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The Assignment:
This assignment will have two parts:
1.) Summary
Summarize in 150-200 words the article your instructor has chosen from the assignment: “How to Save the Middle Class When Jobs Don’t Pay” (provided below). In this summary, you should relay the article’s main points, completely and accurately, in your own words. If you find yourself in a situation in which the author’s words needed to be quoted directly (perhaps for emphasis), you must make it clear that these words are the author’s by using quotation marks appropriately. You will not want to quote anything over one sentence in length, and you will want to limit yourself to no more than 2-3 direct quotes, if you use any at all. Remember that the whole point of this portion of the assignment is for you to restate the author’s points objectively in your own words.
In general, I recommend you structure your first sentence something like this:
In “How to Save the Middle Class When Jobs Don’t Pay,” Peter Barnes argues that…
This will function as the thesis statement of your summary, so this first sentence will need to convey the main point(s) of the article to give your reader an overall view.
2.) Response
Write a 1 ½ to 2 page response to “How to Save the Middle Class When Jobs Don’t Pay.” Before you even begin drafting, you will want to decide on the terms of your response. Once you decide on the terms (or grounds) of your response, you’ll want to figure out how you can support your points—using logic, outside evidence, examples from your personal life—whatever is appropriate.
The essay
How to Save the Middle Class When Jobs Don’t Pay
Peter Barnes
There’s long been a notion that, because money is a prerequisite for survival and
security, everyone should be assured some income just for being alive. The notion has
been advanced by liberals such as James Tobin, John Kenneth Galbraith, and George
McGovern, and by conservatives like Friedrich Hayek, Milton Friedman, and Richard
Nixon. It’s embedded in the board game Monopoly, in which all players get equal
payments when they pass Go.
And yet, with one exception, Americans have been unable to agree on any plan that
guarantees some income to everyone. The reasons lie mostly in the stories that
surround such income. Is it welfare? Is it redistribution? Does it require higher taxes and
bigger government? Americans think dimly of all these things.
But then, there’s the exception. Jay Hammond, the Republican governor of Alaska from
1974 to 1982, was an independent thinker who conceived of, and then persuaded
Alaska’s legislators to adopt, the world’s first system for paying equal dividends to
everyone. In Hammond’s model, the money comes not from taxes but from a common
resource: North Slope oil. Using proceeds from that gift of nature, the Alaska Permanent
Fund has paid equal yearly dividends to every resident, including children, ranging from
about $1,000 to over $3,000. (Bear in mind that a family of four collects four same-sized
dividends.) While this isn’t enough to live on, it nicely supplements Alaskans’ other
earnings. And paying such dividends regularly for more than thirty years has bolstered
the state’s economy, reduced poverty, and made Alaska one of the least unequal states
in America.
The question Americans in the lower 48 should now ask is: Did Alaska find the right
formula? If it can convert part of its common wealth into equal dividends for everyone,
can the rest of America do the same?
There are many good reasons to ask this question. One is that America’s middle class
is in steady decline. In the heyday of our middle class, jobs at IBM and General Motors
were often jobs for life. Employers offered decent wages, health insurance, paid
vacations and defined pensions. Nowadays, such jobs are rare.
It’s also unlikely that the jobs of the future will pay more (adjusted for inflation) than
today’s. In unionized industries like autos and airlines, two-tier contracts are now the
norm, with younger workers paid substantially less than older ones for doing the same
work. Nor is the picture brighter in other industries. In the Labor Department’s latest list
of occupations with the greatest projected job growth, only one out of six pays more
than $60,000 a year. The implication is clear: without some form of supplementary non-
labor income, we can kiss our middle class goodbye.
The second reason to ponder Alaska’s dividends is climate change. It might seem odd
that dividends based on oil could presage a remedy for climate change, but such is the
case. Imagine if we charged companies for using another common resource—our air—
and distributed the revenue equally to all. If we did this, two things would follow. First,
higher air pollution costs would lead to less fossil fuel burning and more investment in
renewables. And second, households that used less dirty energy would gain (their
dividends would exceed their higher costs) while households that used a lot of dirty
energy would pay. This would spur both companies and households to do the right
thing.
A third reason for considering Alaska’s model is our long-lasting economic stagnation.
Not counting asset bubbles, our economy hasn’t sparkled for decades, and neither
fiscal nor monetary policies have helped much. Tax cuts for the rich have benefited no
one but the rich, and as Mark Blyth and Eric Lonergan recently wrote in Foreign Affairs,
pumping trillions of dollars into banks hasn’t stimulated our economy either. What’s
needed is a system that continually refreshes consumer demand from the middle out—
something like periodic dividends to everyone that can be spent immediately.
One further reason for looking north to Alaska is the current stalemate in American
politics. Solutions to all major problems are trapped in a tug-of-war between advocates
of smaller and larger government. But dividends from common wealth bypass that bitter
war. They require no new taxes or government programs; once set up, they’re purely
market based. And because they send legitimate property income to everyone, they
can’t be derided as welfare.
In this regard, it’s worth noting that Alaska’s dividends are immensely popular.
Politicians in both parties sing their praises, as do the state’s voters. One attempt in
1999 to transfer money from the Permanent Fund to the state treasury was trounced in
a referendum by 83 percent. Nationally, Alaska’s model has been lauded by Fox News
commentators Bill O’Reilly and Lou Dobbs as well as liberals like Robert Reich.
The reasons for this popularity are pretty clear. Alaskans don’t see their dividends as
welfare or redistribution. According to several surveys, most Alaskans consider their
dividends to be their rightful share of their state’s natural wealth. There’s no stigma
attached to them, and any attempt by politicians to reduce them is seen as an
encroachment on legitimate property income.
Moreover, because the dividends are universal rather than means-tested, they unite,
rather than divide, Alaskans. If only “losers” got them, “winners” would be resentful.
Universality puts everyone in the same boat. No one is demonized and a broad
constituency protects the dividends from political attack.
How Would It Work Nationally?
How might a common wealth dividend system work at the national level? The easy part
is distributing the dividends. As in Alaska, enrollment could be done online and
payments could wired electronically at a cost of pennies per transaction. The Social
Security Administration could set that up in a jiffy.
The harder part is collecting the revenue. In my latest book, With Liberty and Dividends
For All, I show how, over time, we could generate enough revenue to pay dividends of
up to $5,000 per person per year. Initially, a sizable chunk would come from selling a
declining number of permits to dump carbon into our air. Later, more revenue could flow
from our monetary infrastructure, our patent and copyright systems, and our
electromagnetic airwaves.
Consider what $5,000 per person per year would mean. If a child’s dividends were
saved and invested starting from birth, they’d yield enough to pay for a debt-free college
education at a public university. In midlife, $5,000 per person would add 25 percent to
the income of a family of four earning $80,000 a year. In late life, it would boost the
average retiree’s Social Security benefit by about 30 percent. Thus, dividends from
common wealth would provide a badly-needed boost for poor and middle class families
during what promises to be a lasting shortage of good-paying jobs.
Surprisingly, the core idea behind Alaska’s dividends is over two centuries old. In his
1796 essay “Agrarian Justice,” American patriot Thomas Paine distinguished between
two kinds of property: “natural property, or that which comes to us from the Creator of
the universe—such as the earth, air, water … [and] artificial or acquired property, the
invention of men.” The second kind of property, Paine argued, must necessarily be
distributed unequally, but the first kind belongs to everyone equally. It is the “legitimate
birthright” of every man and woman, “not charity but a right.”
And Paine went further. He proposed a practical way to implement that right: create a
“National Fund” to pay every man and woman a lump sum (roughly $17,000 in today’s
money) at age twenty-one, and a stipend of about $1,000 a month after age fifty-five.
Revenue would come from what Paine called “ground rent” paid by landowners. He
even showed mathematically how this could work. Presciently, Paine recognized that
land, air, and water could be monetized not just for the benefit of a few but for the good
of all. Further, he saw that this could be done at a national level. This was a remarkable
feat of analysis and imagination, and it’s time to apply it broadly.
Today, Paine’s core idea—that everyone has a right to equal income from common
wealth—can be applied not just to natural resources but also to the creations of society.
Consider, for example, the immense value created by our legal, intellectual, and
financial infrastructures, the Internet, and our economy as a whole. This value isn’t
created by single individuals or corporations; it’s created collectively and hence belongs
equally to all. In a fairer economy some of it would actually be distributed to all. The
ideal mechanism for doing this would be common wealth dividends—simple,
transparent, direct (not trickle down), built on co-ownership rather than redistribution,
and politically appealing.
And here’s the best part. If Paine’s idea and Alaska’s model were applied at sufficient
scale, the implications would be vast. The current tendencies of capitalism to widen
inequality and devour nature would be self-corrected. Instead of plutocracy and climate
change, our market economy would generate widely-shared, earth-friendly prosperity.
And it would achieve these goals automatically, without much need for government
intervention.
Is this wild-eyed dreaming? Possibly, but no more so than universal suffrage or Social
Security once were. Common wealth dividends could be the next step in America’s long
march toward equal rights—and the game-changer that leads to a new version of
capitalism. But first, we have to see the opportunity and demand it.
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