• Are citizen dividends from oil rent funds currently or potentially a source of substantial basic income?
• Are oil rent funds the best source for citizen dividends or should CDs be based on other types of resource rents?

Louis Post: Outlines of Louis F. Post's Lectures, with Illustrative Notes and Charts (1894) — Appendix: FAQ

Q2. Would the single tax yield revenue sufficient for all kinds of government?

A. Thomas G. Shearman, Esq., of New York, estimates that sixty-five per cent of the rent that the land in the United States now yields actually and potentially to its owners, would be sufficient. But whether it would or not is as yet an unimportant question. If all revenues ought to be raised from land values, then no revenues should be drawn from other sources while any land value remains in private possession. Until land values are exhausted the taxation of labor cannot be excused.

Q4. What disposition would you make of the revenues that exceeded the needs of government?

A. The people who ask this question ought to settle it with those who want to know whether the single tax would yield revenue enough. I do not believe that public revenues under the single tax would exceed the just needs of economical government; in better highways, better sidewalks, better wharves, better schools, better public service of various kinds, we should find sufficient demand for all our revenues. But the question of deficiency or surplus is one to be met and disposed of when it arises. The present question is the wisdom and the justice of applying land values to common use, as far as they will go or as much of them as may be needed as the case may prove to be. ... read the book

Dan Sullivan: Are you a Real Libertarian, or a ROYAL Libertarian?

The Rev. Martin Luther King, Jr., Where Do We Go From Here?

We must create full employment or we must create incomes. People must be made consumers by one method or the other. Once they are placed in this position we need to be concerned that the potential of the individual is not wasted. New forms of work that enhance the social good will have to be devised for those for whom traditional jobs are not available. In 1879 Henry George anticipated this state of affairs when he wrote in Progress and Poverty:

The fact is that the work which improves the condition of mankind, the work which extends knowledge and increases power and enriches literature and elevates thought, is not done to secure a living. It is not the work of slaves driven to their tasks either by the task, by the taskmaster, or by animal necessity. It is the work of men who somehow find a form of work that brings a security for its own sake and a state of society where want is abolished. [Book IX: Effects of the Remedy; Chapter 4: Of the changes that would be wrought in social organization and social life]

Work of this sort could be enormously increased, and we are likely to find that the problems of housing and education, instead of preceding the elimination of poverty, will themselves be affected if poverty is first abolished. The poor transformed into purchasers will do a great deal on their own to alter housing decay. Negroes who have a double disability will have a greater effect on discrimination when they have the additional weapon of cash to use in their struggle.

Beyond these advantages, a host of positive psychological changes inevitably will result from widespread economic security. The dignity of the individual will flourish when the decisions concerning his life are in his own hands, when he has the means to seek self-improvement. Personal conflicts among husbands, wives and children will diminish when the unjust measurement of human worth on the scale of dollars is eliminated .

Now our country can do this. John Kenneth Galbraith said that a guaranteed annual income could be done for about twenty billion dollars a year. And I say to you today, that if our nation can spend thirty-five billion dollars a year to fight an unjust, evil war in Vietnam, and twenty billion dollars to put a man on the moon, it can spend billions of dollars to put God's children on their own two feet right here on earth. ... read the whole chapter and speech

Bill Batt: The Compatibility of Georgist Economics and Ecological Economics

Mason Gaffney: Canada's System of Revenue Sharing

Surpluses

Another difference is that Canadians are much more restrained and self-controlled than Americans, and therefore they've managed to build up enormous surpluses. There's something called the Alberta Heritage Fund, where instead of just blowing that money as it came in, they squirreled it away and saved it up and it's now considered I believe the largest single block of available capital in North America: $6-10 billion (I lost sight of the figures somewhere as they were going up). But can imagine Howard Jarvis in Alberta with his beady eyes on the Alberta Heritage Fund? Why, when we built up a surplus of just a few million dollars in Sacramento Howard Jarvis climbed all over everybody, 'We've got to cut taxes.' And that's when we got 'Proposition 13'. Saskatchewan has a Heritage Fund too, quite modest compared with Alberta's, but worth mentioning.

Shared Rent

But the most delightful distinction about Canadians is the strong and explicit recognition among almost everyone, even if he's an economist, who discusses this subject, that different resource endowments are the basis of inter-provincial differences. Equalisation in Canadian politics means sharing the economic rent. Everybody talks that way. Canadian economists even when they come to the States talk that way. Just as though rent were a permissible word in polite discourse. It's very refreshing. However there's a very selective attitude towards rent -- towards what rents are shareable, I should say.

• Rents from oil and gas are fair game.
• Forest revenues are fair game.
• Mineral revenues of other kinds are fair game.
• Water power is fair game.

But now how about the rents that are generated by the valuable lands of Montreal, or Toronto, or some of those other big and powerful cities in the east? They are not fair game. As a matter of fact, if you pore through the fine print of the equalization law, which I did on the airplane, you find the most interesting exception to what's included in the formula. I'll explain the formula to you in a moment if you are still awake.

The formula says that the greater the capacity to raise taxes that a province enjoys, the less will be its equalization payment. And various potential tax bases are included in this formula. And one of those is the property tax. But then you look at the fine print and only the improvements are included. The land is specifically excluded. Very pecular. In the formula as it's commonly printed you don't see that exclusion; it's only in the footnote. But in the footnote it says 'Instead of the value of land we will substitute the gross provincial product.' Of course, all right thinking people know that land value is in direct proportion to the growth of the provincial product. Or do they? I always thought that was the product of other inputs. What it means is that if a province has a great deal of valuable land which is not being used to a highest and best use, that valuable land will not be included in its potential tax base, and it can continue to get subventions from the federal government. Whereas on the other hand if its potential tax base includes oil and gas, then the revenues that it receives from that, or the ability it has to receive revenues from that, is counted against it in the sharing formula. So this is a very peculiar sort of rent sharing. Some rents are shared and others are not. You might even call it a conspiracy against Alberta. I'm sure that's the way they look at it. ... read the whole article

Clarence Darrow: The Land Belongs To The People (1916)

This earth is a little raft moving in the endless sea of space, and the mass of its human inhabitants are hanging on as best they can. It is as if some raft filled with shipwrecked sailors should be floating on the ocean, and a few of the strongest and most powerful would take all the raft they could get and leave the most of the people, especially the ones who did the work, hanging to the edges by their eyebrows. These men who have taken possession of this raft, this little planet in this endless space, are not even content with taking all there is and leaving the rest barely enough to hold onto, but they think so much of themselves and their brief day that while they live they must make rules and laws and regulations that parcel out the earth for thousands of years after they are dead and, gone, so that their descendants and others of their kind may do in the tenth generation exactly what they are doing today — keeping the earth and all the good things of the earth and compelling the great mass of mankind to toil for them.

Now, the question is, how are you going to get it back? Everybody who thinks knows that private ownership of the land is wrong. If ten thousand men can own America, then one man can own it, and if one man may own it he may take all that the rest produce or he may kill them if he sees fit. It is inconsistent with the spirit of manhood. No person who thinks can doubt but that he was born upon this planet with the same birthright that came to every man born like him. And it is for him to defend that birthright. And the man who will not defend it, whatever the cost, is fitted only to be a slave. The earth belongs to the people — if they can get it — because if you cannot get it, it makes no difference whether you have a right to it or not, and if you can get it, it makes no difference whether you have a right to it or not, you just take it. The earth has been taken from the many by the few. It made no difference that they had no right to it; they took it.

Now, there are some methods of getting access to the earth which are easier than others. The easiest, perhaps, that has been contrived is by means of taxation of the land values and land values alone; and I need only say a little upon that question. One trouble with it which makes it almost impossible to achieve, is that it is so simple and so easy. You cannot get people to do anything that is simple; they want it complex so they can be fooled.

Now the theory of Henry George and of those who really believe in the common ownership of land is that the public should take not alone taxation from the land, but the public should take to itself the whole value of the land that has been created by the public — should take it all. It should be a part of the public wealth, should be used for public improvements, for pensions, and belong to the people who create the wealth — which is a strange doctrine in these strange times. It can be done simply and easily; it can be done by taxation. All the wealth created by the public could be taken back by the public and then poverty would disappear, most of it at least. The method is so simple, and so legal even — sometimes a thing is legal if it is simple — that it is the easiest substantial reform for men to accomplish, and when it is done this great problem of poverty, the problem of the ages, will be almost solved. We may need go farther. ... read the whole article

Peter Barnes: Capitalism 3.0 — Chapter 2: A Short History of Capitalism (pages 15-32)

One observer of this transformation was Thomas Paine, America’s pro-independence pamphleteer. Seeing how enclosure of the commons benefited a few and disinherited many others, Paine proposed a remedy — not a reversal of enclosure, which he considered necessary for economic reasons, but compensation for it.

Like Locke, Paine believed nature was a gift of God to all. “There are two kinds of property,” he wrote. “Firstly, natural property, or that which comes to us from the Creator of the universe — such as the earth, air, water. Secondly, artificial or acquired property — the invention of men.” In the latter, he went on, equality is impossible, but in the former, “all individuals have legitimate birthrights.” Since such birthrights were diminished by enclosure, there ought to be an “indemnification for that loss.”

Paine therefore proposed a “national fund” that would do two things:

[Pay] to every person, when arrived at the age of twenty-one years, the sum of fifteen pounds sterling, as a compensation in part, for the loss of his or her natural inheritance, by the introduction of the system of landed property: And also, the sum of ten pounds per annum, during life, to every person now living, of the age of fifty years, and to all others as they shall arrive at that age.

A century and a half later, America created a national fund to do part of what Paine recommended — we call it Social Security. We’ve yet to adopt the other part, but its basic principle — that enclosure of a commons requires compensation — is as sound in our time as it was in Paine’s. ... read the whole chapter

Peter Barnes: Capitalism 3.0 — Chapter 5: Reinventing the Commons (pages 65-78)

ONE PERSON, ONE SHARE

Modern democratic government is grounded on the principle of one person, one vote. In the same way, the modern commons sector would be grounded on the principle of one person, one share. In the case of scarce natural assets, it will be necessary to distinguish between usage rights and income rights. It’s impossible for everyone to use a limited commons equally, but everyone should receive equal shares of the income derived from selling limited usage rights.

INCLUDE SOME LIQUIDITY
Currently, private property owners enjoy a near-monopoly on the privilege of receiving property income. But as the Alaska Permanent Fund shows, it’s possible for common property co-owners to receive income too.

Income sharing would end private property’s monopoly not only on liquidity, but also on attention. People would notice common property if they got income from it. They’d care about it, think about it, and talk about it. Concern for invisible commons would soar.

Common property liquidity has to be designed carefully, though. Since common property rights are birthrights, they shouldn’t be tradeable the way corporate shares are. This means commons owners wouldn’t reap capital gains. Instead, they’d retain their shared income stakes throughout their lives, and through such stakes, share in rent, royalties, interest, and dividends. ... read the whole chapter

Peter Barnes: Capitalism 3.0 — Chapter 6: Trusteeship of Creation (pages 79-100)

“Let us suppose,” economist Ronald Coase wrote in 1960, “that a farmer and a cattle-raiser are operating on neighboring properties.” He went on to suppose further that the cattle-raiser’s animals wander onto the farmer’s land and damage his crops. From this hypothetical starting point Coase examined the problem of externalities and proposed a solution — the creation of rights to pollute or not be polluted upon. Today, pollution rights are used throughout the world. In effect, Coase conjured into existence a class of property rights that didn’t exist before, and his leap of imagination eventually reduced real pollution.

“Let us suppose” is a wonderful way for anyone, economists included, to begin thinking. It lets us adjust old assumptions and see what might happen. And it lets us imagine things that don’t exist but could, and sometimes, because we imagined them, later do.

Coase supposed that a single polluter or his neighboring pollutee possessed a right to pollute or not be polluted upon. He further supposed that the transaction costs involved in negotiations between the two neighbors were negligible. He made these suppositions half a century ago, at a time when aggregate pollution wasn’t planet-threatening, as it now is. Given today’s altered reality, it might be worth updating Coase’s suppositions to make them relevant to this aggregate problem. Here, in my mind, are the appropriate new suppositions:

* Instead of one polluter, there are many, and instead of one pollutee, there are millions — including many not yet born.
* The pollutees (including future generations) are collectively represented by trusts.
* The initial pollution rights are assigned by government to these trusts.
* In deciding how many pollution permits to sell, the trustees’ duty isn’t to maximize revenue but to preserve an ecosystem for future generations. The trusts therefore establish safe levels of pollution and gradually reduce the number of permits they sell until those levels are reached.
* Revenue from the sale of pollution permits is divided 50 percent for per capita dividends (like the Alaska Permanent Fund) and 50 percent for public goods such as education and ecological restoration.

If we make these suppositions, what then happens? We have, first of all, an economic model with a second set of books. Not all, but many externalities show up on these new ledgers. More importantly, we begin to imagine a world in which nature and future generations are represented in real-time transactions, corporations internalize previously externalized costs, prices of illth-causing goods rise, and everyone receives some property income.

Here’s what such a world could look like:

* Degradation of key ecosystems is gradually reduced to sustainable levels because the trustees who set commons usage levels are accountable to future generations, not living shareholders or voters. When they fail to protect their beneficiaries, they are sued.
* Thanks to per capita dividends, income is recycled from overusers of key ecosystems to underusers, creating both incentives to conserve and greater equity.
* Clean energy and organic farming are competitive because prices of fossil fuels and agricultural chemicals are appropriately high.
* Investment in new technologies soars and new domestic jobs are created because higher fuel and waste disposal prices boost demand for clean energy and waste recycling systems.
* Public goods are enhanced by permit revenue.

What has happened here? We’ve gone from a realistic set of assumptions about how the world is — multiple polluters and pollutees, zero cost of pollution, dangerous cumulative levels of pollution — to a reasonable set of expectations about how the world could be if certain kinds of property rights are introduced. These property rights go beyond Coase’s, but are entirely compatible with market principles. The results of this thought experiment show that the introduction of common property trusts can produce a significant and long-lasting shift in economic outcomes without further government intervention.

Commons Rent

It shouldn’t be thought that the commons is, or ought to be, a money-free zone. In fact, an important subject for economists (and the rest of us) to understand is commons rent.

By this I don’t mean the monthly check you send to a landlord. In economics, rent has a more precise meaning: it’s money paid because of scarcity. If you’re not an economist, that may sound puzzling, but consider this. A city has available a million apartments. In absolute terms, that means apartments aren’t scarce. But the city is confined geographically and demand for apartments is intense. In this economic sense, apartments are scarce. Now think back to that check you pay your landlord, or the mortgage you pay the bank. Part of it represents the landlord’s operating costs or the bank’s cost of money, but part of it is pure rent — that is, money paid for scarcity. That’s why New Yorkers and San Franciscans write such large checks to landlords and banks, while people in Nebraska don’t.

Rent rises when an increase in demand bumps into a limit in supply. Rent due to such bumping isn’t good or bad; it just is.We can (and should) debate the distribution of that rent, but the rent itself arises automatically. And it’s important that it does so, because this helps the larger economy allocate scarce resources efficiently. Other methods of allocation are possible. We can distribute scarce things on a first come, first served basis, or by lottery, political power, seniority, or race. Experience has shown, though, that selling scarce resources in open markets is usually the best approach, and such selling inevitably creates rent.

Rent was of great interest to the early economists — Adam Smith, David Ricardo, and John Stuart Mill, among others — because it constituted most of the money earned by landowners, and land was then a major cost of production. The supply of land, these economists noted, is limited, but demand for it steadily increases. So, therefore, does its rent. Thus, landowners benefit from what Mill called the unearned increment — the rise in land value attributable not to any effort of the owner, but purely to a socially created increase in demand bumping into a limited supply of good land.

The underappreciated American economist Henry George went further. Seeing both the riches and the miseries of the Gilded Age, he asked a logical question: Why does poverty persist despite economic growth? The answer, he believed, was the appropriation of rent by landowners. Even as the economy grew, the property rights system and the scarcity of land diverted almost all the gains to a landowning minority. Whereas competition limited the gains of working people, nothing kept down the landowners’ gains. As Mill had noted, the value of their land just kept rising. To fix the problem, George advocated a steep tax on land and the abolition of other taxes. His bestselling book Progress and Poverty catapulted him to fame in the 1880s, but mainstream economists never took him seriously.

By the twentieth century, economists had largely lost interest in rent; it seemed a trivial factor in wealth production compared to capital and labor. But the twenty-first century ecological crisis brings rent back to center-stage. Now it’s not just land that’s scarce, but clean water, undisturbed habitat, biological diversity, waste absorption capacity, and entire ecosystems.

This brings us back to common property rights. The definition and allocation of property rights are the primary factors in determining who pays whom for what. If, in the case of pollution rights, pollution rights are given free to past polluters, the rent from the polluted ecosystem will also go to them. That’s because prices for pollution-laden products will rise as pollution is limited (remember, if demand is constant, a reduction in supply causes prices to go up), and those higher prices will flow to producers (which is to say, polluters).

By contrast, if pollution rights are assigned to trusts representing pollutees and future generations, and if these trusts then sell these rights to polluters, the trusts rather than the polluters will capture the commons rent. If the trusts split this money between per capita dividends and expenditures on public goods, everyone benefits.

At this moment, based on pollution rights allocated so far, polluting corporations are getting most of the commons rent. But the case for trusts getting the rent in the future is compelling. If this is done, consumers will pay commons rent not to corporations or government, but to themselves as beneficiaries of commons trusts. Each citizen’s dividend will be the same, but his payments will depend on his purchases of pollution-laden products. The more he pollutes, the more rent he’ll pay. High polluters will get back less than they put in, while low polluters will get back more. The microeconomic incentives, in other words, will be perfect. (See figure 6.1.)

What’s equally significant, though less obvious, is that the macroeconomic incentives will be perfect too. That is, it will be in everyone’s interest to reduce the total level of pollution. Remember how rent for scarce things works: the lower the supply, the higher the rent. Now, imagine you’re a trustee of an ecosystem, and leaving aside (for the sake of argument) your responsibility to preserve the asset for future generations, you want to increase dividends. Do you raise the number of pollution permits you sell, or lower it? The correct, if counterintuitive answer is: you lower the number of permits.

This macroeconomic phenomenon — that less pollution yields more income for citizens — is the ultimate knockout punch for commons trusts. It aligns the interests of future generations with, rather than against, those of living citizens. By so doing, it lets us chart a transition to sustainability in which the political pressure is for faster pollution reduction rather than slower.

There’s one further argument for recycling commons rent through trusts. As rent is recycled from overusers of the commons to underusers, income is shifted from rich to poor. That’s because rich households, on average, use the commons more than poor households. They drive SUVs, fly in jets, and have large homes to heat and cool — thus they dump more waste into the biosphere. Studies by Congress and independent economists have shown that only a rent recycling system like the one just described can protect the poor. Absent such a system, the poor will pay commons rent and get nothing back. In other words, they’ll get poorer.

As always, there are a few caveats.

* First, to the extent commons rent is used for public goods rather than per capita dividends, the income recycling effects are diminished. This is offset, however, by the fact that public goods benefit everyone.
* Second, the less-pollution-equals-more-dividends formula doesn’t work indefinitely. At some point after less polluting technologies have been widely deployed, the demand for pollution absorption will become elastic. Then, lowering the number of pollution permits sold will decrease income to citizens. But that time is far in the future, and when it comes, the world will be a healthier place. And even then, trustees won’t be able to increase the number of pollution permits without violating their responsibility to future generations.

The Effect on Poverty

I’m now ready to make a bold assertion: sharing commons rent through per capita dividends isn’t just the best way to bring our economy into harmony with nature, it’s also the best way to reduce poverty. That’s because there’s no other pool of money of comparable size to which poor people have a legitimate claim.

The free market notion that those at the bottom of the ladder will somehow lift themselves out of poverty, without any capital or property, just isn’t credible any longer. Our economic operating system has long been stacked against the poor, and globalization hasn’t made it any less so. The prospects for taxing and spending the poor out of poverty aren’t much brighter. Arguably, such policies reached their zenith in the Johnson era of the 1960s, and didn’t get the job done.

The reason commons rent-sharing can work is that it’s driven not only — or even primarily — by compassion for the poor. Rather, it’s driven primarily by the need to preserve threatened ecosystems. When this problem is tackled, the question of who gets commons rent will necessarily arise; we can’t solve the first problem without addressing the latter. We’ll then have to decide whether to take, once again, the commons from the poor, or let them share in our joint inheritance.

The poor’s claim on commons rent is, of course, no different from the claim of middle-income households or the rich: commons rent rightfully belongs to everyone. But commons rent, if fully paid, would boost living standards for the poor much more than for anyone else. And unlike other forms of help for the poor, commons rent can’t be derided as welfare. It is, technically, unearned income, but no more so than dividends received by inheritors of private wealth. It’s property income, and should be a universal property right. That, I believe, is a winnable political strategy, as well as sound economic policy. ... read the whole chapter

Peter Barnes: Capitalism 3.0 — Chapter 7: Universal Birthrights (pages 101-116)

The Idea of Birthrights

John Locke’s response to royalty’s claim of divine right was the idea of everyone’s inherent right to life, liberty, and property. Thomas Jefferson, in drafting America’s Declaration of Independence, changed Locke’s trinity to life, liberty, and the pursuit of happiness. These, Jefferson and his collaborators agreed, are gifts from the creator that can’t be taken away. Put slightly differently, they’re universal birthrights.

The Constitution and its amendments added meat to these elegant bones. They guaranteed such birthrights as free speech, due process, habeas corpus, speedy public trials, and secure homes and property. Wisely, the Ninth Amendment affirmed that “the enumeration in the Constitution, of certain rights, shall not be construed to deny or disparage others retained by the people.” In that spirit, others have since been added.

If we were to analyze the expansion of American birthrights, we’d see a series of waves. The first wave consisted of rights against the state. The second included rights against unequal treatment based on race, nationality, gender, or sexual orientation. The third wave — which, historically speaking, is just beginning — consists of rights not against things, but for things — free public education, collective bargaining for wages, security in old age. They can be thought of as rights necessary for the pursuit of happiness.

What makes this latest wave of birthrights strengthen community is their universality. If some Americans could enjoy free public education while others couldn’t, the resulting inequities would divide rather than unite us as a nation. The universality of these rights puts everyone in the same boat. It spreads risk, responsibility, opportunity, and reward across race, gender, economic classes, and generations. It makes us a nation rather than a collection of isolated individuals.

Universality is also what distinguishes the commons sector from the corporate sector. The starting condition for the corporate sector, as we’ve seen, is that the top 5 percent owns more shares than everyone else. The starting condition for the commons sector, by contrast, is one person, one share.

The standard argument against third wave universal birthrights is that, while they might be nice in theory, in practice they are too expensive. They impose an unbearable burden on “the economy” — that is, on the winners in unfettered markets. Much better, therefore, to let everyone — including poor children and the sick — fend for themselves. In fact, the opposite is often true: universal birthrights, as we’ll see, can be cheaper and more efficient than individual acquisition. Moreover, they are always fairer.

How far we might go down the path of extending universal birthrights is anyone’s guess, but we’re now at the point where, economically speaking, we can afford to go farther. Without great difficulty, we could add three birthrights to our economic operating system: one would pay everyone a regular dividend, the second would give every child a start-up stake, and the third would reduce and share medical costs. Whether we add these birthrights or not isn’t a matter of economic ability, but of attitude and politics.

Why attitude? Americans suffer from a number of confusions. We think it’s “wrong” to give people “something for nothing,” despite the fact that corporations take common wealth for nothing all the time. We believe the poor are poor and the rich are rich because they deserve to be, but don’t consider that millions of Americans work two or three jobs and still can’t make ends meet. Plus, we think tinkering with the “natural” distribution of income is “socialism,” or “big government,” or some other manifestation of evil, despite the fact that our current distribution of income isn’t “natural” at all, but rigged from the get-go by maldistributed property.

The late John Rawls, one of America’s leading philosophers, distinguished between pre distribution of property and re distribution of income. Under income re distribution, money is taken from “winners” and transferred to “losers.” Understandably, this isn’t popular with winners, who tend to control government and the media. Under property pre distribution, by contrast, the playing field is leveled by spreading property ownership before income is generated. After that, there’s no need for income redistribution; property itself distributes income to all. According to Rawls, while income re distribution creates dependency, property predistribution empowers.

But how can we spread property ownership without taking property from some and giving it to others? The answer lies in the commons — wealth that already belongs to everyone. By propertizing (without privatizing) some of that wealth, we can make everyone a property owner.

What’s interesting is that, for purely ecological reasons, we need to propertize (without privatizing) some natural wealth now. This twenty-first century necessity means we have a chance to save the planet, and as a bonus, add a universal birthright.

Dividends from Common Assets

A cushion of reliable income is a wonderful thing. It can be saved for rainy days or used to pursue happiness on sunny days. It can encourage people to take risks, care for friends and relatives, or volunteer for community service. For low-income families, it can pay for basic necessities.

Conversely, the absence of reliable income is a terrible thing. It heightens anxiety and fear. It diminishes our ability to cope with crises and transitions. It traps many families on the knife’s edge of poverty, and makes it harder for the poor to rise.

So why don’t we, as Monopoly does, pay everyone some regular income — not through redistribution of income, but through predistribution of common property? One state — Alaska — already does this. As noted earlier, the Alaska Permanent Fund uses revenue from state oil leases to invest in stocks, bonds, and similar assets, and from those investments pays yearly dividends to every resident. Alaska’s model can be extended to any state or nation, whether or not they have oil. We could, for instance, have an American Permanent Fund that pays equal dividends to long-term residents of all 50 states. The reason is, we jointly own many valuable assets.

Recall our discussion about common property trusts. These trusts could crank down pollution and earn money from selling ever-scarcer pollution permits. The scarcer the permits get, the higher their prices would go. Less pollution would equal more revenue. Over time, trillions of dollars could flow into an American Permanent Fund.

What could we do with that common income? In Alaska the deal with oil revenue is 75 percent to government and 25 percent to citizens. For an American Permanent Fund, I’d favor a 50/50 split, because paying dividends to citizens is so important. Also, when scarce ecosystems are priced above zero, the cost of living will go up and people will need compensation; this wasn’t, and isn’t, the case in Alaska. I’d also favor earmarking the government’s dollars for specific public goods, rather than tossing them into the general treasury. This not only ensures identifiable public benefits; it also creates constituencies who’ll defend the revenue sharing system.

Waste absorption isn’t the only common resource an American Permanent Fund could tap. Consider also, the substantial contribution society makes to stock market values. As noted earlier, private corporations can inflate their value dramatically by selling shares on a regulated stock exchange. The extra value derives from the enlarged market of investors who can now buy the corporation’s shares. Given a total stock market valuation of about $15 trillion, this socially created liquidity premium is worth roughly $5 trillion.

At the moment, this $5 trillion gift flows mostly to the 5 percent of the population that own more than half the private wealth. But if we wanted to, we could spread it around. We could do that by charging corporations for using the public trading system, just as investment bankers do. (For those of you who haven’t been involved in a public stock offering, investment bankers are like fancy doormen to a free palace. While the public charges almost nothing to use the capital markets, investment bankers exact hefty fees.)

The public’s fee could be in cash or stock. Let’s say we required publicly traded companies to deposit 1 percent of their shares each year in the American Permanent Fund for ten years — reaching a total of 10 percent of their shares. This would be our price not just for using a regulated stock exchange, but also for all the other privileges (limited liability, perpetual life, copyrights and patents, and so on) that we currently bestow on private corporations for free.

In due time, the American Permanent Fund would have a diversified portfolio worth several trillion dollars. Like its Alaskan counterpart, it would pay equal yearly dividends to everyone. As the stock market rose and fell, so would everyone’s dividend checks. A rising tide would lift all boats. America would truly be an “ownership society.” ... read the whole chapter

Peter Barnes: Capitalism 3.0 — Chapter 10: What You Can Do (pages 155-166)

To build Capitalism 3.0, we each have unique roles to play. I therefore address the final pages of this book to a variety of people whose participation is critical. ...

WAGE EARNERS

You had it good for a while. Thanks to labor unions, you lifted yourselves into the middle class. You got paid vacations, forty-hour workweeks, time-and-half for overtime, health insurance, a pension, and most of all, job security. Even companies without unions paid well and offered lifetime employment if you wanted it. There was a social contract, if not a legal one, between employers, workers, and communities. This was America’s version of the welfare state, and if you were part of it, it wasn’t bad. But those days are dust.

In today’s global marketplace, capital moves at the speed of light, and you’re just a cost to be minimized. What management seeks — what capital demands — is more profit next quarter. Did you give the best years of your life to Acme Inc.? Too bad. Nothing boosts the bottom line faster than downsizing, outsourcing, or playing games with your pension fund. And forget about help from the union; it’s toothless now. We’re all on our own.

What can you do? Truthfully, not much. In the era of global capital, your form of income — wages — is at a serious competitive disadvantage. But over time, things can get better. The way out — for your kids, if not for you — is through a new version of capitalism that gives you (and everyone else) property income from a share of common wealth. That share is your birthright. It can’t be downsized or outsourced.

It pays some dividends in cash, and others in no-fuss health care, free Internet access, healthy food, clean air, and lots of places to go fishing. So claim your birthright, and your children’s. Claim it in living rooms, at church, in barbershops, and hair salons. This is how movements begin. ... read the whole chapter

“Free to Choose: A Conversation with Milton Friedman” — July 2006: http://www.hillsdale.edu/imprimis/ The following is an edited transcript of a conversation between Hillsdale College President Larry Arnn and Milton Friedman, which took place on May 22, 2006, at the Ritz-Carlton Hotel in San Francisco, California, during a two-day Hillsdale College National Leadership Seminar celebrating the 25th anniversary of Milton and Rose Friedman's book, Free to Choose: A Personal Statement. excerpt:

LA: Let me ask you about demographic trends. Columnist Mark Steyn writes that in ten years, 40 percent of young men in the world are going to be living in oppressed Muslim countries. What do you think the effect of that is going to be?

MF: What happens will depend on whether we succeed in bringing some element of greater economic freedom to those Muslim countries. Just as India in 1955 had great but unrealized potential, I think the Middle East is in a similar situation today. In part this is because of the curse of oil. Oil has been a blessing from one point of view, but a curse from another. Almost every country in the Middle East that is rich in oil is a despotism.

LA: Why do you think that is so?

MF: One reason, and one reason only — the oil is owned by the governments in question. If that oil were privately owned and thus someone's private property, the political outcome would be freedom rather than tyranny. This is why I believe the first step following the 2003 invasion of Iraq should have been the privatization of the oil fields. If the government had given every individual over 21 years of age equal shares in a corporation that had the right and responsibility to make appropriate arrangements with foreign oil companies for the purpose of discovering and developing Iraq's oil reserves, the oil income would have flowed in the form of dividends to the people — the shareholders — rather than into government coffers. This would have provided an income to the whole people of Iraq and thereby prevented the current disputes over oil between the Sunnis, Shiites and Kurds, because oil income would have been distributed on an individual rather than a group basis.

LA: Many Middle Eastern societies have a kind of tribal or theocratic basis and long-held habits of despotic rule that make it difficult to establish a system of contract between strangers. Is it your view that the introduction of free markets in such places could overcome those obstacles?

MF: Eventually, yes. I think that nothing is so important for freedom as recognizing in the law each individual's natural right to property, and giving individuals a sense that they own something that they're responsible for, that they have control over, and that they can dispose of.

Reprinted by permission from IMPRIMIS, the national speech digest of Hillsdale College, www.hillsdale.edu.

Mason Gaffney: Cannan's Law

At the same time, there should be no more capital grants to localities for public works. When cities pay for their own public works they must attract population to justify the capital outlays and service the debt.  ... read the whole article