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Who should profit from the Commons?

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Money Tree - grown from the Commons?
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In a recent interview of Lawrence Wilkerson, by Rob Kall, Wilkerson makes some interesting comments into how to de-billionairize the economy without killing incentives to achieve. He comes close to recognizing the public value of the Commons but not quite, and how to collect this value is a critical pivot point between allowing reasonable incentives and profiting from things one didn't create, but merely collects the rent from.

For example, suppose you are Bill Gates as a young man and you decide to create a new OS for a new computer from IBM. At first, you are rewarded for your tech savvy, and you have to struggle hard to overcome the competition (back then, it was CP/M, Apple, and some proprietary hardware-OS combinations). But eventually you succeed and then so many people are using your system that more people start to use it just because others have used it first. This is profit from the commons, and one should not make money on that. In fact, it is collecting rent that rightfully belongs to the people. This is not to say that competition ever ceases, but just that at some point, which may be hard but not impossible to determine, many people will use your product because many other people use your product. I know this from personal experience. I started my career as an I.T. professional at a major university just as the original IBM PC was being introduced. Later, when Microsoft DOS and then, MS-Windows, came out, I had a choice of what to recommend to the two divisions I was the Manager of Information Systems for (when I first started we had an Apple II and 2 NCR computers with their own OSes and 8" floppy drives!). Only, it really was no choice - one had to use DOS or Windows to use the most popular business PC (IBM too, was a beneficiary of the Commons, and ought to have been paying rent back for that, at least as a form of taxes). Yes, there was OS/2 from IBM, but it was a niche product that never made it deeply into the Commons, and which died in a few years.

Tech companies actually realize the value of the Commons to some extent; this is why Facebook does not charge a monthly fee to use its product, you can use it for free and then they charge advertisers to access that huge pool of users in the commons.

But, this needs to go further.

If a Google, let's say, profits from a huge user-base, they ought to pay more for renting bandwidth in that congested "virtual city," just as a store owner in the middle of Manhattan, NY would pay more rent than one in the middle of New York State (locational value is often under-charged even in Manhattan, especially on under-used lots, encouraging further under-use, and wasting billions in potential city revenue).
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This is the question that must be answered for a fair, progressive, sustainable economy: At what point are profits coming from the commons vs. innovation? That is the point to start returning rent to the people.

Oh, and if people are worried that entrepreneurs like Elon Musk will pack their bags and move elsewhere, don't be:
1. Elon Musk was and is a huge beneficiary of government investment and (ongoing) subsidies. He got nearly half a billion dollars from the DOE for Tesla, and continues to be able to sell his expensive cars in part because of large national and state subsidies for electric cars. SpaceX nearly went under, by Musk's own admission, before NASA contracted with them and NASA remains by far their largest customer. His third company, Solar City, also benefits from government subsidies to encourage home solar installation. This is not bad, in spite of occasional blow-ups like Solyndra; the best societies have a combination of public and private enterprises and support.

2. Elon Musk is not paying for most of his companies with his own money. Even as rich as he is now (8.4 billion US$ (2014) says celebritynetworth), he still needs investors and government contracts and subsidies to start and run his companies, and remember, his wealth is a recent phenomenon, and not one that under current S.E.C. rules and other laws, that he can quickly access without paying large tax penalties (I'm not saying he ought to pay lower taxes; just that it already limits what he can do with his wealth; it is "tied up" so to speak, so the huge money he needs in the future has to come mostly from elsewhere, as it always has).

3. As society processes the rent from the commons, it will, or at least could, put that money to use in education, infrastructure, other start-up companies on the cutting edge, and other things that will provide opportunities for a whole new crop of Elon Musk-like entrepreneurs. Even if we take a bit off the top of Elon Musk's output (which is by no means proven) with Commons-taxes eventually, we can instill that sense of entrepreneurship in a whole new generation. In fact, we ought to be simultaneously un-taxing actual labor and sales, and only collecting rent from the commons, including land, which, economists who have studies this, like Michael Hudson and Mason Gaffney and Nic Tideman, tell us is more than 1/3 of GDP (second video in link). That ought to be enough though we might have to give up a few wars, and let those countries develop their own entrepreneurs.

At the opposite end, billionaires who barely innovate at all, like the Koch Brothers, would have to pay for their pollution of the commons, their access to coal and other minerals of the commons (what the U.S. collects in royalties for this is woefully inadequate, going back to the oil-land fire sale prices of James Watt, Interior Secretary under Reagan, economists generally agree).

Finally, we have to move away from what economists call a "willingness to pay (for clean water and air, etc.)" model to a "willingness to accept (payment for pollution of water and air, etc.)" model. The latter imposes the onus of payment on the polluter, not on the person who drinks water and breathes air, who may or may not have the money to pay to keep those relatively clean. We should always start from the presumption that everyone has an equal right to the fruits of nature, and that those who want to use them beyond minimal use should pay rent to everyone else to do so, rent to the Commons.

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http://newthinking.blogspot.com/

Scott Baker is a Managing Editor & The Economics Editor at Opednews, and a blogger for Huffington Post, Daily Kos, and Global Economic Intersection.

His anthology of updated Opednews articles "America is Not Broke" was published by Tayen Lane Publishing (March, 2015) and may be found here:
http://www.americaisnotbroke.net/

Scott is a former President of Common Ground-NYC (http://commongroundnyc.org/), a Geoist/Georgist activist group. He has written dozens of articles for (more...)
 

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