Sharing the wealth

American Prospect, March 13, 2015

Why can’t we broadly distribute the wealth produced by America’s common resources?  Conservative Alaska manages to do it.

mid-17th century, Gerrard Winstanley led a series of protests in Eng­land against enclosure, the practice of landlords privatizing common lands.  Winstanley’s followers, the Diggers, published pamphlets and, more quixot­ic­ally, sang their hopes and fears.

A stanza from one of their songs:

Your houses they pull down, stand up now, stand up now

Your houses they pull down, stand up now.

Your houses they pull down to fright poor men in town,

But the gentry must come down and the poor shall wear the crown.

Stand up now, Diggers all.

Peter Barnes’ new book, With Liberty and Dividends for All, isn’t as poetic as a Digger tract; yet at its core, it is as relevant to the 21st century as Digger pamphlets were to the 17th.

What do we do, Barnes asks, when increasing numbers of Americans no longer have jobs that pay enough to generate a modicum of economic security, and when our poli­tical system seems too paralyzed to do much more than tinker on the margins?  What do we do when median wages are unlikely to rebound to pre-2008 levels, while exploitation of common goods by private companies continues to en­rich those already perched atop the economic ladder?

The answer: use the riches of the commons to provide decent living standards for all.  Barnes’s inspirations include Thomas Paine’s social insurance proposal of the 18th century, British economist Arthur Pigou’s pioneering work on taxing pollution in the early 20th century, and Francis Townsend’s idea in the 1920s for a universal pension.  His modern inspiration is Alaska’s Permanent Fund, which pays residents an annual dividend from royalties oil companies pay to operate in the state.  Out of these roots, he carefully develops the idea that profits extracted from the commons should be broadly shared.

Alaska Gov. Sean Parnell announces the 2010 Permanent Fund dividend amount

Alaska Gov. Sean Parnell announces the 2010 Permanent Fund dividend

Barnes, the co-founder of Working Assets, a socially responsible financial services group, and the author of five previous books, asks readers to visualize a series of “pipes,” through which these new revenue streams would flow.  These pipes, he calculates, could generate up to $1.5 trillion a year from “rent” paid by private companies for their use of common assets, to be recycled via dividends paid to all citizens and legal residents of the United States.

Barnes estimates that upwards of $300 billion a year could be generated by charg­ing polluters who dump carbon into our atmosphere.  Another $350 billion could be brought to the table through financial transaction fees.  Another $300 billion-plus could be raised by charging companies for intellectual property protec­tion which they currently get for free.  Additional moneys could come from charging for use of the electromagnetic spectrum.  Barnes also suggests that the Federal Reserve could create new money by injecting it directly into the economy on a per capita basis.

The proposed $1.5 trillion is roughly the amount that Social Security, Medicare, un­employment, and disability insurance already pay out annually.  It’s a huge sum, but Barnes aims to show that the idea is not just fiscally possible but politically feasible.

CONSIDER EVERY American to own one “share” in America, Barnes asks his read­ers.  And then give each shareholder an annual dividend.  On one level, it’s a fairly con­servative idea.  Barnes isn’t proposing to raise taxes to fund more govern­ment.  He is simply proposing new revenue streams to give everyone a social dividend that will off­set dwindling wage and salary income.  In conservative Alaska, where the Perma­nentFundgivesanequalshare of oil revenue to every man,woman and child, this idea is pheno­menally popular.  In some native Alaskan communities, the Perma­nent Fund pro­­vides a significant portion of all cash income.  As in Alaska, Barnes’s proposed revenue stream, once experienced, would be politically untouch­able.  Even former Governor Sarah Palin is a strong supporter.

It’s in the mechanism for raising revenue that this plan morphs from conservative to radical.  If Barnes has his way, companies long used to freeloading off the public would be faced with higher costs than they are used to.  Corporations that have effect­ively engaged in a modern-day enclosure movement, privatizing large parts of the environment and the economy, would be made to compensate the public.

On the flip side, individuals long used to working for wages that can’t cover all of their needs would find that their families receive many thousands of dollars a year to supple­ment paychecks of dwindling reliability.  Barnes projects that each Ameri­can could re­ceive up to $5,000 per year in dividends—or $20,000 for a family of four—that would catapult low-income families into something approximating econ­omic security.  Don’t think of it as a government handout, he argues, in a Digger-like turn; think of it as a citizenry reclaiming essentially looted public property.

A similar system has been proposed in Vermont.  Several tribal communities across the country have also embraced a form of collective ownership and wealth-sharing.  The principle has been institutionalized in California, via utility bill credits, as a part of the state’s effort to reduce greenhouse gas pollution.  Barnes reports on local ini­tiatives, such as in Sherman County, Oregon, where a booming wind industry has generated fees that the county uses to pay $590 annually to local households.

Overseas, a mixed analogy is sovereign wealth funds.  While some of these are run by corrupt regimes and benefit only a privileged few, elsewhere they are used to shore up vital public services.  According to Barnes, Norway’s sovereign wealth fund has assets of roughly $1 million per Norwe­gian.  It’s such a large amount that the state has shied away from cash hand­outs, insteadinvesting heavilyinedu­ca­tion, job training, health-care services and the like.

The social dividend becomes, in Barnes’s telling, both a stunningly effective tool for raising Americans’ incomes and reining in anti-environmental business practices.  “Linking nature’s well-being to that of our middle class is the key to har­monizing capitalism with nature,” he writes.  “If that connection isn’t made, nature’s rent can’t rise very much, and markets will continue to overuse her.”

With Liberty and Dividends for All does a lot in relatively little space.  Over the next few years, the social dividend concept will enter the broader conversation about how to structure a new economy that reduces inequality and protects nature better than our current model.  If the Occupy Movement put the spotlight on economic in­equality, Barnes has now defined a particularly creative solution.  It deserves to be taken very seriously.