Arguments for a UBI – The Philosopher

This post is part of the sequence Arguments for a Universal Basic Income.

The Land Dividend

In the depths of pre-history, before all of the land in the world was parcelled up and owned by individuals and organisations, the human population was quite low, and it was possible for a stone-age human to hunt, forage and maybe even subsistence farm on some land to eke out a meagre existence.  Life was hard, the margin of error was thin, a bad winter or a poor harvest could be fatal; yet in this anarchist’s dream world, unless another marauding tribe came to drive you away, you could live on and extract as much wealth from this land as you were able or inclined to.

In modern times, if you are unlucky enough to be born into a family that does not own land, you do not have the right to any land to live on or extract wealth from.  You may rent some land to live on, if there is something you can do that someone is willing to pay you for, but if there is not, and you find yourself ineligible somehow for whatever “state assistance” may be provided, there is no longer the fall-back option of subsistence.  There exists common land, but in most areas it is illegal or at the very least frowned upon to try to live on it or extract wealth from it.  Unable to rent a place to sleep, not permitted to erect any effective form of shelter such as a tent, with no land to cultivate and with increasing restrictions on even their ability to scavenge, a modern homeless person lives a far more fragile existence than they might have found had they lived ten thousand years ago.

It is unreasonable to expect every step of progress to be a “Pareto improvement” (a change which results in everything either staying the same or improving, with nothing at all getting worse), for instance environmental regulations may save lives and be a vast improvement for society over all, but some companies will inevitably lose out, and some people may lose their jobs.  Pareto improvements are indeed very rare, but an example of somewhere you might expect a Pareto improvement is in the change between your prospects had you lived ten thousand years ago, and your prospects now.  Is it so unreasonable to hope that a human born into the world today would, if not be better off, at least never be worse off than they would have been, had they been born in the stone-age?  If modern society cannot even make a Pareto improvement to stone-age society, we must be doing something wrong, and yet for the person sleeping huddled in a doorway, with just a few damp sheets of cardboard to protect them from the blustery December wind, being awoken and moved along every few hours by security guards or the police; it is hard to see a cave with a fire, or a bivouac in the forest as anything but an improvement.

The key issue is that the population of humans is increasing, but the supply of land is not.  Although owning land may not be the best way to make a quick buck, those families that managed to gain ownership of some land have, over the course of a couple of hundred years, become exceedingly wealthy.  The lack of land available for the increasing number of remaining people, combined with the low cost of holding onto land, and the requirement of everyone to have a place to live, gives rise to a very profitable situation for land owners.  Yet in the stone-age, what rights did people have over the land?  It simply existed – ownership is a fundamentally human concept, not a natural characteristic of anything.

As every human is an individual, and not just an extension of their parents, the question is, why should one have less land to sustain them, just because their parents had more children or less wealth?  The only truly fair way to divide up the land in the world, that is so essential for survival, is for everyone to have the same worth of land as everyone else, as a birth-right (worth rather than area, as the area of desert required to sustain a human is significantly larger than the area of fertile pasture that is required).  This is clearly impractical for a number of reasons: firstly, it would be a bureaucratic nightmare to manage, as every new person born would need to be allocated their plot of land, taking a small amount from everyone else; secondly, how would we accurately assess the worth of an area – desert is almost worthless, but in our modern society oil is a very valuable commodity – clearly land cannot be allocated based solely on its subsistence value, but equally desert with oil beneath it is still worthless to someone that doesn’t want to drill for oil.

Thankfully the solution to this problem is much simpler, due to the invention of money.  Rather than explicitly dividing land between people according to its worth, a country can “own” all of its land on behalf of its citizens, and pay them all an equal rent or a “land dividend”, based on the total value of the land to the country.  Now the only thing needed to make this a Pareto improvement over the stone-age, is for this “land dividend” to be enough money to be sure that you can avoid death from exposure or starvation.  It does not necessarily have to cover a comfortable existence, but it needs to be enough to cover a place to live, heat, food and water.  On the other hand, if it truly is a “land dividend”, this dividend should be reflective of the worth of that land, which in turn is reflective of the economic activity performed on the land, which could be much higher than just covering subsistence in a wealthy country.

If the “land dividend” is based on the concept that the country is holding the land in trust for all of its citizens, the government might want to charge rent (or more commonly referred to as a “Land Value Tax”) to anyone using land in the country.  There might be a certain point, a particularly sized area of land, that could be rented by an individual from the government, that cost exactly the same amount as the “land dividend” that they were paid, resulting in no net payment to or from that individual.  This individual, should they feel so inclined, could live like a cave-man, with very little interaction with the government, thus demonstrating incontrovertibly that a Pareto improvement had indeed been attained – at the very least they wouldn’t be better off, had they been born ten thousand years ago.

This can be considered an extension of the original argument made by Thomas Paine:

“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.” … “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 I know of no better term to express the idea) for the land which he holds; and it is from this ground-rent that the fund proposed in this plan is to issue.” … “to every person, rich or poor”, “because it is in lieu of the natural inheritance, which, as a right, belongs to every man, over and above the property he may have created, or inherited from those who did.”

Which whilst rather academic, does give us some very good principles to build on.