With Liberty and Dividends for All: How to Save Our Middle Class When Jobs Don't Pay Enough

Views: 1350
Ratings: (0)

Peter Barnes argues that because of globalization, automation, and winner-take-all capitalism, there won't be enough high-paying jobs to sustain America's middle class in the future. Therefore, to survive economically, our middle class needs-and deserves-a supplementary source of nonlabor income. To meet this need, Barnes proposes to give every American a share of the wealth we own together- starting with our air and financial infrastructure. These shares would pay dividends of several thousand dollars per year-money that wouldn't be welfare or wealth redistribution but legitimate property income.

List price: $19.95

Your Price: $14.96

You Save: 25%

 

11 Chapters

Format Buy Remix

1. A Simple Idea

ePub

Every individual is born with legitimate claims
on natural property, or its equivalent
.

—Thomas Paine

We live in complicated times. We have far more problems than solutions, and most of our problems are wickedly complex. That said, it’s sometimes the case that a simple idea can spark profound changes, much as a small wind can become a hurricane. This happened with such ideas as the abolition of slavery, equal justice under law, universal suffrage, and racial and sexual equality.

This book is about another simple idea that could have comparable effects in the twenty-first century. The idea is that all persons have a right to income from wealth we inherit or create together. That right derives from our equality of birth. And the time to implement it has arrived.

Why is this? America today is on the brink of losing its historic vision. From our beginnings we aspired to build a meritocratic middle class, and by the mid-twentieth century we had largely done so. Though millions of Americans remained marginalized, our median income — the income that half of Americans earn more than—was enough for a family to live comfortably on, often with only one wage earner. Further, most Americans assumed that their children would live better than they did—in other words, that our broad middle class would not only survive but expand.

 

2. The Tragedy of Our Middle Class

ePub

They’re closing down the textile mill across the railroad tracks,
Foreman says these jobs are going, boys,
and they ain’t comin’ back …

—Bruce Springsteen

In 2011, Occupy Wall Street brought to the fore a truth that many had known but few had spoken of: a hugely roportionate share of wealth in America is concentrated in the hands of the top 1 percent. This thin upper crust currently owns 35 percent of all wealth, while the next 19 percent claims 53 percent. This leaves the remaining 80 percent of Americans with—well, not much as shown in figure 2.1.

Figure 2.1: US WEALTH DISTRIBUTION (2010)

Anyone looking at this graph can’t help but ask, “Where’s the middle?” It simply isn’t there. This isn’t the kind of society most Americans want, yet it’s what we now have.

This sort of society has two major problems. One is the vastness of the inequality, which has numerous negative side effects. As studies have shown, highly unequal societies have more homicides, obesity, heart disease, mental illness, drug abuse, infant mortality, and teenage pregnancies than do more egalitarian societies.2 Highly unequal societies also suffer from a loss of spirit. When people know their economic system is stacked against them, they cease to believe they can attain security and comfort, much less riches. They also lose faith in their political system, which, mirroring their economy, makes a mockery of the American vision.

 

3. Fix the System, Not the Symptoms

ePub

A system is a set of things interconnected in such a way that they
produce their own pattern of behavior over time
.

—Donella Meadows

In the previous chapter, I linked the decline of our middle class to a convergence of historic trends. What I didn’t do was ask whether those trends were mere accidents or the result of something deeper. In this chapter, I argue that it’s the structure of our economic system that, day after day, shifts wealth from the middle to the top. This means that if we want wealth to spread more evenly, we need to change our economic system.

Americans aren’t in the habit of thinking, much less acting, systemically; we prefer breaking problems into discrete pieces. Our government agencies, academic disciplines, and nonprofit organizations all focus on specific silos of interest. They develop policies for housing, education, the environment, and so on, but treat our economic system itself—in which every silo affects every other—as off-limits. Wealth distribution is a particularly systemic phenomenon, a result of how all parts of our economy interact. It can’t be understood without viewing it at that level, nor can it be fixed without treating it at that level.

 

4. Extracted Rent

ePub

Forget about hard work and the merit system and honesty
and all that crap, and get to where the Money River is
.

—Kurt Vonnegut, God Bless You, Mr. Rosewater

When I cofounded Working Assets (now known as Credo) in 1983, we organized as a private corporation. Our corporate charter was our license to enter the American marketplace, with its 300 million consumers and all the legal, financial, and physical infrastructure Americans have built over generations. It also gave us the right to maximize financial gain for ourselves. We paid a pittance for these privileges and at no extra cost got limited liability and perpetual life. The entire package came with a timeless guarantee that our physical, intellectual, and financial property would be protected by the full authority of America’s state and federal governments.

“Not a bad deal, starting a corporation,” I mused at the time. “Sure, we may fail, and I may lose my investment, but if we win, we win big. And boy, is America behind us!”

Ten years later, when our annual sales passed $100 million, my partners and I realized that our closely held company would be worth millions more if we took it public. Thus, in addition to all the gifts America had already given us, we could pluck several extra million dollars out of thin air simply by floating a stock offering. Having just read Kurt Vonnegut’s novel God Bless You, Mr. Rosewater, about a wealthy heir and the crafty lawyer who advises him, I thought I was getting close to the Money River.

 

5. Recycled Rent

ePub

You built a factory and it turned into something terrific—God bless!
Keep a hunk of it. But part of the underlying social contract is
you take a hunk of that and pay forward
for the next kid who comes along
.

—Senator Elizabeth Warren

So far, I’ve described rent as a negative force in our economy. Now I want to present it as a potentially positive force—as money that, rather than being extracted by a few, is shared among many. I’ll call this virtuous variant recycled rent.

There are two key differences between extracted and recycled rent. The first has to do with how the rent is collected, the second with how it’s distributed.

The collection of extracted rent is done by businesses whose market and/or political power enables them to charge higher-than-competitive prices. It leads to unnecessarily high costs that serve no economic, social, or ecological purpose. Recycled rent, by contrast, is money that we, as co-owners, receive from businesses that use our co-owned assets. It too can lead to higher prices but for good reasons: to make businesses pay costs they currently shift to society, nature, and future generations, and to counterbalance extracted rent.

 

6. The Alaska Model

ePub

Our dividend program simply gives back to the people a portion of
earnings from invested oil wealth that belongs to the people.

—Former governor Jay Hammond

Jay Hammond, the Republican governor of Alaska from 1974 to 1982 and father of the Alaska Permanent Fund, led a life nearly as exciting as Thomas Paine’s. He was a Marine fighter pilot during World War II, then a bush pilot, commercial fisherman, and backcountry guide in Alaska. Friends urged him to run for local office, then the state legislature, and then for governor, all of which he did with some reluctance. After retiring as governor, he moved with his native wife to a remote lakeside cabin accessible only by float plane. He died in 2005, a state hero.

It’s unlikely that Hammond read, Agrarian Justice. Nevertheless, he conceived and then persuaded legislators and voters in a ruggedly individualist state to adopt the world’s first universal dividend-paying fund of the sort that Paine envisioned. He did this, and the people of Alaska approved it, not out of any ideology but because it just made sense.

 

7. Dividends for All

ePub

The spectrum is just as much a national resource as our national forests. That means it belongs to every American equally.

—Former Senator Bob Dole

What Alaska has done with oil, our whole country can do with air, money, and other co-owned assets. But before I show how, it’s worth exploring other ways to spread nonlabor income broadly.

A citizen s income. A basic income guarantee, or citizen’s income, is an equal amount paid by government to all, with the money coming from general taxes. There’s no means test and the income is unconditional. Leading advocates have included economists Robert Theobald and Nobel Prize winner James Tobin.1 In 1968, Paul Samuelson, John Kenneth Galbraith, and 1,200 other economists signed a document supporting the idea.2 Four years later, a modest version ($1,000 per person per year) was proposed by presidential candidate George McGovern, whom Tobin advised. Called a “demogrant,” it was poorly explained, badly received, and quickly withdrawn. No major US politician has proposed anything like it again, though the idea has caught on in Europe (see chapter 9).

 

8. Carbon Capping: A Cautionary Tale

ePub

Our planet’s atmosphere is a sacred public trust that belongs to all of
us, and the right to pollute it should not be given away for free
.

—Senator Edward Markey

Many of the ideas discussed so far in theoretical terms collided with reality in 2009, when Congress attempted to limit carbon pollution in the United States. Like two previous attempts, this one failed. At the same time, though less noticed, Congress also missed an opportunity to create a fund that pays dividends to all Americans. The revenue for this fund would have come from selling rights to dump carbon dioxide into our co-owned air.

The story of these failures is both political and intellectual. In this chapter, I trace the transformation of a good idea—a market-based limit on carbon pollution—into a compromised and beaten one. This transformation was driven by the familiar Washington process of rent seeking, and its story yields a number of lessons.

THE IDEA OF CAPPING FLOWS of harmful substances, and then letting markets allocate them, goes back to 1968, when a Canadian economist, the late John Dales, floated the idea in a book called Pollution, Property & Prices1 At the time, Dales wasn’t thinking about climate change; he was thinking about farmers who polluted streams with chemical runoffs. Some farmers could reduce their pollution more efficiently than others. If a declining quantity of pollution rights were issued and farmers could trade them, Dales argued, farmers themselves would find the cheapest ways to cut their pollution.

 

9. From Here to the Adjacent Possible

ePub

Only a crisis—actual or perceived—produces real change.
When that crisis occurs, the actions that are taken depend on
the ideas that are lying around
.

—Milton Friedman

Building a dividend system as proposed here is well within America’s financial and technical capabilities. The ingredients to do it lie at hand. The organizing principles are over two centuries old and have been road tested in Alaska. Our challenge now is to scale the concept to a meaningful size.

That said, the current political environment makes such scaling all but impossible. It therefore behooves us to take a longer view.

As Charles Darwin and Alfred Russel Wallace noted in the nineteenth century, living systems evolve through a process of variation and selection. Many nonliving systems, including economies, evolve in a similar way. Capitalism in particular has been characterized as a system of “creative destruction.”1

One aspect of evolution that remained unclear for decades after Darwin and Wallace was whether the vary-and-select process proceeds gradually or in sudden bursts. In theory, it could work either way, but in 1972, paleontologists Niles Eldredge and Stephen Jay Gould published a landmark paper that argued, based on fossil records, that “the history of evolution is not one of stately unfolding, but a story of homeostatic equilibria, disturbed only rarely by rapid and episodic events of spe-ciation.”2 They called this pattern punctuated equilibrium, and it seems to apply not only to biological systems but to others as well.

 

Join the Discussion

ePub

 

Appendix: The Dividend Potential of Co-owned Wealth

ePub

Co-owned wealth is wealth we coinherit or cocreate, wealth of the whole system and/or its subsystems, wealth not created by individuals or businesses. Much of it is truly priceless and should remain that way. However, users of some of it should pay rent, with the income pooled to pay dividends to owners. The question I address here is: Is there enough co-owned wealth that we can plausibly organize this way to pay meaningful dividends to everyone?

To answer this question, we must first establish criteria for choosing assets to rent. The criteria I use are the following:

• The income generated from renting the asset (as opposed to selling it) should be great enough to justify doing so.

• Renting the asset should create benefits beyond dividends. Such ancillary benefits could arise from the internalization of currently externalized costs or from the redirection of extracted rent. I also make two assumptions:

• Renting is done asset by asset, as political opportunities arise.

• One hundred percent of the rent is distributed in equal dividends to all legal US residents who have a Social Security number.

 

Details

Print Book
E-Books
Chapters

Format name
ePub (DRM)
Encrypted
true
Sku
9781626562165
Isbn
9781626562165
File size
0 Bytes
Printing
1 times / 1 days
Copying
1 times / 1 days
Read aloud
No
Format name
ePub
Encrypted
No
Printing
Allowed
Copying
Allowed
Read aloud
Allowed
Sku
In metadata
Isbn
In metadata
File size
In metadata