Re: HOMESTEAD: Rabbit trick or elegant solution?

[John Médaille <john@medaille.com>]

At 08:57 PM 7/27/2005 +0100, Rodney Shakespeare wrote:
>John,
>  1.   Your email sends a contradictory message -- on the one hand you 
> refer (with pejorative implicaton) to a "financial rabbit trick" whatever 
> that means) but, on the other, you say (with positive implication)  "It 
> was an elegant solution that vaulted  Taiwan from an agrarian, feudal 
> society to an industrial powerhouse in only one generation."
>
>     So which is it -- "rabbit trick" or elegant solution?  (I am asking 
> you separately for your Taiwan paper).

Cannot a rabbit trick be elegant? It certainly was in this case. The 
Kuomintang sold land it didn't own for money it didn't have and used the 
proceeds to finance industry that didn't exist. That fits my definition of 
both the rabbit trick AND economic elegance.

>
>2.    As far as I can ascertain, you are missing the point that binary 
>economics uses interest-free issuance (ultimately coming from the central 
>bank) to enable capitalless people to purchase newly-issued shares.

But the question is the price of those shares. If (and I keep asking this) 
the returns to capital should be a lot higher than they are, as your 
"productiveness" theory asserts, won't prices for those equities also be 
higher?

>   A worker's earnings or those of a binary beneficiary, are not used for 
> the purchase.  Yes, those shares will eventually become very valuable.

Right, the earnings are used to pay off the original owners (or the bank), 
which means that the earnings are not available for expansion of the firm 
and have to be borrowed. There simply is no way around this.

>
>  3.    You say that the use of interest-free issuance is expropriation 
> because only one group gets the use of the money.    The present system 
> is expropriation because it enables the existing holders of capital to 
> deny others their right to own capital.

The fact that the current system is expropriation doesn't mean that your 
system isn't also expropriation. Mind you, I don't mind it being 
expropriation, I just think we ought to call that spade by its real name.

>  Binary economics stops that expropriation.
>
>     You either agree with a genuine wide ownership (not least to turn 
> Say's Theorem into Say's Law) or you do not.

That's not the issue. Everybody here agrees with wide ownership, but we all 
have different ideas on how to achieve that. Because you say a plan will 
work doesn't mean it will work. I am still baffled as to why an increase in 
returns would not lead to an increase in price.

>
>     The use of interest-free issuance has been extended to public sector 
> capital projects, small/start-up businesses and green capital projects.

You mean like the SBA loans? In fact, there has been a lot of corruption 
and inefficiency in that program, no?

>
>     If members of this elist (or of Ownership) are not unequivocably bent 
> on an extension of capital ownership,  I am wasting my time in engaging 
> in corrspondence.

But everybody *does* want more capital ownership. Disagreement with you is 
not disagreement on this principle. Why don't Binarians get that?


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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