand for certain things I believed in, but a lot of it was simply due to slow but steady asset inflation.

Those who do not generate the wealth they own tend to be conservative about dealing with it. They don’t take risky swings at things that might make or break them. That allows people who are more willing to take risks some opportunity to gain wealth.

This is a good point. The income gaps and lack of mobility have started since the killing of all price inflation became the overarching concern. At the same time the wealthy, unable to assure gains through normal business activity, are bidding up commodities. Commodity prices are a primary (name removed by moderator)ut, to the cost-of-living of the most humble. (Meanwhile, the well-off have reduced their own costs, through internet purchasing.)