Citizen Dividend vs. Basic Income

The biggest problem with basic income is its name. Andrew Yang, the candidate for the Democratic Party of the United States, has been touring the US and advocating for the establishment of a Freedom Dividend. The re-framing of a basic income as a dividend is absolutely critical to its success in the public discourse. A dividend is defined as “A dividend is the distribution of reward from a portion of the company’s earnings and is paid to a class of its shareholders”. I would argue that we are all shareholders in the society’s we live in.

While the ultimate objective of a dividend and a basic income remain the same, the critical difference is the structure of the program. In general, basic income advocates position the program as a new form of wealth redistribution that is simpler, fairer and easier to administer. The huge challenge with making the sales pitch in that way is quite simple. Citizens do not want more social programs. Of course, certain citizens do want more social programs, but it is a small minority of the overall population and they are typically activists on the fringes. The vast majority of the voting population has no interest in more taxes and more programs. A dividend allows you to avoid this massive roadblock to implementation.

Peter Barnes wrote an excellent book on the subject, With Liberty and Dividends for All. He basically argues for a dividend that is funded on “public assets”. This would include items that are, in theory, the property of society and not the property of individuals or corporations. That way, we can avoid the perception and counter-attack by the right that this is yet another tax and spend program. We could apply taxes and levies on environmental permits (which allow pollution into our common air, water, soil,…), taxes on the sale of wireless spectrum, land taxes (not property taxes), levies on natural resource extraction, tourism taxes, etc. These revenues could be put into a fund and invested. Part of the returns of this fund would then be distributed as a basic income (oops!) – a dividend to all members of society.

By implementing a citizen dividend, we would achieve most of the objectives of a basic income, but we would bypass the insurmountable mountain of political barriers to a traditional basic income program. Who could argue with a citizen dividend on public goods? When you are born into a society, you typically receive citizenship and certain fundamental rights. A dividend would become a fundamental right you receive upon membership. You would benefit from the increased wealth of your society and you would be offered the financial freedom to invest in your future, help your family and contribute to the further enrichment of your society. With a citizen dividend, all citizens’ interests would be better aligned and we could start to move forward towards a fairer and freer society.

Published on August 3, 2019