What We Could Learn From Alaska When It Comes to Sharing the Wealth
By Peter Barnes
174 pp. Berrett-Koehler Publishers $19.95
In the mid-17th century, Gerrard Winstanley led a series of protests in England against “enclosure,” the practice of landlords privatizing public lands. Nonviolent, with a utopian communist agenda, Winstanley’s followers, the Diggers, published pamphlets and, more quixotically, sang their hopes and fears.
A stanza from one of their songs:
“Your houses they pull down, stand up now, stand up now
Your houses they pull down, stand up now.
Your houses they pull down to fright poor men in town,
But the gentry must come down and the poor shall wear the crown.
Stand up now, Diggers all.”
Peter Barnes’s new book, With Liberty and Dividends for All: How to Save Our Middle Class When Jobs Don’t Pay Enough, isn’t as poetic as a Digger tract; yet at its core, it is a book about power relationships as relevant to the 21st century as Digger pamphlets and songs were to the 17th.
What do we do, Barnes asks, when increasing numbers of Americans no longer have jobs that pay enough to generate a modicum of economic security, or when the federal political system seems too paralyzed to do much more than tinker on the margins? What do we do when median wages are unlikely to rebound to pre-2008 levels, while exploitation of common goods by private companies continues to enrich those already perched atop the economic ladder?
The answer: Use the riches of the commons to provide decent living standards for all. Barnes’s inspirations include Thomas Paine’s social insurance schemes of the 18th century, British economist Arthur Pigou’s pioneering work on taxing pollution in the early 20th century, and Francis Townsend’s idea in the 1920s for a universal pension. His modern inspiration is Alaska’s Permanent Fund, which pays residents an annual dividend out of the proceeds from taxes on oil companies that operate in the state. Out of these ideas, he carefully develops a framework for change with the core idea that profits extracted from the commons should be broadly shared. Barnes doesn’t explicitly mention Henry George, but the concept of taxing the unearned increase in the value of land, and then plowing that money back into the common good, is also tacitly present in Barnes’s thinking.
Barnes, the co-founder of Working Assets, a socially responsible financial services group, and the author of five previous books, asks readers to visualize a series of “pipes,” which would generate new revenue streams. These pipes, he calculates, would allow for up to $1.5 trillion per year, generated by developing “rent” mechanisms for private companies’ usage of common assets, to be recycled into the economy via dividends paid to all citizens and legal residents of the United States.
Barnes estimates that upwards of $300 billion could be generated through carbon taxes. More than $350 billion could be brought to the table by taxing financial transactions. Another $300 billion-plus could be made available by charging companies for the use of intellectual property and technological infrastructure seeded with public investments, which they currently use for free. Additional moneys could be raised by charging for use of the electromagnetic spectrum.
Barnes also suggests that the Federal Reserve could create more money—a function it has long utilized during economic contractions. The last few years of quantitative easing have been a partial success, but a lot of that money has sat unused in banks. Barnes thinks the Fed could inject it directly into the economy.
The proposed $1.5 trillion is roughly the amount that Social Security, Medicare, unemployment, and disability insurance already pay out annually. It’s a huge sum, but Barnes aims to show that the idea is not just fiscally possible but politically feasible. Last year, The Wall Street Journal reported that the 60 largest companies alone had parked more than $166 billion offshore to avoid paying taxes on that income. Large gas and coal companies weren’t paying the costs of their contribution to carbon pollution, but were passing them along to the public as invisible social expenses. Create the mechanisms to raise funds on this scale, Barnes writes, and the funds will be generated along with the political support. Even if $1.5 trillion proves an impossible goal to attain anytime soon, plans that raised several hundred billion dollars to cycle back into the broader economy would have transformative implications.
On one level, it’s a fairly conservative idea. Barnes is not proposing to raise taxes to fund more government. On the contrary, he is proposing new revenue streams to give everyone a social dividend that will offset dwindling wage and salary income. In conservative Alaska, where the Permanent Fund gives an equal share of oil revenue to every man, woman, and child, this highly redistributive idea is phenomenally popular. In some native Alaskan communities, the Permanent Fund provides a significant portion of all cash income. Like the fund, Barnes’s proposed revenue stream, once experienced, would be politically untouchable. Even former Governor Sarah Palin is a strong supporter, and Alaska voters beat back a recent industry-backed campaign to dilute the annual dividend.
Consider every American to own one “share” in America, Barnes asks his readers. And then work out a way to give each shareholder an annual dividend in the profits generated for the country from the usage of the environment and the broader public sphere: Develop cap-and-trade systems so that carbon polluters pay their way; charge for groundwater withdrawals; create financial transaction taxes paid by large financial companies who currently utilize America’s trading and legal infrastructures for free; create profit taxes on oil and mineral extraction; charge large Internet companies rent (or royalties or licensing fees—the terminology is less important than the outcome) for use of the Internet infrastructure and charge phone, television, and radio companies for use of the electromagnetic spectrum.
It’s in these details that this plan morphs from conservative to radical. If Barnes has his way, companies long used to freeloading off of the public—and having that freeloading purchased by well-paid lobbyists and protected by a captive political class—will be faced with far higher bills than they are used to. The more those companies pollute and otherwise wreck the natural environment, the more those bills will increase. Corporations that have effectively engaged in a modern-day Enclosure Movement, privatizing the benefits of large parts of the environment and the economy, will be made to financially compensate the public for the lost access.
On the flip side, individuals long used to working for wages that can’t cover all of their needs will find that their families qualify for many thousands of dollars a year in “dividend” income to supplement paychecks of dwindling reliability. Barnes projects that each resident would receive roughly $5,000 per year in dividends—or $20,000 for a family of four—thus locking into place a viable subsidy that would catapult low-income families into something approximating economic security. Don’t think of it as a government giveaway, he argues, in a Digger-like turn; think of it as an empowered citizenry reclaiming essentially looted public property.
A similar system is being developed in Vermont, via a proposed Common Assets Trust, which would raise money from taxes on pollution and other socially harmful practices and pay dividends to each resident while bulking up social investments such as education and public libraries. Several tribal communities across the country have also embraced a form of collective ownership and wealth-sharing. The principle has been institutionalized in California, via utility bill credits, as a part of the state’s effort to encourage utility companies to reduce greenhouse gas pollution. Barnes reports on local government initiatives, such as in Sherman County, Oregon, where a booming wind energy project has generated large tax windfalls that have allowed the county to pay $590 annually to local households.
Overseas, a mixed analogy is sovereign wealth funds. While some of these are run by corrupt regimes and benefit only a privileged few, elsewhere they have been used to shore up vital public services. Norway has taxed oil production and other usages of public resources in order to sock away huge amounts of money for public investments, cash distributions, and the protection of expansive social safety net systems. According to Barnes, Norway’s fund has assets of roughly $1 million per Norwegian. It’s such a large amount that the state has shied away from cash handouts, instead investing heavily in education, job training, health-care services, and the like.
The social dividend becomes, in Barnes’s telling, both a stunningly effective redistributive tool and a way of reining in some of the most anti-environmental business practices. “Linking nature’s well-being to that of our middle class is the key to harmonizing capitalism with nature,” he writes. “If that connection isn’t made, nature’s rent can’t rise very much, and markets will continue to overuse her.”
With Liberty and Dividends for All does a lot in relatively little space. Over the next few years, the Social Dividend concept will enter into the broader conversation about how to craft a new economy—based on environmental and equity ideas too often absent from current growth-model conversations. If the Occupy Movement put the spotlight on economic inequality, Barnes has now defined a particularly creative solution. By itself, Barnes’s proposed Social Dividend won’t change the underlying power dynamics that generate such wealth extremes in the first place. But it does have the potential to transform our comprehension and politics. Such an idea for reform deserves to be taken very seriously.