Ecological Resources and Funding a Global Basic Income
by Alex Arin* - June 26, 2011
A real Basic Income** (guaranteed livable income) is a monthly income paid in a legal tender in the same amount per individual without any preconditions or obligations.
What follows are ideas to add to the basic income movement, as well as a critique of the Earth Dividend proposal [1] which has outcomes that are at cross-purposes to its stated goals.
Part 1) APT Tax
Part 2) Eco-Taxation
Part 3) Critique of Earth Dividend
THE FRAMEWORK
PRICELESS -- All living things are priceless and their environments that sustain them/us are priceless as well: there can be no price assigned to them because there is no way to calculate any exchange mechanism on things that are essential to life itself. Trying to generate symbolic wealth to pay for natural wealth is impossible because it is unscientific - there is simply no way to calculate the value of natural wealth such as clean air, clean water, and arable soil.
It should be noted that an universal basic income is considered by many as a necessary transitional step to achieve an economy that is accountable to the environment. And that once there is basic social security for citizens, problems of limited global resources will turn out to be solvable.
REFORM OF THE MONETARY SYSTEM -- A reform of money cannot be avoided, because today's non-cash money is not a legal tender and it is not controlled by any central bank or any institution with democratic legitimacy. This makes the financial and currency system extremely unstable on a world-wide scale. The earnings out of newly issued money could and should contribute to the Common Good. For a further discussion we refer to [3, 4].
QUESTIONS ON WORK -- Nature provides humans with many things, but before we can use them, we must use our labor to harvest or extract them: money for social transfer is generated through the work of people, even a levy on resources. The topic of funding a basic income must include a discussion about work, participation, and unpaid work, as this is central to the movement for Basic Income. The importance of unpaid work to human society and how this work might be shared more equitably in the future is an essential discussion and cannot be skipped over since it affects all those who provide unpaid care (still mostly women) for babies, children, elders .
PART I - APT TAX
AUTOMATED PAYMENT TRANSACTONS TAX -- There is one idea with many advantages in regards to financing a basic income through taxation (to generate stable earning in the long run): An APT — an automated tax on all payment transactions — is a concept introduced by Prof. Edgar Feige (University of Wisconsin-Madison) [2]. With an APT tax, all transactions from one bank account to another are taxed with a very low rate (under 1 percent).
The advantages of APT:
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Due to simplicity and automation this tax is very easy and low cost to administer.
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Since the volume of cash transfer of the rich is much higher than that of the poor it is a socially sustainable system.
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Since highly speculative businesses operate with an extraordinarily high number of transactions, they will pay significantly more than production and trading of real goods and services, which will possibly lead to a more stable world economy.
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The APT creates earnings on a daily basis and the rates could constantly be adjusted without difficulty. With a little buffer this system can easily finance a Basic Income, even on a world-wide scale.
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This taxation concept covers other concepts for transaction taxes that have been debated for some time, such as the Tobin tax on currency transactions and John Maynard Keynes' tax on stock market transactions.
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Due to the transparent system and the very low tax rate there will be little possibility, or motivation, to evade contributing.
PART 2 - ECO-TAXATION (back to top)
To avoid overuse of natural resources we should distinguish and use different measures according to the different resources. Today the biggest problems are caused by fossil and nuclear fuels, their use endangers the ecosystems on both a regional and a global scale.
Their place in the production processes must thus be taken over by other fuels or forms of energy as quickly as possible. The best way to accelerate this process is to make them more and more expensive, which means to raise taxes on these fuels. This can happen per content of energy or of estimated pollution, mass or volume, or a combination of these parameters.
The advantages are:
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The tax rate for a certain resource is clear and transparent, as well as the rise for the next year or other time-interval.
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The industry can then plan their investments in ecological innovation while they don't have to use their resources for the trade with certificates and/or taking influence on the process of determining how many certificates shall be emitted in the next turn.
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Eco-taxation rates and their increase (per year or other time interval) could very easily be understood by the population since the decision about how much we impact the ecosystem always is normative, and the system of eco-taxation is quite simple. They could even be subject to regularly held referenda. This could give them an extraordinary legitimacy.
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If the earnings from that levy are in return invested into the research of sustainable energy and basic materials, the overall effect can be a boost for cheap and renewable energy and a sustainable industrial structure.
PART 3 - A CRITIQUE OF THE EARTH DIVIDEND (back to top)
The Earth Dividend proposal [1] is the idea that each person in the world should have an equal share of the world's ecological resources and a share of the national resources of their country of residence. The aim is that resource use is sustainable and that poverty is eliminated through an universal dividend. However, the problem with the Earth Dividend concept is that it creates outcomes that are at cross purposes between ecological and social goals due to inaccurate assumptions about ecological resources.
"Earth Dividend" cannot at all replace or introduce a Basic Income/Guaranteed Livable Income as a means of secure and reliable monthly income and it may also send efforts to establish basic income down the wrong path.
Problem One: There is no way to objectively determine which resources have to be in the "Earth Dividend" and which do not, nor to distinguish within the Earth Dividend between "global" and "national" resources. And philosophically it is debatable whether the world "belongs to all people". How many are we? We don't know how many future generations are still to come, so how can we distribute equal shares?
It is an illusion that scientists can determine the quantity of the earth's ecological resources that can be used in a given time without causing negative effects. In most cases, exact mechanisms of global ecosystems are not understood and consequences of human impacts on these systems are widely unknown. In fact our knowledge about complex interactions of ecosystems is fairly limited, and is one of the reasons for ecological problems.
Especially for inorganic or fossil resources, estimations of remaining reserves have been very imprecise or simply wrong. Additionally, current estimated productivity within different ecosystems may drastically change with altering climate conditions and expanding land use. This calls into question the ability to make any reliable quantification of national or global ecological resources.
Separate from the quantification problem, the question of how much of any resource we may use per year, is normative rather than scientific: It strongly depends on decisions on how we want to live, limited by what negative effects on the ecosystem we would be willing to accept for our life style.
This kind of decision is an ethical question and cannot be left to experts. Strictly speaking, humans may be able to survive even after chopping down all the rainforests - but in a radically changed manner. Before going that way, the population really should have a say in the matter.
In addition, in an economic context, scientists have always been a target for lobbyists and the scientific approach to political questions is frequently out-played by a political or short-term economic approach. Powerful and experienced industrial lobbies can easily influence, corrupt, or replace any group of scientists, or modify their interpretations or credibility over the media.
Problem 2: After experts have determined the annual quota for each resource, people would get their share in the form of a certificate. If somebody wouldn't sell their share, it would mean that this quantity is still available next year (or next round) and it will thus be given into the system again.
That is why an Earth Dividend makes it impossible to protect resources against exploitation: even if somebody would rather not use their share of the resources but wants them left unused (under the ground, in the seven seas etc), the quota determined by experts, is in fact the minimum quantity of the used resources per time unit.
On the other hand it is obvious that it is very easy to expand the quantity of eco-resources used. Nobody will refuse a company extraordinary "rights to pollute" - and to use resources - if they are, for example, running a power plant on which a city or region depends.
This is exactly the way all kinds of emission trading systems already are corrupted today. The company can then be forced to pay a penalty for the extra use of fuel. The amount of this penalty is the maximum price you can ever get for the respective resource, since, of course, no company ever will buy a certificate for more money than they would pay in penalty if they just proceeded without certificate.
This system thus creates on the one hand a 'lower limit' of the consumption (the 'at least' used quantity) and, on the other hand, an upper limit for the price companies have to pay for the right to use scarce resources, which is exactly opposite to the declared intention.
Problem 3: The system needs a lot of administration, it could create an unwieldy bureaucracy as it is very complicated. In addition to the higher administrative costs, the complexity of this system will result in citizens who will neither be able to understand, nor to control or influence what is going on. The distribution of real power will be extremely uneven.
Problem 4: Technically the companies will make the consumers of their products pay for the certificates. While the Earth Dividend generally is not able to provide stable basic security we cannot exclude the possibility that for some people it will create even more poverty if their income from the selling of certificates doesn't meet the rise in the prices of the products they depend on.
Problem 5: While the maximum price for the right to use resources is determined by national governments in form of penalties, there is no minimum price. This means the system doesn't even guarantee a reliable minimum income for the citizens. Even if an intermediate organization buffers the revenue (which means they keep some money for the next turn) it still isn't adjusted to the peoples' needs but to what the companies need and how much they will pay for the certificates. A system that really provides social security (and by doing so facilitates a stable market-economy giving people individual freedom and purchasing power to influence what and how things are produced) can itself never be organized in form of competition or markets. The reason for this is that a real market situation always produces both, winners and losers. So we simply need a back-up system that will always and unconditionally provide basic social security!
If ecologically limited resources are one after another used up and companies can no longer exploit them, the income of people from the ED would shrink too. This will also happen if a general economic crisis occurs and companies use fewer resources, or if companies develop sustainable, more efficient processes faster than experts estimate.
Also "the right to pollute" is a questionable concept. Not everything that happens and - possibly - cannot (or not instantly) be avoided, needs to be established as a legal entitlement to do so.
Connecting a personal bonus income to the exploitation of the earth's resources and to the "right to pollute" has a clearly corruptive impact on the people's awareness of critical impacts on ecosystems. For individuals, groups or organizations on the other hand, who are responsible for these impacts, it will be very easy to refer to the fact that they "have already paid" for the right to do so.
Thus ecological and social intention are then directly working against each other.
References:
[1] Heeskens, René (2005): Earth Dividend and Global Basic Income: A promising partnership.
[2] The Automated Payment Transaction Tax
[3] Publications by Joseph Huber on Plain Money
[4] Joseph Huber & James Robertson (2000): Creating New Money: A monetary reform for the information age. 92 p., London.
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* Alex Arin is the pseudonym for 4 writers in EU and NA
**Along with Global Basic income, other terms for this policy include: guaranteed livable income (GLI) basic income guarantee, basic income grant, citizen's income, citizen's basic income,
minimum income guarantee, national dividend, citizen's dividend, guaranteed annual income, LIFE grants (Livable Income For Everyone), Participation Income, and Buckminster Fuller's Lifetime Fellowship.
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Related: The Environmental Benefits of a Guaranteed Livable Income
10 Reasons why we need a Guaranteed Livable Income
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