Last week the leader of the Australian Greens Party, Richard Di Natale, jumped on the ‘Universal Basic Income’ (UBI) bandwagon.
Di Natale has called for the replacement of the existing welfare system with regular and unconditional government payments to everyone, regardless of employment status. ‘Welfare for all’ is his mantra.
Now, don’t get me wrong, there definitely is a need, and a growing one at that, for a rethink of the way the financial system works in a world where technology is replacing human labour.
Beyond the high cost of living and the fact that wages and salaries tend to buy less and less of what is available (thus rendering it necessary to borrow more and more credit from the banks to make up for the difference), it has been widely predicted that, within 20 years or so, 50% of existing jobs will be automated out of existence. Machines are doing more and more of the work and are now replacing ‘workers-by-brain’ just as much as they used to replace ‘workers-by-brawn’.
We must adapt the financial, economic, and cultural systems to this new reality, or else we will be faced with an unprecedented social crisis: systemic poverty, disenfranchisement, and even revolution loom on the horizon.
However, the problem with a Universal Basic Income or UBI is that it is, in essence, a socialist and ultimately faulty solution to some real systemic problems.
Indeed, there is reason to believe that the ever-growing calls for a UBI are, like Keynesian economics before it, the latest attempt – not necessarily conscious or deliberate – to co-opt and pervert certain Social Credit proposals that had been put forward in the early part of the twentieth century.
It was C.H. Douglas, the founder of the Social Credit movement, who first proposed that everyone should be given an income – regardless of his employment status – in the form of a National Dividend.
Douglas, who was an accomplished engineer, argued that under the accountancy rules of the existing financial system, businesses were obligated to recover more money from the public than they had distributed to the public in the form of wages, salaries, and dividends. The flow of prices always exceeded the flow of incomes.
The purpose of the ‘National Dividend’ was to help fill this gap. Whereas the gap is currently filled, if it is filled, by borrowing more money into existence from the private banks, the dividend would be a ‘debt-free’ injection of credit in lieu of all of this compensatory borrowing.
In effect, this ‘national dividend’ recognises the productive work of the nation that is not adequately reflected or distributed in the current accounting methods of the financial system.
There are other vitally important differences, however, between Douglas’ proposal for a National Dividend and contemporary calls for a Universal Basic Income.
To begin with, the UBI is set at a certain level regardless of the economy’s performance. It does not rise or fall. By contrast, the National Dividend is not a guaranteed amount, but would vary as economic conditions change.
The dividend was to be indexed to productivity. If too many people withdrew their labour and elected to live on their dividend payments alone, production would decrease. This would serve as an automatic feedback loop indicating the need for additional labour if the standard of living were to be maintained.
The second major difference has to do with the methods of financing a UBI versus the methods that Douglas had proposed for funding a National Dividend.
Di Natale describes a UBI as ‘welfare for all’. And indeed, since it would be based on the redistribution of wealth via taxation and/or on increasing public indebtedness, a conventional UBI could be regarded as the universalization of socialism.
Compare this with the Social Credit proposal of ‘dividends for all’, which may be likened to the universalization of capitalism.
The Social Credit view is that we are all shareholders in our economies and heirs of society’s cultural heritage. Society’s profit, i.e., its ‘surplus’ production made possible by the overflow of prices relative to incomes, can be distributed to the shareholders of Australia Ltd., that is, to the citizens, by creating new money in the form of additional income and giving it to individuals as a periodic dividend payment.
Now, Di Natale’s additional suggestion of a People’s Bank to provide low-interest loans to first-time home buyers, amongst other services (including possibly on-line banking via Australia Post), is a better one and deserves to be looked at in greater detail. Indeed, what is ultimately needed is what Social Credit refers to as a National Credit Office. Its purpose would be to ensure that the whole financial system is effectively serving the right policy: the common good of the Australian people. Creating and distributing a National Dividend to each citizen would only be one of its main functions.
M. Oliver Heydorn, Ph.D., is the founder and director of The Clifford Hugh Douglas Institute for the Study and Promotion of Social Credit. He is also the author of Social Credit Economics, The Economics of Social Credit and Catholic Social Teaching, Social Credit Philosophy, and, most recently, Lives of Our Own: Social Credit, Catholicism, and a Distributist Social Order.
To read more about Social Credit, visit www.socred.org.