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.

New School, Hillary Clinton and Chinese Interests

Rumors are abounding that left-wing New School University (whose most famous division is the New School for Social Research) in lower Manhattan has been a conduit for Department of Defense funding and as well may have provided a link via Norman Hsu between the Democrats, especially Hillary Clinton, and the Chinese government. Blog impresario Larwyn has sent me some interesting links.

Doug Ross @ Journal asks whether "the New School has been a conduit between China and the Clintons?" He states that Bob Kerrey (not to be confused with John), the New School's president, has obtained DOD grants and speculates that Hillary was involved in procuring the grants. Doug Ross @ Journal also states that "the New School also has deep ties to Bernard Schwartz, former head of Loral, who allegedly instigated donations by the Chinese military to the DNC in exchange for the right to sensitive missile technologies". Moreover, he alleges that the New School gave Norman Hsu, a fundraiser for Hillary Clinton who was associated with earlier corruption scandals, a job, and that the New School has eight $100,000 fundraisers for Hillary Clinton on its board.

Doug Ross @ Journal cites the dailykos.com website, which alleges that Norman Hsu, who has "known connections to the Chinese nationals who were involved in the Clinton scandal of 96" has had "dealings with the Chinese mafia". Dailykos.com states that although Hsu was bankrupt, he made large contributions to the Hillary Clinton's campaign. Dailykos.com adds:

"Bernard L. Schwartz, who worked for the Chinese shell company that the Clintons gave the ballistic missile technology to after Bill Clinton's re-election put Norman Hsu on the Board of Trustees of the New School....Hillary Clinton ear-marked 750,000 dollars to the new school recently as a pork barrel project."

Ross notes that Kerrey had been involved in funding the National Geospatial Intelligence Agency's (real, not a 007 script) declassification project and subsquently became an "expert" in satellites.

Merv of PrairiePundit notes:

>"the Hsu scandal also is reverberating in a heartland Senate race that could be crucial to Democrats’ hopes to expand their congressional majority. If former Nebraska Sen. Bob Kerrey decides to run for the Senate, it’s clear that he will have to address his connections with Hsu, whom he recruited to serve on the board of the New School under his presidency...Bob Kerrey was not only a receiver of contributions [to the New School]...he actively recruited [Hsu] to the New School...
when Hsu was known as a prominent Democratic donor in New York fundraising circles...In addition to serving on the school’s Board of Trustees, he donated money intended for a school scholarship"

I have long opined that universities are concerned with money first; ideology is secondary at most. It seems that after his time as New School's president, Bob Kerry has some 'splainin' to do!

The Essential Problem with Liberalism is Incompetence

>"Dinocrat.com posts an excellent article by George Will on Real Clear Politics:

>"In June, the Times was in high dudgeon -- it knows no other degree of dudgeon -- about the Supreme Court's refusal to affirm a far-reaching government power to suppress political speech. The court ruled that a small group of Wisconsin residents had been improperly refused the right to run an issue advocacy ad urging the state's two senators not to filibuster the president's judicial nominees....

>"...Less than three months after the Times excoriated the court for weakening restrictions on issue ads, the paper made a huge and patently illegal contribution to MoveOn.org's issue advocacy ad. The American Conservative Union, under Chairman David Keene, immediately filed a complaint with the Federal Election Commission, noting that the purchaser of the ad, MoveOn.org Political Action, is a registered multi candidate political committee regulated by the mare's-nest of federal laws and rules the multiplication of which has so gladdened the Times...

>"The Times, a media corporation that is a fountain of detailed editorial instructions about how the rest of the world should conduct its business, seems confused about how it conducts its own. The Times now says the appropriate rate for MoveOn.org's full-page ad should have been $142,000, a far cry from $65,000, which is what the group paid. So the discount of $77,000 constitutes a large soft-money contribution to a federally regulated political committee. The Times' horror of such contributions was expressed in its enthusiasm for McCain-Feingold."

The problem with liberalism is advocacy of government solutions that require a degree of competence that does not exist. The Times imagines itself to be competent enough to understand how government programs are to be executed. In fact, the Times has trouble managing itself. What comfort level do we have that any of the programs that the Times advocates, such as national health insurance, will be better managed than the Times manages itself?

Escalating Health Costs and Health Care Vouchers

The New York Sun reports that health care costs in New York and nationally are expected to rise by 8.7 percent, or roughly $700. The national cost per person is $7,982, while in New York it is $8,719 (the difference is probably due to the cost of parking in New York City). The Sun quotes the management consulting firm of Hewitt Associates to the effect that nationally employees will pay 21% of the cost, or $2,008 and employers will pay 79% of the cost.

I have previously blogged that the sum of current Medicaid; Medicare; tax expenditures on corporate plans; and state and federal employees' insurance would pay about 69% of the cost of health insurance for every person, including the uninsured, in the US. Thus, if instead of sponsoring inefficient plans like Medicaid and Medicare, and by combining all the federal and state governments' spending on all plans, including tax expenditures, Congress could create health care vouchers which Americans could use to purchase health insurance from private companies. In fact, the percentage would be higher than 69% of cost because of the large amount of waste and corruption in Medicaid and probably in the other government plans as well. This would require ending the corporate tax deduction for health insurance and replacing it with a blanket tax credit that would apply to all Americans. Those whose taxes are less than $8,719 would receive reverse income tax to cover the cost of health care. Taking government out of health care to a greater extent (by ending Medicaid, Medicare and government employee plans) would be a step toward deregulation of health care. If this were combined with increased incentives for globalization (receiving expensive operations in foreign countries like India where they cost 90 percent less) and limits on heroic end of life care which is in the area of 1/3 of all costs but does not produce life-extending outcomes (insurance for which could be purchased privately if wanted) and unnecessary operations, current government spending would likely cover health costs for all Americans, at as good a level as they receive now and probably better than other nations'.

The problem is not one that ought to involve spending money, but rather one that ought to overcome government bureaucrats, public health officials and health providers, all of whom have juicy "stakes" in arguing for more bureaucracy, more spending and ineffective care.