How to Allocate Legitimate Government Revenue
The Progress Report is pleased to present a guest op-ed on the topic of government finance.
Citizen Dividends or Public Goods?
by Al DateThis article presumes an understanding of the political philosophy of John Locke, who held that
- the fruits of labor belong entirely to the human-producer; but that
- land should be privatized only to the extent that equally good land is still available for others to use.
This article presumes an agreement that the primary source of public funds should come from site-rent (a.k.a. land rent), and from "other economic-privatizations of naturally-occurring opportunities," such as rights to the use of certain airwaves, or rights of mineral-extraction. Taxation of income or sales would be entirely prohibited.
This article is an argument for a limited constitutional government which attempts to provide "public goods" such as national defense, impartial justice, infrastructure for a free/open market -- including protection of property rights, and limits on pollution. The author believes that a properly-constituted government would preclude the need for forced income-redistribution, since 100% of income would accrue to the earners, since the cost of land would be minimized by the removal of speculative premiums, and since local public goods would be provided for.
Site-rent collection requires an Entity with enforcement powers, beginning with hegemony over the viable rent-producing land mass -- a national government. I fail to see how this could ever be achieved under anarchism.
In a modern setting, this Entity would ensure property and contracts, engage in some environmental protection, prosecute violent criminals, police the roads and sea-fares -- and provide a public currency. (I would argued that a uniform national currency is a necessary infrastructure for efficient markets).
It's amazing how many public goods are under-provided by the private free market. Even my friend David Friedman, the famous libertarian anarchist, freely admits this. But rent-collection gives us a golden opportunity to provide the public goods that are generally associated with advanced civilizations -- while leaving the fruits of labor to enrich individuals/families, and to propel the private markets.
Rent is not created by individual human beings, but by an entire vibrant community of economically-active human beings all bidding for land-use.
Thus, rent is not owed to individuals, but to the community in toto. Calculating an average citizen's dividend is misleading and propagandistic, because there can be no dividend of any kind without the primary public collection of what is OWED. Hence, it is more correct and more fundamental to say that
EACH LAND-USING RESIDENT OWES RENT; she is not necessarily owed any rent!She IS OWED justice and defense of property rights, clean air, sound currency and other public goods, etc. -- all of which are provided by the public spending of collected-rent by some form of democratic government under a constitution.
Since rent is inherently public, and since we have so many justifiable and necessary public expenses, the idea of a citizen's dividend strikes me as defeating the whole spirit and purpose of rent collection. It is an unwise, unjust re-privatization of public assets. Rent collection is the ONLY JUST PUBLICIFICATION (meaning the opposite of privatization) OF PRIVATE ASSETS. Let us protect that essential principle, by leaving what is private private, and what is public, public.
And, I'm sorry, but I cannot ignore the obvious secondary effect of a substantial citizen dividend which would allow people to avoid having to do any work. Now, being lazy myself, I can be tempted with the utopian idea of not having to lift a finger to survive, but in reality, a society which encourages people to be lazy will suffer economically. And a society which provides laziness-inducing citizen dividends without FIRST taking care of the public business is simply loony and will not be able to sustain itself.
If there is ANY MONEY LEFT OVER after the provision of essential public goods, shall we have a dividend? I admit that this is a great idea for attracting adherents to the "cause."
But NO, I say! It would be better "to throw that extra rent into the sea," if we cannot find some marginal public good to provide. (That's an inside joke -- I do not really favor feeding money to crustaceans.) In modern life, there is no limit to the extent of the provision of marginal public goods, such as local transit systems, except as provided by the discipline of collecting all the rent, and not a penny more -- thus spending only what is taken in. No deficit spending at the national level.
Civic life in a rent-collecting democracy would basically be a matter of prioritizing which public goods were more important than others, and which marginal ones would be provided only if there was money left over.
For example, in times of war, it is likely that most rent would be spent on the war, and other public goods deferred or reduced until peace returned.
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For more information on this topic, try the Ask Henry search engine
- Land Rent in a Tax-Free Society by Dr. Mason Gaffney
- The Rent, the Whole Rent, and Nothing But the Rent
- Citizens Dividend Headquarters
- Adam Smith on Rent
- The Earth Share Manifesto by Jeff Smith
- Fred Foldvary on the Citizens Dividend
- The Geonomy Society
- Common Assets
- Understanding Economics -- a Tuition-Free Online Course
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