The book, “The Ethics and Economics of the Basic Income Guarantee:” Free Version available

by Karl Widerquist | Sep 17, 2019 | Opinion, The Indepentarian

The Ethics and Economics of the Basic Income Guarantee (2005) edited by Karl Widerquist, Michael Anthony Lewis, and Steven Pressman, published by Publishing is availed in a free version at this link.

This book available because most publishers allow authors and editors to post early version for free on their personal websites. That means it has lots of typos and other problems. But it’s a reasonable approximation of the final version. Please see the published version if you can. It’s available at university libraries.

Summary from 2005

This book is divided into four Parts. They cover the history of BIG, philosophical debates over the vision of society it represents, sociological and economic debates concerning its effects, and finally some practical proposals for a BIG in several countries.

The four chapters in Part One trace the history of the BIG proposal from its beginnings in the late eighteenth century to the present with special emphasis on the guaranteed income movement of the 1960s and 1970s in the United States.

Steven Pressman

In chapter 2, Fred Block and Margaret Somers examine the relationship between the welfare reform passed by the United States Congress in 1996 and Speenhamland, a British town that (in May 1795) decreed the poor were entitled to certain public assistance. As the program spread among English parishes, it generated a great deal of controversy. Critics argued that it provided relief to the able bodied, and thus reduced work effort and increased the local tax rates (to support the poor). Block and Somers revisit the Speenhamland episode. Drawing on four decades of recent scholarship, the authors show that Speenhamland policies could not have had the consequences attributed to them. They then seek to explain how the Speenhamland story became part of the accepted wisdom regarding public assistance to the poor and how it contributed to the 1996 welfare reform legislation in the United States. This argument has important consequences of BIG proposals, since it points out that income guarantees have not had negative consequences in the past and so they should not be rejected for this reason.

In chapter 3, economists John Cunliffe and Guido Erreygers focus on the historical antecedents of contemporary basic income proposals. Specifically, they focus on proposals put forth by the nineteenth century American writers Cornelius Blatchly, Thomas Skidmore, and Orestes Brownson. They argue that these writers may have been influenced by the ideas of Thomas Jefferson and Thomas Paine, American revolutionaries whose ideas about economic policy and distribution bear striking similarities to current basic income proposals.

Robert Harris gives an inside account, in chapter 4, of the politics behind the guaranteed income movement of the 1960s and 1970s. The movement grew out of dissatisfaction with the conditional welfare system that had been in place since the New Deal, which was failing to eliminate poverty either for workers or for people unable to work, and which was causing significant poverty traps. Many people on the left and right began to see the guaranteed income as a simpler and more effective system for both the working poor and those on social assistance. Nixon’s modified guaranteed income was overwhelmingly passed by the House of Representatives, but failed narrowly in the Senate thanks to opposition from both left and right and to lukewarm support from Nixon himself.

One offshoot of the guaranteed income movement was that five NIT experiments were conducted in the United States and Canada during the 1970s. These experiments divided a group of subjects into two groups. One group was part of a negative income tax plan; the other group was a control group that was subject to the regular United States income tax. The experiments were designed to measure the impact of NIT on labor force participation and marital dissolution in a rigorous scientific manner. These experiments were not only important for the basic income guarantee, but they were also the first large scale social experiments and had farreaching influence on policy research in a number of different areas. Some of the original scholars from the negative tax experiments reunite in chapter 5 to discuss their importance after 30 years. The panel members discuss the political reasons for setting up the experiments and their results. Although the results were largely positive, showing small workdisincentive effects and important effects on health, educational attainment, and well being, some politicians and pundits used the experimental findings to help quash the NIT.

Part Two examines the philosophical debate over BIG. The papers in this section of the book discuss various justifications for a BIG and compare the case for a BIG to the case for other types of income support plans.

In chapter 6, political theorist Almaz Zelleke examines political rights and BIG. Her concern is that social thinkers on both the right and left tend to agree that income policies should have work or social contribution requirements attached to them. After discussing and criticizing the arguments of thinkers such as Laurence Mead, Mickey Kaus, Anthony Atkinson and others who hold this view, she puts forth an alternative—the market should be regarded as a sphere of citizenship no less important than the polity. That is, the liberty that we grant to United States citizens is tied to the right to partake in the market as much as it is tied to the right to partake in politics. Thus, we should view income that lets people participate in the market as analogous to voting rights that let people take part in the political process. We grant people the right to vote and, likewise, the basic income should be viewed as a right to “vote” in the marketplace.

Philosopher Michael Howard’s article (chapter 7) is largely a discussion of the liberal neutrality principle associated with the philosopher John Rawls, and its relevance to the basic income debate. The neutrality principle roughly stipulates that an acceptable theory of justice cannot be biased toward any particular substantive conception of the good life. Howard’s thesis, presented with the argumentative and analytic skills philosophers are known for, is that any income policy that requires some contribution to society is biased toward those whose conception of the good life involves such contribution; a basic income isn’t biased in this way, rendering it the more just policy.

Michael A. Lewis

In chapter 8, Karl Widerquist defends basic income against the “exploitation objection,” which asserts that a basic income allows individuals to benefit from social cooperation without contributing to society, thereby exploiting those who do work. He specifically addresses Gijs van Donselaar’s version of this objection, and argues this objection has three critical flaws. First, the conclusion that a basic income is exploitive relies on holding the poor responsible for the level of scarcity in the world. Second, van Donselaar treats work rents differently than other rents. Third, van Donselaar’s definition of exploitation is unworkable in practice, and the connection between it and a case against basic income is weak.

In chapter 9, Michael A. Lewis enters the debate between basic income and the basic stake proposal put forth by Bruce Ackerman and Anne Alstot. This proposal stipulates that a lump some of $80,000 be provided to each high school graduate at age 18 if the recipient plans to attend college or age 21 if she does not plan to do so. Lewis addresses the question of whether basic income or the stake is better at promoting freedom. He suggests that if one makes assumptions associated with rational choice theory it would seem that the stake is more freedom promoting. However, he goes on to argue that there appear to be pervasive patterns in decision making that might result in people allocating their stakes in ways they might later regret, and that a basic income might be more freedom promoting because it would constrain people’s ability to make such decisions.

While Part Two is philosophical in its orientation, Part Three is empirical. The papers in this section address questions concerning the real world impact of a BIG and its alternatives.

Steven Pressman, in chapter 10, addresses one of the key tradeoffs faced in a BIG plan—the lack of incentives to work hard and make more money that are likely to occur as a result of giving people a sum of money with no strings attached. Generating greater equity with a BIG will therefore also reduce economic efficiency. If these efficiency losses are large enough, reduced efficiency would constitute a good case against BIG. Using an international dataset that stretches back over 20 years (the Luxembourg Income Study), Pressman examines the tradeoff between equity and efficiency empirically. He finds negligible efficiency losses due to government redistribution efforts, and concludes that any efficiency-equity tradeoff is likely to be small (as long as redistribution efforts remain in their current range).

In chapter 11, economist James Bryan focuses on poverty reduction as a central goal of any income policy, but also attends to the effect such policies have on work incentives. Bryan looks at the extent to which the mid-1990s welfare reforms reduced poverty by focusing on trends in poverty before the reforms, from

1993–1995, and trends afterwards, from 1995–1996. He arrives at three conclusions: (1) poverty among families with children declined in the post-reform period but the rate of decrease was slower than during the pre-reform period, (2) among poor single-mother families there were reductions in disposable income, and (3) these reductions in disposable income were only partially offset by cash and in-kind programs such as the earned income tax credit (EITC) and food stamps. Bryan argues that a basic income guarantee could decrease poverty to a larger extent while creating smaller work disincentives than the current package of the Temporary Assistance for Needy Families (TANF), workfare, food stamps, and EITC programs. He attributes this to the high benefit reduction rate in current programs compared to the lower reduction rates that would obtain in basic income plans. From an economic point of view Bryan sees two arguments against the basic income. First, the volume of transfers needed to achieve an acceptable minimum income guarantee may be very high compared to more highly targeted programs. Second, to maintain work incentives for beneficiaries, the benefit reduction rate must be low. This would, in turn, create a small net donor population, thus requiring a high marginal tax rate and generating a larger work disincentive for this group.

In chapter 12, Thierry Laurent and Yannick L’Horty examine the work incentive problems of a basic income guarantee. They argue that most previous studies of the work incentive problem take a static approach. People are thought to balance just the income from working now against the income received now from a guaranteed income plan. However, Laurent and L’Horty note that there are also dynamic considerations. People with jobs today are likely to get promotions and higher pay in the future. So the real choice is a dynamic one, where individuals must balance both the short- and long-term benefits of work against the BIG. The authors then model labor force participation in an intertemporal framework, and use data from French labor market surveys to test their model. Their results show that there are differences between short-run back to work incentives and long-term problems. They also show that there is no obvious link between short- and long-run incentive problems. Finally, their results explain why some workers may have an incentive to accept jobs that do not pay, while others do not.

In chapter 13, Stephen Bouquin presents research results on the effects of tax-credit systems in Europe that use “in-work benefits,” which are meant to be combined with the wages of the working poor. He examines the labor market policies of three European countries that have been increasingly relying on inwork benefits, including the United Kingdom (Working Tax Credit, Income Support), France (Tax Credit), and Belgium (several policies). He finds evidence of what he calls the “Speenhamland effect” on wages. That is, in-work benefits can reduce real wages, as employers capture some or all of the benefits (intended for workers) by reducing the wages they pay. Through these effects, expenditures intended to benefit poor workers end up benefiting their employers. The existence of Speenhamland effects raises serious doubt for any policy based on forcing individuals into the paid labor market.

BIG also raises practical questions. How much would a BIG cost? How can it be financed? What is the optimal level of BIG, given tradeoffs between poverty reduction on the one hand, and costs and work disincentives on the other hand? Part Four, the final section of the book, contains chapters that examine the political prospects of BIG and chapters with nuts and bolts proposals for making basic income work in various countries around the world.

In chapter 14, Nicoli Nattrass and Jeremy Seeking discuss the possibility of implementing a BIG in South Africa. South Africa is the only country in the world with a major grassroots movement pushing for BIG, and it has a unique political and economic situation that make BIG politically feasible. The authors argue that BIG has been on the agenda because of the coincidence of four main factors. First, the country already has a system of public welfare that is unusually extensive in its coverage, unusually generous in its benefits and unusually redistributive in its effects. Second, poverty persists due to unemployment and the absence of subsistence agriculture, and there is little prospect of reducing poverty through job creation or land reform in the short- or medium-term. Third, the existence of an extensive system of private welfare, through remittances sent by employed workers to rural kin, means that it is in the interests of the powerful trade union movement to support a BIG. Fourth, the extent of inequality, paradoxically, makes it easier to finance a BIG based on redistribution from the rich to the poor.

Karl Widerquist, credit: Enno Schmidt

In chapter 15, Brazilian Senator Eduardo Suplicy discusses the movement for a BIG in Brazil. Suplicy and others have been pressing for BIG at the federal, state, and municipal level since the late 1980s. The measure was twice approved by the Brazilian Senate but languished until the Workers’ Party (of which both Suplicy and President Lula are members) took control of the presidency. Success was finally achieved in January 2004 when President Lula signed a basic income bill into law. The new law gives the executive wide authority to determine the timing of the phase-in, but it authorizes the gradual introduction of a small basic income guarantee within the next eight years.

In chapter 16, political scientist Yannick Vanderborght discusses recent debates over BIG in Belgium and the Netherlands. Reviewing the various arguments both for and against the basic income, he concludes that the supporters of a basic income have an uphill battle. Vanderborght views the main obstacle to the basic income in these two countries as the widely held belief that able-bodied recipients of income assistance should make some social contribution in return for assistance. He concludes with a discussion of the so-called “participation grant,” a policy that would provide a universal grant to all citizens or residents as long as they engaged in some socially beneficial pursuit. Such a pursuit does not necessarily mean one has to sell her or his labor. Thus, providing uncompensated (by the market) care for children, or for other friends or relatives, and a host of other “outside the market” activities would qualify. Vanderborght argues that such a policy might have a more promising future than the “pure” basic income.

In chapter 17, Derek Hum and Wayne Simpson provide some cost estimates for several possible Canadian BIG programs. Employing two different definitions of poverty, Hum and Simpson estimate that a BIG to eliminate poverty in Canada would cost between $141 billion and $176 billion (or around 15 percent of Canadian GDP). This, they believe, is too costly and would not be politically acceptable in Canada. They also provide estimates of alternative BIG plans that provide income guarantees below the Canadian poverty line. These programs would cost little more than current income transfer programs because they include a negative tax or claw back of the income guarantee. Hum and Simpson find that these programs would do much less to reduce poverty and the income shortfall facing the poor. They conclude by noting that there are many possibilities between these two extremes; these plans would not be very expensive, yet would be relatively effective in reducing poverty in Canada.

In chapter 18, Randall Bartlett, James Davies and Michael Hoy explore how to set up a negative income tax in the United Kingdom. Their goal was to formulate a set of programs with a guaranteed income and a single flat tax rate that collects the same amount of money as the existing United Kingdom progressive tax system. They then test whether their negative income tax is as progressive as the current United Kingdom tax and transfer system. Their findings are that it would be relatively easy to structure a negative income tax for the United Kingdom that is more equitable than the current system and that does not require high marginal tax rates.

The chapters in this book bring the debate over basic incomes into a contemporary and eclectic context. They provide many different perspectives to the BIG proposal in specific and to antipoverty policy in general. And they show that BIG is a feasible policy alternative.

The Ethics and Economics of the Basic Income Guarantee (2005) edited by Karl Widerquist, Michael Anthony Lewis, and Steven Pressman, published by Ashgate

A free version is available at this link.

Book review of “The War on Normal People”

by Karl Widerquist | Sep 1, 2019 | Opinion, The Indepentarian

The War on Normal People: The Truth About America’s Disappearing Jobs and Why Universal Basic Income Is Our Future

By Andrew Yang, Hachette Books; 304 pages

Review by Karl Widerquist

NOTE: This article is reprinted from Delphi – Interdisciplinary Review of Emerging Technologies.
The original article and citation is:
Widerquist, K., “Book Review ∙ The War on Normal People: The Truth About America’s Disappearing Jobs and Why Universal Basic Income Is Our Future.” Delphi – Interdisciplinary Review of Emerging Technologies, Volume 2, Issue 1 (2019), 59 – 60

Andrew Yang is a technology entrepreneur who is taking three years away from his business to run for the Democratic nomination for president. His book, the War on Normal People, explains why Basic Income is the centerpiece of his platform.

This book review comes from the perspective of a political theorist who has been writing about Basic Income since the 1990s. Yang’s candidacy is one of many signs that the Basic Income movement is experiencing a substantial wave of support right now. But he is not necessarily the candidate of this extremely diverse movement. Basic Income comes in many forms and can go with almost any other set of policies. Whether any particular Basic Income supporter will also support Yang will depend on a host of other issues, but they should all take a serious look at his candidacy and his effort to make Basic Income an issue in the 2020 election.

This book communicates very clearly that Yang’s heart is in the right place. He’s not some narcissistic business owner running for president on the strength of his ego. He is very aware of the trail of luck and privilege that put him where he is today. He stresses that the American economy is not really the land of opportunity where anyone can make it if they try. It is full of injustice and unfairness. Most people will never get an opportunity to do what he did. And he points out clearly, the opportunities available to most normal people are shrinking.

Andrew Yang with Jason Burke Murphy

Yet, Yang is no opponent of capitalism. He sees it as an incredibly productive and useful system in the right institutional setting, but the book’s title, The War on Normal People, typifies his perspective: even as our technology has made greater prosperity and opportunity possible, legal and institutional changes have reduce opportunities for all but the luckiest and most privileged Americans. The current generation of Americans is the first that can’t expect to improve substantially on the economic situation of their parents, and might well be doing worse.

Many factors have combined to cause this problem. Automation makes it possible to produce more goods with the same amount of labor, which ought to be good for everyone. But most people are dependent on labor for their income. They spend their lives building up skills that are suddenly outmoded by technology, forcing them into the already crowded lower end of the labor market.

Automation has produced enormous benefits for the people who own the machines and the people who lend the money to finance machines. And it’s created a few wonderful jobs for people who happen to have the right skills, but there are only so many of those wonderful jobs to go around, and not all of them have certain futures either.

For normal people automation has produced both lower wages and less certain employment.

Yang argues that the side effects of automation are only getting worse. Trucking companies are already in the process of replacing truck drivers with self-driving trucks, a direct threat to millions of drivers and an indirect threat to millions more people who work in supporting sectors, such as truck stops.

College tuition has gone up exponentially, and people have had to take out increasingly large loans to pay for it. According to Yang, people in their twenties and thirties today have so much educational debt that they are increasingly unable to buy homes, start businesses, or take advantage of their salaries.

The healthcare industry has also saddled people with increasing debt-a problem no other country imposes on its people. According to Yang, many Americans-even some who think they have good health insurance are vulnerable to bankruptcy if they have an accident or come down with a disease that isn’t adequately covered by whatever insurance they might have. It seems to be so easy for people to fall into bankruptcy these days, so it’s important that people budget their spending to make sure they are financially stable. However, if this can’t be done and people are on the verge of bankruptcy, it might be worth contacting a bankruptcy attorney San Diego, for example, to see if they can help people struggling with financial troubles.

One thing technology has given us is greater distraction. Yang argues that video games and social media are cheap, easily accessible, and built to draw you in. The decline in labor hours among young American men has been mirrored almost exactly by an increase in hours spent playing video games. Millions of American men in their 20s live with their parents and play video games 40 hours per week. In the short run, the instant satisfaction video games provide can make up for a lot of frustration and unhappiness in the rest of people’s lives. Whilst this may be true for some people, a lot of people around the world have actually been making money from these video games. By using platforms, like Twitch, people can stream themselves playing these games live. They can, eventually, start making money. To do this, people would just need a computer and then they would have to find out where to get ps2 roms. That would allow them to play those PlayStation games from their computer. They can then stream them live and make some money.

Yang points out many other serious problems that need to be fixed and that most American politicians are ignoring, but the one serious drawback of this book is that some readers might find it drawing their attention more to the severity of the problems Yang points out than to the promise of the solutions he suggests. This is unfortunate, because Yang is optimistic and offers serious and realistic solutions.

Any reader who feels despondent by Yang’s pull-no-punches statement of the problem, should reread the parts of the book stating Yang’s solutions, and concentrate on the ultimately optimistic, uplifting nature of his message.

Yang supports a host of policies that put him firmly in the most progressive wing of the Democratic Party. He wants single payer healthcare, also known as, Medicare for all, and an end to medical debt and bankruptcies. He wants campaign finance reform to get money fully out of politics. He wants free or cheap college tuition and an end to student debt.

But the centerpiece of his book, and what most separates him from other progressive Democrats, is his unequivocal support for Basic Income. Other progressive Democrats and even some mainstream Democrats have said favorable things about Basic Income. But even some of the most progressive Democratic elected officials, such as Alexandria Ocasio-Cortez, have directly endorsed no more than the ‘exploration of it.

Yang wants a full, national Basic Income right away, and he wants it for good reasons. He doesn’t see it as a way to toss out a few tidbits to the poor but as part of the solution to the economic unfairness and injustice in the world today. Retraining will not cushion the disruptions caused by automation. Education will not end the stagnation (or reverse the decline) in wages that most normal people are experiencing. Yang wants to give them a boost and one that is not dependent on their employers.

He doesn’t make the mistake (common among tech entrepreneurs) of portraying Basic Income as something we’ll need someday when all labor is replaced by machines. He portrays it as something that’s needed right now and is perhaps already overdue after the last 40 years of automation-fueled economic growth have failed to deliver either higher pay or shorter working hours to normal people.

The Basic Income Yang begins with is too small, only $12,000 per year and not adequately covering single parents and their children (the poorest demographic group in the United States), but it’s a good start. That amount won’t end poverty, but it will be an enormous improvement for everyone living on the margins and a significant boost to the middle class. I had the chance to speak to Yang, and he told me he chose that plan because he needed something that was fully costed already. It’s just a start; he’s open to much more.

Yang’s book provides an excellent statement of the severe economic problems facing normal people in America right now, and it makes a compelling case that Basic Income is an essential part of the solution. Yang is a solid standard-bearer for the Basic Income movement. Whether he can bring Basic Income fully into the debate during the 2020 U.S. Presidential election remains to be seen.

The people’s endowment

by Karl Widerquist | Aug 14, 2019 | Opinion, The Indepentarian

This article is an early version of a paper that was published as:

Karl Widerquist, “The people’s endowment.” In Axel Gosseries and Inigo Gonzalez (eds.) Institutions for Future Generations, Oxford University Press, pp. 312-330

The proposal

Governments should start to build up a permanent endowment of publicly held assets, both financial and physical, lease at least some of them out to private industry, and use the revenue for two purposes: half for government spending and the other half for a dividend in the form of an unconditional basic income for all people-in recognition of their shared ownership of their common resources and the sacrifice they make living in a world where others own the environment they live in.[1] The goal should be to keep the total value of the portfolio growing (taking into account the overall value of its income-generating and non-income-generating assets), so that each generation leaves the next with a more valuable endowment.

Many private institutions, such as universities and museums, have large and growing endowments. Why doesn’t the government have one? Simply, we have failed to take advantage of enormous opportunities to create one.

There are essentially three things we can do with shared resources. 1. We can hold them as a commons, such as parks, rivers, and nature reserves, keeping them basically in their natural setting for the use of all but the property of none. 2. We can use them for jointly for public enterprises such as a national health service or a transportation system. 3. We can privatize them.

The endowment model is not about what mix of these three uses we should choose. It is model of how and under what conditions we should privatize resources. The private sector could be large or small, but we should privatize resources only if it is better for current and future generations to do so, and when we do privatize resources, we do so for profit to be returned to the people. The upfront sale price has to justify privatization. The government can hold and manage resources when there is a particular reason to do so, such as an environmental need, an obvious common use, or a market failure. Otherwise, it should lease resources at market prices, leaving private agents free to decide how to use them. It doesn’t necessarily need to oversee business; it merely needs to manage the terms on which it leases resources to private entities.

This model is very different from contemporary capitalist or socialist models of property ownership. Under contemporary capitalism most resources are assumed to be privately owned, but few governments have any consistent model of how resources are privatized. Permanent titles are often granted on an ad hoc basis, sometimes to cronies, often at little or no charge. Our governments give resources to corporations free or far below market rates, and our corporations sell them back to us at full market rates, capturing not only the value they add in production but also the scarcity value of the resources they received as a gift with resource rents going almost entirely to wealthy private individuals and corporations.[2] Ad hoc privatization continually shrinks the pool of shared resources, ignores environmental concerns, and creates institutions that cause inequality to persist across generations.

Under the socialist model, many resources are held and managed by the state, but there is no obvious socialist theory of privatization. Mixed socialist states and welfare capitalist sates are usually as ad hoc in their privatization as more capitalistic states.

The endowment will increase both the revenue governments earn from private use of common assets and our ability to protect both privatized and non-privatized assets for future generations. The dividend is important not simply to relieve the effects of poverty, inequality, and economic uncertainty, but also to ensure that every single person in whose name the endowment is held actually benefits from it. The permanent nature of the fund is necessary to ensure that all people with a claim to the environment, including our descendants benefit from the decisions we make now.

Thinking like a family farmer

Although the endowment model is far from the way most governments manage the people’s resources, it is typical of the way most or all private owners manage their resources. Two comparisons illustrate the difference.

1 A family farm

Imagine a successful farmer who wants her farm to benefit her children and their descendants. She has many options, including selling the farm to put the money into a trust that will pay dividends to them, renting it out and splitting the rent among them, holding it as a joint venue that would provide produce for her descendants, creating a land conservancy to preserve it as a family park. Any mix of these strategies treats the farm as her family’s endowment.

Now consider an option the farmer would never take seriously: a corporation asks her to give the land to it for free with no strings attached. The corporation claims that this will benefit the farmer’s children because it will “create jobs.” If her children are good workers, they can get those jobs and take out loans to buy houses the corporation will build on the land. Of course, it will charge market rates for those houses and the land they’re on. Certainly the farmer would recognize that although this proposal might get her children wages for their labor, it gets them nothing for the legacy she would relinquish.

No family farmer-no private owner-would do such a thing. Yet, this is exactly what governments do with the most of the assets they control in their peoples’ names. They give them away at vastly below market costs with few if any conditions attached in the hopes that the people designated as owners will create jobs. By giving away resources, governments not only create inequality of wealth and income; they also cede unequal control of those resources. They thereby create entrenched interests that become powerful in the public decision-making process for generations.

2. University endowments

Many non-government institutions-such as museums, universities, NGOs, and wealthy families-have endowments made up both of financial assets they use to generate income and of physical assets used to further the institution’s mission directly (such as items on display at a museum, the buildings on a university campus, or a family home).[3] In many cases, universities’ financial portfolios grow as their campuses get larger and more elaborate. Harvard’s financial endowment is over $32 billion, having risen from $17 billion in 2001.[4] Its managers claim to have delivered an average annual return of more than 12% per year over the last 20 years.[5] Its real estate holdings have increased to include thousands of acres of land and hundreds buildings, some used directly by the university others leased out for income.[6]

Thomas Piketty presents a great deal of historical evidence that the returns to capital have tended to exceed the economic growth rate for most of the last two centuries.[7] If his findings are correct, any capital-holding institution (whether a family, a business, or a non-profit enterprise) can grow its endowment over time as long as it spends less than its returns each year.

In light of these examples, it seems strange that governments don’t already have large and growing endowments as their legacy from centuries of the privatization they have authorized. In the name of the people, they control more assets than any private institution, yet the commons tends to shrink in size and value every year to privatization and pollution, and governments seldom build up financial (or any other) assets in return for all it relinquished.[8] For the most part, governments have acted neither as good custodians of the environment nor as profit maximizing sellers of resources.

SWFs: a positive step but a limited example

There is one example of national and regional governments taking small, limited steps toward the endowment model by establishing financial endowments, called “sovereign wealth funds” (SWFs). An SWF is a pool of financial assets held by the government in the name of the people. Usually, SWFs are set up by resource-exporting polities in hopes of turning a temporary resource windfall into a permanent income. One SWF, the Alaska Permanent Fund (APF) pays a regular dividend, called the Permanent Fund Dividend (PFD), to citizen-residents of Alaska. While the fund makes part of the temporary windfall permanent, the dividend ensures that every Alaskan, now and in the future, benefits from the state’s windfall.

SWFs provide an example of how governments can use endowments to benefit people, but they represent only a limited application of the wider endowment strategy, and their example might give people the impression that the possibilities of a resource endowment are more limited then they really are. [9] Right now, few resource-based industries pay the market value of the resources they appropriate; governments devote little of their resource revenue to SWFs; and only one of those SWF pays a dividend.

Alaska created the APF in 1974 and began paying out the PFD in 1982. Over the last 10 years (2004-2013), the dividend has averaged about $1,213 per year for every individual or about $4,853 for a family of four. Despite all those payouts, the APF is now worth more than $50 billion.[10] So far, the APF and PFD have been instrumental in helping Alaska avoid the resource curse, in which the people of many resource-exporting nations fail to benefit from their resource exports or in which those benefits prove temporary. If nothing else, all Alaskans have benefited in one direct way from Alaska’s oil. Very few resource-exporting regions can make that claim. For example, it is hard to say how or whether the poorest Mexicans and Nigerians have benefited from all the oil their nations have exported.[11]

The APF and PFD are financially sound. Alaska might choose to get rid of them someday, but as long as they are allowed to exist, they will provide benefits for all future Alaskans. Modern Pennsylvanians probably can’t say how or whether they’ve benefited from the Pennsylvania oil rush of the 1860s,[12] but future Alaskans will have one small tangible benefit.

Other SWFs are much larger than the APF. The United Arab Emirates and Saudi Arabia each have SWFs worth over $500 billion.[13] Norway’s SWF has $818 billion or about $161,000 for each person. It is primarily used to support the country’s pension system. [14] Norwegian pensions will be financed by the assets their government owns around the world for generations after their oil-exports have run out. The fund is now larger than the country’s national debt ($759 billion), so that by some counts, Norway has no net national debt.[15]

Not all SWFs are people’s endowments because they are held by authoritarian governments.[16] I use them only to demonstrate the possibility that public agents can build up endowments. I’m arguing that under a democratic government, the endowment is preferable. I have no statement whether authoritarianism with an endowment is better than authoritarianism without one.

The success of these SWFs ought to inspire imitation. If it is a good idea for Alaskans and Norwegians to be paid for their share of their country’s oil, it must also be a good thing for Namibians to be paid for their share in the country’s diamonds, for Jamaicans to be paid for their country’s beach resorts, for South Africans to be paid for the country’s gold, for the Swiss to be paid for their banking system, and so on around the world. However, because the SWF is a relatively new idea that has been tried only in limited circumstances, I’m worried that they will give people the impression that the endowment model is more limited than it is.

Four features of the endowment model

The endowment model has four features, or one could say, there are four tests to see whether a policy is following the endowment model. Governments fully employing the endowment model do the following things:

1. They charge market rates (profit-maximizing prices) for the resources they privatize.
2. They apply the model to all resources they privatize.
3. If they privatize nonrenewable resources they save and invest a sufficient amount of the revenue so that the future generations receive a fair share of the benefit.
4. They take sufficient account of the environmental, social, and political impact of privatization to ensure that whether they decide to privatize a resource, use it for a public enterprise, or leave it as part of the natural environment, the decision will fairly benefit all people of current and future generations.

The first goal applies to the price not the conditions of leases. An oil lease with environmental restrictions probably sells for less than one without. Maximizing revenue from a signal sale without regard to its impact on the environment would be a shortsighted effort to maximize the value of the endowment. The first goal simply means no gifts to businesses: once the authority sets the conditions of a lease, it charges what the market will bear for that lease.

The next two sections look at two examples of privatizations to see how resource-based SFWs get closer to the endowment model than most privatization efforts, but still fall far short of it.

1. U.S. broadcast spectrum policy

The broadcast spectrum is used by radio, television, cell phones, wireless internet, and so on-apparently with few direct environmental side effects. When you pay to access the broadcast spectrum, you pay partly for the company’s provision of service, but you also pay for the slice of the broadcast spectrum they control. Their slice has value because with currently available technology the spectrum is a scarce resource. The company didn’t create the broadcast spectrum. It didn’t invent it. It didn’t discover it. It controls the broadcast spectrum because the government gave it a lease. Although most governments nominally assert ownership of the broadcast spectrum,[17] in most cases, they charge little or nothing for leases to it.[18] The U.S. government, for example, gave away television-broadcasting rights largely in exchange for broadcasters’ promise to run occasional public service announcements.[19]

Of course, companies with broadcast spectrum leases spend money. It costs money running a business provide the cell phone networks, television, radio, wifi, or similar things, that is why business Accountants Brisbane, and ones similar, need to be incorporated in helping look over and manage financials. Businesses, big or small, encounter a number of costs they probably didn’t expect to be included in their budget. For example, as stated previously, networks and technology cost money. This could also be due to the hiring of Managed IT Melbourne services, or IT services wherever a company might be based, to give them assistance with running the technology side of things. They are equivalent to a young entrepreneur running a coffee house in a nice location where her wealthy grandmother pays the rent. Some of the money she makes is the return on her entrepreneurship, but all the value the flows form her location is a gift from grandma. The difference is huge. A 2003 study evaluated U.S. broadcast spectrum at $301 billion per year (more than one-eighth of government expenditure that year).[20] This does not include the value of that broadcasters add from their efforts and expenses. It’s the pure rental value of the spectrum-the gift from grandma government. The revenue forgone would be enough to provide a dividend of $1000 for every man, woman, and child in the United States every year from now on. Instead, from now on, this revenue will provide returns for the heirs of those who received the government’s gift of the broadcast spectrum.

Many other common assets are treated like the broadcast spectrum. The government created the internet; the community makes it valuable; but private companies capture most of the revenue it generates. The government lends money to banks at low interest rates, and they lend it out to the rest of us at higher rates. The U.S. government spends enormous sums to bail out banks and other institutions during financial crises, but does not usually leverage those moves into permanent ownership of banks or anything else.[21]

2. Alaskan Oil policy

Clearly, Alaska’s oil policy is closer to the endowment model than U.S. broadcast spectrum policy. Alaska have made money from resource privatization and taken steps to share part of that revenue with all current and future residents. But Alaska has fallen short of the endowment model in many ways. As mentioned above, the PFD is a small legacy, and barring a significant change, it is not likely to rise significantly.

The APF and PFD are small partly because Alaska receives a relatively small portion of the revenue from its oil exports. The state has received about one-third of the revenue generated by its oil exports. The other two-thirds have gone to private for-profit oil companies. Norway receives 78% of oil revenue, and still finds plenty of oil companies willing to drill.[22] Conditions are different in Norway than in Alaska, and it is not fair to could have done that well, but it is fair to say that Alaska could have raised a lot more money if it charged the market rate.

The other reason that the dividend will have a relatively small impact on future generations is that Alaska devotes only a small portion of its oil revenue to the fund. As of 2010, only 18.3% of the state’s oil revenue had been devoted to the APF.[23] One plan that was discussed in Alaska at the outset of the oil boom was to put all of the state’s oil revenue into an SWF and spend only the interest, gradually reducing other taxes as revenue from the fund made them unnecessary.[24] Had Alaska done so and had it received two-thirds instead of one-third of oil revenues, all else equal the fund would now be 10 times their current levels. The APF would be more than $500 billion.[25] If the state devoted half of the returns to the dividend and half to government spending, the dividend would be about $6,000 ($24,000 for a family of four) and the state would have $20 billion to spend each year-far exceeding the state’s budget of $12 billion in 2013.[26] Of course, all else would not have remained equal, and so it is not fair to say that this strategy would definitely have produced a fund this large, but it is fair to say that Alaska’s fund and dividend could be several times larger than they are now.

Instead, the state gave itself an enormous tax cut at the expense of future generations by eliminating the income tax in 1980. Lower taxes, of course, are a benefit to for many of the people, but as then governor, Jay Hammond argues, the benefit of eliminating the income tax was felt mostly by the wealthiest Alaskans.[27] Additionally, it might not have been best for Alaska to devote all of its oil revenue to the APF. The state badly needed improvements to its educational system and its infrastructure at the time. These are also part of the endowment we leave for future generations, and they can be a more important than any financial legacy.[28]

In effect, by eliminating the income tax, the current generation of Alaskans is spending a temporary revenue stream on themselves, depleting a resource forever but leaving a fiscal cliff for future generations when the oil runs low. Similarly, living in the Persian Gulf, I get the impression that most hydrocarbon exporting nations will leave neither sufficient physical infrastructure nor sufficient financial savings to sustain their current level of development after the boom. These decisions represent a serious failure of today’s leadership to be a good custodian of the people’s common inheritance.

Alaska has also failed to apply to the model to most of the rest of its environment. There are a few other resource taxes, but the model could be applied many more of the Alaskan economy, such as land value. Valuation of land is a critical element of real estate and many hire a land valuer to maximize property revenue. Probably the most significant way that Alaska differs from the endowment model is not in its failure to maximize revenue from the privatization of resources, but in its failure to take ownership of the environment as a system, and to protect it sufficiently. I’ll talk about environmental issues later in this chapter.

Applying the model more widely

The rest of this chapter will dispel the following potential misconceptions as it explain the benefits of wider applications of the model.

1. People might think that the financial fund is the endowment.

• Actually, our common resources are the endowment. The establishment of a financial fund is only one of many things we can do with it.

2. People might think that resource endowments are inherently small or only for nations experiencing a resource boom.

• Actually, the all nations have many extremely valuable common resources, most of them renewable.

3. People might think that getting revenue from resources naturally accompanies the irresponsible depletion of resources or degradation of the environment.

• Actually, a resource endowment provides a coherent mechanism for more responsibly managing resources for the benefit of future generations.

1. It’s not the fund: it’s the resources

SWFs are financial endowments, but our nonfinancial endowments-physical resources-are far more important. The act of creating an SWF is not the establishment of an endowment; it is the transformation of a physical endowment into a financial endowment. Physical assets don’t always have to be transformed into other forms to give people their highest value. As mentioned above, our parks, rivers, beaches, and public enterprises are parts of our endowment and they might already be in their highest value use.

The most important thing to learn from the resource-exporting polities is not that they have set up SWFs, but that they have stopped giving away resources for free and started demanding payment for at least some of the resources they privatize. Even the largest SWFs in the world represent a small and narrow model of the potential for a people’s endowment, because they are made up entirely of financial assets, and they are usually based entirely on revenue from one or two resources, which are generally not treated as part of a national endowment. The potential for all governments to build up SWFs is enormous and the potential for them to build up a common asset endowment beyond the financial SWF is even greater.

On average, from 1977 to 2010, 87% of the State of Alaska’s government revenue has come from oil taxes, fees, and royalties.[29] Several resource-exporting polities (such as Norway, Qatar, the UAE, Kuwait, and Saudi Arabia) are also financing all or most their government spending from resource-revenue.[30] Citizens pay almost no taxes, and so are less defined by their role as taxpayers and more as owners of shared resources.

The most important thing we, the people, do by establishing the endowment is to assert ownership over our environment as a system. Currently, no one truly owns the environment. Individuals own parts of it, but no one manages or takes responsibility for the system as a whole. The obvious candidate is the government as representative of the people, but governments have not really asserted ownership. They regulate some uses of the environment here and there but not as part of a systemic plan to restore and maintain a healthy environment and the total value of the people’s portfolio.

To see the natural resource base as the people’s endowment is to see the natural resource base as our treasure. It has to be managed for the long-term benefit of the people-in every sense in which it benefits the people-and we have to consider future generations as owners of the environment as much as we are. We will bring them into existence, and so, any transformation of resources we do should be a net benefit to all of them as well as all those alive now.

2. All nations are resource rich: the Vermont example

This section argues we can apply this model to nations not usually recognized as resource-rich.

This chapter does not discuss international justice. It assumes we’re stuck with the nation state system and discusses what states can do. Perhaps someday international institutions will have the authority to employ some or all elements of the endowment model. If so, most of what I say here still applies, and our ability to address the ecosystem as a whole improves. I do not discuss the issue that some nations have more valuable resources than others, because it is not as pressing as how we use those resources. Difference in the size of the resource base explains why Yemen is less wealthy than Qatar but not why it is less wealthy than Singapore. The most important issues involving our resources are in how we use them, who we allow to own them, and how we allow them to cross borders. Better management of resources would not make all nations equally wealthy, but it would make the poorest and most unequal countries much better off.

The difference between what we usually think of as a resource-rich nation and what we think of as a resource-poor nation is that resource-rich nations are rich in the kinds of resources governments usually sell and resource-poor nations are rich in the kinds of resources governments usually give away. All nations have enormously valuable resources, most of which are being privatized without any compensation to the people for removing them from the commons. For example, bottled water is just as much a resource as oil, but many companies take it out of the ground (or out of the tap) at no charge, many paying no more taxes than non-resource-extracting companies located on similarly valuable real estate,[31] like another gift from grandma.

Another example is perhaps even more telling. The beach resort industry is-financially speaking-just as much a resource export as the oil industry. The beaches of many developing countries are dotted with-and sometimes dominated by-resorts. Yet, to the best of my knowledge, there are no beach-resort-real-estate dividends. Not only are taxes on resorts often low; sometimes governments offer corporate subsidies for their development. Taxes for them can be handled by small business accounting firms. Resorts in the developing world are often owned and patronized by people from developed countries, offering little more than a few jobs to the locals. This is exactly what the farmer in the original example would never do: closing off land that were once freely available; getting no revenue in exchange; sometimes paying people to take it away; sometimes for little more than the hope of employment.

How big is the potential for revenue from common assets? Gary Flomenhoft estimates the value of common assets in the “resource-poor” state of Vermont, including the following assets: air, wildlife and fish, public forests, groundwater, surface water, minerals, land value, wind, the broadcast spectrum, the internet, the financial system, and the monetary system. He finds the total rental value of these assets to be somewhere between 8.86 and 28.31% of Vermont’s GDP. The wide range exists because of the difficulty of estimating the outcome of auction markets that don’t yet exist.[32]

If Flomenhoft’s low estimate is representative of the United States as a whole, common assets produced $1.28 trillion of revenue per year. If the higher figure is representative, the amount of rent available is $4.10 trillion-28.31% of the $14.5-trillion GDP of the United States. If half of that ($2.05 trillion) were used for government spending, it could fund 82% of the US government budget. The other half could fund a dividend of $13,300 per person per year, or $54,200 for a family of four.[33]

According to Mark Blyth and Eric Lonergan, the Bank of England, the European Central Bank, and the Federal Reserve already own assets in excess of 20% of their countries’ GDPs.[34] That alone would make a good start: something in the neighborhood of $300 billion in that United States.

In one sense, it doesn’t matter how much money there is in treating assets as the people’s endowment. Whether it raises a little or a lot, we owe it to ourselves and our descendants to start thinking about our resources as our endowment, rather than squandering it for the benefit of the politically connected. We need to stop thinking that businesses need or deserve the gift free resources just to induce them to provide services using those resources. If they can make money with otherwise common resources, they should pay the full market value for those resources.

3. Our responsibility to future generations

People are likely to ask two nearly opposite question about the idea of financial compensating future generations for what we do now. They could point to technology improvements and ask why we should we financially compensate future generations for anything when they will probably have far higher living standards than we do. They could point to environmental degradation and ask whether any amount of financial wealth can compensate future generations for the incredible damage we’re doing now.

A. Finance and future generations

The question of whether we should financially compensate future generations is closely tied to a question of whether it is even possible for one generation to financially compensation another. One might argue that we can’t financially compensate future generations, because they will have to produce all the goods they consume from the stock of natural resources, developed capital, and labor available at the time. Financial instruments are not resources; they are only claims on resources by one party against other parties living at the same time. Given this obvious fact, what does it mean to say that a financial endowment provides anything for future generations?

The key to the answer is that any generalization we make about future generations applies only to the average, not to everyone. The unequal world we live in is-financially speaking-nearly opposite of Lake Woebegone: most of our children are below average. We need to compensate all financially below-average citizens for granting claims resources that create financially above-average citizens.

We need to take responsibility not only for the physical environment but also for the institutional setting that we leave our descendants. The ad hoc privatization system our ancestors left us creates an institutional setting that guarantees inequality. If we don’t change, the wealthiest 1% of future generations will control most of the world’s resources, because ad hoc privatization assigns permanent ownership of resources to some and not others. The beneficiaries of privatization will pass on the benefits of those resources to future generations, giving them greater claim to the natural resources, capital, and labor available than other members of their generation.

Future generations could rectify economic inequality using the government’s power to tax and redistribute property that exists in their generation, but it is wrong of us to put them in the position where they have to do so and to create an institution setting making it so difficult for them to do so. Once a group obtains strong legal rights over specific resources, they gain both the motivation and the political power to protect that privilege. The income tax, the inheritance tax, and the capital gains tax all have powerful political enemies. The APF has no enemies. It’s just a pool of publicly owned funds with a long established history as public funds. Even though it is an equalizing mechanism just as much a redistributive income tax, no one feels inhibited by its existence. If it did not exist, some wealthy people would own those assets instead. Established history would tell them it was theirs. They would feel the pinch of any tax meant to have the same equalizing effect as the APF, and they have political to resist those taxes.

Thus, the goal of a shared financial endowment is to bolster the income and wealth of those who would otherwise be born with fewer claims on resources in compensation for the privatization that would otherwise result in default inequality. The financial endowment will give all the members of future generations some claim on the wealth accumulation our economy will do between now. The endowment gives future generation greater political and economic leverage to distribute their production in ways that recognize everyone as free and equal citizens. Although we cannot compensate a future generation as a whole, we can compensate the average person for the privileges we bestow on the people we name as owners of property. And for this, the financial portion of the endowment works very well.

B. How can we compensate for environmental degradation?

If we leave future generations an unhealthy environment, there is nothing we can do economically or technologically to compensate for it. The environment we leave our descendants is as much a part of our legacy as the capital and knowledge base we leave them. It is as much theirs as it is ours.

We have to pass on a healthy environment, but it’s unreasonable to think that no natural resources should ever be converted into consumption or investment goods. The environmental problem is not that we have made environmental tradeoffs. It is that we have avoided facing them for what they are. Even today environmental regulations tend not to be based on a careful examination of the costs involved. Some actions (such as chlorofluorocarbon emissions) are limited or prohibited; other actions (such as most green house gas emissions) are allowed freely,[35] as if anything not prohibited imposes no costs on others. Any use of natural resources involves environmental tradeoffs that affect all current and future people. Environmental accounting-the effort to make these tradeoffs explicit-is still in its infancy, and little, if any, public policy around the world incorporates realistic appraisal of environmental tradeoffs.[36] Within a strategy to protect a healthy environment, it is these tradeoffs we compensate for. Estimating future environmental costs of present use is extremely difficult, and until we have better understanding, we need to err on the side of caution.

The endowment is a powerful tool to help because charging for something discourages its use. A simple application of Adam Smith’s invisible hand theory[37] implies that users of resources will overexploit them unless they pay the environmental costs of their use. This is one reason for the rule that the purchase price of any resource has to justify its use. Once we tie government revenue to the value of the resource endowment, we give government an incentive to put a high value on the resource base.

One might think that if we start charging businesses for resources, we will start privatizing even more of our environment to make more money. I want to argue that the opposite is true. Throughout history, resources have typically been up for grabs or given away by governments to crony capitalists. In either case, people have incentive to exploit resources to extinction.[38] There was no dodo dividend. The assertion of ownership over common resources provides the following three mechanisms to reduce the overexploitation of resources.[39]

1. The endowment encourages the community think like an owner. A demand for payment asserts ownership, and ownership confers rights to control and manage.[40] When private companies own the environment, any government action to protect it is “interference” with the powers that naturally flow from ownership. Once we establish the people as owners of the environment, government as custodian, and private companies as the hired help, environmental protections naturally follow from the people’s ownership. If companies want to lease the people’s resources, they have to follow the people’s terms.

Ownership (whether public or private) is the solution to the tragedy of the commons. The term “tragedy of the commons” comes from theorized pastoralists who have an incentive to over-graze a common field that none of them owns.[41] One solution is to divide the field into private property, but another solution is to formalize collective ownership, establishing an authority to set rules of access.[42] Agribusiness firms do not have incentive overgraze their own fields or butcher their own herds to extinction; they do have incentive to overwhelm the common watershed with excessive cattle excrement, hormones, fertilizer, and other pollutants.[43] Establishing the people’s endowment creates an authority to say this is people’s watershed; these are the terms of access.

2. The endowment encourages the community to think like a monopolist, and to realize its price-setting power. This statement is less true of a resource like oil, which is sold a world market. But even the poorest countries have monopoly power over many valuable assets, including local real estate, the monetary system, and the broadcast spectrum. Monopolists don’t sell all they can at the lowest prices. They restrict supply to obtain higher prices. Once we realize the enormous monopoly power the community has over access to the environment, it doesn’t make sense for the people to unload their precious resources at bargain prices; it makes sense to hold them back to see how much money they can get.
3. The endowment encourages people to think not just like any monopolist, but like Johnny Carson. Who? In the late 1970s and ’80s, he was the highest-paid television entertainer in the world.[44] His command over a huge audience gave him monopoly power, which he used not just to demand more money but also to demand less work. His time was valuable. The wealthier he became from selling his time, the more time off he could afford. He restricted the supply of his time beyond the profit-maximizing point and enjoyed the non-market value of his resource.

Currently the community’s share of the revenue from privatization is so small that we don’t feel like we can afford to hold any more back. Once start making companies bid pay for what they take out of the commons, we can realize the power over our environment Johnny Carson asserted over his time.

Compare two strategies for a country managing its beaches. Under the current strategy, politically connected corporations obtain the beaches at far less than their market value. Most the beaches become private resorts inaccessible to many citizens. Under the John Carson strategy, the people raise the price above the revenue-maximizing level, holding back a large amount of beachfront property to retain for public use, but making a very high rate on beaches they do privatize. A few private resorts dot the beaches, but large areas remain for public or for wildlife.

Our environment-left alone and unexploited-is the most important part of our endowment. We can have fewer smoke stacks, fewer drain pipes, bigger parks, cleaner air, a healthier environment, and make a higher rate of return on the resources we do exploit. We will leave our descendants in a better position both financially and environmentally. We aren’t doing this now, partly because we don’t have enough democracy, but also because we’re not looking where the money is and not taking power over it.

Conclusion

This chapter has introduced the idea of a people’s endowment, in which we establish the precedent that the people as a whole own the environment and the resources within it. It has argued that this strategy will help create an institutional structure that more fairly shares the benefits of our economy with-and better protects the environment-for all people, living today and in the future.

The people’s endowment is better than the tax-as-you-go method of financing government expenditure because it alters the institutional structure toward greater equality and responsibility. Default ownership in the current system is highly unequal creating leverage for the wealthy to resist tax-as-you-go efforts to combat inequality. Once the endowment is established, a high level of equality becomes the default. Businesses have to add value and pay for the resources they hold to make money.

The chapter has argued that the endowment will better maintain the environment for future generations because it focuses our attention on the environmental tradeoffs we make daily and because it gives the community greater power to set environmental rules.

The chapter has not argued for any specific level of public and private sectors. It has simply argued for how we should go about privatization of resources. This strategy does not necessarily imply a larger government sector. We should choose the mix of public and private uses of resources based on what is better overall for present and future people. We should privatize resources only if our environmental endowment is made more valuable by doing so, and only if private actors are paying enough to make privatization profitable for the community.

Of course, we need to make sure that the terms of use are loose enough to give people flexibility in the projects they will pursue as individuals with the resources they obtain. Access to resources needs to be open to all people on the same basis without discrimination. And everyone has to have access to enough resources to afford the basics of life. But anyone who holds resources must pay back to the community, and that payback must be enough to make their ownership a benefit for everyone else-now and in the future.

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[1] Similar proposals include (Barnes 2014); (Blyth and Lonergan 2014); (Flomenhoft 2012); (Widerquist 2012b); (Widerquist 2012a) This proposal obviously takes inspiration from left-libertarian proposals such as (Vallentyne and Steiner 2000); (Vallentyne and Steiner 2000b) The main difference between this proposal and more standard left-libertarianism is the emphasis on the community’s monopoly power over its resources (explained below).

[2] (Mansfield 2008)

[3] These institutional endowments are not people’s endowments, because they are not set up to serve the interest of the people as a whole. Whose interest these endowments serve is an interesting issue, but off the topic of this chapter. I use them only as examples of how endowments can work.

[4] (Institute 2003); (Institute 2014)

[5] (Harvar-Management-Company 2014)

[6] (Arsenault 2009)

[7] (Piketty 2014)

[8] (Flomenhoft 2012); (Widerquist 2012b)

[9] (Widerquist and Howard 2012b); (Widerquist and Howard 2012c)

[10] (Alaska-Permanent-Fund-Corporation 2014); (Permanent-Fund-Dividend-Division 2014), averages are the author’s calculations from the table.

[11] For further arguments along these lines, see (Widerquist and Howard 2012b); (Widerquist and Howard 2012c)

[12] (Black 2000)

[13] (Sovereign-Wealth-Fund-Institute 2014)

[14] (Norges-Bank 2014)

[15] (International-Monetary-Fund 2013)

[16] (Tétreault, Okruhlik, and Kapiszewski 2011)

[17] In the United States for example, public ownership is asserted in (73d-Congress-of-the-United-States 1934), 301.

[18] (Flomenhoft 2012), 100.

[19] (Snider 2003), 12.

[20] (Snider 2003), 12.

[21] (Sherman 2009)

[22] (Flomenhoft 2012)

[23] (Erickson and Groh 2012)

[24] (Moss 2012), 76, 86 n18.

[25] Author’s calculations assuming a population of 700,000 and a real return rate of 4 percent.

[26] (Roberts and Solow 2003)

[27] (Hammond 1996)

[28] (Rose 2008)

[29] (Erickson and Groh 2012), Table 3.1, 43

[30] Qatar for example receives more than 70 percept of government revenue from hydrocarbons and another 10 percent from business taxes, much of which is directly or indirectly related to hydrocarbons. (International-Monetary-Fund 2010), table 13, p. 10.

[31] (Flomenhoft 2012), 96-98.

[32] (Flomenhoft 2012).

[33] (Widerquist 2012b)

[34] (Blyth and Lonergan 2014)

[35] (Hoffman and Wells 1989)

[36] (Odum 1996); (Mathews 1997); (Owen 2008)

[37] (Smith 1976)

[38] (Martin 2005); (Martin and Klein 1984) (Roberts and Solow 2003)

[39] Adapted from (Widerquist and Howard 2012a)

[40] The now-standard account of that we mean when we use the word “ownership” defines it as a bundle of 11 rights and duties (Honoré 1987), 161-192.

[41] (Hardin 1968)

[42] (Feeny et al. 1990)

[43] (Williams and Hann 1978)

[44] (McWhirter 1982)