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IEET > Rights > Economic > Former > Edward Miller

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The Basic Income Is Dead


Edward Miller
By Edward Miller
Embrace Unity

Posted: Mar 27, 2012

Technological progress is accelerating faster than ever before. Are robots going to “take our jobs?” Do we require a Basic Income to solve this? Let’s examine some basic principles.

Wages are determined by the margin of production. What this means is that a laborer’s bargaining power in the market is determined by their next best alternative to wage labor. Typically, that alternative, where available, has been homesteading.

That was the historic difference between the “New World” and the “Old World.” The New World was a land of opportunity because it had a lot of high quality land available for the taking. Not just for elites, but for any citizen who was willing and able.

In fact, in the United States the federal government didn’t require any income taxes for the first hundred years. Government was funded largely by the sale of federal lands (as well as tariffs). The rate of growth was astounding. Like China today, the growth rates were regularly reaching 10% per year.

As the land became increasingly homesteaded and auctioned off, the margin of production was reduced. By this I mean the quality of freely available land was diminished, and this reduced the bargaining power of labor.

Land is required for all production and even life itself. Without access to it, we die. Simple as that. Yet, there is no principle of justice by which one can legitimately claim sovereignty over locations on the Earth. It can and is accomplished with the sword or the barrel of a gun, but the principles of classic liberalism provide no basis for any exclusive claims over our common inheritance of nature.

“The land is the original inheritance of mankind. The usual, and by far the best argument for its appropriation by individuals is that private ownership gives the strongest motive for making the soil yield the greatest possible produce. But this argument is only valid for leaving to the owner the full enjoyment of whatever value he adds to the land by his own exertions and expenditure.” – John Stuart Mill

With the exception of Malthus, all the classical liberals recognized that land is there for everyone. With the exception of Malthus, the classicals saw the potential for an increasing pie of wealth to be enjoyed by all. The aristocratic Malthus, by contrast, was fixated on natural limits and overpopulation.

The idea of Technological Unemployment is a Malthusian concept (via Keynes) which teaches us to focus on scarcities, even though the scarcities are entirely artificial. Malthus didn’t believe we had a right to exist on the planet. He didn’t see people in their proper role as wealth-creators, but instead as resource consumers. And if the current owners of land decided to “make room” for more, that would just mean less food to go around.

All this raises an obvious question. What happens when there is no free land? The answer is that landless laborers become entirely dependent upon landowners simply for their right to exist on the surface of the planet. You get a scenario that looks very much like a Malthusian Trap, but in fact has nothing to do with natural scarcity.

When the free land is gone, and the bargaining power that comes with it, wages tend towards subsistence. The only reason subsistence wages are paid at all is because it would be unprofitable for the landlords to let their serfs starve to death. When they’re dead they stop paying rent. Landlessness is the essence of serfdom, and although the aesthetic trappings of feudalism are gone, serfdom has never left us.

The last chapters of Henry George’s book Protection or Free Trade were devoted to this topic, especially the one titled “The Robber Who Takes All That Is Left.” Here’s an excerpt:

“Labor may be likened to a man who as he carries home his earnings is waylaid by a series of robbers. One demands this much, and another that much, but last of all stands one who demands all that is left, save just enough to enable the victim to maintain life and come forth next day to work. So long as this last robber remains, what will it benefit such a man to drive off any or all of the other robbers?” – Henry George, Protection or Free Trade

Because of this, labor is placed into an artificial race to the bottom in wages. There is always some level of wages at which it is profitable to trade capital for labor. Furthermore, even if technology somehow progressed to a stage where robots really were better at every single task than humans, it would still make sense to employ humans because of the Law of Comparative Advantage.

If you want a vision of the future, imagine a child grinding away in a sweatshop… forever. That is, unless we awaken to the realities I just described.

The secret to raising the margin of production without the chaos of land redistribution or the economic damage of income taxation is to use Land Value Taxation.

“Men did not make the earth… it is the value of the improvement only, and not the earth itself, that is individual property. Every proprietor owes to the community a ground rent for the land which he holds.” – Thomas Paine, Agrarian Justice

One way to share the fruits of that rental value of the Commons is to simply distribute it as an equal Citizen’s Dividend.

How is this different than the Basic Income? The Basic Income is not tied to any funding mechanism, and as such would almost assuredly come out of taxes on labor, sales, or other productive activities. Thus, it leaves untouched the Robber Who Takes All That Is Left.

How does giving money help a serf whose existence is utterly dependent upon a landlord? The rents are not based on cost of production… because land is not produced! The landlord will just increase the rent by however much the Basic Income is, because he has all the bargaining power. It is like trying to fill a bucket with a hole in the bottom.

We can plug up that hole by taxing the rental value of land to the fullest extent possible, and provide not just a “basic” income, but a dividend that sustainably grows over time with the progress of civilization. The value of our birthright to the Earth increases with every passing year. Why limit ourselves to just a basic income?

The Basic Income is Dead. Long Live the Citizen’s Dividend!

 

 


IMAGE #1: “Sharing” by Toban Black


Edward Miller, a former intern of the IEET, is the Chief Information Officer of the Network for Open Scientific Innovation. He is a passionate advocate of Open Source development models. His blog, EmbraceUnity, deals with democracy, humanism, and sustainable development.
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COMMENTS


There are a number of things I find questionable in this article.

Firstly I question the idea that Malthus “didn’t believe we had a right to exist on this plan”, or more precisely I question the alleged significance of this idea. If Malthus believed that we don’t have some kind of an absolute, God-given right to exist, then I agree with him. What we have are choices and consequences. “Rights” are concepts that we have invented to regulate the way we interact with each other. We exist now, but it may be that nature has other plans for the future. Malthus perceived this, and while he may have been unjustifiably fatalistic in seeing our eventual demise as somehow inevitable, we ignore his warnings at our peril.

Secondly, my negotiating position as a “labourer” - that is to say as an economic operator capable of providing services in return for money - is not determined by my ability to grow my own crops. It is determined by supply and demand. Obviously I need someone to grow the crops, and ship and sell the produce at a price I can afford, but as long as such activity is not captured by monopolists the laws of supply and demand apply there as well. I don’t need to own land in order to thrive. I don’t even need some kind of public stake in land per se. I need to be able and willing to provide a service that people are willing to buy at an attractive price, and I need the global geopolitical, economical and ecological system to function in such a way that my essential needs can be met at a price I can afford.

I agree that we have not yet entirely thrown off the yoke of serfdom, and this is of course especially true in the developing world. But this is not specifically because of land ownership. It is because too much power is still concentrated in the hands of an elite. Like information (see the discussion on Giulio’s Big Brother piece), land ownership is one, but only one, of the assets that are relevant in determining the distribution of power.





> Firstly I question the idea that Malthus “didn’t believe we had a right to exist on this planet”

Malthus stated:

> “A man who is born into a world already possessed - if he cannot get subsistence from his parents on whom he has a just demand, and if the society do not want his labour, has no claim of right to the smallest portion of food.”

> “At nature’s mighty feast there is no vacant cover for him. She tells him to be gone, and will quickly execute her own orders, if he does not work upon the compassion of some of her guests…”


> If Malthus believed that we don’t have some kind of an absolute, God-given right to exist, then I agree with him. What we have are choices and consequences. “Rights” are concepts that we have invented to regulate the way we interact with each other.

I agree completely and I think that natural rights are confused philosophy.

> Secondly, my negotiating position as a “labourer” - that is to say as an economic operator capable of providing services in return for money - is not determined by my ability to grow my own crops. It is determined by supply and demand.

Your ability to grow your own crops reduces the supply of laborers to employers because a certain amount of people will choose to live that lifestyle. From the other end, it reduces the demand for an other-provided job. Both of these affect the market prices labor can demand.

> I don’t need to own land in order to thrive.

True. However, you need access to land and some semblance of security of improvements to thrive.

> I need to be able and willing to provide a service that people are willing to buy at an attractive price

That is one way to thrive, but that means you must have a right to a job. If others won’t offer you a job, even if it’s not your fault, then you cannot thrive in the current paradigm. It’s possible to imagine a world where very little human labor is required. In such an environment, laborers would have very little bargaining power.

> I agree that we have not yet entirely thrown off the yoke of serfdom, and this is of course especially true in the developing world. But this is not specifically because of land ownership. It is because too much power is still concentrated in the hands of an elite.

Land ownership, including all forms of economic land such as control of the EM spectrum, mineral and natural resource rights, etc. is one of the two primary pillars of power concentration - the other is control of information, as you point out.





Edward,

You present an argument on how to structure an economy around the notion of very little human labor being required due to the use of technology to perform most labor. I agree with your basic argument that all humans share in a common ownership of the land, less improvements, and therefore should receive a dividend, or some value from the use of that land. There have been many suggestions from notable authors on how best to solve this problem; most involve some form of taxation on the owners of the means of production, and some form of welfare paid to the bulk of humanity that can no longer find employment. Among the suggestions that attempt to maintain ownership of capital, and a monetary economy yours is the best I have seen, however I believe it still shares the same fatal flaw as the others.

The ability to control the government will lie with those that control the wealth. That is the current situation we have in most nations today, including the U.S. As long as the wealthy craft our laws and control government, they will establish an environment that favors their position over all others. In their eyes, any person that does not contribute to their power/wealth is a drag on that power/wealth. There will be no drive or motive to sustain the lives of anyone that is a drag. They will corrupt any attempts of an egalitarian society by altering the rules in society to feed their hunger for more power. As long as society uses or creates a mechanism to accumulate unbound wealth and power, the ultimate outcome will always be the same, with all wealth and power in the hands of a few. We cannot arrange our complex society in a winner take all fashion.  This was the basic argument for higher tax rates in the past in the 90+% range for extreme wealth; to prevent or put a cap on a single entity getting too big and possessing the power to corrupt the system. Higher tax rates also forced companies to reinvest in their profits in growth rather than excessive payouts to top executives that we see today; the opposite of what the conservatives would like us to believe.

My recommendation, though radical, would be to solve the problem you first posed by eliminating the use of money in society. Shared ownership by all humanity would not only be in the land, but the resources, means of production, and any products of that production. If technology is capable of creating a true abundance of material wealth without the need for labor, the only viable solution is to share that abundance in an equitable way with all of humanity, and to place a high priority on the preservation of our environment ability to sustain life. No individuals or groups should hold a special status that entitles them to more than the others. The details of how such a society might be structured are still being worked out, and there are still more questions than answers, but I have been attempting to do just that. You can read some of what I have written on the subject here in a three part series:

http://kellybalthrop.wordpress.com/2012/01/22/change-is-the-future-part-i/





We do not need land to thrive. We need land to live. Our shelters are on land (for the most part… when that changes, only the term needs to change, not the argument). If you have no place to live, how can you thrive? “The rent is too damn high.” Why? Because landowners have a government-given monopoly over the land, whose value comes from the services government provides using the tax dollars of many of the same laborers who pay the rent to live on that land!

Kelly, I’d prefer to own my own body and not be told by some dictator/oligarchy what I can and cannot do, as long as those also affected by my actions agree that what I’m doing is fair. The problem right now is that we only have regulation from the oligarchy rather than seeking agreement from our neighbors.

If we have abundance, population will grow to the point where there is no longer abundance, so there is no magical solution of simply “sharing”. “Sharing” everything simply rewards procreation rather than labor to provide goods and services to the expanding community.

Progressive income taxes do not tax wealth, they tax those who would be wealthy, giving the landed gentry a high barrier to entry, solidifying their position as our feudal overlords. Those who are wealthy do not need any income. They can simply mortgage their properties, since those will forever go up in value, with depreciation of improvements being counterbalanced by appreciation of land. So the solution is to hoard land and keep it out of the hands of the working class while taking out mortgages to pay for daily expenses and collecting minimal income, which can be offset by expenses that can be claimed for maintaining the property in addition to the interest on the mortgages.





@jdkeith
Can we really say that land ownership (in the extended sense you define it) and information are “the two primary pillars of power concentration”? In our current (and admittedly almost certainly insustainable) global system money surely plays a role; then there is firepower (weapons), authority (e.g. Legislative and executive state power), charisma (admittedly a bit vague, but think how much more you can get done when you have a celeb on your case), and probably plenty more that doesn’t immediately spring to mind.





@rjain We need land to live, sure. We just don’t need to own it.





@ rjain

“If we have abundance, population will grow to the point where there is no longer abundance, so there is no magical solution of simply “sharing”. “Sharing” everything simply rewards procreation rather than labor to provide goods and services to the expanding community.”

Evidence shows this is not the case, as more affluent nations have lowering birth rates, which are still decreasing, this perception may be offset by immigration and multiculturalism. Yet even migrants from high birth rate cultures to affluent countries quickly become aware that having more babies is not claim to success or even happiness and well being and quality of life.

So your point that abundance for all will be overrun/matched by humans having more babies, (to overcome boredom perhaps), is false.

Human labour for wage is servitude, no matter how we paint it. Therefore through technology, automation and robots, we may envision a “Star Trek” styled, (non-dystopian), future governed by a technocracy and not crony politicians and bureaucracies. A future of abundance where human endeavour and enterprise is promoted, creativity and individualism is valued, and peace and security is maintained as there would be little hardship, less suffering, and hopefully an end to anger, jealousy, envy and fear - and where human civilization as a whole will be uplifted?

And although the Earth’s resources may yet still be limited, (even with advanced technology efficiently managing usage and wastage), remember there is still the solar system and beyond, where enough resources reside for colonisation of the entire galaxy?

Eventually, and in the future, we will not need use of monies or capital at all?


Now, how we humans get from A, (the status quo, and a defunct socioeconomic capitalist model supported by politicians and cronyism for the benefit of the few), - to B, (a technocracy and post-scarcity society/civilization where technology serves humanity, and human labour is not enslaved to it) - is the big question?

What we need are many ideas, including the philosophy of LVT, to develop working models and hybrid socioeconomic models to pursue a future that does not hold back the promises of technological endeavour and enterprise?


Visualizing Global Population Growth - Hans Rosling

http://ieet.org/index.php/IEET/more/rosling20100904





@CygnusX1, nicely said.

@rjain, where did I mention that you would not own your own body; that is just weird. AS CygnusX1 said, having a computer control the distribution of resources does not make it your master any more that the thermostat in your home is your master. Does the payroll system your employer use control your life? Does it own your body?  I seriously doubt it. Does the fact that software that permits you to order things online control your life? That’s all we are talking about here, except on a grander scale. When you need something, a computer will get it for you. It will make sure that the manufacturing process has the resource needed to make that item, and probably arrange to have it delivered.

The simple fact is that technology is creating automation that replaces workers. In the past we have had new industries expanding that these displaced workers to move to. However now, that technology is automating jobs in all sectors, even white-collar jobs. The number of attorneys in law school has dropped 25% in the last 5 years because software is automating a lot of the research they used to spend time doing, so an attorney is freed up to take more cases, reducing the demand for new attorneys. The same thing is happening all over. Do you shop at a store that has started replacing the checkout clerk with an automated kiosk? When is the last time you talked to a live bank teller? When you call a company, how often do you get a real person on the phone? The service industry is being slammed right now as manufacturing was 30 years ago. Hospitals are starting to use robots to deliver supplies around the facility; work that used to be done by nurses.

Our economy is heavily reliant on people working and consuming goods. If people cannot work, then they cannot consume, and the system fails. That does not mean that we have to take the Luddite attitude that technology is bad. However, it does mean that we need a different socio-economic system that is compatible with the reality that is coming.

The current structure that permits a few to receive all the rewards from automation and increased productivity is resulting in those few getting extremely wealthy while the working class is becoming poorer. That finite process cannot continue much longer.

Now, I also believe we will reach a point that we merge with our technology and become post-human eventually, but the systemic failure of our economic system will occur first.





@Peter, you are correct - it was a pre-coffee ill-thought out response.

The money and tax systems are surely also huge pillars of control. Non-government individuals still have more firepower overall and the military is comprised of people; weapons don’t shoot themselves (for the most part). Other mechanisms of control, most primarily money and fostering certain modes of thought / keeping people distracted and infighting probably end up being the most effective means of control.

@CygnusX1, all systems fail to scale to infinity. I happen to believe that sharing the earth works better than first come first serve. Regardless, I agree with you and the facts appear to be on your side regarding people with more life options having fewer children.

@Kelly, I agree with you regarding technological unemployment. The economists in the crowd howl when I mention it and people love to point out how it’s been avoided every time in the past. However, unless there’s some fundamental reason why it’s especially unlikely to come to fruition, that’s merely the gambler’s fallacy. Martin Ford’s The Lights in the Tunnel is a decent read regarding technological unemployment and even if I disagree with some of his proposals I don’t disagree with his actual points.

I see an LVT coupled with a dividend to be a way to cross the bridge from the broken system that exists today to something like The Australia Project mentioned in Marshall Brain’s short story Manna. The market system has a lot to offer and throwing it out entirely, as it appears groups like The Venus Project want to do, is a mistake in my opinion.





@jdkeith, yes I agree Fords book was a good read, though I disagree with setting up a welfare state with high taxes. I think that would be a return to Feudalism. I enjoyed Mana also. I’m a volunteer on the Venus Project, and the only difference betwen that and The Australia Project is TAP uses a credit system to allocate resources where TVP does not. Other than that the two concepts are identical.





A Better System of Economics - Mohamad Tarifi

“‘Panoply’ provides equal economic opportunity and basic income security, encourages community building and long term thinking, resolves the tragedy of the commons in a mature way, and is resilient to future changes in automation and robotics.”

“Money is traditionally perceived as a medium for the exchange of human effort. With the increased automation of labor, as we automate intelligence, the cost of effort is decreasing for the majority of the population. As the automation process continues its exponential increase, the rationale behind the concept of labor-based money is breaking down. With the breakdown of our traditional monetary thinking, we need a major shift in our collective consciousness as a species, to redefine the concept and meaning of work, and to center it around human values.”

read the rest here..

http://ieet.org/index.php/IEET/more/4884





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