Thursday, 27 November 2014

Who is more Fiscally Responsible – Citizens or Elected Politicians?

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

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

"Switzerland is an interesting laboratory for direct democracy.

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

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

The highly fascinating result was this:

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

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

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

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

Monday, 17 November 2014

Transcending False Dilemmas with Living Income Guaranteed – Part 5 - Kill or Be Killed

This post is a continuation to the blog-posts:

Transcending False Dilemmas with Living Income Guaranteed – Part 1
Transcending False Dilemmas with Living Income Guaranteed – Part 2 – Sustainability vs Full Employment
Transcending False Dilemmas with Living Income Guaranteed – Part 3 – Tools of Intervention
Transcending False Dilemmas with Living Income Guaranteed – Part 4 – Abundance of choice vs Sustainability

Please read them first for context.
Example 3

‘If we don’t maintain our military forces and curtail individual freedoms, terrorists will have free reign and come to destroy our beloved country.’

Here we’re looking at the false dilemma presented to justify military forces to remain active, for funds to be invested in them, by feeding the fear of terrorism and war visiting upon us.

It would seem to me, that so long as there are guns, so long as machines of warfare are produced and placed in the hands of some or other military force – that then, we can expect these arms to be utilized at some point in time. Even if they are said to only be meant for ‘peace operations’ – to go to some other country and break up quarrels there – you’re trying to fight fire with fire. So-called legitimate armies only perpetuate the production of arms – which can really end up anywhere. What use do we have in the 21st century to shoot people with bullets? Why have we not yet stopped global weapon production? If Human Rights are at all regarded as important – and if you value your own life – you have reason to do so – then isn’t the production of deadly weapons the first gross violation of these rights? Really – if we were actually interested in peace operations – we wouldn’t shoot bullets –but we’d use tranquilizer guns. When people revert to violence to solve a conflict, obviously, they’ve been unable to communicate and direct their problems effectively. Is it really going to solve ANYTHING to go kill them? Is it really those individuals that are the problem that they must be taken out, done away with – or are they just so tired of a particular problem that they see no other way than to take out their rage through aggression on others? Are we solving anything by taking out the individuals without addressing the real issue? If you must bring guns – then at least just use tranquilizer guns – it will stop the fighting all the same – people can’t kill when they’re sleeping.

Anyhow – we’re not going to create peace on Earth if we’re going to continue producing the means with which to wage war. We suggest within the Living Income Guaranteed proposal that all countries dismantle their weapon-production industries and declare an overall ban on weapons. We should be ashamed of ourselves that we haven’t done so already – it’s the minimum requirement for peace AND the first step in honoring the right to life. Military spending could then be re-allocated towards funding a Living Income Guaranteed, or taxes could simply reduced.

Rather than meddling in foreign affairs under the banner of ‘promoting peace and democracy elsewhere’ – would it not be more productive to stand as an example within one’s own country first – to create a political and economic model that is sustainable and honors the rights of each citizen – and show other countries how they can achieve the same?

One can point at the waves of democratization, but they were never genuine – western countries going to undemocratic regimes and forcing them to ‘democratize’ or else they won’t receive any more funding – and what’s more – “please arrange your economy so that it will better suit our needs”.

In the meantime, which of the countries maintaining armies for so-called peace operations and which of the countries ‘helping other countries become democratic’ has in fact eradicated poverty at home? None.

One cannot claim the right to instruct others when one hasn’t absolutely proven to stand as an example of peace, support and care oneself. Allowing poverty and destitution within one’s own country deprives one of this right.

Wednesday, 5 November 2014

Transcending False Dilemmas with Living Income Guaranteed – Part 4 – Abundance of choice vs Sustainability

This post is a continuation to the blog-posts:

Transcending False Dilemmas with Living Income Guaranteed – Part 1
Transcending False Dilemmas with Living Income Guaranteed – Part 2 – Sustainability vs Full Employment
Transcending False Dilemmas with Living Income Guaranteed – Part 3 – Tools of Intervention

Please read them first for context.

Example 4

‘We’ve created a society with an abundance of choices and so freedom to choose. Producing so many varieties of the same product places pressure on the environment, but reducing it would mean to give up the freedom we’ve gained.’

We all like to have options and choices – being able to ‘choose for ourselves’ which product we buy – the one that suits our needs just a little better, the one that has the specific features we are looking for. When we are not satisfied with a particular service, we like knowing that there are alternative providers of the same service and that we are not stuck with the only service provider.

Choices and options give u a sense of freedom, a sense of self-determination. So, it would seem that the more options we have available to choose from, the more freedom we have, the happier we are. And so, it would also seem that with the amount of choices we enjoy in our western consumerist lifestyle, we must have reached a state of absolute freedom. But have we?

Barry Schwartz did an excellent TED Talk presentation about this very topic and I will quote some of the key points he brought up as a quick summary – for the full presentation, click here.

“The official dogma runs like this: if we are interested in maximizing the welfare of our citizens, the way to do that is to maximize individual freedom. The reason for this is both that freedom is in and of itself good, valuable, worthwhile, essential to being human. And because if people have freedom, then each of us can act on our own to do the things that will maximize our welfare, and no one has to decide on our behalf. The way to maximize freedom is to maximize choice. The more choice people have, the more freedom they have, and the more freedom they have, the more welfare they have. This, I think, is so deeply embedded in the water supply that it wouldn't occur to anyone to question it.”

“We all know what's good about it, so I'm going to talk about what's bad about it. All of this choice has two effects, two negative effects on people.”

“One effect, paradoxically, is that it produces paralysis, rather than liberation. With so many options to choose from, people find it very difficult to choose at all.”

“The second effect is that even if we manage to overcome the paralysis and make a choice, we end up less satisfied with the result of the choice than we would be if we had fewer options to choose from. And there are several reasons for this. One of them is that with a lot of different salad dressings to choose from, if you buy one, and it's not perfect […] it's easy to imagine that you could have made a different choice that would have been better. And what happens is this imagined alternative induces you to regret the decision you made, and this regret subtracts from the satisfaction you get out of the decision you made, even if it was a good decision. The more options there are, the easier it is to regret anything at all that is disappointing about the option that you chose.

Second, what economists call "opportunity costs." Dan Gilbert made a big point this morning of talking about how much the way in which we value things depends on what we compare them to. Well, when there are lots of alternatives to consider, it is easy to imagine the attractive features of alternatives that you reject, that make you less satisfied with the alternative that you've chosen.”

“Opportunity costs subtract from the satisfaction we get out of what we choose, even when what we choose is terrific. And the more options there are to consider, the more attractive features of these options are going to be reflected by us as opportunity costs.”

“Third: escalation of expectations. This hit me when I went to replace my jeans. I wear jeans almost all the time. And there was a time when jeans came in one flavor, and you bought them, and they fit like crap, and they were incredibly uncomfortable, and if you wore them long enough and washed them enough times, they started to feel OK. So I went to replace my jeans after years and years of wearing these old ones, and I said, you know, "I want a pair of jeans. Here's my size." And the shopkeeper said, "Do you want slim fit, easy fit, relaxed fit? You want button fly or zipper fly? You want stonewashed or acid-washed? Do you want them distressed? You want boot cut, you want tapered, blah blah blah ..." On and on he went. My jaw dropped, and after I recovered, I said, "I want the kind that used to be the only kind.
He had no idea what that was, so I spent an hour trying on all these damn jeans, and I walked out of the store -- truth! -- with the best-fitting jeans I had ever had. I did better. All this choice made it possible for me to do better. But I felt worse. Why? I wrote a whole book to try to explain this to myself.  The reason I felt worse is that, with all of these options available, my expectations about how good a pair of jeans should be went up. I had very low -- I had no particular expectations when they only came in one flavor. When they came in 100 flavors, damn it, one of them should've been perfect. And what I got was good, but it wasn't perfect. And so I compared what I got to what I expected, and what I got was disappointing in comparison to what I expected. Adding options to people's lives can't help but increase the expectations people have about how good those options will be. And what that's going to produce is less satisfaction with results, even when they're good results.”

“Finally, one consequence of buying a bad-fitting pair of jeans when there is only one kind to buy is that when you are dissatisfied, and you ask why, who's responsible, the answer is clear: the world is responsible. What could you do? When there are hundreds of different styles of jeans available, and you buy one that is disappointing, and you ask why, who's responsible? It is equally clear that the answer to the question is you. You could have done better. With a hundred different kinds of jeans on display, there is no excuse for failure. And so when people make decisions, and even though the results of the decisions are good, they feel disappointed about them; they blame themselves.
Clinical depression has exploded in the industrial world in the last generation. I believe a significant -- not the only, but a significant -- contributor to this explosion of depression, and also suicide, is that people have experiences that are disappointing because their standards are so high, and then when they have to explain these experiences to themselves, they think they're at fault.”

As with so many things in life, when we see something as beneficial, we have the tendency of overdoing it and pulling it to the extreme only to realize how that creates other adverse effects and we have to reign ourselves in a again. Sleep is good – it is a vital part of life and required for the body to rejuvenate – but sleep too much and you’re just wasting time. Chocolate is good, it is one of those substances that can give great pleasure – but eat too much of it and your face will be plagued with zits. With all such things – the key is to add the magic words ‘in moderation’: Sleep is good… in moderation. Chocolate is good… in moderation. Having choices is good… in moderation.

So, looking again at the original statement that we have to choose between either freedom through an abundance of choices – and sustainability in refraining from utilizing resources that no one actually needs – we can now clearly see that this is a very ‘black and white’ representation of the story, leaving out important considerations. In understanding that yes, some choice is better than no choice, but too much choice is worse than some choice – we are able to pursue both freedom and sustainability –they are not mutually exclusive.

To this end, we suggest in the Living Income Proposal that before new products and services are produced and made available on the market, it must first be proven that there exists an actual genuine demand for it: that it is something people are asking for – and not merely the same product or service of which there already exists a multitude of options to choose from, only to then create the demand through marketing and advertisement.

Saturday, 1 November 2014

Transcending False Dilemmas with Living Income Guaranteed – Part 3 – Tools of Intervention

This post is a continuation to the blog-posts:

Transcending False Dilemmas with Living Income Guaranteed – Part 1
Transcending False Dilemmas with Living Income Guaranteed – Part 2 – Sustainability vs Full Employment

Please read them first for context.

Example 2

‘The government has two kinds of policy at its disposal to correct market failures: fiscal policy and monetary policy – not using these policies means letting the free market dictate economic conditions.’

Most economists have come to accept that the free market is the ideal way of conducting economic activity – let market forces dictate prices and output and don’t try to control these forces, because they eventually create the best outcome for everyone. Most economists, however, have also come to accept that there are certain situations in which intervention is called for – to correct market failures and inefficiencies. Looking at only the national economy – the ways in which intervention happens, apart from declaring laws that set standards, minimum or maximum requirements, quotas, etc. – fall under the categories of either fiscal policy or monetary policy.

Fiscal policy refers to those policies that have to do with tax collection and government spending. In overly simplistic terms: if the government sees it is needed to increase output and income/employment – it can implement expansionary fiscal policy through reducing taxation and/or increasing government spending.

Monetary policy refers to those policies that have to do with the rate at which money is released into the economy. Here the government has no authority, it is the central bank in each country that influence interest rates to either contract or expand the economy.

Both kinds of policies, when used to achieve a certain goal, always have certain drawbacks in other areas. In other words, the usefulness of their application is always limited by the nature of the free market principles – where their use becomes a careful balancing of adjustments here and there to ‘kind of’ have ‘some’ movement in a certain desirable direction.

Problems such as poverty, deprivation, insufficient incomes and job insecurity, to name but a few, cannot be tackled directly from within this economic paradigm – to do so with the use of fiscal and monetary policies would in most countries require substantial interventions – and create substantial drawbacks, crippling the economy in other areas, and over time, undoing its own efforts. So – what can we do? This is just how it is, right? This is just the nature of economics, right? ‘Sorry for those fellas struggling to survive, but there’s really not that much we can do for you. Sure, in theory you have certain basic human rights, but looks like it’s just not gonna happen.’ In brutal terms, that is the attitude that has been adopted when it comes to our economies and the intertwined question of human rights.

At the Equal Life Foundation, we take the guaranteeing of human rights very seriously – in our view, they are not optional and they should not be seen as variables that are dependent on the grace of market forces that may or may not grant these rights at some points in time. Seeing that the conventional paradigm and available policies lack the capacity to ensure these rights, it became clear that it was necessary to step outside of this paradigm and dare to look for alternative measures that CAN guarantee human rights, yet won’t result in the crippling and destabilizing of the whole of the economy.

Providing a Living Income to those who are unemployed or retired through the profits of companies that are considered human rights companies and national resources companies is exactly such a measure. It’s not a fiscal policy, because it is not funded through taxation and it’s not a monetary policy, because it is not funded through printing more money. Fascinatingly – if a measure is none of those two – and it’s not purely free market… ‘well… well… then… it has to be communistic!’ Lol. Yet, it’s not communistic, because the economy will still operate according to free market principles, there will be no centralization of ownership – there will be decentralization – and the role for government would become smaller than it is now.

For more information about Living Income Guaranteed,
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