Re: [Futurework] A Basic Income as a form of Economic Governance

[Ed Weick]

Thanks, Harry.  I'll make a few comments.   Ed ----- Original Message ----- From: Harry Pollard To: 'Ed Weick' ; 'Ray Evans Harrell' ; 'Thomas Lunde' ; [EMAIL PROTECTED] Sent: Thursday, December 18, 2003 2:44 PM Subject: RE: [Futurework] A Basic Income as a form of Economic Governance Ed,   Several remarks from the point of view of Classical Political Economy.   You’ll remember that.   If Ricardo is correct, all that will happen over time is that wages will fall by about the amount of the BI. (The so-called “working poor” are an example of this.)   I think that Ricardo’s Iron Law of Wages is correct (that’s the constant pressure downward on wages). However, I would add the element of land speculation to the equation – something he didn’t do.   I'm not arguing that the Iron Law of Wages is incorrect, but would point out that we live in a very different world than Ricardo's.  His world was one of a huge number of poor, many having left or been kicked off the land, scrabbling for factory jobs in the emerging industrial cities.  Ours is one of a much smaller proportion of poor and a huge middle class.  Ours is also one of what I would call "income stratification".  For example, you wouldn't expect an accountant or lawyer working for a corporation to be moiling about at the subsistence wage because a very long process of custom building, social stratification and unionization has led to an acceptance of what the recompense for an accountant and lawyer, or a middle or senior civil servant, should be.  Even guys (men and women) who work on the shop floor of large factories can expect to be pretty decently paid.  So, no, I don't see a BI leading toward a general downward spiral to a subsistence wage.  What I see is bringing people who currently do not have a subsistence income moving up to that level.   So, this year’s great Basic Income addition to income would become not a useful extra – but would be linked to lower real wages as incomes become not much different from before BI. (Of course, the “dollars” would no doubt be greater.)   Secondly, I would adopt a premise that Canadian land belongs to Canadians. Not some Canadians, but to all Canadians. People who want more valuable land than the margin should compensate the rest of the owners by paying Rent.   In other words, though the houses and other structures built privately belong to those who built them – the land is held in trusteeship and requires a Rent payment to compensate the rest of the owners.   This collected Rent belongs to all Canadians and could well be shared among them. However, unlike most suggestions for BI, which would be financed by the “rewards for screwing Canadians” (or as I would put it, Privilege income) – this distribution would merely be returning to Canadians what belongs to them.   You have me here.  All I can say is that our practice is to distinguish between privately held and publicly held lands.  Productive privately held lands yield a return to their owners - i.e. income in the form of rent which can be taxed as income.  Part of the rent is also taxed away as a property tax.  For example, we pay property taxes which are related to the assessed value of our land.  Public land put out to private uses (mining or oil and gas leases) yield returns such as licence fees until they begin to produce and resource royalties thereafter.  There is always a lot of debate about whether the fees and royalties are set at a sufficiently high level.   And no, the land is not seen as belonging to all Canadians.  Most of the public lands in the provinces are provincially held and technically belong to the residents of those provinces.  I believe the federal government is still the major landholder in the territories, but much is now also held by Aboriginal groups via land claims settlements.   I have no idea what the land of Canada is worth, but an estimate of the value of American land is $30 trillion (that’s trillion). Would you like to take 5% of that and divide it among 285 million Americans?   I make it a bit more than $5,000 but don’t trust my arithmetic. So, a family of 4 would get $20,000. (Ricardo’s Iron Law would be squelched by collection of Rent.)   Some Georgists are active in pursuing this. They call it a Citizen’s Dividend.   Its advantage over the BI is that it is a recapture of values that belong to the people of Canada (or the USA). The BI, as I said, is redistributing money taken by taxes.   I don't think it would work in Canada.  Revenues from lands are simply absorbed into general revenues.   (When I discuss this kind of thing, an ancient memory intrudes. TIME reported this at the time of Johnson’s “War on Poverty”. The income tax collected from those below the poverty line was greater than the entire budget of the OEO (Office of Economic Opportunity) which fought the war on poverty.)   The poor paid for the war on poverty.   If that was the case, the poor really lost that one.    I must say, a trifle smugly, that all this is predictable by Classical PE. Modern economists hold meetings and form committees as they try to fit their art to reality.   After all this, I must add that I don’t agree with the amount of Citizen’s Dividend. Further, although a land tax makes much more sense than any of our present impositions – the amount collected is not so important.   What is important is the economic consequences of collecting land Rent. (It used to be called Economic Rent, but the neo-Classicals have appropriated the name for something else. Essentially, it removes the most basic privilege of them all -- the right to appropriate privately values created by the entire community.   If I recall my economics from way back, "economic rent" was essentially the profit from any monopoly, just as rent is the return from exclusive right to holding a particular piece of land.  But I'm afraid I'm really rusty on this.   Churchill, in discussing monopolies, called this the “Mother of all Monopolies”.   He was right.   Harry ******************************************** Henry George School of Social Science of Los Angeles Box 655  Tujunga  CA  91042 Tel: 818 352-4141  --  Fax: 818 353-2242 http://haledward.home.comcast.net ********************************************   From: [EMAIL PROTECTED] [mailto:[EMAIL PROTECTED] On Behalf Of Ed Weick Sent: Tuesday, December 16, 2003 10:53 AM To: Ray Evans Harrell; Thomas Lunde; [EMAIL PROTECTED] Subject: Re: [Futurework] A Basic Income as a form of Economic Governance   Wow!  If I read you right Ray, you are still associating BI with work, whether for profit or not for profit.  I can't go there with you.  It sounds a little too much like workfare, essentially grabbing people by the scruff of the neck and making them do the shit work nobody else wants to do in order to teach them "responsibility" and "self-reliance".  IMHO, a BI has to be based on need and if there is a moral purpose behind it, it has to be that everyone has a stake or "entitlement" in society that must be respected by society.  How great is this entitlement?  I don't think that a liberal democracy could function properly unless it recognized that everybody's entitlement is equal.   If one were to look at this entitlement in terms of income, which is only one of many ways, one might say that everybody should have an income that provides for the basic needs of families, including needs associated with education and health.  For families that need that income, whether their heads are working or not, that level of income should be provided without any stigma and without grabbing people by the scruff of the neck in order to teach them "self-reliance".  Indeed, the underlying assumption has to be that people are self-reliant, but they are not in a position to exercise their self-reliance due to circumstances beyond their control.  People who do not need the income should have it available to them for the sake of universality, but it should be withheld or clawed back via the tax system.   What I've argued is that a variety of programs for the poor that are currently operated by governments be cobbled together to form at least part of a BI.  What can happen when these programs are kept separate and administered by separate bureaucracies using different rules is illustrated by a tragic case which occurred here in Ontario recently.  In the summer of 2001, a young woman, Kimberly Rogers, pregnant at the time, died in her sweltering apartment while under house arrest. Rogers was convicted of fraud for violating the rules of social assistance; she concurrently received both social assistance and a student loan.  I might add that Rogers has become something of a cause celebre by advocates of better ways of treating the poor, but she can't take any pleasure in that because she's dead.  Surely we can do better.   Ed       --- Incoming mail is certified Virus Free. Checked by AVG anti-virus system (http://www.grisoft.com). Version: 6.0.552 / Virus Database: 344 - Release Date: 12/15/2003 --- Outgoing mail is certified Virus Free. Checked by AVG anti-virus system (http://www.grisoft.com). Version: 6.0.552 / Virus Database: 344 - Release Date: 12/15/2003