To: Citizen's Income Online at URL http://citiinco01.uuhost.uk.uu.net/discussion/index.shtml and friends on several mail lists Hi folks, By the word "The," I understand "The one and only one." By "universal," I understand a public policy applicable to any society. And by "Citizen's Income," I understand a periodic payment from the public revenue to each citizen of a subsistence level income, not taxed, and regardless of other earned or unearned income. Such a financial structure is absolutely necessary to bring every person who wants to work into the labor market with "decreasing returns to scale," and thereby enable the free market to approach an optimum allocation of human resources (cost per unit of value-added is the same for all suppliers). The future piecemeal steps we must take to introduce a UCI depends on our present condition and which parts of the UCI have already been established. Now it seems to me that the standard practice of our most capital intensive industry, electric power, the industry which defines the lifestyle of industrial societies, provides a powerful argument in favor of establishing a UCI in four sections, for our human assets. The standard industry practice is to subsidize, from corporate revenue, three fixed expenses of each plant; that is, the debt service on the cost of acquiring each plant in the first place, the expense of maintenance to keep each plant in good working order, and the expense of the no-load losses of each plant while each plant is unemployed but available for production when required. These three subsidies, from corporate funds to the plant, suggest the first three sections, of a four section UCI for our human assets. The guiding principle here is to remove all fixed costs from the data used by the control system at the plant level, so that supply and demand can be matched at every level of production with a minimum fuel input o the whole system. Corporations obey this principle because it is the only way to make an automatic control system work reliably. Governments, on the other hand, seem to think of society as a big bean bag, without any regulating principles, which can be punched up in any desired shape by just passing a law. Our present condition shows that corporations treat their productive capital assets much better than governments treat their citizens. If the power grid were operated under the same financial rules our government imposes on its citizen, the US would have a third world power system. The same standard practice is also a vital technical requirement for the efficient operation of the workforce. A free market automatic operation of the labor market price mechanism can properly regulate only about 70% of the total value-added because the other 30% must be diverted by taxation to subsidize the fixed or sunk costs which, by definition, cannot play any role in achieving a "Pareto Optimum" dispatch of value-added from the available suppliers. In other words, over the lifecycle of any reproducible productive asset, human or capital, three subsidies must be paid from that part of corporate or public revenue (the gross margin) which is over and above the direct manufacturing costs of producing the value-added. The first subsidy is for the cost of development, which is a sunk cost by the time the asset becomes productive. The second is for the cost of management or government, that is, the salaried workers as opposed to direct labor. The third subsidy is for the cost of maintenance and no-load losses while the plant or person is available for production, but not in production. For human assets, of course, there is an additional fourth cost for maintenance while in retirement. It is that fourth cost, social security payments, which presently gives this writer the freedom to say what he thinks without regard to zerosum employers or pecksniffian mail list moderators. Given the propensity of wealthy, healthy, intelligent, and powerful (WHIPs) to "do whatever it takes" to survive and evolve to a better condition for themselves, how can we explain why the United Kingdom has remained locked in a public policy which has generated 2-3 percent per year inflation and 4-10% unemployment, ever since the advent of industrialization in Adam Smith's day? Even more perplexing, how can we explain why the United States, after wining its War for Independence from England and its Civil War to remain one nation, reverted to the same second-best public policy after the advent of industrialization in the US in the late 1900s? "The Great Transformation," as it was called by a prominent social scientist, is clearly shown on Figure 10 of The Global Model at URL http://www.freespeech.org/darves/bert.html. The inflationary trend of this second-best policy is illustrated also by the profiles of the price indexes for the two countries shown in a 1993 book, THE GREAT RECKONING, by authors James Dale Davidson and Lord William Rees-Mogg. The unemployment levels of this second-best public policy, as two centuries of experience in the UK and one century of experience in the US confirm, are moderated only while the nations are at war. Surely this is a sorry performance compared to the stability and economic efficiency demonstrated by our corporations over the last two centuries, and by Japan, Germany, and the smaller European industrial nations during the three decades following World War II. Even if John Maynard Keynes (1883-1946) was accurate in his assertion "that not one person in a million can diagnose inflation," we should today have about 300 such persons in the English speaking countries: the UK, the US, Canada, Australia, New Zealand, and South Africa. Is it reasonable to conclude that these 300 people remain silent because they are at the top of the heap and fear to disturb the status quo by addressing the general welfare of their respective nations in public? I think not. The silence must have a much more fundamental cause. Sally Lerner, owner of list <[EMAIL PROTECTED]>, has written often of the obstacles to getting a public debate started in North America on the need for a UCI, and has established list <[EMAIL PROTECTED]> to get that debate started. In the UK, Kevin Donnelly, spokesperson for the Christian Council for Monetary Justice, recently invited my attention to a 1986 paper by Sir John Wally KBE CB. The paper entitled, PUBLIC SUPPORT FOR FAMILIES WITH CHILDREN; A Study Of British Politics, traces the question of subsidies for families from 1795, when Prime Minister Pitt critiqued the Spleenhamland System, down to today's "academic pressure groups who had no interest in the principles of income taxation, except to misrepresent its deductions for children as handouts to the better-off." Of course, any reduction of taxes, based on exemptions from taxable income multiplied by multiple progressive tax rates, is exactly a "handout to the better-off." It does nothing for the working poor! Clearly, there has not been a generation of English speaking people in the last 200 years without one or more prominent persons speaking in favor of support for parenting families. But today, the public is numb on the question, and prominent persons are quiet as church mice. It is as if there were a powerful religious taboo in effect, but never articulated in the public debate. A taboo which proscribes all assistance to parenting families until they are unemployed and sink into poverty and dependence on public welfare. Much of the teaching of the Church of Rome has carried over, unmoderated, into the teaching of the Protestant denominations and the principle of "Subsidarity" is one such teaching which addresses the relationship between higher and lower levels of social organization. I only recently noticed the shift in emphasis over the sixty year interval between the following two definitions of "Subsidiarity." #1, Subsidiarity, 1931, as defined in the Papal encyclical Quadragisemo Anno, forty years after RERUM NOVARUM, on the condition of the working man: >> "It is an injustice, a grave evil and a disturbance of right order for a large and higher organization to arrogate to itself (the government) functions which can be performed efficiently by smaller, lower bodies (the family)..." << There is no question about the determination of most families to provide adequate support and education for their children. We all did it. The proper question is: how did this practice contribute to the deficiency of purchasing power among English parenting families? A deficiency which made "Imperialism" the second best solution, as J. A. Hobson described it in his 1902 book of that title? Then and now, the only sustainable solution was, or is, the UCI designed to satisfy Say's Law. #2, Subsidarity, 1991, as defined in the Papal encyclical Centesimus Annus, Page 94, one hundred years after RERUM NOVARUM, on the condition of the working man: >> "Here again the principle of subsidiarity must be respected: a community of higher order should not interfere in the internal life of a community of a lower order, depriving the latter of its function, but rather should support it in case of need and help to coordinate its activities with the activities of the rest of society, always with a view to the common good." << Does this statement imply the Church's present approval of a UCI for every person over their whole lifecycle? For children and students only until they enter the workforce? For retired people only, at the expense of families with children? This latter segment of a UCI is all that the UK and the US have implemented adequately, two centuries after Pitt, the younger, proposed children's allowances as a practical alternative to the Speenhamland System of wage supplements indexed to the price of a loaf of bread. Think about it, and then talk about it. Its your future, not mine! Kind regards, Wesburt
