GMI - A Response to Treasury’s Economic Analysis

The New Zealand Treasury has produced a report on ‘A Guaranteed Minimum Income for New Zealand (A Preliminary Assessment of the Tax and Equity Implications)' at the behest of the Welfare Working Group.

Given my interest in a Shared Base Income (SBI), which is similar to a Guaranteed Minimum Income (GMI) – both are universal incomes – and the looming general election, I have decided to provide a response to Treasury's analysis, as it is seriously flawed.

I should start with the first point that no policy instrument should be introduced in isolation, especially a universal income, but this is how the GMI is treated in the Treasury’s analysis. Despite this, there is merit in responding, as their analysis reflects a general economic response grounded in the belief that people's primary motivations must be financial, when this is in fact a structural outcome of our system, and not a primary motivation when a base income is guaranteed.

The Treasury report’s analysis is divided into five main sections (I’ll ignore the overseas examples in Section 7 in order to focus on the GMT, and I’ll ignore the Executive Summary in Section 1 as that is simply a summary of the body of the report which I am already responding to.

“A GMI scheme has a number of policy implications. These will be discussed in the following sections: Section 2 discusses equity and fairness; Section 3 covers the efficiency and growth implications including the labour market effects; Section 4 discusses the fiscal cost; Section 5 the integrity and coherence of the tax system; Section 6 covers administration and compliance; …” p5, A Guaranteed Minimum Income for New Zealand (Oct 2010), The Treasury.

I shall deal with each of the substantive points the Treasury makes in the sections it has created. Generally I quote the point(s) and then respond, but I focus more on the negative analysis (as that's what I have issue with) than the positive (you can read that yourself in their report). To begin:

“2. Equity & Fairness”

“The universal, unconditional nature of GMI means it is generally an equitable policy in a redistributive sense. The broad nature of the GMI also means every person is covered and none are allowed to slip through the social safety net. The Gini coefficients conform this…” p5

All well and good as this is the purpose of a universal income: everyone receives it as of right, because everyone is entitled to an income that enables them to realise their potential, a freedom only a universal income can grant.

“In both cases the primary losers would be single-person households without children earning over (roughly) $50,000.” p7

“Losers” in the rather emotive vocabulary the Treasury uses, in the sense that they pay more tax than those earning less than $50,000 - though of course they still earn more, which really means they're 'winners' (in the fiscal sense that Treasury and economists invariably use).

“Many beneficiaries, including second and third tier assistance, receive an income in excess of $300 per week. These include carers, sole parents and the disabled. Despite the removal of abatement rates, many of these beneficiaries are unable to undertake part-time work. Thus, a GMI would distribute money away from people with the most need for government assistance, towards those who have plenty of opportunities but in some cases choose not to work. Super annuitants would also receive less…” p7-8

A guaranteed minimum income (GMI) does not entail that all targeted benefits must be eliminated. The Treasury’s isolation of its analysis to a single policy change may be practical for analytical purposes, but is not realistic.

“3. Efficiency & Growth”

“There are many opposing incentives on the labour market. The removal of the abatement regime for beneficiaries would, in isolation, reduce the disincentive to undertake part-time work thereby boosting labour market supply. On the other hand some lower income earners would choose not to work or reduce their hours at a benefit rate of $300 per week, and higher tax rates on individual earnings would cause many skilled/higher income earners to reduce their hours or migrate to countries with lower tax rates.” p8

The GMI is not a “benefit”, it is a right – the right that every human being has to a basic income. Treasury has simply not grasped that a basic income, free of government control, is an enabler of people, not a disabler.

The 'reduction in hours worked' is a desirable outcome that would result in higher productivity. A six hour a day is more productive per hour than a longer day. If a GMI reduces per capita working hours to a level that is more productive, New Zealand will see an increase in productivity per worker, which is beneficial to New Zealand and to New Zealanders.

New Zealanders who live here do not come or stay here for 'lower taxes'. Income security is of more vital importance to people than tax levels. If New Zealand provided the highest level of real income security in the world many more people would want to come and work here, and many more would want to stay.

“…benefit levels have little to no effect on higher skilled individuals. Instead, higher tax rates are much more likely to discourage effort, implying important efficiency effects for taxation.”

There are other reasons for doing things than income and the tax rate. People work to make a contribution that fulfils their potential, this is what makes work meaningful, and is the true reward. A satisfactory income is of course necessary, but once that’s in place people get to work doing what they’re best at if they possibly can.

The trouble with Treasury (and economics generally) is that they suppose that people’s only motivation for doing things is financial, when in reality people would rather have a satisfactory, secure income locked in place so that they can forget about that aspect and get on to contributing in a way that actually unlocks their potential.

“…the income effect associated with the higher out of work income associated with the GMI could discourage people from taking entry level jobs.” p8

No, the GMI enables people to take entry level jobs. Entry level jobs do not pay well. A GMI supplements that income, it enables people to take entry level jobs and, indeed, to change careers using entry level jobs.

“The GMI could give employees a degree of additional bargaining power, giving them the option of leaving a job with unsatisfactory working conditions. The higher safety net also encourages greater risk-taking and entrepreneurial activity as people will have time to set up small businesses to create employment. However, we do not consider that this would offset the negative impacts of the GMI on the labour market discussed above.” p8

The GMI would give employees a degree of additional bargaining power, as well as enable greater entrepreneurial activity. And given that I have just shown how faulty the Treasury’s analysis is on the “negative aspects” it can be clearly recognised that all these positive aspects will act in synchrony to create a much better functioning labour market, economy and society.

“The net effect is theoretically indeterminate but it appears likely that the net effect would be to weaken education and training incentives.” p9

Total nonsense. The GMI clearly enables any person of any age greater ability to access education, whether through formal or informal channels. Indeed it allows people to self-educate, to choose the most cost-effective, least restrictive educational methods. This should be complemented by physical faculties available to all and communications that alert the public to the value of education, understanding and knowledge.

“New Zealand has one of the most internationally mobile labour forces in the OECD. The effect on migration incentives is similar to those on education. Incentives on the unskilled to migrate would reduce, due to increased incomes in New Zealand, while the higher skilled would face stronger incentives to emigrate, due to the increase in the gap in take-home real incomes between NZ and comparator countries, particularly Australia.” p9

Again, Treasury in its economic myopia, cannot see that income is not the primary driver of human contribution. A secure base income and home is what is necessary to keeping unskilled and higher skilled people in New Zealand. A GMI, and good policy around housing, can provide this for all New Zealanders. Once this is in place the focus and driver of people’s contribution is not primarily ever higher incomes, it is rather the fulfilment gained from realising their potential in their contributions. To reiterate, meaningful work and a secure income matters more than ever higher incomes and ever lower taxes. People would stay and come here if we had a secure base income that enabled them to contribute to the best of their ability.

It should also be noted that in a shared base income, everyone shares in the rewards from their contributions, because it is dependent on the production of the nation to which all people contribute.

“Economic Growth”
“…the literature does provide a range of estimates and it is not clear that this relationship would hold for such a large change in fiscal policy. However, it suggests that there would likely be significant growth consequences from the introduction of a GMI.” p10

Yes, and that growth would be up. At this point the Treasury tries to (unconvincingly) introduce estimates, without evidence, that a GMI would reduce GDP growth. It is unconvincing (and wrong) and to its credit, Treasury does note that the ‘relationship’ might not ‘hold for such a large change in fiscal policy’. Unfortunately Treasury then goes on to analyse these ‘significant growth consequences’ as if they would hold, which there is no point discussing, given they would not.

“The form of taxation used to fund GMI schemes is also important for growth. OECD studies show that income taxes (including personal and corporate income taxes), are among the most damaging for economic growth.” p11

I doubt that the OECD analysis is of income taxes with a GMI, in which case their analysis is inapplicable here.

“Significantly increasing the tax levied on the personal income tax base has negative implications for savings, investment and productivity.” p11

By itself it might, but with a GMI it does not. It is disingenuous of the Treasury to take on gospel the word of previous studies on income taxes that take no account of a GMI when the issue in discussion here is a GMI.

“An increase in personal tax rates to these levels would also significantly increases tax paid by domestic investors (although non-resident investors would not be effected). This would increase the cost of domestically sourced equity finance.” p11

It is a stretch to question domestic investment in the analysis of a GMI. This aspect requires complimentary policy change to reflect the principle that finance isn't the primary incentive of humankind in a tolerant society built on equal opportunity for all people.

“4. Fiscal Cost”

The calculated fiscal cost of a GMI is roughly a 50% tax rate. This is also the proposed fair tax rate of a Shared Base Income (fair because it is half for the individual and half for all). The difference is that a Shared Base Income starts and stays at this rate – with the income itself varying according to the revenue generated and, indirectly, the level of Gross Domestic Product (GDP). The point being that everyone becomes aware of their relationship to the economy and to everyone else, provoking a greater sense of community and sharing.

It is also the case that a shared base income is a flat half share of all the income from profits and trade – so it includes corporate profit.

“5. Integrity and Coherence”

“Integrity”
“The universal nature of the GMI payments would reduce integrity pressures on the current social assistance structure. However, the high rate of personal tax, particularly when combined with the high effective marginal tax rates for many tax payers, would create incentives for individuals to structure their affairs in such a way as to pay a lower rate (for example, the 28% company tax rate).” p12

Obviously this straw man argument is negated if we apply the flat tax across the board. It seems pretty ridiculous not to expect corporates to pay the same tax on their profits as individuals do on their incomes.

“Coherence”
“The tax system proposed would be internally coherent as it taxes all forms of taxable income at the same rate. However, the degree of non-alignment between the personal rate and the corporate tax would cause the tax system to become less coherent.”

Again, this same obvious straw man is negated if we apply the flat tax rate across the board.

“6. Administration and Compliance”

“A GMI scheme would be administratively efficient as it lowers the administrative, management and operating costs of the current social assistance and tax systems. The scheme is also simple to understand and the cost is transparent to taxpayers.”

This part is correct.

“However, the change will have transitional administration and compliance costs and the scheme could increase the costs of enforcement; in particular in relation to integrity measures needed to protect the difference between the personal and company rates, and in relation to audit activity.”

And of course, again, we wouldn’t expect human beings to pay a fair tax rate and corporates not to. The tax rate would be flat and fair across the board.

“8. Conclusion”

So in conclusion, a GMI and even more, a Shared Base Income, decreases hours worked in formal employment but does so with the benefit of increasing the productivity of those remaining hours.

It leads to less emigration of skilled workers, indeed, it is more likely to attract them into the country and keep them.

It encourages people to take entry level jobs as people have an income to complement them, and it encourage further education and training for the same reason.

It also enables greater entrepreneurial activity and the creation of new, innovative business which provides greater employment and greater productivity.

It also helps eliminate poverty, removes the disincentives that benefits have (as well as the stigma) and gives employees more bargaining power for greater flexibility.

Most of all it alters the structural incentives to ones that reflect people’s owner inner drives to realise their potential in what they do, a drive that is naturally far stronger than the financial acquisition drive (and far more fulfilling) when a GMI or Shared Base Income is in place.

Ben Wallace
Author The Common Purpose Manifesto
LinkedIn - http://nz.linkedin.com/in/benwallace13
Twitter - http://twitter.com/BenDWallace

Treasury Report: A Guaranteed Minimum Income for New Zealand

The Common Purpose

The common purpose of life is living. This is the purpose of all life, to grow, to realise its potential and find fulfilment.

But as well as that purpose, there is a principle, that is really the human principle, the human wisdom, that, for all people to find fulfilment, we must all live without harm – without harm to others, and without harm from others. This is the principle of no harm.

And given that only we can live our own lives – only I can live my life and only you can live yours – ‘controls’ (ones that don’t apply equally to all of us) must be a form of harm. So freedom from harm also means freedom from control.

This pursuit of fulfilment without harm, to or from others, can be considered ‘the right way’.

The right way, of fulfilment without harm, leads to rights for all, to human rights like those embodied in the United Nations Declaration of Rights.

And it also leads to a legal system based on human rights, rights that assist our living and pursuing our fulfilment without harm.

In economics, fulfilment without harm leads to free and fair competition in open markets, as opposed to closed markets and unfair competition.

It leads to the realisation of human potential, through us being enabled to make our best contributions.

It leads to shared earnings and a shared base income.

To shared ideas and shared growth, rather than exclusive ideas and limited growth.

And it leads to unlimited product through unlimited ideas.

Fulfilment without harm leads to money as a tool for facilitating transactions in trade, rather than money as purpose.

It leads to productive finance, investing in people and their contributions, rather than speculative finance, investing to exploit changes in price.

Pursuing fulfilment without harm leads to value as fulfilment, rather than as money.

In organisation, fulfilment without harm leads to common purpose organisations, rather than centralised monopolistic organisations.

It leads to distributed responsibility and open information systems.

To democratic, collective decision-making.

To organisation by permission.

And to organisational earnings shared more evenly.

It also leads to open accounting for fairly distributed earnings.

To responsible, liable owners.

And to voluntary membership in common purpose organisations.

In society, the right way, pursuing fulfilment without harm, leads to cultures of confidence and care (of freedom) where mistakes are understood (to safe cultures).

It leads to universal, equal respect, rather than differential respect.

It leads to greater self-governance, rather than imposed governance and policy controls.

It leads to universal, open education.

And to universal health care with healthy living in responsible, tolerant environments.

And it leads to environmental responsibility.

It also leads to open and free media transmitting in real time, only filtering after the fact and with minimum interpretation.

And it leads to free and open faith, rather than exclusive religion.

To respect for ethnic identity and homeland.

And to security built on trust.

The right way, pursuing fulfilment without harm thus leads to a system that serves our purpose of fulfilment without harm. This purpose must guide the policies, rules and regulations that shape our system, as well as the unwritten rules by which we all behave.

To know how to act in any situation, in any role, for any policy or decision, return to the base purpose and principle with which all such things should comply, these will guide the right way to act in any situation.

To make the changes we need individually, we look to find our niche (what we’re good at, where our talents lie) and fulfil our potential by living our lives without harm in a system that enables fulfilment without harm because it is based on this purpose and principle through the actions, policies and decisions we all choose to make in conscious respect of this purpose and principle.

With this purpose and principle, and a system shaped to enable it, we achieve our greatest possible potential.

Ben Wallace
Author The Common Purpose Manifesto
LinkedIn - http://nz.linkedin.com/in/benwallace13
Twitter - http://twitter.com/BenDWallace

Occupy Wall Street Cartoon

This is a good one:

Data-Information-Knowledge Diagram

There's been a few attempts at meaningfully diagramming the relationship between data, information and knowledge, but I haven't seen one the same as this, so I thought I would share (click on the image to see it larger):

Ben Wallace
Author The Common Purpose Manifesto
LinkedIn - http://nz.linkedin.com/in/benwallace13
Twitter - http://twitter.com/BenDWallace

Could A Capital Gains Tax Lead To A Shared Base Income?

It is possible that the introduction of a Capital Gains Tax (CGT) on shares and property, could eventually lead to a Shared Base Income (SBI). It could be a step on the way. An SBI is a universal income, paid to all resident citizens of a nation over the age of entitlement. It is funded from a half share of income – that is, a 50% flat tax on all income from trade, whether from trade in services, products or property.

Obviously, the CGT must eventually rise to be equivalent to the level of personal income tax, and all tax on income from trade must eventually converge to be a half (50%) share. The other side of the SBI, the Base Income, means that the real tax on income under a certain amount is actually reduced by the introduction of a Base Income. In addition, any income earned over the Base Income, is kept at a consistent rate (i.e. 50%), so there is no disincentive to earning more.

A flat 50% tax on income from all sources of trade also means there is no preference on investment due to different tax levels. Rather, the financial preference is formed by the real value of the return on those investments, that is, those investments earning more will be favoured because they earn more, not because they are taxed less.

My position on shares and property and international commodity markets, has been to break those markets down. For shares, to alter these to one-on-one fixed term, interest paying bonds in businesses, that cannot be traded, but only returned to the business, who then pay them out and reissue to others if they desire. For private property, to limit this to personal ownership for residence purposes only, and for international commodity markets, to restrict these to commodity producers and consumers (no ‘investors’/speculators).

My position hasn’t changed on these markets and the necessity to tie them down if we want to move away from boom and bust, ‘business cycle’ economies, which any sensible person would avoid. However, the move to tax the incomes made in these markets at a level equivalent to the incomes gained from other trade, and eventually at a half (50%) share of income level, could well serve to reduce much of the preferential income treatment these markets receive. It may make these markets less volatile. It should also raise a great deal more cash which can be distributed in a Shared Base Income. In addition, by leaving these markets in place they will continue to suck up the excess cash of those who have it, which, along with the 50% share, will serve to assist in the better distribution of wealth.

Ben Wallace
Author The Common Purpose Manifesto
LinkedIn - http://nz.linkedin.com/in/benwallace13
Twitter - http://twitter.com/BenDWallace

Labour & Productivity: What Is Under Our Control?

According to standard economic formula, if participation rates are falling, and economic growth is constant, then this growth must come from increases in labour productivity. This is due to labour productivity being calculated as the value of Gross Domestic Product (GDP)[1] over employment.[2]

GDP/Employment↓ = LP↑

When employment is decreasing, due to less participation in the labour force, and GDP growth is constant, then the other factor in the equation – labour productivity – must be increasing.

Labour productivity increases indicate that it requires less labour to generate a higher value of Gross Domestic Product. The emphasis is on the total ‘value’ of Gross Domestic Product produced.[3]

The value of GDP (beyond the formal calculation) is due to a number of different factors, but these essentially come down to which products are produced, how they are produced, how they are delivered and how they are marketed.

The forms of products produced has a base dependence on the raw resources and geography of the country, which act as a constraint on the choice of which products a nation produces. Post this dependency, the forms of products produced are dependent on the skills and knowledge of the population, and the application of these attributes to develop and add value to products.[4]

Skills and knowledge are applied through the development of technology to develop products, through the development of better techniques for developing products, through the development of new forms of products, through the development of new methods to deliver products, and through the development of new ways to market products.[5] This application of skills and knowledge to development is commonly known as innovation. The skills and knowledge people have acquired, in addition to their base labour capacity, can be called human capital.

All of these factors require financial investment in the development of skills and knowledge and the financially-backed directive to apply this human capital to decisions on what products are produced, how they are produced, how they are delivered and how they are marketed.

All these factors are also largely under the control of human labour. However, the constraints of a nation’s natural resources and geography, and many vital elements determining international demand for these resources, are not. In other words, there are factors that can increase, decrease or constrain GDP over which a nation has little internal control. Despite this, they will give rise to an increase or decrease in labour productivity according to their effect on GDP (less any change in employment). This is because labour productivity measures (LP = GDP / Employment) do not distinguish between rises in GDP due to factors under the control of labour, and factors not under the control of labour.

Vital external factors not under a nation’s control include the supply of natural resources from other nations and the demand for a nation’s natural resources from other nations.[6] Both these factors will dictate (along with other variables) the value of a nation’s resources. The value of a nation’s resources will feed into the value of its Gross Domestic Product, and an increase in its GDP due to external factors will increase the measure of its labour productivity, even though it has made no change to factors under the control of its labour (i.e. even though it has not innovated, or invested in human capital).

The point here is that labour productivity is a misleading term. It does not relate strongly to how much product labour produces, but in fact to what is the sum total value of the product produced, a value that is not wholly determined by the labour input into the product (and so should hardly be called ‘labour productivity’).

In fact, the best way to increase labour productivity is to reduce the labour input (replacing it with technology and more efficient techniques), and raise the value of the product produced through the means we have under our control (design and marketing), realising at the same that a large component of value is down to internal supply factors outside of the control of labour, such as the natural resources and geography of the nation, and external demand factors outside of the control of labour, such as natural resource demand from other nations.[7]

And the best way to necessitate the reduction of labour input, with concurrent increases in technology and more efficient techniques, is to focus incentives on contribution and understanding, followed by finance (rather than the reverse). This can be rightly done by the introduction of a Shared Base Income (among other things), which leads everyone to profit from the work they decide to do (according to what they see needs doing).

Ben Wallace
Author The Common Purpose Manifesto
LinkedIn - http://nz.linkedin.com/in/benwallace13
Twitter - http://twitter.com/BenDWallace

FOOTNOTES
1. GDP is the measure of the value added from all economic activity in a nation, and the standard measure of economic growth.
2. Employment being a measure of total hours worked or numbers in employment, both of which are typically diminished by less labour force participation.
3. Volume matters when increasing volume adds to the total value of product produced, but as less labour is available to produce greater volumes, further increases in volume must come from better production techniques or greater use of production technology, which rely on the application of skills and knowledge (innovation).
4. This also requires the finance to invest in developing and applying skills and knowledge.
5. Including the development of the forms of market (local, international, open, incorporating derivatives, auctions and so on) and the development of new markets in other regions that haven’t previously taken, or restrict, the products in question.
6. To a significant extent it also includes the subsidies, quotas, and tariffs of other nations; however, a nation can fight for and against these trade restrictions.
7. Which at the moment are high-growth/high-population nations such as China and India.

LinkedIn Discussions

If you want to view or comment on any of these discussions (and more) go to the OUR SYSTEM LinkedIn Group or click on the link under each discussion. Join the group to start your own discussions and keep up with the current ones.

A Fair Share, Is That What We Want?
http://lnkd.in/tfr5Yy

What Are We Good At, And Where Do We Fit?
http://lnkd.in/hWs5RN

Crazy Finance – The Gold Explosion, When Will We Learn?
http://lnkd.in/zWK5Rx

Some Thoughts On Change…
http://lnkd.in/VvtC8m

Freedom In Organisations: Why Do We Accept Less Freedom In Them, Than We Do In Society?
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Teach The Foundations Of Knowledge & Understanding And Where These Are Taking Us?
http://lnkd.in/8zxGRW

Should Work Be Hard Or Easy?
http://lnkd.in/FEqTcR

If We’re Doing Work We Love, Is It Hard Work?
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Managers Are Public Figures And Should Be Prohibited From Using Institutional Powers To Retaliate Against Public Comment…
http://lnkd.in/5aQFZg

Unlimited Education With No Entry Requirements…
http://lnkd.in/jy44cF

Educational Institutions Should Ask Students What Is Not Known, Not What Is…
http://lnkd.in/xWDR6Q

Value

Real value is not money. Real value is fulfilment. Fulfilment is from realising potential, achieving understanding, having ideas, contributing and producing, learning and growing, from living.

Fulfilment is a factor of realisation, understanding, ideas, contribution and productivity, learning and growth. All of this is enabled by freedom from harm.

A good economy enables us all to contribute. It is sustainable, not sabotaged by speculation. Its reward is not a steady rate of return (or wild riches), but fulfilment through the realisation of potential, through best contribution.

In the same vein, real costs are not financial in the real economy, they are human. These are the hidden but also often blatant costs we pay now when we are unable to realise our potential, find fulfilment and contribute. This is the real cost. Financial cost is not the factor of importance; harm to our ability to realise our potential and find fulfilment is the real cost.

The real economy is not only politically democratic, but also organisationally, in corporates and bureaucracies. It is an economy with equal opportunity to contribute, where financial inequities are reduced so they do not constrict opportunities.

We do not measure real value in dollars, we measure it in fulfilment. For this we have to ask ourselves, “Are we fulfilled?”, “Are we unharmed?”.

[Excerpt from The Common Purpose Manifesto]

Finance

Sustainable, equitable productivity is through realising our potential and contributing without harm in free and fair markets, not through gambling and speculating for financial gain.

Money is as abundant as productivity, but non-productive financial speculation de-links money growth from productivity growth resulting in inflation of money without inflation of productivity. This discrepancy leads inevitably to market corrections and economic recessions that damage those trying to make an honest contribution, entirely innocent of speculation. These ‘corrections’ are a factor of the market systems we now have, but they are not an inevitable factor of the market system we could have.

The way current markets are designed permits and encourages non-productive financial speculation. National and international markets which centralise the trading of a single non-perishable resource to a single central market and allow the resource to be bought without taking hold of it distort the real price of the resource (the price set by the cost of production, supply and consumer/user demand). These markets allow financial corporations and individual speculators, that do not use the resource for consumption or production, to purchase a large portion of supply and withhold it from users that rely on the resource for consumption and production. The purchase of a great portion of supply makes the financial speculator a virtual monopoly that can name the price those that need to use the resource must pay, there being no alternative market.

It is not necessary that the financial speculator be a single corporation or individual (although a single speculator has greater sole control) – numerous uncoordinated speculators also reduce the supply to users needing it for consumption and production, so raising the price beyond what would be mediated by production, supply and consumer demand alone.

The price of a resource in this market will keep rising for as long as increasing amounts of speculative finance purchase it, not to use, but to hold and on sell.

Any market centralised on a national or international level, confined to a single non-perishable resource, and allowing purchase without possession, permits and facilitates financial speculation that raises the price of resources beyond their full cost of production, regardless of whether producer supply is enough to meet user demand (as user access to supply is restricted by speculators pulling it from the market).

If resource producers were to increase supply so financial speculators could not purchase enough to restrict it to less than needed by users, the price would eventually collapse massively as speculators released their holdings back onto market. The situation would now be producer supply massively greater than needed by users (due to prior speculative removal of supply from the market) supplemented by the flood of withheld supplies released back onto market by speculators fleeing the market.

Such speculator-friendly markets should be eliminated or, the traders that buy, not to use, but to on sell, should be banned from these markets. Imagine a physical market of growers and sellers in which one person came along and bought all the produce, then proceeded to sell that produce at whatever price he demanded. There would be outrage, but in one form or another this is what happens on international markets.

To ban speculative trading:

In resource markets (gold, crude oil, rice, milk powder, cocoa, coffee, and so on), disallow financial derivatives that enable a right-to-use, without taking possession of, a resource.

In share markets, disallow trading in shares. Make shares only purchasable from the organisation. Shares cannot be traded, only transferred back to the organisation at cost. The only revenue from shares is from dividends and there is no speculative trading in them.

In property markets, allow only ownership with occupancy.

In currency markets (foreign exchange markets), monitor and slow the market, restrict to sale for use, not for trading.

Revert all funds of non-productive financial speculation into production and consumption by sharing excess income and wealth to all via a base income that enables universal opportunity to contribute.

Investment and production is determined by us individually and through participative, democratic organisations of people partnering to achieve particular purposes that accord with the common purpose of fulfilment for all.

Anyone can produce (it is not state controlled) but half our earnings are shared in a shared base income.

Our motivation is not in profiting and finance, but in making our particular, self-directed, contributions and the fulfilment this realises.

[Excerpt from The Common Purpose Manifesto]

OUR SYSTEM Discussion Group On LinkedIn

OUR SYSTEM now has an OUR SYSTEM Discussion Group on LinkedIn. LinkedIn discussion groups are the best format I have yet seen for group discussions, and I find them an excellent provoker of new ideas or at least new expressions of existing ideas.

I believe you do have to create a profile on LinkedIn to join the discussion groups, but this is worth doing.

Here is the link to the group: http://www.linkedin.com/groups/OUR-SYSTEM-2599027?mostPopular=&gid=2599027

Ben Wallace
Author The Common Purpose Manifesto
LinkedIn - http://nz.linkedin.com/in/benwallace13
Twitter - http://twitter.com/BenDWallace

A Shared Base Income Diagram

I've created this diagram to illustrate a conception of the shared base income. Click on the image to see it larger. Feel free to question or critique.

Ben Wallace
Author The Common Purpose Manifesto
LinkedIn - http://nz.linkedin.com/in/benwallace13
Twitter - http://twitter.com/BenDWallace

Slideshow: A Shared Base Income

The following is the slideshow from a presentation I delivered on an unconditional income, and in particular, the shared base income. It gives an outline of the concept, what it entails, how it might be funded, and who have been some of the proponents of an income like this in the past.

A Shared Base Income Presentation

View more presentations from benwallace13.

Ben Wallace
Author The Common Purpose Manifesto
LinkedIn - http://nz.linkedin.com/in/benwallace13
Twitter - http://twitter.com/BenDWallace