Milton Friedman on Educational Freedom

Free to Choose

After 50 years, education vouchers are beginning to catch on.

BY MILTON FRIEDMAN Thursday, June 9, 2005 12:01 a.m.

Little did I know when I published an article in 1955 on "The Role of Government in Education" that it would lead to my becoming an activist for a major reform in the organization of schooling, and indeed that my wife and I would be led to establish a foundation to promote parental choice. The original article was not a reaction to a perceived deficiency in schooling. The quality of schooling in the United States then was far better than it is now, and both my wife and I were satisfied with the public schools we had attended. My interest was in the philosophy of a free society. Education was the area that I happened to write on early. I then went on to consider other areas as well. The end result was "Capitalism and Freedom," published seven years later with the education article as one chapter.

With respect to education, I pointed out that government was playing three major roles: (1) legislating compulsory schooling, (2) financing schooling, (3) administering schools. I concluded that there was some justification for compulsory schooling and the financing of schooling, but "the actual administration of educational institutions by the government, the 'nationalization,' as it were, of the bulk of the 'education industry' is much more difficult to justify on [free market] or, so far as I can see, on any other grounds." Yet finance and administration "could readily be separated. Governments could require a minimum of schooling financed by giving the parents vouchers redeemable for a given sum per child per year to be spent on purely educational services. . . . Denationalizing schooling," I went on, "would widen the range of choice available to parents. . . . If present public expenditure were made available to parents regardless of where they send their children, a wide variety of schools would spring up to meet the demand. . . . Here, as in other fields, competitive enterprise is likely to be far more efficient in meeting consumer demand than either nationalized enterprises or enterprises run to serve other purposes."

Though the article, and then "Capitalism and Freedom," generated some academic and popular attention at the time, so far as we know no attempts were made to introduce a system of educational vouchers until the Nixon administration, when the Office of Economic Opportunity took up the idea and offered to finance the actual experiments. One result of that initiative was an ambitious attempt to introduce vouchers in the large cities of New Hampshire, which appeared to be headed for success until it was aborted by the opposition of the teachers unions and the educational administrators--one of the first instances of the oppositional role they were destined to play in subsequent decades. Another result was an experiment in California's Alum Rock school system involving a choice of schools within a public system.

What really led to increased interest in vouchers was the deterioration of schooling, dating in particular from 1965 when the National Education Association converted itself from a professional association to a trade union. Concern about the quality of education led to the establishment of the National Commission of Excellence in Education, whose final report, "A Nation at Risk," was published in 1983. It used the following quote from Paul Copperman to dramatize its own conclusion:

"Each generation of Americans has outstripped its parents in education, in literacy, and in economic attainment. For the first time in the history of our country, the educational skills of one generation will not surpass, will not equal, will not even approach, those of their parents."

"A Nation at Risk" stimulated much soul-searching and a whole series of major attempts to reform the government educational system. These reforms, however extensive or bold, have, it is widely agreed, had negligible effect on the quality of the public school system. Though spending per pupil has more than doubled since 1970 after allowing for inflation, students continue to rank low in international comparisons; dropout rates are high; scores on SATs and the like have fallen and remain flat. Simple literacy, let alone functional literacy, in the United States is almost surely lower at the beginning of the 21st century than it was a century earlier. And all this is despite a major increase in real spending per student since "A Nation at Risk" was published.

One result has been experimentation with such alternatives as vouchers, tax credits, and charter schools. Government voucher programs are in effect in a few places (Wisconsin, Ohio, Florida, the District of Columbia); private voucher programs are widespread; tax credits for educational expenses have been adopted in at least three states and tax credit vouchers (tax credits for gifts to scholarship-granting organizations) in three states. In addition, a major legal obstacle to the adoption of vouchers was removed when the Supreme Court affirmed the legality of the Cleveland voucher in 2002. However, all of these programs are limited; taken together they cover only a small fraction of all children in the country.

Throughout this long period, we have been repeatedly frustrated by the gulf between the clear and present need, the burning desire of parents to have more control over the schooling of their children, on the one hand, and the adamant and effective opposition of trade union leaders and educational administrators to any change that would in any way reduce their control of the educational system.

We have been involved in two initiatives in California to enact a statewide voucher system (in 1993 and 2000). In both cases, the initiatives were carefully drawn up, and the voucher sums moderate. In both cases, nine months or so before the election, public opinion polls recorded a sizable majority in favor of the initiative. In addition, of course, there was a sizable group of fervent supporters, whose hopes ran high of finally getting control of their children's schooling. In each case, about six months before the election, the voucher opponents launched a well-financed and thoroughly unscrupulous campaign against the initiative. Television ads blared that vouchers would break the budget, whereas in fact they would reduce spending since the proposed voucher was to be only a fraction of what government was spending per student. Teachers were induced to send home with their students misleading propaganda against the initiative. Dirty tricks of every variety were financed from a very deep purse. The result was to convert the initial majority into a landslide defeat. This has also occurred in Washington state, Colorado and Michigan. Opposition like this explains why progress has been so slow in such a good cause.

The good news is that, despite these setbacks, public interest in and support for vouchers and tax credits continues to grow. Legislative proposals to channel government funds directly to students rather than to schools are under consideration in something like 20 states. Sooner or later there will be a breakthrough; we shall get a universal voucher plan in one or more states. When we do, a competitive private educational market serving parents who are free to choose the school they believe best for each child will demonstrate how it can revolutionize schooling.

Mr. Friedman, chairman of the Milton and Rose D. Friedman Foundation, is a senior research fellow at the Hoover Institution and a Nobel laureate in economics.

Greens and Libertarians

The yin and yang of our political future

by Dan Sullivan

Over the past three decades, people have become dissatisfied with both major parties, and two new minor parties are showing promise of growth and success. They are the Libertarian Party and the Green Party. These are not the only new parties, but they are the only ones that promise to attract people from across the political spectrum. Most other small parties are either clearly to the left of the Democrats or to the right of the Republicans. Such parties would have a place in a system that accommodates multiple parties, but are doomed to failure in a two-party system.

The Libertarian Party is made up mostly of former conservatives who object to the Republican Party's penchant for militarism and its use of government to entrench powerful interests and shield them from market forces. The Green Party is made up mostly of former liberals who object to the Democratic Party's penchant for centralized bureaucracy and its frequent hypocritical disregard for natural systems of ecological balance, ranging from the human metabolism and the family unit to the ecology of the planet.

Both minor parties attempt to adhere to guidelines that are much clearer than those of either major party. Libertarians focus on rights of individuals to control their own lives, limited only by the prohibition against interference with the rights of others. These rights include their right to the fruits of their labor and the right to freely associate and form contracts. They advocate limiting government to protecting those basic rights.

Greens advocate ten key values (ecological wisdom, grass roots democracy, social justice, non-violence, decentralization, community-based economics, post-patriarchal values, respect for diversity, personal and global responsibility, and sustainable future focusas a guide for government as well as for their own party organization.)

These different guidelines underscore basic differences between the approaches of the two parties and their members. Libertarians tend to be logical and analytical. They are confident that their principles will create an ideal society, even though they have no consensus of what that society would be like. Greens, on the other hand, tend to be more intuitive and imaginative. They have clear images of what kind of society they want, but are fuzzy about the principles on which that society would be based.

Ironically, Libertarians tend to be more utopian and uncompromising about their political positions, and are often unable to focus on politically winnable proposals to make the system more consistent with their overall goals. Greens on the other hand, embrace immediate proposals with ease, but are often unable to show how those proposals fit in to their ultimate goals.

The most difficult differences to reconcile, however, stem from baggage that members of each party have brought with them from their former political affiliations. Most Libertarians are overly hostile to government and cling to the fiction that virtually all private fortunes are legitimately earned. Most Greens are overly hostile to free enterprise and cling to the fiction that harmony and balance can be achieved through increased government intervention.

Republicans and Democrats will never reconcile these differences, for whatever philosophical underpinnings they have are overwhelmed by vested interests that dominate their internal political processes. These vested interests thrive on keeping the distorted hostilities alive and suppressing any philosophical perspectives that might lead to rational resolution of conflict.

But because minor parties have no real power, they are still primarily guided by values and principles. Committed to pursuing truth above power, they should be more willing to challenge prejudices and expose flaws in their current positions.

There is nothing mutually exclusive between the ten key values of the Greens and the principals of the Libertarians. By reconciling these values and principles, we can bring together people whose allegiance to truth is stronger than their biases.

This could be of great value to both parties, partly because any new party that wants to break into a two-party system has to appeal to a broad spectrum of voters. But even more importantly, each party needs attributes the other has to offer. Libertarians need the intuitive awareness of the Greens to keep them from losing touch with people's real values, and Greens need the analytical prowess of the Libertarians to keep them from indulging in emotional self-deception. Libertarians can teach Greens about the spirit of enterprise and the wonders of economic freedom, and Greens can teach Libertarians about the spirit of compassion and the wonders of community cohesion.

Reconciliation is absolutely necessary. Even if one of the parties could rise to power, it could do great harm by implementing its current agenda in disregard for the perspective of the other. Moreover, proposals that violate values and principles of one party often violate those of the other. If members of both groups come together to discuss each other's proposals, they are likely not only to find areas of agreement, but to find conflicts between each group's proposals and its own principals. If this happens, and the two parties work in concert, they stand a real chance of overtaking one of the major parties and drastically altering the political power structure.

Many third parties have had important impacts on American politics, but the last time a political party was dislodged was when the Republicans knocked the ailing Whig party out of contention over 130 years ago. It should be noted that the Republicans were a coalition of several minor parties with seemingly differing agendas, including the Abolitionist Party, the Free-Soil Party, the American (or Know-Nothing) Party, disaffected northern Democrats, and most of the members of the dying Whig Party. A similar coalition of parties has a much better chance of repeating this success today.

Anyone who looks at current national platforms of Greens and Libertarians will conclude that bringing these groups together is no easy task. For example, the Libertarian platform states dogmatically that they "oppose any and all increases in the rate of taxation or categories of taxpayers, including the elimination of deductions, exemptions, or credits in the name of 'fairness,' 'simplicity,' or 'neutrality to the free market.' No tax can ever be fair, simple, or neutral to the free market." On the other hand, the national platform of the Greens leaves one with the impression that they never met a tax they didn't like.

Yet the historical roots of the Greens and the Libertarians are quite similar. That is, early movements for alternative, intentional communities that live in harmony with nature greatly influenced, and were influenced by, anarcho-syndicalists who advanced principals now embraced by the Libertarian Party. This essay will attempt to show that the differences that have emerged are due less to stated principals and values of either group than to the baggage members have brought to each party from their liberal and conservative backgrounds.

On Conservatism and Liberalism

It is said that Libertarians have a conservative philosophy and Greens have a liberal philosophy. In reality, conservatism and liberalism are mere proclivities, and do not deserve to have the name "philosophy" attached to them. People who have more power than others are inclined to conserve it, and people who have less are inclined to liberate it. In Russia, as in feudal England, conservatives wanted more government control, as government was at the root of their power. Liberals wanted more private discretion.

In the United States today, where power has been vested in private institutions, conservatives want less government and liberals want more. What passes for conservative and liberal "philosophies" is merely a set of rationalizations that power-mongers hide behind.

Conservative support for traditional approaches and liberal support for new ways of doing things also follows from the desire for power. Traditional approaches have supported those now in power, and change threatens to disrupt that power. Changes are often embraced by conservatives once they prove unable to disrupt the underpinnings of power.

For Greens and Libertarians to rise above the power-based proclivities of liberalism and conservatism, they must focus on their roots and reconcile their positions with their philosophical underpinnings.

On the Roots of the Greens

In The Green Alternative, a popular book among American Greens, author Brian Tokar states that "the real origin of the Green movement is the great social and political upheavals that swept the United States and the entire Western world during the 1960's." As part of that upheaval, I remember the charge by elders that we acted as though "we had invented sex." Mr. Tokar acts as though we had invented Green values.

Actually, all the innovative and vital features of the Greens stem from an earlier Green movement. The influx of disaffected liberals to the movement since the sixties has actually imbued that movement with many features early Greens would find offensive.

This periodical, for example, has been published more or less regularly since 1943, calling for intentional communities based on holistic living, decentralism, sharing natural bounty, freedom of trade, government by consensus, privately-generated honest monetary systems and a host of other societal reforms. Yet the founder, Ralph Borsodi, wrote extensively about the evils of the state, and would clearly oppose most of the interventionist policies brought to the Green Party by disaffected liberals and socialists. The same can be said of more famous proponents of Green values, such as Emerson and Thoreau.

The Green movement grew slowly and steadily and quite apart from mainstream liberalism throughout the sixties and seventies. In the eighties, however, it became clear that the liberal ship, and even more clear that the socialist ship, was headed for the political rocks. The left had simply lost credibility, even among those who felt oppressed by the current system. Gradually at first, discouraged leftists discovered the Green movement provided a more credible platform their positions.

Because of their excellent communications network, additional members of the left quickly discovered the Greens, embraced their values (at least superficially), joined their ranks and proceeded to drastically alter the Green agenda. For example, early Greens pushed for keeping economies more diverse and decentralized by promoting alternative, voluntary systems, and by criticizing lavish government expenditures on interstate highways, international airports, irrigation projects, and centralized bureaucracies that discriminated against small, independent entrepreneurs.

Today the National Platform of the Green Party calls for "municipalization" of industry (that is, decentralized socialism), limits on foreign trade to save American jobs (which they insist is not protectionism), and other devices to create artificial decentralization under the guiding hand of some benevolent central authority.

The influence of Greens who are fond of government intervention (referred to as Watermelons by more libertarian Greens) seems to be strongest at the national level and weakest within most Green local organizations. Despite the National Green Platform's resemblance to a new face on the old left, many people who are genuinely attracted to Green principles are either undermining or abandoning the left-dominated Green Party USA. Specifically, the principal of decentralism is being used to challenge the right of a national committee to dictate positions to local Greens. This is fortunate for those of us interested in a coalition of Greens and Libertarians, as reconciliation between the Green Left and libertarianism is clearly impossible.

On the Roots of the Libertarianism

The Libertarian Party was born in 1971. Like the Green Party, it has philosophical roots that extend far back into history. It emerged, however, at a time when conservatism was in decline. Just as Greens attract liberals today and are strongly influenced by the liberal agenda, Libertarians attracted conservatives and were influenced by their agenda. However, as Libertarians are more analytically rigorous, there are fewer blatant inconsistencies between their positions and their principles.

Libertarian bias tends to show up more in prioritization of issues than in any particular issue. For example, Libertarians are far more prone to complain about the capital gains tax than about many other taxes, even though there is nothing uniquely un-libertarian about that particular tax.

Many Libertarians ignore classic libertarian writings and dwell on the works of Ayn Rand, Murray Rothbard and Ludwig von Mises. The classical libertarians get mere superficial attention. For example, few have read Tragedy of the Commons, but many quote the title. Specifically, they are unwilling to recognize that the ecological mishaps like those referred to in that work had been absent for centuries when almost all land was common. As with the tragedy of the reservations, commons were abused because so many people had to share access to so little land. All this was a result of government sanction, allowing vast tracts of commonly held land to be appropriated by individuals without proper compensation to those who were dispossessed of access to the earth. These facts are ignored because they cannot be reconciled with pseudo-libertarian conservatism.

Just as contemporary Greens have fondness for government and contempt for private property that their forebears did not share, Libertarians take an extreme position on private property and have hostility to all forms of government that their philosophical predecessors did not share.

Their refusal to acknowledge natural limits to private property and their insistence of unlimited protection of property by the state is their one great departure from their predecessors and their principles. For example, they dismiss the following statement by John Locke, known as the father of private property:

God gave the world in common to all mankind. Whenever, in any country, the proprietor ceases to be the improver, political economy has nothing to say in defense of landed property. When the "sacredness" of property is talked of, it should be remembered that any such sacredness does not belong in the same degree to landed property.

They similarly ignore Adam Smith's statement that:

Ground rents [land values] are a species of revenue which the owner, in many cases, enjoys without any care or attention of his own. Ground rents are, therefore, perhaps a species of revenue which can best bear to have a peculiar tax imposed upon them.

Private ownership of the earth and its resources is the one area where Libertarians depart from their own philosophy. After all, their justification of property is in the right of individuals to the fruits of their labor. Because the earth is not a labor product, land value is not the fruit of its owner's labor. Indeed, all land titles are state-granted privileges, and Libertarians deny the right of the state to grant privileges.

Even here, Libertarians are on solid ground when they argue that freedom could not survive in a society where land tenure depended on bureaucratic discretion. They are split, however, over devices like land value taxation that would, with a minimum of bureaucracy, put the landless in a more tenable position with respect to land monopolists. Just as liberals dominate the National Greens, conservatives dominate the Libertarian position on this issue, though many Libertarians, including Karl Hess, former editor of the Libertarian Times, do not share that conservative position.

Again, this is a key issue for reconciliation. The Green tradition cannot be reconciled with pseudo-libertarian claims that a subset of the people can claim unlimited title to the planet.

The Magic of Honest Compromise

Compromise is too often a process whereby people on each side give up what they know to be right in order to gain a supposed advantage for their interest group. What I am proposing is that each side give up supposed advantages in order to harmonize with what is right. It takes an open mind and a great deal of courage, but the results can be magnificent.

If the Libertarians accept that ownership of land is a privilege, and agree to pay a fair rent (or land value tax) for that privilege, they will hold the key to getting rid of property (building) tax, income tax, sales tax, amusement tax, and a host of other taxes. Furthermore, statistical evidence indicates that land value tax promotes compact, harmonious use of land and eliminates a root cause of poverty. In this case, adopting land tax can reduce the need for zoning and protection of rural land, and for housing projects, welfare, and a host of bureaucratic services for the poor.

Greens who study this issue will find that small and simple combination taxes that are essentially payments for exclusive access to common resources will address most of thier interests without complicated and intrusive bureaucracies. Land tax itself will eliminate land speculation and land monopoly, and will promote orderly development of land in cities and towns, taking developmental pressure off suburban and rural land.

Severence taxes on our common heritage of non-renewable resources can even-handedly reduce the rate of exploitation of these resources, conserving them for future generations.

Finally, taxes on pollution are really payments for exclusive use of our common rights to clean air and water. It reflects that the air and water is less valuable to the rest of us when it is polluted, and those who pollute literally owe us for the right to tresspass on our air and water.

Of course land monopoly will not solve all the problems by itself, but it is the key area where Greens and Libertarians are separated from each other as well as from thier own principles. Once this is reconciled, we can more readily work together on other issues where we are in agreement, such as liberating our monitary system the banking monopoly, ending military domination of foreign peoples, and ending government interference against people who commit victumless "crimes."

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Uncivilized

By Edmund Vance Cooke,

revised by Dan Sullivan

There was an ape in recent times
Who liked to eat, but not to climb.
He picked the jungle's finest tree
And said, "This tree belongs to me!"

These monkeys haven't brains nor guts
And I can make them gather nuts
And bring the bulk of them to me
By claiming title to this tree.

He found a broad leaf and a reed
And wrote himself a title deed.
Next morning, when the monkeys came
To gather nuts, he made his claim.

"All monkeys climbing on this tree
Must bring their gathered nuts to me,
Cracking them on equal shares;
The meats are mine, the shells are theirs."

"But by what right?" they cried, amazed,
Thinking he was surely crazed.
"By this!" he answered. "If you'll read,
You'll see it is a title deed."

"Made in precise and formal shape,
And sworn before a fellow ape,
Exactly on the legal plan
Used by Man to own the land."
Unless my deed is recognized,
It proves you most uncivilized."

"But," said one monkey, "you'll agree,
It wasn't you who made this tree."
"Nor," said the ape, with deed in hand,
Does any owner make his land.
It doesn't have to make much sense,
It is the law. I want my rents!

The monkeys tried to sort it out,
But it was clear, without a doubt.
The ape's procedure showed no flaw.
He really knew his human law.
And yet, no matter what he said,
The stomach still denied the head.

Up jumped one spunky monkey then.
"We are monkeys; we're not men!
This ape should try his legal capers
On men, who might respect his papers."

"We don't know deeds, we do know nuts.
There are no 'if's' or 'ands' or 'buts.'
Whoever gathers and unmeats them
By monkey practice also eats them."
"Let's show this ape and all his flunkies
No man-tricks can be played on monkeys!"

So, apes still climb to get their food,
And gripe that monkeys are so crude,
And monkeys, all so ill-advised,
Still eat their nuts, uncivilized.

Who owns the Earth?

Udo Herrmannstorfer: Who owns the Earth?

The Question of Modern Land Reform (Theses)

1. The system of land legislation, i.e. the canon of rules for the utilization of land, is a

fundamental feature of every society. However, it is also an expression of the society’s self perception.

The emergence of modern concepts of state, with the break-up of traditional social

hierarchies, and the advent of a globalized world order make a new look at land legislation

mandatory. Otherwise serious injustices and damages will result, of the kind which we

are already facing today in numerous instances.

2. Land forms the basis of the whole of any society. Thus the necessary allocation of

land utilization must benefit all individuals within the society. Since land, with few exceptions,

is not a producible commodity, it cannot be put on sale in a market. Selling land means privatizing

that part of the ground rent which should actually be socialized. Turning the factors of

production into salable commodities is a serious and fundamental mistake of our economic

system. In this regard, labour and capital are similarly problematic, though for different reasons.

3. The land always belongs to everyone, though it can be utilized only by individuals.

Thus individual “ownership” of land can only refer to the right of utilization. As long as this

individual utilization continues unchanged, there is no need for societal action. Society only

has to ensure that a new user can step into the rights of the previous utilizer when he quits.

In such a system, the right to land utilization would change hands only by assignment, not by

sale. In this way, land “ownership” would be brought back into circulation within the social

system. Society would not manage the land; it would only ensure that it is available to (suitable)

individuals for utilization, and that such utilization is not made impossible by prohibitive

sales prices.

4. Instead of a sales price paid to the to the pre-possessor, society could impose a social

compensation payment for the ongoing utilization of the land. This is justified because

the use of land by one individual excludes everyone else from using the same plot. The

communal income accruing from the compensation payments would be used to the benefit of

all people in the respective region, or part of the world. Such compensation payments do not

constitute interest on capital, since no sale, and thus no capital transfer, has taken place.

Their level would not be determined by supply and demand, but by social considerations. For

instance, society can adjust the level so as to further ecological agriculture or other societal

goals.

5. A land reform of this kind would have enormous consequences for the conditions of

social life, from housing to regional and town planning, and finally to the agricultural system.

Even more serious would be the effects on prices and incomes if the manner of land utilization

were thus to be brought back to a state of stable health. The capital, which is presently

tied up in land property, would be set free for other, useful purposes.

6. Large parts of the world are presently being forced to reorganize their social systems,

adapting them to the conditions of globalization. It would not be necessary to plunge these

regions into the same problems of land speculation which other parts of the world have gone

through - possibly in even more acute forms. In the rich countries, long-established social

rights and public welfare alleviate the problems arising from land legislation. Countries that

are still developing have not had the time to establish such safeguards; consequently, they

lack the corrective forces that make the adverse effects of outdated forms of land legislation

tolerable in our part of the world.

Our Responsibility for Our Resources (Theses)

1. Since time immemorial, the resources of our world seemed inexhaustible. Again and

again, new discoveries and inventions seemed to make serious concern unnecessary. This

euphoria is now gone. We have become conscious of the limitations of our resources. Care

and husbandry are indicated. A more sophisticated concept is sustainability, based on self-renewal

and circulation of resources.

2. Land legislation has a greater impact on resource management than is generally realized.

It is not only the direct effects mentioned in the theses of the first Building Block that are

of concern. Directly or indirectly, property legislation influences a lot more: the right to mineral

resources in the ground; preferred types of agricultural utilization; the management and

care of water supply and atmospheric pollution. Those are also the points of origin of the

strongest opposition to reforms. The problem is aggravated by WTO’s claim to deregulate

land property transactions everywhere.

3. A special problem is posed by mineral resources below the sea outside national territories,

which so far have been exempt from sovereignty. The extension of territorial limits to

200 miles was a first coup against the chances of making those resources available to all

mankind. Contention for territorial rights to islands and bases such as the Falklands, the Aegean,

Morocco etc., which at first sight appears politically senseless, often concerns suboceanic

mineral or oil deposits. Reversing this aberration would constitute a movement towards

a constructive type of globalization that would not imply real loss of sovereignty, only

abstention from an expansion of power spheres - an important step toward building confidence.

4. In agriculture, promotion of ecological (“bio”) cultivation methods is the foremost goal

- being the closest we can get to real sustainability. In our countries, the percentage of ecological

methods being used is steadily increasing, although it has yet to reach the 10 per cent

level. But in the end, ecological methods will survive only if the price structure allows. Reacting

to the change from traditional into area-proportional subsidies in the developed economies

(without regard to ecological aspects), the developing countries now ask for the total

abolishment of agricultural subsidies. This brings out a second problem in agriculture: that

indeed we must learn to sustain regional equilibrium everywhere. Agriculture is tied to immobile

land, and that puts regional limits to its markets. It would be absurd if globalization, in

striving for trade and technical equalization, were to destroy the agricultural part of the economy

in our countries. Ecology is not the only reform we need in our agricultural sector: we

also need a new type of economy.

5. With regard to materials, today’s watchwords are economy of use, abstention, reusability

and substitution. Water and air take a special place because everybody needs them

absolutely. In the long run, a globalized economy should also strive for equilibrium of goods

transfers since the place of consumption increasingly does not coincide with the place of

production. Low prices for raw materials and low transport costs lead to an unnecessary acceleration of consumption. Ecological taxation would be a remedy. In order to ‘shape’ globalization,

such taxes would have to be earmarked for global (supranational) efforts, to ensure

that they are not misappropriated for the internal financing of individual states.

6. Resource consumption is determined, to an important part, by the technology available

to the civilization that does the consuming. If we want to avoid that societies developing

in our wake wreak damage similar to what we have done, we must enable them to start at

our present technological level. Thus our goal in dealing with developing countries should not

be maximum competitive advantage, but ensuring that they use the most economical and

resource-preserving technologies available. Economists should think about how the necessary

economic regulations would have to be formulated.

7. Human resources are a special chapter. The task of creating working conditions that

promote development without offending human dignity is irrefutable. But it can be achieved

only by a concerted system of economic measures - for instance, when we want to avoid that

the introduction of a minimum wage leads to a loss of sales because of increased prices. The

slogan “Poverty is our biggest competition factor” is a forceful example.

8. The way of using capital, as a resource needs to be further developed. Obviously,

this is dependent on how the processes generating capital needs are perceived. We must

acquire special sensory organs for a correct perception of such needs, to avoid the danger of

a proliferation of spending, or of misappropriation by the ruling establishment.

9. The development of economic thought and policy relies predominantly on economic

stimuli. But recent insights show that ecological considerations are generally fading from

public consciousness, leaving control to purse strings. Yet one would expect people to realize

that without a thorough alteration of public consciousness, it will not be possible to solve

our resource problems. In fact, it appears questionable whether moral appeals to husbandry

and technological equilibrium considerations are at all suitable to stimulate global responsibility.

10. Finally, this whole problem area of resources must be extended by asking what final

use is made of the products. What really matters is not how much is being consumed by

someone, but to what end he or she is using it? What is mankind achieving while it is “consuming”

nature?

Donations as a Condition of Development.

Handling "Intellectual Property" (Theses)

1. With the development of a global world order, particularly of a global economic system,

the old frontiers are disappearing more and more. However, frontiers also give protection

behind which processes of life can develop in a protected space. These shelters were

increasingly destroyed or even abolished by the Bretton Woods appeal "Down with protection".

We ask again for the responsibility for the development of all regions, which are less- or

least developed at the time when the frontiers are abolished. The neo-liberalism believes that

markets are the only answer to this question. But markets alone are not a social development

model.

2. Life starts with an enormous donation. In our countries young people are in a socially

protected place for many years. Parents or the society take care of them, until they can enter

professional life after a period of education, training and studies. Donation in this context also

means that parents and society do not demand a pay-back.. We trust in the possibility that

there will be a return flow via social life in general. In contrast the development aid which the

northern countries pay is extremely low. The industrial nations have “tormented” themselves

with the question for decades, whether 0.5% foreign aid is reasonable for their national

economies or not. Moreover, a large part of the very low donations is only given in the form

of allowance for depreciation.

3. At the doorway of world economy one cannot expand straight away because the

growth then hits back to inside for lack of expansion capabilities. Additional growth in productivity

for example causes unemployment instead of more jobs. The forces of economy released

by the growth of productivity have to be use in a new way to avoid illness of the social

life. The development of the stock exchange shows the problem quite well since the stock

exchange seems to be able to grow ad libitum because it does not need to take reality into

consideration. The stock quotations are abstract and not filled with real life. The crisis of the

stock markets has created some reflectiveness and doubts. But it is a question if this mood

will survive the next stock market upswing.

4. The TRIPS agreement aims to protect intellectual property rights just at the moment

where, for the purpose of development, the largest scale know-how transfer would be necessary..

Behind this question lies the problem that research has been increasingly drawn into

the sphere of microeconomic business management and profit making. In this way questions

of know-how become pure questions of competition.. Competition, however, doesn't ask after

the development of the other human being but only looks after its own interests. For this reason

it would be necessary to separate research and licensing on the one hand and production

and distribution on the other hand. Starting from such a separation, a completely different

distribution of the utilization rights would arise. The effect would level the development

differences instead of heightening them.

5. The development of a global situation makes it necessary to enlarge the understanding

of economy by including the idea of donation. Without donation no development.

About the author

Udo Herrmannstorfer (Dornach); born in 1941 in Breslau; industrial manager, master of

business administration, studies in economics. Since 1971 a freelance management consultant

focusing on organization and training. Study of Anthroposophy and its social impulses.

Consultancy and support of initiatives which are searching for new forms, - based on the idea

of social three-folding. Working on the questions of societal- and economic policies from a

socioscientific point of view. International work includes lectures and seminars, works also as

an editor and author. Heads the institute for modern forms of economic- and social life in

Dornach, Switzerland.

The History of BIG

Excerpts from:

New Era Online - BIG: Time to separate fact from fiction - by Lucy Edwards, 28 May 2010

History of BIG

As far back as 1795, Thomas Paine in Agrarian Justice made a call for redistributive economic justice through the creation of a fund that can make transfers to dispossessed citizens. In the context of an agrarian-based society, he recognized the systemic basis of poverty, inequality and exclusion and argued that poverty “is a thing created by civilized life and does exist not in the natural state”.

In other words, people are poor not because they are born to be so, but because of the way economic resources are distributed in society. A civilized society should remedy this and not simply leave it to the individual poor person to sort out for him or herself.

Paine argued that the land and all that is on or under it is in fact common property owned by the human race. This he called the natural state. With cultivation, he argued, “private landed monopoly began” and “with it has produced the greatest evil”.

It has dispossessed more than half the inhabitants of every nation of their natural inheritance, without providing for them, as ought to have been done, an indemnification for that loss, and has thereby created a species of poverty and wretchedness that did not exist before.”

Paine thus called for the creation of a fund to compensate the dispossessed, as “it is a right and not a charity.” This fund would serve as compensation to the poor person “in part, for the loss of his or her natural inheritance”. His notion of compensation for dispossession underlies calls for income guarantees.

Internationally, income guarantees to fight poverty have found support from diverse groups and individuals ranging from civil rights leader Martin Luther King to the high priest of free market economics and the minimalist state, Milton Friedman.

King in his last book Where Do We Go From Here: Chaos or Community (1967) argued that the simplest and most effective solution to abolish poverty is the guaranteed income. Friedman believed it could reduce both poverty and the size of government.

In 1968, 1 200 American economists that included luminaries like James Tobin, Paul Samuelson and John Kenneth Galbraith signed a document that called for a system of income guarantees.

In Brazil, the idea of BIG was first put on the agenda by Senator Eduardo Suplicy and was approved by the Senate in 1991.

In South Africa, the call for the introduction of BIG came from the 2002 government-appointed Taylor Committee of Inquiry into a Comprehensive Social Security System for South Africa.

The Basic Income European Network (BIEN), now Basic Income Earth Network, was launched in 1986.

In Namibia, the idea of income guarantees to overcome poverty and inequality came out of the 2002 recommendations of the government-appointed Namibian Tax Consortium (NAMTAX) report on taxation.

In 2005, the churches, trade unions and civil society organizations formed a coalition, thereafter known as the BIG Coalition, to lobby government for the implementation of such a grant.

Criticisms of BIG as a policy measure:

One must distinguish between those who oppose BIG as a matter of principle and those who support the principle, but reject some of the recommended implementation modalities. The common criticisms are about universality, productivity, dependency and affordability.

Those against the universality principle (i.e. that it should be available to all citizens) argue that the wealthy should not benefit and that it should be targeted at the poor. This will involve some means testing to prove that those targeted are in fact poor.

Proponents argue that through a progressive taxation system those who have sufficient income, and pay taxes, will in the end pay more in taxes than the sum they get as a grant and this would help fund the costs of the grant. This would also result in a redistributive effect.

In other words, we take from the wealthy to give to the poor. Proponents also argue that through a more efficient tax collection system, additional funding could be found.

Another reason for universality forwarded by proponents is that it reduces administrative costs. Government does not have to employ armies of social workers and administrative officials to conduct means tests, since citizenship is the only requirement.

This reduces implementation costs and corruption. It also eliminates the stigma associated with means testing. At the same time, it ensures wider reach.

Global Basic Income

Why a Global Basic Income? From: www.globalincome.org

I. Compassion shouldn't stop at borders

More than a billion people in our world suffer from extreme poverty and more than 800 million are chronically undernourished. [See: Facts & figures]Neither the societies we live in nor the world community as a whole guarantee everyone the means to fulfil basic needs. We believe they should. First and foremost out of compassion, a compassion without which all morality is empty. Such basic feeling of human solidarity shouldn't stop at country borders.

We live in a rich world with a lot of natural resources and economic wealth. We pride ourselves about our scientific knowledge and our technological abilities. At the same time we are not able to guarantee every child enough to eat. Each day thousands of children die from malnutrition. There is no excuse for this. We must make it our priority to guarantee every man, woman and child enough means for basic necessities.

II. To regulate the global market

Secondly, we need a global system of social security to regulate the global market. We believe in a society based on freedom and this includes a free market economy, where people are free to produce, trade and consume goods and services. However, the freedom of some should not harm others. If the global market is governed only by its own principles of competition, profit and growth, it will be destructive to people and nature. We need an international framework of rules, arrangements and institutions that ensures that the outcomes of global competition serve the interests of all people and that protects nature and environment.

III. To raise global awareness

A third reason for advocating a GBI is that a strong increase in global awareness is necessary to solve the problems that humanity is facing. We will not be able to reach international agreement on effective policies to make this world a safe place and to protect nature and environment, as long as we are strongly divided by country borders and the gap between rich and poor. The introduction of a GBI would be an important declaration of human solidarity and then, once it is introduced, it would itself constantly advance the awareness that we are one humanity, living on one planet.

Why a basic income?

Other global rules or systems of social security than a basic income are possible. However, no other system guarantees basic economic security to all people in such an unconditional and straightforward way.

Apart from the specific reasons for a Global Basic Income that are mentioned above, the arguments that support pleas for a basic income on a national level also apply to a GBI; with the exception, of course, of those that have to do with the economic competitiveness of a country. A GBI will not have competitive advantages, or disadvantages, for one country, it will level the playing field of the global market for all countries.

The general arguments for a basic income, national or global, can be grouped into two interdependent categories:

a. The values that a basic income stands for: A basic income is a recognition of the dignity of every human being. It increases individual freedom. It supports the personal and voluntary activities of people and the values that those represent against the pressures of the market. A basic income also leads to a fairer sharing of resources and wealth, and contributes to the protection of nature and environment.

b. Economic and social advantages: A basic income leads to a better distribution of paid labour and income and a decrease of unemployment. It supports a transition from the present economic system and policy, which aims at maximum economic growth and full employment, to an economy that ensures all people a meaningful participation - through paid work or otherwise - within the limits of nature and environment. A basic income will also have other positive consequences, such as a reduction of work stress, sickness, disablement and the need for medical care.

In the following all arguments for a basic income are listed and explained in greater detail:

1. The right to life and dignity of all people

Every human being has an unconditional right to life. In conditional social security systems, there will always be people who don't meet the requirements. A basic income is unconditional and as such recognises the right to life of all people. It also supports the dignity of every human being by freeing people from degrading poverty and enslaving working conditions.

2. Freedom and democracy; work motivation

A basic income frees people from the formal obligation to work. It enables people to choose freely what work they want to do. The formal work obligation and the total dependency on work for income is an incursion on democratic values and human dignity. As a result, many people are now unhappy with the work they are doing: because of bad working conditions and underpayment, or because the work that they have to do is not corresponding with their capacities, aspirations, ideas and values. A basic income will give people the freedom to choose the work they really want to do. It will increase the motivation of people to work and the satisfaction and joy that people get from working.

The work motivation will be further increased because of the positive effects of a basic income on working conditions (see 3 and 4).

3. A free labour market; better working conditions; a fairer income distribution; decrease of sickness and disablement.

The formal obligation to work and the dependency on work for income gives employees a weak bargaining position vis-&-vis employers. This obstructs the free operation of the labour market. A basic income will give employees a more equal negotiating position. It will lead to better working conditions and fairer wages. This, and the improved work motivation (see 2), will lead to a decrease in sickness, disablement and the need for medical care.

4. Better distribution of paid labour and income; reduction of unemployment

In most systems of social security working allowances are stopped or reduced as soon as someone starts to do paid work again. This discourages people to start working again, especially people at the low end of the income scale. The financial benefits of working can be minimal or even negative, because working often involves extra costs (transport, child care). This is commonly referred to as the poverty trap.

In a basic income system every extra hour of paid work leads to an increase in income, because the basic income benefit will not be reduced. This makes it much more profitable and easy for people to work part-time. As opposed to the current situation, where there are many people who have to make long working days while others cannot find a job, a basic income leads to a better distribution of paid labour and a reduction of unemployment.

A basic income also makes it easier for people to start their own business, because they don't have to worry about their basic livelihood anymore. This will further improve the overall employment opportunities.

5. Revaluation of unpaid work

A lot of important work that people do is not paid, such as raising children, household work or voluntary work for social organisations and people in need. A basic income is a recognition of the fact that most people who don't have an official, paid job are nevertheless doing important work. Furthermore, a basic income safeguards people's personal lives as well as voluntary work against the pressures of the market. People now often cannot spend enough time with their family or they have to stop with valuable voluntary work, because they are forced by law and the need of an income to do paid work.

The present social security systems also stigmatise people who receive benefits. Only paid work is regarded as 'real' work and those who receive social security benefits are seen as profiting from those who work and pay taxes. A basic income will remove this stigmatisation and will enable people who cannot do or find paid work to participate and contribute to society in other meaningful and respected ways.

6. Adaptation of the economy: productivity, environmental limits and social harmony

Through mechanisation, automation and computerisation productivity has been enormously increased in the last century. This means that we can produce much more with less labour. Because of this the goal of full employment is increasingly difficult to achieve. In principle, it is possible to maintain full employment despite the constant increase in productivity by also increasing production and consumption all the time. However, the limited resources and carrying capacity of the earth prevent this option. Continued insistence on maximum economic growth and full employment will lead humanity down a self-destructive path.

Besides the negative impact on nature and environment, the present economic policy also leads to a growing division of society. There are those who profit from the scientific and technical progress and from global competition, while at the other end of the social scale there is a growing number of people who have to do low paid service jobs for the rich to make ends meet. This is degrading to many people and leads to despair, dissatisfaction and increasingly tense relationships between the different groups in society.

We have to accept that we can produce more with less labour. Instead of continuing to aim at full employment, we should count our blessings and begin to pick the fruits of the increased productivity through scientific and technical progress. Labour and income should partially be disconnected, because not only those who have paid work are entitled to the benefits of scientific progress, and the remaining labour should be better distributed. This will be achieved by introducing an unconditional basic income for everyone. A basic income seems to be the only reform proposal that we currently have, which solves the contradictions in our present economic system and policy, and which will enable a gradual transition to a sustainable and social economy.
A basic income will ensure everybody a livable income. It will enable people who cannot find a paid job to participate in society in other respected and meaningful ways. People will no longer be forced to participate in the increasingly unsound pursuit of more and more production and consumption. A basic income will give everybody the opportunity to achieve a better balance between work, income and consumption on the one hand and personal, family life, social activities and voluntary work on the other. A basic income will give people the power to refuse work that is harmful to people, animals, nature or our living environment.

Finally, pleas for the introduction of a basic income are often coupled with tax reform proposals, such as a shift of taxes on income and profit to taxes on non-renewable and scarce resources. Such a combination of basic income and ecotaxes provides an encompassing solution to solve social and ecological problems simultaneously. The next argument provides an even stronger foundation for such a coupling of social and ecological perspectives.

7. Fair sharing: equal birthright of all people to natural resources

In previous times, people could take care of themselves by using natural resources. In modern society nature has been privatised and natural resources are exploited by companies. Modern society has an obligation to replace the loss of free access to natural resources, and the loss of freedom resulting from it. What better way to compensate both than a basic income, financed by taxes on non-renewable and scarce natural resources?

The idea of a basic income has always been closely linked to the notion that the earth belongs to all people. The first advocate of a unconditional basic income was Joseph Charlier in 1848. He saw the equal right of all people to land as the principle argument for a basic income, which he named 'land dividend' (dividende territorial). In the article about an Earth Dividend on this website the shared history of basic income and the equal right of all people to natural resources is examined more closely.

8. Fair sharing of value created by society

Economic production and value are now seen as something which is created through individual efforts of entrepreneurs, managers and employees. However, they are also created through efforts of and on behalf of the local, state, national and world community that we live in.

Above (see 6) we already pointed to the important contribution of science and technology to economic production. It would not be fair if only the people who have paid jobs would profit from the enormous increase in productivity through science and technology. We are all children of mankind. If our ancestors would have a say in this matter, wouldn't they want all their offspring to profit from their efforts?

Government policy is also invaluable for economic production. Without a government policy that provides good conditions (legislation, infrastructure) a productive, efficient economy wouldn't be possible. Now only companies profit from this contribution of governments to economic production, but all people should.

Finally, as already has been indicated in argument 5, most people who don't have a paid job nevertheless do work that is important for society and for the economy: raising children, taking care of sick people and voluntary work.

9. Simplicity

A basic income is the most simple system of social security. Because it is unconditional no bureaucracy is needed to determine whether someone is entitled to receive a basic income or to how much someone is entitled. Only a reliable and updated register is needed to make sure that people don't receive more than one basic income, and a good banking system.

Especially for a global security system, simplicity and transparency are important.

Human nature

A GBI is undeniably a high ideal. From the perspective of the world as it is today most people will probably think it is unrealistic. However, we believe that it can become a reality. This belief is based first and foremost on our belief in people. People are egoistic; they want what is good for themselves. We don't want to deny that, but we believe that people also want what is good for others. We don't want other people to suffer; we all would prefer to live in a world where everybody can lead a worthy, fulfilling, happy live. That is the basic conviction that underlies our goals. The challenge, therefore, is to organise our societies and the world community in such ways, that the fulfilment of our own personal needs does not harm others. A basic income that guarantees every man, woman and child freedom from starvation and degrading poverty would be an important step to achieve this goal.

A few centuries ago almost no one would have believed that universal suffrage or social security systems like the ones we have today would be possible. Yet, here we are. There are no insurmountable obstacles to the introduction of a GBI. All depends on our ideas, will and the choices we as individuals and nations make.