Righting capitalism with dividends

08/21/2014

Peter Barnes’s new book, With Liberty And Dividends For All, extends the author’s ongoing investigation of capitalism, identifying the system’s shortcomings and offering ideas about how to improve it for the benefit of the shrinking American middle class. Barnes, a West Marin resident who founded the Mesa Refuge writers retreat, is best known as a cofounder of Working Assets, an innovative credit card and phone company that has raised more than $64 million for progressive nonprofit organizations since its inception. Barnes has also been a columnist for liberal publications, and is the author of a number of books. 

Although he is critical of capitalism and proposes some concrete changes, Barnes is committed to the nation’s economic system. In his book, he makes it clear that,

“As an entrepreneur, I strongly believe in markets, though markets with more players than today’s. And I believe just as strongly in private property, tempered by a certain amount of community property. My ideal economy is a multistake-holder equilibrium in which profit-driven businesses, a large middle class, and the earth’s vital ecosystems—acting through legally empowered agents—balance each other for the good of all.”

Barnes offers what he considers a simple idea to help realize an ideal economy: charging rent for community-owned assets, including the atmosphere, our monetary infrastructure, the intellectual property protection system and the parts of the electromagnetic spectrum used by broadcasters, cell phones and satellites. He recommends the distribution of dividends to every American from the fees that are collected, and explains the steps needed to collect rents and disperse those dividends.

Two existing examples illustrate some aspects of his approach. One is the Alaska Permanent Fund, which collects royalties from the state-owned North Slope Oil Field and uses a portion of the revenue to make investments. The fund’s assets have grown from $900 million in 1980 to more than $44 billion. Each resident of Alaska receives an annual dividend from the fund’s income; in recent years the dividend has surpassed $1,000 per person for everyone who has lived in the state more than a year.

The fund has several features that Barnes considers important. First of all, the payment is a dividend; it is not means-tested and residents each receive an equal amount. There are no required steps residents must take to receive the payment. The system avoids the onus of being considered a tax and the stigma associated with welfare payments. It is attractive to almost all Alaskans across the political spectrum, from liberal to conservative. In fact, when Sarah Palin was governor she added a bonus of $1,200 to the annual payment.

Barnes’s proposal differs from that of the Alaska Permanent Fund in that it would consist of privately owned corporations whose carefully selected directors would insure protection of the environment and other resources. These managers would make sure every American owns a share in the corporation and receives the same dividend.

Another example Barnes offers is cap and dividend, a system designed to reduce pollution of the atmosphere that he and others unsuccessfully advocated for in Congress and in the California legislature. For Barnes, cap and dividend is superior to the widely publicized cap and trade system, which he feels can be manipulated by private companies to circumvent efforts to reduce pollution. The proponents of the cap and dividend approach were disappointed when the state legislature adopted a cap and trade system instead. To a certain degree, subsequent action by the California Public Utilities Commission rescued the initiative from exploitation. The CPUC has taken steps to assure public ownership of the pollution permits used by utilities to regulate and limit discharge of contaminants into the atmosphere. The commission also ordered utilities to pay equal climate dividends to their residential customers.

Still, Barnes points out that “… California’s climate dividends aren’t perfect.” The payment is not made to every person; instead, disbursements are calculated at one share per meter. They are distributed as little-recognized biannual credits on customers’ utility bills, rather than as cash payments. 

Nonetheless, he is encouraged: “[H]ere is the important thing: this is the first time an American government agency has declared the atmosphere a commons owned by everyone in equal share. Thomas Paine would be proud,” Barnes writes.  

A blueprint for changing our economic system will not be easy to achieve, and Barnes examines two elements he thinks are essential. First, there must be a period of preparation, when ideas and programs are conceived and pilot-tested. The actual adoption of wide-reaching changes typically occurs at times of crisis; Barnes believes the severe economic challenges the United States experienced in the 1930s Great Depression and in the Great Recession of 2008 were necessary to make the public and political leaders receptive to change. He also observes that a great opportunity was missed in 2008 because there was not adequate preparation, such as there was prior to the Great Depression. 

Now is the time for such a period of exploration during which ideas and plans can be vetted. In order to facilitate this preparatory phase, Barnes invites readers to participate in two ways. First, he invites them to join the discussion at dividendsforall.org.

His second suggestion is intriguing. Barnes believes that simple childhood games can serve as training for the participation in our economic system. He notes that Monopoly, a game that a vast number of youngsters have played, teaches acquisitive, winner-take-all capitalism. In a sense, the game has indoctrinated generations of players with the capitalist spirit.

A new game could be an effective way to facilitate a change in the system, he concludes. In fact, the ideas that resulted in With Liberty And Dividends For All started as the basis for a board game that has not been fully developed. The game will incorporate Barnes’s ideas about equal dividends and other aspects of his proposal for a more egalitarian system of entrepreneurship.

However, Barnes recognizes that “…it’s not as easy to create a game as it is to write a book—the numbers have to be right, the play has to be fast and many things have to be in sync.” He has invited game developers to contact him in order to help complete the design. 

In the end, we have to ask if Barnes’s dividend-based approach could have a major impact on American society. He calculates that the four elements of common property he identifies can produce a combined annual dividend of $5,000 per person. Would this be enough to reverse the threats to the middle class created by the aging of the American population and the overall decline in productive jobs that provide adequate wages to maintain the middle class? With Liberty And Dividends For All is a short book that offers a significant contribution to the discussion about how to prepare for major change. We look forward to further contributions from him, and from others who may be stimulated to add their ideas to this important conversation.

 

Peter Barnes’s new book is available at Point Reyes Books, which will co-sponsor a reading and booksigning on Thursday, Oct. 2 at Mesa Refuge, in Point Reyes Station.