Who is more Fiscally Responsible – Citizens or Elected Politicians?

In the blog-series ‘Democratization – Put your Money where your Mouth is with LIG’ I briefly discussed an argument against direct democracy (placing authority directly in the hands of citizens rather than elected politicians) that dates from the time of Plato – the argument being that citizens would make ‘bad decisions’ and don’t possess the necessary intelligence, knowledge and skills required in political decision-making.

I came across the following information when browsing through the comments on a blog regarding the implementation of a Basic Income in Switzerland:

"Switzerland is an interesting laboratory for direct democracy.

I dimly recall a very interesting study by (I believe) University of Zurich (maybe 20 years old).

They analyzed for each of the 26 Swiss cantons (=states): (1) influence of direct democracy on canton politics (which varies by canton. Some cantons don’t have all that much direct democracy. Others such as Appenzell-Innerrhoden don’t even have a parliament because EVERY single law is passed directly by the people). (2) fiscal situation of the state.

The highly fascinating result was this:

the stronger the people can directly influence public spending and taxes, the healthier the canton’s budgets (!!). The people tended NOT to spend more than they had. Rather, the professional politicians (or the canton’s that gave elected officials greater power) tended to be more fiscally irresponsible."

Naturally, my interest was peaked and I went to search for studies about this topic. And, yes, you guessed it – I found the material supporting these claims. I think we can all agree that when states spend beyond their means – we have a case of bad political decision-making. According to the logic of the argument that it would be dangerous to have citizens directly participate in politics, we would expect citizens’ involvement within budgeting decisions to exacerbate fiscal irresponsibility. And yet – here we have an example that not only shows that citizens wouldn’t make matters worse – but that citizens would do better than elected politicians when it comes to balancing the budget.

If at any point it is relevant to ask the citizens for their direct input on a particular topic to increase democratic practices, it would be: how should we spend public funds? Voting a person into office is one thing – but it is the budget that really determines political policy for the coming year. Mandatory budget referendums should be a minimum requirement for any regime to qualify as a democracy, really. When the extent of your political participation is to vote someone into office – then all you have is ‘hope’ that the people in power will use public funds responsibly and for the purposes that you expect them to. Mandatory budget referendums would create a point of direct accountability towards the citizenry that once politicians are in power, they are indeed acting out their mandate on behalf of the people. It would immediately reduce corruption and prevent budgetary deficiencies down the line, where one is suddenly told that the retirement age has to increase and austerity measures are being implemented because there are insufficient public funds and one only then starts wondering ‘well, where did all the money go?’. 

The fiscal problems most countries are experiencing today could have been prevented. It is now a time of walking through consequence that has already been created and yes, it is worthwhile looking for solutions to address current problems head-on – but it is most important to prevent the same scenario from taking place again. In Dutch there is a saying ‘a donkey doesn’t bump his head on the same rock twice’ – seems like humanity can learn a thing or two from donkeys since we have this tendency of not even looking at what it is we bumped our heads on and why – but simply try to put some ice on the wound. However much we may be upset with governments and politicians – we are the ones who gave them the power to do what they did. The consequence that is here is as much ours as theirs – and rightfully so. If anything – let us at least learn from our mistakes – otherwise all the troubles we’re going through will really be for naught. Let us at least enshrine solutions within the constitution and develop new political practices that we can pass on to the next generations, because surely, part of the consequence we are experiencing is due to continuing traditions from previous generations, but that doesn't prevent us from rising to the occasion and creating new traditions to shape a better future.

Living Income Guaranteed and Taxation - From Redistribution to Contribution

‘The re-set’ is a UK-based movement consisting of several proposals to effect ‘a constitutional re-set to re-store fair principles, accountability, community led governance and ethics. Ensuring peoplecare, earthcare and fairshare for the benefit of all’. You can  check out their website here: www.thereset.org. An overview of the proposals is presented here: http://www.thereset.org/proposals.php.

In this blog the focus is the Proposal on the abolition of Taxes. The re-set proposes to abolish the current tax system and replace it with ‘TEAL’ – Total Economic Activity Levy:

“TEAL is very much a ‘pay as you go’ tax. Every time money is withdrawn or paid into a bank account, a tiny percentage of money from each transaction will speedily find its way into the treasury. Even people without bank accounts will contribute, because whenever a pack of cigarettes or a loaf of bread is purchased, the seller (say a shop) will be paid, and when the shop pays into his bank TEAL will be collected, and if you sell your labour (i.e. you have a job) TEAL will be paid by your employer and collected by your bank.”

This principle is the same one we propose under the Living Income Guaranteed proposal. Within such a system, the focus changes from ‘redistribution’ to plain ‘contribution’.  It’s not about trying to equalize incomes and moving it from the rich to the poor – but a matter of: if you make more use of the economic system, you proportionally contribute more to sustain it. One likes to believe that one’s wealth is derived from merit alone – but it simply isn’t. There is an entire economic system in place that enables a successful person to be successful. There are those who have gone before you, who have shared their know-how with you, there are those who have an income to buy your goods or services, an income they earned through participation in the economic system, there is physical infrastructure like roads and railway systems that enable all economic activity. If the economic system was self-sustaining and never required any financial input in order to maintain it or correct its inherent weaknesses, then we could say the economic system is a free one. Obviously, that is not the case. The ‘pay as you go’ tax is therefore a reasonable method of collecting the funds to be re-invested within the economic system that each one depends on.

If a basic income or living income is provided through non-tax funding – then the ‘pay as you go’ tax or ‘TEAL’ should be sufficient to mobilize the funds needed for other government expenditures, which we suggest would be quite limited if the economy in itself is largely corrected and empowered through the integration of the Living Income or Basic Income – then other taxes can indeed be abolished.

Day 263: Campus Education vs. E-learning - My Verdict

With a rising amount of online tertiary courses being developed and made available, a debate has started about whether online education can guarantee the same quality tertiary education that a student would receive when attending a campus college. (See: http://www.pbs.org/newshour/bb/can-online-courses-replace-campus-education/)

Anant Agarwal - the CEO of edX, a joint partnership between MIT and Harvard University that offers free online learning - sees the benefits of recording lectures and then making them available to a large amount of students. He says: "Of 155,000 students that took the course, about 5 percent passed the course and earned a certificate. So that was about 7,200. That is a big number. If I were to teach on campus twice a year, both in the spring and fall semesters, I would have to teach for about 40 years before I could teach 7,200 students."

On the other side of the table,  you have arguments such as the one formulated by Shyam Sharma from Stony Brook University: "In our discipline, the objective of students learning is not to basically learn the content of the discipline, but instead to use the content as a context to engage in intellectual discussions, to develop their positions, intellectual positions, to debate and argue and develop critical thinking skills. And that oftentimes requires the expertise and guidance and mentoring and close connection, one-on-one support to the students."

Having had the 'pleasure' of receiving tertiary education in a classroom on a campus as well as through online courses, with some subjects being the same, let me share my perspective.

Comparing the content-material of the subjects I took both at the campus college and through the online course - I can say it was largely the same. So, from that perspective, the 'quality' of the online course was no different than that of the campus college. Differences were mainly due to the fact that I attended the campus college in Europe and the online education in Africa, so case-studies and examples were local and therefore quite different. Considering that the core content was the same, which did I prefer? If I have to choose between sitting in a classroom with hundreds of other students where the professor is standing at the bottom with a microphone, or comfortably sitting at home and going through the material at my own pace, I have to say the latter is my preference. Video lectures can be paused and re-winded so a student can make sure he/she hears all the information. This luxury doesn't exist in a classroom, where one can get distracted by other students, or simply miss information as one is splitting one's concentration between hearing what the professor is sharing and writing it down simultaneously.

To attend classes I had to either travel from my home town to the campus each day, spending time and money to be able to sit in the class room, where most of the time I had to hear the professor repeat what was already explained in the textbooks - or I needed to rent a room on campus/close to the campus to not waste the time traveling between home and campus - but this obviously came at the extra cost of paying rent. It was the fact that 'the professor might share information that is not already covered in my books' that required me to attend, in order to make sure I had all the material necessary to prepare myself for assignments and exams. I didn't find that for the subjects that I took in both scenarios - which were largely theoretical - that I gained anything from sitting in the class room - the amount of students that attended the course were plentiful, not really allowing for any one-on-one support in any case. For some subjects I was sitting in a room with a thousand other students. Rather then, make one lecture that can be used by many universities - and professors can add their own insights, examples, exercises and notes to provide their personal touch. This was exactly the format that was used in my online education.

Now, there were subjects I attended on the campus college that were very different in nature from the ones I attended online, where the focus of the subjects was to develop practical skills such as working in teams, making presentations, going out in the field, interviewing people, etc. For such subjects where you require to produce and present a project through team-work, there are benefits to physically sitting in the same room and having a personal relationship with your co-students. It is in these instances that I would say it is worthwhile having an actual campus with professors assisting students to develop these skills.

When it comes to 'developing critical thinking skills' as an argument for class-attendance - I have to disagree. Critical thinking should be a focus in primary and secondary education. If a person is supported from an early age to develop a clear vocabulary and to develop common sense, then whether one is at home going through material or sitting in a class room - one can view the material in a critical manner either way. Online platforms such as forums can be utilized for students to exchange views on subject material as well. I personally engaged critically with all the material I was presented with throughout my online education, of which the Economist's Journey to Life blog is a clear testimony.

So, I believe that campus college education has been romanticized and been given more credit than it actually deserves. A large part of college and university courses can be provided online. This would reduce the cost of the education and make it accessible to a larger audience. Why have professors - experts in a certain field - spend their time every year giving the same lectures over and over again - when they could record it once and then make it available to students to watch at home? Surely, humanity would benefit if professors were able to dedicate a larger portion of their time on research and developing solutions to current problems? Reducing the cost of tertiary education, more students could afford it and avoid the trap of student loan debts. Some degrees can then be followed online entirely, whereas for others a mix would be optimal, to have some subjects/courses online and have classes in education centers/on campuses for practical skill development.

Day 262: Democratization - Put your Money where your Mouth is with LIG - Pt3

This blog-post is a continuation of the blogs

Day 260: Democratization - Put your Money where your Mouth is with LIG - Pt1
Day 261: Democratization - Put your Money where your Mouth is with LIG - Pt2

where we've been investigating what exactly stands in our way from living the principle of Democracy in its true form - with government of the people, by the people and for the people. Herein we identified two crucial factors that require to be addressed in order to bridge the gap between the people and government, being:

1. Education
2. Ownership of Economic Influence

The point of Education was discussed in the previous blog, where it became clear that for individuals to develop political capital in order to become effective participants in direct democratic decision making, we require to invest in the people through a Living Income Guaranteed.

Within this blog we look at the second problem:

Ownership of Economic Influence

In the first part of this blog-series we stated that:

"Instead of politics being a one-party system - in the sense that only one party is involved: the people - we are working with a three-party system - there is the people, there is the elected government officials and there is those with the financial means that participate in rent-seeking to influence policy to their own advantage, regardless of public opinion."

Most are aware of the role of lobbyists in politics - but here some points of clarification:

"A lobbyist is an activist who seeks to persuade members of the government (like members of Congress) to enact legislation that would benefit their group."

"The highest paid lobbyists know that they can charge top dollar for their services because they can offer their clients access and influence at the highest levels of government. Not surprisingly, these firms' client lists are a "Who's Who" of the corporate scene; hiring these firms is simply beyond the reach of most organizations and special interests."

Those who can afford to hire the best lobbyists are able to affect change at the highest levels of government. This shows a simple equation: more economic power equals more political power. One can ask if lobbying shouldn't be made illegal - it definitely sounds fishy - but it is justified under the principle that anyone can make the government aware of their interests and ask to consider them in policy making. Some people are obviously better at this than others - and as with anything in a capitalist society - if there is a demand for services of a particular skill, the private sector will start to supply it according to the rules of the private sector. So - it seems that we will just have to compromise on the original principle - which is not meant to discriminate against who is able to/can afford to lobby the government - if we at the same time wish to retain a capitalistic free market system.

However, the Living Income Guaranteed proposal implicitly formulates a solution to this conundrum. The proposal suggests that every citizen of a country become shareholder of human rights companies (such as water provision, electricity, telecommunications, media) and natural resource companies (eg. mining companies) in their country, under the principle that such points should never be owned by  private persons as they should operate in the benefit of the whole of society. Such an adjustment would change the economic landscape from a political perspective quite drastically - whereas previously all huge corporations that can affect change through lobbying at the highest levels were owned by the elite in society - many big corporations would now be owned by the people and would become a source of effective economic influence and a vehicle for political participation on a level that simply did not exist before.

For a political dispensation to become democratically correct - we require to not only level the political but also the economic playing field because policy is determined as much by government as by the economic elite. So for those who have given up on democracy in the true meaning of the word: a Living Income Guaranteed would put an end to the compromised political systems of representation we have today.

There is one more objection to direct democracy that is still being raised - though in today's world it is so laughable I almost forgot to mention it. But here it is anyways: 'Direct democracy is not possible because it would just be too expensive and too difficult to get all the citizens in one place to rule the country.' In a world with the technology we have today - it is silly to still think of 'coming together' as a physical event. Facebook proves that it is possible to daily vote on issues - we're already doing it by the simple click of the mouse: 'Like'. So all that requires to be done is use the technology that has been developed and create online platforms for political participation.

So - there we have it: Education, Ownership of Economic Influence and Technology - all three points no longer an obstacle with the implementation of a Living Income Guaranteed. Will we come up with more excuses - or will we realize that for the first time in the history of man we have the privilege of living in the day and age that the means and ability for implementing and practicing real democracy are available? Since everyone seems to agree that democracy is the best form of government, we at the Equal Life Foundation say: Put your money where your mouth is! It is not enough to call oneself a democrat or to support democracy 'in principle' - it requires investment in the people and an adjustment in ownership of economic influence - it requires us to ACT. Money makes the world go 'round and politics is herein no exception.

Day 261: Democratization - Put your Money where your Mouth is with LIG - Pt2

I ended off the previous blog with the following:

"Within allowing such a representative system of politics, we have created a 'gap' between demos and kratia - between the people and the government - where we can in fact no longer say that it is the people who are ruling, as it is the elected government officials in the executive and legislative branches of government that are ruling - and this excludes most citizens. This gap has allowed for secrecy and rent-seeking. Instead of politics being a one-party system - in the sense that only one party is involved: the people - we are working with a three-party system - there is the people, there is the elected government officials and there is those with the financial means that participate in rent-seeking to influence policy to their own advantage, regardless of public opinion.

In order to bridge the gap between the people and the government, two specific problems require to be addressed:

1. Education
2. Ownership of economic influence"

Let's start with discussing the first problem.

Education

In principle, everyone seems to agree that the people should rule together - there is an undeniable sense of moral rightness within this - society should together lay down the laws by which it will organize itself and together give direction to their shared environment through public policy - simply because - we are all, individually yet together, a part of a certain society and there is no acceptable justification to exclude any free citizen from this process. In practice, however, Plato's argument still holds strong. "The people are too easily swayed by emotion"; "the people cannot see the bigger picture"; "the people don't have sufficient knowledge and understanding of politics, economics, ecology, law, you name it". There is of course truth in this argument - however, it is not one that cannot be overcome.

Plato lived in the 4th and 5th century BC - so that's about 25 centuries ago - and still, we have not seriously attempted to overcome this problem in order to uplift our political system to the principle it morally requires to ascribe to. What have we been doing for these 25 centuries? Is it so hard to find a way to empower individuals so that they may be capable of critical thinking that in the last 25 centuries we didn't manage to come up with one? Or is it just that we haven't actually tried and rather gave up before having started because it is more convenient that way, at least for those individuals that currently do have the capacity of influencing decision making.

So - let's create a profile of the 'type' of citizen that would have the intellectual capacity of participating in political life.

We can imagine such a person:
- Having a rich vocabulary that enables him/her to participate in discussions in the political arena; big and difficult words are not seen as big and difficult for this person, they are words with a meaning
- Being relatively emotionally stable in that emotions/feelings do not play a decisive role in this person's decision making process
- Being interested in and informed in terms of current affairs

The points listed above refer to a person having political capital. So - what makes one person have political capital and another person not? How can such capital be developed and how can we facilitate the development of political capital within individuals in order to eradicate the education-problem standing in the way of manifesting a real democracy?

Which is one of the main variables that determines the richness of one's vocabulary?

SES.

'SES' is something you'll often see in sociological and psychological scientific research, because it determines almost Everything about a person's development, and place in society. 'SES' stands for socioeconomic status and formally refers to the income, job and education level of the parents. "Fifty years of research has revealed the sad truth that the children of lower-income, less-educated parents typically enter school with poorer language skills than their more privileged counterparts. By some measures, 5-year-old children of lower socioeconomic status score more than two years behind on standardized language development tests by the time they enter school."

Now - which is one of the main variables that determines emotional intelligence?

SES!

According to research: "High socioeconomic [students] are found to be more responsible, better able to make intelligent decisions using a healthy balance of emotions and reason, better able to focus on task at hand and pay attention. They have more control over their feelings as compared to low socioeconomic status students."

Starting to see a pattern here...

What makes a person interested in current affairs in such a way that they actually read the news and keep abreast of developments in the region/nation/world?

That question refers back to the first point of vocabulary; one of the main reason why people don't watch the news is because they don't understand the vocabulary involved, which brings us back to SES.
Secondly - many individuals do not understand the importance of watching the news in terms of how it affects them or do not see how them being informed about problems would increase the likelihood for the problem to be solved. This is a cultural point that is largely created through the very representative system of democracy we have today - where individual citizens simply do not see how their voice, how their views would make any difference. It is someone else's responsibility to come up with a solution, so why even bother getting informed? So - this particular problem that is preventing the development of political capital is the very political system in place today and can thus not be seen as a reason or argument for not changing it.

Political capital, like any form of capital, requires investment to grow and develop. Seeing that socioeconomic status is one of the main determining factors of the development of such political capital within individuals - and seeing that this political capital is a necessity to enable people to rule their country in terms of the principle of democracy we all seem to agree is best for everyone - it becomes clear that the 'problem' of education is not insurmountable - it only requires us to do a simple thing: Invest in the people!

And this is exactly what an implementation of a Living Income Guaranteed would do: ensure that each one has a dignified income, in other words - ensuring there are no more individuals with 'low' socioeconomic status in society. In seeing to what extent one's socioeconomic status affects one's abilities, one's opportunities, one's power to affect change, why would we allow anyone to have a 'low' socioeconomic status? We surely wouldn't wish it on ourselves or our own children - instead, we (would) want to give them the best possible nurturing grounds - and so - this courtesy, we should extend to all in society.

Anyone who calls themselves a Democrat but allows a representative system of democracy is a hypocrite, if they do not at the same time support a proposal such as the Living Income Guaranteed that would solve the conundrum of allowing the people to rule directly when currently individuals may not have sufficient political capital to do so. It is not acceptable to make such an assertion and then leave it at that - compromising for centuries on a principle that can be lived for real through a simple correction in how we value Life and substantiate it through real action.

To be continued.



Sources:
http://news.stanford.edu/news/2013/september/toddler-language-gap-091213.html
http://www.sciencepub.net/nature/ns1103/017_16199ns1103_114_119.pdf

Day 254: Only for the Brave: Living Income Guaranteed and the End of Warfare

Q: Within my studies I touched upon international relations and there is a point I learned about which I see could be a concern regarding the point of the redirection of military budgets.

The point is similar to a point in the animal kingdom where the majority of decisions/disagreement/tension is resolved not through actual violent interaction, but rather through intimidation with large size, vicious displays etc... where one animal simply submits within self-preservation.

The USA has a large capacity for such intimidation which can be seen as preventing attacks from its smaller and less capable 'enemies' due to the fact that the US can annihilate them and they do not have the means to prevent this or retaliate in any substantial way. If the USA redirected the military budget, many could look at this as a form of weakening/weakness placing the USA in a more vulnerable position to be attacked due to its lessened ability to intimidate others or defend itself.

A: The offense-defense game in international political affairs is played by creating a continuous process of intimidation through potential military interventions by the world’s hegemons/ world powers upon nations that represent an obstacle to their expansionist greed. This is how ‘pseudo enemies’ are deliberately created to give continuation to a warfare industry that enables profit to be made upon these constant calls for the necessity to intervene in the name of peace and democracy in other countries or defend themselves from 'potential terrorist attacks' which is mostly a fabrication of such threat to keep the military industry in place.

  This continuous provocation forces the nations ‘under the mire’ to arm themselves as well to have the means for defense. This ever present tension between nations is what creates the belief that each nation should always be ready and prepared to go to war, when in fact wars only represent the interests of a few that benefit from it, since war is always implying death and destruction using the public’s opinion as manufactured consent to support it in the name of fighting against terrorism and national defense; other reasons include fighting certain nations that do not comply to the views of imperialist-powers and so represent  an obstacle to their own imperial position. However throughout history we’ve witnessed how wars are justified consent to commit crimes against humanity including the use of tax payer’s money to fund such destructive enterprises.

 For example, If the USA redirected their military budget to fund a Living Income Guaranteed,  those with common sense would not perceive it as a weakness, not intimidating and invading others  for the sole profit of few corporate elites, realizing that the nation is already having a weak economy due to most of the funds being directed for military purposes for the illegitimate benefit of a few, instead of strengthening the economy at home if such funds would support individual's financial security.

Q: I can see a point of fear wherein citizens might resist this point due to being seen as a militarily weak country vulnerable to being taken over, having resources taken or populations enslaved, much like the US and other countries have perpetrated in weaker countries in the form of such things as colonization in all its dimensions.

How can this fear be addressed?

Do you think that this is a real threat that could actually happen? If so, what do you suggest as a counter measure?
A: The fear of attack from outsiders is a propaganda-point in order to gain public support for wars that only have economic interests for few elites behind them. Instead of going to wars, the US and other power nations could focus on signing International treaties and create a sustainable global economy through implementing LIG in each nation, so that no wars are required to keep a non-sustainable economy at survival state. When the people of imperialist regimes grasp the real agenda behind the militarism and wars and do not participate in invasions and occupations, other countries no longer feel they have to protect themselves from the bullies/power nations of the world, the propensity for war will be significantly reduced.


For context:

Living Income Guaranteed - the Proposal: http://livingincomeguaranteed.wordpress.com/the-proposal/

Living Income Guaranteed YouTube Channel - watch the hangouts: https://www.youtube.com/user/BIGuaranteed?feature=watch 

Living Income Guaranteed Website: http://livingincome.me

Day 253: Living Income Guaranteed and Means Testing

Q: What information will be gathered to determine whether a person can receive a Living Income Guaranteed?


A: This question pertains to another question, which is: who will receive a Living Income?

The purpose of LIG in its most basic form is to provide a Living Income to those individuals who are unemployed or retired. Similarly to how the system works in most countries today – if you are unemployed and want unemployment benefits you require to register yourself as unemployed. Therefore, those who are registered as unemployed will receive a LIG. Those who retire and wish ‘retirement benefits’ would also make it known that they are retiring – hence with LIG – those registered as retired will receive a Living Income.

If within a country it is seen that it is viable to extend LIG to a wider range of recipients, additional criteria can be specified, for instance: anyone who is a student, or even every child (where the funds would first be available to the parents and only at a certain age become available to the child) in order to replace child support grants. Within such a system, additional information will have to be available – and thus, a greater degree of information integration should be in place. In some countries information integration is already quite extensive and if the resources are available, it would be a viable option. Other countries will first require to grow their economy and information infrastructure in order to expand LIG to a wider range of recipients.

Another way of expanding LIG is to tailor the Living Income to individual needs. For instance, an unemployed person with a chronic medical condition that requires continuous treatment will have higher monthly expenses than a healthy unemployed person. Where possible, the Living Income received by those two individuals could be different in order to provide each one with a more equal living standard. Such individual tailoring will require even more information access as it requires a detailed overview of every person’s expenses. Whether such expansion of LIG takes place will depend on the will of the people: a more equitable distribution of LIG is possible, but it would require individuals to allow a greater degree of information transparency. In many countries the tax return system is already so detailed that such information sharing would not be seen as an issue. Of course – in order to not make LIG too expensive, it would again require a certain level of automatization and integration of information, interlinking the information that is available by various institutions through for instance an electronic identity card, a card with a chip that can be linked to bank accounts, etc. This would allow the LIG allocation system to run the relevant calculations and equations according to the information attached to each person’s ID. Instead of going through the tiring and costly process of completing forms, each one would for instance have an ID card reader at home, place the ID card into it and upload the information to the LIG allocation system. Again, where such technology is not yet being deployed, an online system that ties all the information of an individual together by ID number can be used.

One must remember that information sharing is generally resisted by individuals when it comes to income tax collection. The tendency exists to hide information in order to not be charged a higher tax rate. With LIG, we suggest no personal income tax be charged and information sharing would be done from the perspective of receiving benefits in the form of Living Income. As such, we don’t foresee great resistance towards this point. Also to remember that eligible citizens would have a RIGHT to a Living Income but not an obligation to claim this right. Hence, if a person declines the right to a Living Income, one would not share one’s information and this person will not be taken into account by the LIG allocation system.

Recipients of LIG are not required to show that they are actively looking for employment and there is no limit to the period of time that one is supported by LIG.

The question also involves a second question: How can it be verified that a person truly deserves a Living Income?

What would happen in a scenario where a person registers as unemployed in order to claim a Living Income when the person is in fact still employed and receiving an income at least double the Living Income? This pertains to information integrity and would be the responsibility of the institution that registers a person as unemployed. Measures can be taken to contact the previous employer in order to verify the person is indeed no longer employed and bank account transactions can be monitored. Another scenario is where a person is registered as unemployed and works ‘under the table’, where the combined income of LIG and the wage received enable a person to live a luxurious lifestyle. Such points will only effectively be eradicated once money is entirely digitized and no transactions can take place without there being a record of it in the system – which is a point that any country that implements LIG should work towards in order to minimize abuse of the system. One must remember however that employment in informal commerce is often motivated by the need to survive. With LIG, such motivations would fall away as one can live a dignified life through receiving a Living Income.


For more information on the Living Income Guaranteed Proposal - please read this Document and visit http://livingincome.me.

Day 252: The Rich Be Cursed, The Rich Be Blessed

This image of Harris Rosen has been circulating Facebook. I find it amusing to read the comments made under it. On the one hand society is angered by the rich for appropriating such huge amounts of money for themselves while others are struggling to make ends meet. Yet, when one of these rich people takes responsibility for one neighborhood, he is revered and blessed for doing 'God's work'. This creates quite a conundrum, because on the one side the rich are seen as the problem, as the cause of hardship of the poorer groups in society, but on the other side charity by the rich is seen as a miracle-solution, a divine intervention, that may save the world. The rich are cursed and the rich are blessed.

Truth is that it is indeed unacceptable that some may bathe in glory and riches, the world at their feet, if this disproportionate wealth is enabled by an economic system, which is the same system that can deny others a life of basic dignity. Even the most liberal philosophers tend to agree that liberty cannot be increased at the expense of others' opportunity to improve their well-being - yet due to the interconnectedness of our lives as a result of a shared economic system, it is undeniably what is happening.

At the same time one can see in the example of Harris Rosen that problems such as crime and structural poverty can be remedied through generosity, through giving, through sharing. But can we allow such charity to be dependent on the benevolence of the few rich who give a damn? Perhaps we have no choice, because one needs to have a lot of money to give away a residual amount one doesn't need for personal support. Of course, such a situation is unsustainable and implicitly allows the suffering of many as we submit to the whims of those who have the money to affect change. But is this the whole story?

In fact, each one of us has the power to affect change, because each one has the ability to vote for change. This vote of course does not mean much when the only available proposals are the ones who maintain the status quo. This is where the Living Income Guaranteed proposal intends to offer a solution. With Living Income Guaranteed, the rich can live by the principle of liberty, putting their talents to use to improve their own lifestyle and fulfill their dreams - while at the same time each one is guaranteed of a life of dignity with the opportunity to improve themselves and build themselves up to a similar position. With Living Income Guaranteed, charity would be institutionalized through the provision of a Living Wage to anyone who doesn't have the means to otherwise support themselves. Such a Living Wage can be funded through the profits of companies that form part of the national heritage. This means each citizen is owner of these companies, and in effect, each citizen takes part in charity. As such - we ensure that charity reaches every neighborhood and every family in need of it - and not the lucky few that happen to live in a neighborhood that some rich fellow 'fell in love with'.

The word 'charity' comes from the Latin word 'caritas', which can be translated as 'generous love' - or in other words, charity stands for: Love Thy Neighbor as Thyself - and as the word 'generous' shows: requires giving. As a principle - charity should then not be exclusive or temporary, but institutional; as an agreement by the people to do unto each other what we would like to be done unto.

With Living Income Guaranteed we would no longer curse the rich, because their enrichment is not done at the expense of the rest of society and we would no longer bless the rich, because we have empowered ourselves be the source of the greatest charity through enabling a Living Income.

For more information on the Living Income Guaranteed Proposal - please read this Document and visit http://livingincome.me.

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Day 251: Living Income Guaranteed and Market Mechanics

This blog is in response to a comment made on Day 250: Economics Nobel Prize reduced to Laughingstock :
“Economics is about, or should be about, how to employ the available means in such a way that no want more urgently felt should remain satisfied because the means suitable for its attainment were employed - wasted - for the attainment of a want less urgently felt. This is what it means to economize: to allocate scarce resources to their most productive/urgent use. "Most urgent use" is determined by supply and demand as established on the free market. I agree with the criticism that empirical economics seem frivolous and misplaced. But I disagree with the conclusion of this article; the only way to make the world more wealthy is by increasing the ratio of capital to people through investment and savings. Wealth redistribution will only succeed in making us all equally poor. Well written piece, though, thank you for a thoughtful opinion.” - Matt Summers

“Economics is about, or should be about, how to employ the available means in such a way that no want more urgently felt should remain satisfied because the means suitable for its attainment were employed - wasted - for the attainment of a want less urgently felt. This is what it means to economize: to allocate scarce resources to their most productive/urgent use. "Most urgent use" is determined by supply and demand as established on the free market.”

The effectiveness of markets in being able to successfully allocate resources to ‘their most productive/urgent use’ is dependent on how effectively the market is able to capture supply and demand signals. Here, we currently have a problem as not everyone has an equal opportunity to access the field of the free market and cast their demand / signal their need. Access to the free market is restricted, and the only way to gain access is by having a ticket – where one’s ‘purchasing power’ is representative of such a ticket that will grant you access.

So long you do not have the money / financial means to back up your demands, your demands will fall on deaf ears and not be catered for. Alternatively, depending on the scope of purchasing power available to you, your demands may only be catered for partially, as you are unable to ‘validate’ or ‘redeem’ all of your needs into demands due to the size and scope of one’s purchasing power – and thus the free market will only pick up one those demands/needs that are backed up by purchasing power, while not registering others.
With not everyone’s demands in effect being picked up by the market, we get a distorted view and picture of what we believe is wanted/needed - and use this distorted picture as a map to allocate scarce resources. To actually be able to direct and allocate resources to their most productive and urgent use, we require a lot more information – information that is missing and not being received simply because not everyone has the capacity to validate their demands through purchasing power.

Whether we like it or not, we currently live in a world with huge levels of income inequality^[1] and thus purchasing power inequality – where there is an inverse relationship existent between the size of purchasing power and the amount of people who have purchasing power.
In terms of the mechanics of Supply and Demand, this structure gets translated into the market receiving a big amount of information about the demands of a few people, while receiving little to no information from the majority of the people who have smaller to no purchasing power.

Within providing a Living Income Guaranteed, the goal is not to ‘equalize’ the entire purchasing power structure – but merely to give those at the bottom / those who do not have access to the market mechanisms -- the chance to be heard and recognized within the market. Providing a Living Income Guaranteed effectively provides everyone with a base amount of purchasing power, so that at a minimum everyone can effectively signal their demands to be able to achieve a dignified living standard.

“Wealth redistribution will only succeed in making us all equally poor.”

Here I will assume that your statement is based on the same logic Nozick follows, where he perceives a problem in redistribution leading to disincentive for the productive members of the economy who would then produce less and less until they cover only their immediate needs and having no ‘surplus’ to redistribute.
In terms of the Living Income Guaranteed proposal, where we want to ensure that those who are unable to sustain themselves financially through providing them with a Living Income – we are not looking at a massive movement of redistribution. In terms of the capital and wealth that is available within the world, it only takes a small fraction^[2] being moved from top to bottom to give the majority of people the necessary ‘bump’ to be able to realize a dignified living standard for themselves.
There will thus still be a wide range of incomes, a wide range of competition and more than enough incentive to be innovative and keep producing.

A more drastic change will rather be seen within the market system within the mechanics of supply and demand being able to capture a lot more information about the needs and wants of people – which will provide society with more effective and accurate guidelines as to where resources should be allocated for their most productive/urgent use. The biggest change will be seen in the living standards of people and the actual realization of having everyone’s fundamental human rights secured.

Here, we can look for instance at the ‘ideal’ many people envisage when looking at the distribution of wealth in society. As you can see from the graph below, it still leaves plenty of incentive for those who are incentive driven to be productive and innovative – while at the same time allowing the bottom two quintiles to have sufficient wealth to live a dignified life (and to have any share of wealth at all for that matter! Since both the first and second quintile barely get registered on the ‘actual’/’current’ graph).

The Nozickian notion that redistribution will ‘leave us all equally poor’, is a very radical and extremist position, which takes on a very rigid and narrow view on human nature and values. It is assumed that we only care about ourselves and within this will go as far as compromising and sabotaging our own living standards just because we don’t want anyone else to reap benefits of ‘our work’ and ‘our effort’. There is no space for relating to one another and helping each other out – even when it comes down to something basic such as having everyone’s fundamental human rights covered. We suggest that humans are not the completely irrationally selfish beings Nozick assumes us to be, and that we are capable of compassion and can realize this compassion in the form of having everyone’s fundamental human rights secured.

“But I disagree with the conclusion of this article; the only way to make the world more wealthy is by increasing the ratio of capital to people through investment and savings.”

This statement is not necessarily true – as it assumes that we are currently experiencing a ‘lack’ in real capital and actual resources to effectively provide everyone with a proper living standard. The capital and the resources are already here – but through the market system operating at an inefficient level (due to our current supply and demand curves not capturing the full extent of demand as explained above), the capital/resources are not moving and not being directed towards those who need it most.

This is how we end up with scenarios of food dumping and having huge amounts of food destroyed and thrown away parallel to having high levels of hunger and starvation in the world. This is simply because our economic system is not sensitive and attuned to human needs and instead being irrationally driven by the profit motive. Economics and the market have become all about non-human elements as profit and numbers which have stopped serving the general human interest. By placing in a Living Income Guaranteed system, we are placing the human element back in the center of economics, allowing economics to be the life supporting instrument that it was destined to be. Economics and money are then here to support ourselves in living our life – and not the other way around where are lives are lived in the service of money and the economy, as how the majority of people’s lives are currently being lived.
It’s time to reverse the roles.
 
[1] See our blog on the World’s Lorenz Curve, which displays almost perfect inequality “Day 143: The Neo-Apartheid Era”
[2] See “World’s 100 richest could end global poverty 4 times over”, which is but one example of ‘how little it takes’ to make a ‘big difference’ for many

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Day 249: Nozick's Entitlement Theory of Justice - what are we REALLY entitled to?

Robert Nozick is best known for his work ‘State, Anarchy and Utopia’ in which he argues against patterned principles of justice and in favour of an entitlement theory of justice (2013:26). We will first consider what the difference is between the two, to then proceed with a critical review of Nozick’s argumentation, herein paying particular attention to the relevance of such a theory in consideration of the present as an outcome of human history.

The difference between patterned theories of justice and unpatterned theories of justice revolves around the means-end question: Is it just (or can it be justified) to use unjust means to attain a just end? For Nozick the answer to this question is ‘No’. In his view, if every step of the process of distribution throughout history is just, then the result is a just distribution (Nozick 1974:151). Herein, the justice of an act of distribution is measured in relation to whether one is entitled to one’s resulting holdings (2013:26). In contrast, patterned theories of justice pertain to ensuring an ideal ‘kind’ of outcome from distribution – where this ‘kind’ is dependent on and determined by the values a particular society holds. If equality is treasured, the outcome of distribution would require being that each one has equal holdings. If the fulfillment of basic rights is valued, then the pattern of distribution would require standing in relation to ensuring each one’s basic needs and rights are met as a minimum condition.

Within his argumentation, Nozick holds two concepts at heart: property and liberty. A problem he sees with patterned theories of justice is that goods are treated as thought they are ‘just here’ and available to be distributed in any way we see fit. He argues that resources cannot merely be allocated according to some patterned principle, because: “The situation is not one of something’s getting made, and there being an open question of who is to get it. Things come into the world already attached to people having entitlements over them” (Nozick 1974:160). Not taking into consideration the source of a good would therefore be a form of stealing. The same logic is used in an attempt to prove that taxation should be included under the category of theft (2013:29).
When it comes to liberty, Nozick argues that if distribution happens in a patterned way, then individuals require sacrificing their freedom to give to charities and gift goods to others, because such acts would upset the particular preferred pattern in question (2013:28).

As noble and logically thought-out his arguments may seem – I simply question the relevance of an entitlement theory of justice. Considering that throughout history, we can see countless examples of ‘unjust initial acquisition’ and ‘unjust transfer’ – where elites were built based on for instance the colonization of an entire people and the appropriation of their resources. The current allocation of resources is still a result of such past events. Therefore, one cannot say that at this point, one can simply go on with making sure that ‘from here-on out’ all distribution is conducted in a just manner – for our starting point is already unjust in itself – leading to unjust advantages and disadvantages. Where Nozick supports the correction of past injustices we must ask how he attempts to do this without a patterned form of distribution – for, it would imply re-constituting history by imagining how distribution would have taken place at each step of the way if no injustice had taken place. As said above, history is filled with unjust transfers and acquisitions, therefore, such a task would involve the creation of an ‘alternate timeline’ of not only a village, a region or a country, but of the world in its entirety. We simply do not have the data or means to construct such an alternate timeline in any accurate way – we cannot ‘predict’ or ‘come to know’ how things ‘would have’ played out if it weren’t for injustice. Therefore, Nozick’s entitlement theory is irrelevant as it is not practically applicable in terms of our current reality. What it does seem to do and seems to have done, is to create a great set of justifications as to why we should not attempt to bring about greater equality or make sure the needy are taken care of – protecting those with significant wealth from any form of accountability with respect to the past and with respect to their fellow human beings.

If one is to constitute an entitlement theory of justice one should utilize human rights as the basis for such a theory, as unless each human being’s rights are provided for, one cannot speak of entitlement, one would instead be protecting an economic system of distribution that does not honor the life of every man, woman and child equally, but places the luxury of some over the bare survival of others. Each one is entitled to a certain level of well-being as it is enshrined in the Bill of Rights, each one is entitled to a certain level of education as it is enshrined in the Bill of Rights, each one is entitled to adequate housing as it is enshrined in the Bill of Rights. Such are true entitlements – and unless an entitlement theory of justice comprises a system of distribution that guarantees the fulfillment and honouring of these entitlements at all times – we know we are in fact dealing with deception – the deception of those using fuzzy logic and fear to protect their own self-interest and to protect the elite of the world – where the theory has in fact no foundational basis in reality as that which actually matters in terms of supporting and enhancing (human) life on Earth.

In conclusion, to proclaim any patterned theory of justice as ‘unjustified’ by default means to ignore the reality of the world and its historical injustices. Nozick’s entitlement theory can only become relevant and applicable once the current distribution has been re-patterned to reflect the values and rights in the constitution.


Bibliography

(Author not specified). 2013. PLS3705: Guide 1. Pretoria: University of South Africa

Nozick, R. 1947. Anarchy, State and Utopia, New York: Basic Books.

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Day 245: Living Income Guaranteed and Equal Currency

The ideal of free market in terms of globalization in being able to buy from anyone and sell to anyone - is based within the idea that: one should be able to get access to the best products and services - and if that means people keep buying cars from Germany, then it means car companies in other countries have to step up their performance if they want to compete - and so - creating a worldwide stimulating environment for excellence in service and quality-price ratio.

Though, one of the major influential factors determining whether people buy their stuff in their own country or in a foreign country - is the exchange rate between currencies. The exchange rate is in fact the price you pay for a currency in terms of another currency. So - if in the US the price of the car you want is 40 000 dollars and in Germany a very similar car would cost you 40 000 euros and say that both cars meet your requirements and you have no preference between the two - then there is still a difference in cost. Say that you are located in South Africa and that the price for 1 dollar is 7 Rand and the price for 1 euro is 10 rand - then the car in the US is 'cheaper', but only because the American dollar is cheaper than the Euro. One would have to pay 280 000 Rand for the American car and 400 000 Rand for the German car. With no preference between both cars, the choice is easily made, and the American car is bought.

To understand what determines the exchange rate between two currencies - read: 'What are Currency Exchange Rates and Why do they Keep on Changing?'

From there - you can see that the exchange rate is a result of the performance of an economy as a whole in relation to the performance of other economies - and, in turn, the exchange rate affects the economy deeply. You can also see that within currency exchange rates there are always winners and losers. Say - if the euro is 'strong' in relation to the dollar, then Americans will buy less from Europe and more locally, and Europeans will buy more from America and less locally. That would mean that European exporters are worse off, but American exporters are better off. At the same time, America importers are worse off and European importers are better off. So - the exchange rate is one of those things that has a deep impact on the individual lives of people, that does not stand in relation to their particular merit. So, the whole global free market is skewed, because it's not only the quality of goods and services that determines in which country you buy your products - much is determined by the exchange rate, over which one, as an individual, can exert no influence. So, here is another example of how the free market theory as yielding the best result is not being applied and lived.

So - why do we propose equal currencies with Living Income Guaranteed?

Because the Living Income Guaranteed system ensures that one's economy is stable and effective from the perspective that each one will have an income with which to purchase the required goods to live a dignified life and in turn this income that was spent becomes the income of the labor force, that now can afford a more luxurious lifestyle - as such Human Rights are ensured and the principle of those who work harder earn more money is still in place as well. However - if we now have currencies with different values - the whole point can collapse - because instead of buying the products locally, one can buy the exact same products abroad for a 'cheaper' price, just because of a favorable exchange rate - as such, money drains out of the economy and the cycle is disrupted. Unequal currencies distort the values of goods and services across the globe. With equal currencies - if one goes and buys products abroad, its not because of a distortion - it's because the goods and services are actually better or are produced more cost-efficiently. Therefore, when in a particular country it is noticed that one's company is suffering due to people buying abroad, it is an actual indication that one requires to change the quality of one's goods and services or become more cost-efficient - such indications are valid and stimulate the economy in the way it is supposed to.

If one has a look at the entire Living Income Guaranteed proposal, one will notice one thing: Central to this entire economic system stands one point: Real Value. The Real Value of Life, the Real Value of Labor, the Real Value of effort and merit, the Real Value of goods and services - to be done with the charade of survival on the one hand and outrageously extravagant entertainment on the other - neither have Real Value - to get back to what matters, to give back to ourselves and each other that which we have lost: Dignity, Respect, Consideration, Support, Acknowledgement, Integrity, Gratitude.

Living Income Guaranteed is an effective, clear-cut way to make an end to all and everything that has been diminishing Life over the centuries, of which we see it is unacceptable, but for which we haven't been able to formulate a solution before - and to bring back all that we have always wanted and searched for - not just for the rich and famous - but for every single human being.

For more information:
http://basicincome.me
http://basicincomeguaranteed.wordpress.com