Economic Democracy



Two weeks ago (18 Nov 2016) I participated in a panel discussion about Universal Basic Income, at the 2016 ACOSS (Australian Council of Social Services) Conference. While the audience was very receptive, I remain well aware that the mental barriers which inhibit and distort the debate in New Zealand are alive and well in Australia too.

Just as in New Zealand the most radical step to reform is the necessary reconceptualisation of what we already have. Just as we pay unconditional benefits of upto $175 per week (based on a 33% tax rate) through the graduation of the income tax scale, so in Australia they pay unconditional benefits of upto A$236 per week (based on a 37% income tax rate there). In addition, both countries pay many conditional ‘transfers’ to beneficiaries, for which the first $175 (or A$236) could easily be made unconditional. The Sydney audience seemed to get this point more easily than New Zealand audiences do.

Once such accounting reform is in place, the creation of a truly universal benefit is little more than a tidy-up operation. Indeed Australian Jane Gleeson-White – author of ‘Double-Entry’ and ‘Six Capitals’ – recognises the importance of the (actual) oldest profession (accounting) as the potential saviour of the human world.

Of the six capitals Gleeson-White identifies, three-and-a-half of these – natural, human/cultural/institutional, intellectual, and the infrastructure component of manufactured capital – are inherently public. It’s a no-brainer that the public should get a return on its (collectively-held) capital, just as shareholders of Air New Zealand or Qantas get a return on their financial capital. This was one of my key points, on 18 November.

At ACOSS, I drew the analogy between universal basic income and universal suffrage. While the latter is the core principle of political democracy, the former is the equally core – and equally important – principle of economic democracy. Anyone who has seen the movie ‘I, Daniel Blake’ will understand how universal basic democracy could have made such an enabling difference to the lives of that story’s two principal characters. Another key point from my Sydney remarks was that a Universal Basic Income is work-enabling, whereas our regime of conditional and increasingly begrudging welfare is work disabling. If you wish to eulogise work – as Australian Minister of Social Services Christian Porter did – then move to institutions that enable rather than disable appropriate work.

Middle and high income people in New Zealand receive, through their income tax graduations, an unconditional benefit (what I call a ‘public equity benefit’) of $175 per week ($9,080 per year). That is the obvious amount of universal basic income that we in New Zealand can pay and should pay – as soon as 2017 or 2018 – to all resident adults.

It would mean that the first $175 of any beneficiary’s income would become a right rather than a hand-out, and that under no condition could a beneficiary ever be stripped of or stood down from the first $175 of her or his benefit.

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Fight for this! Don’t quibble about whether $175 is too much or too little. Kate Sheppard and her co-agitators fought for the principle of universal suffrage, the principle of one-person, one-vote. It amazes us today that anyone could have disagreed with what Mrs Sheppard struggled for. In the future, it will amaze us, similarly, how anyone could accept that a basic unconditional benefit might be anything other than a human right.

Universal Basic Income is neither an idea of the political left nor of the political right. The principles of liberté and égalité are not principles of partisan politics. (While the matter of how large an unconditional benefit might become may be a matter of political ideology – reflecting philosophical disagreements relating to the appropriate balance and boundaries between the public and private spheres of human life – the existence of, and acknowledgement of, public property rights are no more a matter of politics than democracy itself is a matter of politics.)

An unconditional universal benefit – a public equity dividend – does not deny the requirement, in a humane and civilised society, of needs-assessed social welfare. A universal basic income is necessary but not sufficient. Needs-based social welfare is a very important though largely separate matter from public equity. (In the jargon needs-based welfare is an application of ‘vertical equity’, which is complementary to ‘horizontal equity’.) Nevertheless there can be no doubt that, under conditions of economic democracy, the total requirement for needs-based benefits would be significantly less than under a society that rejects the principle of public equity.

A humane society is uplifted by principles, not hidebound by rules. If you haven’t already done so, see ‘I, Daniel Blake’. Then become an active proponent for democracy, for economic suffrage, for public property rights, for a universal basic income that is a public equity dividend.


  1. I think it’s a no brainer to go to a UBI but I think it should go to citizens not residents or else we will be bankrupted before it gets off the ground. And citizenship should be a lot harder to come by in this country and actually mean something.

    • Save NZ raises an important point. Let’s be ambitious enough to imagine that just as we were the first country to give women the vote, we can be the first country to give all citizens a UBI. This would make moving to NZ and getting residency and then citizenship even more attractive.

      Yes, new immigrants will get jobs (they have to before being granted residency), and pay tax, increasing the funding pool from which the UBI is paid. But clearly there’s a maximum population our small, mountainous islands can support, and a maximum speed at which our built infrastructure and social welfare systems (in the broader sense of the phrase that includes public health, education etc) can be scaled up to handle new immigration.

      What is the fairest system for deciding who can come here, and in what order? How do we determine the maximum carrying capacity of our country? These are uncomfortable questions for radical leftists like myself, who would ideally like to see all border control abolished worldwide, but we must work with progressive and green nationalists to address them, or reactionary nationalists like UKIP and Trump will do it for us, in ways we probably won’t like.

      Another wiggly question about the UBI is should we still be paid it if we leave the country? We can longer receive an unemployment or sickness benefit if we leave the country for more than a few days, but AFAIK superannuitants can go wherever they want, for as long as they want, as still get paid their Super. Would our proposed UBI work like a benefit or like Super? Again, a tricky issue, but one of many that we must find good answers to if we want to make UBI a reality.

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