Book review: Peter Barnes, With Liberty and Dividends for All: How to save our middle class when jobs don’t pay enough

Peter Barnes, With Liberty and Dividends for All: How to save our middle class when jobs don’t pay enough, Berret-Koehler Publishers, 2014, 1 62656 214 1, pbk, xii + 174 pp, £13.99

There are not enough well-paid jobs to sustain a large middle class, and Peter Barnes offers as a solution to this problem the idea that co-owned wealth could pay dividends to everyone. The Alaska Permanent Fund is the model, and the inspiration is Thomas Paine’s Agrarian Justice, in which Paine proposes an equal distribution of the income generated by the property which belongs to all of us. This is the ‘co-owned property’ that is at the heart of Barnes’ proposal; and he extends the meaning of the economist’s term ‘rent’ to include payments made to all of us in recognition of the uses that are made of our co-owned wealth.

Drivers of the changed outlook for the United States’ middle class – and the middle classes of all developed nations – are globalization, automation, and deunionization. The effect of all three of these is to reduce the proportion of the proceeds of production going to labour, and to increase the proportion going to the owners of capital ( – the main point made by Thomas Piketty in his book Capital). Economic stimulus, education, and job creation, might ameliorate the situation slightly in the short term, but automation, globalization and deunionization will defeat them in the end, as will the fact that the economic system quickly magnifies small differences in wealth into sizeable inequalities. As Barnes suggests, the system needs to be fixed, not the symptoms. One particular change that is required is that means-tested benefits need to be replaced by universal ones, but the most important change is that the rent that owners extract from assets that belong to all of us (‘extracted rent’) should be distributed to everyone (‘recycled rent’) as a Citizen’s Income

Barnes suggests several types of co-owned wealth that could be made to generate the income to pay for a Citizen’s Income: the money infrastructure, the electromagnetic spectrum, sovereign wealth funds generated by extraction royalties (as in Alaska and Norway), and the atmosphere ( – rather than ‘cap and trade’, Barnes recommends ‘cap and dividend’, in which anyone who pollutes the atmosphere has to pay, and in which what they pay is redistributed as Citizen’s Incomes).

This is a very American book, and the context in view is always the USA. For Barnes, it is the middle class that needs to be cared for, and, by implication, not the rest. The situation looks very different in the UK. Here we have a generally more egalitarian society ( – compare the universal NHS with the United States’ differentiated health systems), and the ways in which a Citizen’s Income would benefit everyone will be higher up the UK’s agenda than would be the protection of the middle class. But having said that, this is an engaging introduction to a Citizen’s Income and to how we might pay for it. Something similar for the UK and for other European countries would be welcome.