Co-ownership democracy – the path to a basic income grant

South Africa’s path to a welfare state has not been easy. For starters the problem of how to pay for social welfare in a country with too few taxpayers and not enough full-time employed citizens, has meant that social services have been rolled out first to those in most need — children, the disabled and the elderly. In recent months the ruling party announced the introduction of universal healthcare in the form of National Health Insurance and a number of pilot schemes in which the system would be phased in incrementally.

Although opposition parties and civil society groups have already called for a basic income grant for all citizens along with health care, South Africa has lacked both the political will and the means to achieve this goal. Both the Freedom Charter and our country’s Constitution enshrine the right of citizens to share in the wealth of the country but this promise has appeared out of reach, resulting in ongoing poverty for millions. The pressure on the state to deliver essential services while moving towards a technologically sophisticated industrial economy has resulted in political infighting with far left groups such as the Economic Freedom Front (EFF) demanding that private property be confiscated by the state in a plan that would essentially reduce the economy and the country to a communist dictatorship.

Such a path is not the inevitable outcome of South Africa’s democracy. According to social and economic rights activist Nicole Tin,”Communism tries to correct the imbalance between the poor and the rich through the idea of common ownership. The fault is the implementation of a centralized common ownership. All the wealth gets centralized into the hands of a few people in the government and wealth distribution becomes a problem. China and Russia have given up on this idea of a common centralized ownership.”

Democracy, she says “is attractive as every citizen has a vote to pick the government. However, beyond this vote, democracy has nothing tangible to offer to its citizens. Wealth and power are concentrated among the rich.”

In the new democratic order envisaged by post-Marxists like Tin the common ownership of property would exist side by side private ownership of property by individuals or organizations, as currently practiced in democratic countries. For example, land pieces sold by governments.

The most important difference is that the proceeds from the lease or sale of common properties are distributed directly to all citizens equally.

In current democracies, even communist ones, Tin says, “such proceeds are kept, confiscated, in the government treasury. Common properties include land, oil, minerals, water, air space, road space, electromagnetic wave bands, nature parks, fishery license, sovereign wealth fund, and anything else in the country that is not already owned by private individuals or organizations.”

“In current democracies, citizens get zero wealth from being a citizen. In a citizen-ownership or co-ownership democracy, citizens equally share the wealth realized when common properties are sold. Each citizen in a citizen co-ownership democracy has a right to vote and a right to an equal share of the country’s wealth.”

In South Africa where the dominant theme  of wealth sharing and resource allocation is known as ubuntu, this makes sense, since there are limitations to what can or cannot be shared, necessitating the creation of shares, stocks and bond certificates.

“The amount of citizen dividend per citizen depends on the country’s common wealth. The amount is expected to be very substantial in many countries. For example, in Alaska, the amount can be easily a few thousand dollars per resident. In Singapore, the amount is estimated at about $9000 per citizen. (The details are in the cases supplied by Tin below). The amount over a person’s lifetime is easily hundreds of thousand of dollars, or even a million dollars.

So how exactly are we going to pay for all of this wealth sharing? Welll, South Africa has mineral wealth, the reserves of which remain some of the world’s most valuable, with an estimated worth of R20.3-trillion ($2.5-trillion). Overall, the country is estimated to have the world’s fifth-largest mining sector in terms of GDP value.  Government investment in the economy is in the region of billions of rands and like Dubai plans are afoot to beneficiate mineral wealth and to move beyond this windfall to a modern information economy.

The transition from a democracy to a citizen co-ownership democracy needs no revolution says Tin,  It needs only a political party to champion this idea, win the citizens over and you institutionalize this idea. “In some countries such as Switzerland, citizens can initiate and vote for a new democracy. They do not have to wait for any political party.”

“Careful institutionalization of citizen co-ownership and citizen dividend is essential. Past examples, e.g., the Alaska Permanent Fund and Alberta Heritage Fund, have shown that  dividend funds without careful protection will be diverted by politicians to other “urgent” uses. A good protection is through Constitutional laws that require a high referendum to change. A normal law that can be easily changed by a simple Parliamentary majority is not much of a protection.

The path towards a Basic Income Grant in which citizens gain financial freedom from birth and where the state essentially pays each and every citizen a basic salary every month is a long one. We may not ever get there as a developing nation, but we can certainly redistribute the nation’s wealth on a per annum or quarterly basis. There is no reason why the annual windfall from the state on the basis of co-ownership could not benefit us all in the same way that below par taxpayers already receive annual benefits from SARS in the form of a tax return. If you earn under R99 056 pa you already get your employees IRP pay deductions back, but if you unlucky enough to be unemployed you receive nothing. This is the gap which opposition parties need to fill in order to stay relevant to the 25% -36% segment of South Africans who remain unemployed.