classical economics
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Human Rights Economics

By Wayne Jett
© April 21, 2008
    Pope Benedict XVI told the General Assembly of the United Nations that fundamental human values are the basis for religion and for human rights the UN seeks to advance. This shared foundation gives the UN and the Catholic Church common purpose in certain respects, His Holiness observes. Religion cannot be shut out of a body like the United Nations, he says, which aims at "a social order respectful of the dignity and rights of the person. … A vision of life firmly anchored in the religious dimension can help achieve this, since recognition of the transcendent value of every man and woman favors conversion of heart, which then leads to a commitment to resist violence, terrorism, war and to promote justice and peace.”
    This is a worthy statement deserving a complementary conclusion. People acknowledge transcendent value of the individual more readily when their own economic rights are respected. If abused and victimized economically, humanity eventually rebels with the sword and the gun. To promote justice and peace, both the UN and the church would do well to put economic rights at or near the top of the human rights agenda.
Ban Manipulated Currencies
    Human right number one: No government or government-sponsored central bank may issue currency which loses value after being exchanged for labor or produce. Manipulated currency harms poor workers worst of all. Inflationary currency robs workers of purchasing power commensurate with the value of their labor, while also depriving them of free choice to save for working capital or improved standard of living. If they save, their savings lose purchasing power. Deflationary currency deprives poor workers of jobs, since they are always the marginally employed.
Limit Total Taxes Extracted
    Human right number two: No person shall be taxed more than one-quarter of gains from labor or enterprise by all governments asserting authority over the individual. Twenty-five percent of earnings and all net income of every kind ought to be the limit of government’s power to take from an individual. Government can always assert that the “common good” requires the individual to give up the fruits of productivity, all the way to one hundred percent. The fact remains, however, that every increase in marginal tax rate drains capital from private endeavors and thereby costs jobs. A person ought to have unfettered right to three-quarters of his produce. With this human right observed by governments, individuals and societies prosper.
The Agenda of Global Mercantilism
    If the United Nations and the Catholic Church promote these human rights, they will be opposed by global mercantilism. Mercantilists are those with pools of “organized money” who influence government power for their financial gain. From the Middle Ages through the Eighteenth Century, mercantilism reigned in most nations. Influential courtiers of monarchies (and their counterparts in other forms of government) acquired market monopoly licenses protected by trade embargoes and tariffs. Impoverished populations were told the high prices they paid for necessities protected their jobs from cheap foreign competition.
    Twenty-first Century mercantilists have learned to rake greater profits from financial markets without participating in the dirty work of producing goods and services. Managed currency value is better disguised than tariffs and more useful to mercantilists as a weapon of trade war. Manipulating interest rates can drive asset prices up and down. Mercantilists will not easily relinquish advantages as central banking insiders who know before the rest of us how particular currencies will be “managed” by interest rates and injection or draining of liquidity.
    Sad to say, global mercantilism lives in the United States. Its dominant influence at the Federal Reserve and at the U. S. Treasury should be obvious, but is not well reported or understood. The hallmark of Federal Reserve monetary policy since 1971 has been its manipulation of domestic interest rates. Concurrently, the Fed has devalued the dollar by ninety-six percent during the same period, mixed with bouts of severe deflation that serve as wrecking balls of economic growth. During the past twelve months alone, the dollar has been devalued fifty percent relative to gold (the only yardstick that works or matters), while economies of Europe and Asia are battered by U. S. “competition” made possible only by the weak dollar. Other central banks struggle under pressures to devalue along with the dollar, though doing so will not enable their people to avoid ravages of inflation that will follow.
Give Humanity a Chance
    Human rights to stable currency and low taxes would advance global peace, justice and prosperity like nothing else on the international agenda. The federal government of the United States can advance these human rights more readily than can the United Nations or the Catholic Church. Reform of monetary policy at the U. S. Treasury and the Federal Reserve can produce stable currency for global commerce, permitting all other central banks to conform their own practices. Lower marginal tax rates in the U. S. drive tax rates lower around the world, as occurred in the Eighties. Right now, though, the U. S. is lagging other nations in cutting tax rates and threatens to allow the 2003 tax rates to jump immensely when they expire in 2010. Congress ought not to do that.
    The Federal Reserve must stop manipulating interest rates and allow markets to set them. The Fed should be ordered by Treasury or the President to manage liquidity to stabilize the dollar’s value at a specified target price between $450 and $500 per ounce of gold. Current policy will continue to reward billionaire currency speculators and doom the world to recurring boom, bust and stagflation. Better to do our part to advance human rights. The UN and the Catholic Church are welcome to help. ~