Thesis Number: #10 (Page 7 of 8)
As work-life experiences are re-balanced in people-centred neighbourhoods, these locations would become increasingly attractive as living spaces. More people would register their approval in the form of the willingness to pay higher rents for the benefit of locating in those areas. And as those rents are recycled back into the arts and education, the human condition is further elevated. The cumulative effects would be reflected in rises in the index of rent, enabling an increase in the Citizen’s Rent Dividend.
That dividend would be open-ended. So comparisons should not be made with the annual dividend paid to Alaska’s citizens from oil rents. These vary, topping $2,069 in 2008. But notice the qualitative differences.
- Alaska’s dividends are in part tied to the performance of stock markets in the boom-bust economy. And: oil is a wasting asset.
Reserves of petroleum will one day be exhausted. When that happens, Alaskan communities will atrophy, with an exodus of residents as the oil wells run dry.
- Rent created by people working in co-operative communities is infinite: infinite in size and duration, contingent solely on everyone participating in the activities that generate improvements in the quality of life in common. This is as close to a tangible measure of paradise on Earth as we are going to get.
Is this too good to be true? What would prevent the new prosperity from turning into a traditional boom/bust depression?
By recycling rent back into the public purse, we establish the financial loop that solves the major problem of instability in the economy. The Citizen’s Rent Dividend would be a participating element in society’s negative feedback mechanism.
- At present, increases in the value of land-based assets provide the incentives to speculate, which creates bubbles that inflate prices that turn into the vicious business cycle that has to implode.
- When rents are automatically recycled back into life-affirming activities (personal development, the arts, recreational opportunities and community services in all their varied forms, from nurturing the young to caring for the aged), growth becomes a virtuous circle of creativity (Box 6).
The Feedback Mechanism
Negative feedback is a process that moderates fluctuations within an operating system. It facilitates self-regulation to secure stability. Negative feedback loops are used by living organisms and in electronic engineering. An early example of a control technique is the refinements to the water clock introduced by Ktesibios of Alexandria in the 3rd century BCE. To prevent steam engines from exploding, James Watt patented the governor in 1788. In the economy, the land market reveals the information needed to apply negative feedback policies. As the economy grows, rents rise faster than either wages or the profits of capital. If rent is re-cycled back into virtuous social uses, growth remains stable. If rents are privatised, amplitudes in the fluctuations become increasingly unstable. This creates the vicious cycle that eventually explodes in boom/bust property prices.
Learn, don’t Lament
The process of enhanced self-realisation entails healing. This must include forgiveness for those who did terrible things in the past, and for what we are doing to ourselves today. But the self cannot be healed in isolation from healing the community.
The challenge is immense. The process of re-creating a community free of socially-acceptable forms of cheating, for examples, includes the need to cancel sovereign debt. To avoid “shock therapy”, a controlled shift from irresponsible consumption to “pay our way” behaviour needs to be designed. The transition period will include disruptions that need to be sympathetically addressed.
Prophets preached doom in the past, and they were often proved wrong. But, at worst, it was their regionally-confined civilisation that was at risk. Ours civilisation is global in reach. In addition, we now command the power of total destruction. Can we risk clinging to a Do Nothing policy in the hope of muddling through? Don’t we deserve better?