The Citizen’s Dividend

The Citizen’s Dividend

The Association for Good Government

Importance & Relevance

• Prejudiced Distractions: Straw man arguments on encouraging indolence in a “welfare state” or simplistic focus on human greed for the causes of social ills

A Sense of Urgency• Systems that Feed Greed

& Idle Speculation: Rewards and incentives for economic rent-seeking have caused major social upheavals– Grabbing economic rent by

manipulating the social or political environment in which economic activities occur, rather than by adding value

Origins of the Idea

• Henry George: • A proposed state policy based upon the

principle that the natural world is the common property of all persons.

• It is proposed that all citizens receive regular payments from revenue raised by the state through leasing or selling natural resources for private use.

• The Crime of Poverty. Speech delivered in Opera House, Burlington, Iowa.April 1, 1885. (http://www.historyisaweapon.com/defcon1/georgecripov.html)

Origins of the Idea• Thomas Paine’s Agrarian Justice

and Thomas Spence’s “The Rights of Infants”

• "Men did not make the earth. It is the value of the improvements 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.“

• Right to subsistence & Poor Laws, opposed by scarcity phobes & advocates like Thomas Malthus

What Is a Citizen?• Fr. Citeain = inhabitant of a

town or city • A legally recognized subject or

national of a state or commonwealth, either native or naturalized

• Bearer of allegiance to defend and uphold a particular social, political, national or human community

• Possesses rights & obligations whom the community in which the citizen belongs & for whom the state is bound by duty to uphold

What Is a Dividend?• L. Dividendum = that which is to be divided• Payments to shareholders of a corporation or

cooperative for and pro-rated on their investments in the enterprise

• Basis is the profit, income net of expenses incurred & net surplus values generated by an economic endeavour

• An investor’s fair share

Citizen’s Dividend

• Payments made to citizens

• Division of economic value added in a society or community due to the citizen

• A citizen’s fair share of a common wealth

• A virtual guarantee of a minimum economic threshold of a free and dignified human existence compatible with the principles of a democracy.

Principles of the Citizen’s Dividend

• Requirement to the right to life, liberty & dignity of a human as a physical being– i.e. C = a + bY

• Economic justice for the unpaid but contributing citizen = not all economic values are monetized by national income accounting

• Inherent oppression of justifying a “desirable unemployment rate” to maintain a “economically competitive wage rate”

• Everyone receives it. No exceptions

Economic Rent = Dividendum

• In Land/ Ger. Lebensraum: the part of the produce that accrues to the owners of land (or other natural capabilities) by virtue of ownership" and as "the share of wealth given to landowners because they have an exclusive right to the use of those natural capabilities” (Ch. 11 Law of Rent, Progress and Poverty)

Effects of Enclosures

Economic Rent = Dividendum

• In cooperation: generates values not clearly attributable to individual efforts. It is a joint product, a net benefit beyond the net marginal product of each individual. The whole is greater than the sum of the parts. Cooperation generates “economic rent.” (Mary M. Cleveland. “Cooperation, Competition and Economic Rent: A Natural History Perspective”) http://www.mcleveland.org/working_papers/Cooperation_Competition_and_Economic_Rent.pdf

seasite.niu.edu

Simple Test: Compare

$99 in gold coin $100 Bill

Paradigm Shift 1: Fiscal Policy

Current• Taxation as the State’s Fair

Share of the Wages from Labour, Interest from Capital & Rent from Land & Consumption Spent From Already Taxed Incomes

• Fiscal Management = Revenue Maximization & Cost Minimizations

Intrusive Taxation

Rent

Wages

Interest

Consumption

Transactions

Government Revenue Takes

from EVERYONE’S

PORTION of the Economic PIe

Man Made Assets


Georgist• Fiscal policy as recovering

economic rent & returning to the natural bounties of land what is due the land & to the cooperation of the community what is due to the community

• Government Duty = Enhancing Human Freedom & Rights

Georgist-Cooperative

Rent

Wages

Interest

Recovers the Natural & Community Values to Increase the Common Wealth

Consumption

Transactions

Assets


Current• Collection of taxes, levies &

fees from points of transaction, compensation, consumption

• Periodic & complex monitoring & collection

• Enables & tolerates rent-seeking & speculative attacks on commodities & land itself

Complex

Rent

Wages

Interest

Consumption

Transactions

> 120 Taxes, duties levies &

fees + tax loopholes

Man Made Assets


SimpleGeorgist• State leaves incomes,

expenditures, assets & transactions alone

• Simple weekly or fortnightly collections of lease or municipal fee payments that matches the distribution of the citizen’s dividend

• Prefers & encourages productive use of land

Rent

Wages

Interest

Two sources of wealth - nature & social cooperation -- & not individual endeavour & their fruits

Consumption

Transactions

Assets

Paradigm Shift 2: Monetary Policy

• Central Monetary Authority & Primary Agent Risk: How do the people know that the banking & financial markets & the monetary authorities are working to the best interests of the general citizenry?

Savers BorrowersFinancial Markets

Politicians

Central Monetary Authority


• Democratic Monetary Authority & the People’s Sovereign Will: Currency’s value relies on the society’s cooperative confidence & the balance with the goods, services and assets that the currency is able to purchase or mobilise


Representative Government

Democratic Monetary Authority


Centralized Monetarism• Monetary expansion &

contraction is SOLELY through the banks

• Rediscounting window where banks are able to “sell their loans” for fresh cash to re-lend

• Quantitative easing through banks




Democratic Monetarism• Monetary management &

economic rent from cooperation is returned to the sovereign = people

• Rediscounting window with monetary authorities is closed

• Quantitative easing is done democratically


Fiscal Authority


Implementing the Fiscal System• Collect Site/Mineral Rent

for the Common Wealth Fund for Distribution & Government Investment

• Distribute citizen’s dividend equally & universally

• Finance civil works & basic services prioritising targets to sustain basic economic thresholds & raising economic rents

Rent

Wages

Interest

Rent Grabbers:

PrivatiseursExtractors

Speculators Consumption

Transactions

Assets

Common Fund

Citizens Dividend

Civil Works & Basic Services

Implementing the Fiscal System• Revenue Base:

individuals/ parties willingness to pay for site occupancy & extracted resources

• Dividend Basis: computed minimum economic threshold

• Deficit (if any) financing borrowed interest-free from monetary authorities to be repaid from higher rent revenues

Rent

Wages

Interest

Consumption

Transactions

Assets

Common Fund

Poverty Eliminated

Pump-Priming


Fiscal Policy Shift

Rent

Wages

Interest

Consumption

Transactions

Government Bureaucracies

Take from EVERYONE’S

PORTION of the Economic PIe

Rent

Wages

Interest

Recovers the Common Wealth to Act as Stewards who

Increase the Value of the Source of Common Wealth

Man Made Assets

Consumption

Transactions

Man Made Assets

Making the Monetary Policy Shift• Issuance of currency &

management of money supply

• Regulation of inflation, interest, foreign exchange rates

• Financial supervision• Computation by DMA of

the minimum economic threshold as the basis of citizen’s dividend

Making the Monetary Policy Shift• One-term democratic

election, not political appointment, among private citizens for monetary board

• Non-partisan but competency based

• Candidacy requirement: money, finance & banking seminars w/ performance disclosures

• No Conflict of Interest

Monetary Governance Shift


Politicians



Representative Government


Inflationary?

• Citizen’s Dividend $750/ fortnight

• Issued to 23 million Australians

• Money Base = $17.25 B• MB = $53B (2009)• Velocity = 26 wks/ year• Contribution to GDP =

$448.5 B (1/3)• 100% Recoverable http://upload.wikimedia.org/wikipedia/en/f/f2/Money_supply_of_Australia_1984-2007.jpg

It Is Non-Inflationary

• Money Supply & Velocity Closely Matching Essential Human Needs First

• Products and Services More Predictably Matched w/ Minimized Speculative Attacks

Economic Rent

Citizens Dividend

Poverty Elimination

Consumption + Savings

Spurs Capital Formation

• Savings Can Be Mobilized to Private Lending/Investment & Government Bonds

• Interest is not-taxed & investments will yield private profits &/or raise economic rents

Economic Rent

Common Wealth

Poverty Elimination


Increase Size of Pie

Production

Infrastructure & Basic Services

Discourages Wealth Without Work

• More Long-Term Views with Minimal Speculation

• May Be Further Discouraged Through Added Taxation

No Rent - Seeking

Increase Size of Pie

Value-Adding Activities

Common Wealth

Poverty Elimination


Infrastructure & Basic Services

What’s In It For You?• Not Forced to Work But

Not Prevented from Volunteering

• Freedom to work at what one is good at

• To Work, Earn Extra & Save to Further Improve Station in Life

• Financial markets conflicts of interest & primary agent risk is settled

What’s In It for Us?

• Can Spend, Save or Repay Debt & Improve Creditworthiness

• Can Invest in an Enterprise Individually or Collectively

• Entrepreneurial drive: value-added & innovation, not by “competitive labour cost” or “speculations”

More Inflationary & Volatile

• Privatized economic rents• Speculative attacks that

cause artificial shortages/slumps

• Economic displacements: foreclosures, higher rents, job losses from credit tightening

• The responsible aren’t accountable

http://thedepression.org.au/?p=5711

Rent Grabbing = Injustice

What’s Next?

Documents

The Citizen’s Dividend