What if We Were Paid for Work in Assets rather than Ephemeral Wages?

Something that Yanis Varoufakis proposed in a speech I previously shared on a Video Weekend got stuck in my mind, making me want to dedicate an entire article to it. An article I have announced and promised a view times. Today, I finally fulfill that promise to me and you.

Besides explaining the mechanisms of democracy’s decline, in his speech, Varoufakis also proposed an amazingly fair economic system, one that would end the division between an owner class (from which arise the robber billionaires who ruin this world for the rest of us) and a working class. In this model, we would all become owners. If you want to skip to this part of Varoufakis’ recorded speech, it stretches from 10:00–11:49 minutes:

(Note: if the video linked above gets deleted, you may search the Internet for the title: “Capitalism will eat democracy – unless we speak up | Yanis Varoufakis”)

Varoufakis lays out an ingenious alternative to – or variant of – capitalism, a kind of fairly shared capitalism or universal ownership society, a fairly shared assets society — a Star-Trek-like utopia instead of the Matrix-like dystopia where we are currently headed. It is an intriguing economic system where there is no more disparity between wage-based and asset-based income, a system where we all become asset holders and will no longer be ordered around by a few ownership lords who condemn us to live out our lives as their oppressed serfs and puppets. 

Basically, instead of getting paid a finite amount of money per hour, day, week, or month of worked time, in Varoufakis’ proposed economic model we would get paid with assets, company shares essentially, the ownership instruments from which dividends arise — same as currently CEOs and other shareholders are benefited. In other words, we would build up residual income instead of being paid off with one-time payments of finite sums of money. Residual income is the dream of anyone who isn’t rich. It is the kind of financial security which a large section of a prior generation of American workers actually used to have, in a limited fashion. It was called a pension and only kicked in upon retirement. Residual income is money you don’t receive in exchange for hours of your time at a given rate, say 10 bucks per hour worked, but rather money you receive because of your accumulated labor contributions in the past.

It’s like when you plant an apple tree and raise it up. Once it has grown, it won’t stop growing apples when you recline in its shadow to rest or turn your time and labor to new projects.

Currently, our economy works this way only for a few privileged people, mostly rich folks who hold ownership titles not just over apple trees, but over our places of work, our housing, the industries that produce our stuff, the places we shop, the banks that collect interests from us, the mass media, growing portions of the Internet, and so forth.

A few writers and musicians have the same luck when their old books and recordings keep generating sales years or decades after the work of their creation was done. Unlike most of the rich, however, these creators are the exception that confirms the rule, sadly most often to the tune of ridiculously small residual earnings. Meanwhile the billionaire and millionaire “owners” of our world, reap most of its riches, the lion’s share of all residual earnings, reaping where they never sowed, since we – the disowned people – do most of the human work (including building the machines that eventually replace us), and the natural-resources part of our economy are there without folks having had to work for them. So, why do we accept the evil fiction that it all rightfully belongs to a tiny top for whom the rest of us must forever toil? Did this tiny, super-rich minority work everything into existence while the rest of us, and our prior generations, lazed about all our lives?

Since our economy’s existing infrastructure is just like an apple tree or stack of books and music recordings — in other words, the result of prior centuries of human labor combined with natural resources, a large construct contributed to by anyone who ever worked in it — why shouldn’t we all own it and receive residual income dividends? Why should it belong to a small handful, most of whom never worked?

Clearly, those of us who work in it, build it, rebuild it, and keep it productive, deserve to own a fair share that reflects our contribution. As for the inherited part, the one that comes from nature and the labor of our ancestors, we could all receive a citizens’ dividend (a.k.a. a “universal basic income”) to start out in life with, simply as our inherited fair share of our jointly owned country’s natural resources and prior generations’ build-up. And, as reward for our own work, we could, as Varoufakis suggests, add assets to our portfolio and thereby increase our monthly dividends over time, thus tying pay to merit.

This idea really bears some thinking about. Combined with a universal basic income that would cover the living essentials for everyone and eliminate the constant existential fear most of us must live with in our deeply flawed current system, Varoufakis’ idea of getting paid for our work in assets and the residual income they yield, would indeed be a lot fairer and more secure than the current profit-driven system which creates enormous residual incomes for the rich and fobs off the rest of us with small, fixed amounts of cash that, once we have spent them on groceries, rent, electric bills, and so forth (a sizable chunk of which goes right back to the rich “owners”) are gone forever, leaving us with nothing when we are laid off. As things stand today, we stand empty-handed when our pay runs out, while the rich keep having their dividends roll in until the day they die, at which point the endless money stream is diverted to their heirs, and we working people shift from being the late “owners’” serfs to being these new “owners’” serfs. This is the ultimate refinement of old slave-holding and feudal societies since the new lords can renounce all reciprocal responsibilities to their slaves or subjects. That’s why they don’t blink twice when they export our jobs overseas or replace us with machines to then lay us off and keep the temporarily enhanced profits all for themselves, leaving us to beg for alms or starve.

It’s as if a thief stole your land, makes you pay rent to stay on it, and passes this continued theft on to his heirs. And when the heirs can replace you with even cheaper serfs (like machines), they kick you off the land to die. The obvious cure would be to reclaim the land from the thieves and their heirs.

To review, by restructuring our economy, we could have a vastly superior economic system creating individual income from two major sources. One, a universally inherited basic income — based on evenly shared national assets and functioning as a liberating safety cushion that would protect us from financial despair. And, two, an earned residual income derived from additional assets obtained through our own work. To top it off, federal monetization of useful work which the market does not support (like taking care of our kids and elderly or offering public services), a thing often called a Federal Job Guarantee, would greatly increase useful work opportunities for people who want to work for an additional earned income and who might be needed to do work that may be too unattractive if it isn’t paid. Maybe we should call this concept a Holy Trinity. 😉

Varoufakis’ suggestion of how to handle work compensation makes for the best economic alternative to our current pyramid system that I think I have yet heard, and precious addition to the other two measures of growing popularity.

I must admit, this sounds really intriguing. I will elaborate a little more tomorrow. And maybe we should all discuss it this week over Thanksgiving dinners.

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Note: To realize this scheme to the full extent, and also to rescue democracy from Big Money, we would have to eliminate the billionaire class. No later than when they die, their holdings should be distributed among their workers and/or all citizens as citizen assets, their heirs getting the same size share as everybody else. Better, yet, their holding should be broken up in their lifetimes (like Teddy Roosevelt broke up the big “trusts”) without further delay, so as to immediately protect democracy and the new, just economy from corruption through bribery. The billionaire class is where money in politics comes from, after all — money in politics being the curse which always results in our system being corrupted to oppress, rob, and silence the many on behalf of the few. If this sounds too revolutionary to be practical, let’s consider mild transition forms, for example using economic crashes like 2008’s great Recession to nationally buy up big assets rather than bail them out. A more gradual transition could take its clue from the current practice of paying CEOs in assets more than cash, a scheme aimed at reducing CEOs’ taxes (surprise!) and which leads to insider trading abuses like the current Sears-CEO’s fire sale of the company into his own pocket, costing thousands of employees their jobs. Fairly distributed assets would save us from such abuses, too.

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Follow-ups:

1. The Shared Assets Economy – Part 2
2. A Beautiful Future (Happy Thanksgiving)
3. 11 Videos about the UBI part of the proposed package: Video Weekend 11-25-2017 (12 Videos)