Economics
Bounty: Our Surplus—a Way to Remake the World (part 2 of 2)
The worth of Earth—so, so immense—what if we humans put it to good use?
February 17, 2019
Jeffery J. Smith
Activist

Well-Being

More money in the pocket means that one can afford medical care while not needing much medical care. Presently, medical care is the fastest growing expense in the economy. Much of the illness we endure is due in part to anxiety whereas receiving a Citizens Dividend eases one’s money worries.

How bad is it? Among men between the ages of 20 and 35, the leading cause of death is suicide. Anxiety and depression are predicted to be the second biggest causes of ill health in Western countries by 2020.

Conversely, when people for more secure, they feel less need to self-medicate, weakening their health. When people in underdeveloped nations (including Honduras, Nicaragua, and Tanzania) receive free cash, they consume less tobacco and alcohol, showed World Bank researchers David Evans and Anna Popova. Should hold true in the developed world, too, I imagine.

Another major stressor is the degraded environment. All those toxins not only poison we humans but also as the health of ecosystems fails, the worth of Earth falls. That in turn would reduce the dividend. Since most would prefer a greater dividend, they’d minimize their footprint and support policies that’d discourage pollution and depletion, thereby maximizing land value. Self-interest would align with eco-interest.

If people get a slice of that value, then owners and developers would be compensated for not exceeding the carrying capacity of their land. Owners could profit from building or otherwise using their land, but its rental value would go into the common kitty and back out again as the dividend. By keeping their land healthy, residents would increase the dividend for themselves and for their neighbors, too.

One more way we hamper our health is via overwork. Employees working more suffer more and so produces less. Conversely, a shorter workweek does increase morale and health, not to mention productivity and more from less is the whole point of an economy.

Already 40 hours per week exceeds our needs. How short could the workweek be?

* Marshal Sahlin figured our Stone Age ancestors’ full-time is our half-time.

* After the Black Plague left far fewer people for so much cultivatable land, James Rogers figured in the Middle Ages our peasant ancestors worked 14 hours a week.

* Bucky Fuller figured two hours was enough for actual goods and services.

* Juliet Schor while at Harvard figured it’d be 6 1/2 hours by 2002 if productivity gains did not go to the 1%.

Just as jobs sicken, time off heals. You can hang out with friends and neighbors—maybe even have dinner together as a family. Go spend time in nature, spend time defending nature. You can play more, develop new skills, realize lifelong ambitions, and lead a more fulfilling life. You’d feel good. Then the Protestant Work Ethic becomes an anachronism as the Polynesian Play Ethic becomes relevant.

“Lack of money is the root of all evil.” —George Bernard Shaw

Turning from individual health to societal health, as prosperity spreads, the motive to steal would become less common, as it is in Northern Europe. Furthermore, materially secure people become more hesitant to go off to war. And that’s without winning any international agreements or signing any treaties between erstwhile belligerents. But imagine … What if in the MidEast the high value of locations in Israel were shared with both richer Israelis and more numerous Palestinians. while Palestinian markets were opened to the Israeli business? That’d establish some cross-border community, right? This practice of sharing rent could deliver both peace and prosperity in our time.

Prices Precise, Choices Efficient

With those concrete goods is an abstract one—precise prices. Prices guide and misguide our economic choices. For choices to be wise, prices must be accurate.

Prices would not inflate when citizens spend rent dividends. Public recovery of site value—via land dues or land tax or land use fee or land lease—would keep landowners in competition among themselves. If any of them tried to raise what they charge, their buyer would look elsewhere and their tenant would move to a new building that another owner erected in order to have income to pay the land dues.

Rather than distort prices, sharing rent would correct prices.

Take land. Speculators constrain its supply while people crowding into cities exaggerate its demand. But with land dues, we motivate owners to use land efficiently and with rent dividends we enable people to move to human-scale cities. Improving supply while modifying demand means the price of land becomes accurate, and our choices influenced by that information become rational.

Take labor. Currently people chase jobs instead of jobs chasing people, what with jobs being taxed and deprived of some prime locations. So labor is underpaid. But when everyone, not just the rich and poor, get money without working—a rent share—people become less desperate for jobs; they can be picky. To persuade people, employers would raise the wages they offer, improve work conditions, and tolerate flexible schedules. Work could even become something people look forward to.

Bosses who’ve not thought this through can be passionately opposed to paying higher wages. Others see the upside. Henry Ford did, when he raised his employees wages so they could afford to buy his cars. With Citizens Dividends, that phenomenon would occur society-wide.

Along with falling wages, some worry about disappearing jobs. It’s not news; old technology eliminated old jobs—where did all the blacksmiths go? However, the same techno-progress obviating jobs also pumps up site values in desirable areas; see Silicon Valley. Recover socially-generated site values, and society can harness modern automation for a comfortable living.

Take capital in the sense of tools, machinery, factories. Getting extra income, inventive people could spend less time in non-creative jobs and more time inventing. Contributing their ideas and breakthroughs would accelerate techno-progress, letting us get more from less, cutting the cost of living. As prices deflate—just the opposite of ruinous inflation—physical capital would only need a steady income to profit.

Take capital in the sense of mounds of money—fiscal capital. Now, without a share of rent, people borrow more: mortgages, car loans, student loans, credit card debt, etc—and the middle class shrinks. Conversely, getting extra income, consumers could avoid taking on so much debt. Less demand leads lenders too lower their rates.

Businesses, too, could borrow less. Their customers would have some rent to spend and their happy workforce is more productive. Firms would have more working capital and a booming business. That scenario attracts investors—an infusion better than borrowing. Again, bankers would need to cheapen their loans as prosperity expands.

Regardless of who wins the election they have to raise taxes to pay for the damage.

Governments, too, could avoid taking on so much debt. When prospering, citizens would not need quite so much in the way of social programs. Politicians could cut them. Secure materially, people grow less warlike. Politicians could cut military budgets, too.

Presently, whenever a government creates bonds, the middleman selling them—bankers like Goldman Sachs—reap a tidy bit of income. The deeper governments go into debt, the richer such brokers become. For them, nothing’s wrong with that picture. However, as the Fed creates more money (for the bonds) unmatched by output, they create inflation—just the opposite of the deflation the Citizen Dividend creates.

None of the big borrowers—neither governments nor businesses nor consumers—would need to borrow so much. Minimizing debt in society translates to less inflation (distortion) of prices. With better information, people make better choices.

Society Shifting toward Sharing?

Given human nature and being used to the status quo, normalcy bias tells us this sharing of land value sounds too good to be true. Yet true it is.

Alaska pays all its residents some of the surplus it generates from the sales of its oil. The US talked about having Iraq do the same but other voices prevailed. Elsewhere in oil-rich countries, reformers call for adoption of the oil dividend.

Every man is guilty of all the good he did not do. —Voltaire, who also said the fruits of the earth belong to all of us.

Inspired by Alaska, nearby British Columbia pays residents a tax credit from its carbon tax.

Most places don’t have oil but every region has a sizable downtown, and that’s where the money is, even more so than buried under desert sands or Arctic tundra. That’s the goldmine: urban location values. Just ask FIRE.

Overcoming our widespread attachment to “property” value, some places do recover some socially-generated location value and disburse it to residents. Aspen CO recoups some land value to help residents (even doctors) afford housing. Singapore and Hong Kong tap land values for public revenue and keeping counterproductive taxes low, spending much to house the populace, with Singapore even paying a dividend.

Other places may catch up as popular longing for transformation reaches critical mass. Today’s advocates could work with powerful allies. The tech billionaires pushing Basic Income draw attention to the concept of an extra income for all in general. That paves the way for a “Citizen’s Dividend”, too. Further, the rich entrepreneurs who realize that Basic Income inflates prices may refine their proposal to base it on deflationary rent and win that version for all.

American society is approaching or is already at a tipping point where people question work and the workweek. Some young adults especially, many tens of thousands of dollars in debt for student loans, have their doubts about rote work. They envision an end to meaningless work, even to an end of the financial definition of useful contributions.

It’s usually they youth who make change. And if not this generation, then perhaps the next. Those children naturally share resources; they think it’s fair.

Adults, OTOH, think justice is impotent. What’s powerful to them are technology, government, and acts of God: earthquakes, hurricanes, and tsunamis. However, to the extent that injustice creates problems, then pro-justice could solve those problems.

Conversely, redirecting rent solves the problems that concentrating rent creates.

Given that rent impacts our well-being and shapes output’s prices, how we decide to distribute the surplus determines whether our economy will be effective and fair. It’s he who has the gold who makes the rules, and the gold actually is those streams of spending for nature and privilege. To where rent flows will make or break not just an economy but also an ecosystem, a democracy, an entire society.

If you think the gains from sharing surplus is impressive, just wait. Sharing rent amplifies the gains from sharing rent. With knowing the size of surplus now—and how bountiful our economy is and where it’s headed—we can extrapolate the size of surplus later, after we divvy it up equitably. And then glimpse our future, when we can lock the hood on the economy.

This article is Part 40 of a series highlighting the forthcoming book, “Bounty Hunter: a gadfly’s quest to know the worth of Earth,” by Jeffery J. Smith. To date, the experts have not risen to meet the challenge. Indeed, some have even stood in the way. Yet the payoff for knowing this datum is huge.

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JEFFERY J. SMITH published The Geonomist, which won a California GreenLight Award, has appeared in both the popular press (e.g.,TruthOut) and academic journals (e.g., USC's “Planning and Markets”), been interviewed on radio and TV, lobbied officials, testified before the Russian Duma, conducted research (e.g., for Portland's mass transit agency), and recruited activists and academics to Progress.org. A member of the International Society for Ecological Economics and of Mensa, he lives in Mexico. Jeffery formerly was Chief Editor at Progress.org.