Reply to Owen McShane's "Fable for our times (with moral)" (National Business Review, 31 July 1998), by Keith Rankin.
Owen McShane's fable has virtually no specific connection to UBI. At it's simplest level it is a discussion of the gains from trade. Tom, Jim and Sue all become better off because they buy from each other what each other produces best. It's like an Economics 101 text, in which the example activities are fishing, legislation and defence.
The surprise is that McShane, whom I had thought was a believer in trade, says that "almost everyone ... would agree that Jim and Sue were a thoroughly nasty pair".
OK, McShane's fable suggests that Tom, in selling his fish, is being forced to buy collective goods that he doesn't want, or doesn't think he wants. So the fable addresses the tension that exists in an economy - in any economy - in which there is a mix of individual and collective goods.
Most economists, contrary to McShane, accept that there is a synergy between the private and public sectors. The purchase of collective goods almost always requires at least some legal sanction; otherwise would-be free riders (such as Tom) would fully benefit from collective goods such as legislation and defence without contributing to paying for them.
The fable still says nothing about UBI.
What I am very pleased to see McShane say is that UBI "'works' in so far as the numbers appear to add up".
The remainder of McShane's article is diametrically wrong. The majority of the wealth in modern developed economies is a result of our public inheritance: our environment, knowledge, technology, institutions, cultures, infrastructures. Together, along with the socially beneficial externalities arising from unpaid work and socially responsible business activities, these collective productive assets constitute the public domain. The public domain is the equal property of all.
In a system of laissez-faire capitalism in which all income streams are deemed to be private income, private capitalists appropriate for themselves the values created by property that is in the public domain. The payment of a social wage - and its corollary, a universal income or social dividend - is no more than a reflection of true property rights; an acknowledgement that public proprietors have as much right to an income from public assets as do private proprietors have from their assets.
The valuation of public property and the recognition of public property rights is not only highly moral; it is essential to the survival of developed economies. It is the plunder of the public domain purely for private profit that is immoral.
Who actually owned the fish that Tom caught? Are the fish in their pre-caught state really the free goods that McShane suggests?
