Will Social Credit Finally Get Tried In a Real Country?

Switzerland may end up guaranteeing every citizen a modest living just because they are living.

This idea was popular on the high prairies in Canada and in Quebec for some time and had representation in Ottawa, and occasionally were the governing party in a province, but they never came close to forming a government, and the provinces were in no position to issue currency.

I was brought up to mock it. Indeed it was probably premature when they proposed it in Canada in the 30s, and as I understand it had already declined into racist and incoherent rural crankdom when I was a kid. They had split into the SoCreds in the prairies and the Creditistes in Quebec and held on to a couple of seats in the federal parliament well into the 60s before fading out altogether. So the idea had a long history in Canada but was never really tried.

Nowadays, though, Social Credit as an idea makes perfect sense. There isn’t enough productive work to go around. The current system forces us to find destructive work instead. This is a bad idea.

Guaranteeing everyone a bed and three squares is not an obviously bad alternative. It is time to reconsider it. I propose a global compact that nobody starves anymore; then we won’t have to work quite so hard playing musical chairs.

From the linked Salon article:

The proposals that are floating around the world vary a lot. But the basic idea is, no matter what you do, if you’re a resident — or in some cases, a citizen — you get a certain amount of money each month. And it’s completely unconditional: If you’re rich you get it, if you’re poor you get. If you’re a good person you get it, if you’re a bad person you get it. And it does not depend on you doing anything other than making whatever effort is involved to collect the money. It’s been a topic of discussion for several decades. Why is it happening right now? I think it’s obvious that it’s a reaction to the high level of economic inequality that we’ve seen. Most European countries haven’t had big increases in inequality at the same scale that we [in the U.S.] have, [but] some of them have had much more than they’re used to.

Comments:

  1. When I lived in D.C. my colleagues used to complain bitterly about panhandlers lingering outside Metro stations. "Aggressive" panhandlers (what we call "marketing" when practiced by people filling our mailboxes with trash) are indeed pretty annoying. That being said, my feeling was that simply giving money directly to these people was better than employing them to help sell toxic fast food, deposit chemicals on lawns thereby creating yet another long-lived and destructive mess, etc.

    The total harm of simply passing the money straight along to end users is arguably less and the resulting "economic stimulation" probably somewhat better than letting some of it be concentrated in the hands of McDonald's, or TruGreen or whatever other useless appendage might otherwise fall in its path.

    Unfortunately we convey the message that helping to manufacture and sell useless and often dangerous goods is necessary to maintain self-esteem.

    At this point a complete rethink is a terrific idea. Hats off to the Swiss.

    • "Unfortunately we convey the message that helping to manufacture and sell useless and often dangerous goods is necessary to maintain self-esteem."

      The one particular economic idea I've always thought was most powerful: revealed preference. Or "judge people by their actions". What someone buys that you judge useless, they may see it differently. Follow the argument through: who gets to decide what's "useless" and what's "useful"?

      I don't want to argue that it's not possible to collectively constrain economic forces either - if a given country can democratically decide that e.g. palm oil is too damaging a product, I see no reason why trade shouldn't be shaped by that collective choice. But equally, I think it's waaaay too easy to presume that what one set of people think is "useless" should apply universally.

      The citizen's income concept is interesting. I think there might be lots of reasons it's not workable (plenty mentioned in the article) - but equally, it'd be nice to have a bit of a Cambrian explosion of economic ideas (although a lot of them are old at MT's text above highlights, so, er, maybe more of a rummage in the attic, to mix metaphors horribly).

      One thing about the citizen's income that I've mulled over before: we usually think of this kind of thing having to happen through national policy and legal change. But in Bitcoin-world, I wonder if there are other, more organic possibilities, even ones that cross international boundaries? I'm writing that thinking, hang on... I'm sure I've read someone else talking about the same thing...

      • Yes, what's useless or dangerous is susceptible to individual interpretation.

        I don't think I made myself clear in my first approach.

        Put another way, tying a person's sense of self-worth and their well-being directly to their contribution to what we call "GDP" regardless of what is their specific role as an employee seems to me an inversion of priorities.

        Making up an extreme case let's imagine a person who has a choice to confront, choosing between unemployment and taking a job.

        Refusing to take the offered job consigns this person to greater hardship and negative judgement from society at large.

        Conversely, according our conventions if the person accepts the job then not only will he or she face fewer hardships but they will also enjoy more approval from society.

        If the job on offer is helping to make medical bandages then most of us would accept that taking the job is congruent with generally accepted values.

        If the available job is pouring one half of a binary chemical weapon into artillery shells being shipped to an unknown buyer then the net effect of the job on general well-being is much more dubious, a matter for serious debate.

        Despite the stark differences in the effective role being played by the hypothetical employee, material and psychological benefits to the employee are broadly similar. As well, each activity is undifferentiated in the thing we call GDP.

        I suggest that ideally a person should be able in a practical sense to honorably refuse employment that is harmful to society, without being made to suffer either psychologically or materially.

        The experiment being performed by the Swiss is a step in that direction, even if the intent of the experiment has nothing to do with what I've described.

      • "But in Bitcoin-world, I wonder if there are other, more organic possibilities, even ones that cross international boundaries? I’m writing that thinking, hang on… I’m sure I’ve read someone else talking about the same thing…"

        I've been wondering that too, but in trying to imagine the design of such a thing I always get stuck on the question, what stops someone from creating thousands of accounts to collect multiple citizen's incomes? So instead of a decentralized monetary system that just runs itself, you really need some organization running it to verify identities and watch for fraud.

        An interesting alternative to Bitcoin is Freicoin. I think they take things a step in the right direction, and their money system includes an automatic wealth tax that could be used to fund something like this. However, like Bitcoin, they are stuck in the belief that you get a stable value for the money supply if there is a stable quantity of money; in reality the velocity of money can change unpredictably and with it the value of money, and this has to be actively countered by changes in the money supply. The thing is, I'd expect something like the Taylor rule or NGDP targeting would be relatively easy to automate so... okay at this point I'm probably too many steps down the road of designing the next Bitcoin. I'm curious to hear more on your thinking.

    • It's a nice idea, but if you think it has a snowball's chance in Hades, you're dreaming.

      But it's a good place to present my latest jawdropping obscenity of the wealthy:

      The text of this cartoon is behind a pay wall at The New Yorker (if you can find a copy, the 10/14/13 issue). The link provides the illustration, and here's a bit I typed out for y'all. The perpetrator is "arson insurance baron F.F. Formica":

      it takes more than money and privilege and cronies in all the right places to ransack Nature's bounty for the private pleasure of the demanding few, to obliterate what has always existed and make out of it what never existed before, and then to flank it with "No Trespassing" signs. It takes a vision. It is a vision that sees molehills made into mountains - and to hell with the moles. ....

      Feeding the round-the-clock blaze annually requires the equivalent of a hundred square miles of the virgin Wyoming forest ... "At the rate we're cutting it, ... pretty soon the land around here is gonna be as bare as a nudist's bum."

      http://www.newyorker.com/fiction/features/2013/10/14/131014fi_fiction_mccall

      I watch the obscene prices attached to famous works of art (some pretty worthless from an aesthetic point of view these days, imnhso, too) and marvel that they provide an excuse for the acquisition of wealth that is beyond the needs of even the most greedy sociopaths. (Speaking of which, the Brits just gave the Queen a pay raise!)

  2. Alaska has done this for quite a while with the Permanent Dividend Fund. Each man, woman, and child in Alaska gets a check every year from the state's oil revenues account.

    • It's an interesting note on this - Alaska of all places having a citizen dividend. But these numbers (~ $1000/year) are not enough to live on, particularly in Alaska, so they don't really constitute trying the experiment.

  3. "Social Credit" was founded by an anti-Semitic crank, Major Douglas, so it started in crankdom.

    In Alberta, William Aberhart took the Social Credit money theory (minus most of the anti-Semitism) and made it into more of a religion than an economic theory. He also promised everyone would be paid $25/month. That is most likely what got him elected. That promise was never kept.

    But "Social Credit" has a lot of baggage and is not the best term to use, and probably Douglas's actual money theory is not workable.

    • I think the more useful term would be guaranteed annual income; or universal basic income or universal income security

      Some links about them here: http://accidentaldeliberations.blogspot.ca/search/label/guaranteed%20annual%20income

      • Guaranteed income usually involves negative tax on the low income side; it injects government bureaucracy and complexity and all sorts of possibilities for gaming the system. The idea that everybody gets a check before you start counting anything is different from what I usually understand "guaranteed income" to mean.

        Whatever the history of the Creditistes, (and thanks for the info) I do think the name "Social Credit" has a nice ring to it. But names are secondary, The point is that if we stop having desperation and fear as part of the background of daily life, we might be able to start making some progress again.

      • Well, I'm all in favour of having less desperation and fear in daily life (currently looking for work and a new apartment)

    • Holly, ad-hominem is not a legitimate argument.

      Michael, thank you for this post on your blog. Douglas's monetary proposals include more than just a national dividend provided to everyone. They also include a price rebate mechanism at the point of retail. Prices would be reduced at retail by the ratio of consumption/production.

      The financing for the dividend and rebate would not come through taxation. Financing would come from debt/cost free credits created by a credit authority and distributed directly to citizens. This is not a "re-distributive" mechanism but a distributive mechanism. The necessity for creating these debt free credits is based upon Douglas's A+B theorem and the observation that prices always increase faster than incomes.

  4. Another alternative, the truncated work-week:

    http://www.telegraph.co.uk/finance/jobs/10316850/Reduce-working-week-to-30-hours-say-economists.html

    strikes me as stuck in almost delusional old-line thinking about labor. Who works 40 hours anymore? Many people are paid as if they worked 40 hours, but fewer and fewer people actually punch a clock anymore.

  5. This to put the cat amongst the pigeons:

    "From each according to his ability, to each according to his need" (Karl Marx)

    http://en.wikipedia.org/wiki/From_each_according_to_his_ability,_to_each_according_to_his_need

    Not such a bad idea, but human nature being what it is, it was almost immediately corrupted by another oldie but goodie, the seven deadly sins (and probably a few other things).

    wrath, greed, sloth, pride, lust, envy, and gluttony

    Wikipedia is ringing the bell today:
    https://en.wikipedia.org/wiki/Seven_deadly_sins

    Unfortunately, technology has evolved fast, but the human capacity for sharing appears not to have done so, though I have not yet given up hope.


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