Day 257: Living Income Practicality

Q: Will LIG result in the replacement of jobs by machines?

A: The foundation of LIG is to provide the necessary access to the living necessities as a human right, therefore if jobs are replaced by machines as an on-going trend, people will receive the LIG as a means to have their living needs covered. Therefore we don't directly endorse the idea of replacing human labor with machines as that is at this stage decided by each corporation's capacity to implement it in their business. However, also to consider that with LIG, due to financial security, many will feel more confident to start new business ventures, which will again create more jobs.


Q: How do we prevent those receiving LIG from being exploited by greed? For instance: Everyone working is receiving at least double the Living Income. What is to stop the price of goods from moving up so that it's not feasible for people on LIG to afford goods?

A: There will still be short-term fluctuations in the prices of various goods. However, when the prices of the commodities that represent living necessities follow an upward trend to such an extent the Living Income becomes inadequate – the Living Income amount will be increased. If the Living Income goes up, it means the minimum wage – which is defined as double the Living Income – will proportionally increase as well – thus increasing costs for firms. In the long-run it is therefore in firms’ best interest to expand operations in order to meet the increased demand rather than increasing prices. The period where inflation due to an increase in demand is most likely to occur is after the implementation of LIG. It is key, therefore, to ensure that the implementation is done in a transparent way, so that any increase in demand is not unexpected, but firms are prepared for the change and have defined strategies to expand their output.


Q: How will people be motivated to work and perform well under LIG?

A: The classical notion that money is what motivates people to perform well – where the more one earns, the better one performs, has been disproven – for perspective, watch: http://www.youtube.com/watch?v=u6XAPnuFjJc.
By setting the minimum wage at double the Living Income, every worker is recognized as a vital part of the company, which creates loyalty and a commitment to the goals of the company. It has been shown that when employees receive more than a subsistence income, a firm incurs less turnover costs as well as less costs relating to monitoring the employees. That being said, the relationship between employer and employee is likely to change as LIG increases the bargaining power of employees significantly; no-one will ‘need’ to work anymore. Currently – the threat to lose one’s job is often enough to compromise oneself within one’s job by accepting inferior labor conditions – because one knows that there are always others who will do any job just in order to survive – and thus one is replaceable. With LIG – working is no longer a matter of survival and employers will require to put in the effort to make jobs attractive by creating optimal labor conditions and treating every employee as an individual and not merely as a cog in a machine. The above-referenced video includes several examples of how appealing to employees’ sense of purpose creates far more effective motivation than the threat to lose one’s job.


Q: One point that came up for me is that with the Erasmus program in Europe many students travel to other countries for one year. The student is integrated into the local university system and learns about the culture and the language. In general students' mobility is highly supported by the EU. If there is a country that offers LIG at lower age than most other countries, then that country might see an influx of immigrating youth - would this play a role?

A: Being a student in a country doesn’t make one a citizen, and so, one is not entitled to a Living Income. Countries can specify whether permanent residents would receive LIG, as well as citizens – this could also go in stages, where initially only citizens can claim a Living Income and later, as more countries implement LIG, permanent and perhaps even temporary residents can receive LIG as the inflow of immigrants will not be as intense at that stage.




For context and more information:

Living Income Guaranteed - the Proposal: http://livingincomeguaranteed.wordpress.com/the-proposal/
Living Income Guaranteed YouTube Channel - watch the hangouts: https://www.youtube.com/user/BIGuaranteed?feature=watch
Living Income Guaranteed Website: http://livingincome.me

Day 256: Will LIG result in a Centrally Planned Economy with a Coercive Government?

This blog-post is a response to a Facebook Comment made in relation to the Living Income Proposal.

"Government is still government. Centrally coerced power nonetheless."

I suggest reading the blog ‘How Companies will be Nationalized and What does it Mean? LIG’ for more clarity on how we suggest nationalization is to occur – where it is NOT the government that would centrally own/control the resources ‘on behalf of the people’ – it would be the every citizen directly being a shareholder of the nationalized companies. This means that the companies will not be used in favor of the government – but in benefit of the population as a whole. Herein, no changes really have to occur in how the companies are operated today, the only difference is where the profit goes and who takes part in shareholder meetings. 

" "If we define competition as the ability achieve the best living condition in a society " has absolutely NOTHING to do with competition within a free market sense. Such fundamental misrepresentations / rebranding of words is disservice."

Competition for the sake of competing/winning is a disservice to society as a whole. This is what the ‘invisible hand’ doctrine is all about – that self-interested competitive behavior yields result that are favorable to others in society, which was not intended. However, currently this competition has, let’s say, ‘evolved’ to the point where the ‘losers’ in the competition literally lose everything – including those things that are supposed to be guaranteed human rights. This is where LIG intends to make a difference. Competition is useful from the perspective that it creates an environment where participants strive to create the best product and the best service – which in turn enhances the quality of life of the members of society (which is what is referred to in the quote you mentioned) but it shouldn't do so at the expense of an individual’s ability to provide themselves with living necessities.

"None of these terms mean anything. "Activation of the economy"?"

Simply referring to increasing economic activity, employment and productivity.

Who knows what standards they employ for not interfering with the "nationalization of natural resources". How do you qualify "interfere with public services"? Who the hell even determines what is objectively the "highest quality"? This is complete monopoly of resources, enstated through force / coercion / compulsion, with extremely ill-defined definitions of language. This is one step away from having a dictator.

You’re using quite a slippery-slope type of argumentation here – it would be a good example of ‘how not to do it’ in critical reasoning courses. Anyhow – monopoly of resources: no – it would be quite the opposite – resources would be owned by every citizen of a country and would no longer be able to be controlled by a few. Remember – it is not government that owns the resources, it is the citizens directly. Also – it’s not that we are suggesting to have only one company provide for instance electricity and that this company should be nationalized and that this company will now receive funds from the government that other companies don't - No – we encourage healthy competition between firms supplying the same/similar services – whether these are ‘nationalized’ firms (in the sense that is discussed in the Living Income Proposal) or whether they remain in private hands.

 A HUGE issue with this program, besides the mind-blowing idiocy in their understanding of basic economic concepts, is the perversion of price. I guarantee you if you linked a good description on how they intend to replace the price mechanism I'll blow it away in a second. Not even Zeitgeisters' resource-based economy can figure this out.

 You know how monopolies are kept in check in a FREE MARKET? Companies A, B, C, D. A uses profits / loans to buy companies B. Company C raises the price of his business since he knows that company A is trying to corner the market. If Company A tries to buy D he either already used so much of his $$$ or took on so much debt than company D can simply hold on and corner the market himself.

 Self-interest and FREE markets naturally limit these things. It is self-regulating.

How about collusion? A, B, C, and D form a union and agree to raise prices across the board. Guess what? The first company who defects from the pact and drops his prices gets the WHOLE market share. In return the other 3 companies HAVE to lower their prices as well.

Probably have never heard that in your entire life.

Please – I suggest you get your head out of your economy-books and rather do some real-life investigation. How can Nestle, for instance, have 12% of the WOLRD market if the free market is so self-regulating? Theory and practice are not the same thing. The free market is inherently not designed to take into account, for instance, living conditions – as you probably know – equilibrium wages have nothing to do with living wages – yet, how can we allow companies to set prices that adhere to market-principles, when it means they cannot pay their employees a proper wage? With LIG we suggest to make minor adjustments so that at the very least, everyone’s human rights are guaranteed and so that any worker is actually recognized as someone who participates in providing their labor for the benefit of society through producing goods and services, through a wage double the living income.

You require to consider that ‘pure’ free market principles are nothing more than a nicely formulated set of justifications the elite uses to continue abuse in the market. So, I suggest supplementing your studies with independent research, so that you can come to grips with what is really happening and how it doesn't match the economic theories. 

It's a big ol lie that the government "protects" you from monopolies and collusion. They kill the competition and FORM the monopolies. Governments take out the risk of monopoly by taking AWAY the risk. Ever hear of bank bailouts? Privitized profits and socialized losses? They only got that big anyways because of the government. The problem isn't banking. It's the coercive nature of government which traps people (under the point of a gun) to this fraud.

Again – we propose a very limited role for government with Living Income Guaranteed and suggest that as much as possible is done automatically to minimize the possibility of fraud and inefficiency.

Bureau of Standards? I mean the hell, it is not economically efficient of ideal to produce everything to the "highest-standard" possible. Should a lead pencil be made from Brazillian hardwood? Would wooden pallets for shipping all be required to be made from hardwood to withstand maximum weight load? Would we even have the existence of goods such as particle board / press wood / mulch (after all ALL of these were reinventions of waste products which had no productive use before...... but according to this theory we should have not have even cut the lumber before we planned what to do with the chips). You put this policy in place 100's of years ago and we'd have no such thing as cheese or whey protein because damn........ once you make the cheese we'd have to employ 100 researchers to find out what to do with the whey! Guess no cheese until we figure out the "perfect plan" eh?

Here you’ve taken words out of context. With the Bureau of Standards the intention is to go back to good-quality products. Of course, there is no purpose for a pencil to be made from Brazilian hardwood. But there is a purpose for a microwave to last for 50 years instead of 5. So – we’re here looking specifically at equipment/tools that are not actually consumer-goods in the sense of, for instance, food that is consumed – where you buy it, you consume it, now it’s gone and you have to buy more. Equipments/tools were originally designed/meant to last a long time, but as it was realized that if you make something to break – people have to come buy a new one – inferior materials started being used and tools/equipment started becoming consumer products in that you use it only x times/ for an x amount of time and now it’s broke and you have to buy a new one. Such behavior creates consequences not only for the current but for future generations as well, as it perpetuates a wasting of resources. So, the Bureau of Standards is a suggestion to ensure we do not waste resources on inferior products. This is something the free market does not regulate, because it is an external cost. Yet, it is absolutely important that we start pacing our rate of production to the physical if we want to keep living on this planet. It is not, however, a means for central planning. In the same way we have regulations for safe food-production – there should be a Bureau of Standards for quality tools/equipment because it is in everyone’s best interest.

The understanding of the fundamentals are completely whack. Even if you cut past this hogwash it ultimately is just coercive force / violence by the state put into extreme, pretty much Soviet Russia or Communist China. Centrally-planned, coerced ideals through "objective calculations" that seem good on paper but starve millions due to misallocation of resources.

Not really worth any more of my time. All of the 10+ pages from this program have been utterly shameful. If it wasn't for the fact that stupid people can "democratically" vote and enslave the rest of us under this type of tyranny I wouldn't even bother.

I suggest taking a breath – letting go of your fears, and with the perspectives given in this blog – read the proposal again – so that you may see it for what it is, rather than filter it through your mind – as you’re currently making associations and interpretations that are in no way part of the LIG proposal.

For context and more information:

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

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

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

Day 255: How will Companies be Nationalized and What does it Mean? LIG

How will companies be nationalized and do you foresee any resistance?

Within LIG, nationalized companies would not be owned by the government – they would be owned by each person of the population directly. One of the great down-sides of nationalizing companies as how it has been done in the past, is that the government owns the companies, and thus – the companies are managed in a way to benefit the government, often creating inefficiencies due to corruption and fraud. With LIG – the government would be the vehicle to transfer the company from the private to the public sector – but the company would not be owned by the government, where the government then supposedly runs the companies ‘on behalf of’ and ‘in the interest of’ the people. No – each citizen would become a shareholder of the company and have the ability to perform their shareholder duties. The Liquid Democracy platform would herein be beneficial to allow such large numbers of people to participate in events such as annual shareholder meetings.

In terms of the process of nationalization – herein the laws of a specific country must be consulted. In countries where nationalization occurs through providing compensation to the current business-owners, we suggest this would be the last investment for which personal income taxes would be required. The government would then purchase the companies on behalf of the people, however still with taxpayers’ money – which implies the company belongs directly to the people.


What does it mean in effect that a person owns an equal share in a country's national companies?

We suggest that every citizen becomes shareholder of those companies that are nationalized as part of a nation’s national heritage. In being a shareholder, each citizen owns an equal part of the company and hence:
-    Each citizen has an equal vote in important decisions, such as nominating directors.
-     Management and daily operations are likely to remain as they are.
-    The companies and their management are directly accountable to every citizen.
-    Citizens can submit shareholder resolutions.
-    The companies serve the interest of the shareholders, which means: they serve the population as a whole.
-    Government officials play no privileged role in the management of the nationalized companies – they are citizens and thus their role equals that of every other citizen.

In terms of receiving dividends, every citizen has a right to receive a Living Income Guaranteed, funded by the profits of the nationalized companies, when they have no other means of supporting themselves (as determined by the particular means-test of the country).

So the share-income from National companies does not work as stock dividends do in today's world, if those who have sufficient means to support themselves have their Shares but don't get LIG?

Correct.

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

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

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

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

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

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

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

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

How can this fear be addressed?

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


For context:

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

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

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

Day 253: Living Income Guaranteed and Means Testing

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


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

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

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

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

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

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

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

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


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

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

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

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

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

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

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

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

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

Related articles

• What If Every Millionaire Were to Follow Harris Rosen's Lead?
• Day 252: The Rich Be Cursed, The Rich Be Blessed
• Day 227: The Myth of Conscious Buying
• Day 350: A Living Income Guaranteed will End Charity - for Real
• Day 228: Sorry I'm not Qualified to Understand That

Day 251: Living Income Guaranteed and Market Mechanics

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Day 250: Economics Nobel Prize reduced to Laughingstock

“The award was for their work on the pricing of financial assets. Together they concluded that predicting the price of stocks and bonds in the short term is virtually impossible. But they showed it is possible to forecast the broad course of prices over longer periods, such as the three to five years.

Shiller was among those who warned in the 1990s that the run-up in stock prices as part of the Internet stock bubble was the result of "irrational exuberance." 

Last decade, Shiller made similar warnings about the run-up in U.S. home prices. That proved to be correct when the housing bubble burst and plunged the nation into the worst economic downturn since the Great Depression.”

http://money.cnn.com/2013/10/14/news/economy/shiller-nobel-economics/index.html?iid=s_mpm

Our expectations and standards of economics and economists really has reached an all-time low when we hand out Nobel prizes for work on how to improve one’s gambles in the financial market and for predicting failures in our economic system.

While we still haven’t mastered basic resource management, whereby we ensure that everyone has got access to those resources which safeguard human subsistence – we rather place value and importance on the speculative side of economics which only cares about profit and unsubstantiated growth at the expense of issues of real importance, such as eradicating poverty and starvation.

We entertain ourselves with the fringe side of economics while we haven’t even got the basics in place. Resource inequality and living standards disparity are skyrocketing. We’ve never had this many people living in poverty and we’ve never had this much wealth and ‘know how’ in the world.

And still, even though we have everything in place to create a world where everyone lives a life of comfort and dignity, we’re not moving the puzzle pieces in place to bring a better world into being.

Economics as a discipline has failed us in every way. Economics should be disqualified as a field from receiving any form of recognition of praise until we have put into place the basics as a foundation where everyone is able to secure their life. This should be the primary focus of economics, and so long primary structures and logistics are not in place to support life on earth – we shouldn’t bother indulging ourselves in fictional economics pertaining gamble and speculation.

If we really want to do something worthwhile in the name of economics, we would start with providing a safety net such as a Living Income Guaranteed, which practically ensures that everyone is provided with the means to live their life, without being deprived of basic necessities and living in a survival state of being - the way life is supposed to be lived.

To find out more about the Living Income Guaranteed, visit:

www.basicincome.me 

basicincomeguaranteed.wordpress.com

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

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

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

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

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

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

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


Bibliography

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

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

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Day 248: Q&A on Living Income Guaranteed

Here follow questions and perspectives about the Living Income Guaranteed proposal - from the Discussion Forum at livingincome.me.

It would be very helpful if all the essential information on your LIG proposal were to be found in one place, preferably a single page or two, instead of being scattered all over numerous blogs and vlogs. What I mean by essential information is how exactly it is to be financed, who are entitled to it and on what conditions.

I am aware that your proposal differs from the one laid out by the Basic Income Earth Network (BIEN), but what I would like to know is to what extent LIG comply with the four criteria that are adhered to by most proponents of BIEN. Those criteria are that the Basic Income should be: universal, individual, unconditional and high enough for a decent standard of living.

What I have understood so far is that the LIG is means-tested, in other words conditioned on not having wealth or savings or a paid job for that matter, but not conditioned on the willingness to take a job (I only know the latter through correspondence, but have found no references). What this seems to imply is that if you are willing to live with few belongings no one can force you to work. This would make the proposal as a whole partly conditioned.

But what happens if you are not working full-time? Will you be entitled to a Living Income supplement? And if so, how would it be calculated considering the minimum wage is twice the amount of the LIG? Is the minimum wage the same for a part-time job for instance?

As I understand the proposal, it is to be financed solely from sales tax or value added tax, the idea being that the value of labor is directly reflected in the prices of goods and services. But does this mean that income tax is completely abolished? And have you ever considered a negative income tax system which is a model often used in financing a Basic Income?

From what I can see, LIG is to be paid individually and not to households or families, so that settles, I guess, the question of individuality, but how about universality? It is not entirely clear to me whether every individual, including children, will receive it, and, if so, the full amount. Also, if children are included, will their LIG be dependent on what means the parents have, savings, job or otherwise?

It is stated in several places that LIG is to be high enough to secure a decent standard of living, so that would seem to satisfy the last criteria.

I would prefer having all replies here or with links to texts, not videos. Thanks.

“It would be very helpful if all the essential information on your LIG proposal were to be found in one place, preferably a single page or two, instead of being scattered all over numerous blogs and vlogs. What I mean by essential information is how exactly it is to be financed, who are entitled to it and on what conditions.”

Yes, we’re working on exactly that. The information will soon be found on a page on this website.
“I am aware that your proposal differs from the one laid out by the Basic Income Earth Network (BIEN), but what I would like to know is to what extent LIG comply with the four criteria that are adhered to by most proponents of BIEN. Those criteria are that the Basic Income should be: universal, individual, unconditional and high enough for a decent standard of living.”

The principle of universality in terms of ‘anyone gets a living income regardless of whether one is employed or not’: No – Living Income Guaranteed does not adhere to this principle. It is about making sure that everyone has a Guaranteed Living Income – meaning, an income that secures a dignified life. We suggest the minimum wage to be double a Living Income so that if one is employed – one can afford not only a dignified lifestyle, but one with ‘perks’. In general terms, then, LIG is for those who are unemployed.

In terms of your question on working part-time – labor will be equated at an hourly rate, where the particular rate will also be determined according to one’s skill/educational level. One may thus be able to be employed part-time without requiring a Living Income Guaranteed as one is self-sufficient due to the particular rate one receives as determined by one’s skill / level of education. For those working part time on a minimum wage would mean they would receive the same amount of income as they would being unemployed and receiving LIG. Herein – one can look at setting an absolute minimum of part-time wage at 3/2 of the Living Income Guaranteed in order to create incentive for part-time workers. Alternatively, one can simply accept that those who are currently working part-time to make ends meet, will instead stop working, receive a LIG and from there perhaps have more time to perform the tasks that makes it impossible for them to work full-time in the first place, which are often tasks such as caretaking or studying. Those part-time workers who like to work to keep themselves busy or because they would like to contribute but have no financial reason to do so – can still do this and receive a part-time minimum wage, or can volunteer and receive LIG.

Children – Ideally, yes, children should receive a LIG, which would be available to the parents up until a specified age, after which, the parents are locked out and the LIG is solely accessible by the child. A child’s LIG is not dependent on the parents’ income. However – one would require investigating the financial capabilities of a particular economy at the implementation stage. It is possible that one would require to continue with a basic child grant system until the economy expands sufficiently to allow for a LIG for every child.

Individual – yes – Living Income Guaranteed is not given to families but to individuals.

Unconditional – yes, but only insofar as discussed above. Meaning – anyone receiving a minimum wage is excluded from LIG. However, there are no other specified conditions such as having to actively search for a job.

High enough for a decent standard of living – yes.

“As I understand the proposal, it is to be financed solely from sales tax or value added tax, the idea being that the value of labor is directly reflected in the prices of goods and services. But does this mean that income tax is completely abolished? And have you ever considered a negative income tax system which is a model often used in financing a Basic Income?”

The primary way of financing LIG would be through the nationalization of resources:

Nationalization of Resources and Social Dividends
One of the ways to fund a Living Income Guaranteed is through the Nationalization of Resources within a particular country. Within this, relevant resources are appropriated towards the public good, where those companies dealing with the production and manufacturing process of these resources will be nationalized. The citizenry would then effectively become shareholders of these companies. Economic profits or surplus value generated by publicly owned companies would partially (or wholly if possible) finance the Living Income Guaranteed.
Aside from the obvious funding function of such a step, the nationalization of resources and connected enterprises also provides an opportunity for the management of the country’s resources by the people of that country, and is thus in fact an extension of direct democracy.

On Taxation:

Taxation
Within the Living Income Guaranteed, Direct or Personal Tax methods will be discontinued. Only Indirect Tax methods will be facilitated in the form of inter alia Value Added Tax (VAT), Sales Tax and Import Duties. When a society and system is in place which effectively tends to all points of requirement within a country, one does not require an extensive government structure to tend to those points which the private sphere has not yet covered. As such, there is no longer a need for excessive taxation, as the role and functions the government will be required to execute and fund, will be minimal.
The amount of tax an individual takes on, will then be directly related to one’s activity and participation within a particular system or section of society (eg. Toll roads / Road pricing).

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