How to make BI inflation-proof while also raising wages by Jeffery J.

Smith President, Forum on Geonomics Presented at the 2008 US BIG track ithin the !astern !conomic "ssociation annua# conference in Boston at the Park P#a$a %ote#, &arch '() Abstract *hen an ad+ocate ,romotes a Basic Income Grant -BIG or BI. to thou/htfu# ,eo,#e, they ine+itab#y ,oint out that increasin/ ,eo,#e0s ,urchasin/ ,o er cou#d be inf#ationary. "nd indeed, they cou#d be ri/ht, at #east for one sector 1 housin/. In the ,ast, hen /o+ernment /a+e money to the ,oor or students or ,ensioners, then their #and#ords raised hat they char/ed for tenements, dormitories, and trai#er ,arks. 2et there is a ay to ,ut #and#ords in com,etition for tenants. It0s a ay to a#so raise funds for ,ayin/ a BI or a 34 -3iti$ens 4i+idend.. 5hat is, here /o+ernment has ta6ed #and, it has discoura/ed #and s,ecu#ators and encoura/ed #ando ners to kee, their im,ro+ements affordab#e. 5he raised re+enue cou#d fund an income su,,#ement, some hat #ike hat. "s,en 37 does. "dditiona##y, here /o+ernment reco+ers rent, they kee, do n ,rice. Since the +a#ue of the #ocation is an immense ,art of the ,rice of rea# estate, hen #and costs #itt#e, #and ,#us bui#din/s cost much #ess, so that buyers borro much #ess. *ith #ess debt in society, there is #ess debt( backed ne notes. *ith the su,,#y of money in better ba#ance ith the out,ut of ne /oods and ser+ices, the means to inf#ate ,rices is #ackin/. Go+ernment cou#d s e## the BI or 34 to a 8uite comfortab#e si$e and sti## not orry about inf#ation as #on/ as it reco+ers rent. %istorica##y, here /o+ernment ta6ed #and, there a/es ere hi/her, since affordab#e #and ,ro+ided more o,,ortunity to ork for onese#f, besides more em,#oyment o,,ortunity. P#us, if a orker0s income ere au/mented by a share of rent, that too ou#d enab#e orkers to ne/otiate better a/es. "nd if the com,#ete /eonomic ta6 shift ere ushered in 1 ta6 ,o##ution, not income9 ta6 e6traction, not sa#es9 ta6 #ocation, not bui#din/s 1 there the a+era/e resident ou#d ,ay #and dues but nothin/ e#se. %ence the a+era/e citi$en ou#d en:oy #o er ta6es, #o er ,rices, hi/her a/es, ,#us a 3iti$ens 4i+idend. 7n ba#ance, the a+era/e citi$en 1 ,eo,#e ho must su,,ort the e6tra income ,ro,osa# in order for it to ,ass 1 ou#d come out ay ahead. Fina##y, if there are no e6cess ne notes to inf#ate ,rices, and as #on/ as techno#o/y kee,s ad+ancin/, then ,ro/ress ou#d sho u, as a #o er cost of #i+in/. ;ather than inf#ate ,rices, a BI or 34 ou#d #o er them, as #on/ as its fundin/ source ere society<s sur,#us, a## the money Jeffery J. SMITH, Forum on Geonomics, 4842 NE Cleveland St, Portland OR 97211 503/281-6690; jjs@geonomics.org; www.geonomics.org

How to make BI inflation-proof by SMITH, JJ

,eo,#e s,end on the #and, resources, and /o+ernment(/ranted ,ri+i#e/es that they use. Better than ,acka/in/ an income su,,#ement as a necessary sa#+e for inf#ation is to sho ho it can be ,art of a ho#istic ,o#icy to transform the economy into orkin/ ri/ht for e+eryone. Introduction 5hou/htfu# ,eo,#e, u,on hearin/ the ,ro,osa# of a Basic Income or 3iti$ens< 4i+idend -the BI is a set amount, enou/h to co+er basic needs, the 34 is a share of ,ub#ic re+enue sur,#us, hich cou#d be much hi/her than a BI., often raise the same 8uestions. = First, ho cou#d ,eo,#e e+er deser+e somethin/ for nothin/> By that im,#ied #o/ic, e shou#d of course ,ay for another manna from hea+en, the air e breathe 1 hich, /i+en current en+ironmenta# trends, may not be too far in the future9 in 3a#cutta, traffic co,s take breathin/ breaks to inha#e from bott#ed o6y/en.. = Second, thou/htfu# ,eo,#e ant to kno , here<s the money /oin/ to come from> &ost ,eo,#e, inc#udin/ most BIGists, are not a are of society<s sur,#us, of the f#o of income /enerated not by one<s #abor or ca,ita# but by the ad+anta/es inherent in a re/ion<s #and. = "nd third, the to,ic of this ,a,er, ou#dn<t s,endin/ money for nothin/ be inf#ationary> 5he sim,#e ans er is ?no@, since no ne money is created and issued o+er and beyond the amount of /oods and ser+ices ,roduced. Further, the income su,,#ement does not increase the amount of s,endin/ in society but mere#y redirects it from those ho no /et too much income to those ho no /et too #itt#e. Have some income supplements inflated prices? !+entho< an e6tra income for e+eryone ou#d not necessari#y inf#ate ,rices economy( ide, it cou#d inf#ate the ,rice of a certain sector, de,endin/ on the source of the funds for the uni+ersa# ,ayment. 5hat is, the basic necessity that often re8uires ,oor ,eo,#e to ,ony u, first 1 e+en before s,endin/ on food 1 is housin/. *hen /o+ernment /i+es ,eo,#e money, #and#ords /enera##y raise hat they char/e to absorb as much of that /ift as they can. " century a/o in !n/#and hen *inston 3hurchi## cam,ai/ned for economic :ustice, he ou#d te## the story of a Aondon brid/e that c#aimed so much of the mea/er income of the ,oor residents of Aondon ho #i+ed on one side of the 5hames and orked on the other. Fee#in/ sorry for them, reformers or/ani$ed to #e/is#ate a #o er to## for the brid/e. *ithin eeks, rents in the im,o+erished :urisdiction ent u, by the same amount. 5he ay thin/s ere is the ay thin/s sti## are. 5oday, hen /o+ernment /rants money to ,oor ,eo,#e or students or ,ensioners, their #and#ords raise hat they char/e for tenements or dormitories or trai#er ,arks. 5he e6tra money from the /o+ernment increased demand for housin/ by its reci,ients but not su,,#y of #ocations by o ners9 it enhanced com,etition amon/ ,eo,#e seekin/ housin/ but not amon/ ,eo,#e ,roducin/ housin/, raisin/ the cost of housin/. What BI source is anti-inflationary per sector? 11/21/13

How to make BI inflation-proof by SMITH, JJ

"s #on/ as #and#ords can kee, raisin/ hat they char/e, then income su,,#ements #ike Basic Income are s,innin/ their hee#s, are mere e6ercises in futi#ity. %o e+er, there is a ay to -a. ,ut #and#ords in com,etition for tenants. "nd it<s a ay that -b. ,rec#udes the ,ossibi#ity of an e6tra income causin/ inf#ation. P#us, it<s a ay that a#so -c. raises funds for ,ayin/ a BI or a 34 -3iti$ens 4i+idend.. Furthermore, this ay -d. con+eys a :ustification of hy recei+in/ money for nothin/ is fair. 5his four( ay so#ution is for society to reco+er the rent for #and and natura# resources and for /o+ernment(/ranted ,ri+i#e/es, such as uti#ity franchises, hich beha+e #ike #and in the economic arena. Society, throu/h its a/ent, /o+ernment, cou#d #e+y a ta6 on the +a#ue of #ocations or char/e o ners #and dues or a #and use fee but by some mechanism redirect a## the money e s,end on the nature e use from o ners and #enders to the ,ub#ic treasury -thence to e+eryone in /enera#.. P#us, /o+ernment cou#d char/e fu##(market +a#ue for the #itt#e ,ieces of ,a,er it /rants, inc#udin/ cor,orate charters, bank charters, uti#ity franchises, broadcast #icenses, medica# #icenses, etc. *here /o+ernment has done so, hich is not often, it has #o ered #and ,rice. *hen Pittsbur/h ta6ed urban #and more than bui#din/s, it had the most affordab#e housin/ -on home sites, of course. of any ma:or city in "merica. *hen 4enmark, 3a#ifornia, "ustra#ia, Be Cea#and, and 5ai an ta6ed rura# #and, they dro+e do n its ,rice and broke u, #ar/e estates into fami#y farms. *hate+er the effect on ,rice -yet to be studied e#se here., a fe /o+ernments e+en ,aid di+idends. = "s,en 37 ,ays housin/ assistance from site rent, reco+ered +ia a ta6 on sa#es of ,ro,erty - hose +a#ue in that ,ricey resort is most#y #and, that is, #ocation.. 7thers use other rents. = "#aska ,ays di+idends from -in+ested. oi# rent. 7ther :urisdictions share rent to he#, ith a basic and uni+ersa# costD = "#berta 3anada has used oi# rent to ,ay ener/y bi## rebates. = British 3o#umbia rebates a fi6ed di+idend from a carbon ta6 -atmos,heric rent.. Pub#ic reco+ery of rents orks to dam,en ,rices by re+ersin/ the incenti+es for the ho#ders of ,ri+i#e/e. 3onsider the c#assic e6am,#e of o nin/ #and. *hen o ners must ,ay o+er -some or a##. rent rather than kee, it, #ando ners ty,ica##y cannot afford to #et their ,ro,erties become em,ty, so they do not raise hat they char/e tenants, many of hom ou#d mo+e on to more affordab#e bui#din/s, but instead acce,t a sma##er ,rofit. &oreo+er, o ners ho had been underuti#i$in/ their #ocations tend to no #on/er s,ecu#ate but ,ut and kee, their sites at hi/hest and best use, in order to /enerate re+enue for ,ayin/ the #and dues or #and ta69 #ando ners are s,urred to erect ne bui#din/s. 5he increased su,,#y of structures for both residence and business -a. ,uts #and#ords into com,etition amon/ themse#+es for buyers and tenants. Just the o,,osite of inf#atin/ ,rices in the housin/ sector, this reba#ance actua##y #o ers ho much o ners can char/e tenants and buyers. 5he dro, in the ,rice for bui#din/s is ,ara##e#ed by a fa## in the cost of #and, a/ain he#,in/ the ,oor the most since they do not ty,ica##y dea# in #and e6ce,t occasiona##y to buy a sub(,rime 11/21/13

How to make BI inflation-proof by SMITH, JJ

,arce# ith a sma## o#d house on to,. Pub#ic reco+ery of rent orks to #o er #and ,rice because the #ess rent that the ,ub#ic #ea+es on the tab#e, the #ess ,rice an o ner can char/e. Buyers cannot afford to ,ay both a hi/h #and ,rice and a hi/h #and ta69 as #on/ as /o+ernment kee,s its #and dues hi/h, o ners must brin/ their #and ,rices do n. Put abstract#y, since #and ,rice is ca,ita#i$ed #and rent, hen /o+ernment socia#i$es rent into ,ub#ic re+enue, then o ners cannot ca,ita#i$e rent into ,rice9 the more rent that society reco+ers, the #ess they #ea+e for se##er to con+ert into ,rice. Whats the source of inflation in general? &embers of society ,ay a hu/e amount of their income for rea# estate. Indeed FI;! 1 Finance, Insurance, E ;ea# !state 1 is by far the sin/#e bi//est sector of the economy, constitutin/ e## o+er F0G of the G4P -at the US Go+ernment<s officia# ebsite of the B!".. *ithin FI;!, it is for #ocations, not for bui#din/s, that ,eo,#e s,end the most money. 3om,are t o homes of identica# si$e on identica#(si$ed #ots, the same distance from do nto n, a ma:or traffic artery, a schoo#, a ,ark, but one in Boston and the other in 3#e+e#and. 5he former ou#d ty,ica##y cost three times as much as the #atter -HF00k +s. HIJ0k, Bationa# "ssoc. of ;ea#tors.. 5he cost of construction and materia#s are rou/h#y the same. It<s the +a#ue of the #ocation that costs so much more in ,#aces #ike Boston, Be 2ork, San Francisco, and San 4ie/o -e+entho< officia# assessments do not ref#ect this fact.. 5o buy #and 1 actua##y, a #ocation 1 ,#us hate+er<s on it, most ,eo,#e don<t ,ay cash for more than a ten ,ercent do n ,ayment and borro the rest. In today<s de+e#o,ed or#d, banks meet the demand for credit in ,art by creatin/ ne money that ne+er e6isted before and issue that into circu#ation +ia #oans. Since banks #end so much for the ,urchase of rea# estate, hen #and costs more, banks #end more. Since #and is not ,roduced, much of the ne money for mort/a/es does not re,resent any ne #y ,roduced /oods and ser+ices. *hen #and se##ers and mort/a/e #enders s,end their e6cess ne notes on the same o#d amount of /oods and ser+ices, they bid u, their ,rice, hich is another ay to say ?inf#ation@. Present#y in the US, inf#ation is risin/, fo##o in/ years of risin/ debt, both ,ub#ic -for ar. and ,ri+ate -for #and, hich ar is a#so for.. For years, many of those e6cess do##ars ere drained out of the domestic economy by forei/ners buyin/ do##ars and stock,i#in/ them. But #ate#y, forei/ners increasin/#y buy euros, ,ounds -and other risin/ currencies., and /o#d ith their do##ars. So those do##ars must come home not to roost but to f#ood the domestic economy. "s those ne+er(backed do##ars circu#ate throu/hout the economy, consumers una+oidab#y use them to bid u, the ,rices of basic essentia#s, such as ener/y, food, and medica# care. "s #on/ as "mericans kee, deficit s,endin/ and forei/ners kee, do##ar dum,in/, e can e6,ect inf#ation to rise e+en faster. It may seem that a necessity #ike oi# causes inf#ation but its risin/ ,rice is inf#ation. 5he cause is e6cess currency, hich a necessity #ike #and has the ,o er to absorb. If there ere no e6cess of ne money, then the ,rice of oi# or #and cou#d rise, but it<d ha+e to be offset by ,eo,#e s,endin/ #ess on somethin/ e#se, hose ,rice ou#d fa##. 5he ,rice of ne c#othes has fa##en -in constant do##ars., #ar/e#y due to automation and /#oba#i$ation, but #o as it is, it sti## dri+es some sho,,ers 11/21/13

How to make BI inflation-proof by SMITH, JJ to secondhand stores hose ,o,u#arity has mushroomed -?Secondhand Stores &o+in/ Into the ;etai# &ainstream@ by Aes#ie Kaufman, 5he Be 2ork 5imes, ",ri# 2L, 2000.. 5heir for/oin/ the ,urchase of ne c#othes is another factor for hy the ,rice of ne c#othes has fa##en. What BI source is anti-inflationary in general? !+en if /o+ernment does not reduce its o n borro in/ and deficit s,endin/, it can sti## reduce tota# debt in the economy 1 the ,ri+ate borro in/ of homebuyers and deficit s,endin/ of homeo ners. Go+ernment can ta6 #and, thereby reducin/ #and ,rice9 thus buyers need borro #ess and o ners can<t borro more -to take ?e8uity@, the #and +a#ue, out of their ,ro,erty.. Aess borro in/ of course means #ess #endin/, fe er ne notes unmatched by ne ,roduction, and thus #ess inf#ation. Besides #o erin/ the ,rice of housin/, #ess e6,ensi+e #and a#so #o ers the tota# ,rice or #ease of sho,s, offices, and factories. 5hus, e6,andin/ businesses #ookin/ to ,urchase or #ease commercia# sites need borro #ess, too. *hi#e commercia# bankin/ does not /enerate as much debt as does #endin/ to homebuyers or /o+ernment, it is sti## a si$eab#e amount and shrinkin/ it ou#d s#o inf#ation. *here ,eo,#e need s,end #ess on #and, they ha+e more here itha# to s,end on the thin/s that humans do ,roduce, enab#in/ ,roducers to ,ros,er. *here ,eo,#e ,ros,er, they both need /o+ernment ser+ices #ess and can afford to ,ay more. %ence their /o+ernment cou#d increase its income and decrease its out/o, and be in a ,osition here it need not borro so much. *ere its ,o#iticians to take that en#i/htened ,ath, it ou#d reduce the amount of un(backed, e6cess notes.

Shrinkin/ the borro in/ of /o+ernment, business, and residents, the amount of debt cou#d then e8ua# the amount of actua#, ,hysica# economic e6,ansion. Be money ou#d be in ba#ance ith ne out,ut. Inf#ation ou#d dro, to $ero9 it<d disa,,ear. "n economy of $ero inf#ation de,ends u,on fu## reco+ery of rents9 f#ush ith a## those rents, then /o+ernment cou#d ,ay a cash income su,,#ement to the ,oor or e+eryone, an amount #ar/e or sma##, and -b. sti## not tri//er inf#ation. Aand#ords and #and se##ers ou#d sti## ha+e to com,ete for business. Bone cou#d inf#ate the ,rice of #and, nor the amount of borro in/9 kee,in/ do n debt ,rec#udes economy( ide inf#ation. What BI source raises wages and lowers ta es? Pub#ic reco+ery of rent 1 hether for fundin/ an income su,,#ement or socia# ser+ices or both 1 not on#y cuts consumer costs -the inf#ated ,rice of /oods and ser+ices. but a#so raises orkers< a/es. %istorica##y, here /o+ernment ta6ed #and or other ise reco+ered rent, it discoura/ed s,ecu#ation so that o ners did not hoard #and or kee, it id#e a aitin/ a future #ift in rent or ,rice. 5hat #eft #ots of #and a+ai#ab#e to others at ,rices they cou#d afford. 5hereby ne comers or youn/ adu#ts cou#d turn to farmin/ if one did not #ike the a/es offered for orkin/ in factories. Bot e+eryone had to refuse city ork but here a critica# mass did 1 e./., in the "merican co#onies +s. in !uro,e, then #ater on the !astern Seaboard +s. the continenta# interior 1 a/es ere hi/her.

11/21/13

How to make BI inflation-proof by SMITH, JJ

!+en today, affordab#e #and #ets orkers ne/otiate hea#thier a/es. Peo,#e refusin/ the offers of bosses need not turn to farmin/. 5hey cou#d use an a+ai#ab#e #ocation to #aunch hate+er enter,rise. "s #on/ as they turn a ,rofit and stay in business, they need not com,ete for :obs and instead kee, em,#oyers com,etin/ for em,#oyees, hich kee,s a/es hi/h. In the I)20s hen Be 2ork ta6ed #and, construction orkers en:oyed hi/her a/es. In the #ate I)M0s hen 4enmark ta6ed #and, orkers /ot the bi//est :um, in a/es in 4anish history. P#us, if entre,reneurs and orkers ere to recei+e a BI or 34, that too ou#d act as free #and and further em,o er ,eo,#e to ne/otiate hi/her a/es. "re a/e increases inf#ationary -not of a basic necessity but of /oods and ser+ices in /enera#.> *hether biased or back ard, the mainstream media say hi/her a/es do cause inf#ation. *hether biased or back ard, the mainstream media do not b#ame easier credit besto ed u,on in+estors for inf#atin/ the ,rices of stocks and rea# estate. 2et, ironica##y, neither more income for #abor or for ca,ita# is the cu#,rit9 it<s the o+er(issuance of ne notes +ia #oans, main#y for rea# estate, but a#so for cor,orate e#fare. If /o+ernment ere to reco+er the rents for ,ri+i#e/e, then ca,ita#, e+en ith fatter earned ,rofits, cou#dn<t bid u, the ,rice of stocks. If /o+ernment ere to reco+er the rents for #and, then #abor, e+en ith hi/her ne a/es, cou#dn<t bid u, the ,rice of housin/. "bsent e6cessi+e ne notes, hi/her a/es or ,rofits cannot inf#ate ,rices in /enera#. "s a society, ,eo,#e s,end immense sums for ,ri+i#e/e, for #and tit#es, resource #eases, !& s,ectrum #icenses, emission ,ermits, con/estion char/es, cor,orate charters and other #iabi#ity #imits, ,atents and co,yri/hts, uti#ity franchises, medica# #icenses and other ,rofessiona# /ate ays, bankin/ charters, etc. 5he annua# market +a#ues of those ,ieces of ,a,er constitute a ,rodi/ious ,ortion of any economy, at #east a third of G4P, ,erha,s a ha#f or e+en more. "ny /o+ernment that reco+ers this immense f#o of rent ou#d be a##o in/ in ea#th. Such a /eonomic /o+ernment ou#d -c. ha+e so much re+enue it cou#d not on#y fund hate+er socia# ser+ices a democratic ma:ority desires, and use the sur,#us to share amon/ the members of society, /o+ernment cou#d a#so abo#ish other ta6es. 4oin/ so ou#d not cost /o+ernment any re+enue. *here ta6es on income, sa#es, and bui#din/s are #o or non(e6istent, ,eo,#e ant to #i+e and ork. So there they bid u, the +a#ue of #and. By reco+erin/ that rent, /o+ernment raises as much re+enue as before, if not more. Bot ha+in/ to ,ay counter,roducti+e ta6es, ,eo,#e do more business, hich ,um,s u, site +a#ues, hich the /eonomic /o+ernment ou#d reco+er. !uns vs" butter or #pending vs" dividends? !+en ithout cuttin/ ,ub#ic bud/ets, /o+ernments cou#d o,erate ithout borro in/, since reco+erab#e rent is so immense, and sti## ,ay a modicum of BI or 34. But if /o+ernment ere to curb its discretionary s,endin/, then the sur,#us of ,ub#ic re+enue ou#d be stu,endous, makin/ ,ossib#e a sta//erin/ income su,,#ement. 3hoosin/ bet een s,endin/ by #e/is#atures +s. disbursin/ to citi$ens is somethin/ the ,o,u#ace cou#d ,artici,ate in by ,uttin/ the bud/et on the ba##ot, as do many to ns in southern Bra$i#. 3iti$ens cou#d do ithout socia# ,ro/rams if they recei+ed an income su,,#ement to make u, the difference. ;ather than ha+e citi$ens ,ay ta6es to ,o#iticians to ,ay bud/ets to bureaucrats to ,ay sa#aries to ,ro+iders to ser+e citi$ens, /o+ernments ou#d ,ay di+idends to citi$ens direct#y, 11/21/13

How to make BI inflation-proof by SMITH, JJ

drastica##y reducin/ the o+erhead of bureaucracy. *hat they recei+e no as ,ub#ic schoo#in/ and socia#i$ed medicine, citi$ens ou#d recei+e as a strai/ht cash ,ayment, then reci,ients ou#d se#ect their o n ,ro+iders. *hi#e /o+ernment ou#d sa+e, citi$ens ou#d not #ose9 indeed, they ou#d #ike#y /ain. ;eco+erab#e rent is immense and a share of rent 1 minus the cost of bureaucratic o+erhead 1 ou#d tend to be /reater than the +a#ue of a subsidi$ed ser+ice. P#us the citi$en recei+in/ it cou#d s,end the money any ay they ant, findin/ su,,#iers of education and hea#th care that more ,recise#y meet their indi+idua# needs, and ho cou#d sa+e them money. If citi$ens ere to /et a share of reco+ered rent, they cou#d do ith #ess /o+ernment, es,ecia##y the state<s ori/ina# raison d<etre, the mi#itary, hich consumes so much of so many ,ub#ic bud/ets. 5he mi#itary recruits ci+i#ians ith offers of money, money for co##e/e or housin/, or free medica# attention. If ,eo,#e /ot their monetary needs met ithout en#istin/, then the mi#itary ou#d become sma##er, #ess threatenin/, and by necessity the /o+ernment ou#d become #ess be##i/erent. Bote ho much sma##er the mi#itaries are and #ess ad+enturous the /o+ernments are of *estern !uro,e, hich are socia# democracies s,endin/ most of their si$eab#e bud/ets on e#fare. By ,ayin/ an income su,,#ement, /o+ernment cou#d s,end #ess on /uns and butter both, s#o in/ inf#ation. "#on/ ith nationa# /o+ernments, constituent /o+ernments a#so aste ,ub#ic re+enue. Go+ernments miss,end hu/e sums 1 as a nation to a/e ar 8ua ar, as a state to a/e ar on dru/s inc#udin/ bui#din/ more ,risons than schoo#s or hos,ita#s, and as a #oca#ity to ,ick u, the tab for s,ra # by e6,andin/ infrastructure into the suburbs. If /o+ernments 8uit the aste, they cou#d shrink their bureaucracies and ba#ance their bud/ets. Go+ernments ou#d no #on/er ha+e a rationa#e for borro in/ to fund their o,erations. 5hey cou#d sti## se## bonds to fund desired e6,ansion 1 ne infrastructure such as bike ,aths and ater recyc#in/ ,#ants. But those rea# ,hysica# /oods ou#d ,ay for themse#+es and mi/ht merit an increase in the money su,,#y and not tri//er inf#ation. By reducin/ the debt of /o+ernment, business, and househo#ds, so that the remainin/ debt is for actua##y addin/ to the out,ut of rea# /oods and ser+ices, then debt ou#d not be inf#ationary. Instead, inf#ation ou#d ha#t. !+en better, it ou#d #ike#y re+erse. Better yet$ is a %& anti-inflationary? *hen ca#cu#ated in constant do##ars, the ,rices of /oods that are su,,#ied ithout ha+in/ to ,ass throu/h bott#enecks are actua##y fa##in/. In arenas here there is techno#o/ica# ,ro/ress and some com,etition 1 manufacture of c#othes, cars, and com,uters 1 one finds ,rices dro,,in/ -in constant do##ars.. In arenas here techno#o/y is hoarded by ,atent ,rotection and su,,#iers ha+e formed carte#s to #obby for #e/a# e6c#usion of com,etitors 1 doctorin/, teachin/, #a yerin/, :ust #ike the /ui#ds of o#d 1 one finds ,rices skyrocketin/ throu/h the stratos,here. *ere /o+ernment to ,ermit ca,ab#e ,eo,#e to com,ete ith credentia#ed ,eo,#e, and to char/e fu## market +a#ue for credentia#s #ike a medica# #icense, then doctors and the rest cou#d not char/e near#y so much. *ere /o+ernment to char/e fu## market +a#ue for ,atents and co,yri/hts, then 11/21/13

How to make BI inflation-proof by SMITH, JJ cor,orations ho /et a #e/ u, and try to corra# a## the in+enti+e ta#ent and ne ideas cou#d not afford to be do/s(in(the(man/er. Be ideas and de+ices ou#d s,read to e+en #ess endo ed consumers, dri+in/ do n the cost of #i+in/ faster.

Ima/ine #i+in/ in a /eonomy here society<s a/ent, /o+ernment, reco+ers then disburses a## rents for #and, nature, and ,ri+i#e/e. 5he a+era/e ,erson ou#d not suffer the conse8uences of un anted unem,#oyment, so a/es ou#d rise across the board. 5he a+era/e ,erson ou#d o n on#y a homesite of a+era/e +a#ue, but no commercia# or industria# or minera# or a/ricu#tura# or s,ectra# or en+ironmenta# sites, so they<d ,ay #and dues of an amount far #ess than the ta6es they no ,ay. 5he a+era/e ,erson ou#d /et the same hefty rent share as other citi$ens. "nd mean hi#e, thanks to acce#eratin/ techno(,ro/ress and dece#eratin/ debt, the cost of #i+in/ ou#d ni/h dai#y be dro,,in/. Soon, one<s rent share ou#d be bi//er than one<s a/esN Ai+in/ off the automatic and irre,ressib#e bounty of nature and society, not off arduous #abor or c#e+er ca,ita#, ima/ine ho that ou#d chan/e the or#d+ie and +a#ues of the a+era/e ,erson. #haring is not inflating but transforming "mericans #i+e by the business mode#. *e a## kno the s#o/ans, ?buy #o , se## hi/h@, and ?run /o+ernment #ike a business@. ;ather than condemn such mottos, the #eft shou#d em,#oy them. %a+e /o+ernment char/e fu## +a#ue for its ,ermits 1 e+erythin/ from deeds to charters. "mericans cou#d not fau#t /o+ernment but ou#d sa#ute it for char/in/, as ou#d any rationa# businessman, as much as the market ou#d bear9 ? hat<s /ood for the /oose is /ood for the /ander.@ Since e citi$ens are the stakeho#ders, and since the market +a#ue of ,ub#ic ,ri+i#e/e be#on/s to a## of us, then most of us -d. cou#d c#ear#y see that e<re entit#ed to an e8uitab#e share of sur,#us re+enue. P#aces here residents do recei+e a di+idend, such as in "#aska, ,eo,#e do more than admire rent reco+ery 1 they ce#ebrate it. If e citi$ens ere made beneficiaries of such sound business ,ractice, the thou/htfu# citi$en ou#d easi#y see that the ,ub#ic reco+ery of rent is a necessary 1 and fair 1 ,re#ude to the disbursement of shares into their o n ,ockets. ;ea#i$in/ a +enerab#e idea#, this /eonomic ,ractice ou#d a#i/n se#f(interest ith socia# interest. 5he se#f is ser+ed by not ,ayin/ ta6es on efforts hi#e /ettin/ a di+idend. Society is ser+ed by reco+erin/ rents hi#e #osin/ subsidies for s,ecia# interests. 5he secondary effects ou#d be transformationa#. ;eco+erin/ a## rents ou#d dri+e efficient use of resources and c#a back the economic and ,o#itica# c#out of the e#ite. Fattenin/ the di+idend ou#d s,read ,ros,erity and shrink the o,,ressi+e ,o er of the state. 5his bi/ ,icture, #on/ term +ision fu#fi##s a ,romise /reater than a ay to ,ay e+eryone an e6tra income ithout /eneratin/ inf#ation. 2et the /rander or#d fo##o s from the same reform 1 sharin/ rents in #ieu of ta6in/ efforts 1 as does the sin/#e benefit of a+oidin/ inf#ation. *hi#e the thou/htfu# ,erson ou#d a,,reciate kno in/ that a Basic Income or 3iti$ens 4i+idend ou#d not mere#y raise ,rices by a #ike amount, thou/htfu# ,eo,#e mi/ht be ins,ired to me#d into a mo+ement u,on rea#i$in/ that e need not ser+e the economy, e can strai/ht a ay make the economy ser+e us. 11/21/13