by Karl Widerquist | Apr 4, 2018 | Opinion, The Indepentarian
This essay was originally published in the USBIG NewsFlash in November 2009.
The political barriers to the current situation in the United States and the implementation of a full basic income are daunting. On an international basis, the outlook is much brighter. As far as I can tell, there are more basic income projects underway or under discussion worldwide now than ever before. There are small, privately funded pilot projects going on in Namibia and Brazil. Thirty basic income supporters were elected to the German Bundestag in recent elections. The Nigerian government is considering a regional basic income in the Niger Delta area. The Mongolian government has recently pledged to introduce the world’s first national basic income. (See stories below.)
Just last week, October 29, 2009, I had the honor to be present when the city council of Santo Antonio do Pinhal, Brazil (a city of about 7,000 people in the State of Sao Paulo) voted unanimously to create a small basic income from local tourist revenue. What will come of this small, locally based income remains to be seen. But remember that the Alaska oil dividend was inspired by a local basic income introduced in a small town. And the Alaska dividend may prove to be an inspiration for similar programs in places as far away as Mongolia and Nigeria.
So, progress is happening worldwide. In America, however, it is important to focus on small victories. Politics is full of opportunities to change minds toward the ways of thinking that support basic income.
Two of the most compelling reasons to support basic income are the belief that people have an equal right to the world’s resources and the belief that everyone should have the right to meet their needs. Any policy that helps establish these norms moves us (however gradually) in the direction of basic income.
People don’t discover oil every day, but some kind of new government giveaway of natural resources does happen just about every day. Every new mine, well, or beach front hotel is an opportunity to establish the norm that people have a shared right to natural resources, and that they should be compensated if private firms want to privatize it.
Two years ago we missed an opportunity when the U.S. government gave away a substantial portion of the broadcast spectrum to a few corporations at no charge; and then allowed those companies to sell it back to us. But the issue isn’t settled. A recent study by the Consumer Electronics Association found that reallocating broadcast spectrum could yield cost savings of more than 1 trillion dollars. If and when that reallocation happens, we have the opportunity to press for auctioning off that spectrum and sharing the proceeds.
Several BIG-related campaigns are under way right now. The refundable child tax credit was won a few years ago. It is essentially a very small basic income for children, but only a portion of the federal government’s child tax credits are refundable. Several groups are pushing for a larger refundable credit. The cap-and-dividend approach to greenhouse gas reduction would establish a small basic income out of taxes designed to discourage the behavior that causes global warming (www.capanddividend.org). Cap-and-Dividend is a live issue on Capitol Hill, and several Members of Congress have signed on.
Probably the biggest issue in U.S. politics right now is healthcare reform. The current debate is largely a debate over whether there should be a universal right of access to healthcare. Almost every other country has established that right in law, and the United States might finally join them this year. The versions of healthcare reform on the table right now are not as close to true universality as the healthcare systems exist in most other countries, but they clearly help to establish the norm that healthcare ought to be universal.
Once norms like this are established in law, they tend to become more popular. Although the creation of national health was controversial in many countries, I don’t believe that there is any country in the world that has the universal right to healthcare in which a majority of people would like to go back to a system in which some have health insurance and some don’t. Public education is far from equal, but few people today want to deny a basic education to the children of the poor as most countries did a hundred years ago.
Establishing a universal right to healthcare is not the same as establishing the norm that all people should have an unconditional right to other necessities, but it certainly brings us closer to that objective. The fight for universal healthcare is our fight.
-Karl Widerquist,
Begun in Santo Antonio do Pinhal, Brazil, October 29, 2009
Completed in Doha, Qatar, November 4, 2009
by Karl Widerquist | Mar 28, 2018 | Opinion, The Indepentarian
This essay was originally published in the USBIG NewsFlash in September 2009.
Many people believe that the Alaska Permanent Fund Dividend is an idea ready to export—a model that should be copied around the world. Two U.S. Senators have gotten the idea that the Alaska model is ready to be copied, not by the country over which the U.S. Senate has jurisdiction but by Iraq instead.
Last January, John Ensign (Republican-Nevada) introduced the “Support for Iraq Oil Trust Act” of 2009. According to the official summary of the bill, it would force the U.S. State Department to present a plan for an oil trust fund (based on the Alaska model) to the Iraqi government, and it threatens to reduce U.S. aid to Iraq if the U.S. Secretary of State fails to do so.
The bill picked up one cosponsor, Senator Evan Bayh (Democrat-Indiana). No further action has been taken on the bill since it was referred to committee in January, and probably the bill will die in committee.
But the bill has received negative attention from press in the Persian Gulf region. Saadallah Fathi, writing for GulfNews.com (based in Dubai) sees the bill as an effort to pressure the Iraqi government to adopt a policy that is not well-suited for Iraq’s situation.
Whatever the value the Alaska model might have for Iraq, this bill is probably the wrong way to export the idea. The U.S. government could make a greater effort to lead by example. If the Alaska Permanent Fund is a model to be copied, the Senate might consider copying the model itself by creating a Federal U.S. Permanent Fund. Copying the model yourself seems much more reasonable than trying to influence someone else (a sovereign foreign government) to copy the model.
The United States is resource-rich. It has the potential to create a very large Alaska-style fund using taxes on resource exploitation, such as mining, drilling, forestry, carbon emissions, and real estate. If the senators are right that the Alaska-model is ready to be copied, they might consider implementing it first in their own jurisdiction.
-Karl Widerquist, Doha, Qatar, August 2009
For Saadallah Fathi’s article in the Gulf News, go to:
https://www.gulfnews.com/business/Comment_and_Analysis/10322760.html
by Karl Widerquist | Mar 21, 2018 | Opinion, The Indepentarian
This essay was originally published in the USBIG NewsFlash in August 2009.
If I use the phrase “lesson of 1938,” most people will probably think about Britain’s unsuccessful attempt to avoid war with Nazi Germany by giving away a piece of Czechoslovakia. There are important lessons in that event, but that’s not what I want to talk about.
1938 was also an important year in American economic history, and the economic lesson of that year is relevant to our handling of the global recession today. By 1937, the Great Depression had been going on for eight years. Franklin Roosevelt’s New Deal programs had been stimulating the economy for five years, and they began to show significant signs of working. Industrial production and national income were coming back up. Employment was going back down. The economy appeared to be just about out of the depression—
—and then—
Roosevelt and Congress decided to balance the budget. They raised taxes. They reduced government spending. They contracted the money supply and helped send the economy back into depression by 1938, and it remained in recession for three more years. Unemployment was still 10 percent when the United States entered World War II at the end of 1941. At that point, the government started spending massive amounts of money. They worried less about the budget deficit and more about spending what it takes to do the job. The depression disappeared almost overnight.
The economic lesson of 1938 is that the government cannot balance the budget during a major recession—even in the early stages of recovery. A depressed economy needs a stimulus. Although politicians usually won’t say it out loud, a stimulus often requires not only spending but deficit spending. One of the things that turn a financial crisis into a recession is that people and businesses stop spending in a reinforcing cycle. They can’t afford to spend because they’re not making money. They’re not making money because no one else is spending. Only the government has the size and budget flexibility to break the cycle. In a financial recession, concern for the government’s budget deficit can wait.
The government can get away with deficit spending because the government budget doesn’t work like an individual’s budget or even a corporation’s budget. Government creates the money supply; its spending is not limited to what it takes in or what it can borrow. If you or I spend more than we can get, we will go broke. The government doesn’t have to “get” money. It creates money. If the government creates too much money at any given time, it will overstimulate the economy and create inflation. If inflation becomes a problem, we can take action, by say, taxing some of that money back, but for now it is not a major concern. At a time like this, when resources are going unused because no one’s buying, the government as a lot of leeway to create and spend money without worry of inflation.
We should be more concerned with making sure that the direct beneficiaries of government stimulus are the people most in need. Too often the government stimulates the economy by helping corporations (such as investment banks, automobile manufacturers, and defense contractors), telling us that the stimulus will indirectly make its way to help those who actually need help.
A more effective way to stimulate the economy and help people is with universal programs. Universal healthcare or a universal basic income guarantee would be excellent ways to do so.
-Karl Widerquist, Doha, Qatar August 9, 2009
by Karl Widerquist | Mar 14, 2018 | Opinion, The Indepentarian
This essay was originally published in the USBIG NewsFlash in May 2009.
The global recession has been spreading and deepening for nearly a year. It could become the worst downturn since the Great Depression of the 1930s, and it has captured nearly all of the attention we, our media, and our leaders pay to economic issues. Perhaps we’re paying too much attention to it. I want to convince you in this editorial that a recession—even a major depression—is not an economic problem of the first magnitude. Our most pressing economic problems are distribution, and they exist whether we are in recession or not. Recessions appear to be a major problem primarily because we allow existing distributional problems to get worse during recessions.
To see my argument, imagine that you lived through the entire Twentieth Century. You were born on January 1st, 1900 and died exactly 100 years later on January 1st, 2000. During all of that time, you were a member of a representative American family of three with an income equal to the average U.S. income for a family of that size.
I have included figures below of average income per person and per family of three for the entire Twentieth Century. The appendix includes a table with the background data for these figures as well as some information about the percentage changes you’re looking it. Don’t fear all these numbers. I’ll just ask you to glance at it and take a closer look at a few important ones. These figures are “adjusted for inflation” meaning that they are reported in 2008 prices. It is notoriously difficult to adjust for inflation in a world in which the prices of different goods are changing at different rates, new products are being introduced, and old products are being discontinued. Adjusting for inflation is much more subjective than most economists let on, but these figures represent our best guess about how to do it.
Financially, your imaginary family did awfully well during the Twentieth Century. A simple glance at the graph shows that your family’s income goes up and down, but mostly up. Your family’s income started at about $20,000 in 1900. It rose sporadically to reach $136,000 in 1999. That an increase of more than 577 percent—almost six times what your family made the day you were born. In the early years you could not have afford a computer, television, and many things we now take for granted, but your family’s $20,000 income would have been more than enough to pay for a home, for food, and for clothing for the whole family. At no time in that 100 year period would your family have had any difficulty securing its basic needs, and you were able to consume many luxuries as well.
Figure 1: GDP per family of three for the Twentieth Century
THIS FIGURE FAILED TO UPLOAD.
Figure 2: GDP per capita for the Twentieth Century
THIS FIGURE FAILED TO UPLOAD.
Your income didn’t rise every year; it fluctuated with the business cycle. Glance down the third column of the appendix table. That shows the percentage change in your income from year to year. The years when your income dropped (shown in bold) are the recession years. In the first half of the Twentieth Century, the business cycle was volatile. Your income could go down 9 percent one year and up 10 percent the next. But if you look at the graph, you see that the only downturn that looks terribly significant was the period of 1930-1933, when over four years your family’s income declined from by nearly 25% from $34,093 to $23,607.
You might be tempted to think that 1945-1947 was worse because your income declined by a greater percentage in a shorter time. To see that this isn’t so, you have to realize that there is a lot this table doesn’t show. I doesn’t show how hard you are working, how much you want to work, and what you’re working for. You had a great increase in your income during the years 1940-1945, but that was largely because you were working extra hard for the goal of winning the Second World War. The decline from 1945 to 1947 mostly reflects that you no longer needed to work so hard because the war was won. Your income in 1947 (after 3-years of decline) was still more than 25% percent higher than 1940 and 85% higher than in 1933. You were actually doing just fine in that year.
The depression was different. You didn’t want to work any less in those years, but as a representative American, you were unemployed 25% of the time in 1933. This would have been difficult for your family. You might have had to sell some of your luxuries or move into a smaller home. But your inflation-adjusted income was still more than 16 percent higher than when you were born. If you could feed, cloth, and house your family in 1900, you could do so in 1933 and you could have spent all of your additional income on luxuries that you couldn’t afford in 1900. As a representative American family, you were not in financial distress even in the depths of the Great Depression. There would have been no reason for a member of your family to stand in a bread line or head to California in search of work as a migrant farm laborer.
After 1950, the business cycle became even less of a problem for you and your family. You experienced the occasional 1 or 2 percent decline, but such a small decline would have been barely noticeable, especially with your income being 300% or 400% higher than a few decades earlier. The worst recessions such as in the mid 70s and early 80s caused less than a 3 percent drop in your income. That might have slowed your accumulation of savings or caused you to put off buying a new luxury for a year or two, but no more than that.
The current recession might well cause national income to drop by 6 percent this year. Suppose it goes on, and we experience a decline similar to the Great Depression, say lowering national income to 20 percent less than it was in 1999. That would bring the income of our representative American family down to $109,509—higher than in the boom year of 1987. That means, even if we suffer the worst depression since the 1930s, we will still have a greater technical capacity to feed, clothe, house, and provide luxuries our people than we did in the boom year of 1987. If we dealt with such a crisis sensibly, it would affect only our consumption of luxuries, not necessities.
These facts illustrate the point that I’m trying to make: if we keep in mind the truly important economic issues, recessions are something we can easily handle. The most important thing about your income is not whether it rises or falls by a few percentage points in a given year, but that’s all a recession is. The most important thing is not even that your income grows over time, although a growing income is always nice. Actually, the most important thing about your income is that it meets your needs.
Our main concern about the national economy should be same the same as each individual’s main concern about his or her own income. Before worrying about the bankers, or about the rise or fall of an abstract figure like GDP, we should ask ourselves: how can we secure food, housing, clothing, medical care, and education for everyone? Whether we are in a recession or not has little to do with our answer to that question. Going back to 1776, there has never been a time when America lacked the economic capacity to secure every citizen’s needs. Nor was there a time when it was even close. This fact is not unique to America. Economist Amartya Sen has found evidence that there has not been a famine in modern history in which any nation actually lacked the economic capacity to feed its citizens. Modern famines have all been caused by mal-distribution of plentiful resources.
Sen’s observation is true only for modern history, not for all of human history. The Norse in Greenland, the Mayan Empire, the Easter Islanders and other societies all apparently experienced episodes in which they simply could not feed their people. But these were environmental disasters, not financial depressions. Once we solve the important economic problems of how to secure our needs without screwing up our environment, even a severe depression means no more than a fluctuation in our accumulation of luxuries. Distribution of necessities is what is important, not a 10 percent fluctuation in our ability to produce luxuries. A recession is a trivial issue for the nation as a whole; it is a minor fluctuation in output. This could and should cause no more than a pause in our accumulation of luxuries.
Of course, what actually happens during recessions is significant: more people are in poverty; more people are homeless; more people lack their necessities; more people have reason to fear economic security. All of this is true, but it is only true because we allow it to happen. We had the technical capacity to eliminate economic deprivation in the recession years of 1982 and 1992 just as we did in the boom years of 1987 and 1999. We did not do solve these problems in boom years and we let them get worse in recession years. A recession cannot hurt anyone in a significant way unless we let it. The tragedy is that we let it.
-Karl Widerquist, begun in Reykjavik, Iceland, completed in Oxford, UK, May 2009
Appendix: GDP per capita and per family of three in constant 2008 dollars for the Twentieth Century
by Karl Widerquist | Mar 7, 2018 | Opinion, The Indepentarian
This essay was originally published in the USBIG NewsFlash in February 2009.
Like millions of people around the world, I watched Obama’s inaugural last month and saw the panning shots of huge crowds against the backdrop of the Washington Monument and the Lincoln Memorial. This image made me think not only about Washington and Lincoln but also Martin Luther King, Jr. and the pictures of the crowds listening to his “I Have a Dream” Speech. The fact that that picture from the center of U.S. capital brings to mind those three names, shows how much the racial divide has affected U.S. history.
There is a line on the Washington Monument about a third of the way up to where the stone slightly changes colors. Tour guides say that this line is there because construction was halted during the Civil War, and builders couldn’t find a perfect match for the original stone when construction resumed. There is something fitting about that. Slavery disfigures Washington’s legacy. Washington made it clear that he knew slavery was wrong, as did Benjamin Franklin, Thomas Paine, John Adams, Thomas Jefferson, and many other revolutionary leaders. But none of them found a way to put an end to it. Instead, they set us on a path that led to the Civil War, and to the racial divide that Lincoln and King dreamed of resolving.
With the election of Obama, the United States became the first majority-white nation to elect a black chief executive. I think most Americans of both parties are rightly proud of that. Ideally, there should be nothing special about electing a member of a minority group, but for more than two centuries, America chose all of its presidents because they were white men. This time we didn’t. Certainly, our willingness to put a black man in charge indicates that racism isn’t as strong as it was 50 years ago when few whites would accept a black in any position of authority over them. Maybe white racial identity will no never be a prerequisite for political success in the United States.
The election of a black president is probably the most significant in a long series of small victories in the struggle against racism in America, but it doesn’t mean racism is over. Familiar racist incidents are still happening. On election night three white supremacists set fire to a predominately African-American church in Massachusetts. On New Year’s Day, a police officer in California shot an unarmed black man who was being held down on the ground by another police officer. In three states, Louisiana, Mississippi, and Alabama, more than 85% of whites voted for the white candidate and more than 85% of blacks voted for the black candidate. Such racially polarized voting has to indicate a continuing problem with racism.
And, as Rev. Joseph Lowery reminded us in his benediction at Obama’s inaugural, oppression isn’t about any one group. It would not be a victory for equality if European-Americans lost all prejudice against African-Americans only to single out some other group such as Arab-Americans, women, gays, Muslims, or Jehovah’s Witnesses. But comparing the United States today to where it was 50 years ago, I think members of almost every group that has suffered from prejudice would say we have made significant progress.
How will we know when we have won? I’ll offer two thoughts. First, ask a member of the oppressed group. Ask many. Don’t tell anybody else when their problems are solved; let them tell you. Second, maybe oppression is over when we have no more ghettos. As long as children still grow up in large concentrations of poverty, despair, and danger, we still have oppressed people whatever their identity.
I think this is why Martin Luther King turned to the Poor People’s Campaign in the last year of his life. Nominal legal equality was largely achieved by the Civil Rights legislation of the mid-60s, and King recognized that economic and social barriers were now the main obstacle to real equality and freedom. King proposed a host of economic reforms, including a basic income guarantee, not to reduce—but to eliminate—poverty, because by then poverty was the greatest source of oppression in America. It remains so today.
I think we can celebrate an important achievement, but we should remember that we have lot more to do to build a society free from oppression.
-Karl Widerquist, Reading UK, January 2009
by Karl Widerquist | Feb 28, 2018 | Opinion, The Indepentarian
This essay was originally published in the USBIG NewsFlash in November 2008.
Most people will be surprised to learn that the Republican Vice-Presidential nominee and the Democratic Presidential nominee have both endorsed the basic income guarantee (BIG). In one form or another both support policies to guarantee a small government-provided income for everyone. As reported in the USBIG Newsletter earlier this year, Obama has voiced support for reducing carbon emissions with the cap-and-dividend strategy, which includes a small BIG.
Sarah Palin, like most Alaskan politicians, supports the Alaska Permanent Fund (APF). Existing rules caused the APF dividend to reach a new high of $2,069 this year. That much had nothing to do with Palin. But, whatever else you might think of her, she deserves credit for adding $1200 more to this year’s dividend (see the story above and another in issue 49). She proposed it to the legislature and pushed it through, resisting counter proposals to reduce the supplement to $1000 or $250.
Most people who learned about Palin at the Republican National Convention in August would probably be surprised to learn that such a hard-line conservative supports handing out $16,345 checks to even the poorest families. Actually, families the size of Palin’s will receive $19,416—no conditions imposed besides residency, no judgments made.
The support of politicians like Palin’s provides evidence against the belief that BIG is some kind of leftist utopian fantasy with no political viability. In the one place BIG exists it is one of the most popular government programs and it is endorsed by people across the political spectrum.
The APF has not become an issue in the campaign, and I doubt she has Palin plans to introduce a similar plan at the national level, but when the issue has come up, Palin has taken credit for it as a conservative policy. In an interview on the Fox News Network, Sean Hannity confirmed that Palin increased the Alaska dividend by $1200 this year. Hannity comment, “I have to move to Alaska. New York taxes are killing me.”
Sounding like some kind of progressive-era land reformer, Palin replied, “What we’re doing up there is returning a share of resource development dollars back to the people who own the resources. And our constitution up there mandates that as you develop resources it’s to be for the maximum benefit of the people, not the corporations, not the government, but the people of Alaska.”
Tim Graham, writing for the conservative website Newsbuster.com criticized NPR’s Terry Gross for asking questioning that implied opposition to the APF in an interview with Alaska public broadcasting host, Michael Carey. Graham writes, “Gross walked Carey through the idea that it’s not hard for Palin to be popular in Alaska when she’s handing every family a $1200 check from all the oil business. She then elbowed Carey about how that money could have been better ‘invested’ (as Obama would say) in government programs.’ Suddenly conservatives are ridiculing people they assume do not support unconditional grants.
Palin justified a tax increase on the oil companies to support higher BIG on the PBS Now program before she was nominated for vice-president. “This is a big darn deal for Alaska. That non-renewable resource, of course, is so valuable …. And of course [the oil companies] they’re fighting us every step of the way when we say, ‘Well we wanna make sure, especially as it’s being sold for a premium, that we’re receiving appropriate value.’ … The oil companies don’t own the resources. They have leases and the right to develop our resources for us. And we share a value, we’re partners there, because they do the producing for us. But we own the resources.”
It is tempting to dismiss all of this conservative praise for BIG as election year insincerity. No doubt if a democratic candidate had handed out an unconditional grant of $3,269 to every citizen of their state, many conservatives would jump on it as socialist class war. Indeed some of Obama’s tax credit proposals, which are not nearly as far reaching as the APF have received just this treatment.
Speaking at a recent rally in Virginia, McCain took issue with Obama’s refundable tax credits saying, his tax plan “is not a tax cut; it’s just another government giveaway …. I won’t let that happen to you. You’re paying enough taxes. … Obama raises taxes on seniors, hardworking families to give ‘welfare’ to those who pay none.” McCain often invokes Joe the Plumber to label such policies as “socialism.” Ruth Marcus noted that only minutes later John McCain touted his own “refundable tax credit” and that McCain vilifies Obama for wanting to reverse the Bush tax cuts McCain voted against. I have little doubt that McCain would give the APF the same treatment if his opponent rather than his running mate had expanded it.
Politicians who call themselves strait-talkers and don’t talk straight are nothing new, and they exist in all parties. But this doesn’t meant that we can dismiss all conservative support for the APF as insincere. There are limits to what people will accept even from leader of their own party. Many conservatives would not accept, for example, a leader who had proposed public funding to help rape victims obtain abortions, but they will support a leader who endorses $16,345 in no-questions-asked grants to every family of five.
The lesson here is that the APF is a model ready for export. Readers of this newsletter will know that governments in places as diverse as Alberta, Brazil, Iraq, Libya, and Mongolia have recently thought seriously about imitating the Alaska model.
Some might be tempted to think that the APF isn’t a true BIG and it isn’t motivated to help the poor. Not so: Jay Hammond, the Republican governor of Alaska who created the APF, came all the way to Washington, DC to speak at the U.S. Basic Income Guarantee Network conference in 2004. He told me that his intention was to create a BIG to help everyone—most especially the disadvantaged. If he had his way the APF fund would now be producing dividends 4 to 8 times the current individual level of $2,069.
Others might dismiss the Alaska model saying that it is a unique case because Alaska has so much oil wealth. Again, not so: Alaska ranks only sixth in U.S. states in terms of per capita GDP, with an average income just over $43,000 in 2006, more than $15,000 per year less than number-one Delaware, and only $6,000 per year ahead of the national average. Any other state or the federal government can afford to do what Alaska has done.
Alaska has oil wealth; other states have mining, fishing, hydroelectric, or real estate wealth. Governments give away resources to corporations all the time. The U.S. government recently gave away a large chunk of the broadcast spectrum to HDTV broadcasters at no charge. Offshore oil drilling will soon be expanded on three coasts. Everyone who emits green house gases and other pollutants into the atmosphere takes something we all value and—so far—pays nothing.
What was different about the Alaskan situation was that Jay Hammond was there to take advantage of the opportunity. With the Alaska model in place, it will be just a little easier for next person at the next opportunity.
-Karl Widerquist, Reading, UK, October 23, 2008
For the Newsbusters article go to:
https://newsbusters.org/blogs/tim-graham/2008/10/19/snobby-airs-nprs-terry-gross-goes-after-palins-extreme-religious-views
For the Hannity Interview go to:
https://www.foxnews.com/story/0,2933,424346,00.html
For the Now program report go to:
https://www.pbs.org/now/shows/347/index.html
[The quoted exchange occurs about 18 to 20 minutes into a 25-minute report titled “Alaska: The Senator and the Oil Man.”] (Thanks to Paul A. Martin)
For U.S. GDP figures by state go to:
https://www.ssti.org/Digest/Tables/062007t.htm
Ruth Marcus’s editorial on McCain is online at:
https://www.realclearpolitics.com/articles/2008/10/mccains_campaign_is_both_unciv.html
