Daydreaming reform: basic income, money and work ethic

To say we face an economic crisis is hardly controversial but the crisis is so severe that the reforms needed make Karl Marx look a part of the establishment.   The changes needed are radical beyond the comprehension of many people as they require more than just tweaking what we already have.

The basic problem is that we have used up most of the easily accessible energy and mineral resources.  Those that are left require so much energy to extract that they are almost useless.  There have been other times in economic history when humans have had to cope with resource shortages but these were temporary as more resources were waiting to be discovered.  This time the problem is not knowing where the resources are located but the cost/energy required to extract them.

The three basic changes are a basic universal income, the way in which we create money and overcoming the work ethic.  To accomplish anything all three reforms will be needed at the same time.  As there are so many conflicting vested interests this will be an impossibility.  Prove me wrong.  While these appear to be radical ideas, this writer did a degree in conventional economics at the University of British Columbia and has a strong commitment to a market economy.   The radical comes from wanting a market economy when a major feature of the current economy is that competition is restricted by government legislation.

The basis for an income scheme is the agricultural surplus resulting from all the technology which has developed at least since a farmer discovered he could produce more by using a collar on a horse rather than a harness on an ox.  Through the centuries the elite have confiscated most of the surplus with the use of force. Since the industrial revolution psychological tactics such as legal restrictions on competition,patents, copyright and the work ethic have been less messy.  The need for labour to man the empires has allowed workers to claim a share of the surplus.  As robots replace workers it will be interesting to see what happens to the agricultural surplus – and workers.

This writer would like to see the agricultural surplus treated as an inheritance to be shared equally by all the people of the world.  The way to distribute this inheritance is with a basic income scheme.  Some ideas as to how to do this are in the free e-book, Funny Money: Adapting to a Down economy, available from this weblog.

One of the advantages of an income scheme is that individuals would be able to take action on social and environmental issues related to their employment.  Workers would no longer have to work for exploitive employers and people who disagreed with a firm’s social or environmental policies would not have to bite their tongues for the sake of a pay check.

There is an old saying that money is the root of all evil.  When I studied the economics of money and banking I decided it was the lack of money that is the root of all evil.  I now think the way in which we create money is the root of all evil.

In most of the world’s economies money is created when the banks  make loans and because banks are generally required to keep a fraction of their deposits on reserve most loans become additional deposits in the banking system.  This is called fractional reserve money.  It is a problem because loans that have to be written off reduce the amount of money available, with a multiplier, and because interest is charged on the loans.  A sudden reduction in the money supply is the most difficult of all economic crises.   If all the loans outstanding had to be repaid at the same time there would not be enough money to repay the principle and the interest.  We would recognize the problem as a financial crisis.  This is why I titled my book Funny Money.  I encourage you to get a free copy from Smashwords for an explanation of this problem.

Money is useful because it is a tool which facilitates the exchange of goods and services especially when a lot of our exchanges are with strangers.  We have traditionally used gold or other material items as a basis for money.  Some people still talk about the gold standard although fractional reserve money is based on faith rather than gold.

A few small groups around the world have established what they call Local Exchange Trading Systems.  These people base their exchanges on credits.  You get a credit when you sell a good or service to another member and use credits when you purchase something.  I like this system because the credits are a form of money without the problems of fractional reserve and interest.  In my book I propose we adopt a national exchange trading system and combine it with credits from a guaranteed income scheme.  This would be using money as a tool rather than a commodity.  See the book for more details.

Adopting this system would be revolutionary because it would be a transfer of decision making power from bankers to individuals.  Under fractional reserve bankers get to make decisions about what projects get funded and who gets to do them.  A National Exchange Trading System would allow individuals to make these decisions as they decided what to do with their share of the agricultural surplus.  Some of us would use our share to vote for zero economic growth and more leisure activities.

Many people feel guilty if they do not work continuously.  The work ethic and a distribution of the agricultural surplus via employment are the main motivators that keep our economy going. But the truth is that we do not need everyone to work full-time to provide foods, shelter and entertainment to everyone.  Most of the work people do is work for the sake of work and to maintain the empires of the one per cent.

The bushmen of the Kalahari desert in Africa are/were known for not being interested in material things and for not working hard.  But as hunters and gatherers they had no need to store food.  Any day of the year they could go out and collect the food they needed for that day.  When our ancestors moved to agricultural pursuits, they had to store food and this meant working at least at some times of the year.  We have now taken this need to an extreme.

One of the reasons work is so important is that most of us get our self-identity from our employment.  To save our resource base and to preserve the environment we will have to get our self-identity from other activities.  How about a leisure ethic which encourages people to perform operas, write poetry, write economic weblogs or many other useless things.

This blogger keeps by his computer a little statue of the Laughing Buddha to remind him not to take life too seriously.  Most of the time it works but when thinking about the current economic outlook it is hard to laugh.  Most of us think and act in our own short-term interests as opposed to the long-term in interests of our selves or our communities.  So long as that holds true the outlook is for a lot of human suffering.  But  what does it matter.  To quote a famous economist, in the long term we will all be dead.

 

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Retirement, the future and The Economist

The editors and writers of The Economist news magazine must be ageing and not seeing things too clearly.  That is my conclusion after reading their recent special report on the future of elderly people.  Another option is that my view of the future is incorrect.  The Economist is much more optimistic than I am, I hope they are correct.

I disagree with them on three issues – the future of the economy, the work ethic and financial issues.

Most of their readers probably have a vested interest in continued economic growth and to prosper the magazine needs to support this. And they do.

This blogger figures the current economic problems are related to energy and mineral resources.  We have used up the most accessible of these and those which are left take so much energy to extract they are worthless.  If this is correct the outlook for the future is rather grim.  We can anticipate a lot of human suffering as we have to adapt to a down economy.  So far retirees have largely been exempt from this but our time may be coming. Trump, Brexit, Saunders, Corbyn and Macron could all be symptoms of this problem.  Lots of people recognize something is not right but do not know what it is.

In recent years The Economist has come up with a number of cute cures for the economic crisis.  This time we are going to save ourselves by getting people to work further into old age.  This commitment to the work ethic may be good for those whose fortunes and status depend upon getting other people to work for them but if the above analysis is correct increasing economic activity will use up more energy and resources and bring forward the timing of a complete economic collapse.  Rather than promoting the work ethic we need to be pushing a leisure ethic  in which people get their self identity from doing non economic things such as music, theatre, art or writing a weblog on economics. The Economist talks about a longevity dividend.  Should this dividend be more work or more leisure?

One of the features of money is that it gives a person control over resources.  Financial obligations left over from the era of prosperity mean some older people have a greater  command over current resources than the young.  Older people are going on luxury cruises in which a waiter from a third world country puts the pepper on their food while their grandchildren are struggling to find jobs and homes.  When the crisis hits pensions and other savings the cruise ship operators will be lobbying for the release from prison of a famous Italian captain so they can put him back to work.

This blogger tends to be pessimistic about the economic future.  I figure I was very lucky in the time and place in which I was born and have lived most of my life (1941 and western Canada).

Guaranteed work or guaranteed income?

As an alternative to a basic income scheme a commentator on Medium is proposing universal guaranteed work.  This writer has put a lot of thought into his proposal and deserves to have it given some consideration.  I have a strong commitment to a guaranteed income scheme and I have some heavy-duty concerns about his work plan.

My first concern is a belief that we do not have enough energy and mineral resources to provide employment for all the people who inhabit this planet.  There are still lots of resources but we have cherry picked the most accessible and those which are left will require lots of inexpensive energy to extract.  Even if the cost of solar energy continues to drop there may not be enough other resources to maintain the economic growth required to provide work for everyone. Topsoil is a major resource which may deteriorate and restrict growth.

The proposal for guaranteed work is probably based on a belief in economic growth and a long tradition that people must “do their share” and work to support themselves.  It may be that some people see a basic income scheme as a way of distributing goods and services rather than as an economic necessity.

Technology has been changing our economy at least since an ancient farmer discovered he could increase his production by using a horse with a collar instead of an ox with harnesses.  This development and all those that  followed allowed fewer people to work the land and more people to do other things such as fight and prey.  (In medieval times there were three classes of people – those who prayed, those who fought and those who worked to support the first two.)  My professor of European economic history spent a lot of time talking about agricultural developments which increased productivity.

Modern technology is an extension of this trend releasing more people to do things other than work to provide food and shelter.  A major question is what is this free time going to be used for.  There are many choices beyond preying and fighting including making more electronic gadgets and performing or listening to music.  Another question is who is going to make the decision about what to do with this time.  I believe individuals should be able to make the decisions for themselves.

My third concern is that a guaranteed work scheme is a continuation of the work ethic which allows a few people to tell the rest of us what to do.  We should consider the agricultural surplus and the benefits of technology an inheritance for all of us rather than a right which can be expropriated by a few.  We should be able to decide for ourselves what we want to do with the free time we have inherited from our ancestors.  That could be drinking beer or creating great works of art.  Who is to say one activity is better than another? We need a leisure ethic rather than a work ethic.

Sadly there are some people who feel they should be able to tell others how to live their lives.  A universal guaranteed work scheme is an open invitation to these people to practice this dark business.

Our civilization has to deal with some serious economic problems.  I fear the work program as proposed would make a lot of those problems even worse.  A guaranteed income program would not be enough to solve all the problems but it would be a start and needs a lot more thought.

 

 

Bill Gates and vested interests

The world’s richest man thinks robots that displace human labour should be taxed and the money used to fund philanthropic employment in health care and education.  This proposal would suit the interests of the one per cent but there are probably better ways to deal with problems created by the agricultural surplus.

Bill Gates deserves some credit for his philanthropy and for recognizing educational and health care needs although one has to be concerned about the economics of how he became the current chairman of the board of the world’s elite.

To evaluate proposals like this we need to look at the vested interests of the person making them.

Mr. Gates’ foremost interest has to be in maintaining copyright and patent legislation as that is the foundation of his fortune.  If our society did not have that legislation he would be just another clever computer nerd, we would all be using cheaper and better software and there would be a great deal more equality in our society.

His second greatest interest has to be promotion of the social monitoring and tracking industry. The future of his fortune probably depends upon the success of Microsoft in tracking and monitoring all people so the information can be sold to advertisers.  I fear this not so much because of the advertising but because once the information is collected it will also be available to governments and the one per cent for social control.  I switched my computer to linux minx because I figured Microsoft was getting too blatant and too untrustworthy in its collection of information.

Another major interest of this guy is full employment and the work ethic.  He needs for everyone to be working so we can all purchase his software and be subject to targeted advertising.  If that does not happen his position as the richest man on earth becomes precarious.

Another of Mr. Gates interests is the maintenance of poor people in this world.  Without them he would not get brownie points for philanthropy.

Will his proposal help to save jobs?  Probably not because the root problem is that we have used up the most easily available energy and mineral resources.  Those that are left will take so much energy to extract their value is limited.

The development of robots should be seen as part of a long-term technological development which has given us a high agricultural and material goods surplus and which allows all the benefits of modern civilization.  The challenge is to use the technology for the greatest enjoyment of human lives.  It may be the greatest benefit would come from a new emphasis on doing arts, crafts, music  and theatre rather than marketing more elaborate gadgets.

So there are two things which might interfere with Mr. Gates’ desire for full employment and his future.  First is the depletion of energy and mineral resources which will reduce our economic activity and the second is if more and more people get fed up with the marketing conspiracy and reduce their interest in contributing to economic growth.
 

A guaranteed income – another impossible dream

I believe the arguments in favor of a universal income scheme are overwhelming.  The problem is this belief is not shared by everyone.  I would go even further than an income scheme and say there is an urgent need to reform the way in which we create money and the two reforms should be combined.

Our survival and our enjoyment of life depends upon our being able to provide ourselves with food, shelter, clothing and smart phones.  The way in which we do this involves a lot of complex relationships with people we do not know.   As, for the most part,  we do not understand how these relationships work,  any attempt to change them will be a threat and arouse a lot of fierce emotions.  On top of that a lot of people have a vested interest in the current way of exchanging goods and services and will resist change.

It may be impossible to overcome these problems, but is that a good reason to not discuss them and to not try?  With current economic trends it could be that changes will be forced upon us and maybe we should try to influence them rather than just let them happen.

The essay “LETS go to market; Dealing with the economic crisis”  on this weblog deals with a proposal for a guarantee income scheme and how it could be combined with a different way of creating money.  Do have a look at it.

A major question around an income scheme is how much work needs to be done.  Modern technology has reduced the amount of labor needed for survival.  I think we are at the point where a lot of work is just for the sake of working to satisfy the work ethic.  The work ethic allows a lot of people to build empires to fulfill their own ambitions.  The work ethic is unnecessary and makes a lot of people into slaves.

A guaranteed income scheme would be a major transfer of decision-making power to individuals because having money allows people to make decisions.    No longer would people be dependent upon an employer for their total income.  No longer would we be slaves to employers.  We would be able to decide what we want to do with our time.

An income scheme would deal with problems of poverty, inequality and economic inefficiencies.  With an income scheme there would no longer be a case for subsidies to producers and this would remove a lot of price distortions from the economy.  The result would be a more efficient economy.

Value is determined by supply and demand.  As all of us have a limited lifespan time should be the most valuable thing we have.  Therefore we should by trying to use modern technology to give us more time in which to do the things we most enjoy.  Instead it seems modern technology is mostly being used to sell us more smart phones which are used to sell us more junk.  That’s stupid.

The complexities and limitations of freedom

We value “freedom”  so much that people have lost their “freedom” by fighting to death for it.  But it is a complex concept with lots of limitations.

This post was inspired by an article on economic freedom with a nice graph showing we now have more economic freedom than we have ever had..  I was too lazy to try to figure it out but it did get me thinking.

Definitions are sometimes fuzzy. For for this post there are two aspects to freedom.  There is the freedom to make decisions and to act accordingly and there is the freedom from having to do what others tell us.

The main factor affecting our freedom is the agricultural surplus because that relieves us of the drudgery of producing or gathering or hunting for food.  The less time we use for food the more time we have with which to do what we want or which other people want us to do.  If the agricultural surplus per person were to decrease we may find ourselves with less freedom.

Freedom varies in different parts of our lives.  In British Columbia we have freedom of religion and can attend any church of our choosing – or mostly not.  However, we are required by law to educate our children.  The options are home schooling, a few expensive  private schools (mostly religious) or public schools (in effect a monopoly) over which we have very little say.  So we have freedom of religion but very little freedom as to how we educate our children.

Here are some of the things which limit our ability to make and act on decisions.

Our own values, morals and religion.  If your religion tells you salvation comes from work, then that limits your right to goof off.  The work ethic is part of many people’s belief system but it is also very much in the interests of people who want others to work for them.

The values, morals and religion of other people.  The most evil of all people are those who try to force their values, morals and religion upon others.  Unfortunately my belief in this evil does not stop others from trying and often succeeding.  The greatest evil comes when these people get into government.

Politicians and their bureaucrats sometimes like to tell the rest of us how to live and our commitment to the “rule of law” gives them means to do so.  Try to sell unpasteurized milk in Canada and you will probably have a rule of law learning experience.

At least in the industrial countries many people worry, and probably rightly so, about their pensions and their well-being in retirement.  This could be a natural need for security or it could be a result of marketing by the financial industry.  In any case it limits our freedom to do things that do not contribute to a pension plan such as extended travel or going to live in the forest.  The problem is that our well-being in retirement will depend up on the quantity of goods and services the economy is capable of producing at that time.  Pensions and savings are vulnerable to inflation or bankruptcy.

Economics is about relationships and relationships can  be both supportive of freedom or restrictive.  I believe relationships are most satisfactory when there is a more or less equal exchange but there is no law which states that relationships have to be satisfactory.  Relationships are as complex as the personalities of the participants.  The key to happiness may be in finding a partner whose personality compliments our own.

I have long believed that little girls should not be allowed to play with dolls because they learn that they can have relationships in which they have total control over actions and thoughts.  When they grow up this tends to limit the freedom of their husbands.  Us guys have to learn to be assertive.

It may be that some people can’t cope with a lot of freedom and seek out life situations where their right to make their own decisions is limited.  Erich Fromm was concerned about populations giving up political freedom to dictators and wrote a book in 1941 called Escape From Freedom.

There are people who feel they have the right to tell others how to live their lives and these people limit the freedom of others.  There may have been times and places where these people could use force but at least is some places today force is not easy.  It is much less messy to use psychological tactics.  For example the work ethic,  fears about future security or psychological marketing can be used to encourage people to do what somebody else wants them to do.

It may be the great industrial societies in which some of us live and which we associate with freedom were in fact created because most people have given up a some of the freedom of the agricultural surplus.  Sometimes I think we have overdone the technological development and work for the sake of work although there is a lot I would not want to give up.

Freedom appears to be a complex concept which varies by individual and by the different aspects of our lives. Those of us who value the right to make our own decisions should fare reasonable well and those with a submissive personality should find it easy to meet their needs.

 

If you liked this post your are invited to comment, press the like button and/or click  one of the share buttons. If you disagree you are invited to say why in a comment.  While I like the idea of sharing this platform, my personality is such that I don’t reply to many comments.

The unemployed scapegoats

Apparently a lot of people are blaming themselves for their own unemployment.  This is sad because there is a high probability that our committment to the work ethic will make it difficult or impossible to cope humanely with the economic crisis.

I believe economics is largely about relationships and for relationships to be satisfactory they require a  more or less equal two-way exchange including compassion and understanding.  Too often the victims of the economic crisis are being blamed for their misfortune which is neither understanding nor compassionate.  For them to blame themselves must be psychologically devastating.

Our economic problems are a result of our having consumed the most easily accessible energy and mineral resources and are aggravated by a financial system that has a built-in collapse mechanism.  Those of us who have lived through and enjoyed the recent golden age of prosperity should collectively  take responsibility for the crisis even  though we would not be human if we had not used the resources. To blame any one group for what we have all done is to make them into scapegoats.

Our economic problems could be a lot worse than we would like to think and could lead to a population reduction up to 80 per cent.  That is what the native North Americans experienced when the Europeans arrived.  Of course we are exempt from that kind of disaster but there are so many things threatening our civilization and our way of life that we might be wise to think about how we can cope with a serious disaster so as to minimize human suffering.

One approach may be to look at anthropology and history.  How have other cultures organized themselves and how have they organized the exchange of goods and services.  This has allowed me to see that there are other ways of doing things.  Sometimes those other ways are very appealing.

Our culture places too much emphasis on jobs and employment.  Not only do jobs provide us with food, clothing, shelter and entertainment, they also provide us with self-identity.  If one does not have a job one is a nobody and deserves to be look down upon.  The proper place for such people is that famous burning garbage dump in Jerusalem known as hell.

The reality is that full employment is not a realistic expectation.  The huge agricultural surplus we currently produce makes it unnecessary and our having used up the most easily accessible resources makes it impossible. We need to reorganize our economy so that all people can have the opportunity for a standard of living similar to most other people regardless of what they do with their time.  This means we need to look at some sort of universal income scheme.  Before we can have an income scheme we have to get over our committment to the work ethic.

To some extent we all have to take responsibility for how we live our lives within limitations.  Sometimes we must live in circumstances that are beyond our control.

This blogger feels quite pessimistic about the economic future but has to recognize that people have been pessimistic about the future for millenia.  On the other hand, there have been times during the millenia when pessimism has been justified.  Please don’t blame the economic crisis on those people who are suffering from it.

 

If you liked this post your are invited to comment, press the like button and/or click  one of the share buttons. If you disagree you are invited to say why in a comment.  While I like the idea of sharing this platform, my personality is such that I don’t reply to many comments.

 

 

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