Saturday, September 29, 2007

Hillary Clinton Revives the Major Douglas Social Credit Concept--Republicans Should Advocate Peoples' Equity Plan Instead

The New York Daily News reports that Hillary Clinton has proposed a "baby bond" scheme whereby each newborn baby will receive a $5,000 account from the federal government that they could use for college. Blog impresario Larwyn questions whether the idea can be taken seriously. As with any redistribution scheme, baby bonds would have unforeseen effects. For example, they would raise the federal deficit; and they would raise taxes, making it more difficult for moderate-income families to pay for college. Given the parlous state of the US dollar, excessive federal spending and $150 billion in state and federal subsidies to higher education, not to mention persistent college tuition cost inflation, it is difficult to follow how such an idea can be taken seriously. It does not bode well for our country's future that a potential president was incompetent enough to even float this idea.

Hillary's baby bond plan is a throwback to the nonsensical theory of social credit advocated in the 1920s by Major Douglas and described in Wikipedia. Major Douglas's theory of social credit starts with the fallacious belief that prices ought to be linked to the costs of production. Common sense tells us that value does not relate to production costs. The fact that I spent a lot fixing up a house in New Orleans, Louisiana doesn't necessarily mean that the house is worth a lot. Production theories of value have been discredited by Carl Menger and many others who show that value is derived from the utility that consumers place on merchandise, i.e., supply and demand.

The key social credit recommendation, a guaranteed income for
all regardless of whether they work, was a larger scale idea than Hillary's who limits the guaranteed income to only $5,000 to new-born babies, but the concept is parallel.

The social credit concept is just another version of welfare, income redistribution or social security. A simpler way to do this would be to simply cut everyone's income tax by $5,000. Why limit it to to babies? The Republicans ought to counter with a "peoples'" or "taxpayers'" equity plan--an across-the-board $5,000 tax credit to all taxpayers.

Since you can't keep socialists down, the social credit fallacy soon turned into a rationale for anti-Semitism. As Wikipedia notes:

"Some prominent groups and individuals, most notably the poet Ezra Pound and the leaders of the Australian League of Rights, have subscribed to Social Credit as an economic theory, believing that it demonstrated the guilt of "Jewish bankers," who supposedly control the world's economy[citation needed]. Social Credit lays the blame for many economic woes at the feet of private banks, most especially those that practice fractional-reserve banking."

In case you're interested, Wikipedia describes social credit's implications:

"-a 'National Credit Office' to calculate on a statistical basis the amount of credit that should be circulating in the economy;
-a price adjustment mechanism that reflects the real cost of production (aggregate consumption in the same period of time);
-a 'National Dividend' to give a basic guaranteed income to all regardless of whether or not they have a job"

Obviously, a national divided will not come from any "credit surplus" (and it will not be free, as Hillary seems to believe). Nor would any central office have the ability to calculate the amount of credit that should be circulating. Nor should prices be related to the cost of production. All of these ideas lead to widespread poverty, as would Hillary Clinton's election.

While banking and the paper money system are statist institutions that ought to be abolished, a simple way to do so is a gold or other standard such as a fixed monetary rule.


Socred said...

There is nothing similiar between Hillary's dividend and the dividend advocated by C.H. Douglas.

Hillary want to give people a dividend financed through taxation.

Douglas wanted to give people a dividend financed through issuance of new debt free credits.

The former is a redistribution of wealth, while the latter is an addition to wealth.

Douglas's dividend was to correct for an accounting flaw described in his A+B theorem, and was designed to reflect the reality that automation is replacing the need for workers. It was also only part of the distribution of new credits, because he also advocated a price rebate in ratio of consumption/production.

You claim that money is "gold", but even under a gold standard, the majority of money was bank created credit. Gold comprised a very small percentage of the money supply. Most money in a "gold standard" was bank credit, created by private banks when they issue loans.

Secondly, I'd like to know what correspondence the quantity of gold in existence has to the ability of the community to produce, and deliver, goods and services, when, and where, they are required?

Anonymous said...

You are clearly a capitalist schill. To discredit Douglas' clear thinking as nonsense does nothing but soldify your capitalist ways. You have little or no respect for the work done by the working class. Your callous observations are indicitive of elitist prejudice.