by Karl Widerquist | Feb 7, 2018 | Opinion, The Indepentarian
This essay was originally published in the USBIG NewsFlash in June 2008.
What does the Stone Age have to do with modern justice? According to property rights advocates: everything; their arguments rely on two factual claims that can be enlightened by a look at prehistoric anthropology. (1) Property begins as individual property and then governments come along and impose taxes that interfere with the rights of owners. (2) A market economy with no restrictions on inequality makes everyone better off than they were befor the private property was created (i.e. when our ancestors were hunter-gatherers).
I have heard private property advocates make these claims many times, but I’ve never seen them support those claims by referring to anthropological studies of prehistory. How do we know that property began as private property? Are we sure that every single modern worker is better off than our hunter-gatherer ancestors? Recently I’ve taken a look at some anthropological studies including Stone Age Economics by Marshall Sahlins, Bronze Age Economics and How Chiefs Come to Power by Timothy Earle, and The Evolution of Political Society by Morton Fried. I found out that the claims of property rights advocates don’t hold up very well.
To examine the first claim, we need to go back to the creation of fixed property rights in the Bronze Age. Property rights advocates like to imagine land being first appropriated by individualistic pioneers who tamed the wilderness by their own efforts. But that’s not what actually happened. The transformation from hunting and gathering to a settled agricultural life took the joint act of entire bands not simply one person. The rights of land tenure in primitive settled communities were extremely varied, but it seldom if ever looked anything like the neoliberal systems that property rights advocates suppose. In the earliest agricultural societies, every individual had a right of direct access to the land, which was usually owned (if at all) by villages or large extended families. In slightly more economically advanced societies where property rights have become exclusive, the original owners are not private businessmen, but chiefs. Ownership of resources was synonymous with ownership of the government.
The reason chiefs doubled as owners is obvious: the earliest societies were too economically simple to have separate spheres of power—such as government, religion, and business. All of these powers were vested in one person. The Hawaiian Islands were first settled by human beings around the year 600 and so they provide a very recent example of the first creation of property rights. For the most part by the 1400s, each island was run by a chief who owned the land and the irrigation systems that made everyone’s efforts to farm the land viable. Local lords were employees of the chief. They doled out land to peasants only if the peasants promised the interests of the chief. In short, the chief ran his island as a wholly-owned, for-profit business.
Property rights advocates sometimes claim that only recent history matters, but taxation and regulation of property are not new. Modern governments inherited their regulatory powers from medieval kings, who owned the right to regulate their domain in any way they saw fit. Modern landlords hold titles that derive from the medieval vassals of the king. Government taxation is simply the exercise of property rights that are as old as or older than private holdings of property. Some countries went through a brief laissez faire period in the Nineteenth Century, when governments chose to tax and regulate less than before. But I know of no government that signed an enforceable contract to alienate its rights over its domain. So-called property rights advocates simply want to interfere with the property rights of kings to promote opportunities for his vassals, which has about as much to do with “freedom of property rights against interference” as redistribution from condo associations to condo owners, from landlords to tenants, or from stock holders to middle management. If the property rights system the king set up is unjust, his rights should go to the people, not his lords. If the property rights system the king set up is just, we must respect his rights and not force him to cede power to his lords.
To examine the second claim, we need to go back all the way to the Stone Age. Studies of hunter-gatherer communities that survived into the Twentieth Century show that people worked an average of three to four hours per day (including time spent preparing food and commuting). They worked at their own pace and slept more than people do today. Researchers reported that they appeared to feel extremely secure about their ability to find food and other necessities, and they never had to answer to a boss. When a hunter-gatherer is in the mood to forage for food, she sees if anyone else feels like joining her. If not, she waits or goes out alone.
Modern capitalism is a very productive system with great potential to produce goods that could benefit everyone, but as we practice it, it has extreme inequalities. People live on the street and eat out of garbage cans. Others work long hours in sweatshops at the edge of their physical ability and still face the possibility of hunger and malnutrition. Most modern workers have more access to luxuries and better medical care than hunter-gatherers, and on the whole they live longer. But many work longer and harder; they have to follow the orders of a boss; they have less economic security; and do not forget the some individuals die young (and younger than many hunter-gatherers) because of malnutrition and other complications of poverty. In short, the transition from hunter-gatherer society to modern capitalism has not been an unequivocal gain for the working class. It has been a tradeoff. But a tradeoff is not good enough to meet the standards that property rights advocates set for themselves.
I am not the one who put forward the standard that the poor must be at least as well off as their Stone Age ancestors. Property rights advocates chose that standard because they thought it was easy to meet. It is. A society, as productive as ours, can easily make everyone far better off than they would be as hunter-gatherers, but we have failed to do so. The minimum we can do to justify our property rights is to make sure that every single human being has more freedom and economic security our Stone Age ancestors. To make sure the standard it met, we only need to make sure that everyone can have some minimal level basic necessities without having to submit to a boss.
We don’t, I believe, largely because we, the better off, have convinced ourselves that we have the right to boss around the poor. We have property and they don’t; and therefore, supposedly, we have the right to make them do what we say 40 hours per week. Yet, studies of societies without property rights show that our property rights are the only thing coming between the poor and their ability to meet their own needs with less effort and without following anyone’s orders. It is we who owe them, not they who owe us. Perhaps we can make the poor work for us if they want to share in the luxuries of capitalism, but we have no right—even by the standards set by property rights advocates—to force them to work for us just to meet their basic needs.
-Karl Widerquist, New Orleans, LA, May 2008
by Karl Widerquist | Jan 31, 2018 | Opinion, The Indepentarian
This essay was originally published in the USBIG NewsFlash in February 2008.
The unexpected success of Mike Huckabee in the Republican primaries has given a substantial boost to the small movement to replace all federal taxes with a national sales tax with an accompanying tax rebate in the form of a partial basic income (see story above). The basic income movement has been almost an entirely left-of-center movement since the 1980s, made up of mostly of people who want an equal society with much better, freer lives for the poor. I believe that most basic income supporters would like to have an ally on the other side of the political divide. Is the sales tax movement such an ally? Although I have no doubt that a basic income as small as the one proposed by the sales tax movement would be better than no basic income at all, there are two main reasons why the sales tax movement promotes something that is very difficult for most basic income supporters to endorse.
First, the stress of the sales tax movement is almost entirely on the benefits of income tax relief to try and discover if there is anything that could be done to help them. The tax rebate is included almost as an afterthought to cushion the blow on the poor, who currently pay little or no income taxes and would stand to lose significantly by a shift to sales taxes. Any motivation to help provide basic economic security is left out of the movement’s literature. The poor are expected to work, and adequate work is assumed to be available in the job market. As the sales tax movement sees it, the poor only have one problem-the government makes them pay taxes. If the government rebates their taxes, private employment provides everything they need. Even if we disagree with the motives of sales tax advocates, and even if their basic income is far too small, it is better to get some of what we want than nothing. That is, as long as the cost is not too high, which brings me to the next reason.
Second, sales tax advocates would only support a small basic income as part of a shift to the national sales tax, which supporters call “the fair tax.” But the sales tax has significant problems. The three most obvious measures of an individual’s economic standing are income, wealth, and consumption. Any one of these measures could provide a base for taxation: an income tax is obviously a tax on income; capital gains, wealth, and inheritance taxes fall on wealth; and a sales tax falls on consumption. What difference would it make to base federal taxation on sales? Savings (i.e. the accumulation of wealth) is the difference between income and consumption. If you make $30,000 and save $3,000, you spend $27,000. An income tax would tax you based on how much money you make; a sales tax would tax you based on the portion of that money you spend that year. Sales tax advocates call this fair because it encourages savings and because it supposedly taxes people how what they actually consume rather than on what they are able to consume. If someone is self-employed, paying their taxes can be a stressful thing when the tax month comes, and with the new changes, they may find themselves confused about how to do this if they sort their own taxes out, that is why the use of resources like Golden Apple Agency accounting services or services closer to their location, are used to support them during this time with any tax changes.
For most of us, there is no a big difference between income and savings. The poorest people tend to spend all of their income, and members of the middle class are lucky if they can put away 10 percent. But at higher levels of economic well-being, there is an enormous difference. The richer one is; the less one spends as a percentage of income. Therefore, the “fair” tax is regressive, making after tax incomes between the middle class and the wealthy less equal than before tax incomes. Supporters argue (fairly) that it will be no more regressive than the current system with all of its exemptions, but the sale tax is simply not a mechanism capable of making the system progressive. A government financed by a national sales tax will allow families to accumulate more and more wealth and the power that goes with it. They will be able to pass that wealth down for generations and generations with no interference from income or wealth taxation.
Sales tax advocates say that it is fair to tax people on what they actually consume rather than their potential to consume. Yet, the holding of wealth takes up resources that other people might as much as consumption does. If my family holds land as wealth, we block anyone else from using that land, but we would pay no sales tax on it. Under a sales tax, if a middle class man spends $50 to buy his son a baseball glove, he pays tax. But if a wealthy man spends $50 million to buy his son a professional baseball team-that’s investment spending, not consumption-he pays no tax. This is the “fair tax” in name only.
Even so, a national sales tax could be part of an overall progressive system if it was accompanied by a substantial basic income and some kind of tax that hits large dynastic family accumulations of wealth. Inheritance taxes and capital gains taxes don’t actually do that job very well, but there are two taxes that could, a tax on land value or a tax directly on wealth holdings (see Top Heavy by Ed Wolff). However, I fear that sales tax advocates would resist any changes in their preferred system that would make it progressive.
-Karl Widerquist, Oxford UK, February 2008
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by Karl Widerquist | Jan 24, 2018 | Opinion, The Indepentarian
This essay was originally published in the USBIG NewsFlash in November 2007.
Public awareness of BIG took a small step forward this summer when the Simpsons Movie made a joke about it. Homer and his family are greeted at the Alaskan border by an official who says, “Welcome to Alaska. Her ares a thousand dollars. We pay everyone in Alaska to let us destroy the environment.” It’s not the most flattering joke, but it makes a fair point about the oil-based dividend. Although taxes on the extraction of fossil fuels might be a good way to give firms an incentive not to over-exploit them, and although a BIG might be a good thing to do with those revenues for many reasons, a resource-linked BIG might make people more willing to accept environmentally damaging resource exploitation—thus partially counter-acting the exploitation-discouraging effects of the taxes. This is underlying moral behind the Simpsons’ joke, but it was funnier when they said it.
12.5% of state oil taxes go into the APF, which is invested in stocks and bonds. A portion of the returns on the fund are distributed to Alaskans each year. Of course, the Alaskan government does not pay people when they arrive in the state; Individuals must be residents in the state for a full year to be eligible for to receive dividends from the Alaska Permanent Fund (APF). But this is fairly within the confines of the writers’ license for a cartoon.
In one way the cartoon significantly understates the generosity of the APF Dividend. The APF gives the same dividend to every man, woman, and child in the state. Because of recent increases in the stock market to nearly 40 billion dollars, the principal of the APF grew by more than 17.1% for the fiscal year, according to Scripps Howard News Service. Because of this and recent years’ gains, the APF Dividend went up significantly again this year. APF checks this October and November were for $1,654, according to the Juneau Empire. The Simpsons arrived in Alaska with a family of five, and so the border guard could well have said, “Welcome to Alaska. Here’s $8,270.” In other words, the actual figure is eight times more generous the figure mentioned in the movie.
According to the Associated Press, “for many residents, the check is no joke. It means getting caught up on bills and supplementing income that for some is a week-to-week living in Alaska, where the cost of living is high in part because of its distance from shipping centers in the Lower 48 states.” People who have lived in Alaska since the first Dividends went out in 1982 have received a lifetime total of $27,536 in APF Dividends.
It is doubtful that mention in the Simpsons Movie will spark a campaign for a National Permanent Fund based on resource use throughout the United States. However, Albertans have been eyeing the APF with envy for years. Alberta is a Canadian Province a few hundred miles southeast of Alaska. Alberta has also had large oil revenues, but it lacks a mechanism like the APF to ensure that all Albertans benefit from them.
Allan A. Warrack, of the University of Alberta, writing in The Edmonton Journal on October 15, 2007, called for an Alaska-style dividend for Alberta. The province has a fund based on oil revenues, called the Heritage Fund, which was set up for similar reasons as the APF—to smooth out the province’s gains from the boom-and-bust oil industry. But there is one important difference. The Heritage Fund pays no dividends to individuals. Its earning go solely into the province’s general revenues. According to Warrack, this fact has caused Albertans to take much less interest in their fund than Alaskans. Much less has been invested in the Heritage Fund than in the APF, and Warrack argues, it has been less well managed. Warrack writes, “For about a quarter-century, the Alberta Heritage Fund was static in nominal value, [and] fell in purchasing power due to inflation.” The APF has steadily increased in both real and nominal value.
Warrack mentions that Alberta actually had a social dividend in the 1930s, under the government of the Social Credit party. Although it was short lived, the dividend was popular. Alberta tried it again with a one-time payment in 2005. Warrack writes, “Some right-leaning citizens viewed the government cash payments favourably because it meant there would be ‘less for the government to waste.’ Some left-leaning citizens favoured the payments on grounds of social equity—equal payment amounts meant the needy would get the same amount as the rich, though the value to the needy would be much higher. Still others said: ‘Just gimme the dough!’” Perhaps someday the joke will be, “Welcome to Alberta. Here’s 10,000 Canadian Dollars, eh?”
But even as Albertans envy the Alaska Dividend, Alaska lawmakers are coming under increasing pressure to divert dividend funds into general state spending. Each U.S. state receives a significant amount of funding from the U.S. Federal government based partly on the perceived needs of the state. According to Hal Spence, writing for the Peninsula Clarion and Morris News Service-Alaska, Federal lawmakers are reluctant to give money to the Alaska, when they perceive that it can afford to give large amounts of money away to residents each year. Spence believes this pressure will grow as the APF increases.
Warrack’s editorial can be found online at: https://www.cwf.ca/V2/cnt/commentaries_200710120811.php.
Information on the APF can be found on line at:
Home
Hal Spence’s story is on line at:
https://www.alaskajournal.com/stories/081907/hom_20070819001.shtml
And he can be reached at hspence@ptialaska.net.
-Karl Widerquist, Oxford, UK, November 1, 2007
by Karl Widerquist | Jan 17, 2018 | Opinion, The Indepentarian
This essay was originally published in the USBIG NewsFlash in April 2007.
Republican Presidential Candidate Tommy Thompson has endorsed BIG—at least in a foreign country. On his campaign website, the former Wisconsin Governor calls himself “the reliable conservative in the 2008 presidential race.” The first reason he gives is, “Tommy Thompson is the father of welfare reform.” Thompson has a good claim to that title. Since 1996, welfare reform, also known as “workfare,” replaced conditional cash support for single mothers with work requirements, sometimes for less than minimum wage, without providing daycare. The plan was modeled on an earlier Wisconsin program initiated by then-governor Thompson. Workfare is usually motivated by the belief that poor people have a responsibility to take whatever jobs are offered, even if they have substantial childcare responsibilities.
Thompson is literally the last America one might expect to endorse BIG—a plan to provide unconditional cash benefits to every citizen. But Thompson has not only endorsed BIG, he has made it a major initiative in his campaign. He has discussed it in numerous interviews and speeches and at the Republican presidential debates. He hasn’t endorsed BIG for the United States but as part of his strategy to win the war in Iraq. The BIG element in Thompson’s Iraq strategy is that one-third of Iraqi government oil revenues will be reserved for a fund to provide every Iraqi with a small income guarantee modeled after the Alaska Permanent Fund (APF). USBIG Newsletter readers will recall that the APF was the initiative of another Republican Governor, Jay Hammond. It provides a small but significant income guarantee to every Alaskan resident.
Of course, both the APF and any likely Iraq proposal fall short of the goals of most BIG supporters because they are not large enough to cover the recipient’s needs—a “partial BIG” rather than a “full BIG.” But Alaska experience has show that even a partial BIG can make a great difference to the needy and sets the right precedent.
Thompson’s plan is rather far from implementation, however. To introduce it, the U.S. would have to be continuing its involvement in Iraq two years from now, when a president Thompson would take office. At that point the U.S. will have been at war for nearly six years. Even then, Thompson could only recommend the plan to the Iraqi Parliament, which is formally recognized by the U.S. government as the sovereign government of an independent country. If the whole of Thompson’s plan is adopted, United States would likely remain at war in Iraq for four more years while we find out whether the military elements of his plan work.
Thompson has not discussed extending the Alaska-style plan closer to home, nor does he seem aware of the possible conflict between the goals of an APF-style BIG and his pedigree, Workfare.
What’s the big deal if a politician in one country supports BIG in another country where he may have little influence even if elected? It show that framed in the right context, BIG can have a great appeal even to work-ethic conservatives, and it demonstrates the growing appeal of the APF precedent. The APF is so obviously successful, so popular, and so cost-effective that it appeals even to the father of workfare. Much of the motivation for workfare has been popular American resentment against people who receive direct government payments. But there is little resentment in America for people who receive property income whether or not they work and whether or not they received their property through work. The APF makes some part of Alaska’s oil revenues into part of the personal property of every Alaskan. It’s theirs; they own it. It is quite natural to infer that if it is right for every Alaskan to own a share of their oil, then perhaps every Iraqi should own a share of their oil too. But once you have endorsed that principle it is quite natural to infer that every South African should own a share of their gold. Every Botswanan should own a share of their diamonds. Every Welshman should own a share of their coal. Every Bolivian should own a share of their tin. And the full inference is that everyone should own a share of all natural resources. If we put that principle into practice, single mothers would not need workfare at all.
-Karl Widerquist (Michael Lewis contributing), New Orleans, LA, April 2007
by Karl Widerquist | Jan 3, 2018 | Opinion, The Indepentarian
This essay was originally published in the USBIG NewsFlash in September 2006.
I was struck by a report in the Associated Press reported on October 12th that a 63-year-old Ohio man intentionally had himself convicted of bank robbery. Timothy J. Bowers sought a three-year prison sentence to bridge the gap until he becomes eligible for full Social Security benefits. Bowers had lost his job making deliveries for a drug wholesaler more than three years ago and had been unable to find anything but minimum wage labor, which he could not live on. So, finally, he went to a bank, handed the clerk an envelope and demanded that she put cash it in. He then walked straight to the bank’s security guard, confessed, handed him the envelope filled with only $80 in cash, and calmly waited for the police.
The court-ordered psychological evaluation pronounced him sane and competent to stand trial. Judge Angela White gave Bowers the three-year sentence he asked for. According to the AP, “Prosecutors had considered arguing against putting Bowers in prison at taxpayer expense, but they worried he would do something more reckless to be put behind bars.” Arguing against tough sentencing is an ironic position for American prosecutors well known for locking away petty criminals.
This is an isolated incident. It is hardly a repeat of the Irish Potato famine when there were stories of large numbers of people getting themselves arrested to avoid starvation. But still, I think it says something about the low-wage labor market in the United States today. U.S. prisons are not easy, pleasant, or kind places to be under any circumstances. America is not in a famine; by some measures, it is the richest country in the world. What does it say about the jobs we offer the underprivileged when a sane person can choose prison over labor market?
-Karl Widerquist, New Orleans, LA, September 2006
