Earth Dividend and Global Basic Income: A Promising Partnership

by René Heeskens
director GBI Foundation

Introduction

The analysis in this discussion paper is a follow-up of a debate at the annual meeting (2005) of the GBI Foundation about an earth dividend model for the introduction of a Global Basic Income (GBI). The advantages and disadvantages of the earth dividend model were discussed in comparison with the prevailing basic income concept, which is a universal benefit paid to all by a nation-state and funded through taxes or premiums.

The earth dividend model that was discussed is very different. In this model the basic income is not provided as a social security benefit and it is not funded through taxes or premiums. Instead, all people will receive shares of global commons as equal shareholders of the earth. The value of these shares is determined by the market.

In the following I will first point to the fact, that the two ideas of common ownership of the earth and basic income share a long history. Then the outlines of the earth dividend model will be sketched. After a comparison with the prevailing basic income approach, the paper will end with some conclusions for a GBI strategy.

Common ownership of the earth and basic income[1]

The earth dividend model starts from the notion that the earth belongs to everyone. Every human being is entitled to an equal share of the fruits of nature. Why should any person receive more of what nature gives us freely? We are all 'shareholders' of the earth and entitled to a yearly dividend.

The idea of the earth as a commons as justification for a basic income has strong historical roots. The first who proposed a genuine basic income was Joseph Charlier in 1848. He saw the equal right to ownership of land as the foundation of the right to an unconditional minimum income. He named this guaranteed income "dividende territorial".

Even long before that, the first thinkers who worked out proposals for (1) a minimum income provided by the local or national government and (2) for a basic endowment - the two concepts that can be seen as the predecessors of basic income - saw common ownership of land and nature in general as the most important justification for a basic income, together with the need to improve the living conditions of the poor.

Juan Luis Vives was the first who developed a comprehensive argument for a minimum income and who worked out a detailed scheme, as early as 1526 in his writing "De Subventione Pauperum" (On the Assistance to the Poor)[2]. He writes about nature and its resources:

"All these things God created, He put them in our large home, the world, without surrounding them with walls and gates, so that they would be common to all His children."

He who has appropriated some of the gifts of nature, without helping those in need, Vives continues to write ..

".. is only a thief condemned by natural law, because he occupies and keeps what nature has not created exclusively for himself".

Thomas Paine was the first to develop the second idea that underlies the basic income concept, namely the notion of a basic endowment which is not restricted to the poor or the insured. This idea was briefly mentioned before by his friend Antoine Caritat, Marquis de Condorcet. Paine writes in 1796[3]:

"It is a position not to be controverted, that the earth, in its natural, uncultivated state was, and ever would have continued to be, the common property of the human race."

When the land is cultivated ..

".. it is the value of the improvement, only, and not the earth itself, that is in individual property. Every proprietor, therefore, of cultivated lands, owes to the community a ground-rent (...) for the land which he holds .."

These references show, that the idea of common property of the earth and its natural resources has a long history and is closely related to the development of the concept of a basic income.[4]

Outlines of the earth dividend model

The earth dividend model differs from the before mentioned historical proposals for land rents and universal benefits or minimum income. The basic income is not financed by land rents or other taxes on natural resources. Instead, people will receive certificates which represent their share of natural resources. The next step then is that companies who need natural resources for production, will have to buy these certificates. The value of natural resources will thus be determined by supply and demand.

How much of a particular natural resource is available will have to be determined each year by scientists and politicians. Such determination of maximum levels for the use of resources already happens, for example for fish catches or greenhouse gas emissions[5]. (Of course, the existing procedures would have to be improved.)
For some resources, like fish catches and CO2 emissions, maximum levels can or should be determined at the global level, and then every world citizen would receive certificates for these resources. For other resources this would be more difficult. Countries that have a lot of natural resources, like fossil fuels or ore minerals, and whose economy may be very dependent on the revenues of these resources, will not be eager to share the benefits with the rest of the world. Which natural resources will be included in the global dividend system, will have to be decided through international negotiations.[6]
Countries will have the option to put a similar system into practice for natural resources at the national level. Then, for example, an inhabitant of the Netherlands would receive certificates that represent 1/6.5 billionth part of world resources, and 1/16.3 millionth part of Dutch resources.

Companies now already have to buy the right to exploit or use a natural resources in many countries, for example for land use, fossil fuels or fish catches. Some countries also have CO2 taxes. On an international level there is the trade in CO2 emission permits, which has started this year in the European Union. In 2008 other countries that participate in the Kyoto Protocol will follow. What will be different in the earth dividend model is, that companies will have to buy the right to exploit natural resources from people individually in stead of governments.
Of course, companies can't go door to door to buy the shares. People will entrust their certificates to intermediary organisations - public or private - and then these would sell them to companies and manage the revenues. If these intermediary organisations create a buffer fund, they will be able to pay out a monthly payment to their participants.

There is at least one example of a fund created by a state to manage revenues from natural resources and to distribute a dividend, the Alaska Permanent Fund. In 1982 all permanent residents of Alaska received their first yearly dividend. The amount of the dividend has varied in the past 23 years between $331 and $1964.[7]
The idea to give all people in the world shares of the earth's natural resources may seem a far fetched ideal, but the previous shows that all aspects of such an earth dividend system have already been put into practice.

The earth dividend model is consistent with a free market philosophy. The value of natural resources is determined by supply and demand. Moreover, the earth dividend corrects one of the stumble blocks for free competition of the present market economy. A free market economy is basically characterised by free competition between individuals with equal opportunities. In reality, the opportunities of people are not equal. Our place of birth determines to a large extend our chances in life.
Many measures are possible to equal the chances, for example providing (free) education to all children. The earth dividend system also gives people more equal opportunities. The unequal access to natural resources is at present one of the main reasons for the inequality of opportunities. People who own land and other natural resources have more opportunities than those who don't. Moreover, the people and companies that own natural resources, have power over those who don't. This dependence of the non-owners makes them vulnerable to underpayment and ill-treatment.

The earth dividend model compensates for the inequality and loss of independence and freedom, that results from unequal ownership of natural resources, without impeding free enterprise and trade. By making all people shareholders of the earth, the earth dividend will guarantee people the basic means for livelihood, restore their independence and diminish the imbalance in power between owners and non-owners.

As said in the beginning, the earth dividend model is very different from the basic income concept that people usually have in mind. Can we still call it a basic income? Yes, we can. It has all the characteristics of the prevailing definitions of basic income: it is a universal, individual benefit, and it is unconditional, without any means test or work requirement. The only 'but' concerns the level of the earth dividend. It does not have a guaranteed minimum level that is determined by a national or global political authority. However, if enough natural resources are included in the earth dividend and if the intermediary organisations who are entrusted with the certificates do a good job, then it is more than likely that everyone will receive an earth dividend that will be enough for basis necessities. The intermediary organisations can be subjected to globally agreed upon rules to ensure that they don't gamble away the shares and don't charge too much for their services. If private intermediary organisations don't do their job well, governments can start their own national organisations to manage the certificates and revenues for people.

Comparison

After the previous outline of the earth dividend system, I will now compare it with the 'traditional' basic income concept. A basic income is often seen by people as something which has to be earned and paid for by those who work for those who don't. It's being criticised as a bonus on idleness and laziness. The earth dividend model is much less vulnerable for this criticism. It clearly presents a basic income as a fundamental right, based on the notion of the earth as a commons. In the earth dividend system, a (global) basic income is not financed through taxes, paid by companies or those who work, but by the certificates that everybody gets.

Of course, the criticism that a basic income is a bonus on idleness is based on misconceptions and prejudices, and basic income supporters have always advocated a basic income as a fundamental right. Principles and rights other than common ownership of the earth that have been invoked to justify basic income are: freedom and equality, the right to life, the right of all people to be free from hunger and inhumane living conditions, and the right to share in the benefits of the common knowledge and efforts of mankind.
There is no fundamental difference between the earth dividend concept and other justifications for a basic income. All the justifications have a common origin. We can point to this origin by asking the question: why do people have a right to life or the right to be free or the right to an equal share of the earth's resources? What do we mean when we say that people have a 'right' to something? Are these rights engraved in stone somewhere? Are these rights natural laws? We have put many of these rights in constitutions and treaties, but why?
The common foundation upon which all these rights rest is: human solidarity, compassion, love of one's neighbour. All rights that people give each other are based upon the basic feeling of understanding, love and compassion that people can have for one another. It is because of this basic human understanding, that we wish for a humane, happy life for all people and that we grant them fundamental rights. Therefore we can conclude that although pleas for a basic income are based on many different rights, in the end they all spring from the same source.

Nevertheless, the earth dividend has the advantage that it portrays better that a basic income is a right than other approaches and it is less vulnerable to the common critique that those who work have to pay for those who don't. No taxes or premiums have to be paid by employees or employers. The earth dividend only gives back to people, or compensates them, for what was lost when individual people and groups started to appropriate nature and refuse access to others. Our modern societies, that have accepted and reinforced this practice of appropriation and exclusion through law, have an obligation to restore individual freedom and autonomy, to prevent exploitation of the non-owners by the owners and to ensure people the means for basic necessities.

Another important difference between earth dividend and other approaches is, that an earth dividend system is not just a way to finance a basic income, but it is also a system which prevents overuse of natural resources. The major social and environmental problems of our time are solved simultaneously by the introduction of an earth dividend system.[8] Poverty and hunger are eradicated, overexploitation of resources is stopped and pollution is restricted to acceptable levels. The earth dividend concept has the potential of bringing together a broad coalition of organisations that pursue these goals.

Before I draw final conclusions, I want to mention a few possible minuses of the earth dividend concept. The first is that it will probably require long negotiations before countries can agree on the resources that are included in the earth dividend. Secondly, the system involves much more bureaucracy than other methods of financing a Global Basic Income. However, this minus is neutralised by the fact, that the world needs a system to determine the maximum yearly capacities of natural resources anyhow to stop overexploitation and pollution. A third possible criticism is, that there is a tension between the idea of a basic income as an expression of basic human understanding and solidarity on the one hand, and the varying level of the earth dividend which depends on market mechanisms on the other. This tension doesn't have to be a fundamental problem if the earth dividend system is well organised, with a system of rules and controls for the intermediary organisations and with buffer funds to compensate for varying revenues.

If the value of all global common resources is distributed as an earth dividend, then another minus would be that the use of these common resources could not at the same be taxed to raise revenues for the United Nations and other important institutions, initiatives and actions of the international community, such as international peace-keeping programmes. This problem can be overcome by not including all common resources in the earth dividend or by taxing the earth dividend itself with, for example, a tax of ten percent.

In this paper, we have only discussed the common resources of nature. However, there are also other (global) common resources, that can be used to raise revenues for global expenditures, one of which is the value which is created by issuing new money. At the moment the US dollar is used as the main global currency. This results in a benefit to the US of at least 400 billion a year.[9] By comparison: the total expenditures of the UN system are only about 12 billion a year.[10] If a global currency is introduced, the value which is created by issuing new money can be used for the UN and other international institutes and programmes.

Conclusion

The earth dividend system offers a promising perspective for the introduction of a GBI. Compared to other basic income approaches, it has two major advantages. First, it is less vulnerable to the criticism that those who work would have to pay for those who don't. Secondly, it not only provides every citizen of the world with a GBI, but it is also a system that can put an end to overexploitation of natural resources and pollution. It tackles the major social and environmental problems of our time simultaneously.

As a new concept and perspective for the future earth dividend can open up the basic income debate and inspire a close co-operation between organisations that work for social justice and the eradication of poverty, and nature and environmental organisations.

I want to end this article by thanking Paul Metz[11], from whom I have adopted the idea of an earth dividend, and Piet Terhal and Martin Drenthen for their discussion contributions.

(September 2005)

Postscriptum (November 2009), comparable ideas:

Cap and Dividend For an explanation, visit: www.capanddividend.org

Tradable Energy Quotas (TEQ's) For more information: www.teqs.net

NOTES

[1] All facts and quotations in this paragraph are taken from "A Short History of Basic Income" on the website of BIEN, the Basic Income Earth Network. [back to text]

[2] Juan Luis Vives De Subventione Pauperum, Sive de humanis necessitatibus, 1526; Dutch translation reprinted by Valero & Fils, Brussels, 1943, 114p.; French translation by Ricardo Aznar Casanova: De l'Assistance aux pauvres, Brussels: Valero et Fils, 1943, 290p; English translation of part II only by Alice Tobriner: On the Assistance to the Poor. Toronto & London: University of Toronto Press, 1998, 62p. [back to text]

[3] Thomas Paine 1796, p. 611-613. [back to text]

[4] See also: Robert F. Clark - The Earth as a Common Trust: Implications for a Minimum Income Guarantee. This article can be found on the website of USBIG: http://www.usbig.net. For more information on the history of basic income look at BIEN's website. [back to text]

[5] Of course, greenhouse gas emissions as such are not a 'resource'. It would be more precise to say, that the resource that we are talking about is the environment's capacity to absorb emissions without negative effects on living conditions and natural diversity. [back to text]

[6] In 1995 the Commission on Global Governance proposed in its report "Our Global Neighourhood" to tax the following uses of global commons:

• ocean fishing, sea-bed mining, sea lanes, flight lanes, outer space, and the electro-magnetic spectrum; and
• activities that pollute and damage the global environment, or cause hazards beyond national boundaries, such as emissions of CO2 and CFCs, oil spills, and dumping wastes at sea.

Taken from: James Robertson - The Role of Money and Finance, 2003, p. 13 [back to text]

[7] For further information: http://www.apfc.org [back to text]

[8] See also: Gianluca Busilacchi - Two Problems, One Solution: The Earth Basic Income, Department of Social Science - Università Politecnica delle Marche, 2005. This paper is available at: http://www.usbig.net.

James Robertson also advocates sharing of the value of common resources for a "global citizen's income". (See above, footnote 6. Or go to the References page on this website to read his comment.) [back to text]

[9] James Robertson, 2003, p.13 [back to text]

[10] See: http://www.un.org.pk/unic/faq.htm [back to text]

[11] Paul Metz is a member of the Supervisory board of the GBI Foundation and also, among other things, a board member of the European Business Council for Sustainable Energy - e5, board member of the Dutch Foundation for Land Rights "Grondvest", Dutch representative of the Global Marshall Plan and member of the advisory board of the German "Förderverein für Ökosteuer Reform" (Society for the Advancement of Ecological Tax Reform). [back to text]

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