Day 251: Living Income Guaranteed and Market Mechanics

This blog is in response to a comment made on Day 250: Economics Nobel Prize reduced to Laughingstock :
“Economics is about, or should be about, how to employ the available means in such a way that no want more urgently felt should remain satisfied because the means suitable for its attainment were employed - wasted - for the attainment of a want less urgently felt. This is what it means to economize: to allocate scarce resources to their most productive/urgent use. "Most urgent use" is determined by supply and demand as established on the free market. I agree with the criticism that empirical economics seem frivolous and misplaced. But I disagree with the conclusion of this article; the only way to make the world more wealthy is by increasing the ratio of capital to people through investment and savings. Wealth redistribution will only succeed in making us all equally poor. Well written piece, though, thank you for a thoughtful opinion.” - Matt Summers

“Economics is about, or should be about, how to employ the available means in such a way that no want more urgently felt should remain satisfied because the means suitable for its attainment were employed - wasted - for the attainment of a want less urgently felt. This is what it means to economize: to allocate scarce resources to their most productive/urgent use. "Most urgent use" is determined by supply and demand as established on the free market.”

The effectiveness of markets in being able to successfully allocate resources to ‘their most productive/urgent use’ is dependent on how effectively the market is able to capture supply and demand signals. Here, we currently have a problem as not everyone has an equal opportunity to access the field of the free market and cast their demand / signal their need. Access to the free market is restricted, and the only way to gain access is by having a ticket – where one’s ‘purchasing power’ is representative of such a ticket that will grant you access.

So long you do not have the money / financial means to back up your demands, your demands will fall on deaf ears and not be catered for. Alternatively, depending on the scope of purchasing power available to you, your demands may only be catered for partially, as you are unable to ‘validate’ or ‘redeem’ all of your needs into demands due to the size and scope of one’s purchasing power – and thus the free market will only pick up one those demands/needs that are backed up by purchasing power, while not registering others.
With not everyone’s demands in effect being picked up by the market, we get a distorted view and picture of what we believe is wanted/needed - and use this distorted picture as a map to allocate scarce resources. To actually be able to direct and allocate resources to their most productive and urgent use, we require a lot more information – information that is missing and not being received simply because not everyone has the capacity to validate their demands through purchasing power.

Whether we like it or not, we currently live in a world with huge levels of income inequality^[1] and thus purchasing power inequality – where there is an inverse relationship existent between the size of purchasing power and the amount of people who have purchasing power.
In terms of the mechanics of Supply and Demand, this structure gets translated into the market receiving a big amount of information about the demands of a few people, while receiving little to no information from the majority of the people who have smaller to no purchasing power.

Within providing a Living Income Guaranteed, the goal is not to ‘equalize’ the entire purchasing power structure – but merely to give those at the bottom / those who do not have access to the market mechanisms -- the chance to be heard and recognized within the market. Providing a Living Income Guaranteed effectively provides everyone with a base amount of purchasing power, so that at a minimum everyone can effectively signal their demands to be able to achieve a dignified living standard.

“Wealth redistribution will only succeed in making us all equally poor.”

Here I will assume that your statement is based on the same logic Nozick follows, where he perceives a problem in redistribution leading to disincentive for the productive members of the economy who would then produce less and less until they cover only their immediate needs and having no ‘surplus’ to redistribute.
In terms of the Living Income Guaranteed proposal, where we want to ensure that those who are unable to sustain themselves financially through providing them with a Living Income – we are not looking at a massive movement of redistribution. In terms of the capital and wealth that is available within the world, it only takes a small fraction^[2] being moved from top to bottom to give the majority of people the necessary ‘bump’ to be able to realize a dignified living standard for themselves.
There will thus still be a wide range of incomes, a wide range of competition and more than enough incentive to be innovative and keep producing.

A more drastic change will rather be seen within the market system within the mechanics of supply and demand being able to capture a lot more information about the needs and wants of people – which will provide society with more effective and accurate guidelines as to where resources should be allocated for their most productive/urgent use. The biggest change will be seen in the living standards of people and the actual realization of having everyone’s fundamental human rights secured.

Here, we can look for instance at the ‘ideal’ many people envisage when looking at the distribution of wealth in society. As you can see from the graph below, it still leaves plenty of incentive for those who are incentive driven to be productive and innovative – while at the same time allowing the bottom two quintiles to have sufficient wealth to live a dignified life (and to have any share of wealth at all for that matter! Since both the first and second quintile barely get registered on the ‘actual’/’current’ graph).

The Nozickian notion that redistribution will ‘leave us all equally poor’, is a very radical and extremist position, which takes on a very rigid and narrow view on human nature and values. It is assumed that we only care about ourselves and within this will go as far as compromising and sabotaging our own living standards just because we don’t want anyone else to reap benefits of ‘our work’ and ‘our effort’. There is no space for relating to one another and helping each other out – even when it comes down to something basic such as having everyone’s fundamental human rights covered. We suggest that humans are not the completely irrationally selfish beings Nozick assumes us to be, and that we are capable of compassion and can realize this compassion in the form of having everyone’s fundamental human rights secured.

“But I disagree with the conclusion of this article; the only way to make the world more wealthy is by increasing the ratio of capital to people through investment and savings.”

This statement is not necessarily true – as it assumes that we are currently experiencing a ‘lack’ in real capital and actual resources to effectively provide everyone with a proper living standard. The capital and the resources are already here – but through the market system operating at an inefficient level (due to our current supply and demand curves not capturing the full extent of demand as explained above), the capital/resources are not moving and not being directed towards those who need it most.

This is how we end up with scenarios of food dumping and having huge amounts of food destroyed and thrown away parallel to having high levels of hunger and starvation in the world. This is simply because our economic system is not sensitive and attuned to human needs and instead being irrationally driven by the profit motive. Economics and the market have become all about non-human elements as profit and numbers which have stopped serving the general human interest. By placing in a Living Income Guaranteed system, we are placing the human element back in the center of economics, allowing economics to be the life supporting instrument that it was destined to be. Economics and money are then here to support ourselves in living our life – and not the other way around where are lives are lived in the service of money and the economy, as how the majority of people’s lives are currently being lived.
It’s time to reverse the roles.
 
[1] See our blog on the World’s Lorenz Curve, which displays almost perfect inequality “Day 143: The Neo-Apartheid Era”
[2] See “World’s 100 richest could end global poverty 4 times over”, which is but one example of ‘how little it takes’ to make a ‘big difference’ for many

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Day 250: Economics Nobel Prize reduced to Laughingstock

“The award was for their work on the pricing of financial assets. Together they concluded that predicting the price of stocks and bonds in the short term is virtually impossible. But they showed it is possible to forecast the broad course of prices over longer periods, such as the three to five years.

Shiller was among those who warned in the 1990s that the run-up in stock prices as part of the Internet stock bubble was the result of "irrational exuberance." 

Last decade, Shiller made similar warnings about the run-up in U.S. home prices. That proved to be correct when the housing bubble burst and plunged the nation into the worst economic downturn since the Great Depression.”

http://money.cnn.com/2013/10/14/news/economy/shiller-nobel-economics/index.html?iid=s_mpm

Our expectations and standards of economics and economists really has reached an all-time low when we hand out Nobel prizes for work on how to improve one’s gambles in the financial market and for predicting failures in our economic system.

While we still haven’t mastered basic resource management, whereby we ensure that everyone has got access to those resources which safeguard human subsistence – we rather place value and importance on the speculative side of economics which only cares about profit and unsubstantiated growth at the expense of issues of real importance, such as eradicating poverty and starvation.

We entertain ourselves with the fringe side of economics while we haven’t even got the basics in place. Resource inequality and living standards disparity are skyrocketing. We’ve never had this many people living in poverty and we’ve never had this much wealth and ‘know how’ in the world.

And still, even though we have everything in place to create a world where everyone lives a life of comfort and dignity, we’re not moving the puzzle pieces in place to bring a better world into being.

Economics as a discipline has failed us in every way. Economics should be disqualified as a field from receiving any form of recognition of praise until we have put into place the basics as a foundation where everyone is able to secure their life. This should be the primary focus of economics, and so long primary structures and logistics are not in place to support life on earth – we shouldn’t bother indulging ourselves in fictional economics pertaining gamble and speculation.

If we really want to do something worthwhile in the name of economics, we would start with providing a safety net such as a Living Income Guaranteed, which practically ensures that everyone is provided with the means to live their life, without being deprived of basic necessities and living in a survival state of being - the way life is supposed to be lived.

To find out more about the Living Income Guaranteed, visit:

www.basicincome.me 

basicincomeguaranteed.wordpress.com

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Day 249: Nozick's Entitlement Theory of Justice - what are we REALLY entitled to?

Robert Nozick is best known for his work ‘State, Anarchy and Utopia’ in which he argues against patterned principles of justice and in favour of an entitlement theory of justice (2013:26). We will first consider what the difference is between the two, to then proceed with a critical review of Nozick’s argumentation, herein paying particular attention to the relevance of such a theory in consideration of the present as an outcome of human history.

The difference between patterned theories of justice and unpatterned theories of justice revolves around the means-end question: Is it just (or can it be justified) to use unjust means to attain a just end? For Nozick the answer to this question is ‘No’. In his view, if every step of the process of distribution throughout history is just, then the result is a just distribution (Nozick 1974:151). Herein, the justice of an act of distribution is measured in relation to whether one is entitled to one’s resulting holdings (2013:26). In contrast, patterned theories of justice pertain to ensuring an ideal ‘kind’ of outcome from distribution – where this ‘kind’ is dependent on and determined by the values a particular society holds. If equality is treasured, the outcome of distribution would require being that each one has equal holdings. If the fulfillment of basic rights is valued, then the pattern of distribution would require standing in relation to ensuring each one’s basic needs and rights are met as a minimum condition.

Within his argumentation, Nozick holds two concepts at heart: property and liberty. A problem he sees with patterned theories of justice is that goods are treated as thought they are ‘just here’ and available to be distributed in any way we see fit. He argues that resources cannot merely be allocated according to some patterned principle, because: “The situation is not one of something’s getting made, and there being an open question of who is to get it. Things come into the world already attached to people having entitlements over them” (Nozick 1974:160). Not taking into consideration the source of a good would therefore be a form of stealing. The same logic is used in an attempt to prove that taxation should be included under the category of theft (2013:29).
When it comes to liberty, Nozick argues that if distribution happens in a patterned way, then individuals require sacrificing their freedom to give to charities and gift goods to others, because such acts would upset the particular preferred pattern in question (2013:28).

As noble and logically thought-out his arguments may seem – I simply question the relevance of an entitlement theory of justice. Considering that throughout history, we can see countless examples of ‘unjust initial acquisition’ and ‘unjust transfer’ – where elites were built based on for instance the colonization of an entire people and the appropriation of their resources. The current allocation of resources is still a result of such past events. Therefore, one cannot say that at this point, one can simply go on with making sure that ‘from here-on out’ all distribution is conducted in a just manner – for our starting point is already unjust in itself – leading to unjust advantages and disadvantages. Where Nozick supports the correction of past injustices we must ask how he attempts to do this without a patterned form of distribution – for, it would imply re-constituting history by imagining how distribution would have taken place at each step of the way if no injustice had taken place. As said above, history is filled with unjust transfers and acquisitions, therefore, such a task would involve the creation of an ‘alternate timeline’ of not only a village, a region or a country, but of the world in its entirety. We simply do not have the data or means to construct such an alternate timeline in any accurate way – we cannot ‘predict’ or ‘come to know’ how things ‘would have’ played out if it weren’t for injustice. Therefore, Nozick’s entitlement theory is irrelevant as it is not practically applicable in terms of our current reality. What it does seem to do and seems to have done, is to create a great set of justifications as to why we should not attempt to bring about greater equality or make sure the needy are taken care of – protecting those with significant wealth from any form of accountability with respect to the past and with respect to their fellow human beings.

If one is to constitute an entitlement theory of justice one should utilize human rights as the basis for such a theory, as unless each human being’s rights are provided for, one cannot speak of entitlement, one would instead be protecting an economic system of distribution that does not honor the life of every man, woman and child equally, but places the luxury of some over the bare survival of others. Each one is entitled to a certain level of well-being as it is enshrined in the Bill of Rights, each one is entitled to a certain level of education as it is enshrined in the Bill of Rights, each one is entitled to adequate housing as it is enshrined in the Bill of Rights. Such are true entitlements – and unless an entitlement theory of justice comprises a system of distribution that guarantees the fulfillment and honouring of these entitlements at all times – we know we are in fact dealing with deception – the deception of those using fuzzy logic and fear to protect their own self-interest and to protect the elite of the world – where the theory has in fact no foundational basis in reality as that which actually matters in terms of supporting and enhancing (human) life on Earth.

In conclusion, to proclaim any patterned theory of justice as ‘unjustified’ by default means to ignore the reality of the world and its historical injustices. Nozick’s entitlement theory can only become relevant and applicable once the current distribution has been re-patterned to reflect the values and rights in the constitution.


Bibliography

(Author not specified). 2013. PLS3705: Guide 1. Pretoria: University of South Africa

Nozick, R. 1947. Anarchy, State and Utopia, New York: Basic Books.

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Day 248: Q&A on Living Income Guaranteed

Here follow questions and perspectives about the Living Income Guaranteed proposal - from the Discussion Forum at livingincome.me.

It would be very helpful if all the essential information on your LIG proposal were to be found in one place, preferably a single page or two, instead of being scattered all over numerous blogs and vlogs. What I mean by essential information is how exactly it is to be financed, who are entitled to it and on what conditions.

I am aware that your proposal differs from the one laid out by the Basic Income Earth Network (BIEN), but what I would like to know is to what extent LIG comply with the four criteria that are adhered to by most proponents of BIEN. Those criteria are that the Basic Income should be: universal, individual, unconditional and high enough for a decent standard of living.

What I have understood so far is that the LIG is means-tested, in other words conditioned on not having wealth or savings or a paid job for that matter, but not conditioned on the willingness to take a job (I only know the latter through correspondence, but have found no references). What this seems to imply is that if you are willing to live with few belongings no one can force you to work. This would make the proposal as a whole partly conditioned.

But what happens if you are not working full-time? Will you be entitled to a Living Income supplement? And if so, how would it be calculated considering the minimum wage is twice the amount of the LIG? Is the minimum wage the same for a part-time job for instance?

As I understand the proposal, it is to be financed solely from sales tax or value added tax, the idea being that the value of labor is directly reflected in the prices of goods and services. But does this mean that income tax is completely abolished? And have you ever considered a negative income tax system which is a model often used in financing a Basic Income?

From what I can see, LIG is to be paid individually and not to households or families, so that settles, I guess, the question of individuality, but how about universality? It is not entirely clear to me whether every individual, including children, will receive it, and, if so, the full amount. Also, if children are included, will their LIG be dependent on what means the parents have, savings, job or otherwise?

It is stated in several places that LIG is to be high enough to secure a decent standard of living, so that would seem to satisfy the last criteria.

I would prefer having all replies here or with links to texts, not videos. Thanks.

“It would be very helpful if all the essential information on your LIG proposal were to be found in one place, preferably a single page or two, instead of being scattered all over numerous blogs and vlogs. What I mean by essential information is how exactly it is to be financed, who are entitled to it and on what conditions.”

Yes, we’re working on exactly that. The information will soon be found on a page on this website.
“I am aware that your proposal differs from the one laid out by the Basic Income Earth Network (BIEN), but what I would like to know is to what extent LIG comply with the four criteria that are adhered to by most proponents of BIEN. Those criteria are that the Basic Income should be: universal, individual, unconditional and high enough for a decent standard of living.”

The principle of universality in terms of ‘anyone gets a living income regardless of whether one is employed or not’: No – Living Income Guaranteed does not adhere to this principle. It is about making sure that everyone has a Guaranteed Living Income – meaning, an income that secures a dignified life. We suggest the minimum wage to be double a Living Income so that if one is employed – one can afford not only a dignified lifestyle, but one with ‘perks’. In general terms, then, LIG is for those who are unemployed.

In terms of your question on working part-time – labor will be equated at an hourly rate, where the particular rate will also be determined according to one’s skill/educational level. One may thus be able to be employed part-time without requiring a Living Income Guaranteed as one is self-sufficient due to the particular rate one receives as determined by one’s skill / level of education. For those working part time on a minimum wage would mean they would receive the same amount of income as they would being unemployed and receiving LIG. Herein – one can look at setting an absolute minimum of part-time wage at 3/2 of the Living Income Guaranteed in order to create incentive for part-time workers. Alternatively, one can simply accept that those who are currently working part-time to make ends meet, will instead stop working, receive a LIG and from there perhaps have more time to perform the tasks that makes it impossible for them to work full-time in the first place, which are often tasks such as caretaking or studying. Those part-time workers who like to work to keep themselves busy or because they would like to contribute but have no financial reason to do so – can still do this and receive a part-time minimum wage, or can volunteer and receive LIG.

Children – Ideally, yes, children should receive a LIG, which would be available to the parents up until a specified age, after which, the parents are locked out and the LIG is solely accessible by the child. A child’s LIG is not dependent on the parents’ income. However – one would require investigating the financial capabilities of a particular economy at the implementation stage. It is possible that one would require to continue with a basic child grant system until the economy expands sufficiently to allow for a LIG for every child.

Individual – yes – Living Income Guaranteed is not given to families but to individuals.

Unconditional – yes, but only insofar as discussed above. Meaning – anyone receiving a minimum wage is excluded from LIG. However, there are no other specified conditions such as having to actively search for a job.

High enough for a decent standard of living – yes.

“As I understand the proposal, it is to be financed solely from sales tax or value added tax, the idea being that the value of labor is directly reflected in the prices of goods and services. But does this mean that income tax is completely abolished? And have you ever considered a negative income tax system which is a model often used in financing a Basic Income?”

The primary way of financing LIG would be through the nationalization of resources:

Nationalization of Resources and Social Dividends
One of the ways to fund a Living Income Guaranteed is through the Nationalization of Resources within a particular country. Within this, relevant resources are appropriated towards the public good, where those companies dealing with the production and manufacturing process of these resources will be nationalized. The citizenry would then effectively become shareholders of these companies. Economic profits or surplus value generated by publicly owned companies would partially (or wholly if possible) finance the Living Income Guaranteed.
Aside from the obvious funding function of such a step, the nationalization of resources and connected enterprises also provides an opportunity for the management of the country’s resources by the people of that country, and is thus in fact an extension of direct democracy.

On Taxation:

Taxation
Within the Living Income Guaranteed, Direct or Personal Tax methods will be discontinued. Only Indirect Tax methods will be facilitated in the form of inter alia Value Added Tax (VAT), Sales Tax and Import Duties. When a society and system is in place which effectively tends to all points of requirement within a country, one does not require an extensive government structure to tend to those points which the private sphere has not yet covered. As such, there is no longer a need for excessive taxation, as the role and functions the government will be required to execute and fund, will be minimal.
The amount of tax an individual takes on, will then be directly related to one’s activity and participation within a particular system or section of society (eg. Toll roads / Road pricing).

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Day 247: Only in a Broken System does Misery equal Profit

Growing up and living in a First World Country where your Basic Human Rights are actually ‘met’ (albeit through considerable compromises) – you are made sure to be reminded of the many places and many people who are not in the same fortunate position as you’re in. “Empty your plate, don’t you know there’s starving children in Africa who don’t have anything to eat?”, “You should be happy going to school, in country XYZ they don’t get even get to go to school because there aren’t any”, “Stop whining, in country SomethingSomething you’d be living on the street by now”.

The message that gets ingrained is “Don’t complain, you should be happy – out there it is HELL”. So not only is one molded into an obedient citizen, made sure to ‘not bite the hand that feeds it’, we also get imprinted with immense guilt for having the niceties we have – knowing fully that if we had been born somewhere else, things would look a whole lot different.

So, what do we law-abiding-guilt-bearing-citizens do? Once in a while, as we get some ‘time-off’ from being a wage-slave – we want to go and do some ‘good’ in the world. We sign up to take care of the poor people, the less fortunate, the parentless, the hopeless, the marginalized and abused ones ‘out there’. We grab together our hard-worked savings and pay some travelling company to go work somewhere for free.

We are getting our holiday, we’re helping those poor people – it’s a Win-Win situation, right?
Is this ‘voluntourism’ phenomenon an expression of our altruism and good hearts? Or is it just another way devised by a crooked system to make money out of whatever will tickle our fancy?

In fact, 'voluntourism', as it's been dubbed, is the fastest growing travel sector, worth an estimated £1.3 billion globally.

Let us have a look at how the market responds to our demand for Guilt-Relief and Exotic Holidays:

'I thought, even if I can make a jot of difference, it's got to be worth it. So I started looking on the internet. Eventually, I came across an orphanage called the Dream House on the borders of Thailand and Burma, which rescued children at risk of being trafficked. There were videos on the website and it all looked amazing.'

A Thai charity, Starfish, was offering two-week voluntary placements at the orphanage for £400, with basic accommodation included.
Caroline paid in advance, and in January this year she travelled to Thailand. On arrival, she met other volunteers, many of them teenagers on their gap years, all signed up to help at the orphanage.
But within days of starting the placement, Caroline sensed that something was seriously wrong. 'I was pretty shocked at the conditions,' she says. 'The children slept on the floor - although there wasn't even a floor, just carpet underlay - with no beds or blankets. The youngest was only two years old.
'At dinner, they had one chicken between 29 children and a few vegetables. All the volunteers were coming in and giving £200 a week. So where was all the money going?'

Ah… the ways of Supply and Demand: you wish to relieve your guilt – and so we shall provide you with the opportunity to do so. The ways of the free market are cold; the market does not look at your intentions, the market does not care about the repercussions of serving demands – all it does is reek money and provide the quickest and best way to cash it in.

We end up with fake orphanage centers with children trained to act according to our idea of what ‘poor orphans on the other side of the world’ act like – because that is the experience we desire, and our money bring to life such an attraction.

The shocking revelation has been that volunteers, who have intentions to give some love back to children in real need, are tragically and inadvertently having the opposite effect.'

Not only are we maintaining the atrocities we would like to see eradicated within the world, we are in effect enhancing them and not in any way whatsoever addressing the very system, the very design which is responsible for them in the first place. After all, what this ‘voluntourism’ point illustrates, is that we cannot address the symptoms of a broken system through utilizing the same broken system as medium towards a solution.

'One volunteer I heard of turned up to teach at a school, and wondered why he didn't get a very warm reaction. Towards the end of his time there he discovered the local teacher had been fired because a Westerner was coming in to teach for free.'

In a world driven and moved by profit only, we cannot expect to alleviate poverty or alleviate the hardship of people through a profit-driven medium, as it is the very profit starting point, the worshipping of profit/money over Life/People – that lies at the heart of the problem, that pumps and thrusts its poison all throughout the body, leaving no area untouched.

While we see the hardship of remote places on our television screen, we want to travel to those distant places in the belief that the problem and solution lie in the same place. There is actually little that can be done by travelling to the other side of the world for a few weeks / a year and trying to alleviate the symptoms of a much darker dis-ease. It’s not by coincidence or genuine will to ‘work hard’ that we’ve created a Safe First World Bubble for ourselves. We need only to flip through history to see that we’ve acquired our wealth and security through the exploitation of others. In the past in direct forms, through conquest, through colonization – and today indirectly through economic ties whose nature and flow had already been determined, shaped and solidified within the previous Era of exploitation, now merely extending the same relationship in a different form – but really, nothing has changed.

Unless we change the values and principles of the system at home that we live by, we are not going to be able to bring about change ‘out there’. We are the power-center that maintains the problem, if we want to bring about change – we are right where we need to be.

The first step towards a global effect is to put into place the values and principles we want to live by and that we want to see others live by. A good place to start, would be the enforcement and safeguarding of Human Rights which can practically be employed through the implementation of a Living Income Guaranteed. Since the Right to Life has been historically linked to the ownership of money, making sure that everyone has enough money/funds available to live a dignified life is an absolute must.

To find out more about the Living Income Guaranteed, please visit:
http://livingincome.me and http://livingincomguaranteed.wordpress.com

All quotes from: http://www.dailymail.co.uk/femail/article-2418074/Fake-orphanages-Bogus-animal-sanctuaries-And-crooks-growing-rich-Western-gullibility--gooding-gap-year-holidays-horrifyingly-callous-con.html

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Day 246: Green Economics – the Newest Fad?

Reading through a magazine, I came across an article on how traditional neoclassical economics is just not up to the task of providing an effective system of distribution for the world – with which I agree. 

At the bottom of the article, was a whole list to numerous websites promoting different forms of ‘alternative economics’. Being interested in exploring what’s out there on the internet in relation to new developments in economics, I copied the list eagerly to go through the various websites.

As I browsed my way through the 10 or so different websites, a communal theme started to make its appearance throughout the websites – they all looked ‘fresh’ and ‘green’ and we’re all about : reduce carbon emissions, shrink your ecological footprint – essentially: ‘save the planet’.

Something was just not right with this picture.

And then it hit me: this is just another fad.

Just as we have Spirituality within the realms of Religion, the Organic / Raw Food movement in terms of Food – we now have ‘Green Economics’ in the realm of Economy.

What all these movements have in common, is that they jump ahead of the issues that are relevant. Without first providing and ensuring dignified living conditions so all can have a life of delight on Earth, Spirituality immediately jumps to saving your ‘Beingness’ and ensuring that your Beingness can transcend to higher planes. But what is the value of such an objective if we can’t even manifest a sense of brotherhood and solidarity on Earth, within our societies and relations to one another? What is the point of ‘attaining our higher selves’ when we obsessively and compulsively wage War and destroy life?

What is the point of pushing and insisting on Organic Food when we have not even established basic Food Security for everyone on the globe?

What is the point of trying to save the planet through changing the way we do economics if we can’t even set our economic system up in a way that saves everyone from economic hardship? How can we expect to fulfill such a great responsibility as ‘saving the planet’ and ‘taking care of the Earth’, when we haven’t even proven our responsibility towards each other, towards one another as human beings? How can we expect people to support ‘Green Economics’ to ‘save the planet’ when every moment of the day is spent towards survival? How can we expect people to start treating the planet with dignity, respect and care when we haven’t shown that we can live these principles towards another?

If we can’t even actively secure Human Rights and treat one another as we would like to be treated – then we can’t engage ourselves towards saving the Planet. Our efforts towards ensuring that every human being on Earth in fact has a living standard that we would all deem acceptable – has been negligible to say the least. To at this stage demand everyone to treat the planet, nature, the Animal Kingdom with respect – would simply be a spit in the face of those who have never received any such kindness. When people are treated with disrespect and disregard, one is tacitly giving permission to those who receive such treatment, to transfer this treatment in kind to others. 

I’m not saying that nutritious food and ecologically balanced methods of producing and distributing goods is not important – as certainly these points would benefit ourselves, the planet and future generations; but the point is to acknowledge our track records, which is looking kind of dismal at the moment, and to not overreach in our objectives. Our race to ‘save the planet’ is currently one ran knee-deep in the mud, we may be spending a lot of energy on it but it’s not getting us far. So let us rather spend our energy towards getting the fundamentals right, towards getting in place the foundation that will ensure an effective campaign towards a harmonious management of our home, the Earth, by first establishing such a relationship towards one another – and then from there it will simply be a walk in the park, to extend this treatment to the Planet.   

The first step towards fostering an attitude and character conducive to the restoration of the Earth to a state of balance, is to first restore faith in humanity and our capacity to care, through implementing a system such as the Living Income Guaranteed by the Equal Life Foundation. This is a practical way to acknowledge our common humanity, our common Right to Life and to truly develop a sense of respect for Life on Earth, and Earth as Life. We cannot allow ourselves to ignore the impact human activity has on the Earth and the Environment. Only through equipping every human being with the necessary resources to sustain a dignified life, and equipping everyone with the tools of education, can we move as One towards caring for our Planet.

About the Living Income Guaranteed – from the LIG website livingincome.me

Why a L.I.G.?

The Living Income Guaranteed (“L.I.G.”) by the Equal Life Foundation is a Proposal geared towards addressing the most immediate Human Rights problems modern societies are faced with today. Current systems and approaches that have been implemented towards prosperity and well-being of the citizens within nations have been able to facilitate economic growth, but though the bounties of this growth have not yet been able to reach everyone.

The Living Income Guaranteed is aimed at assisting and supporting those individuals within society that find themselves in a disadvantaged position as a result from structural ineffectiveness and inadequacies, through providing Equality of Opportunity for all. The Living Income Guaranteed will function as the medium through which a state is able to remediate the most direct negative effects of a capitalistic system, while still being able to maintain some of the perks that such a system represents and embodies. The Living Income Guaranteed will thus aid in balancing Growth with Sustainability whilst effectively securing Human Rights.

What is L.I.G.?

Living Income Guaranteed stands for the provision of a Living Income for each citizen that is unable to sustain themselves financially to live a dignified life. Unlike the Basic Income Grant proposals, the Living Income Guaranteed is not invariably provided but distributed by a means-test. The Living Income Guaranteed is a social security net which everyone can apply to, when it is necessitated. This principle locks in with the Duties of the Government as laid out within most Bill of Rights, where the State is responsible to ensure the livelihood and well-being of its citizens when the citizen is unable to do so for him or herself.

For more information, visit:

http://livingincome.me

http://livingincomeguaranteed.wordpress.com

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Day 245: Living Income Guaranteed and Equal Currency

The ideal of free market in terms of globalization in being able to buy from anyone and sell to anyone - is based within the idea that: one should be able to get access to the best products and services - and if that means people keep buying cars from Germany, then it means car companies in other countries have to step up their performance if they want to compete - and so - creating a worldwide stimulating environment for excellence in service and quality-price ratio.

Though, one of the major influential factors determining whether people buy their stuff in their own country or in a foreign country - is the exchange rate between currencies. The exchange rate is in fact the price you pay for a currency in terms of another currency. So - if in the US the price of the car you want is 40 000 dollars and in Germany a very similar car would cost you 40 000 euros and say that both cars meet your requirements and you have no preference between the two - then there is still a difference in cost. Say that you are located in South Africa and that the price for 1 dollar is 7 Rand and the price for 1 euro is 10 rand - then the car in the US is 'cheaper', but only because the American dollar is cheaper than the Euro. One would have to pay 280 000 Rand for the American car and 400 000 Rand for the German car. With no preference between both cars, the choice is easily made, and the American car is bought.

To understand what determines the exchange rate between two currencies - read: 'What are Currency Exchange Rates and Why do they Keep on Changing?'

From there - you can see that the exchange rate is a result of the performance of an economy as a whole in relation to the performance of other economies - and, in turn, the exchange rate affects the economy deeply. You can also see that within currency exchange rates there are always winners and losers. Say - if the euro is 'strong' in relation to the dollar, then Americans will buy less from Europe and more locally, and Europeans will buy more from America and less locally. That would mean that European exporters are worse off, but American exporters are better off. At the same time, America importers are worse off and European importers are better off. So - the exchange rate is one of those things that has a deep impact on the individual lives of people, that does not stand in relation to their particular merit. So, the whole global free market is skewed, because it's not only the quality of goods and services that determines in which country you buy your products - much is determined by the exchange rate, over which one, as an individual, can exert no influence. So, here is another example of how the free market theory as yielding the best result is not being applied and lived.

So - why do we propose equal currencies with Living Income Guaranteed?

Because the Living Income Guaranteed system ensures that one's economy is stable and effective from the perspective that each one will have an income with which to purchase the required goods to live a dignified life and in turn this income that was spent becomes the income of the labor force, that now can afford a more luxurious lifestyle - as such Human Rights are ensured and the principle of those who work harder earn more money is still in place as well. However - if we now have currencies with different values - the whole point can collapse - because instead of buying the products locally, one can buy the exact same products abroad for a 'cheaper' price, just because of a favorable exchange rate - as such, money drains out of the economy and the cycle is disrupted. Unequal currencies distort the values of goods and services across the globe. With equal currencies - if one goes and buys products abroad, its not because of a distortion - it's because the goods and services are actually better or are produced more cost-efficiently. Therefore, when in a particular country it is noticed that one's company is suffering due to people buying abroad, it is an actual indication that one requires to change the quality of one's goods and services or become more cost-efficient - such indications are valid and stimulate the economy in the way it is supposed to.

If one has a look at the entire Living Income Guaranteed proposal, one will notice one thing: Central to this entire economic system stands one point: Real Value. The Real Value of Life, the Real Value of Labor, the Real Value of effort and merit, the Real Value of goods and services - to be done with the charade of survival on the one hand and outrageously extravagant entertainment on the other - neither have Real Value - to get back to what matters, to give back to ourselves and each other that which we have lost: Dignity, Respect, Consideration, Support, Acknowledgement, Integrity, Gratitude.

Living Income Guaranteed is an effective, clear-cut way to make an end to all and everything that has been diminishing Life over the centuries, of which we see it is unacceptable, but for which we haven't been able to formulate a solution before - and to bring back all that we have always wanted and searched for - not just for the rich and famous - but for every single human being.

For more information:
http://basicincome.me
http://basicincomeguaranteed.wordpress.com

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Day 244: Transforming Currency into Money with Living Income Guaranteed

In the video "Hidden Secrets Of Money - Ep1 'Currency Vs Money'" Mike Maloney and others present one of the problems we are facing in our current economic system and that is - how the value of our currency is able to change over time - where it can both appreciate and depreciate - but throughout history it has mainly depreciated until it becomes worthless and then a new currency is introduced. The video explains the problem, but it doesn't offer a real solution - which I will be discussing in this blog.

Now - when I said 'the value of our currency is able to change over time' - with 'our currency' I am not referring to a specific currency such as Dollar or Euro or Rand - I am referring to fiat currency. For those who are not aware of the history of our currencies: paper bills were introduced as IOUs - a piece of paper stating that: I owe you 5 gold coins, for instance. Say that you deposited 5 gold coins at the bank. The bank would then write you a claim check that specifies that with that piece of paper, you can at a later time come and claim those 5 gold coins back. Now - over time what started happening, is that when people would go to the market place and wanted to buy something for 7 gold coins, but they only had 2 on them - they would go: "You know, I only have 2 gold coins on me, but I've got 5 at the bank, how about I give you the 2 gold coins plus the claim check for the 5 gold coins at the bank, and then you can just go and claim them." And from there, the ball started rolling and less and less people went to actually collect gold at the bank and started simply trading with the paper claims - which is what we currently know as paper bills. From there, it didn't take long before banks would just start printing money that was no longer 'backed up' by any gold at the bank. From this point onwards - we started trading with fiat currency - a currency that is not limited by the resources that is 'backing up' the value of the currency.

Why does that matter? It matters from the perspective that the amount of gold in the world is limited and therefore, the value of gold stays round about the same over time. What determines the value of gold? It's determined by how much of it is in circulation, and thus - by consequence, how much we are able to buy with it. So - let's take an example of a little village where 10 people live and there are in total 10 gold bars in circulation in this mini-economy. These 10 people have certain goods they want to buy and each a certain amount of gold that they are willing to spend on it. This determines the demand for the goods in the village. The suppliers balance their costs with profits - where they know that if they charge a high price, there will be less villagers able to buy the product, and if they charge a lower price it will become harder to make a profit and eventually even difficult to cover their costs. So - balancing demand and supply - a price for the goods is determined. Now - let's say that suddenly - instead of 10 bars of gold, there are 20 bars of gold - what will happen to the prices? They will go up because the demand goes up. Herein - understand that demand means: people want it and they can pay for it. So - when there is more money - it doesn't mean that people suddenly want more of something - it means they always wanted that amount, but they couldn't demand it because they didn't have the money to demand it. So - with demand increasing - the suppliers will realize that they can now charge a higher price - and so the prices of the goods in the village go up. What has happened to the value of gold? The value of gold decreased, because with the same amount of gold, people are now able to buy less of the goods - because the price went up.

So - with currency initially being backed up by gold - it limited how much money was in circulation - and so, it kept the value of money stable - because it was tied to the amount of gold that was available in the world. Gold is not something we can create - we can melt gold down and change the form but we cannot make new gold. So - the amount of gold we have in the world today is the same amount of gold that we had centuries ago. With fiat currency, however, reserve banks are able to simply print more paper money, increase the money supply - and in turn prices increase and the value of the money depreciates.

So far the reasoning of the economists seems sound - however, it is not - because they are misusing the term 'inflation'.

When they discuss inflation they assume that it means: the prices of all goods and services in an economy go up as a result of an increase in the money supply - and therefore, money becomes worth less and people can buy less and less stuff.

But what is not considered is the following: with inflation - the price of literally EVERYTHING in the economy goes up - and that includes the price of labor. So - from that perspective - if the prices of 'stuff' doubles, it's not a problem, because your wage would have doubled as well. And so - technically - yes - the nominal value of money depreciates - but the real value remains the same: you can buy less with one dollar, but you can still buy the same amount with your wage.

So - this reveals a problem in our current economic system - and how it is deviating from how things should be done. Let's take again the example of a village where there are 10 people and there are 100 dollars in circulation. If the money supply suddenly increases to 200 dollars, suppliers will up their price because the demand increased. Now - this higher price has to also increase the wages of those who work for the suppliers - and when their wage increase, they will have no problem paying the higher price. The wage of the workers would go up simply because they will demand a higher wage through their labor unions because otherwise they cannot pay the higher prices. But instead - what's been happening: the suppliers keep the wages of the laborers the same or only give them a slight increase - and instead: just make a lot more profit. And have a look - that's exactly what's been happening in the world. Why? Because when laborers demand higher wages - what do the bosses say? Well - if you don't want to work for that wage - I let you go and I will find someone worse off than you and have them do the work. That is why we have so many companies that closed down in Europe and America that moved to China and the third world in general - because they could profit from people being worse off there than in their country, that were willing to work for much lower wages.

And this is why within Living Income Guaranteed - we suggest that prices be determined according to the value that was put into it - which includes your labor. And valuing labor means: your workers must have a wage that allows them a certain lifestyle. This should be enshrined in the Constitution as a Human Right - otherwise one creates cycles of abuse where some win and most lose. And so - if all prices in the economy go up because of an increase in the money supply - your wages will have to increase simultaneously - otherwise you're committing a crime against life.

Herein, then - it doesn't matter whether you have fiat currency or not - becaue the real value of the currency remains the same. In the video they explain how the difference between currency and money is that money is a store of value - its value remains the same over time - and with currency this is not part of the definition. So - with making this one adjustment to the economic system, so that it would function how it is intended to function - we would be able to say that our fiat currency is in fact money - because the real value of the currency remains the same over time.

Is it a solution to step away from fiat currency and go back to silver and gold? No! Why not? Exactly because the amount of gold and silver in the world is limited - it doesn't change. But what does change? The amount of people in your economy. So - if you take  again the village of 10 people with 10 gold bars and let's say each owns one gold bar, but now they all make babies and suddenly there are 20 villagers and still the same 10 gold bars - you obviously have a problem - because now each villagers (assuming an egalitarian society) only owns half a gold bar. And yes - the value of gold remains the same: you can still buy the same amount of stuff with one gold bar before there were babies as you can after there were babies - but not everyone has a gold bar anymore - so the standards of living goes down anyway as you can suddenly buy less stuff.

So - to have your money supply absolutely the same over time, regardless of a change in population, is also counterproductive. When it comes to money creation - it should be calculated according to two points:
- available resources
- population

Furthermore - which is quite fascinating - in the video the economists point to history and how throughout history every fiat currency reverted back to zero - and therefore we should use gold/silver instead. But they ignore the fact that throughout history people have always also gone back to fiat currency - simply because it is much more convenient to carry around paper or a plastic card with a chip than a bunch of gold bars. I mean - making gold/silver the currency would eventually lead to history repeating itself, just because it's not practical to transport gold for transactions.

Therefore - instead of telling people to invest in gold and silver because currency will become worthless - and then at least you have something to trade with - rather correct the problem with fiat currency so that it works for everyone.

We continue in the next blog with our discussion on money and currencies where we'll have a look at the nonsense of having currencies with different values.

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Day 243: Living Income Guaranteed and Communism

Whenever a new way of organizing society and our economic system opens up, one of the comments that comes to the surface is :"But isn't that communism?"

Now, communism in itself as a word has become a word of Terror. It is used specifically to instigate fear reactions within people, where you do not want to be linked or involved in anything that may be deemed 'communistic'. But what is communism really? Nobody knows anymore. It's one of those terms -- just like the Inflation concept -- that has taken on a life of its own. In the case of communism, it's become a boogieman story. I mean, when people talk about communism and 'fighting communism' it is done from an assumption that communism is 'one clearly defined thing' and ‘it’s clearly evil’. Truth is, there were many various different concepts that developed that could be deemed 'communistic'. It's the same with Religion, you can talk about for instance 'Christianity' but then within that you have various variations and adaptations of Christianity. Forms of communism were adopted in Spain in the 1930s which were highly effective, yet you don’t hear about it anywhere.

So when you talk to people and ask why they are against anything that could closely be related to communism, they go "oh but just look at Russia, and all those people that died it was a total failure, it’s never going to work". What is not being done is putting communism that took place in Russia (or what actually would be more correct is to say 'the communism that DIDN'T take place in Russia) into context.

What must be understood is that Communism as an idea and Communism as ‘what happened in Russia’ are two different things. You see, people were angry, people then had an idea and then they went into a Revolution to try and implement that idea. The thing is that once they were in power – they had no practical plan or way of implementing their idea in a way that would actually work. They had no knowledge of things like politics and economics and were completely inadequate and incompetent to actually run a country. So, they tried things out, it failed, they went into fear and established a form of authoritarianism and all in all the story did not have a happy ending.

To go back to the Christianity example – the way Communism is treated is the same way the Jesus message and Christianity is being treated today. We have what Jesus said, being one thing – as principles of ‘Love thy neighbour’ and ‘Give as you would like to receive’, which is very much a principle of Equality and Harmonious Living. And then you have Christianity in all its various ways as what is ‘supposedly the Jesus message’ – but when you look at what is actually being lived out, is a message of fear, hate and inequality. So just like ‘what Jesus said’ and what ‘Christianity does’ are two completely different things – you can’t say that ‘Communism as an idea’ and ‘How communism took place’ are the exact same thing.

If you look at what happened in Russia, this is exactly one of the reasons why we never promoted any type of ‘Revolution’ to bring about change within any of our proposals, because they are impulsive and short-sighted. So yes, communism in Russia failed because there was no practical common sense reasoning or research that had gone into what they were doing. And because they failed big time, communism now has forevermore been branded by the mark of the Devil, and we should fight it in any way we can.

So now, each time something comes up that even in the slightest way could disturb the way things currently are and can in the slightest way be interpreted as ‘communistic': fear rises and it gets boxed away. All communism has been reduced to in this day and age is a form of fear induced superstition to keep people from actually thinking for themselves, kind of the same way Parents will tell their children that the boogieman’s gonna come for them if they don’t eat their veggies. Come up with any idea that will bring about a change in the way the current system works and people will come at you with the big C-Word to scare you into shutting up and conforming.

It’s come to a point that anything that doesn’t fit and support the status quo is labelled ‘communism’ and ‘socialism’ and anything that does support the current system is called ‘democratic’ and ‘free’. It’s just a word used as one pleases – if you don’t like it, call it communistic – if you do like something, call it ‘democratic and free’. I mean, you can have two countries who both to some extent operate within a form of Nationalization – but depending on how much they threaten the status quo the one will be called Communistic and the other one won’t. It’s just a word of convenience. Take Chile for instance whose economy is based on the nationalization of copper, copper being one of their main exports. They nationalized it and they did it effectively – and yet Chile is not deemed communistic. In fact, the World Bank will tell you that they are very proud of Chile and that Chile is an example for other South American countries in terms of adopting the Free Market System. But if you’re a different country and you nationalize say your oil and you adopt policies that are unfavorable to the United States = now you’re communistic = You are evil, your president is the Devil, you must be stopped.

It should actually become a rule that you can’t use the word ‘Communism’ in any form of argument or way to make a point, because the word has gotten abused so much that it’s just a joke. If you can’t make a point without resorting to terms like Communism as a form of Propaganda to terrorize people, then you just shouldn’t bother.

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