Re: HOMESTEAD: Ray Carey's Democratic Capitalism

[John Médaille <john@medaille.com>]

At 07:44 PM 7/27/2005 +0100, Rodney Shakespeare wrote:
>Dear Keith and John,
>
>1.    All of binary economics is concerned with financing production and 
>consumption at the same time with one lot of money.  (The Kelsos used the 
>word "simulfinancing").

For an example of this, see the "land to the tiller" program in Taiwan. 
E-mail me privately for my article on this. The Taiwanese used the same 
financial rabbit trick to finance both increased farm ownership and 
expansion of the industrial base. It was an elegant solution that vaulted 
Taiwan from an agrarian, feudal society to an industrial powerhouse in only 
one generation.


>3.    I think John, saying a worker could not afford to buy a share, is a 
>bit confused over productiveness and the price of newly issued shares and 
>is forgetting basic binary policy that interest-free money is used.

Surely you cannot mean what you seem to be saying: that price is related to 
interest on money more strongly than return to capital. Surely the price of 
an equity is well correlated to the return to that equity and less 
correlated to the interest rate used to buy the equity. If "productiveness" 
pushes up the returns to equities, will it not also push up the price of 
the equity? Furthermore, lower interest rates do not necessarily mean lower 
prices--as witnessed by the housing market. Please clarify for me what you 
mean, for surely I am reading you incorrectly.

>
>  Also much of binary policy is concerned with newly-issued shares -- a 
> corporation gets the benefit of interest-free investment if wide 
> ownership is allowed (in circumstancers where there is full payout of 
> earnings).

Right, one group will get a privileged use of interest free money--a form 
of expropriation. But you are opposed to expropriation, so it sounds as if 
your theory is inconsistent, no? You are assuming that the current owners 
will voluntarily allow their ownership to be diluted. And if that happens, 
well and good. But with returns as high as you say they should be, why 
would they do that? For interest free financing? Maybe, but your whole 
increased returns scheme mitigates against that argument. It sounds to me 
like the theory has it both ways.


John C. Médaille

"A dead thing can go with the stream...
but only a living thing can go against it."
         -G. K. Chesterton
http://www.medaille.com/distributivism.htm
john@medaille.com

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