Organizational Capacity Building

Candace LaRue and Associates

#nei2012 Sharing Common Wealth

on June 10, 2012

Peter Barnes

This workshop is related to the themes of institutions – we need to build new economic institutions if we want a new economy. Second, ownership forms are important – worker, public ownership. This workshop is about common ownership, ownership by all citizens in a community collectively through an intermediary institution like a trust, but not state ownership as in the government owning something. The government has a role in creating trusts, but they are self-governing, not agents of the state.

There are a few fundamental features of trust organizations.

1) trusteeship. The organization must preserve its common asset for future generations. There are plenty of organizations that already do that. Trustees have a legally binding fiduciary responsibility.
2) Charge rent for use of the common asset, and to share that rent with the beneficial owners, which in the case of common wealth is all of us, equally.

“Common Wealth” is similar to a “commons,” which is often thought of as a space or system that many people share like the commons where we had breakfast, a pasture, or the Internet. Common wealth is shared economic wealth as in property rights to assets that have value, but assets that are shared and held by all of us out there. At the moment it is invisible, unorganized, and unprotected. The first step is to identify the assets, organize them, assign property rights, and in most cases limit use and charge rent. Finally, the rent needs to be shared.

Capitalism has a couple of serious systemic flaws, including that it fails to internalize “externalities” and destroys nature. Nature is priced at zero. The second flaw is that it sucks income and wealth to a small elite at the top. Part of coming up with a new economy involves new forms of ownership that are much more widely spread, doing that without increasing the size of government.

Common ownership of common wealth is the key to preserving vital ecosystems and sustaining a large middle class in the United States in the 21st century.

Neither markets nor government can actually manage common resources. No institution is accountable to nature or future generations, in the market or in the state. Private corporations a accountable to shareholders, government may “say” they are accountable to nature, but they are not. At best government is accountable to voters, at worst, to donors. There is a massive agency problem.

There are “valves” to the economy that need to be cranked down to slow growth in the economy. Where are they, and who can turn them down? The answer listed in neither government or the market, but in commonly owned institutions.

Common institutions must share income equally. The question is why share current income equally. Some environmental groups say to spend it on clean energy, not to give results of a carbon tax back to the people because they will just spend it, etc – this is a non-trivial question. If we implement a carbon tax, everything will cost more, so money will come from our pockets. If the income is not shared equally, then how would it be shared? One person-one share is a simple political solution. It also creates a virtual feedback loop, and it aligns current and future generations. If you charge people who are overusing nature, and you distribute the income universally, then future generations get a stable income system but the current generation gets more current income. This also creates a universal ownership society around the environment, creating a virtuous feedback loop. It is in everyones self-interest to charge more for nature and to protect future generations.

If America wants a large middle class in the 21st century, the only way to do it is to supplement labor income with non-labor income.

Jobs alone will not sustain a large middle class because of globalization, automation, and de-unionization.

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The origin of the common wealth model dates back to Thomas Paine’s essay “Agrarian Justice.”. There are two kinds of property, private and natural (common). Natural property is a gift to all of us, a birthright, and should be distributed equally. It can be monetized. It doesn’t just mean the physical thing itself, but can be monetized through an institutional framework. Paine proposed a national fund to collect rent (in this case land) and pay universal benefits, one person one share. A national fund is not income redistribution, not charity.. It is Pre-distribution, it is property income from property to which we all have a right.

The Alaska Permanent fund is a new version of this. All governors in Alaska are supportive of the Alaska permanent fund (for obvious reasons…). Profits from oil are paid out in dividends but also invested in an endowment to ensure benefits even after the oil is gone.

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we the people own the gas and oil in America…Land and water are he domain of we the people. ~ Bill O’Reilly

Belief in common ownership cuts across democrat and republican divides. There are also tax-based approaches to non-income middle class income, including the earned income tax credit. But these don’t solve the agency problem because it is under congressional control. Taxes are taking from one person to give to another, and is not visible or tangible.

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People tend not to notice tax cuts, but a dividend is more visible and tangible.

Institutions endure, but policies come and go. We need a new institution that is a new version of social insurance – like ecological insurance, an institutional way to make the 21st century transition to a sustainable new economy happen. It creates a link between the earth and the middle class. Reducing the disturbance of the earth is linked to distribution of universal non-labor income.

James Boyce

Future of the Commons: The Environment as Common Heritage and Common Property

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The principle of common ownership is not just a nice idea, it is a reality being lived around the world. Many societies include a constitutional right to a clean and safe environment, such as the Commonwealth of Massachuestts, Republic of South Africa. This can be juxtaposed to the idea that environmental quality is a commodity or a privilege allocated on the basis of purchasing or political power. The principle of a right to a clean environment is represented in the new environmentalism – protecting nature for people, not from people. It moves beyond sacred groves and sacrifice groves. New environmentalism seeks to defend the zones where people live, work, and play, which were formerly sacrifice zones. This is exemplified in the Environmental Justice movement in the US.

In order to protect the environment means moving from open access to common property. Any attempt to solves problems of open access resources requires the creation of some type of property rights. Examples include regulatory standards, which are asserting a public right to control the environment (polluter pays abatement). Price-based regulation involves extending property rights one step forward (polluter pays abatement, and also pays for the right to pollute). When we move to pricing carbon, a big question is who will get the money. Those who consume more carbon will pay more. A cap-and-dividend policy is a way to enact equal and common ownership of the atmosphere.

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The cultivated commons: agricultural biodiversity. Much of the commons on which we depend is really the result of human interaction with the environment in a way that has improved the ability of the environment to sustain life. When we talk about protecting the environment, we are talking about protecting all the good things people have done throughout history with the environment. Biodiversity is maintained by small farmers, mostly in the places of origin of modern crops (such as corn, potatoes, and rice). This biodiversity is a heritage from 400 generations of farmers, and it needs to be protected from enclosure, and to reward the people who maintain that biodiversity for the common good.

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Questions

With carbon tax, what happens if there is a cap-and-dividend policy within the United State but different prices in China, India, etc? Climate is an international model.

The sky trust is an appealing model throughout the world. Given the difficulties of an international system, there can be systems at smaller levels that can spill over. This policy is not just about global climate change, but also about implementing common ownership.

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