The Money Mustache Community
General Discussion => Welcome and General Discussion => Topic started by: Leisured on April 27, 2019, 05:41:14 AM
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Liberty and Dividends for All by Peter Barnes is an excellent book, clearly written. The book is concerned with financial inequality and cites a computer simulation called Sugarscape, created by Epstein and Axtell, where agents are initially distributed across a space, with sugar also distributed. Agents move toward sugar, try to accumulate more, eat some sugar to keep alive, and as time goes on a small number of agents have most of the sugar.
Barnes quotes Pareto, an Italian economist, who observed a century ago that in Italy 20% of people owned 80% of the land, and looking further afield, he observed the same relationship across Europe.
The rules of Sugarscape can be changed, but under the rules the authors imposed, it seems that rising inequality is just the way capitalism works. The poor do not necessarily get poorer, but the rich get richer, so that rising wealth flows upwards to the very rich.
The very rich get most or all of their income from dividends, non labour income, even if they have a paid occupation. Everyone else has to work for a living, and receive labour income. Barnes suggest finding more opportunities for ordinary people to receive non labour income. He cites the example of the Alaska Fund, paid for by royalties from oil and gas, and which pays about $1600 for each person in Alaska, including children. A family of four receives about $6400 in non labour income, just for being Alaskan.
This idea flows from Englishman Thomas Paine’s idea, late eighteenth century, that everyone born in England, whether rich or poor, has a birthright to the land, water, and other natural assets. He suggested monetising these assets, to provide a modest dividend income for all. Land tax is a possibility, as is the use, today, of the electromagnetic spectrum. The latter means that radio and TV stations pay the government for the use of scarce wavelength, and that spectrum belongs to citizens, so they receive what the broadcasters pay.
Artificial assets, such as farms, businesses, ships, are monetised, and capitalism results in inequalities in possession of these assets. Barnes proposes accepting the capitalist arrangements for artificial assets unchanged, but add an alternative non labour system with natural assets monetised and divided into one share per person, non-transferable. Inequality in ownership of artificial assets, equality in ownership of natural assets. Such dividends bypass the government.
Barnes suggests that even social assets such as commercial law and copyright protection, which is used by the very rich for a low charge, might be monetised to generate some income. Such social assets are in addition to natural assets such as land, water, air. Polluting industries will be forced to reduced pollution, but if they cannot comply, they are allowed to buy rights to pollute. Barnes makes the point that because land, water and air are the natural birthright of all citizens, any fines and levies imposed by environmental protection agencies should be returned as dividends to all citizens, because citizens have a share in these natural assets. Pollution is an externality, where polluters impose a burden on the environment.
Other assets such as minerals and oil are the birthright of all citizens, so a rent resource tax, which is an excess profits tax (economic rent), belongs not to the government but to all citizens of that country. Excess profits occur if a mineral has a world price of $100 a tonne, but only costs a mining company say $30 a tonne to produce, because of favourable geology.
Assets such as state forests and fisheries within the national economic zone can last indefinitely, given good management. Lumber companies should pay a stiff fee for lumber, to avoid over use, and the same for fisheries. This fee should be returned to the owners, the citizens, as dividends.
Barnes makes the point that existing welfare payments come out of tax revenue, and are paid according to need, and result in resentment by the rich who pay the taxes, and are rather demoralising for the poor who receive welfare because the poor are not as able as other members of society. Dividends based on natural assets have a different political effect because it makes sense for all citizens to own a share of natural assets as their birthright, and everyone, rich or poor, receive the same dividend.
Barnes is vague about what natural and social assets could be monetised, and which could not, but even a modest non labour dividend from such assets should have a beneficial political effect. It may still be necessary to have some traditional welfare, paid from tax revenue, but a lessening of such traditional welfare will mollify rich voters.
https://en.wikipedia.org/wiki/Citizen%27s_dividend
https://en.wikipedia.org/wiki/Alaska_Permanent_Fund
https://www.amazon.com/Liberty-Dividends-All-Middle-Enough/dp/1626562148/ref=sr_1_2?keywords=peter+barnes&qid=1555939612&s=books&sr=1-2
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An appropriate way to start would be the carbon tax + dividend idea.
Burning of fossil fuels is taxed based on the carbon emissions. The tax is sent out as a per-capita dividend - so the poor generally end up better off, as they don't use as much fossil fuel (can't afford to!)
This both cleans up the environment and is progressive - if the rich want to fly, have yachts, they can pay for the privilege.
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Sounds like a more elaborate form for universal basic income + universal basic assets?
At first I scoffed at the idea, it took me a long time to come around to this, even though I love Charles Eisenstein's Sacred Economics.
This would be even more important and necessary when automation become so sophisticated that it starts taking over more and more jobs (blue collar and white collar jobs), and the winner takes all economy is getting out of hand.
Actually there is a presidential candidate--Andrew Yang-- who is building his platform on "Freedom dividend" (his term for Universal Basic Income) and also shifting to an economy where we value people more than money, redefining work and rebuilding the commons. He is also for carbon tax & dividend. Check out yang2020.com, or if you like podcasts, check out his Joe Rogan podcast https://www.youtube.com/watch?v=cTsEzmFamZ8
I will check out the book Liberty and Dividends for All. Sounds interesting.
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Thanks for your review on this book! I'm reading up a lot on this subject at the moment. I've almost finished, "The Lights in the Tunnel: Automation, Accelerating Technology and the Economy of the Future", by Martin Ford. It describes in detail the extent of automation and does some really scary forecasting. I haven't finished but will review then.
I also read the "War on Normal People", by Andrew Yang, which is what opened my eyes to the looming effects of Automation. I'd felt before then a big shift in society and my employment which now makes sense. I'm now converted to the idea of UBI being the only solution I can see right now to prevent a full scale economic and social collapse, so much so I'm totally behind Andrew Yang as a Candidate, not because of his political party but his UBI policy and no BS style.
I think the automation issues will gravely affect FI'ers because we are the owners of those companies automating, and if no one has a job, then who is going to consume from those companies?
Amazon alone is single handedly wiping out jobs, not just by automating warehouses & deliveries, but steering consumers away from retail. Retail jobs are one of the most common jobs in the country and they are rapidly declining due to self checkout and Amazon.
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Years ago I would of agreed with everyone above on UBI being a good idea. I guess I am less liberal these days and more centrist. The reasons I no longer think this is a good idea are as follows
A) starting something like this is a very slippery slope. The moment this is implemented and a candidate says “let’s increase the dividend” they would win. There would be no stopping an ever increasing dividend. It would likely work for a couple of decades then cause even more problems-for examples see public pensions and social security.
B) we are at record employment numbers. The economy has always been changing and new jobs produced. We are clearly not in need of UBI now. I would wager that in the future jobs will be created in fields that do not exist today.
I am much more in favor of expanding the EITC for low income families then UBI. I would be willing to entertain the idea of UBI whenever the robots take all the jobs, not before. These vague predictions that “robots are going to take jobs” at some point in the future isn’t very convincing to me.
Also, I would like to point out that work (doesn’t have to be paid) is good for humans, I have seen numerous people whither away when they retired to the sofa. Yes, I know there are exceptions, but I believe the vast majority of people wouldn’t know what to do with their lives if there was no work.
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There are other precedences of sharing the wealth - like the Seminole Indian Tribe of Florida.
This Forbes magazine article at forbes.com speaks of about $128,000 income a year for each member of the Seminole tribe.
https://www.forbes.com/sites/laurengensler/2016/10/19/seminole-tribe-florida-hard-rock-cafe/#2c27b7a15bbc
And for the Seminole people? Today every man, woman and child in the tribe receives biweekly dividend payments totaling about $128,000 a year. Indeed, by the time a Seminole child today turns 18, she is already a multimillionaire, thanks to tribal trusts that prevent children or their parents from touching the funds until adulthood.
As far as I know, the generated shared income has increased since this article was written.
In the 15 years since Allen arrived, Seminole tribe members' annual dividends have risen from about $30,000 a year to an estimated $128,000, plus access to free private school and college tuition, universal health care and elder care.