However Nobly Intentioned, the Just Third Way is Flawed

ImageA quick read of the Just third Way seems to be flawed in its first ideal, that of dispersion of investment capital. The Just Third Way seeks to alleviate the issues of capital concentration in both the capitalistic and communistic models by dispersing it equally amongst the economy’s participants.

Dispersing investment capital into the hands of the middle class and poor would eventually create third world conditions, worse than capitalism and communism, for the seed capital needed for economic growth would simply be consumed.   The definition of poor is to have demands greater than the ability to consume. Not intending this statement to be a judgment of the poor, this same reason is why the vast majority of Americans live paycheck to paycheck

As an initial “testing construct”, what would happen if everyone could be kept from squandering a nation’s seed capital on consumption once it was equally distributed?  For instance, the Just Third Way could be kept initially sustainable by creating two forms of currency, one that could only be used for investment and the other for consumption. While it might stop the disintegration toward third world status, the economy would still end up with rich and poor.

A second investment currency would protect a nation’s seed capital, for the poor could only use this second currency to buy into ventures to hopefully obtain dividends that they could consume.  Yet their investment currency could not be diluted through consumption, only by the failure of the venture in which they invested. Oppositely, their investment currency could be multiplied by growth of the ventures in which they invested.

However, as long as intergenerational property rights continued to exist, which is the basis of both capitalism and the Just Third Way, those that made wise investments would eventually accumulate investment currency and those that did not make wise investments would eventually lose their currency.  Those that made good bets would transfer their winnings to their offspring, where they could multiply over further generations.  In this way, the third way would simply revert to capitalism.

We have the very rich in this country and others partly because of a form of genetic, cultural and institutional Darwinism including genes, education, work experience, inside information, and connections but even without these factors, the mere fact that America protects intergenerational property rights added to the luck of individual investments is all that are needed for the uber-wealthy to exist.

The Just Third Way concept of spreading equity out to all Americans instead of concentrating it in the hands of a few bazzillionaires or in the hands of autocratic communist leadership would reset the starting point to “equality”.  If all had equal capital and all made bets on the economy over a lifetime, a few would do extremely well and others would lose it all by virtue of luck alone. Most would fall on a bell curve with an average that matched the economic growth of the country. 

At the end of life, the equity of each person would transfer to their children who would make bets during the next generation. Some of those that got the extreme wealth of their parents would also do very well through luck and others would lose it all. At the end of several generations, wealth would be once again spread out across a spectrum from very wealthy to very poor and the Third Way would revert to today’s capitalism through property rights and luck alone.

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