10: Letter from Barcelona
Keith Wilde October 14, 2004
Dear ER,
I took a busman’s holiday recently, when an intended sight-seeing visit to the Pyrenees turned into attendance at a conference on economic policy in Barcelona. The Basic Income European Network was holding its 10th conference (after twenty years of existence) as part of a larger event called Dialogue on Human Rights, Emerging Needs and New Commitments organized by the Catalonian Institute of Human Rights, with a heavy involvement by UNESCO. I had been alerted to the existence of this movement six or seven years ago by Sally Lerner (University of Waterloo), and since UNESCO events always treat important subjects with high quality presentations, I stopped in to find out more of what Basic Income is about.
The plenary sessions were interesting and vital, but tended to treat the issue only in its moral and sociological aspects. I selected from the program two of the parallel sessions that seemed to be the only ones to address economic feasibility and financial techniques for achieving the BI goal, which is stated as a payment made by the state, as a right of citizenship to every full member or resident of a society, even if he or she does not work, or is unwilling to accept a job if offered, and irrespective of whether he or she is rich or poor, in other words, irrespective of other possible sources of income and domestic arrangements.
On the way to the session breakout rooms I stopped to look over the BI literature table to get a better idea of scope and focus. There was not a lot, but the quality seemed good and I purchased one monograph and a compendium of past papers prepared by members of the Network. I will pass along my evaluations when I have had time to read them more carefully. My cursory examination reinforced the view obtained from printed program and plenaries that economics and finance have not been well represented in BI discussion. After having sat through two sessions titled “Innovative and Sustainable Financing for Basic Income,” I asked why, after twenty years, did this topic have such a tentative feel, as if it were only now getting under- way? The moderator passed my question to one of the speakers who he said had been present from the beginning. Yoland Bresson answered by observing that those who came together in the founding of BIEN were mainly sociologists, political scientists and moral philosophers, and that they had never sparked much interest among economists.
I think that Bresson’s confirmation of my superficial observation is still surprising to the man-in-the-street, as it most definitely would have been to adults of 30-plus years ago, but given that BIEN is only twenty years old, maybe it isn’t. It is consistent with my discovery exactly one year ago that the professional literature of public policy and administration does not touch the subject matter of monetary and financial policy. (I had this observation confirmed by a political science professor with a strong personal interest in economic policy and a sociologist who has spent a career surveying all the literature that bears on public policy as it is affected by technological, environ- mental and social change. Monetary and financial policy are in the domain of economics, and other social science specialties leave it alone.)
And it bears on your opening question in the September ER of “why so many unanswered, and indeed unasked, questions are leading the world where it does not choose to go.” I wonder if you saw the essay by Lewis Lapham, “Tentacles of Rage: The Republican Propaganda Mill, A Brief History” in the September Harper’s magazine? It goes a long way toward the explanation, providing the background to an emergent effort to influence the thinking of academic economists that I observed as a graduate student in the US almost forty years ago, and which apparently succeeded. In brief, money power bought the academy and converted it to a propaganda machine. Since observing those early efforts in the sixties, I have watched from the inside as government authority, will and muscle to regulate money and financial power in the public interest have been progressively stripped away. Today, it is rare to find an economist who makes empirical investigation of the institutional structures that check and shape the behavior of individuals and groups (corporations) as they express their private drive for more money and power.
One of them who does showed up at the BIEN conference and provided one of the most useful presentations. Myron Frankman of McGill University argued that there is plenty of money at the top of the world’s income distribution to provide $1,000 per year to everyone on the planet, and that this abundance is even more striking when wealth distribution is brought into the picture.
Much of his paper is devoted to problems of measuring and comparing incomes, within and among countries, a difficulty that is only compounded w.r.t. wealth. Available data nonetheless justify his figure of $1,000 per person/ year and more accurate measurement could only make it higher, in his considered opinion. He notes with regret that most of the effort expended on this kind of measurement is focused on the poor, in spite of Susan George’s warning of 30 years ago that in order to help the poor, one should study the rich. This is especially important and difficult because the rich are so successful in keeping their wealth and incomes hidden from view. Frankman’s paper can be viewed at http:// icesuite.com/myron.frankman/files/ mjfbien10.pdf.
I enjoyed a few conversations with Myron over lunch and dinner, and he affirmed the observations above about the decline among economists of interest in empirical study of market structures and related institutional frameworks from a regulatory, public policy perspective. He said that when himself and colleagues of his generation retire, there will be virtually none left. Content of the mainstream economics literature today, and hence of university instruction, is so focused on modeling the behavior of “free” markets (do they portend equilibrium or chaos?) that economics departments are driven to hiring new professors straight from graduate programs in mathematics. The implied emphasis on deductive reasoning at the expense of empirical research can only reinforce economist jokes like the men in a lifeboat with only canned provisions and no can opener–the economist’s solution is “assume a can opener.”
From the literature table and the sessions I attended, I observe that when Basic Income authors do get into the domain of economics and finance they lean toward the traditions initiated by the likes of Henry George, Veblen, and C.H. Douglas. I heard two presentations in this vein, both focused on the unearned income associated with site values (land) and other essentially public or collective resources that have been seized as private property by robber barons of the past or present. As do several other BI authors, these speakers poured scorn on the slogan popularized by economists of the past 35 years that “there’s no such thing as a free lunch.” The essence of rent as explained in the textbooks of neoclassical price theory that I studied and taught from is that it is unearned income – a payment for which the owner has done nothing but to collect it.
Jeffrey Smith of the Geonomy Society of Portland, OR gave a cautiously positive answer to the question “Can Rents Fund an Extra Income for Everyone,” and Charles Bazlinton, a British surveyor and author of The Free Lunch (the monograph I purchased and will review) cautioned against implementing a Basic Income without a deliberate system for taxing land values along with it.
Coincidentally, while attending the conference I was corresponding frequently by e-mail with another author who is a prolific contributor to this line of thinking – empiricist and institutional. Michael Hudson is Distinguished Research Professor of Economics, University of Missouri at Kansas City, and he says it is one of the few departments that has not been completely taken over by the post- Keynesian, Chicago-led fad of monetarism in the neoclassical resurgence. (See the Lapham article mentioned above for added flavor.) Hudson has a book in preparation which addresses your observation about “so many unanswered, and indeed unasked, questions leading the world where it does not choose to go.” In reviewing drafts of his Introduction I can see the struggle entailed in assembling information that is publicly available (if one chooses to look) and then to present it in a way that gives a fundamentally different concept of the world than the one that is driven by the doctrinal fixation of the age–in this case the neoclassical, monetarist resurgence that is assisting finance and property power to reverse 800 years of progressively democratic policies. (A generous sample of his writings is available at www.michael-hudson.com.)
The situation of contemporary economic thought seems to be reflected in an appreciation of Jacques Derrida that appeared in the New York Times on October 14. A close professional friend wrote that The guiding insight of deconstruction is that every structure – be it literary, psychological, social, economic, political or religious – that organizes our experience is constituted and maintained through acts of exclusion. In the process of creating some- thing, something else inevitably gets left out. These exclusive structures can become repressive – and that repression comes with consequences. [W]hat is repressed does not disappear but always returns to unsettle every construction, no matter how secure it seems…. Mr. Derrida understood all too well the danger of beliefs and ideologies that divide the world into diametrical opposites: good or evil, for us or against us. He showed how these repressive structures, which grew directly out of the Western intellectual and cultural tradition, threatened to return with devastating consequences. Mr. Derrida does argue that transparent truth and absolute values elude our grasp. [I]t is necessary to recognize the unavoidable limitations and inherent contradictions in the ideas and norms that guide our actions, and do so in a way that keeps them open to constant questioning and continual revision. There can be no ethical action without critical reflection.
A distinctly novel approach to financing Basic Income was provided by a youthful Australian engineer who pointed out that all the non-human energy that is currently used to do the world’s work could be generated in a space one-quarter the size of South Australia using available solar collection technology. The value of this opportunity would go a long way toward providing a universal income supplement. Further exposition of this idea (adapted from the late Buckminster Fuller) and some of its limitations is provided in the an upcoming review of Cosmic Accounting that I wrote as a letter to the author.
Keith Wilde
-- from Economic Reform, November 2004