There we go again. Our leading economists are condemning us to another year of impasse. To prevail over their customary opponents, they either become blind or become mute in front of the facts.
Economic theories are complicated so they cannot be easily treated in a short piece, but facts are digestible enough for both theoreticians and lay people.
Here are a few key facts. The trend in the value of houses is still downward. The value of much real and financial wealth is also dropping. Unemployment rates are stubbornly high. Large corporations stash inordinate hoards of cash. There is a steady and conspicuous shift of wealth from the middle classes to the rich. And then there is a sly transfer of ownership of national wealth to foreign creditors.
Clearly, all these facts are interrelated and most of them are unmovable. Only one of these elements exhibits a large degree of freedom—not complete but a large degree of freedom.
The handling of cash held by large industrial and financial corporations is that item.
Let us pinpoint the limits of that freedom as well. If large corporations were to spend all that money in a hurry, two likely consequences would ensue. First, because of the current absence of purchasing power in the economy, much of that money would not return in the form of profits. It would only increase the amount of stocks in warehouses.
The second most likely consequence of spending all that cash in a hurry would be to stoke the flames of inflation. The price of commodities would immediately go up; the cost of labor would follow suite—but not fast enough or not enough in sync for increased labor income to be spent on newly created consumer goods. Timing is of the essence in economics.
For corporations to persist in the unwillingness to use that cash is to force a steady loss of wealth upon their stockholders and bondholders. Some of that loss is due directly to persistent inflation whereby the value of cash is reduced accordingly; most of the loss in the value of the wealth of the people occurs indirectly with the fall in the value of real estate and the market value of stocks and bonds because people have no money to buy houses or stocks and bonds.
What to do then?
The solution, once indicated, is so obvious as to be literally within our grasp. Corporate managers can create a wide purchasing power in the economy by distributing a good portion of their stashes of cash among rightful owners: their bondholders and stockholders.
This newly created purchasing power would be spent in reducing current amounts of stocks in warehouses and on newly created consumer goods obtained, most likely, by expanding current employment levels in a gradual—hence, noninflationary—fashion.
Bondholders and stockholders who might receive more cash than they can wisely spend ought to be encouraged to make investments in their local economy. Main Street merchants, local artists, and inventors who are full of ideas and short of cash would most certainly multiply the value of such investments.
It might take only one corporate leader to open the floodgate for the full implementation of this plan of action. But of course there would be certainty of success if individual corporate leaders were to receive some spur from those organizations they support to help them overcome rough patches.
One would hope that associations of manufacturers and chambers of commerce would become discreet directors to help orchestrate such an operation of cash disbursement.
And should not the chorus of intellectuals, literati, and clergy feel free to encourage the operation along?
The beauty of this proposal lies not only in its evident ability to open the gates of prosperity and long term stability in a short time. The beauty of this proposal resides especially in its ability to show that each country can move without the control of either the political or the financial establishment.
No politician, no highfalutin financial wizard need intervene; not one penny of taxpayer money and not one penny of other people’s money is required.
All it takes to unlock the impasse is six months of concerted effort.
Rather than sitting on hoards of cash as evidence of their power and their success, it is high time for the leaders of large corporations to show a sense of responsibility toward the owners of that cash.
If not, it is high time for the people to demand a swift implementation of this proposal.
If not now, when will there be a resurgence of the spirit and the spunk of the people? Strangely enough, that is a consummation implicitly advocated by such diverse persons as Pope Pius XI and Adam Smith.
In Quadragesimo Anno, ## 105-106, Pope Pius XI said: “…it is obvious that not only is wealth concentrated in our times  but an immense power and despotic economic dictatorship is consolidated in the hands of a few, who often are not owners but only the trustees and managing directors of invested funds which they administer according to their own arbitrary will and pleasure”.
Adam Smith, in The Wealth of Nations, B. III, Ch. 4, said: "All for ourselves and nothing for other people, seems, in every age of the world, to have been the vile maxim of the masters of mankind".
Deep thanks to Peter J. Bearse and Ralph Cole Waddey for invaluable editorial assistance.
Carmine Gorga, a former Fulbright Scholar, is president of The Somist Institute, a research organization in Gloucester, Mass. Through The Economic Process, To My Polis, and numerous other publications in economic theory and policy, he has transformed economics from a linear to a relational discipline. Dr. Gorga blogs at http://me-a-new-economic-atlas-and-you.blogspot.com/.