Monthly Archives: August 2016

Economy for the Common Good

dick rodgers 3Northfield’s Dick Rodgers (right) occasionally attends WMNEG meetings and his concept of the Common Good focusses on seven key issues, listed on his website.

Today’s inbox brought news of another initiative: Economy for the Common Good (link does not work on all browsers). The e-correspondent wrote: “The group has established an interesting economic concept which moves away from a purely financial focus in business. Instead, through a technique called the Common Good Balance Sheet, measures are put in place to look at organisational focus on human dignity, cooperation, ecological sustainability, social justice, and transparency and democracy”.

A search found that Wikipedia describes Economy for the Common Good as a social movement advocating an alternative economic model which reevaluates economic relations by, for example, putting limits on financial speculation and encouraging companies to produce socially-responsible products: “It calls for working towards the common good and cooperation instead of profit-orientation and competition which lead to greed and uncontrolled growth”.

common good graphicChristian Felber coined the term in his book Die Gemeinwohl-Ökonomie – Das Wirtschaftsmodell der Zukunft, published in 2010. According to Felber, it makes much more sense for companies to create a so-called “common good balance sheet” than a financial balance sheet. The common good balance sheet shows the extent to which a company abides by values like human dignity, solidarity and economic sustainability”.

Over 1200 companies actively support the concept of Economy for the Common Good and a few hundred of them have committed to creating the common good balance sheet.

These include Sparda-Bank Munich, the Rhomberg Group and Vaude Outdoor. According to proponents of the movement, the success of a company should not be determined by how much profit it makes, but rather by the degree to which it contributes to the common good.

In the words of noted economist Martin Wolf, “[I]f the legitimacy of our democratic political systems is to be maintained, economic policy must be orientated towards promoting the interests of the many not the few; in the first place would be the citizenry, to whom the politicians are accountable”. 

 

 

 

Basic income (2)

ubi planet

In the Canadian Globe and Mail’s March article, Eric Reguly described basic income as:

“. . . a concept that has been around since Thomas More’s Utopia was published in the early 16th century. It was proposed by Thomas Paine, one of the founding fathers of the United States, in his pamphlet Agrarian Justice, and tested during the 20th century in a few unlikely spots, including the town of Dauphin, Man. Martin Luther King, Jr., extolled the virtues of basic income, as did Milton Friedman, the American economist respected by Ronald Reagan and Maggie Thatcher.

“Basic income is being contemplated, or about to be launched in experimental forms. It would streamline bureaucracy if it replaced a tangle of means-tested welfare and support programs. It would, in theory, boost demand in the economy and give people the flexibility to hold out for, or train for, high-paying jobs instead being forced into menial labour to put food on the table. And for those unable, or unwilling, to train for a better job, it could make it worthwhile to take a low-paying one because any additional earnings would not be clawed back. It just might even trigger the development of a young entrepreneurial class”.

On August 25th, the Globe and Mail republished a Bloomberg news report that Finland is pushing ahead with a plan to test the effects of paying a basic income as it seeks to protect state finances and move more people into the labour market. Kela, the Social Insurance Institution of Finland, will carry out the experiment starting in 2017 and including 2,000 randomly selected welfare recipients. The level of basic income would be €560 a month ($816 Canadian), tax free and mandatory for those picked.

“The objective of the legislative proposal is to carry out a basic income experiment in order to assess whether basic income can be used to reform social security, specifically to reduce incentive traps relating to working,” the Social Affairs and Health Ministry said. The effect of a basic income will be assessed by comparing the participating group with a carefully matched control group.

However, Eric Reguly fears that basic income could become the equivalent of a monstrous form of quantitative easing aimed not at the financial markets, but at unskilled and semi-skilled workers: “Don’t worry about the robots, young man and young woman, here’s your guaranteed gruel ticket; now leave the privileged alone”.

He added that the right sees it as way to allow job destruction due to robotisation to happen more easily; the left sees it as protection ‘beefing up’ the welfare state and a tool to protect unskilled workers from automation-obsessed, job-killing corporations.

ubi-degrowth-1024x278

Environmentalists, on the other hand, will warm to news sent in June by WMNEG member Jeremy Heighway, after attending a UBI Hamburg conference which saw unconditional basic income as a route to a ‘degrowth society’.

The idea of a basic income is gaining ground, for a variety of reasons. In June BI was the subject of a national referendum in Switzerland and there is serious interest in the proposal in several other places, including Ontario, Denmark, Portugal, Spain and the Netherlands. There will be great interest in the findings of the Finnish pilot project.

Note: The first ever Nordic conference on Basic Income Pilots, will take place in Christiansborg, the Danish parliament building in the centre of Copenhagen, on September 22-23, 2016

 

 

Is a new land tax needed to burst the housing bubble?

Edward Lucas, The Economist’s central and east European correspondent, thinks so. He fears a ‘smouldering generational resentment’: “The housing crisis doesn’t just throttle labour mobility; it crimps lives. People start families later than they want, commute longer distances and live in crowded conditions”.

One of his recommendations follows:

“We should introduce a real land-value tax. This would be levied not on the value of the house (as with current council tax, and the old rates) but on the value of the land itself.

“This has many advantages. First, it hits the rich (who own land) much harder than the poor (who don’t). In particular, it raises the cost of living in a big house, but hardly affects people in small flats.

“It penalises those who sit on land waiting for it to rise in value — as was scandalously the case for decades with Battersea Power Station. If you pay tax on land whether you use it or not, you are more likely to bring it into productive use or sell it.

“Most taxes depress economic activity; land-value taxation actually stimulates it. It is cheap to collect and hard to dodge.

“Land-value taxation also tackles the root of the housing problem: unearned income. The value of my house has little to do with my DIY skills. It has a great deal to do with the spectacular development of our once-grotty corner of London, notably the new Imperial Wharf Overground station — for which we paid nothing”.

land tax australiaA search reveals that land value taxation is currently implemented in Denmark, Estonia, Lithuania, Russia, Hong Kong, Singapore, and Taiwan. It has also been applied in subregions of Australia (New South Wales), Mexico (Mexicali), and the United States (Pennsylvania).

Left: latest book on the subject: https://www.qbd.com.au/land-tax-in-australia/vince-mangioni/9781138831254/