Basic Income from Fair Inheritance

I’ve been aware of the Basic Income movement for some years but, until recently, I’d never given it serious consideration, seeing their goal (of an unconditional basic income for everyone) as an idea which had even less chance of being implemented than the inheritance-for-all reforms which I’ve been advocating myself. However, an exchange on OpenDemocracy prompted me to think about it more carefully and it seems to me there is a synergy between the two sets of ideas which could bring them both within reach.

At the heart of my philosophy is the belief that a mature society needs to ensure that its most fundamental laws are soundly based, coherent and consistent with its values. I don’t believe it’s possible to build a healthy society by constantly piling up layers of new law to mitigate the ill-effects of older laws which were either badly thought out in the first place or were based on values we have since rejected. Unless we constantly review existing law and maintain it properly we condemn ourselves to an unwieldy legal framework with injustice built into it.

Among the most fundamental of our laws are those governing the allocation of natural resources. Land is uniquely important: not only does the production of our food depend on it but we cannot engage in any activity at all without using it – without it we cannot even have a home. In addition, it is fixed in location, the supply of it cannot be increased and, because it is the primary source of wealth, the laws which govern its use have provided a legal template for many secondary forms of wealth.

A person denied access to land is denied the means to sustain life. Those who control the land, and can deny others access to it, have a hold over everybody else which tilts the entire economic and social landscape in their favour. When the law hands control of the nation’s land to a minority, it effectively makes the rest of the population subservient to them. If we do not ensure that the laws governing the allocation of land are rooted in principles which genuinely serve the public good, we cannot expect any aspect of our society to function properly.

Land is a resource which no human can claim credit for producing, so why should anybody be required to pay for a fair share of it? And why, when principles such as fairness and equality of opportunity are undisputed, should some people have to pay for land while others are given huge amounts of it for free?

For the last few years, therefore, I have been trying to draw people’s attention to the fact that the laws governing the ownership of land (particularly laws on inheritance) are not only blatantly incompatible with generally-accepted principles but are also inconsistent with their own roots. At the time that those laws crystallised, land ownership was part of the machinery of government; landowners’ powers were not simply privileges, they were responsibilities. Over the centuries landowners’ administrative responsibilities have been taken over by other bodies but they have been left with the power to extract rent – which was originally what paid for government – and the power to nominate a successor.

Those two powers underlie a steady flow of wealth from the poor to the rich, and that flow of wealth constitutes a major barrier to the introduction of Basic Income. Not only does it suck up resources that could be used to fund a Basic Income, it also contributes to a culture of resistance – by inflating what the public at large must pay for a decent life for themselves, that flow of wealth drains people’s ability and willingness to contribute to others.

To my mind, the poverty which stems from inequality cannot be solved simply by giving money to the poor, because fundamentally it’s not a lack of money which is the problem – at bottom the problem is one of control over essential resources. If land and other essential features of the economy are controlled by a small group, giving money to the poor is merely a roundabout way of giving it to the rich. We cannot hope to build a fair society as long as we tolerate laws which allow a privileged minority to exercise arbitrary control over our most important natural resource.

However the rentier system is so well established, and so intimately entwined with every aspect of our economy, that most people seem to regard it as part of the natural social landscape, treating the injustice implicit in it as something we can try and mitigate through the tax system but cannot consider trying to actually put right.

So what might we do to put it right?

A turning point in my own thinking was when I read about Gerrard Winstanley and the Diggers, who agitated for land reform in the seventeenth century. It struck me that their demands, for wholesale redistribution of land, were essentially identical to the demands of land-rights activists today, more than 350 years later. That led me to two conclusions: firstly that the problem is too big to be solved in one step – it’s the result of a complex mix of factors which have to be understood separately and resolved with a number of discrete reforms; and secondly that it is too late to properly solve the problem for the current generation and therefore we should focus on solving it for future generations.

The land reforms I’ve been proposing involve:

  • clarifying inheritance law, to restore its primary purpose as a method of passing on responsibility rather than wealth;
  • establishing explicitly that all ownership of land includes an element of trusteeship (i.e. all landowners are trustees for future generations, and owners of all agricultural and industrial land are trustees for the public at large whose survival and well-being depends on them);
  • separating the market in land (which is fixed in quantity) from the market in man-made goods and services (which can be expanded without limit), by establishing a separate, fixed-quantity currency for trading in land.

These reforms would, in time, make it possible for everyone to inherit a fair share of the nation’s real estate. They could be introduced over the course of a generation or so with relatively little explicit redistribution, by transferring real estate into the new system at probate.

Establishing a fixed-quantity currency for trading in land would answer the problem of how land can be allocated fairly when both the land itself and people’s needs are so diverse. The currency would be tradable, allowing people who wanted more expensive properties to buy (or rent) the additional currency from those who wanted less, so there would continue to be a market in real estate, much as there is today, but everybody would have a fair stake in the market because everybody would be given a similar allocation of land currency.

These reforms would have a number of effects which would support the goal of a Basic Income, directly and indirectly. Firstly, because people would inherit a fair share of the stock of residential real estate they would, to a large extent, be freed of the need to pay for a home. Secondly, people would also inherit a stake in the country’s agricultural and industrial land, providing them with the possibility of rental income.

In addition, the changes to inheritance law would almost certainly be extended to other forms of property. At probate, any assets which could be regarded as primarily a store of wealth (for example, shares in public companies) would be treated as part of a common legacy, and this could provide a revenue stream for a Basic Income.

Although it would take a long time for this reform to be completed – perhaps as long as a century – most of it would probably happen within about thirty years. It would also have significant immediate indirect benefits, for two reasons: firstly, land would no longer be regarded as the prime long-term store of wealth, so its price would almost certainly drop immediately (though mortgage issues mean there is a double-edge to that); and secondly, it would make it easier to introduce interim measures to mitigate poverty because objections on the grounds of being unsustainable in the long-term would no longer carry so much weight.

I’ve tried making these arguments directly to politicians, pointing out that current land law is incompatible both with fundamental legal principles and with its own origins and that it leads to a constant flow of wealth from the poor to the rich. The response from the then Secretary of State for Justice, Chris Grayling, was that property law ‘would seem to be working reasonably well at the moment’. As long as there is no clear public demand for fundamental reform the political establishment has no reason to make any move towards it, so as long as I’m alone in making those arguments they will simply be ignored.

The Basic Income movement, on the other hand, has established a foothold in the public consciousness but, as long as its aim is to integrate the concept into a fundamentally flawed economic system, it’s unlikely to ever break through the ‘something-for-nothing’ barrier in people’s minds. What we can do, however, is turn that barrier around and pull it away, by demanding to know how the something-for-nothing culture of the privileged came about, and how those who want to keep it can possibly justify it.

I’m confident that the ideas I’ve outlined above (along with one or two other fundamental reforms, of the monetary system and the obligation to pay taxes) would permanently transform the social and economic landscape within a generation. The reforms I’m proposing will be strenuously opposed by the privileged minority but breaking them down into small steps has the advantage that we can put forward relatively simple arguments which opponents would struggle to offer any reasonable objection to.

The disadvantage of this approach is that it’s difficult to get people excited about small steps because it’s usually not obvious that they’ll lead somewhere worthwhile. But underlying all my ideas is a very simple concept which everybody can understand and nobody can reasonably argue against: that our laws should be consistent with our values. When politicians of every stripe trumpet their belief in fairness and equality, why do we tolerate laws that are blatantly unfair?

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