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Industrial Homestead

The Industrial Homestead Program

The Industrial Homestead Program would vastly increase the might and strength of the industrial sector. One of the great strengths of the early development of the United States was the homesteading of federal agricultural lands through the Homestead Act.  Agricultural homesteading was critical because over 90% of the population was rural and directly engaged in or supported by the agriculture sector. Homesteading was the free give-away of parcels of land to individuals who would develop and work the land. Consequently, the United States quickly developed a large middle class, which is a core attribute of maintaining a robust democracy and the freedom we enjoy.

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The United States has since shifted to an industrial economy. With this shift, the prior broad base of the middle class has lost its share of the ownership of the means of production. What is needed is a homestead-type mechanism which will restore a broad base of ownership to the middle class. In addition to increasing the size and strength of the middle class, it will also strengthen the industrial base by adding more new small businesses, which are the backbone of industrial innovation, growth, strength, and competitiveness.

Increasing small industrial business can be accomplished through an expansion and adaptation of the current Small Business Administration (SBA). The current system is a program of government-guaranteed loans and business counseling. The loans are provided through private banks with a percentage of the loan guaranteed by the government.  Getting the loans is very much dependent on the financial strength of the applicant. The current small amount of business counseling is voluntarily provided through SCORE, the Service Corps of Retired Executives at the SBA offices. The new Industrial Homestead program would create stronger financial support, plus a fully-funded business incubator program. The stronger financial support would be generated from a new business grant system and also from a more robust loan system. It would also tremendously lower the financial requirements for qualification. The purpose for these changes, over the current SBA program, would be to provide the country with the best outcome, and not merely to get the lowest financial risk. The primary goals of the system are to expand the middle class, create a broader industrial base (more owners), and also to spur the greatest innovation possible by empowering innovators who might not have been able to acquire the necessary resources otherwise. But, this would be no free-wheeling money give-away. The system would have checks, balances, accountability, and a long gestation period for the grantees to earn the ownership of their business.

An example of why this type of middle class promotion is so important can be seen in the contrast between the development of Argentina versus that of the United States. Instead of the huge number of small farms that homesteading created in the United States, Argentina opted for selling huge tracts of land. The result was that the people who farmed the land were not owners, but were tenant farmers who barely managed a subsistence level of earnings. Argentina had extremely wealthy absentee landowners and extremely poor tenant farmers. A consequence was that skilled farmers and tradespeople in Europe opted to immigrate to the United States, whereas mainly the unskilled chose Argentina.  In fact, Argentina had to resort to bringing in seasonal workers from Europe because the opportunities were so limited that they did not desire to become permanent citizens.

Similarly, an Industrial Homestead Act would create an enlarged middle class of small industry owners. This would help stop the erosion of the middle class and the erosion of the industrial base of the United States. The strength of any democracy lies in the size of its middle class. It is the middle class that has its interest most in line with the economic strengthening of the nation. The history of the leading wealthy nations is that their wealthiest citizens chose to create policies that increased their wealth at the expense of their countries, and thereby caused the weakening of their countries.




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