By: Frank de Jong
Do not expect justice where might is right – Plato
Children have no filter. They automatically demand their “fair share”, usually at the tops of their lungs. Adults typically comply immediately, acknowledging this universal law among children.
But, the notion of fairness is jettisoned as we become adults. We generally assume society owes adults nothing, that they must earn their share or beg ignominiously for bread. Never mind that Jeremy Rifkin tells us, in “Empathic Civilization” that humans are at peak empathy, no one has the right to a free lunch.
This notion makes the vibrant Universal Basic Income movement all the more remarkable. Promising every U.S. adult $1000 a month propelled Democratic primary candidate, Andrew Yang, from an also-ran to a contender. Alas, this was quickly followed by the COVID-19 pandemic which actually boosted the push for a UBI into a global, political phenomena. Maybe Rifkin was and is onto something.
Through most of human history, it could be said that there has always been a free lunch. With a modest amount of labour, hunting and gathering societies secured food and shelter, and until the modern era, agricultural land was available for little or no cost.
My parents immigrated from the Netherlands to Canada in 1950, got menial jobs, and in 1955, bought a modest farm. We missed the pioneer era of free farmland, so our lunch wasn’t free. But, with hard work, we repaid the mortgage and lived well. Essentially, the land provided.
Most farmers in the 50s and 60s owned a 100-acre farm. No one rented land, so we all rose with the market. No one became rich, but no one was poor. Our family pocketed the imputed rental value of our land, untaxed, as did every other farm family. We effectively received a Universal Basic Income. Andrew Yang’s dream was my family’s reality.
But, as teenagers, me and my friends noticed poverty in our local town. The landless and jobless dressed poorly, had no vehicle, walked with bowed heads. They didn’t get much lunch, free or otherwise.
By the late 1960s, my siblings and I were part of rural depopulation to cities, where, rather than collecting unearned income, we provided free lunches to landlords. After many years of hard work, some of my siblings managed to buy houses. Once again, they rose with the market, collecting their basic income in the form of rising land values. The rest of us, unable to afford houses, helped provide others with a “basic income”.
Roughly one-third of the Gross Domestic Product (GDP) in every economy is economic rent, also called unearned income or the unearned increment. Economic rent is revenue without a corresponding cost of production. It accrues to desirable, non-replicable assets like land, non-renewable resources, the electromagnetic spectrum, scalable internet platforms like Facebook, Google, and Amazon.
Every citizen has the right to their share of the unearned income, either in the form of government services like healthcare, education, roads and police or as a UBI or “citizen’s dividend”. The dollar value of the payment would be calculated by the number of citizens divided by the rental value of all rent-producing assets. When a young person reaches adulthood or an immigrant becomes a citizen, they would begin receiving their share.
At the same time, income that is earned through investment, innovation or value-added should stay, untaxed, with the person or business that earned it. Government services would be financed by economic rent capture in lieu of taxes on jobs, business or sales. In my opinion, people with jobs shouldn’t be taxed to pay for people without jobs.
Might is no longer right — nor is might necessary — in an equitable society. Everyone will benefit financially when no one lives in poverty and when entrepreneurialism is no longer burdened by taxation. The acknowledgement of full entitlement for each citizen will spur civic pride, empathy and inclusion and defuse racism, sexism and intolerance.
There should be no need to grab for food at a rich person’s table. After all, if we correct the ship, there will be enough for all.