The perennially popular board game Monopoly is a
reasonable simulacrum of capitalism. At the beginning of
the game, players move around a commons and try to
privatize as much as they can. The player who privatizes
the most invariably wins.
But Monopoly has two features currently lacking in
American capitalism: all players start with the same
amount of capital, and all receive $200 each time they
circle the board. Absent these features, the game would
lack fairness and excitement, and few would choose to
play it.
Imagine, for example, a twenty-player version of
Monopoly in which one player starts with half the
property. The player with half the property would win
almost every time, and other players would fold almost
immediately. Yet that, in a nutshell, is U.S. capitalism
today: the top 5 percent of the population owns more
property than the remaining 95 percent.
Now imagine, if you will, a set of rules for
capitalism closer to the actual rules of Monopoly. In
this version, every player receives, not an equal amount
of start-up capital, but enough to choose among several
decent careers. Every player also receives dividends once
a year, and simple, affordable health insurance. This
version of capitalism produces more happiness for more
people than our current version, without ruining the game
in any way. Indeed, by reducing lopsided starting
conditions and relieving employers of health insurance
costs, it makes our economy more competitive and
productive.
If you doubt the preceding proposition, consider the
economic operating systems of professional baseball,
football, and basketball. Each league shifts money from
the richest teams to the poorest, and gives losing teams
first crack at new players. Even George Will, the
conservative columnist, sees the logic in this:
“The aim is not to guarantee teams equal revenues,
but revenues sufficient to give each team periodic
chances of winning if each uses its revenues
intelligently.” Absent such revenue sharing, Will
explains, teams in twenty of the thirty major-league
cities would have no chance of winning, fans would drift
away, and even the wealthy teams would suffer. Too much
inequality, in other words, is bad for everyone. ...
Dividends from Common Assets
A cushion of reliable income is a wonderful thing. It
can be saved for rainy days or used to pursue happiness
on sunny days. It can encourage people to take risks,
care for friends and relatives, or volunteer for
community service. For low-income families, it can pay
for basic necessities.
Conversely, the absence of reliable income is a
terrible thing. It heightens anxiety and fear. It
diminishes our ability to cope with crises and
transitions. It traps many families on the knife’s
edge of poverty, and makes it harder for the poor to
rise.
So why don’t we, as Monopoly does, pay everyone
some regular income — not through redistribution of
income, but through predistribution of common property?
One state — Alaska — already does this. As
noted earlier, the Alaska Permanent Fund uses revenue
from state oil leases to invest in stocks, bonds, and
similar assets, and from those investments pays yearly
dividends to every resident. Alaska’s model can be
extended to any state or nation, whether or not they have
oil. We could, for instance, have an American Permanent
Fund that pays equal dividends to long-term residents of
all 50 states. The reason is, we jointly own many
valuable assets.
Recall our discussion about common property trusts.
These trusts could crank down pollution and earn money
from selling ever-scarcer pollution permits. The scarcer
the permits get, the higher their prices would go. Less
pollution would equal more revenue. Over time, trillions
of dollars could flow into an American Permanent
Fund.
What could we do with that common income? In Alaska
the deal with oil revenue is 75 percent to government and
25 percent to citizens. For an American Permanent Fund,
I’d favor a 50/50 split, because paying dividends
to citizens is so important. Also, when scarce ecosystems
are priced above zero, the cost of living will go up and
people will need compensation; this wasn’t, and
isn’t, the case in Alaska. I’d also favor
earmarking the government’s dollars for specific
public goods, rather than tossing them into the general
treasury. This not only ensures identifiable public
benefits; it also creates constituencies who’ll
defend the revenue sharing system.
Waste absorption isn’t the only common resource
an American Permanent Fund could tap. Consider also, the
substantial contribution society makes to stock market
values. As noted earlier, private corporations can
inflate their value dramatically by selling shares on a
regulated stock exchange. The extra value derives from
the enlarged market of investors who can now buy the
corporation’s shares. Given a total stock market
valuation of about $15 trillion, this socially created
liquidity premium is worth roughly $5 trillion.
At the moment, this $5 trillion gift flows mostly to
the 5 percent of the population that own more than half
the private wealth. But if we wanted to, we could spread
it around. We could do that by charging corporations for
using the public trading system, just as investment
bankers do. (For those of you who haven’t been
involved in a public stock offering, investment bankers
are like fancy doormen to a free palace. While the public
charges almost nothing to use the capital markets,
investment bankers exact hefty fees.)
The public’s fee could be in cash or stock.
Let’s say we required publicly traded companies to
deposit 1 percent of their shares each year in the
American Permanent Fund for ten years — reaching a
total of 10 percent of their shares. This would be our
price not just for using a regulated stock exchange, but
also for all the other privileges (limited liability,
perpetual life, copyrights and patents, and so on) that
we currently bestow on private corporations for free.
In due time, the American Permanent Fund would have a
diversified portfolio worth several trillion dollars.
Like its Alaskan counterpart, it would pay equal yearly
dividends to everyone. As the stock market rose and fell,
so would everyone’s dividend checks. A rising tide
would lift all boats. America would truly be an
“ownership society.” ...
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